ARK’s Wood Predicts Deflationary Tech Boom, Yield Curve Inversion Without Recession, And A Bigger Role For Bitcoin
Cathie Wood, CIO and portfolio supervisor at ARK Invest, argues that 5 converging innovation platforms — synthetic intelligence, robotics, power storage, blockchain, and multiomics — might push sustainable US productiveness progress to five–6%, nicely above the two–3% vary buyers have grown accustomed to for the reason that Industrial Revolution. In her newest investor letter, Wood contends that actual GDP progress might speed up past 7% yearly, a situation she believes would resemble the five-decade growth that culminated within the Roaring Twenties quite than any interval of the final hundred years.
Wood frames the present setting as “again to the longer term”: rates of interest, having bottomed close to zero in the course of the COVID crash, are rising in a sample that echoes the pre-Fed period, when short-term charges tracked nominal GDP progress whereas lengthy charges mirrored deflationary technological undercurrents. During the Industrial Revolution, the yield curve was inverted greater than 60% of the time with out signaling recession, and ARK believes an identical inversion immediately can be a bullish sign for equities quite than a warning.
The core driver, Wood writes, is the collapse in know-how prices. AI inference prices have fallen by greater than 99% yearly for the reason that cloud’s debut and the deep studying breakthroughs of the previous decade, whereas whole-genome sequencing has dropped from $2.7 billion in 2003 to below $100. This “good deflation” is already exhibiting macroeconomic results: ARK notes that AI inference demand grew roughly 25-fold in 2025, and estimates that Anthropic’s annualized income run price climbed from $9 billion to $65 billion between December and July — progress that, in its view, undermines the narrative of an AI hype bubble.
Inflation, Oil, and the Case for Equities
On inflation, Wood factors to different knowledge suggesting official measures overstate the issue. While authorities headline and core PCE readings stood at 3.7% and three.3% in July, the Truflation index — which tracks greater than 16 million costs day by day — confirmed headline at 2.5% and core at 2.1%, inside hanging distance of the Fed’s 2% goal. Wood attributes a part of the hole to power: gasoline costs are up about 33% year-over-year amid the Iran War, however she expects a major decline as soon as the battle subsides, doubtlessly towards $30–35 per barrel, citing surging manufacturing from the UAE and different quota-breaking producers.
Monetary coverage, in Wood’s view, reinforces this outlook. With Kevin Warsh put in as Fed Chairman, she expects Volcker-style self-discipline, decrease inflation, and doubtlessly a declining gold worth as productiveness features strengthen the greenback — although she flags bitcoin alongside gold as a hedge in opposition to counterparty threat from disruption.
The forecast shouldn’t be with out dangers. Roughly $16 trillion in personal fairness and personal credit score, a lot of it funded with floating-rate debt, might face extreme stress if brief charges rise to six–8% as ARK initiatives; federal debt service, in the meantime, would surge by some $800 billion below such a situation.
Wood’s conclusion is a name to reallocate: the traditional 60/40 portfolio, she argues, suited the falling-rate period of 1981–2021, however a deflationary know-how growth calls for heavier publicity to equities — and, notably for crypto-focused buyers, to Bitcoin.
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