Cathie Wood Warns of US Recession Risk Due to Trump Tariffs

Cathie Wood, the CEO of ARK Invest, has expressed concerns about the risk of a recession in the US economy, attributing this to the tariff policies implemented by Donald Trump. Speaking at a virtual event, Wood highlighted that while the US Treasury Secretary is not worried about a recession, ARK Invest is concerned about the slowing velocity of money, which is often a precursor to economic downturns. This slowdown indicates that capital is changing hands less frequently, a trend typically associated with reduced consumer and business spending and investment.

Wood believes that if a recession does occur, it could provide the current administration and the Federal Reserve with more flexibility to implement pro-growth policies, such as tax cuts and adjustments to monetary policy. This perspective suggests that a recession, while challenging, could also create opportunities for economic stimulus and recovery.

ARK Invest, under Wood's leadership, has been a prominent investor in cryptocurrencies for several years. The firm's spot Bitcoin ETF, in partnership with 21Shares, was approved earlier this year and has accumulated significant net assets. Despite recent outflows, the overall trend indicates that investors are maintaining their positions, reflecting a long-term investment strategy.

Wood emphasized that ARK's focus remains on long-term innovation, particularly in the cryptocurrency space. The firm has built positions in various cryptocurrencies beyond the major ones like Bitcoin, Ether, and Solana. Favorable regulatory changes have also improved the investment landscape, encouraging institutions to consider cryptocurrencies as a new asset class. Wood noted that institutions are increasingly recognizing their fiduciary responsibility to expose clients to this emerging market, a shift from the dismissive attitudes of the past.

In summary, Cathie Wood's concerns about a potential recession are tempered by the belief that such an event could pave the way for pro-growth policies. ARK Invest's long-term investment strategy in cryptocurrencies, supported by favorable regulations, positions the firm to navigate economic challenges and capitalize on future opportunities.