Cathie Wood is expecting a ‘bloodbath’ in this segment of the market: ‘autos are one example of…many disturbances out there in the world order’ – MarketWatch

In a webinar on Tuesday, Cathie Wood of ARK Invest doubled down on her bet that deflation,rather than inflation, will be the largest factor in the U.S. economy in 2022 and beyond.

Cathie Wood, founder and CEO of ARK Investment Management LLC, speaks during the Skybridge Capital SALT New York 2021 conference in New York City, U.S., September 13, 2021.  REUTERS/Brendan McDermid/File Photo

Cathie Wood is the renowned fund manager and chief executive officer of ARK Invest, in a monthly market update for Tuesday she said that the used vehicle market has been where she expects to see losses following an increase in prices.

She also said she would not be shocked to witness “a bloodbath in the used car market,” with valuations falling over the coming year, and into 2023, as prices have increased due to supply chain bottlenecks and the influx of demand slows.

“We would submit that they might be looking at losses,” Wood said, referring to internal-combustion-engine car companies that managed to outperform electric-vehicle manufacturers such as Tesla Inc. TSLA, +3.93%, which is considered the vanguard of the EV wave, last year.

The remarks Wood posted on her blog on the day were similar to those she made in an official video posted from the firm earlier in the week, in which she pointed to the rising inventory of used cars as well as other factors as proof that prices are likely to plummet in the next year, and will affect sales of new cars as well as traditional car makers such as General Motors GM, -0.70 percent as well as Ford F, +0.49%.

The monthly report of Wood along with her colleagues from ARK Invest come amid a difficult period that has led the managers of the ARK Invest ETFs, including the most popular Ark Innovation ARKK, -2.78 percent fund, to conduct some soul-searching, even though the fund manager has remained to her strategy.

In a tweet later the following day, Wood stated that “China is a leading indicator of a change in the consumer preference for EVs,” in response to a tweet sent by ARK Invest analyst, Sam Korus who also pointed out that the sales of gasoline-powered cars decreased by around four percent, whereas sales for EVs were up by 145 percent.

Wood stated in her tweet she wrote that U.S. “gas-powered car sales are likely to struggle, especially now that used car inventories, as measured by Manheim, are roughly 40% above normal at wholesale and retail.”

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