ARK'S Wood Sees Europe In Recession, High Oil Prices To Drive EV Sales

Europe's economy is likely already in a recession as a result of the Russian invasion of Ukraine and the U.S. economy may not be far behind, which will likely prompt companies and consumers to look toward technology to lower costs, star stock picker Cathie Wood of Ark Invest said in a webinar on Tuesday.

Wood, whose ARK Innovation fund outperformed all other U.S. equity funds following the coronavirus lockdowns in 2020 before stalling in February 2021, said that soaring oil prices should accelerate the transition to electric vehicles, while genomics companies should benefit as a form of cost-saving compared to existing forms of treatment.

"The good news is that innovation solves problems," Wood said.

Wood's optimism comes as her flagship ARK Innovation fund is down 38.6% for the year to date as high inflation saps investor appetite for the high-growth and low-revenue companies that are mainstays of her portfolio. Her largest position, Tesla Inc, is down 32% for the year to date, while streaming company Roku Inc, another top holding, is down nearly 52% over the same time.

The benchmark S&P 500 is down 11.8% for the year to date.

The shock of high gas prices may prompt the Federal Reserve to back off its plan to raise interest rates repeatedly this year, Wood said.

"We've got a lot of fear baked into the markets," she said.