Cathie Wood Tweet Raises Concern as Big Retailers Deal with Excessive Inventories

Cathie Wood, Founder, CEO, and CIO of ARK Invest, tweeted her views on what the retail sector’s current dismal state portends for the economy.

Cathie noted the latest disappointing results of American retailers Walmart (WMT) and Target (TGT) as an indication of reducing consumer spending, which was reflected by huge inventory stores at both retailers.

Pointing out the rise of 20% to 25% in Walmart’s inventory in unit terms, as well as Target’s huge inventory rise of 30% to 35%, Cathie quoted, “In my 45 years in this business, I have never seen such inventory excesses.”

Her debate stemmed from another tweet on billionaire Elon Musk’s take on why we have inflation. As per Musk, the tremendous amount of money supply coupled with the velocity of money held constant has led to inflation.

Notably, U.S. consumer sentiment is also at its record lows, “not seen since the 2008-09 global financial crisis,” which hints that the consumer is spending less due to the reducing purchasing power.

Moreover, she stated that a reduction in money supply coupled with a low velocity of money could result in price deflation. This theory, she said, is backed by the surging credit default swaps and flattening of the yield curve, which forecast a further slowing down in both the economy and inflation.

Cathie further quoted, “I trust that Fed Chairman Powell and the Federal Reserve Governors and Presidents are evaluating more than the short-term supply chain bottlenecks that may have been caused by over-ordering and now are showing up Walmart’s and Target’s record-breaking inventories!”

Discover new investment ideas with data you can trust.