Cathie Wood's contrarian deflation call gets endorsements from Elon Musk, Jeffrey Gundlach

Cathie Wood, Wall Street's astir vocal proponent of deflation, is getting a fewer high-profile supporters adjacent arsenic terms pressures continued to astonishment to the upside.

Jeffrey Gundlach and Elon Musk precocious joined Wood's campy successful calling for a diminution for prices, expressing worries that the Federal Reserve mightiness spell excessively far. The alleged enslaved king warned of deflation hazard connected Tuesday, urging investors to bargain semipermanent Treasurys. Meanwhile, the Tesla CEO called falling commodity prices "neither subtle nor secret" and tweeted to his 100 cardinal followers that "a large Fed complaint hike risks deflation."

"We are getting immoderate large voices present accompanying america connected this deflation risk," Wood said successful an capitalist webcast Tuesday, namechecking Gundlach and Musk successful her comments.

Wood has been informing astir deflation since past twelvemonth connected the content that disruptive innovation volition propulsion down the terms of obsolete goods and artificial quality volition assistance trim accumulation cost. She is present doubling down connected her telephone arsenic a fig of starring indicators she watches are pointing to deflationary forces alternatively of inflationary.

Ark Invest's CEO noted that gold, traditionally an ostentation hedge, deed its highest much than 2 years ago. Other commodities including lumber, copper, robust ore and lipid person each dropped treble digits from their high. She stressed that ostentation is little dire than it was successful the '70s arsenic it's triggered by impermanent supply-chain disruptions during the pandemic.

Markets are betting the cardinal slope raises benchmark rates by at slightest 0.75 percent constituent adjacent week, which would instrumentality the fed funds complaint to its highest level since aboriginal 2007. The Fed has raised involvement rates 4 times this twelvemonth for a full of 2.25 percent points.

Tesla's Musk responded to a Twitter thread with Wood Wednesday that the cardinal slope should "drop 0.25%." Gundlach said the Fed should hike by lone 25 ground points arsenic it mightiness oversteer the system with a jumbo complaint increase. He added that the cardinal slope hasn't paused capable to spot what interaction the erstwhile hikes person already had.

"In spite of the information that the communicative contiguous is precisely the opposite, the deflation hazard is overmuch higher contiguous than it's been for the past 2 years," Gundlach said Tuesday astatine the Future Proof FestivaI. "I'm not talking astir adjacent month. I'm talking astir sometime aboriginal adjacent year, surely successful 2023."