Understanding How Currencies Vary in Value | Insights from Cathie Wood

by | May 14, 2024 | Invest During Inflation | 10 comments

Understanding How Currencies Vary in Value | Insights from Cathie Wood




On episode LV of “In the Know,” (May 3, 2024) ARK CEO/CIO, Cathie Wood discusses the bitcoin halving with ARK Director of Digital Assets Yassine Elmandjra, how interest rates impact innovation, and weighs in on the federal budget deficit, M2 money supply, employment growth, and more.

This month we’re again responding to a few requests by supplementing this episode with charts and data to help illustrate ARK’s perspective on and outlook for the global economy.

As always, Cathie discusses fiscal policy, monetary policy, market signals, economic indicators, and innovation. We hope you find this monthly series useful, especially during periods of heightened volatility. Stay Healthy. Stay Innovative.

0:00:00 Intro
0:01:55 Bitcoin
0:03:10 Bitcoin Inflation Rate and Percent of Supply Mined
0:05:29 M2 Money Supply 4 Year Annualized Percent Change
0:10:53 Bitcoin Inflation Rate and Percent of Supply Mined
0:17:34 Monetary Policy
0:17:38 M2 Money Supply vs. CPI Inflation
0:20:45 Yield Curve 10 Year Treasury Yield Minus 2 Year
0:22:38 Real Federal Funds Target Rate
0:23:31 The Fed Is Keeping Interest Rates Higher For Longer Than Normal
0:24:41 Fiscal Policy
0:24:45 Federal Budget Deficit Or Surplus Percent of Nominal GDP
0:27:58 Economic Indicators
0:28:02 Consumer Sentiment vs Expectations
0:29:05 Restaurants Same Store Sales YOY Percent Change
0:30:38 Nonfarm vs Household Employment Growth
0:34:23 Temporary Help Employment vs. Total Employment
0:34:53 Quits Rate Leads Employment Costs
0:35:32 US Personal Saving Rate
0:36:56 US Existing Home Sales (SAAR)
0:37:19 US New One Family Houses Sold (SAAR)
0:37:46 US Auto Sales (SAAR)
0:38:46 Small Business Optimism Index (NFIB)
0:39:34 Chicago Business Barometer (Market News International)
0:40:15 Market Signals
0:40:18 USD Index (DXY)
0:41:10 USDJPY Spot Exchange Rate
0:42:29 Bloomberg Commodity Index
0:44:44 Metals/Gold Ratio vs. US 10 Year Treasury
0:48:30 Investment Grade And High Yield Index Credit Default Swaps
0:49:42 Common Holdings and Active Share
0:51:13 Weight of the Top 10 Stocks in the S&P 500 Index
0:52:31 Market Cap of the Largest Stock Relative to the 75th Percentile Stock
0:56:38 Outro

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Currencies are constantly fluctuating in value due to a variety of factors such as interest rates, economic stability, geopolitical tensions, and market speculation. Understanding these fluctuations is crucial for investors and traders looking to profit from changes in currency exchange rates.

One prominent figure in the world of finance who closely monitors these fluctuations is Cathie Wood, the founder and CEO of Ark Invest. Wood is known for her innovative approach to investing and her ability to identify emerging trends in technology and other sectors.

Wood and her team at Ark Invest believe that currencies fluctuate based on factors such as supply and demand, market sentiment, and central bank policies. For example, when a country’s central bank raises interest rates, its currency may strengthen because higher rates attract foreign investors seeking higher returns. Conversely, if a central bank cuts interest rates, the currency may weaken as investors seek higher yields elsewhere.

Geopolitical tensions can also impact currency values, as political uncertainty can cause investors to flee to safe-haven currencies like the US dollar or the Swiss franc. For example, during times of heightened global uncertainty, the Japanese yen tends to strengthen as investors perceive it as a safe bet.

Market speculation is another key driver of currency fluctuations. Traders often buy and sell currencies based on their expectations of future price movements, leading to short-term volatility in exchange rates. This can create opportunities for investors who can correctly anticipate these shifts in market sentiment.

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Wood and her team closely monitor these factors to identify opportunities for investment in currencies and related assets. They use a combination of quantitative analysis, fundamental research, and market insights to develop their investment strategies.

For individual investors looking to capitalize on currency fluctuations, it’s important to remember that forex trading carries a high level of risk and requires a sound understanding of market dynamics. It’s advisable to consult with a financial advisor or do thorough research before diving into the world of currency trading.

In conclusion, currencies fluctuate in value due to a complex interplay of factors ranging from interest rates and economic stability to geopolitical tensions and market speculation. Understanding these dynamics is essential for investors looking to profit from changes in currency exchange rates. Cathie Wood and her team at Ark Invest are at the forefront of monitoring these fluctuations and identifying investment opportunities in the currency markets.

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10 Comments

  1. @WheresWaldo05

    Its not that people are investing to the faang stocks. Its that money is being pulled out of mid capper and low end cap companies thus resulting into the record chart you see at the very end of this video. Basically, if i had a 401k, i would be looking into changing your future investment % weights more heavily into the midcap indexes that are offered by your 401k provider. And possibly even doing a complete rebalance of the funds throughout all your alotment of funds.

  2. @cavemanstyle1376

    ARKK 5 year return: -3%. Meanwhile the s&p has returned 95%. Clearly her knowledge of macros has not made her a better investor.

  3. @davidstrong7854

    in a world where the economy isn't working for everyone , in fact, its not working for the majority. But Cathy wants to keep the status quo by protecting all the capital Gains. Im Sorry but capital Gains tax should be a lot closer to the lower to mid tax brackets, not below them. . why is it that we tax sweat, more than we tax capital gains? This lady has destroyed more of my wealth than all my other investments together. Even my own choices in individual stocks havent done as bad as her ETF, over the last 5 years. on top of that , she is still taking a rather LARGE fee. Come on Cathy, cut the extremly high fee you charge , until your funds at least get back to precovid 2020 levels.

  4. @davidknott4884

    Let me just say I appreciate Cathy and if all you people want to do is bash her then don’t waste your time watching the videos simple right but let’s be real y’all know you envy her

  5. @CharmCityAdam

    It's impossible to take you and your "research" seriously at this point. $14 BILLION in wealth destruction is simply criminal.

  6. @theImperfectionistLab

    Thank you so much for putting this series out there. I am learning so much!!!

  7. @ChristosLycos

    Cathie thank you for your regular updates!! Really looking forward to the growth your funds will see in the coming years. It’s unfortunate many will miss out

  8. @Alghamdiim

    The price of ARKK back in May 3 2019 was 48.39$. Now, it is less. The 5-year-horizon is a joke.

  9. @Dman9377

    I just don't see the large names going down, it's in every etf, everyone's portfolio, and less risk. Bunch of cash. Why would it. Apple had a lot of selling presure of buffet and still managed to stay somewhat high still. There strong and will continue to be strong. Rates have to lower for the money to spread out to other stocks until then top 10 is the play and where the volume it at. Google, meta, and Microsoft are my top holdings and prob be everyone's top holdings.

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