Cathie Wood: AI Demand & Market Functionality

The core concern centers on whether businesses will transfer these elevated interest costs to consumers through higher pricing, with Ackman suggesting that the demand from data centers is inelastic to interest rate changes, thus creating an inflation spiral.

Short-term interest rates are expected to align with GDP growth, rather than being solely driven by inflation expectations, with long-term rates predicted to rise less significantly than their short-term counterparts, contributing to a more moderate stance from the Federal Reserve.

Cathie Wood argues that markets did not function properly during the period of zero to two percent interest rates.

She notes that current interest rates better reflect nominal GDP growth and real yields, indicating improved market functionality when rates respond to real economic expansion.