Cathie Wood, founder of ARK Invest, predicts a disinflationary environment and lower interest rates by 2026, driven by AI-induced labor market changes. Wood highlights rising youth unemployment and extended jobless durations as indicators of reduced wage pressure, allowing the Federal Reserve to cut rates without triggering a recession. She notes that AI adoption is replacing entry-level jobs, cooling inflation and easing the need for aggressive monetary policy. Wood also anticipates stronger U.S. returns and a firmer dollar, attributing these to policy directions reminiscent of the Reagan era. She suggests that increased capital inflows into U.S. markets will bolster the dollar, further reducing inflation pressures. This environment, according to Wood, supports a scenario where interest rates can decline alongside economic growth, benefiting long-duration, rate-sensitive assets.