Wood Sister's Three-Year Promise: A Tech-Driven "Super Prosperity" and the Triangular Game Among the US Dollar, Gold, and Bitcoin

Kathy Wood, the fund manager renowned for her disruptive innovation investments, recently outlined a macroeconomic outlook for the next three years in a lengthy letter to investors. She calls it “Enhanced Reaganomics,” with the core logic being that the convergence of deregulation, tax cuts, prudent monetary policy, and technological innovation could propel the U.S. economy into a new “Golden Age.”

She believes that the past three years have seen the U.S. economy undergo a “rolling recession,” akin to a highly compressed spring. Rate hikes have dealt a heavy blow to real estate, manufacturing, and non-AI capital expenditures. Existing home sales have fallen to levels comparable to the 1980s, when the population was 35% smaller. The manufacturing Purchasing Managers’ Index (PMI) has been in contraction territory for three consecutive years.

However, a turning point may be imminent. On the policy front, the appointment of the first “AI and Cryptocurrency Czar” signals regulatory easing. Effective corporate tax rates could drop to around 10% due to accelerated depreciation policies, making it one of the lowest global rates. These factors will serve as powerful catalysts for economic growth.

Regarding inflation, her outlook is even more bold. Oil prices have fallen over 50% from recent highs, new home prices have significantly declined, and more importantly, productivity is improving. In Q3, non-farm productivity grew by 1.9%, while unit labor costs inflation was held at 1.2%. She predicts that inflation could fall to very low levels or even turn negative in the coming years.

Based on this, she forecasts that the U.S. nominal GDP growth rate will remain between 6% and 8%, primarily driven by productivity growth of 5% to 7% annually, with labor contribution around 1%, and inflation fluctuating between -2% and +1%. This “productivity boom” driven by AI, robotics, energy storage, blockchain, and multi-omics technologies will create a deflationary growth environment reminiscent of the early 20th-century technological revolution.

This relative advantage of the U.S. economy will profoundly impact financial markets. She predicts the dollar could replicate the strong performance of the 1980s, nearly doubling. This presents a clear headwind for gold. Despite significant gains in gold prices over the past few years, a strengthening dollar will suppress its upward momentum.

She introduces an interesting comparison here: gold versus $BTC. She notes that part of gold’s price increase stems from global wealth growing faster than gold supply (about 1.8% annualized). Meanwhile, $BTC’s price has surged 360% over the same period, with its supply growth rate at only about 1.3% annually. The key difference is that gold price increases incentivize miners to increase supply, whereas $BTC’s supply mechanism is mathematically predetermined and cannot be changed by market forces.

From a longer historical perspective, the ratio of gold price to M2 money supply has reached extremely high levels, second only to the Great Depression and the high inflation period of 1980. Historical data shows that after peaking, stock markets often enter long-term bull markets.

Regarding $BTC, her argument is based on its unique asset properties. Data shows that since 2020, $BTC returns have had extremely low correlation with gold and other major asset classes, even lower than the correlation between the S&P 500 and bonds. This suggests that for investors seeking diversification, $BTC could offer a high Sharpe ratio.

On the market’s most discussed concern—the AI bubble—she disagrees. Despite record-high capital expenditures, AI companies’ revenue growth is explosive. Reports indicate that the annualized revenue of OpenAI and Anthropic has increased dozens of times within a year. She believes the speed of AI adoption is twice that of the internet in its early days, and real returns will be realized at the application layer.

As for the high valuation of U.S. stocks, she draws lessons from history: the late 1990s bull market was driven by strong corporate earnings amid P/E compression, leading to positive market returns. She expects a similar scenario in the current cycle.

Summarizing her core narrative: a productivity revolution driven by technology, combined with favorable fiscal and regulatory policies, will propel the U.S. economy into a high-growth, low-inflation new phase. This will strengthen the dollar, suppress gold, and make $BTC a unique diversification asset due to its supply properties. The “Golden Age” of markets may not be in gold, but in the technological innovations that define the future.

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