Investment Rating - The report indicates a mixed sentiment with institutional clients being net sellers while private clients have shown net buying behavior [5][7][20]. Core Insights - The report highlights that small cap inflows have continued, with clients showing a preference for small cap stocks over mid caps, while large caps also saw some buying activity [9][25]. - Private clients have turned net sellers for the first time this year, with a rolling four-week average of equity flows turning negative [9][20]. - Institutional clients have been net buyers for six consecutive weeks, marking the longest streak since late 2022, while hedge funds have also shown buying activity [9][20]. - The report notes that corporate client buybacks have accelerated, surpassing typical seasonal levels for the first time in ten weeks [9]. Summary by Client Type - **Institutional Clients**: The largest net sellers post-crisis, with cumulative flows showing significant outflows [5][7]. - **Private Clients**: Have been the only cumulative net buyers year-to-date, but recent trends indicate a shift to net selling [9][20]. - **Hedge Funds**: Showed a buying trend for the second consecutive week, contrasting with the selling behavior of private clients [9][20]. Summary by Sector - **Technology, Consumer Services, and Staples**: These sectors saw the most buying activity from clients [9]. - **Industrials, Financials, and Utilities**: Experienced the largest outflows, with utilities facing near-record outflows in recent weeks [9][20]. - **Equity ETFs**: Clients favored growth ETFs over value ETFs for the first time in six weeks, indicating a shift in investment strategy [9]. Summary by Size Segment - **Small and Micro Caps**: Continued to attract inflows, while mid caps saw outflows [9][25]. - **Large Caps**: Also experienced buying activity, indicating a diversified interest across market capitalizations [9][25]. Summary by Investment Style - **Growth vs. Value**: Growth ETFs have seen greater net flows compared to value ETFs, suggesting a preference for growth-oriented investments [9].

Market Trends - Indian retail investors are still interested in small cap stocks and IPOs [1] - This is happening despite earnings headwinds [1]

Relative Performance - Small cap stocks are more sensitive to economic cycles and interest rate changes than large cap stocks [1] - Historically, small cap stocks have outperformed large caps by 2% to 3% annually, but have recently lagged due to high interest rates and economic uncertainty [1] Impact of Interest Rates - The Federal Reserve's high rate environment since 2022 has weighed heavily on small caps, which typically rely on borrowing to fuel growth [2] - Higher interest rates increase borrowing costs and compress valuations, hitting small cap profitability hard [2] - Rate cuts are bullish for small caps as these companies pay reduced interest expenses on debt [2] Economic Impact of Rate Cuts - Rate cuts tend to stimulate the domestic economy, which benefits small cap companies that rely on domestic demand [3] - Increased consumer spending and business investment, resulting from rate cuts, can disproportionately benefit small cap companies [3]

Group 1 - The article highlights that some of the most profitable small-cap companies are found in the Consumer Discretionary sector, which is characterized as risk-on and cyclical [1] - The Pacer US Small Cap Cash Cows 100 ETF (BATS: CALF) has a significant allocation to the Consumer Discretionary sector, indicating its importance in the small-cap investment landscape [1] Group 2 - The author emphasizes the importance of thematic investing and the analysis of stock market sectors, ETFs, and economic data to identify investment opportunities [1] - The narrative focuses on communicating financial data in an engaging and educational manner, utilizing empirical data and charts to support investment insights [1]

Investment Strategy - TS Lombard is positioning for the Jackson Hole meeting by adjusting views on US small-cap and large-cap stocks [1] - The report suggests adjustments to views on the Japanese Yen (JPY), Swiss Franc (CHF), and Australian Dollar (AUD) assets [1]

All right, so I want to start off. What do you make of what we're seeing in the futures. Futures lower across the board as we await for uh JPAL over at Jackson Hole.What's your take on just the market sentiment right now. I >> I think you hit the nail on the head that that we've had a powerful 34% rally in the S&P over the last 4 and 1/2 months on the basis of the fact that first quarter, second quarter revenues and earnings much stronger than expected and an expectation that the Fed's going to start cuttin ...

All right, Jonathan Kinsky of BTI joins us now because that was the focus of your note which dropped during halftime today. Uh, and it got us thinking about whether this is finally the moment. Now, I probably have asked you and others that question 50 times within the last year.Is this the moment. But is this really it. Scott, you know, it's deja vu all over again.Um, if you go back 13 months ago, July of 2024, uh, small caps were hanging around flat year to date while the NASDAQ was ripping. We got a bette ...

Group 1: Tariff Impact and Market Reaction - The initial announcement of President Trump's tariffs led to a significant drop in major US indices, with the Nasdaq Composite falling over 10% in two weeks, but the actual implementation was less severe than expected, maintaining a base tariff rate of at least 10% [1] - Despite fears of rampant inflation due to tariffs, recent data indicates inflation has not escalated as anticipated, contributing to a rally on Wall Street with nearly 80% of stocks rising [2] Group 2: Small Cap Performance - The iShares Russell 2000 Index ETF (IWM) surged approximately 3% with a 25% increase in trading volume following a positive inflation report, indicating strong investor interest [3] - Interest rate cuts are particularly beneficial for small cap companies, as they rely more on debt and will experience reduced interest expenses, which supports their growth [4] - Small caps have been underperforming due to high interest rates, but with Nasdaq valuations rising, a rotation towards reasonably valued Russell stocks is expected [5] Group 3: Market Dynamics and Breakout Potential - The recent breakout of IWM is notable as it is above key moving averages, supported by a favorable rate environment and a 24% increase in volume, signaling strong demand [6] - Lower interest rates also positively impact crypto assets, with crypto ETFs showing strong performance even before any rate cuts are announced [8] Group 4: Overall Market Outlook - The current market environment, marked by easing inflation fears and a potential shift towards lower interest rates by the Federal Reserve, creates a favorable backdrop for small-cap stocks [9]

Core Insights - The article discusses the investment potential in certain stocks, particularly in the biotech and healthcare sectors, emphasizing the importance of due diligence for investors [2][3]. Group 1: Investment Opportunities - The stocks mentioned may already be part of various model portfolios, indicating their potential value and relevance in current market conditions [2]. - Small-cap and biotech stocks are highlighted as having higher risk but also the potential for significant returns, suggesting a strategic focus for investors looking for growth [2]. Group 2: Market Trends - The article notes that opinions on stocks can change over time with new data, indicating the dynamic nature of the market and the need for ongoing analysis [2]. - Companies mentioned may not be favored in the future as market trends evolve, which underscores the importance of staying informed about market shifts [2].

Market Overview & Strategy - Investors are seemingly overlooking tariffs, focusing on earnings and the Federal Reserve, though potential risks remain [1][2] - The economy shows signs of weakening, with less than 50% of industries hiring in the past 3 months and consumer spending growth slowing [5][6] - The S&P 500's valuation at 245 times trailing 12-month earnings and 23 times forward 12-month earnings, with an expected 7% growth, appears optimistic [8] - Investors should broaden horizons, considering small-cap stocks, which are at their second-lowest valuation relative to large-cap stocks in 31 years [9] - International stocks are up around 20% year-to-date and are expected to continue performing well, potentially boosted by a weaker dollar [10] Small Cap & Interest Rates - Small-cap stocks present opportunities, especially with deregulation and lower tax rates potentially stimulating growth [9][13] - While historically lower rates reset the cycle for small caps, companies are adapting to current rates [12][13] - Investors with a time horizon beyond the next three minutes should consider small-cap stocks for the next 3-7 years, anticipating a cycle of different market leadership [15] Earnings Season & Forward Guidance - Forward guidance is crucial for investors to assess the impact of tariffs on individual companies [16] - Investors should pay attention to what they are paying for earnings revisions, as some large-cap stocks outside of technology trade at 40-60 times forward earnings [17] - A return to basics is advised, focusing on a margin of safety, valuation, and macroeconomic headwinds that may favor international and small/mid-cap stocks [18] Market Pullback & Investor Behavior - Historically, after reaching market peaks, the market continues to rise over 12-18 months, averaging 26%, but with drawdowns of 7% and 12-15% [20][21] - Long-term investors are advised to stay the course, while active investors should add optionality to their portfolios, considering low valuation stocks or hedging strategies using options [23][24] - A market dip is expected to be bought by retail investors, consistent with post-2020 behavior [27][28] AI & Tariff Impact - Structural AI leaders continue to be attractive, with adoption occurring across industries for both cost-cutting and revenue enhancement [33] - The market's shrug in response to recent tariff letters may be premature, given the potential for deals to be struck before August 1st [36][37]