The Russell 2000 has had a strong year, hitting all-time highs a few weeks ago and pacing for its eighth straight month of gains. Its best run since mid 2021, but what can we expect for the group in 2026. Let's turn to our resident small cap expert Julie Beiel.What do you think the backdrop will be for small caps, Julie. >> I I think it looks pretty positive. You know, small caps are more economically sensitive and they should be benefiting from lower interest rates because they tend to borrow on a variable ...

Market Trends & Investment Themes - The market is experiencing ebbs and flows, with a resurgence in the AI sector [1] - The engagement of the US consumer and the performance of the holiday season are key factors to watch in early January [2] - AI is expected to remain a significant tailwind, contingent on capex investments from companies beyond the technology sector, including industrials and financials [4] - Healthcare sector price cuts may provide a tailwind [4] Small Cap vs Large Cap - Small caps are favored entering the year, particularly if economic growth strengthens, rates decrease, and liquidity is infused around tax time in April and May, potentially leading to strong performance in the first half of 2026 [5] - The recent rally in small caps has been primarily in lower-quality companies with low or no earnings [5] Interest Rates & Monetary Policy - At least one more interest rate cut is anticipated in the first quarter [6] - The Fed's actions in the second half of the year remain uncertain [6] - The potential for inflation to decrease may lead the Fed to adopt an easier monetary policy in the second half of the year [7] Global Markets - The US market continues to show significant strength [8] - Optimism surrounds the Japanese market, making developed markets excluding the US (Developed XUS) attractive [8] - Emerging markets (EM) are becoming more appealing, despite concerns about the Chinese consumer and real estate [8][9] - Korea is seen as offering opportunities in the next phase of the AI trade [9] - When considering EM exposure, diversification beyond China is recommended [10]

Chris is here from the great state of Texas and you're wearing something. Educate us, Chris. >> This is uh representing my people back at home.Tooth time. What time is it. >> It's tooth time.>> There you go. >> We didn't even rehearse that. >> There you go. Thank you.Also, shout out to my other Texas people who I just met. >> There you go. It's great state of Texas.Lone star state. What's your question. >> Now, listen.I know Tim is a big small cap hater. [laughter] Tim, you weren't always a large cap. You s ...

Citi Research 5 December 2025 US Equity Strategy Size & Style Chartbook Scott T ChronertAC Managing Director scott.t.chronert@citi.com +1 415-951-1771 Drew Pettit Director drew.pettit@citi.com +1 415-951-1621 Patrick Galvin, CFA Vice President patrick.galvin@citi.com +1 212-816-5373 See AppendixA-1 for AnalystCertification, Important Disclosures and ResearchAnalystAffiliations Citi Research is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covere ...

It's outperformed so far this week, that small cap trade. So, the Russell 2000 is up nearly 5% in three days. And our next guest now says the stage is finally set for those gains to actually continue with some momentum.For more, let's turn to portfolio manager of the Needm Small Cap Growth Fund, Chris Wler, who joins us here on set this Thanksgiving Eve. Chris, thank you very much for being here with us. >> Thank you for having me.>> All right, so let's talk about the small cap trade. You say that it does n ...

Group 1: Small Cap Market Insights - The small cap trade is closely linked to Federal Reserve policy, with recent sell-offs attributed to uncertainty surrounding potential rate cuts [1][2] - Despite economic data visibility issues, small cap companies have shown strong earnings, making them more attractive compared to large caps [3][4] - There is a significant uptick in strategic M&A activity in the small cap space, which typically comes with higher prices, enhancing attractiveness for investors [4][5] Group 2: IPO Market and Valuations - The IPO market is expected to recover, with smaller IPOs likely to perform better than larger ones due to easier pricing dynamics [6][7] - The resurgence of the IPO market could lead to increased visibility for smaller companies, particularly in sectors like semiconductors and biotech [8][9] Group 3: Sector-Specific Opportunities - The defense and aerospace sectors are broadening, with potential growth driven by changes in defense budgets and geopolitical factors [9][10] - Consumer-facing companies are currently facing challenges, with aggressive opening plans not yielding expected rewards, indicating a need for more innovative approaches [11][12] Group 4: AI Integration in Small Caps - Small cap companies are increasingly leveraging AI technologies, with examples like RadNet and Digital Ocean demonstrating effective utilization of AI to enhance operational efficiency [13][14] - The integration of AI in smaller firms is seen as a way to compete with larger companies, emphasizing the importance of effective implementation and training [15] Group 5: Research and Investment Strategy - The investment approach has evolved, with a focus on building a backlog of ideas through more efficient research methods, such as virtual meetings [16][17] - Companies like Myrr are positioned to benefit from energy transmission needs, highlighting the intersection of energy and AI trends [19]

Market Outlook - A healthy bull market should experience profit-taking, suggesting a potential volatile phase is normal and could lead to a healthier market setup [2] - The current market situation is earnings-driven by profitable companies, differentiating it from past bubbles where earnings couldn't meet expectations [5] - Strategists suggest buying on dips and selling on strength, which is considered healthy behavior in a bull market [7] Investment Strategy - The firm recommends a barbell strategy, pairing large-cap growth stocks with small-cap stocks for Q4 [10] - Large-cap growth stocks have strong earnings momentum and should be bought on any weakness [8] - Small-cap stocks have been left behind but are showing an inflection out of an earnings growth recession, making them attractive [9][10] Economic Factors - The market's current performance is disconnected from GDP, focusing more on structural factors that are already priced in [7] - The expectation of Fed easing could be a macro catalyst for small-cap growth [10] - Tax tailwinds are offsetting tariff concerns, supporting earnings growth, especially for small-cap companies [12] - Small-cap companies are showing real earnings growth for the first time in more than eight quarters [13]

Uh the S&P 500 and NASDAQ hitting new highs uh this morning as the government shutdown is in its second day. Our next guest says the deadlock in Washington doesn't change his overall strategy, but he did make some moves uh for Q4, including lowering communication services to a market weight from overweight for the first time since 2023. Joining us now is Scott Croner, US equity strategist at City.Uh Scott, great to have you on here. So big picture, it feels as if I mean the constructive forces remain in pla ...

We're tracking ETF flows that are now over $855 billion year to date. We're also tracking the moves above and below the 30-day moving averages for the popular index funds, the SPY and the triple Q's buying, we're going to show you in a second, surged at the end of the week. This week, the Vanguard Growth Index Fund ETF ticker Bug that focuses on large cap stocks, saw the top inflows, followed by the Vanguard Small Cap Fund, ticker VB, and the the VBR, Vanguard Small Cap Value ETF.Of course, small caps hit a ...

As for the broader market, uh, Dow settled into the red early this morning. Bob Doll is with us. Crossmart global CEO and CIO.Bob, it's good to have you. Thanks for joining us in advance of the number tomorrow. We know this is I mean, we always say the jobs number is one of the most important ever, but this could actually determine the the trajectory of rates in the medium term, wouldn't you say.Totally agree. You guys just covered the job situation very well. Look, the Jackson Hole speech was a pivot.it wa ...