00:00 Speaker A
you're looking into some research on that front this morning.
00:03 Speaker B
Yeah, so the the team over at Bank of America, Savita Subramanian highlighting that she thinks that this the start of the rate cutting cycle or the restarting of this rate cutting cycle, right, the resuming of those cuts could sort of make a larger shift in the market away from large caps. If you go back over the last 10 years, Bank of America was looking at, you've really just had a large cap bias in this market since 2015 and she was comparing it to if you go back to the early 2000s and you go back to the end of one of the last times that we had large caps outperforming this market. That of course was the end of the .com bubble. What happened for early 2000s was small caps were a great trade, value was a great trade, and shows she's sort of making the case that that could play out. On the other hand, you look at what other folks are saying about the small cap trade right now. I mean, the Russell 2000's up 6% in August over the 4% of the S&P 500's up. So you're starting to see this play out in the market and the question is, will it continue? Will we finally get a new high for the Russell 2000, which has not hit a new high during this bull market. And the problem with that trade, strategist argued, the team over at UBS was making this case on a call I was on yesterday, is the path to Goldilocks for small caps is just so narrow right now. We're talking about why the Fed would cut. Is the Fed going to cut for good reasons? Excuse me or is the Fed going to cut because the labor market is weakening. And if the Fed is cutting because the labor market is weakening and we get a lot of rate cuts this year, that is not a good case for small caps. So the debate on why the Fed cuts and how much they cut remains super important for if the small cap trade actually continues to outperform. Julie, of course, we have been debating this and hearing about this for it feels like three years now. If small caps are ever going to join this rally, so it hasn't happened yet.
