Macro strategist explains why it's a good time to own Russell 2000
Small Caps have been particularly impacted by tariffs and uncertainty, suffering as "Price Takers, not Price Makers," said Evercore.
They note that the year-to-date performance through May ranks among the weakest since 1990, extending an underperformance streak approaching Dotcom troughs.
However, Evercore ISI suggests that with trade uncertainty potentially peaking, the current "cratered sentiment intersects with favorable June seasonality."
They explain that historically, the "Small Size reliably outperforms" in June, coinciding with the annual Russell Index Rebalance.
This trend is expected to be amplified in 2025, given strong historical reversion in years with similarly weak year-to-date Size factor returns.
Beyond this tactical opportunity, the longer-term case for Small Cap outperformance rests on "attractive valuation vs. Large Cap," a "cutting Fed," and "potential Policy (Trade/BBB legislation) catalysts."
Evercore ISI recommends buying IWM (iShares Russell 2000 ETF) for broad exposure. Additionally, they screen for "Small Size, Big Alpha" stocks – Russell 2000 companies exhibiting "Strong Sentiment and High Profitability."
They also suggest pairing these investments with "Set It and Forget It" SPY Option Hedges ahead of potential summer volatility.
The analysts note that a recent rally in stocks following Trump-Xi talks and a solid Jobs report has eased earlier concerns.
'With SPX at 23x 2025e EPS, selectivity (positioning, options hedges) is key,' concludes Evercore.
Related articles
Macro strategist explains why it's a good time to own Russell 2000
Tesla downgraded as 'uncertainty abounds'
Echostar stock sinks amid bankruptcy considerations
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
26 minutes ago
- Yahoo
Saia (SAIA) Stock Is Up, What You Need To Know
What Happened? Shares of freight transportation and logistics provider Saia (NASDAQ:SAIA) jumped 3.7% in the morning session after continued positive momentum following several positive analyst price target revisions. Among the positive revisions, Evercore ISI boosted its price target on Saia to $345.00, giving the stock an "outperform" rating. Additionally, Barclays raised its price target to $350.00 and assigned the company an "overweight" rating. These upward adjustments from late July reflect growing analyst confidence in the trucking company's performance and future growth prospects. While not new, this collection of positive ratings appears to be reinforcing investor optimism and driving the stock higher. After the initial pop the shares cooled down to $309.34, up 4.7% from previous close. Is now the time to buy Saia? Access our full analysis report here, it's free. What Is The Market Telling Us Saia's shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today's move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move we wrote about was 5 days ago when the stock dropped 4.2% on the news that an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials. Saia is down 30.5% since the beginning of the year, and at $309.34 per share, it is trading 45.6% below its 52-week high of $569.08 from November 2024. Investors who bought $1,000 worth of Saia's shares 5 years ago would now be looking at an investment worth $2,350. Today's young investors likely haven't read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
Yahoo
an hour ago
- Yahoo
Chamath Palihapitiya plans new $250M SPAC
-- Chamath Palihapitiya, dubbed by some as the Wall Street's "SPAC king," is making a comeback to the blank-check company market with a new special purpose acquisition vehicle. According to a filing released late Monday, American Exceptionalism Acquisition Corp, which Palihapitiya chairs, plans to list on the New York Stock Exchange under the ticker 'AEXA'. The SPAC aims to raise $250 million to target companies operating in artificial intelligence, energy, decentralized finance, and defense sectors. SPACs function as shell companies that raise capital through an initial public offering to merge with a private business and take it public. This method offers companies an alternative path to markets that avoids the lengthier and more expensive traditional IPO process. It has also faced harsh criticism in recent years, after many such listing saw their shares plummet. "While SPACs are not the solution for every issue in the IPO process, I continue to believe that they have an important piece to play in capital formation - and especially now," Palihapitiya said, having spent the past several years away from the markets. Palihapitiya has had notable success with previous SPAC ventures, including SoFi Technologies (NASDAQ:SOFI), which went public through a blank-check deal in 2021 valued at roughly $8.65 billion. Related articles Chamath Palihapitiya plans new $250M SPAC Apollo economist warns: AI bubble now bigger than 1990s tech mania 7 Undervalued Stocks on the Rise With 50%+ Upside Potential Sign in to access your portfolio
Yahoo
an hour ago
- Yahoo
Modi's GST reforms put states on hook
-- Indian Prime Minister Narendra Modi signalled a major reset of India's goods and services tax, proposing to fold the 12% and 28% slabs into 5% and 18%, while creating a new 40% rate for luxury and harmful products. The overhaul, expected by Diwali, would also phase out the compensation cess introduced in 2017 to protect states from revenue current multi-rate system includes four primary slabs of 5%, 12%, 18% and 28% plus various cesses. GST rationalisation would bring system to three primary rates simplifying a regime long criticised for its complexity. Bank of America estimates the rationalisation could shave up to ₹1.2 trillion in annual GST revenue, or about 30 bps of GDP, though stronger consumption may offset loss. Though states would bear the bulk of the shortfall and need to approve the plan through the GST Council, at a time when many are already under fiscal strain. GST collections have been robust, averaging over ₹2 trillion a month so far in fiscal 2026, compared with ₹1.24 trillion in 2022, as there is higher compliance and formalisation. Economists expect the lower rates to lift consumption and will give 20–40 bps boost to GDP growth, while easing inflation could give the RBI more room, even though rate cuts remain unlikely for now. With the Centre targeting a fiscal deficit of 4.4% of GDP this year, down from 4.8% in FY25, economist at BofA warn fiscal risks are likely to surface in FY27 when the full impact of the tax reset kicks in. Related articles Modi's GST reforms put states on hook Risks Rising? Smart Money Dodged 46%+ Drawdowns on These High-Flying Names 7 Undervalued Stocks on the Rise With 50%+ Upside Potential
