Morgan Stanley's Wilson Sees Small Caps Fading After Russell Rebalance

The video discusses the performance of small caps in the context of trade tensions and tax cuts, highlighting their relative earnings growth. It examines the impact of tariffs and the nervousness in tech stocks, particularly focusing on discretionary stocks like Netflix and Amazon. The discussion shifts to defensive market rotations, emphasizing utilities and economic indicators like treasury yields and Fed policy.

What is the main driver of small-cap stocks' relative outperformance according to the transcript?

• Interest rates

• International policies

• Relative earnings growth

• Trade tensions

How do tax cuts affect the consumer discretionary sector in the short term?

• They have no effect

• They provide a temporary boost

• They cause long-term growth

• They lead to a decline

Which companies are considered the 'big three' in the consumer discretionary index?

• Tesla, Ford, GM

• Netflix, Amazon, Priceline

• Apple, Google, Microsoft

• Facebook, Twitter, Snapchat

What is one of the factors leading to a defensive rotation in the market?

• Strengthening of the dollar

• Increase in oil prices

• Peak rate of change in growth

• Rising unemployment

Why is the failure of the 10-year yield to rise above 3% concerning?

• It indicates a potential recession

• It suggests growth is peaking

• It shows a strong economy

• It means inflation is under control