Part 6/10:
Another focal point of Michael's insights pertains to the performance of small-cap stocks. He outlines their significance in the broader market narrative, suggesting that their potential breakout could indicate a stronger momentum shift. However, Michael expresses skepticism regarding small caps outperforming in the current landscape, citing elevated valuations and underlying credit risks as key concerns.
When examining the relationships between small-cap equities and credit spreads, a divergence in sentiment appears. The bond market's optimism contrasts sharply with the concerns highlighted by small-cap performance; this divergence creates an uncertain environment for investors trying to navigate market risks.