Capital Markets: Observations & Insights

​ Performance

Where to Hide from Tariffs?

• Small cap growth stocks began outperforming this year after steel and aluminum tariffs were announced, producing solid relative returns throughout the trade war rhetoric ‒ Small cap growth may be less affected than the broader market given less international exposure and more secular, as opposed to cyclical, growth drivers

Small Cap Growth Outperforms Amid Trade Tensions

Canada announces retaliatory tariffs

U.S. targeting tariffs on additional $100b of Chinese imports

110

U.S. preparing tariffs on China

EU warns of retaliatory tariffs on $300b of goods

105

Total Return

China refuses U.S. demand on trade

100

U.S announces steel & aluminum tariffs

Mexico announces retaliatory tariffs

Russell 2000 Growth / S&P 500

95

Dec-17

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Source: FactSet, StreetAccount, and Alger.

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