Can Small-Cap Stocks Lead the Markets Lower?

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May 15 (Bloomberg) -- Bryant VanCronkhite, portfolio manager at Wells Capital Management, discusses small-cap stocks in the midst of the broader market rally and whether the small-caps can lead the market lower. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

We think small caps can come back, but we are very inflection point now.

If they continue to rate lower on an absolute basis, the large cap outperformance we think we'll have to come to an end as well in the broader implication for that is negative in general.

Small caps can bounce back.

Within your work day today in the equity markets, are these dynamics signaling a flagging of a bull market or even signaling the beginning of some form of intermediate downturn?

Taken be the canary in the coal mine, if you will all stop if small stacks -- stocks move -- we have seen it in a weaker broader market.

It is so significant, we would expected to revert in the short run.

Talk about reversing, our friends put together a chart comparing the exhilaration of small caps versus large caps and only twice since 2009 have small-cap scott in this discounted to large caps in the past.

That meant they bounced back quickly.

What is the timeframe?

We're not sure if we can quantify the exec bounceback.

The stock syndicate about 5% to 10% move coming in and those things if we are correct.

I would not want to quantify that for the broader market.

I want your take on what we're seeing in treasuries.

The prices rallying.

Large-cap stocks have been railing as well.

As one leading the other?

I think they're rather cool with it.

As we are thinking about the bond market and the 10 year bond, it is an indication people are concerned about the direction of the economy, the fight to safety.

Some are fighting back.

If you think about the small-cap market as being the canary in the coal mine, i think the 10 year bond is similar in it is moving with the small-cap moving lower.

Bryant vancronkhite, thank you so much.

Particularly the mid-cap space, we will do some work on that.

I think are greatly under loved by the media.

Apple, apple, apple, google.

There is more -- like very, apple, apple,

This text has been automatically generated. It may not be 100% accurate.


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