Small Caps Are Back (EP. 448)

whatshot 65 snips

Jan 21, 2026

Explore the resurgence of small caps and their potential benefits from falling rates. The hosts dive into geopolitical risks affecting markets and rising bond yields, while also reflecting on historical parallels from 1913. They discuss how household balance sheets look robust and the great real estate wealth transfer looming. There's a touch of humor as they critique the state of Netflix movies and franchise fatigue in cinema. Finally, they weigh geopolitical noise against corporate earnings risks, anticipating an eventful market ahead.

01:04:10

forum

Ask episode

web_stories

AI Snips

view_agenda

Chapters

menu_book

Books

auto_awesome

Transcript

info_circle

Episode notes

insights

INSIGHT

Vertical Yield Spikes Signal Risk

Rapid rises in long-term government bond yields can signal instability rather than healthy growth.
Ben Carlson warns that vertical yield moves are rarely a good sign for an economy.

insights

INSIGHT

Small Caps Are Breaking Out

Small caps and cyclicals are outperforming as investors rotate from mega-cap AI winners into economy-sensitive names.
Michael Batnick sees this as a potential 'year of small caps' if GDP and earnings stay strong.

insights

INSIGHT

Policy Alignment Can Heat Growth

Fiscal, monetary, and credit policy are unusually aligned to boost growth.
Greg Ip's view: coordinated easing makes it likely the administration can 'run the economy hot.'

Get the Snipd Podcast app to discover more snips from this episode

Markets React to Greenland Tariff Threats

01:10 • 3min

chevron_right

Reading 1913 and Historical Perspective

04:35 • 3min

chevron_right

Financial Markets as a Check on Policy

07:18 • 2min

chevron_right

Rising Global Bond Yields and Japan's Spike

08:48 • 2min

chevron_right

U.S. Yields, Volatility, and Gold's Move

10:28 • 3min

chevron_right

Extreme Market Concentration in Mega Caps

13:36 • 2min

chevron_right

Small Caps' Breakout vs. Mega Cap Rotation

15:16 • 2min

chevron_right

Why Small Caps Could Benefit from Falling Rates

17:19 • 2min

chevron_right

Running the Economy Hot: Fiscal, Monetary, Credit

19:49 • 3min

chevron_right

Investor Expectations and Elevated Earnings Forecasts

22:31 • 53sec

chevron_right

Household Balance Sheets Look Strong

23:24 • 3min

chevron_right

Multifamily Delinquencies Explained

26:08 • 3min

chevron_right

Revisiting the Financial Crisis Books

29:01 • 2min

chevron_right

Will AI Make Money Worthless?

30:52 • 3min

chevron_right

AI's Limits: Rain Man Analogy and ChatGPT Quirks

33:35 • 3min

chevron_right

Exchange Innovation: NYSE Tokenized Settlement

36:10 • 3min

chevron_right

Mortgage Rate Distribution Normalizing

39:00 • 1min

chevron_right

The Great Real Estate Wealth Transfer

40:00 • 4min

chevron_right

Wealth Gains by Percentile Since 2012

44:26 • 4min

chevron_right

Consumer Anecdotes, Travel, and Entertainment

48:11 • 3min

chevron_right

Netflix Movies and Changing Attention Spans

51:16 • 2min

chevron_right

2026 Movie Slate and Franchise Fatigue

53:15 • 2min

chevron_right

Personal Stories: Kids, Wrestling, and Home Projects

55:45 • 6min

chevron_right

Geopolitical Volatility vs. Corporate Earnings Risk

• Mentioned in 3 episodes

1913

The Year Before the Storm

Florian Illies

In '1913: The Year Before the Storm', Florian Illies provides a month-by-month account of the year 1913, detailing the vibrant cultural landscape and significant political events that preceded the First World War. The book features accounts of notable figures such as Marcel Proust, Igor Stravinsky, Kazimir Malevich, Louis Armstrong, Charlie Chaplin, and Coco Chanel, among others. Illies captures the spirit of creative freedom, daring experiments, and breakthroughs in culture, science, and technology, while also highlighting the ominous signs of impending disaster. The narrative is enriched with historical facts, photos, and documentary artifacts, making it a charming and riveting tale of a world on the brink of change.

#8346

• Mentioned in 6 episodes

All the Devils Are Here

Joe Nocera

Bethany McLean

This book delves into the motivations and actions of various individuals and groups, from CEOs and politicians to lenders and home buyers, to explain the complex web of factors that led to the financial crisis. It goes back several decades to weave the hidden history of the crisis, highlighting how it was not just about finance but also about human nature and the American mythology of homeownership.

#439

• Mentioned in 67 episodes

Too big to fail

The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves

Andrew Ross Sorkin

Too Big to Fail by Andrew Ross Sorkin provides a minute-by-minute account of the events surrounding the 2007-2008 financial crisis. The book chronicles the collapse of Lehman Brothers and the subsequent efforts by Wall Street and Washington to save the financial system. It is based on hundreds of interviews with top executives and regulators, offering a detailed and dramatic narrative of the crisis, including the motivations of ego, greed, fear, and self-preservation that drove the key players. The book also explores the intricate web of decisions and actions that led to the crisis and the measures taken to mitigate its impact.

On episode 448 of Animal Spirits, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ discuss geopolitical risk in the markets, rising bond yields, why small caps are breaking out, running the economy hot, household balance sheets are in good shape, the end of money, the great real estate wealth transfer, the bottom 50% wealth gains, Netflix movies and more.

This episode is sponsored by YCharts and ClearBridge Investments.

To download YCharts’ Top 10 Visuals click here: https://go.ycharts.com/the-top-10-visuals-for-clients-and-prospects?utm_source=Animal_Spirits&utm_medium=Original_Research&utm_campaign=Top_10_Visuals_Deck&utm_content=Podcast And start your free YCharts trial through Animal Spirits (new customers only) at: https://go.ycharts.com/animal-spirits

International and emerging market stocks outperformed the U.S. in 2025. At ClearBridge, we believe this momentum can continue. Find out more at https://www.clearbridge.com/

Sign up for The Compound newsletter and never miss out: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠thecompoundnews.com/subscribe⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Find complete show notes on our blogs:

Ben Carlson’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Michael Batnick’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Feel free to shoot us an email at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠animalspirits@thecompoundnews.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation.

Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.

The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information.

Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here:

⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠

Learn more about your ad choices. Visit megaphone.fm/adchoices

Home Top podcasts Popular guests Top books