00:00 Speaker a
Talk to me about what will be taken by small hats that excel again, especially given the induction uncertainty, but also the uncertainty that causes this as well.
00:17 Speaker
Yes, well, there are two things that I really see. One is the federal reserve and the other is our basics for companies, right? The basic growth of the Russssell 2000 companies should be stronger than the S&P 500 just to start with small covers that it excels. We have not really seen it since 2018 and 2019 and the recovery period 2021 after the recession 2020. So we really need to see the basic growth. Now, we started to see some in the first quarter, but a lot of the growth of the revenues that we saw in Russell 2000 may have been pulled forward from this tariff, right? So, if you are thinking about any company, and how you will prepare for companies to get a tariff, they will buy products before the tariffs that reach some of these tax consequences and build stocks. So the question is what falls in the profits of the second quarter, is to accumulate or that is already organic growth and we will see more as we get more results.
02:11 Speaker a
Yes, and Mike, I hear you talking about something we are talking about a lot with our sources so that it is really difficult to determine it with regard to the policy of customs tariffs that change constantly and also whether it is dynamic forward or an indication of something else given the uncertainty that the tariff creates. UH for small and medium -sized companies, should investors search more than the broader index in this environment? And if so, what is the best way to do this?
03:08 Speaker
Yes, if you are talking about specific shares and sectors, II tends to focus a little more on the sectors. UM, in all areas, both in the maximum medium basins, small hats and even in large caps, technology is the most open foreign sector in all of these three industries. S & P 500, Russell Mid and Russell Small, right? So technology can harm severely, right? Now we have some criticism of the tariff interface specifically, as you know, Trump went back and forth, ah, whether there will be a tariff in the semi -finals and he pulled it again and said he would come later. So there is a lot of uncertainty about it, but if there is a specific tariff for technical products, it will be very catastrophic for the sector. Now, in terms of the smaller MIDCAP companies specifically, they have a significantly less foreign exposure than large hats, right? So when we talk about the cost of merchandise exposure to MIDCAP companies, we are talking about 40 % of the index with the cost of exposure to goods outside the United States. This is contrary to approximately 50 % for the S&P 500, and it becomes smaller while going to Russell 2000. When we talk about revenues, therefore, mutual definitions, as you know, may put China on the United States and so on. UM, the smaller MidCAP companies are only about 20 % revenue exposed to foreign entities, while the S&P 500 is about a third of exposed. So there is much less reduced exposure to the bottom if that translates into the basics has not yet been seen.
