Small Cap Balance Sheet Fears, Softening EPS Trends, More Midterm Momentum

In this edition of the podcast, we reflect on hot topics and some of the most interesting things we saw and heard last week. Three big things you need to know: First, we received several questions about how Small Caps look from a balance sheet perspective. The short answer is: worse than Large Cap given shorter maturities and less exposure to fixed rate debt. This is admittedly a risk to our Small Cap overweight, but we are sticking with our call. Second, beat rates and EPS growth expectations have continued to soften now that 3Q22 reporting season is in full swing, as has the tone in company commentary. Third, midterm election developments continue to trend in a stock market friendly way. Republicans have pulled well ahead of Democrats in the generic Congressional ballot and are also now expected to take the Senate in betting markets.