Small caps are likely to benefit from infrastructure-spending proposals by both presidential candidates, aimed at accelerating recovery from the Covid-19 recession. The Trump administration proposes spending at least $1 trillion on infrastructure. Joe Biden's campaign has indicated a desire for $2 trillion in his first term. While the latter's plan is likely to include incentives for "green energy" projects and the former's appears more focused on infrastructure repair, the bottom line is that adding fiscal resources to a mountain of easy-money policies is likely to kick the recovery into higher gear, benefiting small caps.
The American Recovery and Reinvestment Act of 2009 ($789 billion) was a key driver of Russell 2000 outperformance (5,161 bps trough to peak) early last cycle.
The American Recovery and Reinvestment Act of 2009 ($789 billion) was a key driver of Russell 2000 outperformance (5,161 bps trough to peak) early last cycle.