Republic: An Update on the Small Cap Rotation

It's Been a Blistering Force in the Market. What should you own now?

Equity Storm Watch Is GREEN on the S&P 500 and GREEN on the Russell 2000

What started as a Trump bump has quickly turned into a Trump slump, following another record-setting day driven by expectations of Federal Reserve rate cuts by the September meeting. Investors awoke to a broad downturn, with significant drops in tech due to concerns over Donald Trump's trade policies, which could impose additional tariffs on semiconductor exports to China. This has led to significant pre-market losses for Nvidia (NVDA) and Taiwan Semiconductor (TSM), each falling around 3%, dragging the Nasdaq down by 1.2%. 

Additionally, as the spread between Mag-7 and Modest-493 begins to tighten as capital rotates, the likelihood traders get caught on the wrong side increases, leading to margin calls and short squeezes like we've seen in small caps. On the earnings front, J.B. Hunt Transport Services (JBHT) reported a stark 24% drop in second-quarter profits, highlighting challenges in the logistics and freight …