The Importance of Small Caps in the Economy

The small caps are one of the best indicators of what everybody thinks is going to happen with the economy. They have not really participated in a rally much of this cycle, so if you compare them to valuations on the S&P or really any large cap index they look incredibly attractive over even compared to long historical periods. If all we're doing is really waiting for the legs of monetary policy to actually take their grip, I think we probably pull back from here in small caps.