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Small-cap Companies Enter ‘Bear’ Market, Down 20% Since November High

US
  • The recent political tensions with Russia have triggered a risk off environment, leading to a significant sell off in risky assets and pushing preference for ‘safe’ assets such as the US Dollar.
  • The Russell 2000 index, which has been oscillating around the 2,200 level last year, has entered into a 'bear' market and is now down over 20% since its November high, currently trading at its lowest level since early January 2021.
  • Even though the probability of a Russian incursion is low, a prolonged period of uncertainty puts US policymakers in a difficult position ahead of the Fed meeting (Jan 25/26).
  • Further downward retracement could result in a more 'dovish' tone from US policymakers.

Source: Bloomberg

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