Small Cap Stocks Will Struggle Without More Rate Cuts, Royal Says

Watch on YouTube ↗  |  January 16, 2026 at 15:47  |  3:06  |  Bloomberg Markets
Speakers
David Royal — Chief Investment Officer, Thrivent
Dani Burger — Anchor, Bloomberg Television

Summary

David Royal of Thrivent discusses why small-cap stocks need additional Federal Reserve rate cuts to rally, arguing that employment weakness should keep cuts in play. He also presents SharkNinja as an interesting consumer stock pick and says he is overweight NVIDIA. The conversation touches on ETF conversions and the relative health of upper-end versus lower-end consumers.

  • David Royal views small caps as rate-sensitive and dependent on a couple of Fed cuts.
  • He expects employment weakness to keep rate cuts in play.
  • Royal highlights SharkNinja as a consumer stock with product innovation and value appeal.
  • He says he is overweight NVIDIA without detailing a separate thesis.
  • The segment discusses ETF conversion benefits such as tax efficiency and liquidity.
  • Royal says the upper-end consumer is healthier but trading down for value.
Ideas
David Royal Chief Investment Officer, Thrivent 0:18
Small caps need Fed cuts to rally.
David Royal sees the small-cap trade as sustainable but rate-sensitive, arguing small caps have behaved differently than in the past and need a pro-cyclical backdrop. He says they need a couple of Fed rate cuts to rally, expects the Fed will deliver them because employment has weakened significantly, and thinks two more cuts could benefit small caps.
IWM HIGH
David Royal Chief Investment Officer, Thrivent 2:19
SharkNinja wins with innovation and value.
David Royal highlights SharkNinja as an interesting stock pick. His theme is that the upper-end consumer is doing better than the lower-end but is still trading down and seeking value, and he wants brands that compete on product innovation or niche positioning rather than relying on macro tailwinds. He says SharkNinja competes with Dyson and cites seeing shoppers choose Shark products over competitors.
SN HIGH
David Royal Chief Investment Officer, Thrivent 2:22
Royal is overweight NVIDIA.
David Royal says he is overweight NVIDIA, noting that it is a widely discussed name. The transcript provides no additional company-specific rationale for the position.
NVDA LOW
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This Bloomberg Markets video, published January 16, 2026, features David Royal discussing IWM, SN, NVDA. 3 trade ideas extracted by AI with direction and confidence scoring.

Speakers: David Royal  · Tickers: IWM, SN, NVDA