Pillar of large cap effect down

One of the key reasons for the gain of large cap stocks in the US has been their focus on international sales. For many of the largest companies in the US, international business has become a majority of their sales and the place where they have seen their major growth. This has pushed them higher relative to mid and smaller cap stocks. Large cap stocks will also do well when in an environment that is seeing more regulation. The cost of regulation can be covered over a larger base.

The data are showing that some key companies that have been dependent on sales in the rest of the world relative to the US are starting to see these gains deteriorate. Caterpillar is one that is now seeing that their US growth is stronger than the rest of the world. This will reduce  the large cap advantage that has been present over the last two years. Watch the those global sales.