Market Rotation From Growth To Value. Will We See Investors Sell In May?

Stocks 
 
Markets in Europe opened broadly resilient, despite another massive day in terms of earnings, with the European equities opening relatively flat on Wednesday. The real story on Tuesday which continues to play out today was market rotation: NASDAQ underperformed, and there was a move out of growth into value – the most significant risk to the market for virtually everyone on the rally bus. Even more so with thoughts of a secondary super spreader lurking in every nook and cranny 
 
The leadership switches that have been underway in the last two days could have a little more to run as the market continues to worry about concentration risk while rebalancing into the month-end. Still, the broader market may do extraordinarily little given the heavyweights of healthcare, and tech in global indices will mostly remain bid on dips. 
 
Go Away In May
 
If you caught the equity lows in March, it probably makes sense to lighten up your allocation a bit (or a lot). Returns are still positive from May to October, but is it worth all the aggravation when they tend to exceed the risk-free rate barely. Hence the "Sell in May and go away" is a well-known financial-world adage based on the historical flatlining of some stocks in the "summery" six-month period commencing in May and ending in October.
 
Especially as we start moving ever so closer the dreaded summer doldrums, which can be particularly dangerous for investors because many of Wall Streets primarily market makers are in the Hamptons. As a result, volatility is higher because liquidity is lower than it otherwise would have been. And something tells me it could be even worse this time around. 
 
Oil
 
Brent up 10% over the past 24 hours as the June contract heads towards expiry, which is good news but hardly a cause for celebration as guidance from the Trade paints a terribly negative view. With BP (NYSE:BP) highlighting retail down 50% and aviation down 90% in Europe and US but retail and B2B ex-aviation rebounding in China – but provide an accurate indication of how vital lifting lockdowns in large economies are essential for any oil complex rebound. 
 
While my colleagues reminded me, I forgot to include that Asia performance could have been helped by an API inventory figure that came is less than expected (albeit still +10Mbbls). I never thought we would be cheering on an inventory report of an eye-watering +10 Mbbls