As we approach the end of April, it's worthwhile to note the obvious: some key sectors are weak, but the broadest swath of the market—the S&P 500—is holding up very well. The index is only 1.4 percent from its recent highs, which compares favorably to other benchmarks:
iShares NASDAQ Biotech -18 percent
Russell 2000 -7 percent
-6.4 percent
Dow Transports -2.0 percent
S&P 500 -1.4 percent
Dow Utilities up 6.5 percent
Much of the action in the NASDAQ, as well as the Russell 2000, seems to be revolving around three dozen or so internet content stocks (all of them growth momentum names) that are getting much of the attention.
Bottom line: investors are unwinding leverage in a small group of heavily traded, well-publicized names — but they're not abandoning the stock market. There is a rotation that has begun, and many have speculated that the broad rotation will be out of growth and into value. There are some signs that this is already occurring:
Growth vs. Value in April
iShares Russell 1000 Growth down 1.2 percent
iShares Russell 1000 Value down 0.2 percent
Growth includes names like FireEye, Tableau Software, Veeva Systems, Workday and Pandora, are all down more than 20% this month. Value names include many oil and exploration/production companies like Anadarko, Chesapeake, WPX Energy and Ultra Petroleum are all up more than 10 percent this month.
The biggest gainers in Value were all energy names, but other components like Micron, Kellogg, Calpine, Staples all have had gains of about 6 percent this month.
Remember the classic definition of value: low price-to-book ratio and/or low price-to-earnings ratio, and they often pay higher dividends. With all that said, it's still early in this rotation game.
Elsewhere
The perverse incentives corporations receive from tax avoidance strategies on overseas profits were on full display Monday morning.
It's been mentioned to me several times this morning that a key rationale behind Pfizer's proposed purchase of AstraZeneca (AZN) is the idea that Pfizer would relocate from New York City to the UK because of a more favorable tax situation.
This is not the only example of perverse incentives set up by our tax code. Here's another: Apple is preparing for a $17 billion bond sale, according to Financial Times. That will be used to fund their additional stock buyback program, which last week was increased from $60 billion to $90 billion. But they have $150 billion in cash, most of it overseas. But using that would cost them a bog tax bill: a 35 percent effective rate, to be exact.
Why not just issue debt at 2 percent?
--By CNBC's Bob Pisani