Trader Talk

Traders pit growth against value as Q2 gets under way

Pisani's market: Value vs. Growth
Pisani's market: Value vs. Growth

Welcome to April! Normally, the first day of the month sees a small push of new money being put to work in the market. You'd think that would generally lead to an up month—and for the most part, first days of the month are up.

Not recently, however. For some reason, the S&P 500 has been down the first day of the month for the last four months. The last time that happened was 2011; prior to that, we were up six months in a row.

The big issue for this quarter will be: will they economy pick up? We need U.S. gross domestic product to pick up steam from 1.5 to 2 percent in the first quarter, to 2.5 percent in the second, and over 3 percent in the second half.

The big debate on trading desks for Q2 will be growth versus value. The popular trade going into Q1 was to be long growth and short non-growth.

Traders work the floor of the New York Stock Exchange.
Getty Images

However, a lot of traders have been hurt badly in the last few weeks on that trade. Much of the debate is over whether the growth names with big gains are worth the higher prices.

A lot of traders are still long biotech, for example, arguing they are not expensive. Gilead, for example, trades at 10 times 2016 earnings, Celgene is 15 times 2015 earnings.

With all that said, it was actually boring consumer names that outperformed last month:

Kroger +4 percent

PepsiCo +4 percent

Campbell Soup +3 percent

General Mills +3 percent

1) Global markets began to rally on hopes Chinese stimulus is on the way, after yet more disappointing economic figures out of the world's second-largest economy. China's official purchasing managing index inched up to 50.3 in March from 50.2 in February.

That's a small expansion. However, some economists argue it still suggest weakness because activity usually picks up more after the Lunar New Year. The Markit/HSBC Purchasing Managers' Index, which focuses more on China's private sector, slid to an eight-month low of 48.0 last month.

2) Michael Lewis, author of "Flash Boys" will join me on Squawk Box at 1 PM ET, along with William O'Brien, President of BATS-Direct Edge exchange.

(See my Trader Talk last night for details on why I am calling for the SEC to immediately begin hearings on the state of the U.S. stock market.)