This just hasn’t been a month for months or Prime Ministers with the name May.  This May, stock markets around the world are on pace for their worst month of the year, and this morning UK Prime Minister Theresa May has finally given in and announced her resignation effective June 7th.  Thankfully, June is right around the corner.  While it’s been a pretty bad May, US equities are doing their best this morning to finish off the week on a positive note as Dow futures are indicating a positive open of +90 points (down from earlier highs) which would mean that it only needs another 184 points to get back to even for the week.  While it’s a full day of trading, with the holiday weekend coming up, you can bet that a lot of trading desks will start to clear out early today.

Make sure to check out today’s Morning Lineup for a recap of all the important overnight and morning events from around the world. Included in today’s report is our take on Theresa May’s resignation, as well as an analysis of the short-term trading action in European equities.

You don’t need us to tell you that investors have been rotating into defensive sectors lately, but we have a great illustration of it for you.  The chart below shows the relative strength of the S&P 500 Technology sector and compares it to the relative strength of defensive sectors like Utilities, Consumer Staples, and Health Care.  In the chart, rising lines indicate periods where the sector outperformed the S&P 500 and vice versa.

For much of 2019, Technology was leading the market higher, while all three defensive sectors lagged.  In late April, though, it was like a switch went off as trade war fears intensified.  Investors quickly started rotating out of Technology and into the defensives, which have surged relative to the market.

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