Canadian stocks fell just slightly over the past week. Bonds rose in value and interest rates fell. But none of the movement was enough to reverse a longer trend that shows stocks outperforming bonds. And that’s just looking at Canada. American stocks turned in positive performance, especially small caps. Emerging markets are where the really strong returns were. Comparing asset classes, the ones with the greatest momentum are China (FXI), Hong Kong (EWH), Brazil (EWZ) and, in CDN$, the emerging markets generally (XEM).

Lower interest rates are supportive of the economy, but they also reflect a lack of “overheating.” The economy doesn’t appear to be really humming. Economic indicators are far from the point where they would indicate a market that risks retrenching from overoptimism.

Market Outlook September 23, 2013

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