Over the past week, bonds performed better than stocks. That reduces the preference for stocks, which was quite large, but it doesn’t erase it. Stocks still appear positioned to outperform bonds over the coming weeks. Of the markets that I track, Brazilian stocks (EWZ) still has a clear advantage over the others, but Emerging Markets (XEM), Canadian Large Caps (XIU) and Real Estate (XRE) are all in a distant second. The market seems to be slowing, which brings to mind the dictum “Sell in May and go away.” (This does not constitute advice.)
Interest rates are somewhat lower than a couple weeks ago, including mortgage rates. This implies that the economy is strengthening. We’ve just gone through earnings season, so the market appears to be sending the same message, with slightly higher prices compared to a couple months ago.