Inflation is higher at 2.4% (top line). Interest rates, however, have fallen, implying that investors expect inflation is currently lower than the backward-looking reported number. Both, however, are indicators of economic strength, which is generally good for corporate profits.

Stocks and bonds both rose over the past week, which is not usual. Stocks were more profitable, so they gained momentum relative to bonds. Amongst asset classes, XCS is no longer very positive, and Brazil stocks (EWZ) have taken the lead. Within Canada, large caps (XIU) shows the greatest momentum (and is not far behind).

Looking across a greater number of stocks, I still see more negative momentum than I’m used to, but the number of positive stocks isn’t so small as to make me worry.

As a reminder, I’m unlikely to be able to post next week because I won’t have access to internet. Such is life.

Market Outlook July 21, 2014

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