Inflation is a bit higher. What’s strange is that core inflation (2.4%) is higher than top line inflation (1.2%). That means fuel and food costs have very low inflation (or deflation), which I can see at the gas pumps. Normally, that should result in a “wealth effect”, where people spend more money elsewhere, since they’re saving it on gas. But in Alberta, that was pre-empted by the announcement of tax increases.

Surprisingly, Chinese stocks (FXI) are holding up, hardly changed from last week’s big jump. Emerging stocks (XEM) and European stocks (XIN) both have decent momentum. Canadian large caps (XIU) also look okay, better than US large and small caps.

I’m surprised to see this penny stock on the TSX60. If you like playing with fire, Penn West (PWT) appears to have potential. Canadian Oil Sands (COS) has similar momentum, but seems far more attractive. CCT and VRX continue to present impressive momentum, and now ERF can be added to that list. I’m happy to see so many good performers.

American stocks are struggling, so it’s harder to find opportunities. Amazon (AMZN) still appears well-positioned. Apache Corp (APA), an independent energy company, is the only other company that seems to have good momentum.

Market Outlook April 20, 2015

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