Remember this chart from back in October?
EEM_Emerging_Markets_Oct_2013
I had suggested that the emerging markets ETF “EEM” was having trouble breaking out to new highs while the SP 500 was leaving most charts in the dust right?
So……now let’s have a look at it “again” while the SP 500 has “the October highs” way back in the rear view mirror.
In a healthy global economy, shouldn’t those emerging markets be moving higher / breaking out as well?
EEM_Emerging_Markets_March_2014
The “proposed taper” has obviously had an effect on EEM as we’ve discussed here several times before ( U.S dollars pulled out of these emerging economies in preparation for rising rates / economic contraction etc…) so…..the question begs to be asked.
Is the U.S Equities market “literally” the last one to fall?
This very well could be the “elusive blow off top” as not a single data point out of the U.S ( or the planet for that matter ) suggests any kind of meaningful recovery.
I’m sure I’m guilty (as we all are) in “seeing what I want to see” but seriously….how far can U.S Equities “diverge” from what’s “really going on”?
Food for thought if nothing else.
Sounds like Plosser let it out that the NFP number will be bad. Probably dollar negative….at least for a short bit. I’m still guessing if it creates real risk aversion the dollar won’t take long to rally.
Is there a chance…for the global asset shift of funds?…..could ppl start shifting their assets from the higher valued markets like US to the undervalued markets like the emerging markets and commodities??
Certainly into commodities yes as the $CRB commod index has literally skyrocketed as of late – yes.
The emerging markets “have” been taking large investment ( all the free money printed in U.S certainly hasn’t been lent to small business / growth promotion in the U.S) as they provide better returns than investment in U.S, but the tapering now puts a “dint” in tha flow of free money, and suggests rising interest rates in the not so distant future.
Thanks for the update on EEM Kong. Always good perspective.
There is a neat BBC special that came out recently called ‘How China Fooled the World’ which your readers might enjoy. It provides a bit more narrative to the themes you’ve been discussing re: China slowing. You can find it free on Youtube.
Have a nice weekend!
Thanks Jworthy….I will certainly look it up and have a go.
I wonder if there’s a comparable / similar one on “how U.S.A fooled the world”? – or at least………..how they’ve tried.
Big week ahead – stay sharp!