EM vs DM: Now its Game On
Emerging market equities in the form of the $EEM ETF have staged a strong comeback versus the SPX since late December when they bottomed as some reality started trickling into Trumpenomics.
The irony is that which ailed EM from Trump’s victory may now be the tailwind to continue an early stage recovery of the asset class after 6.5years of massive underperformance (-60%) to the SPX and developed market equities.
We will focus on small victories and today and see where this adds to a base of support that appears to be an inflection point for the asset class that will not happen overnight. The re-rating of EM will be a process that includes reversion to the mean forces taking over, along with synchronized global growth that is finally flowing from many corners of the earth.
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