EM vs US Dollar is the biggest story of the spring
by Joshua Brown [1]
In the middle of February, I said “Tell me when the dollar rally ends, I’ll tell you when EM starts working again. [2]”
I showed the below chart, in which you can see Emerging Markets (EEM) underperformance vs the S&P 500 (SPX) (SPY) in the top pane, with the US Dollar Index (UUP) in the bottom – a perfect inverse correlation:
[3]
To me, the single biggest story of the spring is the reversal of the prior trend, which began almost the exact day of my post.
Below, I bring my chart up to the present:
[4]
The big question is now whether or not it’s a counter-trend move destined to fizzle or the start of something new.
Courtesy of philstockworld.com [5]