{"id":6905,"date":"2017-05-07T17:43:08","date_gmt":"2017-05-07T17:43:08","guid":{"rendered":"https:\/\/fundamentalis.com\/?p=6905"},"modified":"2017-05-07T17:43:08","modified_gmt":"2017-05-07T17:43:08","slug":"energy-commodities-and-emerging-markets","status":"publish","type":"post","link":"https:\/\/fundamentalis.com\/?p=6905","title":{"rendered":"Energy, Commodities and Emerging Markets"},"content":{"rendered":"

Having never owned the Emerging Markets (EM’s) in any form or fashion in the 1990’s and then staying out of the asset class between 2001 – 2007 given all the money that flowed into the asset class after Technology collapsed, Emerging Markets were bought for clients early in 2016, when the 10-year return on EM’s went negative, and 7 years into the SP 500 bull market.<\/p>\n

The other aspect to this trade was that with Energy and Commodities bottoming in Q1 ’16, whether rooted in statistical rigor or not, there always seemed to be a correlation between rising commodity prices and the out-performance of EM’s.<\/p>\n

The point to today’s blog post is that while watching the very weak price action in crude oil, nat gas and copper this week, Emerging Market’s including Brazil, actually had a good week. In oter words, some EM and EWZ weakness was expected this week, watching the commodity trade, and instead the opposite happened.<\/p>\n

This article may be the reason:\u00a0https:\/\/www.bloomberg.com\/news\/articles\/2017-05-05\/emerging-market-currencies-haven-t-been-this-hot-since-g-w-bush<\/p>\n

It is tough referencing any investment article with the word “hot” in the title, but readers should get the point, Since President Trump came out and actually said he preferred a weaker dollar (unusual for a President to comment on the dollar since the dollar and its relative strength and weakness is usually the purview of the Treasury Secretary), the EM’s have been relatively stable,<\/p>\n

YTD returns of SP 500 and EM ETF’s:\u00a0<\/strong><\/em><\/p>\n