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Anyone See a Correlation?

I have been told that China is slowing down.  I have been told that with the US Fed tapering, some money is being drained out of the Emerging Markets and going to the United States.  I have been told that the Emerging Markets will have reduced competitiveness that will benefit the United States.

I have no idea how any of this will end, but I can tell you factually that the S&P 500 has been very correlated to the performance of emerging market stocks and debt in the last few weeks.  In particular, take a look at the rate action instigated by Turkey and its impact on the Lira along with its impact on the S&P 500.  I would say they were pretty tightly correlated:

S&P Vs LiraMy guess is that the S&P 500 will find stability when the emerging markets find stability.  My guess is that stability will not be found for a few months and could provide an interesting market environment.  I will let the others pontificate on what will happen and spend my time analyzing what is actually happening.

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  1. UA says

    Sir,

    A 2 day sample set might not be the most convincing evidence.

    UA



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