While only a small sample of the last Monday emerging market equities are outperforming the SPX despite the bloodletting in commodities. Today Copper (JJC, quote) is -4% and we are seeing industrial metals tank but EM equities are holding serve.

Image courtesy Kevin Walsh: http://www.everystockphoto.com/photographer.php?photographer_id=21975

Why? Largely because the Dollar is giving ground across major cross (JPY, EUR) as well as core emerging market (EEM, quote) crosses (ZAR, BRL, MXN).

Why? US data suddenly not all that impressive. Retail Sales this AM were poor and people choose to look more at the wage weakness in last Friday's payroll numbers etc.

Emerging market has had multiple periods of outperformance to DM in the last 4.5 years despite overall devastating underperformance. What is interesting is that EM is holding key levels while volatility spikes globally and there is pressure on risk.

Follow this trend. Japan is a funding currency and supposedly the emerging market carry trade currency. It is +1% today and 5% stronger from the lows in late December against the USD. What happened to Trillions of Dollars that flowed to emerging market from funding currencies setting up EM defaults in 2015?? This theme is NOT playing out in the last month.

 Chart_ EEM

 

 

 

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