EM vs SPX: Despite a small relief rally in emerging markets as illustrated by the EEM (EEM, quote) ETF there is no expectation the MSCI EM Index to which the EEM is pegged will outperform in the near term even if the Fed steps back from their taper temporarily.
- Brazils (EWZ, quote) market cap barely exceeds that of Google (GOOG, quote)
- India's (INP, quote) market cap is less than that of Wells Fargo (WFC, quote)
- Turkey's (TUR, quote) market cap is more or less in line with that of Starbucks(SBUX, quote)
Bottom line: the devastation in emerging markets has been great and it hasn’t played out overnight but rather over a few years.
When put in the context of major US corporates who operate globally it is quite staggering to think about how much you could actually buy with the balance sheet of one of these players.