1 Year Comparison: EEM/RUT/EWJ
A few things of note that have changed so far in 2014. First, since mid-March emerging markets have outperformed. Emerging markets, in a bear market since 2011, have already absorbed a large percentage of losses. In the event that we do enter a bear market in the developed markets, EEM may indeed outperform RUT/EWJ.
Also of note, EWJ has noticeably negatively diverged this year. The March high did not exceed the Jan high, and the April high did not exceed the March high. The QE gravy train is coming to an end. The RUT and EWJ will be key markets to follow as the great Ponzi unravels.
I've long stated that once the Fed's balance sheet got near 30% of GDP........which it will by the end of the year.......the Fed will lose influence over capital markets (its a function of math). I "hope" the markets are beginning to piece that into the equation. The credit markets have been squishy for the last few months.........credit leads, equity confirms.