Just as people don’t really care about the Brexit headlines anymore, the similar logic seems to apply to the trade war situation newsflow. Despite the renewed trade war situation, markets have continued higher, with the emerging space outperforming developed markets.

EEM US has been ripping over past 10 sessions, but note we are approaching the 50 day average as well as the negative trend.

The chart that couldn’t catch a bid, JPM emerging market fx index, finally managed bouncing higher. It is closing in on the negative trend line.

EEM (orange) versus S&P since the recent lows. Emerging markets is the relative winner.

Source: charts by Bloomberg

Earlier in September we wrote:

“With regards to the EM equities space the EEM US trades right on the levels from where we bounced off in August. The 41 area is massive. Who knows, maybe the sentiment turns rapidly out of nowhere, but it would be a nervous long…”

Back then we wondered about the nervous long. With markets spiking higher and the EEM US quickly approaching some short term resistance, we would probably start thinking about some nervous shorts.