Is this chart suggesting emerging market and developed market rotation?

Real quick here. Here's a chart tracking EM and S&P500 gains since the beginning of 2016:

Source: Jamie McGeever
How EM closes the performance gap
Two questions:

When and why should we expect EM and US stock markets to move in unison?
If they do start to better track each other, how does the performance gap close?

Given the relative value chart I showed you yesterday, it's clear that the US market is overvalued relative to emerging markets. At the same time, the fundamentals in the US are better. And I see no indications on the horizon that the difference in fundamentals between the US and the emerging markets' real economies will close. They might just increase.

But this chart suggests that when the gap between EM and the US closes, it will do so because of US underperformance...


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