Emerging Markets: Hidden In Plain Sight

The Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO) has seen a net inflow of 481.5MM dollars, and is ranked 7th out of all ETFs for this week.

Furthermore, the iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) saw even higher inflow of 865.07MM, ranking 2nd out of all ETFs.

Emerging markets are heating up, while the only direction left for U.S. markets is down.

Following Trump’s election, the dollar index rose from 97 to 103. While the stock market hasn't cooled off on the Trump trade just yet, the dollar index is a harbinger of things to come.

It's already down to 97.81, and looks close to wiping out all of the gains since Trump's election. The downtrend in the dollar doesn't show signs of abating anytime soon. As the dollar falls, commodities become cheaper to the rest of the world.

Developing economies that depend on inputs of raw materials are expected to benefit from increased purchasing power. As the dollar declines, foreign companies buying raw materials will find that their foreign currency goes much further when they purchase dollar-denominated commodities. This should help the bottom line of emerging market economies, and these earnings will be reflected in a higher VWO price.

Read more at Seeking Alpha.