So on Thursday, we noted the following about investors’ undying love for emerging market equities in an environment where the assumed slow pace of Fed tightening supersedes all other relevant factors:

Emerging market stocks have now risen for eight months in a row.

As far as the ETFs go (i.e. as far as how most people are trading it), EEM has outperformed SPY for six consecutive months in the longest streak of outperformance since February 2005:

Make no mistake, this is starting to get stretched and it’s heavily dependent on the trajectory of the dollar (remember, the Fed matters more than the ECB for EM).

Well given all of that, it should come as no surprise that EEM is outperforming SPY handily on Friday following the lackluster jobs print.

As Bloomberg’s Camila Russo notes, “lower rates for longer means sustained demand for riskier assets [and] EM is still cheaper relative to the U.S. looking at forward P/E ratios.”

(BBG)

That’s all fine and good and we wish anyone who’s still in this trade the best, but do note that not everyone is convinced the dollar will stay more “beleaguered” than Jeff Sessions after a Trump tweetstorm. And a lot of EM’s outperformance hinges on a weaker dollar.

True, the August jobs report seems to portend a cautious Fed, but the quick snapback in the greenback and yields after the initial knee-jerk lower could be a sign that the worst is priced in.