Emerging markets could break to all-time highs if the dollar breaches this level, Miller Tabak strategist says

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Emerging markets could break to all-time highs if the dollar breaches this level

" on Monday. "If you see a breakdown in the dollar below that $92 level, that's going to help the small outperformance the emerging markets we've seen over the last six, eight months become much bigger."

A weaker dollar is highly correlated with emerging market gains — the value of foreign currency-denominated assets rises for U.S. investors as the greenback falls. A lower dollar also helps emerging market economies that have borrowed U.S.-denominated debt."I think [emerging markets] could easily test the 2018 highs and even the 2007 all-time highs if [the dollar] does break down," he said.

The EEM ETF would need to cross $55.83, its record high set in October 2007. It closed Monday at $49.19.Michael Binger, president of Gradient Investments, is warier of the emerging markets as the Covid-19 pandemic puts pressure on the global economy. "I would not jump into emerging markets broadly at this point in time. I still think the world economy is still pretty fragile, very economically sensitive right now," Binger said during the same "Trading Nation" segment."I would endorse going into China right now. I feel they're going to have some really strong momentum and GDP growth, they're going to be positive this year and positive next year. So I'd put a small allocation there," he said.

 

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