Rebound in Non US Markets

Emerging markets and European markets suffered large declines in the last 3 months in response to a litany of perceived problems: Turkey's currency and debt crisis, potential for trade wars, and sharp declines in markets in Argentina and Mexico. As can be seen in the charts below the selloffs were marked by large increases in volume at the low points with an extreme spike in volume at the mid August low. This is typical of non US markets, particularly emerging markets where there is considerable performance chasing. All of these declines occurred as the US markets were hitting record highs.

FEZ (Europe) YTD performance...not volume spikes (bottom scale) at the lows

IEMG Emerging Markets (note volume spikes at market lows)

The divergence in performance between emerging markets and the S+P 500 was the largest in over a decade.

Below is a 2 year chart of IEMG(emerging markets) FEZ(Europe) and SPY S+P 500 as can be seen the large divergence in performance between US and non US markets began in May as "headline risks" had impact on the markets.

This divergence in performance has created large valuation gaps between US and non US markets:
                                             


                                              p/e                         dividend yield


IEMG emerging markets       13.81                        2.66%
FEZ Europe                            15.09                       3.16%
SPY S+P 500                         23.45                        1.84%

Perhaps in reaction to a bit of a fading of the concerns mentioned above and the large divergence in the valuation measures non US markets have has a sharp rebound in the last two weeks perhaps overlooked as US markets keep moving to new highs: Most recently Europe has shown more positive economic surprises than the US and there are signs Germany will step in to give financial assistance to Turkey.

In the last 2  weeks IEMG has rallied 2.4%  FEZ 3.8% vs. a rise of   2.1% for SPY. The non US ETFs are still negative for the year IEMG -6.2 and FEZ -1.4% far underperforming the SPY rise of 9.6%.
Given the gaps in performance and valuation perhaps the recent moves are signs of closing of the performance gap between US and non US markets.