"Another huge development that seems to have gone unnoticed this week was the new cycle low in many emerging markets. This is significant because it is typically a leading indicator of economic growth in this part of the world, and by default, commodity prices. The chart above highlights the tight correlation between emerging markets (KOSPI as a proxy) and S&P 500 multiples. The KOSPI tends to lead commodities like oil, barley, gold and many others by several quarters, and therefore leads U.S. inflation and S&P 500 multiples as well. The KOSPI peaked in October suggesting that a turning point in commodity prices, U.S. inflation trends, and S&P 500 multiples could be on the docket in the coming months. While this may sound a little harsh, we would like to see emerging markets continue to decline if it means less inflation and a better market domestically...."