Even the U.S. equity market seems to be waking up to the reality that the world isn’t perfect. Faced with the growing probability of a global slowdown, U.S. stocks have stalled out in recent months after a spectacular run for the first four months, prompting some wise men like Blackstone’s Byron Wien to conjecture that the second half of 2013 might not prove as rosy as conventional wisdom predicted back in January.

According to the savants at Guggenheim Investment Advisory, the divergence between the U.S. and emerging markets are now becoming too glaring for ordinary investors to ignore. Through August 19, the Standard & Poor’s 500 was up 17% for the year, while the MSCI emerging market index was down 8.5%.

When Guggenheim Investment Advisors CIO Charles Stucke breaks down the different emerging markets components, the picture starts to crystallize. Latin America is down a full 16%, trailing the U.S. by more than 33%. In contrast, Asia and Eastern Europe are down about 5.5%.

“This is a period of time when the gap in performance is extreme,” Stucke says.

Investors are concerned about relative valuations in America but they are even more worried about risks in China, Brazil and elsewhere in the developing world.

Brazil’s commodity links to China explain only part of the giant South American nation’s problems. Stucke says the real rates of return demanded by investors in Brazil had shrunk from their historical 5.0-5.5% norms to around 1.0-1.5%.

“It’s now back to approximately 3.0% to 3.5%,” he notes, as equity markets in Brazil have sold off to levels beyond what real rates of return should imply.

That is producing opportunities to play both sides of the Brazilian equity market, Stucke says. “We think that [the correction in Brazilian stocks] makes markets like Brazil relatively attractive,” he says. “We like them not as a beta play but as a long-short play.”

When correlations are rising, active managers have a hard time earning their fees. In fact, Guggenheim Investment Advisory is stressing long-short managers and other strategies like global macro like event-driven and activist investing on its alternative investments platform.

Stucke concedes that some strategies like managed futures and global macro that has gone sideways after performing brilliantly in 2008 might be a tough sell compared to the S&P 500 which has produced consistent double-digit gains since 2009.