Emerging markets did not follow the lead of the S&P 500 last week with the iShares MSCI Emerging Markets ETF (EEM – 42.05) losing about 0.5% and the iShares MSCI Brazil Capped ETF (EWZ – 48.13) losing just under 1%. The reaction out of the two respective volatility indexes was surprising to me. Both VXEEM and VXEWZ were up about 7% on the week and the underlying futures markets were up as well. Implied volatility is a forward looking measure. However, index volatility is usually reactionary to what is going on in the underlying markets. The relatively big move in VXEEM and VXEWZ makes me pause and wonder if there is some forward looking component to the rise. These two volatility indexes are telling me something that is not bullish for EEM or EWZ over the next few weeks I’m just not sure what circumstance is being expected to push those markets lower.