The iShares Emerging Markets ETF (EEM – 44.75) lagged the performance of the US markets last week rising only one-half a percent. VXEEM seemed diverge from EEM and took the lead from VIX dropping over 15% on the week. Complacency seems to be taking over the world.
Brazil is a country worth watching for the next couple of months. The stock market has defied all critics this year and is up just over 15% (based on the performance of the iShares MSCI Brazil Capped ETF (EWZ – 50.41). Despite a 2% rise in EWZ, VXEWZ was down less than VXEEM. This less of a drop was also off of a higher base, which means VXEWZ has farther to drop.
The VXEEM curve is a normal looking yawner so let’s look to the right at the VXEWZ curve. As I mentioned Brazil is a market to watch and note the elevated levels of the September and October VXEWZ futures – that’s all about a big election coming up on October 5th. India experience a similar situation back in the spring and I look forward to seeing how VXEWZ plays out based on the potential change in leadership in Brazil.