The emerging market sector had what may be kindly referred to as an awful week last week. The iShares Emerging Markets ETF (43.79) losing over 4% can be interpreted as a bad week and that is how VXEEM took the price action rising over 20% in reaction to the drop in emerging market stocks.
I can’t find the words to properly describe the price action in the iShares MSCI Brazil Capped ETF (EWZ – 47.81) which lost over 10% last week. What is sort of interesting is that despite the 10% drop last week EWZ is still outperforming the S&P 500 in 2014. VXEWZ was up about 24% on the price action and this rise came off a pretty high base with VXEWZ already elevated in front of uncertainty surrounding national elections scheduled for early next month.
The curves continue to have different looks to them and probably will until there is certainty with respect to new leadership in Brazil. VXEEM prices are all flat which I always take as the market not being sure what is next and not putting money to work either way. VXEWZ continues to be elevated through October and then dropping off afterward when the people of Brazil will know who is in charge over the next few years.