Emerging Markets

Emerging Markets basically describes economies that are between the stages of developing and developed. The emerging market phase occurs when economies see their most rapid growth - as well as the greatest volatility. From 2000-2011, emerging market economies have swelled to include Brazil, China, India, Russia - collectively known as the BRIC nations - as well as Vietnam, South Africa and many more depending on how tightly or loosely one defines "emerging" as opposed to "developing." Generally speaking, investors and economists are looking for a sweet spot where the political and social growing pains have largely ended and the economic growth has just begun. This is naturally easier said than done.


A nation's economy that is progressing toward becoming advanced, as shown by some liquidity in local debt and equity markets and the existence of some form of market exchange and regulatory body.

Jobless Claims

New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing or decreasing trend suggests either a deteriorating or improving labor market. The four-week moving average of new claims smoothes out weekly volatility.

Jobless claims are an easy way to gauge the strength of the job market. The fewer people filing for unemployment benefits, the more have jobs, and that tells investors a great deal about the economy. Nearly every job comes with an income that gives a household spending power. Spending greases the wheels of the economy and keeps it growing, so a stronger job market generates a healthier economy.

There's a downside to it, though. Unemployment claims, and therefore the number of job seekers, can fall to such a low level that businesses have a tough time finding new workers. They might have to pay overtime wages to current staff, use higher wages to lure people from other jobs, and in general spend more on labor costs because of a shortage of workers. This leads to wage inflation, which is bad news for the stock and bond markets. Federal Reserve officials are always on the look-out for inflationary pressures.

Emerging markets generally do not have the level of market efficiency and strict standards in accounting and securities regulation to be on par with advanced economies such as the United States, Europe and Japan, but emerging markets will typically have a physical financial infrastructure including banks, a stock exchange and a unified currency.

Emerging markets are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems, currency volatility and limited equity opportunities. Many large companies may still be "state-run" or private. Also, local stock exchanges may not offer liquid markets for outside investors.

By tracking the number of jobless claims, investors can gain a sense of how tight, or how loose, the job market is. If wage inflation looks threatening, it's a good bet that interest rates will rise, bond and stock prices will fall, and the only investors in a good mood will be the ones who tracked jobless claims and adjusted their portfolios to anticipate these events.

Just remember, the lower the number of unemployment claims, the stronger the job market, and vice versa. They are reported Weekly