U.S. equities are braced for mid-terms
U.S. equities are braced for mid-terms and any early polling that provides clues as to the pace and style of governance in the U.S. for the next 2-years. A gridlock result with the House flipping to the Democrats remains the base case scenario, with divergence from that result likely determining the extent of post-election volatility in its wake. Appropriately, the VIX equity volatility index remains locked in near 20.0, which equates with its 50% retracement of the October swing. Asia rebounded somewhat from yesterday's losses on hotter China trade rhetoric, with the Japan N-225 +1.1% and HK Hang Seng +0.7%, though China's CSI 300 shed another 0.6%. Europe has mostly ducked for cover across the board, despite a decent round of German orders and Eurozone PMI, with the major bourses 0.5-1.0% lower. In the pharma sector, Eli Lilly rose 3.5% on a beat, while Mylan NV surged 10% following its better than expected results. The WSJ reported Foxconn of Taiwan is mulling bring Chinese engineers to Wisconsin due to a labor shortage. JOLTS job openings will be shrugged off later.