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Biden leads as U.S. election nears. Markets are bracing for a crucial week. And the world's top hedge fund soars 275%.

Final Stretch

Democrat Joe Biden leads President Donald Trump in a series of polls released Sunday, remaining ahead nationally and in battleground U.S. states — though some races remain extremely close. The New York Times and Siena College showed Biden ahead in Pennsylvania, Florida, Arizona and Wisconsin, all key swing states that Trump carried in 2016. An ABC/Washington Post poll showed Trump narrowly ahead in Florida, 50%-48%. The same poll had Biden well ahead — 51%-44% — in Pennsylvania. As the candidates spend the final days of the race crisscrossing those key battleground states, over 93 million people have already cast their ballots, almost 68% of the 2016 total.

Market Open

Stocks will look to rebound from a tech-induced sell-off in Asia as traders brace for a crucial week that could set the tone for the remainder of the year, with the U.S. election and a Federal Reserve policy meeting. Equity futures in Japan and Australia ended Friday higher, indicating the Asia-Pacific region can start November on the front foot following two months of losses for global equities. The pound slipped as increased restrictions in England aimed at controlling the coronavirus overshadowed signs of progress on Brexit. Traders will later watch the release of data on Chinese manufacturing for any clues on the trajectory of the recovery there.

Fauci Slammed

The White House slammed Anthony Fauci after the nation's leading infectious disease expert ramped up criticism of the Trump administration's handling of the coronavirus pandemic. Fauci, director of the National Institute of Allergy and Infectious Diseases, told the Washington Post that the U.S. is "in for a whole lot of hurt" from the Covid-19 pandemic, and forecast a rising death toll over the winter. The White House said Fauci was "playing politics" just days before the election. U.S. cases have slowed as the country's infection rate stands above 9 million; England's partial lockdown might have to be extended. Meanwhile, here's the inside story of how Trump's dismissal of Covid paved the way to the White House outbreak.  

'Land of Promise'

Facing the biggest anti-government protests in years, King Maha Vajiralongkorn called Thailand "the land of compromise" in a rare public comment after months of demonstrations in the Southeast Asian nation. The Thai monarch was responding to a question by the U.K.'s Channel 4 News on whether there's room for compromise amid the protests as he met with supporters in a walkabout. More than 62% of participants in a poll published a week ago by Bangkok's Suan Dusit University said discontent with Prime Minister Prayuth Chan-Ocha was a key reason for the recent demonstrations. Protesters are also pushing for a more democratic constitution and more accountability for the king.

Long Winter Ahead

As troops in the Himalayas hunker down for the brutal winter, the outcome of the worst clashes in decades is becoming clear: China has pushed further into territory once patrolled exclusively by India. And while usually both sides draw down troops during the winter months, this year soldiers holding critical heights are in make-shift shelters. A summer of fighting saw India lose control over about 300 square kilometers (115 square miles) of land along the disputed mountainous terrain, according to Indian officials familiar with the situation. At stake for both sides is control over strategic outposts like the Karakoram Pass, which runs from India into China's Xinjiang region. A hold on the ancient Silk Road route could potentially give open up trade corridors into Central Asian countries that are key to the success of President Xi Jinping's Belt and Road Initiative.

What We've Been Reading

This is what's caught our eye over the past 24 hours:

And finally, here's what Tracy's interested in today

It's an annual Halloween tradition at Bloomberg to put together a list of the scariest charts on Wall Street. The below, from Michael Purves at Tallbacken Capital Advisors, gets my vote. It shows the rolling spread between SPX-implied volatility for options expiring in one week versus two weeks, basically a measure of real volatility in the market. What's scary about the chart isn't the current spread of about 3.5 points, which as Purves points out is pretty normal ahead of big political events such as Brexit or Donald Trump's election victory in 2016. What's scary is that the big jumps in real volatility in recent years have coincided with spasms in market structure instead of actual economic events or historic political shifts. Back in early 2018, two tiny volatility products fueled a sell-off in stocks, for instance. And in March of this year, the U.S. Treasury market briefly seized up as levered trades exploded. 



As Purves puts it, the chart highlights "how financialized the markets have become" after years of low interest rates. What's so disturbing about that state of affairs is that these market structure "happenings" don't necessarily need a fundamental catalyst or a big risk event like, say, a contested election result, to set them off. They can happen at any time. 

You can follow Tracy Alloway on Twitter at @tracyalloway.


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