5 things to start your day

[Bloomberg]( Trudeau wins second term, Brexit rumbles on, and a big day for corporate news. Just enough Canadian Prime Minister Justin Trudeau has [won a second term](, securing enough seats to form a stable government with support from smaller parties. His Liberal Party’s progressive policies will likely continue with the backing of the New Democratic Party, giving the coalition an [11-seat majority]( in Parliament. Initial market reaction to the result has been relatively muted as the country’s economy [performed strongly]( under the first Trudeau administration. This again A [vote in Parliament today]( will let Prime Minister Boris Johnson know if he has any chance of getting his Brexit deal secured, and if it can be achieved ahead of the Oct. 31 deadline. The vote to allow the legislation for the country’s exit from the European Union to proceed is [scheduled for 7 p.m. London time](, and should that pass, Johnson has until Thursday to secure final approval in the House of Commons before it goes to the Lords. That progress is [far from certain](, so as usual with Brexit, there may be some volatility over the coming days. Sponsor Content by PIMCO Defensively Positioned for a Decelerating World PIMCO’s asset allocation experts believe that investors should emphasize quality and stay defensive as they position portfolios for a world of slower economic growth. [Watch video.](  Corporate news It is a mammoth day for earnings. UBS Group AG saw shares rise more than 2% after the bank reported a [stronger-than-expected performance]( from its wealth management unit. Coming up later (deep breath), UPS Inc., McDonald’s Corp., Procter & Gamble Co., Kimberly-Clark Corp., Whirlpool Corp., Lockheed Martin Corp., Harley-Davidson Inc., Snap Inc., Texas Instruments Inc. and Chipotle Mexican Grill Inc. are among the many, many companies announcing results.  Markets rise Overnight the MSCI Asia Pacific Excluding Japan Index [gained 0.4%]( as trade deal optimism was maintained by President Donald Trump’s comments that talks remain on track. Japanese markets were closed for a holiday. In Europe, the Stoxx 600 Index was 0.1% higher by 5:50 a.m. Eastern Time as investors digested earnings in the region. S&P 500 futures [pointed to a flat open](, the 10-year Treasury yield was at 1.780% and gold a little higher. Coming up… Existing U.S. home sales data for September is published at 10:00 a.m., with the Richmond Fed manufacturing index released at the same time. Russian President Vladimir Putin and Turkish leader Recep Tayyip Erdogan [meet in Sochi today](, with the fate of Syria’s Kurds possibly decided by the talks. The top U.S. diplomat to Ukraine, William Taylor, will [testify today in the House](, and his text message exchanges with Gordon Sondland, the U.S. ambassador to the European Union, will form a crucial part of the inquiry. What we've been reading This is what's caught our eye over the last 24 hours. - Emerging markets are the next [asset bubble](. - China’s central bank [boosts liquidity]( ahead of tax payment surge. - Three words, 11 million jobs: Draghi’s [euro-area economic legacy](. - London [investment bankers charged]( in insider-trading ring. - Half the world’s banks are [too weak to survive a downturn](, McKinsey says. - U.S. air quality was improving, now [it is getting worse](. - [Plasma guns firing supersonic jets of ionized gas]( for controlled nuclear fusion. And finally, here’s what Joe's interested in this morning You can think of leverage in two ways. The first is borrowing money to purchase "safe" assets in order to turn modest returns into potentially mammoth returns. That's essentially what the housing bubble was all about. The second is to take modest equity positions in long-shot bets with asymmetrical returns. That's what the VC industry is all about. Make a bunch of small investments, and hope that one of them turns out to be Facebook. The post-crisis era has emphasized the second form of leverage over the first, at least in pop culture. Whereas Flip This House was a mega hit in the early 2000s, the modern version is Shark Tank, where aspiring billionaires pitch their vision for the next iPod or Spanx. While the media has valorized startup culture over the past decade, it's important to see where the leverage lies. Most startups fail. Years of an employee's life can go down the drain on a mission that goes nowhere with no payoff. From pre- to post-crisis we've essentially seen leverage risk transferred outward to the individual employee, who's been encouraged to take on student debt, move to an expensive city, get up at 4 a.m., and "hustle" in the hope for a big (but highly unlikely) score. Unlike VCs, who can spread their bets around multiple startups, most individuals are all-in on one. And now we see the downside, as more and more employees of these companies find themselves underwater on their stock options, with their very jobs at risk. Which brings us to WeWork, which has just about every form of leverage rolled up into one. They have debt (a traditional form of leverage). They have bank-like duration mismatch (short-term tenants and a few long-term leases). And a few months ago, they had numerous employees who spent years of their lives there who thought they were on the verge of multi-millionaire status, and who will now probably get wiped out in the latest [Softbank bailout](. With the rise of startups and all that entails, leverage didn't go away. It just got pushed out to the individual level in the form of extreme financial and career risk. 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