Event risk is starting to take its toll on US equities markets

Event risk is starting to take its toll on US equities markets. The major indices are sliding for the third day in a row as the US steps up its attacks on ISIS (along with a coalition of allies). In addition, the Treasury's new rules to curb tax inversion deals are hitting the healthcare sector (which has benefited most from the old rules). Headline risk seems to be causing investors some concern, with the VIX edging up above 14. While the volatility index is at its highest level since early August, it's still well below its historical average. On the other hand, the lesser known SKEW index just climbed to its highest level since 1998. SKEW, which measures far out-of-the-money option volatility, suggests investors are concerned about tail risk and are hedging against an extreme move in equities.