U.S. Markets: Stocks posted their largest weekly gain since April, despite the lack of a clear winner – during the week - from the presidential election.  With Democrat front-runner Joe Biden appearing to have the clearest path to victory and Republicans likely to retain control of the Senate, investors began to anticipate a possible “Goldilocks” scenario of additional fiscal stimulus but more limited tax increases than under the “blue wave” Democratic sweep that didn’t happen despite the predictions of many pollsters.  The Dow Jones Industrial Average surged over 1,800 points to 28,323 – a gain of 6.9%.  The technology-heavy NASDAQ Composite jumped 9.0%, retracing all of the last two week’s declines and then some.  By market cap, the large cap S&P 500 rose 7.3%, while the mid cap S&P 400 and small cap Russell 2000 gained 6.7% and 7.1%, respectively.

International Markets: Like the U.S. markets, international markets were also a sea of green this past week.  Canada’s TSX rose 4.5%, while the United Kingdom’s FTSE 100 added 6.0%.  On Europe’s mainland France’s CAC 40 and Germany’s DAX each rose 8.0%.  In Asia, China’s Shanghai Composite rose 2.7% and Japan’s Nikkei added 5.9%.  As grouped by Morgan Stanley Capital International, emerging markets finished the week up 7.2% and developed markets rose 7.9%.

Commodities: Precious metals joined the rally in the equities markets.  Gold rose 3.8% to $1951.70 per ounce, while Silver surged over 8.5% to $25.66.  Oil, likewise, finished the week to the upside.  West Texas Intermediate crude oil rose 3.8% to $37.14 per barrel.  The industrial metal copper, viewed by some analysts as a barometer of global economic health due to its wide variety of uses, finished the week up 3.5%.

U.S. Economic News: The number of Americans seeking first-time unemployment benefits fell slightly last week but remained near historic highs.  The Labor Department reported initial jobless claims fell by 7,000 to 751,000.  Economists had expected a more significant decline to 728,000.  After a steep drop off in new claims last summer, the rate of decline has slowed markedly.  Chief economist Ian Shepherdson of Pantheon Economics wrote in a note, “The trend in initial claims probably is now about flat — and still well above the 665,000 peak seen after the crash of 2008.”  The trend in continuing claims is improving, however.  The number of people already collecting state-provided benefits, known as continuing claims, dropped by 538,000 to a seasonally adjusted 7.29 million in the week ended Oct 24.  That’s a fresh pandemic low.

The U.S. added 638,000 jobs in October and the unemployment rate fell sharply, reflecting a surprising show of strength for the economy.  The Bureau of Labor Statistics reported the unemployment rate fell to a fresh pandemic low of 6.9% from 7.9% in September.  In the report, private-employment rose by 906,000, however a sharp decline in government employment pulled down the overall total.  The increase in hiring last month was largely concentrated in professional businesses, leisure and hospitality, and retail.  Hiring in October was strongest among white-collar companies in technology and other professional fields.  They added 208,000 jobs.  Bars and restaurants also created 192,000 jobs while hotels hired 34,000 workers.  Analysts warned clients not to get too optimistic following the report.  Economist Thomas Simons of Jefferies LLC wrote, “We should not expect to see anything nearly this strong in the months ahead, but it is encouraging nonetheless.”

Manufacturing activity grew at its fastest pace since the coronavirus pandemic began last month, according to the Institute for Supply Management (ISM).  The ISM index of manufacturers climbed to a two-year high of 59.3 in October—up 3.9 point from September.  The increase topped the 56.5 forecast of economists.  In the report, the gauge for new orders jumped to 67.9 from 60.2 — the highest reading since 2004.  The index for production also increased to 63 from 61.  In addition, employment turned positive for the first time in 14 months.  Overall, 15 of the 18 industries tracked by ISM reported growth last month.  Chief economist Gus Faucher of PNC Financial Services wrote in a note, “Manufacturing rebounded strongly with fewer restrictions on economic activity and stimulus efforts, but the path forward will be more difficult as the economy continues to cope with the pandemic.”

However, the rate of recovery slowed in the much larger services side of the U.S. economy after the recent rebound in coronavirus cases.  While still expanding, ISM reported its survey of non-manufacturing companies slipped to 56.6 in October from 57.8.  Of the 18 service industries tracked by ISM, 16 expanded in October.  The only two that contracted in October were entertainment and local and state government.  A gauge of output fell slightly, as did new orders, but both were still quite strong.  A measure of jobs and hiring, perhaps the most critical component of the survey, also declined.  The employment index dipped to 50.1% from 51.8%, but it remained above the key 50% level for the second month in a row.

International Economic News: The Canadian government said it would increase immigration into the country to support economic recovery and growth.  Under the 2021-2023 Immigration Levels Plan announced last week, the country aims to take in over 400,000 permanent residents every year, higher than the earlier immigration targets set.  “Immigration is essential to getting us through the pandemic, but also to our short-term economic recovery and our long-term economic growth,” said Marco E. L. Mendicino, Minister of Immigration, Refugees and Citizenship.  While Immigration, Refugees and Citizenship Canada (IRCC) continued to accept and process applications throughout the pandemic, the global travel restrictions and capacity constraints led to a shortfall in admissions over the last several months.

The Bank of England is pumping another £150 billion ($195 billion) into the UK economy after warning of a double-dip recession because of the coronavirus pandemic and an uncertain outlook because of Brexit.  The UK central bank said this week it would keep interest rates unchanged at a record low of 0.1% but would increase its purchases of UK government bonds to £875 billion ($1.1 trillion).  Restrictions introduced to tackle a rapid rise in Covid-19 cases would weigh on consumer spending to a greater extent than the bank projected in August, "leading to a decline in GDP" in the fourth quarter of this year, it added.

On Europe’s mainland, French President Emmanuel Macron has turned to international CEOs to promote France’s recovery plan aimed at saving jobs and pave the way for a greener, more competitive economy as the country is struggling amid the virus crisis.  Macron spoke with CEOs of eight major international groups in an effort to convince them that France is a relevant choice at times when they are looking into European countries’ economic strategies to decide where to invest.  Macron said his economic policies aim at making “our country stronger after the crisis than before.”  “We decided to have a very strong economic answer at the very beginning of the pandemic last spring" to save jobs and business, Macron said.  He then promoted the country's 100 billion-euro ($119 billion) plan, called “France Reboot," which includes 40 billion euros ($48 billion) from the EU recovery plan.

Germany’s disease control center reported a new daily record in coronavirus cases in the country this week.  The Robert Koch Institute said Saturday that Germany's states reported 23,300 new cases, surpassing the record of 21,506 set the day before, which was the first time the country had registered more than 20,000 daily cases.  Alarmed by the rapid rise in cases, Germany imposed significant new restrictions this week.  A four-week partial shutdown took effect on Monday, with bars, restaurants, leisure and sports facilities being closed and new contact restrictions imposed.  Germany has overall recorded 642,488 coronavirus infections since the start of the pandemic with 11,226 deaths.

In Asia, exports from China grew at their fastest pace in over a year and a half last month, while imports also rose as the world’s second largest economy continued its world-leading recovery.  Exports in October rose 11.4% from a year earlier, beating analysts’ expectations of a 9.3% increase and a further rise from a solid 9.9% increase in September.  The surge in exports pushed the trade surplus for October up to $58.44 billion—analysts had expected just a $46 billion surplus.  China’s trade surplus with the United States widened to $31.37 billion in October from $30.75 billion in September.  China’s exports have stayed largely resilient amid the Covid-19 global pandemic, as strong demand for medical supplies and reduced manufacturing capacity elsewhere worked in China’s favor.

A poll of economists reported Japan’s economy likely rebounded in the third quarter as global demand picked up.  Gross domestic product (GDP) is forecast to have grown an annualized 18.9% in July-September, the poll of economists showed, the fastest pace of growth on record since comparable data became available in 1980.  On a quarter-on-quarter basis, GDP is expected to have expanded 4.4% in the third quarter after it contracted 7.9% in the previous three months.  A return to growth would pull the world’s third-largest economy out of its worst postwar recession, but analysts say a rapid recovery like that seen in China is unlikely.  Shinichiro Kobayashi, senior economist at Mitsubishi UFJ Research and Consulting stated, “Although the economy has escaped from the worst period, the pace of recovery is slow as the economic activity remained low and capital spending continued to be weak.”

(Sources:  All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat, Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, CNBC, FactSet.)