Market Action

• Stocks ended October posting some of their best monthly gains in years. 76% of reporting firms have surpassed their earnings expectations thus far in Q3 although sales figures continue to be held back by the strong dollar. It seems companies are on their way to post their first back-to-back earnings declines since 2009.
• Chinese reforms were littered across headlines this week. On Monday the government announced the removal of caps on deposit rates, opening up capital markets to additional competitive forces. On Thursday China announced the formal end of its one-child policy as the Fifth Plenum concluded. Analysts have long argued China needed to scrap the program given its poor demographics but doubts remain on whether it will lead to behavioral changes.
• In addition, the IMF gave a nod towards including the yuan into its Special Drawing Rights. Combined with the United States’ softened language on the yuan-dollar exchange rate it seems China is making headway towards attaining greater international presence in current markets.
• The U.S. announced preliminary estimates for Q3 GDP of 1.5%. The number slightly missed expectations and is a far cry from the close to 4% rate of Q2. Renewed concerns over economic weakness have strengthened advocates for maintaining zero-rates into 2016.
• Despite the worst trade data in years, lowered forecasts for economic growth and fears of a recession Japanese leaders maintain the current course is appropriate for the country. Renewed stimulus from monetary and fiscal authorities has been speculated for the past couple of months.
• The election of Justin Trudeau as the new Prime Minister of Canada marks a new turn in policy in for the country. The new leader has promised to run deficits for 4 years to revitalize an economy struggling with the crash in energy prices.

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