The world economy is clearly causing the fundamentalists to flip-flop endlessly. They offer only opinions, and these are the times that will break the reasoning of men and try their very judgments. We have entered the phase where unless you comprehend capital flow analysis, you stand little chance of surviving the remaining years as we head into that fateful target of 2032. Whatever you may have thought was going to happen, may prove to be your undoing. This is not a period of opinion — it is something that will rewrite the analysis methodology for the next generation.

The week in review for July 11 has shown a continued trend of utter confusion. The vast majority who see the stock market only in terms of domestic earnings and fed watching have been befuddled. The overwhelming analysis has been bearish and this is precisely what is necessary to press high. The Dow lagged the S&P 500 but has now punched through the 2015 high. We have been warning that new highs in 2016 were on the horizon. However, our three main targets for resistance have been unchanged for the past 6 years — 18500, 23000, and 40,000. We finally closed on Friday at 18516.55. It has been a long-time coming.

Our models are still warning of a potential July high with September and then November as the next turning points. We now have a our longstanding Monthly Bullish which stopped the market in May of 2015 standing at 18352. We also have a Minor Monthly Bullish at 18289. This means we need to close above these numbers at the end of July to imply a continued rally into September. Failure to do so implies a retest of support one more time.

Meanwhile, gold was performing quite impressively after rising with the share market and the dollar, which ultimately will be required for a breakout regardless of the goldbug pretend analysts who have been preaching the same nonsense for decades without revision. We elected the first Daily Bearish and that warned the temp high was in place. Friday’s closing at 1327.40 was below important technical support at 1337, which is now resistance. But 1362 remains the key number for month-end closing.

Angela Merkel is now facing the reality that she is out the door after the Nice attack. She has finally admitted that she essentially invited terrorists into Germany, and thus to Europe. Her personal policy to boost her polls in the wake of her hard-line tactics on Greece has torn Europe to shreds. There is no EU dream when one leader can make a decision that rest of Europe has no say in and devastates their countries. This is precisely what Thatcher warned against — a political union by default. Merkel has shocked the political world after finally admitting that her own policy on refugees allowed extremists to invade Europe.

Tensions in Europe have exploded against the refugees and this is now even threatening European civil war. In Germany, the backlash against refugees has soared since Merkel opened the door to Middle Eastern and African migrants. There has been complete incompetence in screening who these people are and a huge number were just young males with no children, wives, or family. German women all over the country are being rapes. Girls are being raped even in swimming pools.

We are looking at the end of the euro. Now we have critical support at 10790 and 10705. Weekly closings below that level will signal the break of the euro ahead. With all the hype about BREXIT, it will prove to be the saving grace of Britain.

The British pound held our key levels even in the middle of a crisis panic. There is no real hope of a bull market now for the pound against the dollar, because the refugee crisis will still cause problems even for Britain. PM May has order an inquiry into Sharia law counts and if they are violating British human rights and equal justice for women. Such a clash in law can be very devastating. If migrants want to attempt to alter the country they move to, then they should not be allowed to enter. If they are trying to impose Sharia law in Britain, then they have no business being there. All one needs to do is look at those who refuse to adopt the language of the host state. They will never assimilate. All the Europeans who migrated to the USA adopted English and that allowed the melting pot to form. Go to Miami, often you need to speak Spanish to go to the store. Refusing to assimilate alters the culture and renders such people unemployable outside their enclave.

The resistance now in the pound against the greenback begins in the 143-144 level. Otherwise, ultimately, the pound will retest the 1985 low as we move closer to 2018.

Asian markets finished small mixed but is the end of what has been an impressive week for the Nikkei. Japan closing the day +0.7% and on the week closes +9%. From China we saw a host of economic data from marginal better growth (+6.7% against an expected +6.6%) and Retail Sales (for June) up 10.6% on the year. It really has been an exhausting week for many markets especially when seasonal activity is normally quite light. JPY has traded from 100 to over 106 this week so will look over the weekend on the closing Reversal numbers.

It has begun. The French port town of Calais will soon tear down the refugee camp known as the “Jungle,” says town’s mayor. He wants all migrants to be sent to Britain and out of his town. This is a radical step to expel the 6,000 asylum seekers currently living there who want to go to Britain.

Since Britain voted to exit the EU, they will not be under any further obligation to accept all these refugees that Germany unilaterally allowed in without a European vote. This is a direct response to the terror attack in Nice, France. There is now a demand that can be heard rising throughout Europe that any refugee charged with any crime whatsoever should be deported from Europe INSTANTLY. So it has begun.

Hollande is a socialist to the core; he claimed to hate the rich, yet spends taxpayers’ money like nobody else. He spends $14,500 per month for haircuts. Sorry, but they charge me $15 for a haircut and I give a $5 tip twice a month. I cannot imagine anyone ever spending that much to have their hair done monthly. Only a socialist would spend that much on nonsense.

COMMENT: Hi Marty,

I am in line with folks emptying ATMs in Turkey during a military coup attempt.

I can keep you updated.

CI

REPLY: Human Nature is the same all over the world

There is a military coup attempt to seize power from Erdogan, who may be the most unpopular head of state ever to hold office. Low flying jets and gunfire have been taking place in Ankara and bridges across Bosphorus in Istanbul are closed. We are hearing reports from clients there in Turkey.

The new British Finance Minister Philip Hammond was appointed as Chancellor of the Exchequer on July 13, 2016. Hammond is a welcome relief and has come out openly to question the policies of Draghi and Merkel. “The markets need calming signals. You need to know that we will do everything necessary to keep on track the economy,” Hammond said.

Hammond came out and stated that it is time to rethink the economic policy of his country, and, in reality, Europe. He stated rationally that the entire idea of austerity was the appropriate response to the financial crisis of 2008. However, Hammond stated bluntly that the world is in a completely different position today. Effectively, Hammond outright rejected the economic policies of Angela Merkel. What we are beginning to see is an economic revolution against the idea of Merkel’s austerity programs. From Italy and France, we are also hearing the same rebellion.

Theresa May became the new Prime Minister of Britain on Wednesday and formally met with the Queen to ask permission to lead her government. May is now embracing BREXIT as such members are dominating her cabinet and on top of that, May made the main Brexit campaigner Boris Johnson her foreign secretary. May is positioning Britain to exit the EU. This is fantastic news for Britain may survive rather than be dragged down by the collapse of the EU. This would be a restoration of economic sanity.

While the British pound will still move lower as the world economy implodes, forcing the dollar higher, the pound will survive compared to the euro which is off to the emergency room.

The Brits who thought staying in the EU was doable will gradually see the real crisis unfold. As the EU banking system is in shambles, they will quickly see that extracting Britain from the EU was the only viable option.

What is beginning to surface is that there has been a rift between Comey and the Obama Administration. Lynch is refusing to answer any question into Hillary’s emails before the House Judicial Committee. She claims it would be “inappropriate” for her to answer and tells them to talk to Comey. She said, “As attorney general, I am not able to provide any further comment on the facts or the substance of the investigation.” Since she has declined to indict Hillary, there is no longer an investigation. Even under the Freedom of Information Act, she must comply.

Lynch avoided every possible question. She managed to frustrate the committee like no other Attorney General in history. One member even said he missed Eric Holder. One member asked her, “Driving down the road, speed limit says 55, I’m doing 65. Have I broke the law?” Her arrogant reply was, “You would have to ask the Highway Patrol.” If she cannot answer even that question, she should be impeached from her position.

This is starting to demonstrate that Comey did not inform Lynch or Obama that he was going to air all the evidence and then claim no recommendation, because even if he did recommend an indictment, Lynch would never go against party politics. It is becoming clear that Comey aired the evidence because he knew that Lynch would never release anything and then point to his recommendation of no indictment. Comey was pulling a cover-your-ass move.

Lynch should be impeached, sanctioned, dismissed from her post and held in contempt of Congress.

Asia resumed its charge with a strong open in the Nikkei and never really looked back from there. Throughout the day the Nikkei made steady progress finally closing +1%. Hang Seng was also strong closing over 1% higher on the day. Shanghai was the lag index for the core closing down 0.2% but was off the days lows of -0.9%. JPY was one of the weakest currencies around today trading almost 106 -2% on the day.

In Europe dealers waited the BOE decision at midday stocks made ground on the back of a stronger Asia euphoria and a seemingly stable US session. The BoE kept rates unchanged despite rumours of a possible hike but once we saw the voting (8-1), it became clear who that “one” could have been. The Central Bank did however, hint at looser monetary policy next month however! GBP made ground as Theresa May named her government with many commenting the speed of the process is a sign of confidence. We also had a vote of confidence in Italy as the EU repeated its statement that any assistance relayed to the banks must adhere to the rules. With the exception of the FTSE all core European indices closed around 1% higher.

US markets were up over 1% before the cash market even opened. Stronger economic data helped but we see more major economic releases tomorrow. Many dealers were saying they had missed this rally and are reluctant to jump on board at these levels – if we see more supporting releases on Friday the decision will have to be made shortly after! VIX was last seen at 12.8 with Gold also having lost $20 intraday.

Bonds suffered as stocks rallied today, with US treasury curve steepening 5bp in the process. 2/10 closed 86.5bp with 10’s closing +6bp at 1.54%. In Germany 10’s gained 4.5bp to close -0.04%; closing the US/Germany spread at +158bp. Italy gained 1bp to close 1.21%, Greece 7.64% (-3bp), Turkey 8.83% (-12bp), Portugal 3.09% (+1bp) and UK Gilt 10yr at 0.79% (+5bp).