The central banks have risked it all and lost. They have reached the point of no return. The Fed decided not to raise rates, which are desperately needed to prevent a collapse in pensions and insurance companies, and merely froze like a deer in headlights. The superficial analysts who think lower rates are good for the stock market are blinded by their own stupidity. The theory that low rates will encourage people to buy stocks is brain-dead and demonstrates that these people are incapable of comprehending how the economy functions.

We have taken simple correlations of interest rates and the stock market and discovered something in plain sight. The market has NEVER peaked with the same level of interest rates in history. WHY? It is not the empirical level of interest rates that matters, rather it is the rate of interest that is a factor of expected inflation. Therefore, if the expectation of gain is greater than the rate of interest, there is profit in borrowing. If the expectation is below the rate of interest, then the rate must decline. Consequently, assuming that simply raising or lowering rates will reverse the trend is primitive and lacks any analysis whatsoever.

The central banks have gone way too far and are now trapped. They do not have the ability to influence the economy anymore for they are loaded with government debt that will default. They have converted government bonds into one of the riskiest asset classes of all time.

More and more of our institutional clients (pensions & insurance) are bailing out of government bonds and switching to corporate. Why? No major corporate debt becomes worthless. One was audited by S&P and they remarked that they were taking on more risk. They conducted their own studies to verify what we have been saying and found no corporate defaults, but countless government defaults and partial defaults. In the few rare cases of a default, you receive a payout after liquidation. In the case of government debt, you have something to frame and that is all. Government debt is unsecured and since they have the guns and the armies, you cannot force them to pay anything.

Some insurance companies have come out and stated publicly that they are selling government debt and moving to corporate. Swiss Re AG moved more of its investments into corporate debt as conceded by its chief investment officer who said, “If you’re looking for a bubble, here you go…With government bonds, you’re not adequately compensated for the risk you’re taking.”

We have been in meetings with pension funds. Here too, we find the same response. They are starting to shift. Government debt has become a time bomb. A simple 1% rate hike will be devastating to bond values and blow the budgets of government sky-high.

The European Central Bank has created a total mess of the European banking system. Negative interest rates have been devastating. Now in the Middle East, the National Bank of Abu Dhabi and First Gulf Bank PJSC are exploring a potential merger to create the largest lender in the Middle East. But forget the fluff — banks do not merge unless there is a problem. Rumors behind the curtain say First Gulf Bank PJSC is in trouble.

Negative interest rates have destroyed much of the economy. The rise in regulations and taxes have combined to create the weakest recovery in the United States post-Great Depression. This is not going to end nicely. It is only a matter of time before the general public begins to see the real crisis, and then everything will explode in their faces.

The weekend BREXIT poll shaped markets as soon as Asia opened today. The GBP bounced 1% from the open while global equity markets followed with DAX, CAC, Nikkei, Shanghai all over 2% better than the Friday close. Treasuries and Gold saw profit-taking as we saw a 1% decline from the opening bell. Japan did release Im/Export figures prior to the market open but despite the disappointing Export number (-10.4% estimated the release was -11.3%) – Imports were as forecast -13.8% and so we were back to focusing on Thursdays BREXIT vote in the UK. By the close of business all core markets were positive with the major gains seen in the Nikkei (+2.3%), HSI (+1.7%) and the ASX returning +1.8% on the day.Europe followed Asia’s lead with futures opening 2.5% better from the Friday close. All core indices produced around 3.25% returns for the day in anticipation that the UK remains within Europe, come the vote on Thursday. We saw impressive performances across the board from banks, retailers and construction companies to Insurance and travel all in anticipation of a “remain” vote. Many quote that so much has been priced-in is there anything left? Buy the rumor sell the news has always served well in the past!

The global impetus swayed into the states also resulting in triple digit gains for the DOW and the other major indices. We did close off the morning euphoric highs as the day wore on but a convincing day none the less. With gains of around 0.7% across the board the mood was more reflective than driven However, we do have Janet Yellen address congress Tuesday but being so close to the recent FED announcement it is unlikely we will hear any new news. The major event this week continues to focus on Thursdays BREXIT vote as they will use the US Dollar to hedge risks, liquidity and leverage.

GBP was the major mover, as you would expect, today reaching highs of 1.47+ a 2.25% rally. The interesting move however was that JPY continues to be bid. We see did early in the session attempts at the 105 handle but these were rejected within 25 tics and late this evening we are looking at a 103 handle.

In the Treasury market we saw curve steepening as stocks rallied. 2/10’s closed +98bpwith 10’s having lost 6bp closing at 1.67%. In Germany 10yr Bund also gave up ground closing 0.06%; closing the US/Bund spread at 161bp. Italy closed 1.51% (-3bp), Greece 7.94% (-12bp), Turkey 9.49% (-6bp), Portugal 3.29% -10bp) and UK Gilts at 1.14% (+3bp)

Most people have never heard of the real man behind the curtain who inspired the whole idea of the European Union, probably because his books are only in German. They certainly do not realize that his idea was to stop the inbreeding within Europe by mixing people and races to create the United States of Europe. The idea was to intermarry all Europeans to end nationality.

Richard Coudenhove-Kalergi (1894-1972), was of noble birth and was very much an elitist. His father, Heinrich, was an anti-Semite who attributed religious intolerance to the Jews and said they were a separate race. His views perhaps influenced Hitler. Richard is the real father of the European Union, for his efforts go back to 1922 when he founded in Vienna the “Pan Europe” movement.

Indeed, his idea was partially supported by the fact that the people of Europe migrated to the United States and intermarried to create America. He believed the same thing was necessary for Europe. This is the idea behind German Finance Minister Schäuble’s outrageous statement that Europe needs more refugee to immigrate, otherwise Europe will “degenerate into [an] inbred” continent.

This is right out of Coudenhove-Kalergi whose argument captured many elitists and spread from Austria to most other countries within Europe. You have to keep in mind that the royal families were engaged in such a policy for themselves. The English monarch was related to the German, Russian, Dutch, and Spanish monarchs where they were all intermarried under the theory of creating political stability, which failed to work.

In 1938, Coudenhove-Kalergi fled from the Nazi regime and sought asylum in Switzerland before moving to the United States. Many people have heard of Hitler and his idea of a master race of pure blood. What they do not realize is that this idea was the opposite of Coudenhove-Kalergi’s proposal, which is why he had to flee.  Coudenhove-Kalergi marketed his vision to breed Europeans into a single race and managed to gain political support for his idea based, in part, on the melting pot of America. However, he would take it even further.

On his return to Europe, Coudenhove-Kalergi was no doubt the initiator of the Parliamentary Union, the concept behind the Treaty of Rome, and the evolution of the euro to attempt to merge Europe into the federalization process. Finally, during 1966, Coudenhove-Kalergi submitted before the X. Vienna Paneuropean Congress a memorandum for the future of Europe, which is still regarded as an important guideline to this day. Coudenhove-Kalergi managed to become an adviser to Charles de Gaulle, Georges Pompidou, Konrad Adenauer, and Bruno Kreisky.

The sudden advocacy of Schäuble for German women to marry refugees to mix the races has a rather disturbing link to Coudenhove-Kalergi. In his book “Praktischer Idealismus” (Practical Idealism), he wrote:

The man of the future will be of mixed race. Today’s races and classes will gradually disappear owing to the vanishing of space, time, and prejudice. The Eurasian-Negroid race of the future, similar in its appearance to the Ancient Egyptians, will replace the diversity of peoples with a diversity of individuals. …

Instead of destroying European Jewry, Europe, against its own will, refined and educated this people into a future leader-nation through this artificial selection process. No wonder that this people, that escaped Ghetto-Prison, developed into a spiritual nobility of Europe. Therefore a gracious Providence provided Europe with a new race of nobility by the Grace of Spirit. This happened at the moment when Europe’s feudal aristocracy became dilapidated, and thanks to Jewish emancipation.

id/Coudenhove-Kalergi 1925, pp. 20, 23, 50

There is a lot more going on behind the curtain than people realize. The Pan-European idea will fail. They are missing the very element that made it work in the United States — a single language. You will not see Scottish men marrying Italian women, generally because of language. Without a single language, Coudenhove-Kalergi’s idea of simply breeding all the races together to end war is rather absurd.

There have always been those who see themselves as playing the role of God. Those people should ask Australians who tried to play God by bringing in one species to combat another, thereby wiping out some of their indigenous life and replacing it with things with no natural predator. It is hard to play God when you lack the quality of being all-knowing.

There is disturbing opinion circulating that Jo Cox may have been assassinated to prevent a BREXIT vote. Many are starting to believe there is a conspiracy plot to ensure a sympathy vote to remain within the EU. People are pointing to the familiar tool of assassination often used to achieve political agendas.

Of course, there is the Kennedy assassination that many believe was orchestrated to create a sympathy vote to start the Vietnam War. In fact, Kennedy vetoed such a measure, but that is not on point. A recent assassination that was on point, occurred on September 10, 2003. Anna Lindh (1957–2003), was a Swedish Social Democratic politician and member of Parliament from 1982 to 1985 and 1998 to 2003. Anna was elevated to minister for foreign affairs by Prime Minister Göran Persson in 1998. She was widely considered to be his successor as party chairman and there was much hope that she would become prime minister.

Lindh was a supporter of adopting the euro and became the face of joining the new EU. On the afternoon of September 10, 2003, Lindh was attacked in Stockholm with a knife while shopping in the ladies’ section of the Nordiska Kompaniet department store. Lindh was to appear on a televised debate later that night on the referendum about Sweden’s adoption of the euro. At the time of the attack, Lindh was not protected by bodyguards from the Swedish Security Service. She died from her wounds.

Then there is the unsolved assassination of Prime Minister Olof Palme in 1986. Palme was accused of being anti-EU and more pro-Soviet. His assassination did clear the way for Sweden to join the EU, which was presented in the Swedish European Union membership referendum of 1994 that gained only a 52% majority.

While Silvio Berlusconi was not assassinated, the EU did stage a coup against him because he wanted to take Italy out of the euro. Then there was the Greek Prime Minister Georgios Andreas Papandreou who wanted the Greek people to vote on any bailout to stay in the euro. He was told by Brussels there would be no referendum.

The recent Austrian election was rigged, as mailed-in ballots decided the closest race in history. As the days have passed, the results of the Austrian presidential election have become far more suspicious. The official results claimed that far-left candidate Alexander Van der Bellen defeated Norbert Hofer from the Freedom Party of Austria by just 31,000 votes (50.35% to 49.65%). Again, the fate of the EU hung in the balance. In major polls, the provisional result in voting released in the last days before the election showed Hofer with the clear majority of public support over his rival after coming in at 53% to 47%.

The Scottish youth called their referendum to leave the UK a “REVOLUTION” and felt very betrayed by what they called the “over-65 crowd” who just want their pension checks from London. It is clear that when people are voting with paper ballots, the vote can easily be rigged. There were countless photos of how they committed outright fraud to ensure there would be no “yes” vote.

COMMENT: Marty; Nobody paid any attention to BREXIT but you. Now Everyone is talking about how it will be a big deal for the world economy. Guess they took the little bus to school. lol

COMMENT: Your BREXIT Report is brilliant! Sad. But Brilliant!

QUESTION: Martin

Happy Fathers Day!!!

As you have noted on many occasions the possibility of Britain leaving is almost NILL. So that being said how should your subscribers positions themselves ahead of the “stay” vote.

Regards,

ANSWER: The propaganda is pervasive that staying in the EU is good and leaving is bad. So the markets should first respond in that manner with the pound up. However, this is a total disaster. Britain cannot save the EU, for it is doomed by its own abusive regulation. It is as Draconian as communism and will fail for the same reason. The majority will be wrong, as always, for that is the fuel that propels the markets. The resistance on the pound basis cash will stand at 14740 and we need a closing above that to suggest there could be any sustainable rally.

It appears we may see some serious trouble unfold after the vote. It seems that unless the vote exceeds 60%, they will rig the votes, which is easy to do with paper ballots. Only a computer ballot would be more difficult to fake as everyone could see the votes as they register. That is the way it should be, but of course, that deprives them of the power to determine what they want the people to say.

If everyone in Britain were to vote on whether to kill the pound and adopt the euro, I seriously doubt there would be more than a 10% vote for such a decision to end the pound. Many say if they had to end the pound, they would prefer the dollar to the euro. Yet, this is the very essence of BREXIT. The pound cannot survive under the terms of the EU. If the markets go against Brussels, they will outlaw short selling and that will then apply to Britain. Yet the banks are telling their employees to vote to stay. This is a really stupid political directive for the banks will suffer in the end.

A critical Monthly Bearish Reversal lies at 13550 in the futures. We have Quarterly Bearish Reversals at 14275 and 14225. Last Thursday we closed at 14216, and the rally into Friday closed at 14360. Clearly, we are at the edge here and we can see technically the pound appears rather weak.

This appears to be playing into the currency crisis on the horizon. The economics are terrible. We have NATO trying to provoke a war with Russia because Europe needs war to distract the people from a completely failed economy. The ECB is trapped with no possible means of “stimulating” any recovery. It appears that Britain’s best day may be behind.

We need a weekly closing above 14535, a monthly closing above 14675, and a quarterly closing above 14820. Without all three, sorry, the pound will only press lower into the future, which appears to be destined for a major low off in 2018.

The FTSE share market index for London has long reflected the problem with the EU. Despite the lies and propaganda that the EU has been some great miracle for Britain, the low in the FTSE took place in 1974. There was a fierce bear market in the FTSE that fell into a sharp low AFTER joining the EU. This reflects more regulation and the oppressive external government imposed upon the British. It was actually Margaret Thatcher who reversed the fortunes for Britain, and we see the share market exploded with her economic reforms, but that would be stopped by Tony Blair. The rally that unfolded in the FTSE lasted for 25 years until 1999. That is when Gordon Brown sold the British gold reserves. Tony Blair became Prime Minister in 1997 until 2007. That shift to Labour resulted in the stagnation of the British economy that was reflected within the price action of the FTSE, which has never been able to close higher than it did in 1999.

The FTSE made a new intraday high in 2015, however, it has not been able to close above the 1999 high for the past 17 years. These two 8.6-year cycle durations warn that we should begin to breakout to the upside during this next cycle, but why is the real question. The answer brings into focus the primary mover behind such a rally. This implies that the pound will FALL sharply. That may indeed be the result of Britain surrendering its independence to be ruled by the EU where it has lost 72 objections every time so far. The FTSE will rally as the only domestic means of a hedge against the government. The stock market will rise simply because people will park money in equity rather than banks or trust the currency. If Britain does not leave the EU, its currency will collapse as will the euro.

The EU even stole the British waters away from their fisherman. Continental Europe has looked down upon Britain in every private meeting I have ever had. Britain has been seen as an outsider, and resentment has run rather deep simply because English became the main language in world commerce. Even in air traffic control, pilots flying internationally must speak English.

We can see the technical resistance stands at 65330 and technical support lies at 49751. This pattern is a holding pattern of stagnation. It has reflected the overall economic decline Britain has endured ever since joining the EU back in 1973.

There is little hope that Britain can be saved from the EU. The vote is likely to be fixed, because if Britain left, the EU would collapse. There is far too much at stake for career politicians. In such conditions, there is no limit to their machinations behind the curtain. I will reveal some of that this week as we approach Britain’s final hour of independence.

Europe is experiencing a very cold summer. Meanwhile, believe it or not, there was a dusting of snow reported at Mauna Kea in Hawaii, according to the National Weather Service, on June 14. We are heading into, not global warming, but a natural cycle of climate change that comes about every 300 years or so. Sorry, I did prefer the global warming. I have never been a fan of cold or digging myself out from snow.

The Battle of the Thames developed with Bob Geldof , the Irish singer and political activist, decided to attack Nigel Farage to support surrendering British sovereignty to Brussels. It turned out to be a real joke. Rich musicians always pretend to be for the poor but do not hand them all their wealth. As long as they advocate that other people should surrender their earnings, well, that is good form. Of course, Geldof may be an over-the-hill song writer, but he knows absolutely nothing about economics and what is at stake in Europe. It is a shame people like this try to influence others, yet are clueless about the agenda they pretend to support mindlessly. It would be rather absurd if I tried to be an actor, no less a singer, but singers and actors pretend to be economists all the time.