From the outset, inside sources have relayed that Cruz is very disliked behind the curtain. His entire strategy from the beginning has been to be the last man standing against Trump. Cruz assumes the party will install him despite the fact that most really dislike him.

All the exit polls show that more than half of the voters in this Republican primary are merely “dissatisfied” with government, compared to one-third who are outright “angry.” The voters in Wisconsin seem to be in Never-never Land, and, for the most part, they want someone with experience. That is how the USA will implode for nobody in the establishment gives a shit about the people; this is all about them. So that experienced candidate will be a vote for more of the same.

Nevertheless, we have to understand that we have two major risks in politics. First, the establishment may not select Trump or Cruz. If they can simply defeat Trump on the first ballot then all bets are off and they can nominate someone who did not bother to run like Romney.

If Trump does not get the Republican nomination, then if he is smart, he could get on the ballot as a Libertarian since they have already done the heavy lifting. Alternatively, Trump could get on the ballot in a few states and win those but not the general election. This could prevent either the Republicans or Democrats from winning enough votes for the Electoral College whom really votes for president.

If no one wins enough Electoral College votes, it will be the ultimate demonstration that we do not live in a democracy by any measure. A failure for any candidate to win the required votes at the Electoral College means the current establishment on Capitol Hill gets to select the next president.

The election of 1824 is an example of how the establishment can do as they like. Andrew Jackson won 153,544 popular votes to John Quincy Adams won 108,8740 popular votes. Neither won the Electoral College so Congress picked the president and Jackson lost. When Jackson finally became president in the 1828 election. Jackson did two major things that were against the establishment. First, he actually paid down the national debt. President Andrew Jackson reported that the United States would be debt-free as of January 1, 1835. This marked the first and only time that the United States, or any other major nation in history, had ever been free from debt.

Jackson declared: “Let us commemorate the payment of the public debt as an event that gives us increased power as a nation and reflects luster on our Federal Union.”

In the course of this objective, Jackson generally opposed bills that allocated taxpayer money for “internal improvements” or what we call “pork barrel spending” today. In the 1863 popular story “The Children of the Public,” Edward Everett Hale used the term “pork barrel” as a homely metaphor for any form of public spending to the citizenry. However, after the American Civil War, the term’s usage turned derogatory.

Andrew Jackson despised the Second Bank of the United States, not because it held too much power over the economy, but because his political enemies controlled it. Jackson set out to destroy the bank for it had provided loans to his political rivals. The bank’s president, Nicholas Biddle (1786-1844), routinely used lending practices for political gain, including using bank funds to publish newspaper attacks on opponents as some money-center trading banks in NY engage in to this day. Biddle openly favored the National Republicans (later to become the Whig Party), many of whom benefited financially from Biddle’s favor. Prominent National Republicans were Congressmen Daniel Webster (who was on the bank’s payroll as a legal counsel) and of course Jackson’s archenemy, Henry Clay, who was his opponent in the 1832 presidential election.

It is ironic that New York bankers today own Cruz and Hillary. Both engage in methods to fund their elections that are not much different from the actions of Biddle. Those who want to see the Federal Reserve eliminated, citing what Jackson had done, fail to understand what really took place. The destruction of the Second Bank of the United States resulted in the Panic of 1837, the sovereign debt defaults of states in the 1840s, and a severe economic decline that set the stage for the Civil War. The parallel to today is not the Federal Reserve with political power, but the New York bankers.

Our models are starting to highlight Panic Cycles hitting in August. This will start just after the Republican Convention. If we go to the extreme in this collapse of confidence in government, then we may see a repeat of the 1828 election. However, we are also in a battle against the establishment and Trump is closer to Andrew Jackson than anyone else running for office. So the future looks like a political war ahead that is going to turn everything upside down. The establishment is focused on defeating Trump; they think everyone will go back to watching soap operas and sports and they can rob us and our children blind as always.

Obama is calling for worldwide tax reform as is his socialist IMF candidate Christine Lagarde. “There is no doubt that the problem of global tax avoidance generally is a huge problem,” Obama said. This whole issue focuses on people not paying whatever the government demands. It never addresses government squandering money. Obama went on to say, “We shouldn’t make it legal to engage in transactions just to avoid taxes.” He further added that it is “the basic principle of making sure everyone pays their fair share.” These statements are dishonest and Orwellian, and it is frightening for the less educated cheers for them.

If one of your parents were American and you were born in Canada and paid taxes there your whole life, the IRS could still come after you because all Americans owe taxes to Washington even if you never lived here or used any services to justify paying your “fair share.” This statement is so twisted because the government sees whatever you earn as theirs and they want a share of your earnings regardless if it is fair or not. They rob us of the money we pay into Social Security and never allow the average person to earn money for retirement. The “rich” get rich from investments; not wages. They rob citizens of their money and then promise to provide future payments that are never invested anything.

When will the ignorant wake-up?

The majority of voters who went to the polls in the Netherlands on Wednesday to express their opinion on the proposed agreement between the EU and Kiev have rejected it. The results of the vote show that 61% of the Dutch are against the agreement to strengthen ties with Ukraine. This is showing that the people are not in sync with the politicians in Brussels. It is also showing that people in every country do resonate with blocking immigration whenever the economy turns down (e.g. Trump in the USA). Is this a trend that will manifest in Britain in June? We are showing targets around June for turning points.

It really felt like a day of two-halves today after a lack-lustre Asian session and a weak European morning. The Nikkei was again a talking point (or at least the JPY was) but Shanghai too saw a bit of volatility as we flirted toward the 3k level early afternoon only to recover by the close. Better than expected PMI in China helped sentiment but many reported they are keen to see tonight’s FED minutes and anxious to see the BOJ’s reaction to recent currency moves. In late US trading we see China 300 and HSI futures up 0.65 from their earlier cash closes.

Europe opened weak and remainder that way until the close. At one stage we saw the DAX, CAC and IBEX all off around -0.5%; by mid-morning trading only to be reversed upon the Oil Inventories release. Given the oil rally all core European markets performed well to reverse all losses and gain on the day. Upon the Inventories release markets took a renewed lease of life and we saw encouraging rallies across many indices. The result of this is an indication of how nervous stocks market are! All core Indices closed the day.

Although, the US Indices had already bounced from the lows and ahead of the Minutes release after the initial wobble it was back to the races again. We saw from several sources (within the Minutes) that the wait and see mode is “prudent”! We heard that the future path (of monetary policy) could be lower than forecasted! Also, upon release and given “almost” full employment, the market starts to price zero chance for April and less even out to Autumn until any movement. One interesting discussion we learned was about future US Dollar strength. Here at least they are aware but will probably be less equipped as market realize there is no capable competitor. DOW, NASDAQ and the broader S+P saw renewed vigour into the close setting the foundation for a healthy Asian/European sessions tomorrow.
Interesting we saw a 200 point range in the DOW today but remains within the 17420/17845 boundaries we expressed yesterday. Many analysis will start to talk of a Pennant soon and the likely breakout to be expected!

Given the 5% rally in the Oil price today, it was no surprise we saw a 2% rally in the Russian Rouble. The JPY was the other top currency talk given the Yen sudden expectation of a 109 breach after the Minutes release, this puts it at almost 18 month highs. GBP was down 1% in London morning but had recovered much of that by the close due to the trade being heavily crowded.

Fixed-Income markets were weaker across the board despite early stock weakness. The US Treasury 10yr traded within a very narrow 4bp range of between 1.72 and 1.76% all day. Early weakness was held after the Minutes release but did start to drift into the close given the performance of stocks. Closing at 1.75% closes the 2/10 0.5bp steeper at 101bp. German 10yr Bund closes 0.12% and puts US/Germany at +163bp. Italy 10yr closed 1.28% (+1bp), Greece 8.80% (+1bp), Turkey 9.68% (+2bp) and Gilts closed 1.38% (u/c).

The Dow failed to elect any Monthly or Quarterly Bullish Reversals. It did elect two of the three Weekly Bullish Reversals, leaving the 3rd intact. We provided these numbers previously, warning not to expect follow-through without electing all three.

“In the Dow, we have a cluster of Weekly Bullish Reversals starting at 17680, 17750, and 17846. You will notice that the top of the Downtrend Line stands at 17651.03. It appears that the Dow should create a temp high and we have a Directional Change Next Week. A closing today BELOW 17420 should signal a drop to retest support. I would expect a follow through to the upside only if we close above 17856 level.”

We also warned that only a closing above the 17750 reversal would see little follow-through into the next week. Why would we say such a thing? April is a turning point and so is June, and then when we get to August we have the Republican Convention, so it does not appear that we are in a runaway trend to the upside yet. We are preparing to breakout but not quite ready for prime time.

Moreover, the weekly array also shows a choppy trend for the weeks of the 11th and 25th and volatility begins to rise in May. So once again, a clear-sailing trend does not appear to be emerging just yet.

Nevertheless, even technically, the Dow is penetrating resistance and attempting to muscle its way ahead, despite those yelling there will be a huge crash once again.

It does not appear that we are ready for complete liftoff until the first quarter of 2017. It appears that we are looking at a collapse in public confidence and that is what we need for liftoff in this shift from public to private confidence. The Panama Papers will help with time. All governments are corrupt. That is a foregone conclusion. The question remains, when will the general public reach the reality that government is not there to protect their future? Politicians only fill their own pockets and are no different than the communist leaders before 1989.

So support now lies at 17434 and 17120. Daily closings below these numbers will signal a near-term correction. Holding 17434 on a closing basis in any retest of support signals a revisit of the resistance. Only a weekly closing above 17846 will signal a retest of the major high. Do not expect a breakout until 2017.

The International Consortium of Investigative Journalists (ICIJ) has clearly targeted Putin, however, it is his aids rather than him personally who were revealed in the Panama Papers. The political agenda of ICIJ is called into question by this action. Icelandic Prime Minister Sigmundur David Gunnlaugsson resigned just two days after the papers were released. Reports say that 12 current or former heads of state are mentioned in the Panama Papers. Whom are they protecting? It will be very interesting since targeting Putin makes this more of a political plot.

Nevertheless, this is coming precisely in line with the other side of 2015.75, which we warned would prove to be the peak in government. This is playing directly into our model’s predicted cycle of a collapse in confidence in government (i.e. politicians). This collapse in confidence is truly the driving force behind Trump. This massive leak may have far more political implications than merely targeting rich people who have a secret stash.

To what extent will this leak alter politics in an era of rising middle-class discontent and declining living standards as socialism collapses? This leak is more likely to fuel further anger among those who blame politicians and see the corruption boiling to the surface. The journalists are really closet socialists who hope that this will inspire the public to hand more control to government. To them, this will support their theory that the middle class is carrying a disproportionate share of the burden in supporting a system that they feel is unfair because the rich have more.

They do not look at government and the corruption. Instead, they just want to blame the rich for having more than they do in a traditional Marxist view of the world. They do not bother to ask why government always has to raise taxes and cannot manage the economy. Imagine if someone managed your funds and lost whatever you gave them each month, blamed the bankers, and then asked you to give them more money to manage again. How many times would you keep giving them more money when they never produce a profit? The hedge funds and Wall Street own Hillary, yet they will never expose such connections or truly investigate her past. This illustrates that they too have a political agenda.

This revelation may actually backfire and produce far more political damage than just hunting the rich, which has been the ICIJ’s agenda. The ICIJ may have just contributed to the collapse of socialism, but they will never understand the consequences of their actions.

Federal Election Commission records show that hedge fund billionaire George Soros donated $343,400 to the Hillary Victory Fund and poured a whopping $7 million into Priorities USA, the Super Pac supporting Hillary to further her occupation of the Oval Office. Donald Sussman of Paloma Partners also gave $343,400 to the Hillary Victory Fund and donated $2.5 million to Priorities USA. The records show that James Simons, the billionaire founder of hedge fund Renaissance Technologies, delivered huge amounts to the Super Pac. Jay T. Snyder of HBJ Investments, a private equity firm, dropped over $300,000 in the Hillary Victory Fund as well. Many other hedge fund operators have also donated to Hillary’s campaign.

This demonstrates that Hillary is by no means going to help society. These people would not be donating to her if they thought she would be going after Wall Street. The list of donors to Hillary should provide a good list of people you better keep an eye on very closely in a Clinton White House. Last time, the Clintons repealed Glass-Steagall and handed the students to the bankers by eliminating their right to ever declare bankruptcy. So you can bet these people are funding the next crisis.

Everything has a cycle. The difference between the Triple Crown and Villanova is that it was actually substantial. In the case of the Triple Crown, nobody won it in 31 years, and I was able to work out the cyclical pattern of the event. Each sports team has a different cycle. Therefore, in the case of Villanova, the team is the basis of their cycle. Villanova simply lined up and its time was due. The methodology between the two events are entirely different. The key is to determine what you are trying to develop a cycle on. Sports are different from the Triple Crown since there is a winner each year.

The obvious critic will say that this means that the Cubs should win every 31 years. That is a pretty shallow statement and it reflects a lack of understanding cycles. Chicago won the majority of its games in 1880; it declined into 1966, winning the least amount of games after completing an 86-year cycle (10 * 8.6). Then Chicago rallied for 18 years (2 * 8.6) and declined for 16 years. Chicago rallied again for 8 years and then fell for 4 years. Since they still won more in 2012 than they did in 1966, they remain in a trending-higher consolidation pattern that will ultimately surprise everyone and score a miracle victory.

Every team has its own cyclical pattern just like markets and politics.

BTW: Oil inventories reached an 86-year high this year and will now begin to decline.

Oil was blamed for the majority of today’s equity weakness but there was no new news and the reason was a little baffling! The Nikkei broke the 16k level and then fell another 300 points quite sharply. In late US trading, it lost an additional 150 points and is currently trading around the 15,500 level. Exporters leading the way and looking at the currency moving stronger (around 1% firmer on the day) Dealers were anticipating intervention soon. Shanghai remained strong throughout the day despite the weaker tone seen from the Hang Seng. Also in Asia we saw India cut rates by 25bp to 6.5%.

Europe saw HSI and Nikkei off 2% and the softer opening was already on the cards. Weak data in Europe and that was enough to see sellers emerge across the board. PMI for individuals were good for Spain, bad for Italy, France slipped back in to contraction (49.9) and bad also for Germany – Euro land average released 53.1 (estimates were for 54). Not great readings and fear produced fear and by lunch we had the DAX down 2.5%. There we stayed for the majority of the afternoon and even though we are seeing the US market bouncing from its lows, Europe will need a bit of convincing tomorrow. Given the mixed data in the peripherals, see Bond spreads below.

In the US futures had predetermined the open and that produced the days lows. A stronger than expected ISM report halved stock losses sadly, not held, but did set the tone for the rest of the day. Towards the close Indices came under renewed pressure as confidence waned when speculation mounted that the economy probably did not grow in Q1. We have the FED minutes tomorrow but given the amount of FED speakers we have heard recently, it is doubtful we will hear anything new!

Treasuries have been rallying most of the day. Opening at unchanged (1.77%) bonds have been bid as equities came under pressure. The highs we saw were around 1.70 but we close this evening around 1.72%. 2’s were last seen 0.715% puts 2/10’s at +100.5bp (about 2bp flatter on the day). In Germany Bunds were bid but given the uncertainty between credit, it was not the same across the board. Bund 10yr closed 0.10% (-3bp), Italy 1.27% (+3bp), Greece 8.78% (+15bp), Turkey 9.66% (+6bp) and UK Gilt 10yr closed 1.37% (-5bp). Portugal saw pressures today on their debt (10yr closed +21bp at 3.12%) on talk of additional issuance and rumors Blackrock and others filed a lawsuit after the central bank decided to impose losses on their securities.

More on this story to follow…

I am not a sports fan. I do not even have time for TV. However, I am a student of cyclical patterns.

When it came to the Triple Crown, I looked at the cyclical pattern and said it was time and he will win. Well, I did it again. Villanova won the championship in 1985. That was 31 years ago and I told all my friends, “They will win, you will see.” I had dinner last night with Glen Downs; I told him the same.

Everything moves in cycles. There are patterns to everything. Once you begin to see the patterns and understand how cycles unfold, they appear before your eyes. This applies to markets, politics, or any human activity.