Last week saw the post-Brexit rally continue. Global indices continued to shrug off the British bombardment of bloated bureaucracy. To "throw their arms in the air. And wave 'em round like they just don't care."
Because they don't. Care, that is. About being a part of anything that does not benefit themselves and their families. And the referendum showed that the majority of Brits felt like the benefits of EU membership were outweighed by the detriments.
Since that outcome, global markets have slapped upside the head the overzealous-yet-ineffective fear-mongering tactics used by the media, politicians, et al. Bank of England Governor Mark Carney warned of England's coming economic post-traumatic stress. And a whiny, fearful coterie of Brits spoke of their "fear and sadness" over the breakup. Yet, the global marketplace -- the world's largest, most objective critic and appraiser of such events -- has essentially told Carney and his fearful protégées to can it. Placing a big seal of approval on the vote. And sending global equities to all-time highs.
Bravisimo!
Despite mixed economic data, markets were driven higher on the wings of intense buying pressure. Through Friday, up volume outpaced down volume by a 3-to-1 ratio. Historically, when stocks perform like this after hitting a multi-month low, they tended to keep rising for the next three-month, six-month and one-year periods.
In the 14 previous occurrences -- including November 2008 -- stocks were 19.1 percent higher on average one year later. The median return was 13.2 percent. Compared to the average one-year return for any given random day of nine percent.
Bottom line? Much of the data suggests that the recent upside breakout may continue. One capable of shattering the market's two-year trading range. Right when the global investor constituency least expects it.
Three weeks ago, we saw little reason for equities to ascend new highs. Then the Brexit referendum occurred. Serving as a catalyst for an unexpected rally. All of which is made all the more plausible only by dint of its sheer unlikelihood.
Should the S&P 500 remain above 2,131 this week? Don't scratch your head and marvel too long. Cause when the current's running strong and the water's cool, you best jump in and go with it. Or risk missing all the fun.
Let's take a look at what transpired overseas last week.
First, Friday's coup attempt in Turkey saw elements of the Turkish military rise up to dispose of President Recep Tayyip Erdowan.
Though Turkey remains a secular constitutional republic, Erdowan has increasingly become an Islamist and an autocrat. Many western analysts believe he is moving towards a dictatorship. Further, his collaboration with terrorists and increasingly misogynistic pronouncements have rattled NATO allies.
The second largest military force in NATO, Turkey's army has overthrown would-be autocrats in the past. Seeking to restore the democratic and constitutional principles created by Mustafa Kemal Attaturk, the nation's heroic founder. This time, they failed. To the detriment of the west. And more than 103 generals and admirals will likely be executed. I was surprised by how quickly American leaders, and President Obama specifically, came out in support of Erdowan. Especially given his strongman tactics and intransigence in helping western governments combat Islamic fundamentalism. Given the circumstances, a little silence may have been golden.
Finally, to Thursday's terror attack in Nice, France. Which reveals how vulnerable Westerners can be. And the scope of the problem. One with which we're yet to deal with directly.
Thousands of families from around the world enjoying summer vacations on France's lovely southeastern coast. Watching the holiday fireworks. Only to have to contend with such barbarity.
I've been to Nice. A beautifully tranquil beach town. Something as ugly as this would have seemed impossible. Yet, here were are.
Thoughts and prayers to the victims. Who include citizens of the United States, Switzerland, Tunisia, Poland, Madagascar, and of course, France. Ten of the 84 were children. God bless them, everyone.
Weekly Results
Major indices finished up this week, as the DJIA gained 2.04%, the S&P 500 rose 1.09%, the NASDAQ climbed 1.47%, and the Russell 2K Small Caps gained 2.37%. 10-year treasury bond yield rose 19-basis points to 1.55%, Gold finished down $28.88 per ounce, or (2.11%).
