I happened to have a conversation with someone from Portugal who was neither a trader nor an investor, just an observant 23-year-old. When I asked for her take on the state of affairs in Europe, she candidly replied:

“Yes, there are groups of people who expect civil war. Actually, the situation in Europe at this moment is a big mess. Those in the Baltic countries are afraid of Russians, others are in a big panic because of ISIS, and the other third are upset about EU not to mention a mess with refuges and etc… In general, war industry brings amazing profit. So it is a question of time when history will repeat once again, as you say.”

The debate shifted following the Jobs Report, and people now assume that the Fed will not raise rates. Hence, we have a bounce in gold and the euro. That makes no fundamental sense regarding gold since higher rates indicate inflation and lower rates warn of deflation. The real confusion has been that most only focus on domestic issues. The euro would bounce if BREXIT won, giving a bit of a bid there. Nevertheless, the typical US analysts and newspapers pay no attention to BREXIT and just assume it is a European thing.

To the contrary, BREXIT is a huge deal for if the “real” vote prevails if we do see an exit that the establishment cannot prevent. Sure, the pound will get hit at first, but thereafter, a contagion of separation movements will appear and contribute to the demise of the euro. That will have a broader long-term influence on capital flows pouring into the USA.

Two-bedroom condos in Brooklyn are now going for over $1 million. This is all foreign capital pouring into the USA on cash deals. The same is taking place in Miami, and this is why the IRS demands title companies to pierce corporate veils to get at the real owners only in New York and Miami.

BREXIT can have a profound impact on the dollar because it has the potential to send mountains of cash fleeing Europe to the USA.

Then we have Donald Trump, and a victory there would really change America. Trump is talking about a 15% corporate tax rate that would match Hong Kong. If this policy were to happen, we would see $2 trillion in offshore corporate cash return to USA. Then if the Fed wisens up and fails to raise the 0.5 rate on excess reserves or eliminates it, as it should, there will be another $2 trillion freed up.

With $4 trillion free, the only place will be equities. We will see the Dow come into that sweet spot where you can buy it with two hands and watch it rally to test the 23,000 level in the years ahead. Nobody seems to expect a rally and that makes this even more explosive.

So for all the Fed watchers worried about a quarter point change in rates, they are missing the international picture. We have issued a special report on BREXIT for one simple reason:

BREXIT IS FAR MORE IMPORTANT THAN A RATE CHANGE

Well, believe it or not, the younger generation is extremely socialistic. Just tell them they will get something for nothing and they are on board. I suppose this is what we get for telling them to pay for schooling that they cannot find a job with. Now in Switzerland, they pushed for an actual vote on Universal Income where they will get a monthly payment of 2500 Swiss Francs paid to every citizen, for their whole life, no matter where they live, and they do not have to work to get anything nor did they ever have to earn anything. This is more than most people earn in retirement check after a lifetime of work. The solution, just give’m the money now. Why work for it? Seems like a waste of a life. They just want to cut to the end. This is the legal way to just rob your neighbor so you do not ever have to work.

Well, the proposal to guarantee a minimum monthly income of 2500 Swiss francs lost 76.9% to 23.1%. It could have, over time, lead to scrapping unemployment, social and pension payments, but it would have been in a dead-heat race with bankrupting the state, which probably would have came first. It was promoted by Daniel Haeni and Enno Schmidt who are really out of touch with how an economy even functions. This same idea has been talked about in Canada and the USA.

The European Central Bank (ECB) will start buying corporate bonds as officials’ stimulus program announced in March. This will broaden the Quantitative Easing expanding it to a new asset class in their desperate struggle against deflation. The Governing Council, meeting in Vienna, left the main refinancing rate at zero, the deposit rate at minus -0.4 percent, and as a component of its asset purchases of 80 billion euros per month, the ECB will begin buying corporate bonds beginning on June 8.

This type of stimulus is at least far better than buying government debt. Governments do not create jobs that truly contribute to economic growth because government produces nothing. Unfortunately, buying the corporate bonds from bankers will only means they are relieving the banks of paper they do not want. The ECB is hopelessly fighting against the head wind of deflation because they do not control the fiscal side of the balance sheet. That means which they try to stimulate the economy, we have the European Commission plotting against the economy by attempting to enforce taxation and raise taxes at every possible turn on top of creating a Byzantine system of serious over-regulation that prevent business expansion and formation.

The superficial view of how this will stimulate the economy is always good for a bounce as people trade within the noise of a market defines by resistance and support. However, the long-term prospects to this actually reversing the trend or “stimulating” anything is hopeless.