“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” -Peter Lynch

1. Turkish Stocks Fall, Currency Rebounds After Failed Coup — the Istanbul 100 Index dropped sharply last week, while the Turkish lira rebounded 3% to 2.9274 vs. the dollar, following Friday’s failed coup attempt that left 290 people dead and over 6,000 arrested. NATO allies have thrown their support behind President Erdogan, but tension is still high over his demand to extradite a U.S.-based cleric whom he blamed for the overthrow attempt.
2. Trump Formally Wins GOP Presidential Nomination — Donald Trump officially clinched the Republican presidential nomination after securing enough delegates during the roll call vote at the GOP convention. “Such a great honor… I will work hard and never let you down! AMERICA FIRST!” Trump wrote on Twitter. The U.S. Federal Election Commission will separately release its June report today, with fundraising details of both the Trump and Clinton campaigns.
3. Florida May Have First Local Zika Case in U.S. — Florida health officials are investigating a possible case of Zika that wasn’t carried back by a traveler. If it’s confirmed, it would be the first evidence the virus has spread to mosquitoes in the continental U.S. All 1,306 American cases up to now have been in people who traveled to Zika-affected regions or who have been infected by their sexual partners.
4. ECB’s Draghi Signals ECB May Boost Stimulus Later This Year — Mario Draghi said the European Central Bank won’t hesitate to add fresh stimulus if needed once it has a clearer picture of the economic impact from the U.K.’s vote to leave the European Union. Draghi spoke after the 25-member Governing Council kept its main refinancing rate at zero, the deposit rate at minus 0.4 percent and asset purchases at around 80 billion euros ($88 billion) a month. Economists foresee the central bank waiting until its next monetary-policy meeting on Sept. 8 to add stimulus, most likely by extending quantitative easing.
5. IMF Calls For Urgent Fiscal Action From G20 –the IMF painted a dark outlook for the global economy, issuing an “urgent” call for the world’s largest economies to roll out more growth-boosting policies and act more aggressively. “I don’t think this is a moment that calls for the kind of coordinated action that occurred during the ‘great recession’ in 2008 and 2009,” said U.S. Treasury Secretary Jacob Lew.

The week ahead — Economic data from Econoday.com:

“Change is the law of life. And those who look only to the past or present are certain to miss the future.” – John F. Kennedy

1. Prime Minister Shinzo Abe’s Liberal Democratic Party’s Landslide Victory — Prime Minister Shinzo Abe’s Liberal Democratic Party and its Komeito allies won a stronger majority in Japan’s Upper House election, in a development that will make it far easier to push through his economic agenda. “It is likely that a large-scale economic stimulus program, in the magnitude of at least ¥10T (2% of GDP), will be implemented,” Societe Generale said in a research note.
2. BoE Weighs Curbs On Property Funds — the Bank of England is weighing a raft of emergency measures to stem the flood of money out of Britain’s biggest property funds that caused fresh market panic last week, the Sunday Telegraph reports. These could include “enforced notice periods before redemptions, slashing the price for investors who rush to the door, or additional liquidity requirements for funds.”
3. Hague Tribunal Rejects Beijing’s Claims in South China Sea — backing a case brought by the Philippines, an international tribunal has ruled against Chinese claims to rights in the South China Sea, citing a lack of evidence that the country “historically exercised exclusive control over the waters or their resources.”. Although no U.N. peacekeeping forces are expected in the region, it can tarnish Beijing’s image as it will be looked at as a unilateral actor if it goes against the international community. Beijing has reiterated it will ignore an unfavorable court ruling on its South China Sea maritime claims, warning neighbors it would “take all necessary measures” to protect interests there.
4. Germany Sells First Negative Yield 10-year Bunds — Germany has sold 10-year Bunds with a zero percent coupon, issuing benchmark debt with a negative yield for the first time in history. The €4.038B sale came with a yield of -0.05%, meaning that investors who hold the paper until maturity in August 2026 will receive back less money than they paid.
5. Theresa May Elected as New UK Prime Minister, Assembles Her New Cabinet — Theresa May appointed Chancellor of the Exchequer Philip Hammond said the country will move swiftly to set broad goals for its new relationship with the EU. Former London Mayor Boris Johnson has been appointed as foreign secretary, fellow Brexiteer David Davis will be May’s Brexit “Tsar,” while former Defense Secretary Liam Fox has been handed the job of establishing new trade links.
6. AAII Bullish Sentiment Increased As Index Makes New High — AAII bullish sentiment increased this week from 31.1% up to 36.9%. It’s the highest weekly reading since early March. At 36.9%, bullish sentiment is still below its bull market average of 39.95%, and has been below 40% for 37 straight weeks! Also, S&P 500 has made a new all-time high and historical average return over the next 12 months courtesy of BIG.

The week ahead — Economic data from Econoday.com:

“I buy fear and sell greed.” Then he was queried, “How do you determine when there is fear or greed?” He responded, “I wait until prices start gapping in the charts!” –Jim Roger

1. U.K.Chancellor Osborne Floats 15% Corporate Tax Rate — U.K. Chancellor George Osborne has proposed slashing the corporate tax to less than 15% (down from 20% now) in an effort to woo businesses deterred from investing in a post-Brexit Britain. Such a sharp cut in business taxes would also take Britain close to the 12.5% tax rate in Ireland.
2. FBI Won’t Recommend Criminal Charges Against Hillary Clinton — the FBI recommended last week that no criminal charges be filed over Hillary Clinton’s use of private email servers while she was secretary of state, but rebuked the Democratic presidential candidate for “extremely careless” handling of classified information. FBI Director James Comey told reporters that “Although the DOJ makes final decisions on matters like this, we are expressing to Justice our view that no charges are appropriate in this case,”.
3. FOMC May Minutes “Weak May Jobs Report” — according to the the minutes of the FOMC’s June meeting, “Almost all participants judged that the surprisingly weak May employment report increased their uncertainty about the outlook for the labor market,” even before the Brexit vote. The outlook continues what has become a familiar pattern at the Fed: The central bank enters the year predicting stronger growth and a gradual return to higher interest rates, but then pares its forecasts as data disappoints.
4. Seventh U.K. Property Fund Freezes Redemptions — four more U.K. property funds have frozen withdrawals as investors look to dump real estate holdings in the aftermath of the Brexit vote. Columbia Threadneedle, Henderson and Canada Life have suspended trading in the investment vehicles, while Aberdeen Fund Managers cut the value of its U.K. Property Fund by 17% and halted redemptions for 24 hours. The development leaves £18B frozen in the biggest seizing up of funds since the 2008 financial crisis.
5. Gap Sales Higher At Old Navy Pick Up — Gap reported sales in June rose 2% year over year to $1.57B. Comparable store sales were up during the month by the same rate. The company cited improved traffic trends during the month, led by the Old Navy chain which recorded a +5% comp. The strong month from Gap (NYSE:GPS) stood out after several other mall retailers posted weak sales reports.

The week ahead — Economic data from Econoday.com: