Equity markets worldwide roared this week, with most up around 2% on strong volume despite yet another horrible attack in France. Our sympathies go out to all those impacted by the senseless violence.

Meanwhile, two key benchmarks, the S&P 500 and the Dow Industrials surged to new all highs Friday before retreating a little by the close. In the aftermarket, equities were down more after news of a coup underway in Turkey.

The disparity between the Eurozone markets and the US is still very much alive.EU equity markets languish and are down around -5.0 % from the pre Brexit levels and remain in bearish phases well below highs set in 2014. In Italy’s or Spain’s case, equities sit at levels seen in 2008 at the height of the financial meltdown. The British Pound hovers at the lowest levels not seen in 3 decades and has barely bounced.

The true reason for the Brexit was revealed this week when France’s scandal “de jour” Coiffure- Gate was disclosed.  The President of France, Francois Hollande admitted that he spends almost 10,000 euros per month of the state’s money on his hairdresser.

Brexit’ers can point out that such irresponsible behavior by an avowed socialist will inevitably trickle down, leading EU bankers to fund personal hairdressers for the entire EU population, including refugees who need a fresh cut and a shampoo the most. This all leads to more deficits and disequilibrium.

While the hair is still drying from Hollande’s last visit from his barber, a cooler head prevails in England as the new Prime Minister is not ready to pull the trigger on Brexit until all the terms are laid out. That includes what do with Scotland who voted to remain. Pulling the trigger on the exit will take a while or might never happen.Maybe, just maybe, Brexit is much ado about nothing and reason for the recent melt up. A strong rally in British Pound from current levels would be supportive to that idea.

Meanwhile, the flight to US bonds cooled this week as did the sizzling gold market. However, industrial commodities such as steel roared along with Emerging markets.

Since rates are at historic lows and with so much cash on sidelines, the breakout to new highs should be able to gather some real steam after working off some short term froth and negative short term trading patterns.

The bubble in rates could be popping or setting the stage for a final blow-off.  However, at the moment there is a shortage of supply of debt fueling the rally.  Even If rates modestly rise and at a slow pace, it would still be very low and supportive to equities.

As I write this, the situation in Turkey is still unfolding but it highlights another festering geo-political uncertainty in a strategically critical area that directly impacts the macro picture. The Turkish people face a difficult choice between secular backed military rule or a democratically elected Islamist in the process of dismantling that same process that put him in power to begin with.

The disconnect, resulting from Brexit, US Presidential elections., terrorist attacks, negative yields and the coup attempt in Turkey while US equities hit new highs indicate the high level of risk inherent these markets. However, Risk -on plays continue to gather steam with Junk debt and other more speculative instruments gaining as well.

Video length: 00:16:20