Brexit-- Implications for Markets and Stocks

[simplefocus]

What are guys buying today?

[KCLarkin]

What are guys buying today?

 

Is anyone seeing any interesting dislocations? Everything on my watchlist looks pretty orderly. Nothing even close to February lows.

[gfp]

Wells was down around February lows.  Picked up some shares there this morning.  Added to Goldman Sachs as well.  I realize those are probably not on your watch list.  Added to ITB (homebuilders) as well.  So far not that big of a change if you factor in that yesterday was a +270 day

[KCLarkin]

Wells was down around February lows.

 

Thanks. Wells is on my watch list (already a full position). I think the moves in the financials are appropriate given interest rates though.

 

[Jurgis]

LBTYA is below February low according to Yahoo, but I am not sure if they adjusted the chart for LILA distribution.

[CorpRaider]

What are guys buying today?

 

Everything on my watchlist looks pretty orderly. Nothing even close to February lows.

 

Ditto. 

[Guest cherzeca]

What are guys buying today?

 

nothing today.

[merkhet]

LBTYA is below February low according to Yahoo, but I am not sure if they adjusted the chart for LILA distribution.

 

I think the concern on Liberty Global is that the U.K. is responsible for 1/3 of their revenues.

[rb]

Yep, everything's pretty calm and not really a big selloff after yesterday. I mean FTSE is only down 2.5%. At one point last night futures were off by 9%. The market seems to be shrugging it off. At this rate we may end up in the green by the end of the day.

[SharperDingaan]

Give it a week or so. Too much emergency liquidity holding the balloon together right now.

 

One has to think that anything trading in London without either a British, or European headquarter - is in trouble.

Commodity miners in particular.

 

SD 

[KCLarkin]

This might be an opportunity for some consolidators (Constellation Software, Cimpress) to buy assets in UK and Europe.

 

 

[Jurgis]

This might be an opportunity for some consolidators (Constellation Software, Cimpress) to buy assets in UK and Europe.

 

I would say Liberties have that opportunity too. Anyway, merkhet is right that there is also risk with LBTYA, so do your own DD.

 

Edit: obviously the forum namesakes BRK and FFH may buy more Euro businesses too.

Edit 2: I wonder if BRK wrote any specialty Brexit (re)insurance.

[Liberty]

I mean FTSE is only down 2.5%.

 

It's down a lot more if you look at it in USD.

[doughishere]

Felix Simon Nails it.

 

http://fusion.net/story/318538/england-brexit-screwed-us-all/

 

 

Brave New World folks

 

 

Anyone else phones ringing off the hook? My not interested in finance friends are buzzing me all over.

[Pelagic]

Felix Simon Nails it.

 

http://fusion.net/story/318538/england-brexit-screwed-us-all/

 

 

Brave New World folks

 

 

Anyone else phones ringing off the hook? My not interested in finance friends are buzzing me all over.

 

It's interesting how people are following and reacting to the Brexit today while last year's Grexit, which was arguably a more important test of the EU, received little attention. The article you linked makes a great point about Britain being EU-lite, without it's involvement in the monetary union they had the best of both worlds. I still think they'll be able to come to free-trade agreements with countries in the EU, it will just take time and a little negotiating.

 

Britain has been in many ways the most unambiguous winner of the European project: it received all the advantages of free trade with an enormous economic bloc, while also having a floating currency instead of one which was pegged mercilessly to how things were going in Germany.

[doughishere]

Felix Simon Nails it.

 

http://fusion.net/story/318538/england-brexit-screwed-us-all/

 

 

Brave New World folks

 

 

Anyone else phones ringing off the hook? My not interested in finance friends are buzzing me all over.

 

It's interesting how people are following and reacting to the Brexit today while last year's Grexit, which was arguably a more important test of the EU, received little attention. The article you linked makes a great point about Britain being EU-lite, without it's involvement in the monetary union they had the best of both worlds. I still think they'll be able to come to free-trade agreements with countries in the EU, it will just take time and a little negotiating.

 

Britain has been in many ways the most unambiguous winner of the European project: it received all the advantages of free trade with an enormous economic bloc, while also having a floating currency instead of one which was pegged mercilessly to how things were going in Germany.

 

Individually I would look at my own experiences and see if they match up with what the rest of the population is seeing. I bet most of the "educated people" think they are the standard...they are not they are the exception....yet they criticize the "uneducated"...call them dumb....how would you react to that I ask?

 

 

Chapter 16 of Warren Buffett's Management Secrets: Proven Tools for Personal and Business Success by Mary Buffett states the following "Warren is a genius at using both praise and criticism. His rule is simple: Praise by name and criticize by category." No one likes criticism even more so when one of Americans highest ideals is one of involvement in government and the right to elect our government. The "conversation" in America is slowly eroding. All I ask is that you think of how would you receive such criticism if it was directed at you.

 

The liberal left is the greatest offender of this right now. I say that as a left-center guy, yes im coming out.

 

Ari Fleischer gets it.

Say what you will about Trump, but it's fair to point out that a majority of UK voters rejected Obama's position and agreed with Trump's.

 

James Carville gets it

http://www.realclearpolitics.com/video/2016/05/23/carville_trump_voters_dont_care_if_he_lies_they_think_were_all_lying_anyway.html

 

 

Winston Churchill gets it.

http://tinyurl.com/gn5xfow

 

 

Neil Tyson gets it in this podcast....I highly suggest you listen to his words.

https://www.samharris.org/podcast/item/thinking-in-public

 

 

Ben Franklin Gets it

http://tinyurl.com/zj6e8wz

 

FDR Gets it.

https://www.google.com/search?q=democracy+cannot+succeed+unless+those+who+express&espv=2&biw=1680&bih=1060&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjszfPOk8HNAhUn74MKHeTEDWoQ_AUIBigB

 

 

Its the liberal left that doesnt.....we like to think were good...my own personal experience has taught me differently.

 

#DemocracyInAction

 

 

Novembers Election just got a whole lot more interesting......keep an eye on those poll numbers.

 

 

Got this in an email....another side.

 

The market reaction to Brexit seems to be a classic case of the market responding to a surprise (markets hate uncertainty) while the long-term fundamental impact of Brexit is probably quite positive.

 

Why is it positive?

 

·                    A European (repeat “European”!) electorate chose liberty and economic freedom over bureaucracy.

 

·                    The UK, I believe as do many others, will end up stronger not weaker as it throws off Euro regulation, can operate more freely, and will continue to be more integrated into a global economy.

 

·                    In response, the EU must truly reform.

 

·                    If the EU does not reform more countries will choose economic freedom over bureaucratic slavery.

 

·                    The threat that the EU will “retaliate” was, and is, wildly overestimated:

 

o        The last thing the EU needs is to try to cut its ties to one of its largest trading partners – a struggling EU economy hardly needs a trade war – even the dopes in Brussels can figure that out;

 

o        Greece sought to renege on its debts and was never “punished”

 

o        The EU will be a lot more focused on preventing other countries from exiting that on punishing the UK (there are reports of even France wanting to exit)  – even the bureaucrats in Brussels will be able to figure out that acting like bureaucratic bullies in response to Brexit, by confirming the wisdom of the UK’s decision, is likely to backfire and actually motivate other countries to leave.

 

David Cameron (aka Louis XVI) and Barack Obama (aka Marie Antoinette), and the media (their royal courtiers) continue to underestimate and misunderstand the electorate and their own failures and incompetence.

 

The free British people just reminded themselves, Europe, and the world that we do not need to be slaves to overreaching government.

 

In the near-term, of course, there will be uncertainty and volatility, but also a lot of opportunity.

 

The key risk is that Brexit leads to some sort of a trade war.  I think it will not as Britain will now seek trading arrangements that are far freer and more dynamic than the EU would ever undertake.

 

What worries me most is Trump’s anti-free trade tirades.  What is unclear is whether he is opposed to trade entirely or only to unfair trade.  I am not sure he is bright enough to know the difference.

 

Is it indeed the case that we are seeing a short-term overreaction to a surprise event while the long-term fundamental impact is positive and may even lead to better long-term results than the path Europe was on prior to Brexit?

 

Imagine for a moment if we had a leader in the White House who understood how free markets work and the opportunity that now lies before us?  Unfortunately, am not sure anyone in the US political “leadership”, including The Donald, understands how free markets work.  Fortunately, a lot of other people do.  Let’s hope those forces prevail.

 

 

 

 

One final thought, on just how bad it can get....In 1914, 3 Cousins dragged 30M people to their death or wounded.

http://www.brookings.edu/blogs/brookings-now/posts/2013/12/family-relationships-that-couldnt-stop-world-war-one

 

 

I hope I am sensationalizing this and I am wrong...I really do. Experience and history has taught me differently.

[CorpRaider]

I find it patronizing and overly simplistic to dismiss the result as merely a symbol of populism and revolt against the political elites.  I don't think the Europeon nation states want to be one federalist nation.  Anytime a little stress is placed on the system (financial or otherwise) this manifests itself.  I think Buffett and many others have been predicting that the EU in current form is unlikely to survive indefinitely and this is perhaps the best way to take a first step in that direction (as opposed to a country which uses the EU leaving under financial duress).

[KCLarkin]

I think Buffett and many others have been predicting that the EU in current form is unlikely to survive indefinitely and this is perhaps the best way to take a first step in that direction (as opposed to a country which uses the EU leaving under financial duress).

 

Buffett's concern isn't the EU. The problem is the common currency. You can't have sovereign nation states with a common currency. One solution is a United States of Europe. Since Britain isn't part of the common currency, Brexit is not relevant. It doesn't solve any of the problems for Britain or the EU.

[Jurgis]

http://fusion.net/story/318538/england-brexit-screwed-us-all/

 

We can only hope that Felix Salmon is too negative.

 

I find it patronizing and overly simplistic to dismiss the result as merely a symbol of populism and revolt against the political elites.  I don't think the Europeon nation states want to be one federalist nation.  Anytime a little stress is placed on the system (financial or otherwise) this manifests itself.

 

No, there are a lot of people who want Europe to be one federalist nation. It's clear from the voting too. Whether nationalists will win in the short term and long term still remains the question. We can only hope that they won't or that any of their victories will be reversed in the future.

 

But sure, knowing Europe and Europeans, the EU progress until 2008 crisis was completely remarkable to me. I never expected EU to go so far as it did. How far it will now step backward is ongoing question.

[doughishere]

Jim Grant: “It’s a great day for humility,”

 

 

http://www.valuewalk.com/2016/06/jim-grant-markets-just-got-a-hard-lesson-in-humility

 

 

Half the nation tellin the other half they are stupid: http://www.newyorker.com/humor/borowitz-report/british-lose-right-to-claim-that-americans-are-dumber

[CorpRaider]

I think Buffett and many others have been predicting that the EU in current form is unlikely to survive indefinitely and this is perhaps the best way to take a first step in that direction (as opposed to a country which uses the EU leaving under financial duress).

 

Buffett's concern isn't the EU. The problem is the common currency. You can't have sovereign nation states with a common currency. One solution is a United States of Europe. Since Britain isn't part of the common currency, Brexit is not relevant. It doesn't solve any of the problems for Britain or the EU.

 

You're right, the comments I've seen were mostly focused on how a common currency cannot be sustained long term in the absence of a stronger federal system underwriting said currency (I didn't detect a lot of concern on his part), but implied in this is the supposition (at least to me) that the common currency was not likely to endure, was a conclusion that the development of a strong European federal government is not (bloody) likely.

 

It is interesting to me, for example, that German national officials frequently comment very authoritatively on definitional EU issues, including with the southern states and now with the UK.  I suppose because they feel they are underwriting the project financially.  Everyone else probably thinks they are abusing the system by continually arranging their affairs to run massive trade surpluses (allegedly, partially, because they can cloak their DMs at last partially in Drachmas). 

 

[Graham Osborn]

Here's my 2 cents, echoing others mostly.  I think:

 

(1) Whether or not the euro is a good currency, it has become a currency people rely on.  And if the dependability of that currency is undermined it will a source of uncertainty, which tends to increase discount rates.

 

(2) Many European banks were never properly bailed out in 2008-09, leading them to retain many assets that should have been written down on their books, hence their instability in the early 2010s and today.  It won't take much to finish them off, as the markets today implied.

 

(3) Most of the market move magnitudes today probably didn't have much to do with Brexit itself but rather with the same kind of fear we saw last August and earlier this year.  While I think the imminent collapse of the EU has been somewhat exaggerated, I am also not siding with the camp that views Brexit as imply another buying opportunity.  The forces driving these moves are much larger.  I wonder if it doesn't have something to do with a fear that the IV drip called QE might be suddenly turned off due to political turmoil.

 

The last 2 years have encouraged people to think that the way to make money is by buying into dislocations - the investing version of Russian roulette.  On the short side, I agree that such events present liquidity opportunities, but the reverse logic has never worked for me.  Like many on the board, I didn't buy anything today.

[scorpioncapital]

It is odd, UK didn't even use the Euro. I mean the only other pillars really are free movement and common regulations for the market and a membership fee to participate. Really the ultimate end of all this is you go to the Costco model. Just a membership fee and that's it since it appears even free movement is objectionable.

 

 

[rb]

It is odd, UK didn't even use the Euro. I mean the only other pillars really are free movement and common regulations for the market and a membership fee to participate. Really the ultimate end of all this is you go to the Costco model. Just a membership fee and that's it since it appears even free movement is objectionable.

That's not an option. You can't just do membership fee. You have to do membership and free movement. I should point out that they also had a problem with the membership fee which actually wasn't that big and the people campaigning for Leave were really dishonest about and inflated it a lot.

[Viking]

Looks like there is lots of blood in the streets.... Usually a good time to buy.

 

Crazy, crazy situation... But one that will get dealt with over an extended period; UK and Europe will muddle through. Hard to see how this makes UK and Europe stronger. On balance, looks to me like strong, big US multinational companies will be the winners.

 

Regarding the big banks, looks to me like the big US banks will be winners (over the next few years). Who will want to deal with the big UK or Europe banks moving forward (I am thinking big companies or very wealthy individuals)? Who will want to work for them? Too much uncertainty.