The Brexit vote was a shot heard around the world much like the first skirmish at Lexington and Concord that ushered in the American Revolution. The roles might be reversed however as the EU can be seen as the puppet-master and Britain like the hapless Colonies looking for independence and their fair share.
Depending on your vantage point the nasty bear attack on equites was “merely a flesh wound†that has already healed or something more serious that has yet to fester. Equities incurred “huge†(borrowing a phrase here) two day losses ranging from -6% to -16%, based on Brexit prices.
For instance, EU countries most vulnerable such as Spain, Italy and Germany are still down over – 5% since closing prices last Thursday. Meanwhile, US, Chinese and Brazilian equities fully recovered by Friday’s close. Commodity rich Brazil even hit new 52 week highs on Friday.
Metals, metal mining and commodities have been on a tear, along with safe havens such as Utilities and US Bonds. Silver was up over 4.8% on Friday alone with it starting to feel like the ghost of Bunker Hunt has come back to the silver pits except they are basically haunted empty rooms these days.
Meanwhile, the British Pound did not get a meaningful rebound at all. Central Banks are really in jam as global rates have dropped to lowest levels (negative) ever amid the Brexit and the global uncertainty with little left to fight a no growth economy.
The bear attack left some nasty wounds that are going to take a while to heal and will leave some permanent scars. This week there were two Bear attacks in the US, one in New Mexico by a black bear and one in Montana by a Grizzly. The attack by the Grizzly killed one mountain biker (another escaped unharmed) while the woman runner in New Mexico survived. The question remains did we just get attacked by a grizzly and receive a potentially fatal blow to this long in the fang rally or just get nibbled by a black bear that only requires a few sutures.
