Brexit: Who Won, Who Lost, What’s Next?

We were right that the post-Brexit panic would be a buying opportunity. The opportunity still exists. The Italian bank problem has been only partially solved, but that seems to have quelled the crisis, and a more robust rescue will be forthcoming if it is needed. Based on equity performance, the bet is that UK and Europe are equally wounded, but the rest of the world unaffected. The equity risk premium makes US stocks highly attractive even at all-time highs – but UK and German stocks look even better, each in their own ways. This is in part due to all-time low government yields, which will not last. But neither are they likely to massively reverse, and forward earnings are recovering. We are concerned by the residual weakness in oil, but see no good reason for it, and expect it to soon reverse. China is managing its severe Brexit FX challenges with great aplomb.