Markets continue to look like 30 miles of bad road as the Dow fell another 270 points to close at 17,140. The Brexit headlines continue to dominate the news and Goldman Sachs today said the confusion in European markets is causing all market related activity to stop. This include bond deals, new issues, hiring etc etc. This has led Goldman to predict the EU will now experience a recession in the near future.
In an interview with the Italian daily Corriere Della, Pier Carlo Padoan, finance minister for Italy commented that the Brexit vote in his opinion came about because of the disconnect between leaders in Belgium and the general population which are beginning to see the EU as a “source of restrictions rather than opportunities.” In the wide ranging interview he also sounded a bleak note regarding the economy in Italy
The Brexit is gold’s best friend while it is the banks worst enemy. Big European banks are feeling the pain as Barclay’s is off over 40% in two days of trading followed by Royal Bank of Scotland which is lower by 27% on Friday and another 14% today as Scotland is considering a vote to separate from Britain to become a full EU member. US banks were off 5% on Friday and were down another 3% or so today even though they just passed the stress test and are well capitalized.
Moody’s downgraded UK sovereign debt from AAA to AA citing uncertainty over the Brexit vote.
Gold closed the day up $2.30 an ounce to $1,327 while WTI crude oil fell 2.7% to $46.33 per barrel.