Stocks today rallied, or should I say “bounced” on lighter volume after two sessions of hard selling. The Dow gained 269 points to 17,409. Banks and energy stocks led the way.
Now that the votes have been cast, the British parliament must draft a letter under Article 50 of the Lisbon Treaty officially telling the European Onion of their intention to leave (aka “piss off” to use a popular British term). Since this has never been done before it will be a work in progress. Also by the 30th of June candidates seeking to become the new Prime “Rib Roast” Minister must notify the official powers of their intent to run. In the meantime the EU is meeting in Brussels to try and figure out a path forward for the rest of the union. David Cameron will be at the meeting but instead of speaking I think they will instead make him sit in the corner with a dunce hat on his head.
The European situation is still in flux and will continue to be for some time. Some are calling the recent pullback in stocks an opportunity and they may be right although Europe is not out of the woods and banks in Europe are still under pressure to maintain strong balance sheets amidst the chaos. I am beginning to wonder however if this will be an opportunity for US financial and private equity firms to take advantage of the situation should there be liquidity needs by European banks and corporations. Firms like Goldman Sachs, Apollo and KKR love times like this since it allows them to swoop in and “rip someone’s face off” with steep fees and interest rates. Firms like Goldman and Blackstone are not the Boy Scouts nor the Vienna Boys Choir! What this tells me is that the US could benefit from the Euro turmoil because we are flush with cash while the chaps in Europe seem to be needing access to capital and therefore might be knocking on our door.
Meanwhile life goes on. Volkswagen today reached a settlement in which they will send over $15 billion to US buyers and states wanting recompense for the emission scandal. Amazon announced it was expanding its “Dash Button” program since orders on the system are up 70%.