A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the Web
Today's headline is cribbed from a Merrill Lynch report that was otherwise constructive, emphasizing a bull case for Asian and emerging markets investment. I think it fits the market mood well – a lot of sentiment driven bearishness but on the whole things are relatively orderly.
"@SBarlow_ROB "If you are going to panic, panic early" pic.twitter.com/y7rUXsLyJy " – (includes research excerpt) Twitter
"@bySamRo "In our experience, markets tend to over-react to political shocks" – [Credit Suisse] pointing to Tiananmen Square protests pic.twitter.com/d74l1IdNIi ' – (includes chart) Twitter
The British pound tried to hold on to Friday's lows against the greenback, but support failed and the pound is now at 30-year depths. But, economist and international trade expert Brad Setser notes that it's important that British sovereign bonds are rallying – the 10-year Gilt yield is below one per cent – and this indicates that no U.K. financial crisis is imminent. If long-term Gilt yields start rising, this would be a sign the market does not trust the U.K. government finances. Right now, markets are adjusting to new realities through currency markets.
" The Brexit's Impact on Capital Flows" – Bloomberg (video)
For domestic investors, strength in gold and relative stability in the energy sector should protect the TSX from a deep sell-off. If there is going to be any problems, it will likely come from Canadian bank stocks. U,K. and European bank stocks are getting bludgeoned Monday morning and domestic financial stocks are likely to fall in sympathy. During the European debt crisis in 2012, Canadian bank stocks moved lower in accordance with climbing Spanish and Italian sovereign debt credit default swaps. The Italian government is currently considering intervention to protect the country's cratering banking sector.
"Italy may be the next domino to fall" – Financial Times
"@MxSba #Brexit bleeding continues: all main European banks are down this morning. Barclays & RBS most hit. pic.twitter.com/lbXx4ysWA3 " – Twitter
"Oil prices ease again after Brexit vote" – Reuters
A Deutsche Bank research report highlighting the two most important indicators for investors to watch in the coming days,
"We think only two variables will matter as the world wakes up to Brexit: European financials and Italian bonds. Reaction to these assets will be the key for the market to assess broader contagion risk and the follow through in asset prices inclusive of the S&P  and emerging markets"
"DB: "we think only two [Brexit] variables will matter" pic.twitter.com/IhhMNDjkkR " – (research excerpt)" – Twitter
"The financial industry fallout from Brexit is about to get a whole lot worse" – Telegraph
The British Labour party is imploding , the conservatives are split and as a result, the U.K. is largely leaderless at the moment unless you count Her Majesty Queen Elizabeth or celebrity chef Jamie Oliver. There is no short of things to worry about. Scare stories begin George Soros, with my personal investing hero, who is predicting the dissolution of the EU,
"'The catastrophic scenario that many feared has materialized, making the disintegration of the EU practically irreversible.' London-based academic blog 'The Conversation' chimed in unhelpfully with 'Brexit impact will be worse than the 2008 crash' which pointed out that Brexit through sand in the gears of all of the U.k.'s growth drivers, 'all known engines of growth in the British economy – finance, services, construction and manufacturing – have stalled.'"
Domestic investors should remember we are in the very early innings here. Separation from the E.U. will take years and nothing is really going to get started until the Brits pick a new leader in October. Markets hate uncertainty and we are seeing the results now but personally, I'm not ready to take the Chicken Little "sky is falling' view yet. That changes if more countries – Spain, Italy and France in particular – start moving towards separation, or we see more severe stress on the European banking system.
Tweet of the Day: "@MarketWatch "Brexit is a once-in-a-lifetime event... All arguments against holding gold have now been crushed." on.mktw.net/28XlHiO " – Twitter
Diversion: "Climb Into the Cockpits of History's Greatest Warplanes, From WWI to Today" – Wired