Daily Agenda: Markets Shake off Brexit Fears

The pound recovers as markets calibrate future Brexit risks; Danone to increase its presence in organic markets; S&P outlook for Australia dims.


As investors continue to recalibrate after the UK referendum vote, the pound sterling appears to have found a level that fixed income traders are comfortable with at levels versus the dollar last tested during the Reagan administration. For most US institutions the factoring in financial markets implies that the worst I over. In a note to clients today, Brian Reynolds -Chief Market Strategist for New Albion Partners commented: “There have been 20 stock market panics since the start of 2011, each defined by an inversion of the VIX curve as investors reach for protection at any price. We have pointed out that none of these would stop the credit boom because our nation’s public pensions keep bringing in more money and allocating it to credit. Those flows are then used by companies for buybacks. In mid-June, we wrote that Brexit may cause some panic, but it would not stop the credit boom. We detailed a number of pensions that voted in the first half of the month to allocate more money to credit despite the Brexit worries. We found even more votes in the second half of the month.”

Danone to buy WhiteWave. French based dairy giant Danone SA today announced that it will acquire organic food company WhiteWave Foods Co. in a deal valued at more than $10 billion. The move puts the firm in a leading position in multiple markets for organic milk based products.

S&P dims outlook down under. On Thursday Standard and Poor’s downgraded its rating for Australia’s sovereign debt, moving the AAA ranked continent/nation to “credit watch negative”. The move comes as fiscal policy decisions, in S&P’s opinion, pave the way for continued budget deficits.

Pepsi beats estimates. On Thursday PepsiCo Inc. announced second quarter results that exceeded consensus analyst estimates. At $1.35 per share the soft drink and snack food manufacturer came in well ahead of expectations and guided higher for the full year to 9 percent growth in earnings.

Citadel poaches Microsoft COO. Chicago based Citadel LLC announced on Thursday that Kevin Turner, the chief operating officer at Microsoft Corp., will join the Hedge fund giant as head of the securities unit. The move comes as Citadel looks to refocus its brokerage arm on electronic trading.