Learning a ton in London at The Deal Economy UK, which took place just as the date of the formal Brexit notification was announced. (The Deal is a sister publication of The Street.) While so many here are optimistic it will go off without a hitch, I come back with a sense that there have been too few hitches to make me all that comfortable about investing here.
With the price to earnings multiple of the entire market at 26, with all-time highs, it seems a bit reckless vs. the continent -- especially if the continent stands to gain from what will be the departure of some of the financial business from the U.K.
The big surprise for me, and the one that demands more work? I kept hearing that Spain's Santander (SAN) could be a winner, made easy by the fact that Spain is ahead of most of the continent in its comeback (of course, it had further to go) and in its technological progress.
I figured the natural would be the Germans (Deutsche Bank (DB) ) or the Swiss with Credit Suisse (CS) , but when we talk capital, the pros here think that Santander is in the best shape on that front, too.
How is the continent doing? I got the feeling that people here are far less worried than people in the U.S. about anything involving currency breakdowns or political stress or nationalism. I am not saying it is noise, but I am saying that people in the U.S. are way too focused on the problems and not the opportunities.
So, initial takeaway: don't go big into the U.K unless it is resource-oriented (Rio Tinto (RIO) ) and certainly not in the banks that I was thinking could be intriguing, and stick with the continent and the surprise find of Santander.
Random musings:
One thing is certain, they are expecting a wave of takeovers here and a lot of pursuit that seems over that might not be, whether it be PPG (PPG) -- Akzo (AKZOY) (news today) or even Kraft-Heinz (KHC) -- Unilever (UL) . It's much more bullish here than you would otherwise believe.
