HYBRID VIGOR: VOL 3 ISSUE 25 "Charge of the Light Brexit"

Half a pence, half a pence, half a pence downward

To economic gloom

Rode the broken pound

“Take back your country

Damn continental rules!”

To the valley of gloom

Rode Britain’s voting fools.

Forward, show them who’s boss

On his bum Cam’ron toss

Listen to Boris… but

Maybe he wrecked it

Far too few made reply

Far too few reasoned why

Theirs but to do and die

Voting for Brexit.

Germans to south of them

Scottish to north of them

All aghast watching them

Voting for Brexit.

Perhaps not since the Crimean tactical miscue that Tennyson immortalized has Britain blundered so badly. There’s already a swelling view over there that a huge mistake has been made, consigning the once-mighty kingdom to a bleak fate in a weakly Quixotic attempt to recapture a long-gone past. Can the vote be undone? Perhaps. More likely, Britain now has to spend the foreseeable future trying to minimize the damage of one ill-conceived vote reflecting well on nobody involved.

And yet, for all that, good can come of this. It’s only irreversible in the most literal sense, and perhaps it’s a wake-up call that the only way forward is intelligent cooperation. After all, that’s the way game theorists usually figure it.

All that said, we’re now looking at a 10-year yielding less than 1.5%, which would not seem to augur well for new convertible issuance. Yes, but high yield is giving back some of its gains, and perhaps that market will not be quite so welcoming of new paper now. The small, growing, domestically focused companies that dominate U.S. convertible issuance may yet have their day in the sun.

(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).