×

Brexit sell-off is a huge buying opportunity for US equities

John Kilduff
Adam Jeffery | CNBC
John Kilduff

The United Kingdom has historically extolled its citizens to "keep calm and carry on." And that moniker has been popularized again, recently, on coffee mugs and other places. It is a mantra that should be heeded by all of us, in the aftermath of the United Kingdom's vote to quit the European Union.

After all, nothing changed today, and nothing will change for some time. We are at beginning of a process.

Handicapping the possible outcomes, the best case scenario would have the remaining European Union leadership channel their inner Abraham Lincoln, and embrace his famous phrase and approach to reconstruction, which urged malice toward none and charity toward all, in moving the United States forward, after the Civil War.

Already, there are reports that the Germans are considering a plan that would take just that approach, giving the United Kingdom a preferred partner status. Despite the bitterness that must surely exist that is exactly what should occur, as it is in Europe's best interests.

The United Kingdom never full embraced the EU. It kept its own currency and central bank, among other things. It was more of a "friends with benefits" relationship than a marriage.

To the extent talk or plans for punitive measures against the United Kingdom emerge, the selling being seen across the markets, today, is just the beginning.

To be sure, except for those who celebrated, wildly, the so-called Brexit vote, everyone went to work today. The trains ran, and bread was baked.

Currency values are being reset. Neither the pound sterling nor the euro will benefit from this, as any bilateral trading hindrances will affect their respective economies. The dollar should get a lift from this, along with the yen.

"Keep calm and carry on. And don't miss out on the bargains in the U.S. equity market that have come courtesy of the British electorate, today."

There appears to be a wait-and-see approach from the global central bankers. The yen, in particular, has burst through resistance levels that you would have thought would garner intervention by the Bank of Japan, but there has been nothing yet.

Given the hopes that sprang up around making the European Union a United States of Europe, a lot of the trading today is being driven by emotions, as the dream has crumbled.

The economic benefits and growth produced by the E.U. do not have to crumble, however, and hopefully won't.

Overall, the current sell-off represents a huge buying opportunity for U.S. equities.

Since it will take time to sort this all out, the uncertainty favors U.S. based companies whose exposure to Europe and the U.K. is limited.

The global economy will not suffer much from this, and the gains in gold, today, should prove fleeting.

If anything, there will be some cost burdens, as companies and individuals will have to navigate resurrected territorial boundaries. An additional stamp tax here and there or passport check is entirely surmountable, though. And the markets will quickly realize this.

To the extent the dollar gains from this upset and the likely monetary tightening by the Federal Reserve, later this year – yes, they will finally tighten again! – commodity prices, especially crude oil, will come under renewed and sustained selling pressure from the currency effect.

Keep calm and carry on. And don't miss out on the bargains in the U.S. equity market that have come courtesy of the British electorate, today.

Commentary by John Kilduff, a partner at Again Capital, an investment-management firm that specializes in commodities. Follow him on Twitter @KilduffReport.

For the latest commentary on the markets in U.S. and around the world, follow @CNBCopinion on Twitter.