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What’s Eating Markets?
The stock market was downright cheerful today. That’s a switch; for most of the year it’s been sulking in the basement, listening to The Cure.
Even with today’s mini rally, major stock indexes are still below records set in late January. And corporate executives keep grumbling about how the good times of a bull market and economic recovery that started nearly a decade ago are almost over.
Based on numbers alone, this grousing makes no sense, writes Stephen Gandel. If stocks are mostly about corporate profits, then stocks should be higher, because profits are good. The economy seems good, too.
Maybe that’s part of the problem: The economy’s so strong that the labor market is tightening and the Federal Reserve is raising interest rates. That doesn’t spell doom for stocks, but it might give them pause. One cause of today’s rally was relief over consumer price data that won’t make the Fed break out its inflation stick.
There’s something else bothering markets, too, writes Shuli Ren: growing geopolitical risk. Malaysia’s surprise election result, Turkey’s snap elections and President Donald Trump’s decision to ditch the Iran nuclear agreement don’t matter much to U.S. corporate profits. But they suggest the world is riskier than usual. Maybe investors should retract their horns.
And markets briefly swapping a goth look for pastel may reflect some lowering of geopolitical anxiety as Trump makes nice with Kim Jong Un. But that rapprochement may falter. Meanwhile, Israel and Iran are shooting at each other. If the world’s on edge, then markets might stay there, too.
The Bloomberg View
Attorney General Jeff Sessions wants to split up families that try to enter the U.S. illegally. Not only is this idea “brutal, immoral and un-American,” write Bloomberg’s editors, it’s also not effective. But mostly: brutal, immoral and un-American.
Coveting Fox’s Content Hoard
If you’re wondering why The Walt Disney Co. and Comcast Corp. are wrestling over $50 billion worth of 21st Century Fox Inc. assets, then check out Fox’s latest earnings, writes Tara Lachapelle. Fox bucked dismal industry trends thanks partly to the stuff Disney and Comcast want – namely, its massive backlog of content. Rupert Murdoch thinks Fox’s news and sports channels are worth more, apparently. But Disney and Comcast think they can get better distribution deals with more product.
Amazon Plays With Bricks and Mortar
Yesterday I wrote about how a smart survival stategy for Walmart Inc. is to become more like Amazon.com Inc. Today Shira Ovide points out a smart survival strategy for Amazon … is to become more like Walmart. This is getting ridiculous. Amazon has conquered e-commerce, but for its long-term health, it needs to dominate the physical world, too.
Hey, Mr. Postman
Senator Kirsten Gillibrand has introduced a bill to turn the U.S. Postal Service into a bank. Noah Smith explains why that’s a risky idea, if Japan’s experience is any guide:
“The problem was that Japan’s postal bank didn’t just take deposits — it also lent money, including to so-called zombie companies, or inefficient enterprises that survive due to below-market-rate loans.”
Eli Lilly & Co.’s tiny $1.6 billion deal might yet outdo Takeda’s $62 billion Shire bid, writes Max Nisen.
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