AT&T Has M&A Bankers Saying 'Merry Christmas' Again

Today’s Agenda

  • What the AT&T verdict means
  • The coming Golden Age of Fake News
  • The Grand Unified Theory of Trump
  • The reckless Fed
  • China’s growing influence

Après AT&T, le Deluge

(Bloomberg Opinion) -- What a time to be alive, especially if you're an M&A banker or lawyer. 

AT&T Inc.’s legal victory over the Department of Justice will let it buy Time Warner Inc. for $109 billion. It also rings a big, clanking dinner triangle for starving dealmakers, according to Tara Lachapelle.

First to the trough was Comcast Corp., which just offered what it termed a “superior all-cash proposal” to outbid The Walt Disney Co. for 21st Century Fox Inc. entertainment assets. Why? Because Comcast CEO-For-Eternity Brian Roberts desires it, fools! Do not question the CEO-For-Eternity! 

The DOJ had valid concerns about the AT&T deal, Tara says. AT&T is buying Time Warner because Netflix Inc. is driving down the price of television content. The consumer may not be front-of-mind here.

Joe Nocera argues the DOJ case was weak, suggesting it smacked a bit of trying to find a legitimate reason to justify President Donald Trump’s desire to punish one Time Warner subsidiary and Enemy of the People (meaning Donald Trump), CNN. Now, however, the DOJ may be leery of prosecuting other, perhaps more-deserving antitrust cases. (Cough, FAAMGs, cough.)

And now that we’ve set the sky as the limit for vertical deals such as AT&T's, maybe we can test the horizon too. Anthem Inc. + Humana Inc.? Why the heck not? asks Max Nisen.

Yesterday, Brooke Sutherland noted we’re on pace for a record number of “megadeals,” worth more than $10 billion, this year. It now seems safe to say we'll hit that record – and not all of these deals will be as consumer-friendly, or well-considered, or cheap, as AT&T-Time Warner. 

Fake News: The Movie

For most of the history of the moving picture, we’ve mostly been able to trust what we see with our eyes (fuzzy images of Bigfoot and the Loch Ness Monster notwithstanding). We soon won’t have such confidence any more, now that video-faking technology has advanced so much that all kinds of highly convincing, “deep-fake” videos can be created, Bloomberg’s editors warn. We are not yet ready for this Golden Age of Fake News. 

The Grand Unified Theory of Trump

Whether you are pro- or anti-Trump, it’s always tempting to attribute deeper motives to his day-to-day activities. Trump’s trashing Canada? He must be a Russian sleeper agent. He’s tweeting angrily about Robert De Niro? He’s just playing 3D chess, setting the stage for peace with a denuclearized De Niro.

But we’re all overthinking this, writes Tim O’Brien. There are just two things that motivate Trump: self-aggrandizement and self-preservation. Every one of his behaviors can be explained by those two things. 

Inverted Yield Curve Watch

The Federal Reserve today raised its key short-term interest rate, along with expectations of more hikes to come. Once the Fed gets its policy rate back to “neutral,” whatever the heck that is, then it will watch for either inflation or economic weakening. Inflation typically triggers Fed hikes. But Conor Sen suggests the Fed should let inflation run hot a while this time, as it might be more a result of supply constraints than high demand.

In any case, Brian Chappatta tried to warn the Fed to be careful about raising market expectations of higher rates, or risk losing its flexibility. The Fed didn’t listen. Partly as a result, the “yield curve” – the spread between short-term and long-term interest rates – is closer to zero than it has been since 2007. An “inverted” curve – when short-term rates are higher than long ones – is a recession signal.  

How Do You Solve a Problem Like Big China?

In the final installment of his four-part series on China’s quest to replace the U.S. as the world’s biggest superpower, Hal Brands takes a look at how the U.S. and its allies can fight back. (Links: Part One, Part Two and Part Three)

This assumes, of course, that the U.S. still has allies. Trump is not helping the cause by trashing America’s pals at the G-7 and elsewhere; such behavior only bolsters China’s influence, writes Mihir Sharma.

Chart Attack

Coal is still King, but renewables are staging a revolution, writes Liam Denning:

It's time to revive the union, writes Noah Smith:

Bond shaman Jeff Gundlach sees the yield on the 10-year Treasury note hitting 6 percent by 2020 or 2021, writes Brian Chappatta. that would be … quite a move. Of course, people have been saying stuff like this for the past 10 years or so.

Speed Round

Macy’s new survival tactic: Be less like Macy’s. – Sarah Halzack

Why isn’t Wall Street freaked out about Trump? Because so far he is just predictable background noise. – Barry Ritholtz

Since the crisis, in their quest for yield, investors have crowded into thinly traded investments. That’s going to make the next financial crisis worse. – Satyajit Das

The ECB should end its quantitative easing tomorrow. – Marcus Ashworth 

The risk of the U.S. cutting off the head of China’s ZTE Corp. is that it springs forth a bunch of mini-ZTEs. – Tim Culpan

Brexit has turned into the road trip from hell. – Therese Raphael (Suggested musical accompaniment: “Road to Nowhere”)

Polar ice is a tree-ring-like record of eons of history. – Faye Flam

ICYMI

Area raccoon climbs building. Area billionaire wants to break up California. Bitcoin’s collapse continues. Trump fixer Michael Cohen might be preparing to flip.

Kickers

FiveThirtyEight previews the World Cup’s Group F, starring Germany and Mexico.

What if some of literature’s most complicated characters were just reasonable people instead?

The universe may or may not be a simulation, but we can now simulate it.

Note: Please send simulations, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.

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