Trump Tilts at Europe. Congress Dithers.

Today’s Agenda

Trump’s European Vexation

(Bloomberg Opinion) -- President Donald Trump ended a contentious NATO summit in Brussels on an upbeat note today, reaffirming America’s commitment to the alliance and saying members had agreed to boost defense spending in response to his demands. But some of those allies immediately contradicted him, suggesting they’d agreed to nothing new. And this followed 24 bruising hours that cast doubt on NATO’s future and made some Republicans in Congress blanch.

Those same Republicans could do more to rein in Trump’s most chaotic impulses in both foreign affairs and international commerce. Instead, they’ve stood by as he ramps up trade aggression against friends and rivals alike on thin “national security” pretenses, write Bloomberg’s editors, who call for Congress to take back its constitutional authority. Jonathan Bernstein suggests Republicans have gotten so much political mileage from attacking institutions such as the UN and the WTO that they don’t know how to support them any more.  

China, meanwhile, is strengthening its business ties to Europe even as Trump tests America’s, David Fickling notes. That could help China ease the pain of Trump’s tariff barrage.

Trump then flew from Brussels to the UK. Two years ago, this probably would have been the high point of his trip, as closely as he identified with the Brexit movement. The fact that the movement is now in shambles could be a warning to Trump of the possible ends of his own populist revolution, writes Therese Raphael.

Bonus Old World reading: Europe is going to need more immigrants, not fewer, as its native population ages rapidly. – Mark Gilbert

Media Merger Mania

Comcast Corp. today raised the stakes in its bidding war with Twenty-First Century Fox Inc. for control of British pay-TV provider Sky PLC. Chris Hughes wonders why it didn’t make a knockout bid, suggesting it may want to keep stringing Sky along just enough to keep it from tearing up an agreement prohibiting Fox (and its would-be partner, The Walt Disney Co.) from buying enough shares in the open market to control Sky.

As if that weren’t confusing enough, Comcast would really like to buy Fox’s entertainment assets, but Fox has already agreed to sell them to Disney. Tara Lachapelle wonders why DISH Network Corp. is sitting all of this out; its stock and debt are taking a pounding while the media world rumbles by it.

A Merger About Nothing

Companies buy other companies for all sorts of reasons, but sometimes they just do M&A for M&A’s sake. That seems to be the case for Broadcom Inc., which yesterday said it was rebounding from its failure to buy Qualcomm Inc. by buying old-school business-software maker CA Inc. This deal makes no strategic sense, write Shira Ovide and Brooke Sutherland

“CA operates in a completely different corner of the technology industry from Broadcom. Much of CA’s technology is musty, its revenue is just recovering from a years-long slump and the company is expensive for what it is. … Other than that, it’s a great deal for Broadcom.”

Click here to read the rest.

Mind the Non-GAAP

Stephen Gandel explores the strange phenomenon of how U.S. public companies seem much better at predicting future performance on bespoke, made-up profit measures than on GAAP earnings measures that quite often don’t flatter them. Investors are overlooking how ridiculous this situation is now, while earnings are strong by any measure. But they will be less patient when the cycle starts to turn, Stephen warns.

Capital Thoughts

Socialism is the hot new thing the kids are into these days. Noah Smith runs through some of the possible reasons why capitalism is only barely more popular than socialism among this set, and why this chart looks the way it does:

Your reaction might be to write this off as those darn Millennials just wanting a free ride again. But, as you might have heard, that 18-to-29-year-old cohort is increasingly politically active –marching, voting, running for office, forming unions. Whatever their motivation, many of them are storming capitalism’s barricades because they don’t feel they’re partaking of its rewards.

Noah zeroes in on one key factor – how corporations increasingly vacuum up much of the capital in the U.S. This both discourages people from starting new businesses but also makes them doubt the benevolence of the free market, Noah writes. Thus capitalism’s salvation might hinge on helping small businesses fight back against those mega-businesses: “That could mean stronger antitrust enforcement, lowering the barriers to starting a company, or directly supporting small businesses against their larger rivals.”

Click here to read the rest.

Chart Attack

The bond market can’t quire figure out how to price in a trade war, writes Brian Chappatta:

Facebook Inc. and Twitter Inc. both have strange stock-market valuations these days, writes Shira Ovide:

Speed Reading

The lessons of one lawyer’s failed 25-year crusade against Chevron Corp. – Joe Nocera

Asian junk-bond investors are nervous. – Andy Mukherjee
The Fed has to be careful how it reacts to tariff-induced price increases – will it see them as temporary or permanent? The fate of the economy is in the balance. – Tim Duy 

Turkish President Recep Tayyip Erdogan and his finance-minister son-in-law are living in a dreamworld if they think they can lower interest rates, curb inflation, protect the lira and impose capital controls all at the same time. – Marcus Ashworth

France’s World Cup success won’t help Emmanuel Macron. – Chloe Morin

Croatia's World Cup success is no fluke. – Leonid Bershidsky

ICYMI

Stocks rallied. Trump got a “ very nice note” from Kim Jong Un. Making Tesla’s Model 3 has been Hell. Trump appealed the AT&T-Time Warner deal ruling.

Kickers

“Find your passion” is bad advice.

Would you be OK with AI modulating your moods?

How superhero movies got funnier.

Sea creature sex is having a moment.”

The winners and losers of the 2018 Emmy nominations.

Nobody’s going to see sports in person any more.

Scientists have found a neutrino from a distant galaxy.

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

***

New subscribers can sign up here

Like Bloomberg Opinion Today? Subscribe to Bloomberg All Access and get much, much more. You'll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With OnWeb News On BloombergQuint