July 10, 2018, by Cecile Gutscher
Banging the drum
Next on Donald Trump’s list of things to do: make NATO hew to his demands. The U.S. president will kick off his European tour this week in Brussels, where he will take partners in the North Atlantic Treaty Organization to task for their defense budgets. Though many in the 29-country organization have already increased spending, Trump has singled out Germany for “owing billions.” Angela Merkel has agreed to devote 1.5 percent of gross domestic product to the military by the middle of the next decade – still well short of the 2 percent target set at the 2014 NATO summit in Wales. His trip will also take him to London, where Prime Minister Theresa May’s government narrowly averted collapse, and to Helsinki for a summit with Russia’s Vladimir Putin. Meanwhile, even as he bangs the drum for Europe to ramp up defense spending, Trump still believes he can persuade North Korea’s leader to denuclearize.
Brett Kavanaugh, a former aide to President George W. Bush and skeptic of regulatory power during a dozen years on a federal appeals court in Washington, is set to succeed Justice Anthony Kennedy on the U.S. Supreme Court, potentially creating the most conservative judicial body in generations. His confirmation by the Senate, which Republicans control, could put the landmark Roe v. Wade abortion-rights ruling at risk and herald a dilution of gay rights, affirmative action, and gun restrictions, not to mention more backing for the death penalty.
Overnight, the MSCI Asia Pacific Index slipped 0.1 percent, while Japan’s Topix index closed 0.3 percent higher as the yen weakened 0.3 percent. China’s Shanghai Composite Index climbed 0.4 percent. In Europe, the Stoxx 600 Index added 0.2 percent as of 5:40 a.m., and the euro retreated. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 2.867 percent and gold was lower.
Theresa May seems to have come out of the latest Brexit-triggered crisis in her government intact as U.K. prime minister. But furious lawmakers warned that she could split the Conservative Party trying to get her plan through Parliament. Despite the resignations of two of her most senior ministers in one day — an event without parallel in recent decades — most in her party appeared content on Monday evening with a proposal that would keep Britain close to the European Union on trade and regulations. Without a parliamentary majority, May can only pass legislation if her party is united or if she borrows support from the opposition. An attempt to woo Labour Party lawmakers Monday outraged dissident Conservatives.
The second-quarter earnings season is underway in earnest with the first big name to publish results. PepsiCo Inc. posted second-quarter profit that topped analysts’ estimates helped by food brands and a diversification away from its iconic drink to drive growth among more health-conscious consumers. Upbeat reports by corporate America may not be enough to cheer investors dispirited by an escalating trade clash between the world’s two largest economies that imperils market access.