Trump gives national security the reality show treatment

Today's Agenda Trump's truces with China and North Korea don't go far enough yet. Runaway rallies in everything may be built on air. There are troubling signs for the labor market. Demagogues aren't having such an easy time these days. Truces and Consequences President Donald Trump just gave us a taste of the benefits of giving peace a chance. Unfortunately, they'll probably be fleeting, offering little more than theatrics. Trump this weekend struck a trade truce with Xi Jinping and then had a DMZ kumbaya moment with Kim Jong Un, reviving hope for a deal on North Korea's nuclear program. All the warm fuzzies briefly boosted the S&P 500 to a new record this morning. The market is right to cheer peace with China, as we've argued for a year now. In fact, everybody should be less confrontational with China on more than just trade, writes Bloomberg's editorial board: Democrats and Republicans alike act as if China is already an existential foe, but that risks becoming a self-fulfilling prophecy. China has issues, for sure, but Trump keeps taking the wrong approach to addressing them, with the tacit approval of even his political rivals. In the process, the editors write, we've alienated allies and set a bad example for the rest of the world. Trump's unreliability as an ally and negotiator could thwart a lasting deal with China on intellectual property, write David Fickling and Anjani Trivedi – even though both sides' interests are increasingly in sync. As if to demonstrate his own flakiness, Trump this weekend waved away previous concerns about the national-security risks of Huawei Technologies Co., making it clear he sees the company as merely a pawn in his trade war, writes Tim Culpan. Giving Huawei a free pass to buy U.S. technology may help end the trade war but weakens American credibility, not to mention those national-security threats. So these issues probably won't die. And anyway, a U.S.-China truce can't stop the long-term slowing trend in global trade, driven largely by tighter bank lending since the crisis, writes Dan Moss.  As for North Korea, Trump took a lot of flak for giving Kim a photo op. But that's a small price if it actually leads to a real nuclear deal, Bloomberg's editorial board writes. Now Trump must get out of the way long enough to let such a thing happen. This weekend's events suggest that's easier said than done. Further Diplomacy Reading: Trump throws around America's weight, but in doing so recklessly, he wastes it. – Hal Brands  Iran has only one reason to want a nuclear program: to threaten its neighbors with weapons. – Bobby Ghosh Nice Rally You've Got There The morning's stock rally faded quickly after reports of slowing global factory activity. After a ridiculous rally in the first half of the year, in which everything from stocks to Bitcoin went hypersonic on promises of central-bank stimulus, reality may be setting in. Mohamed El-Erian warns there's little hope the global economy's structural issues will get settled soon. It's a great time for investors to start thinking defensively. The ugly truth is the global economy is in a prolonged rut of slowing growth and low inflation, dependent on constant influx of central-bank stimulus, writes Satyajit Das. This is unsustainable. The system needs a radical overhaul, though the most useful fixes –debt write-downs, wealth taxes – face powerful resistance. Further Stimulus Reading: Its time the Fed decoupled its balance-sheet management from monetary policy. – Bill Dudley  The Job Market's Sneaky Weakness In what could be a big moment for the market's economic outlook, this Friday we'll get U.S. jobs data for June. Employment still looks strong after the longest economic expansion on record; but at the margins are troubling signs. Gary Shilling notes recent months of payroll data have been revised sharply downward, an early indicator of coming weakness. And Barry Ritholtz writes the headline numbers don't fully account for underemployment, which is keeping wages low and workers dissatisfied. There's still far too much slack in the labor market.  Tough Times for Demagogues  Trump spent much of the G-20 backslapping demagogues from Kim to Vladimir Putin and Mohammed bin Salman. He even mistakenly backed up a Putin critique of Western liberalism by criticizing Los Angeles and San Francisco. As for Putin's claim that liberalism is obsolete, believing it depends on what you mean by "liberalism," writes Pankaj Mishra. If you mean traditional liberal values of freedom and equality, then Putin is wrong. The jury is out on neoliberalism, on the other hand. Anyway, Trump's support aside, demagogues are on a shaky run. In Turkey, Recep Tayyip Erdogan leaned heavily on the scales of Istanbul's mayoral election and ended up falling flat on his face. Bobby Ghosh suggests the opposition's playbook in this election could offer hints to liberals on defeating populists everywhere. Trump also gushed at the G-20 over Brazil's Jair Bolsonaro, a dictator in the making to many observers. But Brazil's democracy seems surprisingly resilient in the face of Bolsonaro's authoritarian leanings, writes Mac Margolis. Its politics are still a dysfunctional mess, but there's hope.  Telltale Charts A new breed of bond ETFs might help investors close the gap between market yields and what traditional bond ETFs offer, writes Brian Chappatta. Further Reading The unified theory of Supreme Court Chief Justice John Roberts is that he favors judicial restraint above all else. – Noah Feldman  New tech platforms make it possible to trade houses like stocks. What could possibly go wrong? – Karl Smith  Breaking up Facebook Inc. wouldn't solve its biggest problems. Regulation would. – Michael Strain  European leaders are far too sanguine about AI talent being poached by American firms. – Lionel Laurent  Too much of the world doesn't recycle trash, or even know why it's necessary. A Shanghai pilot program could start to change that. – Adam Minter  Kamala Harris and Marianne Williamson are fitting breakout stars of the Democratic debates. – Tyler Cowen  ICYMI Hong Kong protests escalated quickly. (And that's bad news for luxury brands, notes Andrea Felsted.) How two college dropouts made $860 million by age 23. Trouble signs abound at Deutsche Bank's Wall Street headquarters. Kickers Why Chernobyl's plants don't die from cancer.  Divers find undisturbed Roman shipwreck off Cyprus. James Dolan should sell the Knicks. Note: Please send Knicks tickets and complaints to Mark Gongloff at mgongloff1@bloomberg.net. New to Bloomberg Opinion Today? Sign up here and follow us on Twitter and Facebook. FOLLOW US SEND TO A FRIEND You received this message because you are subscribed to Bloomberg's Bloomberg Opinion Today newsletter. Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022