Opening Bell 7.9.18

Theresa May doubles down; NATO woes; Breastfeeding legislation and more!
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Defiant May digs in on Brexit stance after blow of Davis resignation [Reuters]

Davis, who campaigned for Brexit in Britain’s 2016 referendum, said he had resigned because the cabinet deal had given “too much away, too easily” to EU negotiators, who, he feared, would simply ask for more.

Sterling rose, as traders bet Davis’s resignation would not imperil May and instead focused on the newly-announced deal that markets believe makes a “soft Brexit” more likely.

Many eurosceptics have expressed anger over the agreed negotiating stance, calling it a betrayal of her promise for a clean break with the bloc that has raised the prospect that some could try to unseat her.

But by appointing Brexit campaigner Dominic Raab as Davis’s replacement, May might hope to quell some of that anger.

Dreams of Goldman Doing Big Takeover Meet Stress Test’s Reality [Bloomberg]

At Morgan Stanley, most of the chatter was behind the scenes. Speaking on condition they not be named, dealmakers around Wall Street -- including some inside the firm -- batted around names of asset managers the bank could acquire to build out its business. “We can do a number of fill-ins,” Chief Executive Officer James Gorman said at a conference when asked about the possibility in May.

Much of that speculation got a reality check on June 28 when both firms scraped through the Federal Reserve’s annual stress tests. The pair got special permission to continue paying out capital to shareholders at past levels -- even though the regulator projected such distributions could leave them with too little capital in a severe economic shock.

Summit Looms for a Strained NATO Alliance [WSJ]

Since the post-World-War-II era the alliance has entwined security, through NATO, and the economy, through trade pacts. Mr. Trump has invoked a Cold War-era U.S. law to brand some imports from Europe as a threat to American security, the first time the law has been invoked against U.S. allies. Using that justification, he has placed tariffs on European steel and aluminum and threatened more against cars. The moves sparked European retaliation against U.S. industries.

The president also says the security umbrella the U.S. spread across Europe during the Cold War allows allies to benefit without paying their full share as set by NATO goals.

“I’m going to tell NATO, you got to start paying your bills,” Mr. Trump said at a rally in Great Falls, Mont., Thursday evening. “The United States is not going to take care of everything.”

Citigroup, with limited options, hopes to lure deposits digitally [Reuters]

The bank is now trying to up its game with a new app it plans to begin marketing in the third quarter. Executives hope it can lure deposits without opening new branches, acquiring a rival or beating competitors’ rates – three ways to collect deposits with their own costs and risks.

“People are willing to switch to a bank that is able to provide this kind of mobile-first experience,” David Chubak, head of global retail banking and mortgage, said in a statement, citing customer research Citigroup conducted.

The app, which does not have a name, will augment the bank’s push to expand its wealth management business, he said.

Competing for deposits is important as interest rates rise. When banks start reporting second-quarter results on Friday, investors will be closely watching deposit levels and what they cost.

U.S. threatened Ecuador over support for resolution encouraging breastfeeding, report says [CBS]

The Times says the U.S. delegation opposed the measure, which was widely expected to be adopted. The U.S. officials, according to the Times, first tried to remove language from the resolution that called on nations to "protect, promote and support breast-feeding." Another section called on countries to restrict promotion of food products that could have harmful effects on children.

When U.S. efforts to water down the measure failed, the delegates reportedly threatened Ecuadorian delegates with retaliatory trade measures and said the U.S. would withdraw military aid unless the country withdrew the measure. The strong-arm tactics worked, and Ecuador dropped its support of the resolution.

But the Russian delegation eventually stepped in and introduced the measure without any threats from the American officials, the Times reports. However, U.S. officials tried for two more days to use procedural methods to stymie its ultimate adoption.

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