Friend or enemy?
Seventy-five years after it was founded to counter threats posed by the Soviet Union, NATO is back to celebrate its second diamond anniversary. The expanded military alliance recently welcomed Finland and Sweden, and now includes 32 countries spanning much of Europe, as well as Turkey, Canada and the United States. Defense spending will be a major topic at tonight’s summit in Washington, D.C., as well as how best to protect the group’s nearly 1 billion citizens in one of the most dangerous security environments since the end of the Cold War.
Rebell: Ukraine’s NATO membership is not yet on the cards, but the alliance will be looking for ways to help the country hold the line more than two years after a full-scale Russian invasion began. NATO allies are expected to pledge an additional €40 billion to kyiv to prevent the war from spreading to their territory, although some critics say this could only embolden Moscow or create greater geopolitical risks in a multipolar world. Keeping the alliance strong and united is not the only issue nations will face at the summit, but many members have growing political problems at home, such as in France and Germany, and potentially even in America.
“Our allies are looking to the United States for leadership,” President Biden said in an interview with MSNBC on Monday. “Who else could step in here and do that? I expanded NATO. I solidified NATO. I made sure that we are in a position to have a coalition of people from nations around the world to stand up to China, to stand up to Russia.” However, Biden’s reelection campaign is also facing challenges, with Stifel releasing a new research note that gives him a 40 percent chance of dropping out of the race.
What else to watch: Tensions have surfaced over military spending, with only 23 of NATO’s 32 allies on track to meet the 2024 target of spending 2% of their annual GDP on defense. Some will likely call for that figure to be the minimum, not the ceiling, especially with members like Canada having shied away from their commitments for a decade. Outgoing NATO Secretary General Jens Stoltenberg also highlighted the alliance’s economic power, noting that “NATO allies hold half the world’s economy and half its military power.”
We have a problem
Most of Houston was left without power as Tropical Storm Beryl made landfall along the Texas coast on Monday, and the blackout could extend for days in the hardest-hit areas. CenterPoint Energy (CNP), Houston’s main electric utility, said nearly 2.3 million customers lost power during the storm, with at least three people killed in the region by winds and flash flooding. Southeast Texas is now facing high temperatures, which poses a higher risk given the widespread power outage. Ahead of Beryl’s arrival, officials restricted shipping traffic at major Texas ports out of an abundance of caution.
Record trip
As air traffic continues to surge this year, more than 3 million passengers were screened nationwide by the Transportation Security Administration on Sunday, marking the busiest day in the agency’s 22-year history. The TSA has seen eight of its 10 busiest days on record in 2024, with the number of travelers surpassing pre-pandemic levels due to cheaper airfare and hotel prices. While many investors have expressed concerns about an economic slowdown, TSA boarding pass scans may provide an optimistic data point for the economy, according to Apollo Asset Management. JP Morgan also predicts stronger oil demand due to revenge summer travel.
Energy benefits
Rising demand may not be enough to help major oil companies, with BP (BP) forecasting a second-quarter impairment charge of $1 billion to $2 billion amid “significantly lower” refining margins. The news sent its shares soaring. down 4% BP’s guidance comes just a day after Exxon Mobil (XOM) reported a decline in second-quarter upstream profit, also hurt by lower gas prices and refining margins. Elsewhere in the sector, Devon Energy (DVN) said it would acquire Grayson Mill’s Williston Basin business in a $5 billion cash and stock deal.
