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Power Sheet – June 14, 2016

The only really interesting aspect of Donald Trump’s extraordinary response to the Orlando shooting is that it demonstrates how far he is from making the essential maneuver every presidential candidate must make at this point in the cycle – pivoting to the general election. Instead, he’s turbocharging his strategy from the primaries. Considering that he has succeeded so far by breaking every rule of electoral politics, I hesitate to say that this cannot possibly work. But it’s getting extremely difficult to imagine that his behavior of the past two days will seem leader-like to Democrats, independents, and moderate Republicans, the constituencies he must now attract.

In a statement that seems beyond belief for any mainstream political figure, Trump appeared clearly to implicate President Obama in the massacre. “We are led by a man that is either not tough, not smart, or he’s got something else in mind,” he told Fox News. “He doesn’t get it or he gets it better than anybody understands. It’s one or the other. People cannot — they cannot believe that President Obama is acting the ways he acts and can’t even mention the words ‘radical Islamic terrorism.’ There’s something going on. It’s inconceivable. There’s something going on.” The meaning is inescapable: Obama at least approves of the attack and maybe played some larger role.

Trump has also blamed U.S. Muslims generally for not preventing the attack. “Muslim communities must cooperate with law enforcement and turn in the people who they know are bad – and they do know where they are,” he told a group in New Hampshire yesterday. He repeated his promise to stop all foreign Muslims from entering the U.S. indefinitely, and then went further, saying he would “suspend immigration from areas of the world where there is a proven history of terrorism against the United States, Europe, or our allies.” So presumably no visitors from Belgium or France until further notice.

Not that Hillary Clinton has advanced any kind of credible response to worsening terror inspired by radical Islam (the big news yesterday was that she finally said “radical Islam” on CNN). Trump must nonetheless face the issue that while his recent statements are the red meat that worked great for him in the primaries, if he wants to be the leader of the whole country, and not just of the minority of the minority party that has taken him this far, he’ll need to change his game. Though he obviously disagrees.

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One of the all-time biggest technology deals merits mention today. Microsoft announced yesterday it will pay $26.2 billion for LinkedIn, a 50% premium over its market value on Friday. Microsoft CEO Satya Nadella has been an excellent steward of the company’s capital so far, but as Fortune’s Shawn Tully explains, it’s difficult to envision how buying LinkedIn at that price can pay off for Microsoft shareholders. I’ve often made the point that synergies and strategic fit can’t rescue an acquisition at an excessive price, and this is not just a matter of boring accounting and number crunching. A business leader’s job is to create value, and paying too much for a company forces the leader instead to create misery for employees, customers, and shareholders. Nadella knows all this and presumably has a plan to make the deal a value builder. But investors don’t understand it; MSFT plunged on news of the deal.

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What We’re Reading Today

FanDuel and DraftKings talk merger
Nigel Eccles‘s FanDuel and Jason Robins‘s DraftKings are in early discussions of a potential merger. The move could make sense as states weigh whether to classify online daily fantasy games as gambling and therefore illegal. A merger would help the two sites fund legal costs and advertising.  Fortune

The friendship between Warren Buffett and Dan Gilbert
Buffett is backing Gilbert‘s bid to buy Yahoo’s Internet business, and it’s not the first time the two have partnered. A Berkshire Hathaway company, Vanderbilt Mortgage and Finance, buys mortgages for traditional homes exclusively from Gilbert’s Quicken Loans. The two also collaborated on a $1-billion contest for anyone who picked a perfect NCAA basketball bracket in 2014. (No one did.)  Reuters

U.S. companies that move overseas still receive local perks
Companies including Omar Ishrak‘s Medtronic and Gregory Case‘s Aon have moved their headquarters to European locations in order to avoid taxes, sparking the ire of many U.S. politicians. But several such companies have continued to receive perks of being American, such as being favored for U.S. contracts and being hosted at receptions by U.S. ambassadors overseas. WSJ

Building a Better Leader

75% of employers say employees lose two hours a day…
…to distractions, especially smartphones. But banning them isn’t an option. Consumer Affairs

The 30 best employers to retire from
These companies, offer unmatched 401ks, health insurance plans, and phased retirement perks. Fortune

How unusual is the blocking of Obama’s Supreme Court nominee?
Researchers say it’s unprecedented. NYT

Worth Considering

Did Microsoft overpay for LinkedIn?
Satya Nadella‘s Microsoft yesterday announced it will buy Jeff Weiner‘s LinkedIn for $26.2 billion. Microsoft has a history of overpaying for companies, but that was before Nadella took the helm; some analysts worry that this deal continues the trend. For the deal to be a success, Microsoft must increase LinkedIn’s operating cash flows by a factor of five. Fortune

Apple opens up Siri to developers
The announcement by Tim Cook‘s company at its developers’ conference yesterday is intended to advance Apple’s artificial intelligence efforts. But Amazon and Microsoft are already doing the same with their versions of a digital concierge, leading some analysts to ask whether Apple is too late. Wired

One of Tribune’s largest shareholders calls for inquiry
Oaktree Capital Management demanded an investigation into whether the Tribune board violated its fiduciary duty when it sold 16.6% of the company to Michael Ferro, Jr.‘s Merrick Media at a discounted price. Ferro became chairman and has replaced much of upper management. Bob Dickey‘s Gannett Publishing wants to buy Tribune, a deal that Oaktree supports, but Tribune has shown little interest in negotiating.  WSJ

Up or Out

Kathy Rogers will step down as U.S. Bancorp’s CFO on August 1 and will be succeeded by Terry Dolan Minnesota Star Tribune

Eli Lilly has hired Aarti Shah as CIO.  Yahoo Finance

Fortune Reads and Videos

Trump cancels the Washington Post’s press credentials
He calls its coverage of him “phony.” Trump has banned several publications from his campaign events. Fortune

PayPal placed a large bet on immigrants…
…when it paid $890 million last July for the Xoom app, which facilitates international money transfers. It’s part of a larger effort to capture part of the $600-billion market for funds sent across borders to help family members in other countries. Fortune

Alibaba says it can fight counterfeit products…
…being sold on its site, but founder Jack Ma admits it’s difficult because some of the fakes are very good.  Fortune

Sony’s VR headset has a release date
The Sony PlayStation virtual reality headset will hit stores October 13. PlayStation 4 owners rejoice. Fortune

Happy Birthday

Donald Trump turns 70 today.  Biography

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