5 things to start your day

[Bloomberg]( U.S. and China may be ready to talk, Trump disrupts NATO unity, and traders see an end to the Fed’s hiking cycle. It’s good to talk Beijing and Washington sought to [defuse](an escalating trade war after the Trump administration released the biggest list yet of Chinese goods it may hit with tariff increases. China’s Vice Minister of Commerce Wang Shouwen said “when we have a trade problem, we should talk about it” -- alongside fresh threats of [retaliation](. The move back to the bargaining table matches some willingness from the Trump team to resume talks, according to a person familiar with the administration’s thinking. Both nations stand to lose by erecting barriers. Morgan Stanley [estimates]( that if the U.S. goes ahead with threatened tariffs on  $250 billion worth of imported Chinese goods, the hit to American growth would be around 0.3 to 0.4 percentage point and, for China, it could constitute a drag of 0.3 percentage point. Show of disunity Far from the staid affairs of the past, the NATO summit has made for [viewing]( akin to the drama of a dysfunctional family on a reality TV show. After suggesting other Western nations double their arms budgets to 4 percent of gross domestic product, Donald Trump had to allay concerns about America’s commitment to the generations-old defense pact after a report he wanted to walk away unless partners "immediately" increase spending. The U.S. president caused ripples with a vehement on-camera breakfast attack on Germany, saying its purchases of Russian gas mean “Germany is totally controlled by Russia.” An earlier comment that the nation is “captive’’  to Moscow provoked an uncharacteristically personal response from German Chancellor Angela Merkel. She reminded Trump that she knew what captive means, having grown up in Soviet-controlled East Germany. Next, the former TV personality heads to the U.K. His [travels]( will take him to Blenheim Palace to discuss post-Brexit trade with business leaders, to countryside retreat Chequers with Theresa May, and to Windsor Castle and afternoon tea with the Queen. Sponsored Content by MarketAxess [MarketAxess created Open Trading™](- empowering institutional investors and broker-dealers to trade directly with one another. In the process, over 1,300 global institutions have created the Open Market. Here, they’ll find enhanced liquidity, real cost savings, better pricing and seamless integration.  Divergent thinking The big data print of the week will be U.S. consumer price numbers, due out at 8:30 a.m. The report for June is forecast to show an index gain of 0.2 percent for the month and 2.9 percent from a year earlier, following a big jump in May. It comes at a critical time for the markets. On the one hand, eurodollar contracts are [calling time]( on the Federal Reserve’s tightening cycle, signaling slightly higher expectations among short-end traders for policy easing between December 2019 and December 2020 than for tightening. On the other, the latest data show speculators have record bets against 10-year notes, implying they expect yields to [rise](. Someone has to be right, and the direction of inflation could be a major clue. Markets recover Overnight, the MSCI Asia Pacific Index halted two days of losses, while Japan’s Topix index closed 0.5 percent higher. China’s Shanghai Composite Index climbed 2.2 percent. In Europe, the Stoxx 600 Index added 0.4 percent, and the euro eked out a gain. S&P 500 futures pointed to a higher open, the 10-year Treasury yield was at 2.86 percent and gold rose. M&A A-OK Comcast Corp. increased its takeover bid for Sky Plc to $34 billion, [topping](an offer from Rupert Murdoch’s 21st Century Fox Inc. The move is the latest twist in a surge of M&A that finds media giants in a pitched battle to fend off powerful digital rivals. Meanwhile, Broadcom Inc. has [splurged](into a new realm of electronics with a planned $18.9 billion purchase of corporate software maker CA Technologies, unveiled late Wednesday, with the rationale for the bid leaving some analysts flummoxed. What we’ve been reading This is what caught our eye over the last 24 hours. - Greece becomes hot bond-market [destination](. - Papa John chairman [resigns]( following racist comments. - Text-addicted [parents]( are driving and dangerous. - Electric cars seen [straining]( U.K. power grid. - A high street in the English midlands becomes a near [ghost]( town. - France woos children that Brexit leaves [behind](. And finally, here’s what Dani's interested in this morning Some big name equity quants are having a rough go of it. A mutual fund from AQR Capital Management rounded out its worst month since inception. Quantitative Investment Management's hedge fund -- which gained 60 percent last year -- is down 35 percent this year through May. If you're not a quant nor have money in such strategies, it may be easy to dismiss the relevance of their struggles. But it speaks to a broader market challenge. [Momentum](-- a bet on stocks with the biggest returns over the past year -- is in the midst of its worst run in two years. So even if you're a discretionary investor, this has implications for you. If you just love, say, semiconductor shares, you're effectively reliant on momentum. What's more, the investing style has made a killing and even held up during the February volatility blow-up. In other words, it's been a pillar of this aging bull market. So if the quants are having trouble, it may be the canary in the coal mine for a downturn in the broader market. Like Bloomberg's Five Things? [Subscribe for unlimited access]( to trusted, data-based journalism in 120 countries around the world and gain expert analysis from exclusive daily newsletters, The Bloomberg Open and The Bloomberg Close. Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. [Learn more.]( [FOLLOW US [Facebook Share]]([Twitter Share]( [SEND TO A FRIEND [Share with a friend]]( You received this message because you are subscribed to Bloomberg's Five Things newsletter. [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022 If you believe this has been sent to you in error, please safely [unsubscribe](.