The first, and the main focus of the speech, is the public’s rising distrust of business, which in the U.S. is reflected in increased regulation (Obama) and growing protectionism (Trump, Sanders, Clinton). As Immelt points out it’s not just in the U.S., “but everywhere. These sentiments have traction in Europe and Latin America, on both the right and the left. The future of the E.U. is an open question. Protectionist barriers are rising in Asia and Africa.” As a result, Immelt said GE is making a “bold pivot” away from traditional globalization, and towards “localization.”

The second trend is what he calls the “digitization of assets.” In a separate graduation speech at Hamilton College, investor Peter Thiel decried the fact that the word “technology” has come to mean information technology, and innovation elsewhere has been moribund. But Immelt sees a coming marriage of physical and digital technology that will unlock a new wave of productivity and help solve energy, healthcare and other problems around the world. “Sometimes business can drive change faster than government,” he said. “It is tough to hate a company that is reducing climate change and creating jobs.”

The third is the drive toward simpler, and less centralized, organizations and a different form of leadership. “Complex and centralized bureaucracies are obsolete,” he said. “Change requires new business models… leaner, faster, more decentralized. The days of cycling global ideas through a central headquarters is over. Globalization requires pushing capability to local teams who are empowered to take risks without second guessing.”

I’m off today to attend my daughter’s graduation from the Yale School of Management, and plan to recommend Immelt’s text as a good summary of both the biggest challenges and the biggest opportunities she and her fellow graduates face.

More news below.

Top News

•   Bayer Puts Its Money Down

Bayer has formally bid for Monsanto, valuing the company at $62 billion, including some $15 billion in debt. The offer is all cash, pre-empting any haggling over the companies’ relative valuations. At $122 a share, it’s 33% over the average Monsanto share price during the last six months, which will make it hard for Monsanto’s current management to convince shareholders they can do better on their own. Bayer’s shares are down over 3% in Frankfurt due to the fact that the company will be issuing new stock to cover 25% of the deal’s value. The German company says the deal will add around 5% to earnings per share next year and over 10% a year thereafter, thanks to $1.5 billion in a year in extra efficiency. There’s no mention of any Dow-Dupont breakup along business lines after the merger, but a company that big (it will be the world’s biggest agrochemicals business by a distance) is going to have to devolve power away from its Leverkusen HQ. The seeds business would  continue to be centered in St. Louis, while pesticides and crop sciences would be based in Germany.  Fortune

• Clouds Over Anthem/Cigna Deal

The biggest merger in U.S. healthcare may be in need of, well, some care, according to The Wall Street Journal. The WSJ reported last night that Anthem’s bid for Cigna, is in trouble because of simmering rows between the two companies’ managements over issues as diverse as Anthem’s lawsuit against drugs wholesaler Express Scripts to the future responsibilities of Cigna CEO David Cordani. Perhaps most significantly, the WSJ warns about the lack of a back-up plan if regulators require the two to sell assets as a condition for letting the merger through. Cigna has already told its shareholders that the deal may not be completed till next year. Its shares, tellingly, are trading 25% below what Anthem offered for them, a reflection of how seriously the market is taking the risk of the deal breaking up.  WSJ, subscription required

•Minecraft To Hit China

Over a year after paying $2.5 billion for it, Microsoft has found a partner to help it launch Minecraft--arguably the world’s most popular video game-- in China. The delay in bringing it to the gaming world’s biggest market is due in part to a thicket of local regulations, the most important of which is the need to have a local partner. Microsoft has chosen NetEase, one of the biggest local competitors to New York-listed Tencent. It isn’t clear how much of the upside Microsoft is having to give away in return. One of the pluses of Minecraft is that it’s hard to see how it will offend the notoriously twitchy Chinese Internet police. But getting the most out of its investment will depend on keeping it safe from fakers—an area where NetEase’s input will be vital.  Fortune

•  Arms and the 'Nam

The U.S. is lifting its ban on the sale of lethal arms to Vietnam, which tells you how much the future threat of China now outweighs any animosity over the past. President Barack Obama made the announcement during a press conference in Hanoi Monday, although he didn’t provide any further information as to what type of arms would be in focus first. Vietnam is one of the countries with competing claims to islands in the South China Sea that China claims as its own. Like most other countries in the region, its prosperity depends on seaborne trade, a trade overshadowed by the sharp build-up in China’s navy in recent years. There are a few plowshares in amongst the swords though: Boeing announced an order from VietJet Aviation for 100 of its 737 Max 200 airplanes, worth $11.3 billion, during Obama's visit.  Bloomberg

Around the Water Cooler

•  Pot Calls Kettle 'Schwarz'

Fiat Chrysler shares are falling in European trade this morning after a  newspaper report at the weekend that accused it of using illegal defeat devices in cars sold in Germany. It cited a confidential report from the German vehicle licensing agency KBA (which had failed for years to notice the defeat devices Volkswagen, Audi and Porsche cars). Fiat refused an invitation to testify to a Bundestag committee on the its engine-management software last week, saying it answered only to Italian authorities under existing European law. That’s the same law that has protected Volkswagen from any awkward questions by other E.U. countries’ authorities. A Berlin investigation found that over 40% of the models it tested used software that dialled back emissions-cleaning procedures significantly in low temperatures ‘to protect the engine’. This is legal under E.U. law, thanks to various loopholes that car industry had lobbied for in the past.  Reuters

• Xiaomi the Money

This is a shoe that’s been waiting to drop for a while. Xiaomi, the Chinese smartphone maker that had a bigger valuation than Uber the last time it asked investors for money, missed its growth targets by a country mile last year, as it failed to make the step up in quality and geographical expansion that it needs to challenge Apple and Samsung. Founder Lei Jun had initially targeted raising sales over 33% from 74.3 billion yuan ($11.4 bilion) to 100 billion yuan last year. In the end, they eked out only 5% in yuan (and only 3% in dollar terms), according to an apparently unauthorised comment by its spokesman that has since been taken down from some of the sites where it was published. At one level, it’s another clear sign of the smartphone market’s saturation (shipments in China, Xiaomi’s only major market, edged up 2.5% last year); on another, it’s another riff on our theme this month on the retreat from public equity markets: the investors that committed to Xiaomi’s last funding round might wish their capital was in a more liquid asset right now.  Fortune

• Tribune to Rebuff Gannett Again

The battle for control of the LA Times and Chicago Tribune goes on. Their parent company, Tribune Publishing, is set to reject the latest $864 million offer from Gannett, publisher of USA Today, according to Reuters’ sources. However, it will make some confidential data available to Gannett, a move that looks like persuading Gannett that it Tribune indeed worth as much as it thinks. Usually, in old media, the target needs a buyer more than the buyer needs another set of pension liabilities (although Gannett has already said it’s less concerned by that than it was initially). Tribune is under pressure from its second-largest shareholder, Oaktree Capital, to sell. The endgame is probably near, although the outcome could still go either way: after all, Mort Zuckerman refused to give into lowball offers for the New York Daily News last year, and Digital First, the publisher of the Denver Post and San Jose Mercury News also stayed independent, rather than sell out to buyout firm Apollo Global.  Fortune

• Europe's Far-Right on the Verge of a Breakthrough 

Europe will have to wait a few more hours to know whether it has its first  new far-right head of state since World War 2. After polling closed in the run-off for Austria’s presidency, the Freedom Party’s Norbert Hofer (who, among other things, wants the South Tirol region returned from Italy), was tied with former Green Party leader Alexander van der Bellen. Hofer still seems the likelier victor, with local press reports suggesting he will attract more of the postal and absentee ballots cast. The turn-out was an impressive 72%. As we’ve noted, the event is less important for the result itself (the post is largely ceremonial) than for the effect it will have galvanizing and legitimizing far-right parties elsewhere across the E.U.. This, remember, is happening in a country with the lowest jobless rate in the bloc.  Reuters