Bloomberg - Evening Briefing - ‘Forever war’

College and university administrators around the US called the police on protestors this week, looking to tear down encampments and, in the case of Columbia University, end a building takeover. It was the culmination of a wave of student demonstrations against the war in Gaza and US aid to Israel. Some 2,000 people were arrested at schools from New York to Los Angeles, with police often engaging in massive shows of force that included using “flash-bang” devices to disperse protestors. It’s a complicated moment for President Joe Biden. Despite his modulation in recent months as the Palestinian death toll climbed, Biden’s steadfast support for Israel may damage his standing with younger voters. At the same time, Biden felt it necessary to make a statement about dissent and lawful behavior. “There’s the right to protest but not the right to cause chaos,” he said at Thursday. It’s a fine line: how to balance free speech while making sure everyone feels safe, especially given concerns raised by some Jewish students who say they’ve been harassed and threatened.

Police faceoff with antiwar protestors on the campus of UCLA after destroying part of an encampment barricade there. Photographer: Etienne Laurent/AFP

In the Middle East, yet another potential deal—a temporary ceasefire for the exchange of hostages held by Hamas—is on the table, with the militant group saying it’s reviewing it in a “positive spirit.” US Secretary of State Antony Blinken arrived in the region pursuing a Saudi-backed peace plan. The proposal, however, seeks a return to a two-state solution, a concept long favored by many global parties as the only way to end decades of bloodshed, but strongly opposed by Israeli Prime Minister Benjamin Netanyahu. In fact, he’s promising an invasion of the southern Gaza city of Rafah despite US opposition and the potential ceasefire. Marc Champion argues in Bloomberg Opinion that Netanyahu should reconsider, in part because the remaining options amount to a “forever war” in which “Israel walks alone in a dangerous region.” 

In the US, Gen Z is looking at a future in which jobs, homes and long-term wealth are much harder to come by than was the case for their parents. “The Generation Z cohort that’s graduating college today keeps hearing how low unemployment is and how hot the stock market has been running, but they’re getting no part of it,” Jonathan Levin writes in Bloomberg Opinion. Federal Reserve Chair Jerome Powell likely knows all about it, but he’s sticking to a cautious approach with the economy. The Fed indicated this week that it will continue to hold interest rates at a multi-decade high to further quash inflation. But to Wall Street’s delight, the central bank played down the risk of more hikes. Still, the robust US labor market, which has helped underpin consumer spending, showed signs of cooling in April as unemployment ticked up to a still-low 3.9%. Overall, the world’s economic outlook is looking up as growth proves more resilient and prices in many countries are set to cool faster than previously expected. And for Japan’s battered yen, the US jobs report took some pressure off in a week in which Japanese officials are thought to have conducted two currency interventions. 

Chinese leader Xi Jinping is heading to the European Union for the first time in five years—with a clear message and agenda: Beijing can offer the bloc more economic opportunity and better relations than the US wants to admit. Xi’s five-day trip will take him to France, Serbia and Hungary as those nations seek new investment from China. But the sojourn comes as the EU forges a more unified voice with Washington in opposing China’s capacity for cheap exports, and over perceived national security risks. Xi’s visit  follows US Treasury Secretary Janet Yellen’s trip to China last month, where she warned that China’s overcapacity was a problem for the world—a message echoed by German Chancellor Olaf Scholz.

Cannabis should be reclassified as a less risky drug, the US Justice Department recommended, a move that would align federal law with a growing number of states that have legalized it to varying degrees. The announcement gave a boost to pot stocks, which had been lagging but rebounded as hopes grew that federal law would be loosened. The change—which would remove pot from the list of controlled substances—is far from certain, though: powerful forces in Congress remain opposed to legislation that would make it easier for cannabis companies to bank and do business.

A cannabis store in New York City Photographer: Gabby Jones/Bloomberg

As global warming continues to accelerate and the energy transition falls behind, cities are scrambling to find ways to help bridge the gap. Heat generated from sewage is now being used in some communities to help warm homes and buildings. Then there’s the huge environmental footprint of livestock. A shift is underway in school cafeterias, hospitals and on university campuses from San Diego to Oslo as diners are directed  to plant-based options—not by removing animal products entirely but by nudging people to make different choices.

Electric vehicles are the transport of the future, but carmakers around the world are warning of a bumpy road to electrification. In this week’s episode of The Circuit, Emily Chang visits a General Motors factory floor to discuss CEO Marry Barra’s ambitions for an all-EV fleet by 2035. Then there’s Serena Williams: she’s already revolutionized tennis—now she’s taking on Wall Street. On the latest episode of The Deal with Alex Rodriguez and Jason Kelly, the tennis icon explains how her venture capital firm is trying to elevate a new generation of founders.

Serena Williams, left, on The Deal with Alex Rodriguez and Jason Kelly

• Japanese auto earnings amid a weak yen, Chinese competition.
• Bank of England rate decision with calls for caution over inflation.
• Boeing, NASA to launch Starliner’s inaugural human spaceflight.
• Bill Hwang, the Archegos founder who lost $36 billion, heads to trial.
• Bloomberg tech conference; Milken Institute conference in LA.

Gucci, once synonymous with larger-than-life luxury, has fallen far from its rarefied perch. This week’s mini-documentary from Bloomberg Originals, How Gucci Fell Off the Catwalk, takes a close look at how laissez-faire management and unsuccessful marketing strategies landed Gucci in the discount bin—and what it might take to pull itself back out.

The window display at a Gucci boutique in Paris. Photographer: Benjamin Girette/Bloomberg

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