Bloomberg Opinion

A new development in the culture wars is about to create a fresh set of headaches for corporate America. Issues that left-wing advocacy groups have been heckling companies about for decades are increasingly being taken up by the right — a shift that’s adding complexity and risk for CEOs already struggling to navigate this moment’s deep ideological rifts. 🔗 Read my Bloomberg Opinion column on how the right and left are finding common ground to pressure CEOs, and why companies will need a new playbook to respond. https://lnkd.in/ea6cYufX 📽 Or watch the tl;dr video version:

THE NEW ESG: Economics, security and geopolitics. President Trump’s “energy dominance” agenda pushes US fossil fuels and denigrates clean energy technologies. But it unintentionally lays the foundation for the latter - outside of the US anyway. Bretton Woods, Pax Americana - whatever you call it, the postwar order of increasing globalization backed by US naval muscle is when oil became the world’s number one energy source. It was part of a broader embrace of traded fuels in a world where most of humanity is short of those fuels but could mostly trust on safe, dependable supply chains. Today, the leader of the free world lauds Russia and threatens Canada. Just as after the 1970s oil crises, many countries have reasons to diversify their energy supply to minimize economic costs, bolster security and enhance their geopolitical position. That means a bigger role for electrification, the backbone of energy transition. It is an imperfect pathway, offering a boost to coal and raising frictional costs for technology. But grids, unlike thermal energy, can change over time and clean tech is already taking market share. Read about it here at Bloomberg Opinion https://lnkd.in/eCS-xUM2

Wells Fargo has been freed from its prison and can now turn to growth - mainly in corporate deposits and trading most likely. Its asset cap was seen as uniquely harsh, but it has proved a more effective rehabilitation than ordinary fines - and Wells has emerged fitter. Read more at Bloomberg Opinion Wells Fargo’s Asset Cap Has Been a Good Punishment https://lnkd.in/eJ5NwDSc

For what shall it profit a man, if he shall gain the whole world, and lose his own soul? That Biblical chestnut should hang over Secretary of State Marco Rubio's bathroom mirror. Andreas Kluth has some thoughts on Rubio's climb up the greasy poll: "The main secret to his success so far is his willingness to abandon all pride and principle in toadying up to Trump. In Saturday Night Live’s exegesis, the president expects Rubio to be his 'good little Marco' and rewards him by anointing him GOAT — 'the scapegoat, but it’s still a type of goat.' And so the man who as senator railed against Moscow and stood with Kyiv nowadays sinks dutifully into an Oval Office sofa while Trump excoriates the Ukrainian president on live television. The formerly pro-migrant son of Cuban exiles is now a MAGA warrior defending the southern border against the invading hordes. The scholar of international relations who used to appreciate soft power these days gleefully vows 'to aggressively revoke' the visas of Chinese students at US universities."

At this early point in Donald Trump’s second term as president, Marco Rubio is riding higher than many predicted. Yet he appears simultaneously to be getting weaker and hollower by the day. That raises two questions. First, what is Rubio thinking? Second, who, if anybody, actually runs the engine rooms of American diplomacy and statecraft on behalf of the president? When Trump picked the then-senator, a former rival for the Republican nomination in 2016, for secretary of state, Washington’s foreign-policy wonks assumed that Rubio would be among the first to be pushed out of the administration. Too stark were the differences in the two men’s worldviews — Trump’s transactional autocrats-come-hither, allies-be-damned nihilism versus the hawkish and often moralistic notions about American exceptionalism and leadership that Rubio used to hold. It did not necessarily help that Rubio, unlike Trump’s other nominees, was almost overqualified in his subject matter; Trump doesn’t like smart alecks in the room. Instead, the first senior member of the administration to be demoted (via a transfer to the relative exile of the United Nations in New York) was National Security Advisor Michael Waltz. The one most at risk of being next is Pete Hegseth, the ever-feckless and chaos-prone defense secretary. Rubio, by contrast, has not only held on to the State Department but added, at least temporarily, Waltz’s portfolio overseeing the National Security Council. The only other person to have both jobs synchronously was Henry Kissinger. Rubio also runs the skeletal remains of the US Agency for International Development (after overseeing its demolition, an act of geostrategic vandalism which the old Rubio would have vituperated). For good measure, he also heads the National Archives and Records Administration (although I doubt he’s doing much archiving). The main secret to his success so far is his willingness to abandon all pride and principle in toadying up to Trump. In Saturday Night Live’s exegesis, the president expects Rubio to be his “good little Marco” and rewards him by anointing him GOAT — “the scapegoat, but it’s still a type of goat.” (Read the whole column - no paywall with this gift link) Bloomberg Opinion https://bloom.bg/45LBnPY

A few years from now, data centers might drink 74 billion gallons of water every year. And a lot of those server farms are cropping up in Arizona, where one entire Lake Mead’s worth of groundwater has disappeared during a crushing, multi-decade drought. But the real problem for Arizona’s water isn’t server farms but farm farms. That 74 billion gallons wouldn’t keep Arizona’s farms in business for even a month. Those use 4 billion gallons of water every single day. My video for Bloomberg Opinion Or just read a column for free: https://lnkd.in/e7GQUJss

Tariffs are raising inflation expectations — but will they reshape behavior and lead to persistent inflation? my new Bloomberg Opinion piece. The University of Michigan’s median long-term inflation expectations were 4.2% in May, up more than a percentage point this year, even as actual inflation slowed. However, I argue there are reasons to be skeptical. 🔹News about tariffs is driving expectations, but it's a complicated, politicized policy with which people have limited experience. 🔹1 in 5 respondents expect inflation to average 15% or more over the next 5–10 years. That's even higher than the prior peak in 1980 when inflation was in the double digits. 🔹 These outlier responses first began to rise after the Michigan survey moved online in 2024, suggesting methodological shifts may be contributing. 🔹 Despite the surge, there has only been a moderate increase in those who say it's a good time to buy consumer durables since prices will rise. Asking about expectations in surveys is a useful exercise, but the current environment is pushing it past its realistic limits. The clearest message from the Michigan survey is not for the Fed. It’s for the White House. In recent years, the survey has picked up sharply pessimistic opinions about inflation. Now it’s picking up sharply pessimistic opinions about tariffs. So while expectations of inflation may have become unmoored, Americans’ dislike of inflation — and tariffs— is firmly anchored. #inflation #expectations #FederalReserve #tariffs #economy #monetarypolicy #macroeconomics #consumerbehavior

This is the latest Points of Return, mostly on section 899 of the Big Beautiful Bill, and its implications for global capital flows. Hope it's of interest:

Brazil's fiscal consolidation is inevitable. It could also be a winning strategy in next year’s presidential election new column for Bloomberg Opinion 🎁 link https://lnkd.in/dHG2MbCq

President Trump has sent a high-level delegation to Alaska to boost energy production there, including a giant, long-mooted LNG export project. He will also reverse a ban on drilling in a large part of the National Petroleum Reserve-Alaska. But in doing all this, he faces one big obstacle: Himself. Alaska has vast oil and gas reserves. But its harsh climate and terrain, plus sheer remoteness, make it a tough and expensive proposition to develop those reserves. The state’s oil boom in the 1970s and ‘80s needed the impetus of the oil crises and the catalyst of enabling federal legislation. Today, the state’s gas own gas needs and a renewed period of international turmoil may provide a security premium to justify another round of investment. But Trump’s own tumultuous trade war and a foreign policy that includes picking fights with allies don’t exactly provide the certainty needed to put big money into new energy projects. Just look at what shale drillers are doing. Read about it here at Bloomberg Opinion https://lnkd.in/eT69q74j