Tension Rises between Pelosi and the Far-Left “Squad”

House Speaker Nancy Pelosi’s hold on the fractured House Democratic Caucus is loosening, as the Californian’s burgeoning feud with a small group of far-left freshmen has spilled into public.

However, President Trump’s decision to target the four Democratic lawmakers—all minority women—with a series of offensive tweets over the weekend, has taken the heat off of Pelosi and handed her an opportunity to unify her caucus.

Continue reading “Tension Rises between Pelosi and the Far-Left “Squad””

What Deutsche Bank’s Retreat Means for U.S. Banks

Deutsche Bank’s plan to downsize is a boon for U.S. investment banks. Germany’s largest bank recently announced that it will cut 18,000 jobs and shut its global equities sales and trading business. The institution will now focus on corporate banking, and asset and wealth management. The bank has been under pressure after years of low profitability, money-laundering scandals and more competition from U.S. investment banks on its own turf. Continue reading “What Deutsche Bank’s Retreat Means for U.S. Banks”

Amazon’s ‘Christmas in July’ Forces the Retail World to Respond

Amazon’s self-created “Christmas in July” sales holiday is coming. The retail juggernaut launches its fifth annual “Amazon Prime Day” at 12 a.m. PDT July 15, which runs until 11:59 p.m. PDT July 16. Amazon boasts that this 48-hour sale bonanza will offer Amazon Prime customers a variety of deals on products—from tech items such as Amazon Fire TV, Amazon Alexa, smartwatches and headphones, to kitchen appliances and bedding.

But that doesn’t mean that its competitors such as eBay, Target, Walmart, Kohls and Bed, Bath & Beyond are taking this sitting down. These rival retail giants are firing back with deals of their own.

Continue reading “Amazon’s ‘Christmas in July’ Forces the Retail World to Respond”

What’s the Next Stop on Oil’s Wild Ride?

If you follow the oil markets closely, you might be feeling a bit motion sick these days. To call the path of crude oil prices over the last nine months “volatile” would be putting it mildly. Benchmark West Texas Intermediate crude rallied at the beginning of last autumn, hitting a peak of $76.41 per barrel on Oct. 3. From there, WTI plunged, reaching a low of $42.53 the day before Christmas: A decline of 45%. Then, crude started a new rally as 2019 began, eventually zooming back up to $66.30 on April 23, for a gain of 56%. Since then, it has fallen back to about $53, for a loss of roughly 20%. Nauseous yet?

What’s been driving all these ups and downs? Two competing narratives of under- and oversupply. The first, which prompted last fall’s big rally, held that the world would soon find itself short of oil because of the strong global economy and looming U.S. sanctions on Iran’s oil industry, which would take key barrels off the market. But when Washington waived some of those sanctions, the market suddenly looked oversupplied, and oil prices tanked. Not for long, though: Anticipation of strong oil demand and concerns that oil exports from Venezuela and Libya would shrink sparked a new rally that lasted through the winter. Then, this spring, investors grew nervous that various trade disputes would weaken the global economy enough to sap oil demand, and prices once again dropped.

Even if you don’t follow the oil markets or invest in oil companies, you probably felt the effects of all these market gyrations. Retail gasoline prices soared this winter and early spring, reaching almost $3 per gallon in the weeks leading up to Memorial Day. Since then, the national average price of regular unleaded has pulled back by about 20 cents per gallon. (Though drivers in many parts of the country have been paying gas prices that start with a 3 lately, the national average price of regular unleaded hasn’t exceeded the psychologically painful $3 mark since 2014.)

So, what comes next for oil prices? As is usually the case with questions of economics, the answer is: It depends.

Specifically, the outlook for oil prices depends on the overall health of the economy and whether the longest expansion in modern U.S. history can keep going. Overseas, growth is weakening significantly in China and sputtering in Europe. Parts of Latin America look even worse. The U.S. remains in good health, but can that continue when most of the rest of the world is slowing down? A resolution to the trade war between Beijing and Washington would go a long way toward reviving overseas growth, but that is far from a given at this point.

If the economy can keep chugging along, and if the trade picture improves, I think the next move in oil prices will be modestly higher, perhaps after a further dip in the near term. Why? Several reasons.

OPEC and its partner, Russia, have been holding back their oil exports in order to boost prices. It’s not certain the cartel and Moscow will maintain that policy for the rest of this year, but there’s a lot of pressure on them to do so. Current oil prices are not high enough to fund the budgets of OPEC’s petro-state members.

Production losses remain a real concern in two troubled countries, Venezuela and Libya. Venezuela has already seen its output drop significantly in recent months as its economic crisis deepens. Libya is holding up for now, though it remains plagued by internal violence. The U.S. has imposed the previously delayed sanctions on Iran’s oil industry, which have also caused Iranian production to slip.

The latest attack on oil tankers in the Persian Gulf further complicates the picture. Two tankers transiting the narrow Strait of Hormuz with petroleum products were reportedly hit by torpedoes and damaged earlier today. It’s not yet clear what happened or who is responsible, but suspicions that Tehran was involved raise fears of a shooting war between the U.S. and Iran in the oil market’s most vital shipping route.

Here in the U.S., production is booming, but it’s probably ready to take a breather. The latest data from the Department of Energy peg domestic crude output at 12.3 million barrels per day, the highest in the world and up 1.4 million barrels per day from a year ago. That’s helped keep a lid on prices recently. But drilling activity has been slowing, which points to less production growth in coming weeks and months. According to oil-field services firm Baker Hughes, there are about 100 fewer rigs drilling new oil wells now than there were last autumn, when prices were higher.

In other words, there are reasons to believe that global oil supply is going to tighten up a bit.

Stephen Schork, editor of energy investing newsletter The Schork Report, thinks the recent sell-off will come to an end fairly soon. “I think we are at the bottom” for crude prices, he says, especially since, at current prices, many operators in U.S. shale fields will struggle to turn a profit. He’s concerned about the health of the economy right now, but believes much of oil’s recent price slide was sparked by strength in the value of the dollar this spring. (When the dollar rises, commodities priced in dollars become relatively more expensive for overseas buyers, which hurts demand.)

Whatever happens, prepare for more volatility ahead. Oil prices jumped on the news of the damaged tankers in the Gulf, but that price spike could reverse quickly if the situation calms down. Likewise, if global oil production slips a bit and stockpiles of crude in storage start to fall, prices will probably jump. So, keep your motion sickness pills handy, but watch for prices to eventually stabilize and trend higher if the economy can maintain its momentum.

Mexican Tariff Turmoil Roils Senate Republicans

President Trump’s proposed tariff on Mexican goods struck the Capitol like a thunderbolt this week, catching lawmakers off guard and forcing Republicans to choose between two things they loathe: pushing back against Trump or allowing him to implement what they consider bad policy. Most, at least in the Senate, are choosing the former.

“There is not much support in my conference for tariffs, that’s for sure,” Senate Majority Leader Mitch McConnell of Kentucky said. Continue reading “Mexican Tariff Turmoil Roils Senate Republicans”

China’s High-Tech Ambitions Take On 5G

Rising tensions between the U.S. and China extend far beyond trade. A battle over high-tech markets is ramping up as China seeks to lead the world in 5G, the latest version of cellular technology.

China’s 5G strategy increasingly worries U.S. officials, who see Chinese telecom gear as a national security threat that could allow Beijing to spy on communications or help developing nations censor parts of the web, as China does. There’s growing fear that China’s leading companies are poised to out-compete and out-innovate U.S. tech giants. That has riled U.S. lawmakers, who point to years of stolen intellectual property by China and unfair conditions imposed on U.S. firms doing business in the country. Continue reading “China’s High-Tech Ambitions Take On 5G”

Disaster Aid Disaster

Congress’ inability to follow through on a routine task with overwhelming bipartisan support—providing aid to areas hit by natural disaster—bodes ill for making the tough fiscal choices that lie ahead.

A proposed disaster relief package for areas hard-hit by flooding, hurricanes and wildfires has been stalled for months, largely over a squabble about how much money—if any—should go to Puerto Rico. President Trump claims that Puerto Rican officials have mismanaged the federal dollars it already received for 2017’s devastating Hurricane Maria and is reluctant to approve more. Democrats disagree and are demanding significant aid for the island. Continue reading “Disaster Aid Disaster”

Shopping for a New Car? Here’s What to Know Now

If you’re going to be in the market for a new car this year, it pays to know what sort of shape the auto industry is in and what sort of deals you can expect to find. If you haven’t shopped for new wheels in a while, you might be surprised at just how much the market has changed.

U.S. auto sales are still going strong, but they’re showing signs of weakening, according to industry analysts. Every expert I spoke with recently expects total sales to come in a bit below 17 million this year, which would be good, but behind the recent pace. Combined sales of cars and light trucks hit a record 17.5 million in 2016 and stayed above the 17-million market in 2017 and 2018; 16.8 million or a bit lower seems like a reasonable bet for this year. Continue reading “Shopping for a New Car? Here’s What to Know Now”

Big Tech Won’t Be Broken Up, but Big Changes Are Coming

Calls are growing louder to split apart Facebook, Alphabet, Amazon and other tech giants. A group of activists and scholars seek to use decades-old antitrust reasoning to regulate or break up today’s largest tech companies. “It’s definitely a new and much greater drumbeat today than it has been,” says Charlotte Slaiman, competition policy counsel at Public Knowledge, a public interest nonprofit based in Washington, D.C.

The rising movement, known as hipster antitrust, “attacks ‘bigness’ per se, says Joe Kennedy, senior fellow at the Information Technology and Innovation Foundation. Kennedy points out in a report that a policy shift in that direction could produce more uncertainty, slow innovation and even reduce economic growth. That threat, however unlikely, strikes fear into some of the country’s biggest companies. Continue reading “Big Tech Won’t Be Broken Up, but Big Changes Are Coming”