Foreign Policy Challenges To Test President Trump

There’s a famous (though probably apocryphal) Chinese curse that is frequently cited when the world becomes unstable and chaotic: “May you live in interesting times.”

Donald Trump, whether he likes it or not, has become president at a very interesting time in history. Only months after taking office, he faces a world rife with potential problems, any one of which could potentially erupt into a full-blown crisis.                Continue reading “Foreign Policy Challenges To Test President Trump”

Who Profits from the Next Billion Internet Users?

Tech companies are eyeing a huge new market: The next billion customers coming online for the first time by 2022, mainly in India, China, Indonesia, parts of Africa and other developing regions.

Falling costs and improving technology are making it possible. Low-cost smartphones, running $100 or less, make mobile broadband far more accessible to consumers with little income. Chinese manufacturers such as Huawei, Xiaomi and ZTE are flooding the market with cheap but capable handsets, almost all of them running Google’s Android operating system. Plus, steady advances in wireless radio antennas and other telecom equipment make it cheaper and easier to build mobile networks with faster speeds, more coverage and lower data prices. Continue reading “Who Profits from the Next Billion Internet Users?”

What’s Next For Health Care, Trump’s Agenda?

The odds of repealing and replacing Obamacare look even worse after House Republicans couldn’t unite around replacement legislation and the bill had to be pulled before today’s vote.

The failure represents a major setback for President Trump and for House Speaker Paul Ryan (R-Wis.). Continue reading “What’s Next For Health Care, Trump’s Agenda?”

The Terror Attack in London

The threat of terrorism in Europe is far from over. That much was clear after the recent attack in London that killed four people, injured dozens and jolted the United Kingdom as the country prepared for negotiations to exit the European Union.

This was the latest in a string of attacks in Europe over the last two years, many of them committed by “lone-wolf” assailants: Those who have been radicalized by online propaganda from groups such as the Islamic State, but aren’t actually affiliated with them. Continue reading “The Terror Attack in London”

What Now for Borrowers and Savers After the Fed Move?

Now that the Fed has raised the effective federal funds rate a quarter of a percentage point to 0.9%, and indicated its intention to raise twice more this year, the effects will ripple out to most borrowing rates, but only to some savings rates.

Borrowing Rates

The bank prime rate, which is the short-term borrowing rate available to the most credit-worthy customers, has already fully adjusted. The prime rate usually rises within one day of a Fed hike. Ditto for home equity lines of credit, which are tied to the prime rate. Continue reading “What Now for Borrowers and Savers After the Fed Move?”

Gasoline Prices To Trend Higher This Spring

Gasoline prices are behaving themselves right now. But if you’re planning a spring or summer road trip, you should budget for higher prices at the pump.

At least, that’s what the history of gas prices teaches us. Almost every year, the average retail price of gasoline reaches a low point sometime between midwinter and early spring, then rises steadily as the weather warms. Part of the reason has to do with simple demand: Americans tend to hit the roads for vacation in greater numbers during the spring and summer than during the winter. For instance, in 2016 motorists burned up between 8 million and 9 million barrels of gasoline per day during January, compared to nearly 10 million barrels per day throughout the summer months.

And part of the reason for the spring price rise has to do with the fuel itself. The so-called winter blend gasoline that refineries churn out during the cold months costs a bit less to make than the summer-blend varieties that they are required to produce when the mercury rises. (AAA has a handy explanation of the difference between the two basic types of gas.)

Of course, gas prices also depend heavily on the price of crude oil. If crude happens to plunge during the spring, retail gas would likely follow suit. But despite last week’s sharp drop in oil prices, I expect the downturn to be short-lived.

So, what should drivers look to pay at the pump this spring?

Start with where we are now, which according to AAA, is a national average price for regular unleaded of $2.29 per gallon. That’s about the lowest average price we’ve seen this winter. If seasonal patterns hold and if oil prices start to recover as I expect them to, it wouldn’t be surprising to see the national average rise to about $2.70 per gallon by late spring.

That would be higher than last year, when spring prices peaked at $2.40 per gallon in late May, but a bit less than 2015’s peak of $2.84 per gallon, reached in mid-June. And of course, it wasn’t very long ago that drivers paid quite a bit more. Indeed, between the beginning of 2011 and October of 2014, the national average price of regular unleaded never fell below $3 per gallon.

The bottom line: Prices stand to move higher, but probably not high enough to put a serious hurt on most consumers’ wallets and cause spending on other goods and services to suffer. No one likes paying more to fuel up, but this spring’s prices will probably seem bearable compared to recent history.

What’s Next for Oil Prices After Last Week’s Tumble?

For much of 2017, oil markets had seemed abnormally calm. Sure, prices gyrated up and down every trading day. But the moves were never very substantial. Between Jan. 18 and last Wednesday, benchmark West Texas Intermediate crude never closed lower than $51.08 per barrel, and never higher than $54.45 per barrel. Then, in a span of a few days last week, WTI dropped to about $48 per barrel.

What happened? And what happens next?

First, recall that OPEC surprised oil markets (and me) last November when the cartel agreed to cut back its collective oil production to reduce excess supply and push prices higher. WTI, which had been trading in the mid-$40s, quickly jumped to the low-$50s as traders bet on tighter markets and higher prices.

OPEC appears to be making good on its pledge to reduce output. And several non-OPEC members that joined the cartel are cutting back, too. But OPEC’s market heft isn’t what it used to be. The price bump its cuts sparked also galvanized drilling activity in the U.S. The number of rigs actively drilling for American oil had already started climbing last summer after a long slide. The pickup accelerated when crude prices suddenly crested $50 per barrel late in the year.

All those new wells getting drilled are translating into more production, undercutting OPEC’s bid to take barrels off the global oil market. After bottoming out at about 8.6 million barrels per day last September, U.S. output is now back at 9 million b/d, according to the Department of Energy’s latest weekly estimates. And with drilling activity still ramping up, production is a good bet to keep growing in coming weeks and months.

The end result: Crude oil is still piling up in storage in the U.S. In fact, stockpiles hit another new record high just last week. Suddenly, it seems that OPEC’s plan to tighten supply isn’t working, at least here in the world’s largest oil-consuming nation.

So perhaps the market was ripe for a tumble. Stephen Schork, editor of energy investing newsletter The Schork Report, notes in an interview that “Wall Street is very long [in] this market,” with bullish bets on oil futures outnumbering bearish positions by a huge 11-to-1 ratio. Given that lopsided outlook, it’s not surprising that the recent data showing a continuing supply glut might prompt a sell-off. Schork thinks that WTI could slip to $45 per barrel or so before rebounding later this spring, when U.S. drivers take to the roads for vacations and refineries boost their oil buying to meet rising gasoline demand.

A price rebound seems like a good bet. Just don’t wager on a big rally. Schork is looking for a return to the mid- to high-$50s per barrel late this spring, after seasonal demand perks up. Meanwhile, however, U.S. oil output should continue to grow, putting pressure on OPEC to keep a lid on its own output. That puts the cartel in a quandary: Stick to its production cuts and lose market share to U.S. energy firms that are pumping more oil. Or open the taps again to defend market share, and push prices down in the process. Not an enviable position to be in.

Finding and Keeping the Workers You Need

While labor shortages have been most severe for technology and health care businesses, they are cropping up in more and more industries, now that the U.S. unemployment rate has fallen. A recent survey of small businesses found that half of them can’t find enough qualified job applicants. The question: What can businesses do to make sure they have the workers they need? The answer, human resources professionals say, comes down to a three-part strategy: Recruit, retain and train.

With good workers increasingly scarce, employers are having to get creative about recruiting. A job ad posted on the company website might not cut it anymore. Companies may need to hire recruiters in order to find the social media websites or career niche websites where folks with desired skills tend to hang out. Recruiters can make sure that want ads are mobile-friendly for the millennials who never use desktop PCs, for example. They can arrange for quick interviews using Skype or Facetime. Some also offer applicant tracking systems. Continue reading “Finding and Keeping the Workers You Need”

Will GOP Sink Trump’s Budget?

As is the case with most presidents, Donald Trump’s first budget proposal is already “dead on arrival” in Congress, with Democrats and many Republicans opposed to his plan – though for different reasons – to finance an increase in defense spending with steep cuts to several federal agencies.

And with the parties at odds over how and where to spend taxpayer money, expect another year in which Congress fails to pass a budget. Continue reading “Will GOP Sink Trump’s Budget?”

A Shortage of Truckers Will Drive Up Freight Rates

Labor shortages are starting to weigh on businesses in many industries across the U.S., as this week’s Kiplinger Letter documents. (Click here to get the first page of this week’s Letter.)   A recent survey of small businesses found that 30% of them have had to increase pay during the last three to six months to find or retain enough workers. That’s the highest level since 2001. About half of small businesses say they can’t get enough qualified job applicants. And the shortages span the pay scale across different industries: Everyone from carpenters to cooks to computer programmers.

One business that is no stranger to the problem: Trucking. Fleet owners have been grappling with a dearth of qualified, licensed truck drivers for years. Veteran drivers are reaching retirement age without enough young recruits joining the industry to take their places. That forces fleets to pony up higher salaries, bigger bonuses and richer benefits to attract or retain drivers. And since labor is the industry’s biggest cost, the competition for drivers points to rising freight rates for shippers this year. Continue reading “A Shortage of Truckers Will Drive Up Freight Rates”