Previewing France’s Presidential Election

A wave of euphoria greeted Emmanuel Macron’s narrow victory in the first round of France’s presidential election last week. Markets and pundits alike cheered, taking the outcome as yet another sign that Europe’s populist threat – which only a few months ago looked as if it might swallow the continent whole – was nothing more than a paper tiger. Talk of France possibly departing the European Union has died down and European stock markets have rallied.

Macron, a one-time Socialist cabinet minister who broke with his party to run for president as an independent, will now face Marine Le Pen of the right-wing National Front in a runoff election on May 7.
Continue reading “Previewing France’s Presidential Election”

Trump’s Tax Reform Plan Faces Tough Challenges

Capitol Hill Republicans have greeted President Trump’s tax reform outline with a mix of lukewarm praise and restrained concern, suggesting that one of the administration’s signature agenda items is no slam dunk.

The tepid response doesn’t necessarily doom the proposal, which is extremely light on details. But it does mean that the White House has plenty of work ahead selling – and likely rewriting – the plan in order to win over enough Republican votes. Continue reading “Trump’s Tax Reform Plan Faces Tough Challenges”

Government Shutdown Will Be Averted

Congress will approve a must-pass spending bill in time to avoid a government shutdown next week, but not before some last-minute histrionics spurred on by the White House.

Federal agencies will run out of operating funds next Friday at midnight, so the massive spending bill is needed to keep them open through September, when the fiscal year ends. But President Trump wants to tack on several of his agenda items, such as money for the proposed Mexican border wall, a ban on federal grants to so-called sanctuary cities, which shield illegal immigrants from deportation, and possibly a defunding of Planned Parenthood. Continue reading “Government Shutdown Will Be Averted”

Can Cable Companies Compete in the Wireless Business?

A new wireless service from cable and internet giant Comcast will shake up the cellular industry. Comcast is launching a mobile wireless plan that will compete head-to-head with AT&T, Verizon, T-Mobile, Sprint and regional cell carriers. Industry competition is already heating up, with carriers being forced to offer unlimited data plans, lower prices, free video services, rebates and more. “Promotions such as T-Mobile offering free MLB.TV for a year and AT&T offering a free HBO trial are manifestations of growing competition,” says Mark Stodden, senior vice president at Moody’s Investors Service. Now, Comcast will add fuel to the fire.

Better wireless deals are in the cards as carriers respond to new competition. Look for wireless companies to offer more goodies such as free pay TV channels to keep customers from defecting to Comcast. Charter, the second largest U.S. cable provider, is also planning a wireless service in 2018. Continue reading “Can Cable Companies Compete in the Wireless Business?”

How Will Political Gridlock Affect the Economy?

Consumer and business confidence soared after the presidential election because of the belief that President Trump’s policies on spending, tax cuts, health care and regulatory reform would give the economy a boost. So, what will be the impact on the economy if political gridlock prevents or delays Trump from delivering what he promised?

For starters, let’s assume a government shutdown is avoided. Congress will need to pass a bill known as a continuing resolution by April 28 in order to keep federal agencies funded and operating. If they fail, the reduction in federal spending would ding second-quarter growth and inhibit the economy’s ability to recover from a weak first quarter. Continue reading “How Will Political Gridlock Affect the Economy?”

How Small Merchants Can Fend Off Costly Cyberattacks

Cyber crooks are increasingly launching attacks at the cash register. The payment terminals and company computer systems used by small businesses are a window into customer credit card data and other sensitive info.

“The bad guys are moving to an easy target: The small- and medium-sized business community,” says Stephen Orfei, the general manager of the Payment Card Industry (PCI) Security Standards Council, a group formed in 2006 by the major credit card companies to create payment security standards. A digital attack can be devastating for a small business that lacks the deep pockets and technical prowess of a big company. Continue reading “How Small Merchants Can Fend Off Costly Cyberattacks”

Senate Rule Change for Gorsuch: A Harbinger of Things to Come?

Today’s confirmation of Neil Gorsuch to the Supreme Court gave President Trump his biggest victory since his inauguration. But the action has a much broader impact, as it potentially sets up a monumental change in the way the Senate does business.

By invoking the “nuclear option,” Senate Majority Leader Mitch McConnell (R-KY) changed Senate rules and barred the use of the filibuster for Supreme Court nominations, meaning that confirmation now is achieved with a simple majority in the 100-seat chamber instead of 60 votes. Gorsuch was confirmed by a vote of 54 to 45, with three Democrats crossing the aisle and one Republican who missed the vote due to illness. Continue reading “Senate Rule Change for Gorsuch: A Harbinger of Things to Come?”

A Renaissance for Coal? Or Just a Reprieve?

President Trump’s recent executive order reversing some of his predecessor’s environmental policies has drawn cheers from affected industries and jeers from environmentalists. I take no position on the political debate Trump’s move has set off. But it is possible to map out some of the likely impacts his executive order will have on the energy industry.

Trump the candidate derided President Obama’s regulations that would clamp down on the coal industry and promised to bring back lost coal mining jobs by undoing those regs. In late March, Trump the president signed an executive order seeking to do just that. “My administration is putting an end to the war on coal,” he declared.

So what exactly does Trump’s executive order do?

Regulatory Rollback

For starters, Trump ended the moratorium on approving new coal mining leases on federal lands that Obama had enacted. He instructed federal regulators to ditch the “social cost of carbon,” the dollar figure that the Obama administration used to calculate the future cost to the environment from emitting carbon dioxide. Coal releases more CO2 to generate a unit of energy than other fossil fuels do, so the SCC essentially makes any regulation that discourages coal consumption look more cost-effective. Trump also softened the requirement that regulators take climate change impacts into consideration when conducting environmental reviews of large industrial or construction projects.

Those are all relatively simple steps, because they reverse executive orders issued by Obama. Rescinding formal regulations is much more complicated. But Trump’s order begins that process for one of Obama’s landmark regulations, the Clean Power Plan.

Briefly, the CPP would have required electric utilities to reduce their CO2 emissions by shutting down coal-fired power plants, improving energy efficiency, installing more renewable power or other measures. The Supreme Court had already ordered the rule held in abeyance until legal challenges being brought by many states run their course. Now, Trump is promising to start the regulatory process for withdrawing the CPP.

Jeff Holmstead, a partner with the Bracewell law firm in Washington, D.C., and a former EPA assistant administrator under President George W. Bush, thinks that it will take six to 18 months for the Trump administration to formally repeal the CPP, depending on which legal route the White House takes. But whatever course Trump follows, legal challenges from environmental groups that want to keep the CPP in place are bound to arise. Suits brought against the Obama EPA by states opposed to the CPP were likely to reach the Supreme Court eventually. Now, Holmstead says he “wouldn’t be surprised” if Trump’s alternative ends up before the high Court instead.

The upshot: The coal industry has gotten a significant respite from regulations and policies that likely would have depressed coal usage.

Market Fundamentals

But ultimately, coal’s fate will be ruled by competition from natural gas, not policy made in Washington. Andrew Moore, managing editor of Platts Coal Trader, says Trump’s moves haven’t changed the fundamentals of the coal industry, which continues to vie with natural gas as a fuel for generating power. A year ago, gas was dirt cheap and electric utilities were burning record levels of it to generate electricity. That in turn pushed coal prices down and led to the lowest coal consumption in the U.S. since the late 1970s.

Since then, gas prices have rebounded because of stronger demand, and coal prices have followed suit, Moore says. He notes that coal consumption is up about 20% so far this year compared with the same period of 2016 as a result of pricier natural gas.

How much of a comeback coal can make depends on where gas prices go. Gas demand has grown rapidly in the last five years and should continue to do so as utilities burn more gas for power and producers export more U.S. gas to Mexico and other foreign buyers. On the other hand, hydraulic fracturing has opened up vast reserves of gas that were once uneconomic to produce, and energy firms are hard at work lowering the cost of getting all that gas to market. Assuming that gas prices don’t rise much from their current level of a bit more than $3 per million British thermal units, coal demand probably won’t rise much.

And coal mining jobs are unlikely to return in large numbers, no matter what Trump does to boost the industry. Talk of bringing back work in the mines conjures images of hard-hit Appalachian towns, but the biggest single coal producing region is actually Wyoming’s Powder River Basin, where the mines are heavily mechanized. PRB coal is cheaper to produce and thus is best poised to benefit if and when natural gas prices rise and utilities start burning more coal, says Moore.