Saudis to Retain Role in Balancing Oil Prices
From The Kiplinger Letter, Dec. 6, 2013
Though U.S. dependence on Middle Eastern oil is waning, Saudi Arabia will continue to play an important role in global markets. The big petroleum producer will find ready buyers in oil-hungry China, Japan, India, South Korea and Europe to replace diminished sales to a more self-sufficient U.S. Thus, the Saudis will retain their influence over whether oil prices rise or fall.
Washington will rely on the Saudis to keep oil prices from whipsawing. The U.S. will continue to count on Saudi Arabia to open spigots during shortages and to reduce the flow when oil supplies are flush to keep prices in line.
Less reliance on Mideast petroleum gives Washington more leeway to shift its focus to growing tensions along the Pacific Rim. But by expanding a base in Bahrain, the U.S. is signaling that it has no plans to abandon the Middle East.
Police Monitoring Social Media for Crime Leads-- From The Kiplinger Letter, Dec. 6, 2013
Police officials are turning to software to monitor social media posts. It alerts them to keywords and phrases that may be linked to crime… drug sales, gang violence, sex crimes, etc. Such software can also help authorities keep a bead on people hunkered down during a tornado or other natural disaster.
But federal guidelines stress that police should have a valid reason to monitor posts on social media sites amid concerns about invasions of privacy. Moreover, posts shielded by privacy settings are legally off-limits to monitoring.
Among the software providers: SnapTrends, BlueJay and DigitalStakeout.
New Drugs on Deck to Treat Staph, Pneumonia and More-- From The Kiplinger Letter, Nov. 27, 2013
A slew of new drugs promise to tackle ailments that resist today’s medicine:
A cure for staph-related skin infections, from Cubist Pharmaceuticals. It’s on track for approval as soon as early 2014. The firm is also working on a drug for complicated abdominal and urinary tract infections, with approval a few years off.
Two new treatments for hepatitis C. Look for the first, from Gilead Sciences, to get the go-ahead from regulators in 2014. The second…being developed by AbbVie and Enanta Pharmaceuticals…is being expedited for approval as early as 2015.
Also expect a breakthrough heart failure treatment next year from Novartis.
And a major pneumonia drug, in late-stage tests at Cempra Pharmaceuticals.
Software to Take Over Advertising Sales Jobs-- From The Kiplinger Letter, Nov. 27, 2013
Automated online ad buying promises to cut costs for both publishers and advertisers in coming years. Now less than 20% of digital ad buying, it’s likely to grow swiftly as the quality and quantity of available data skyrocket. Computers will accurately and automatically assess the value of ads to be placed on websites, determining optimum distribution and minimizing costs for advertisers. Meanwhile, publishers will need fewer sales reps, reserving them for sales of premium spots.
In time, such programmed buying will spread to other media, especially TV.
Snowden Disclosures Affect Trade Deals, Too-- From The Kiplinger Letter, Nov. 27, 2013
As if it weren’t hard enough to negotiate market opening trade deals… The Edward Snowden affair is spurring demands for “no spying” clauses to be included in at least two proposed international pacts. Angela Merkel, Germany’s chancellor, is demanding stringent new privacy protection rules as part of a proposed U.S.-European Union free trade deal. And some participants in 12-nation talks on the Trans-Pacific Partnership are making similar noises.
Pending trade deals aren’t likely to come to fruition quickly in any case… late next year at best for the TPP, probably 2015 for the deal with Europe.
Steep Jump Coming for Post Office Mailings-- From The Kiplinger Letter, Nov. 27, 2013
A big increase in mailing costs, come late January...as much as a 3.7% hike for Postal Service delivery of first-class mail and other printed materials. A 1.7% increase is already in the bag, and by Christmas, the Postal Regulatory Commission will announce that it’s giving the nod to a special additional jump of about 2%. Standard flats...large envelopes...may get a bigger increase than other products.
Stock Market Gains Fueling Retail Sales-- From The Kiplinger Letter, Nov. 27, 2013
One reason holiday spending might come in stronger than expected this year: Household net worth is rising well…the biggest increase since 2005. Robust stock market gains this year…with the S&P 500 up about 29% so far… and a double-digit climb in housing prices in many major markets mean consumers are feeling much better off these days. Typically, that spells more sales being rung up.
Every $100 rise in home equity spurs consumers to spend about $3 more and contribute less to savings. For every $100 in gains on stocks & bonds owned, they’ll typically increase overall spending by about $1.50. Over the course of a year, that adds billions, and it may well give retailers a greater-than-expected boost in Dec.
Continued gains in wealth should also spell better spending growth in 2014.
Comparing Prices Online? The Store Would Like to Know-- From The Kiplinger Letter, Nov. 22, 2013
Some retailers are dabbling in high-tech eavesdropping on their customers, tracking their movements and smart phone browsing on store premises. The idea is for merchants to get shoppers’ OKs to track and communicate with them through in-store Wi-Fi so stores can send customers personalized deals on products that they linger near. Retailers will also know when a shopper opens a browser to price check an item at a competing store, allowing them to match or beat the price. Best Buy and Walmart are among the first retailers to begin testing the concept. The jury is still out on whether shoppers will embrace the idea or just find it creepy.
Where Domestic Commercial Drones Will Be Deployed-- From The Kiplinger Letter, Nov. 22, 2013
Once the government OKs commercial drone use in the U.S. (and it will), business applications of drones will take off. In a variety of industries, burgeoning use of lightweight, unmanned aircraft will pack a big economic wallop, creating thousands of jobs for drone operators, data analysts, mechanics and others.
Among the early adopters: Farmers. They’ll use camera-equipped drones to scan vast tracts of crops for early signs of pests, squashing infestations early.
Emergency responders . Look for drones to be deployed after tornadoes to search large areas for victims and after oil spills to detect which way oil is flowing.
Engineers. Drones will check bridges, pipelines and other infrastructure for wear, helping to replace time-consuming and dangerous in-person inspections.
And surveyors . Aerial mapping will be quicker and cheaper with drones.
The use of drones in civilian airspace will come with several restrictions, stemming from the Federal Aviation Administration’s concerns about them interfering with existing aircraft. When the regulatory go-ahead is given…likely in 2015 or so… expect limits on how many drones are allowed to fly in certain areas, the altitude at which they can fly, the time of day they can operate plus privacy restrictions. Moreover, they’ll have to be FAA approved and flown by licensed pilots. Odds are that drones weighing 55 pounds or less won’t be as regulated as heavier ones.
Among manufacturers poised to benefit. are drone makers AeroVironment, General Atomics Aeronautical Systems, Lockheed Martin and CyPhy Works.
Obamacare Fallout: Higher Rates on Renewed Plans-- From The Kiplinger Letter, Nov. 22, 2013
Some folks who choose to renew canceled health coverage will get a jolt: Rate hikes of up to 15%. Expect some insurers to take the opportunity afforded by President Obama's move to allow renewals of policies that fall short of new federal standards to recoup other costs engendered by the 2010 health law. Other policyholders will discover that they can't reopen the policies they had this year even if they want to. It's up to the insurance firms and state regulators to decide whether to let policyholders re-up, though the president is allowing such a move.
As many as 4 million people may opt to keep their old plans for another year. About half of the 12.7 million Americans who buy insurance on their own have plans that don't meet the minimum coverage requirements of the new health insurance law.
Fewer Spots, Higher Prices at Public Colleges-- From The Kiplinger Letter, Nov. 15, 2013
Prospective public college students face a one-two punch from budget cuts: Tuition hikes two times as much as inflation and a harder time getting in. Many universities are capping enrollment, in part because of reduced state funding, so some qualified students end up having to attend community colleges instead.
Still, there are some bright spots as the pain of the deep recession recedes. Most community colleges expect state funds to increase for the second straight year… by about 4%. But rural community colleges will be hammered. And five states… Ga., La., Mo., N.C. and W.Va...see decreased public funds for all community colleges.
Wary Small Firms Won't Be Hiring Much-- From The Kiplinger Letter, Nov. 15, 2013
Continued uncertainty will keep small businesses from adding many jobs over the next six months, putting a damper on chances for robust economic growth. Three-fourths of firms with up to 500 workers have no short-term plans to expand. The recent uptick in mortgage rates is holding back some construction companies, while other smalls fret about uncertain prospects for sales growth, spending cuts from Washington and state capitals, and chances of another government shutdown. The just-ended shutdown helped drive down consumer sentiment to a two-year low.
But smalls in some regions will step up hiring, especially manufacturing… urban centers in parts of the Midwest (but not Detroit), eastern Fla. and the Southeast.
Candidates to Lean Heavily on Twitter in 2014-- From The Kiplinger Letter, Nov. 15, 2013
Twitter figures to be a big winner in the 2014 midterm elections. Ad spending on the social media network will be heavy, as candidates target news-hungry voters with messages tailored to different users’ interests, ages and other individual qualities. Plus Twitter lets campaigns respond to news or criticisms faster than any other media. The surge in ads on the site will cause some grumbles, but most users will tolerate it.
The rise of tweeting also spells big profit opportunities for cable companies, which are increasingly partnering with Twitter to build up their audience. The goal: Reach new viewers on mobile devices by tweeting short clips of their programming. Twitter’s reams of user data let broadcasters hit the right folks with the right show and better engage with the 19 million users who already tweet about what they watch.
Social media improves TV shows, too. Instant feedback from many viewers will clue producers in to what audiences do and don’t like. They’ll adjust accordingly.
Fed to Keep Stimulus Going Well into 2014-- From The Kiplinger Letter, Nov. 15, 2013
Good odds that the Federal Reserve will dial back stimulus later, not sooner. The retreat from its massive bond buying program had been expected to begin as early as the end of this year. But it’s likely to be put off well into 2014, based on Fed Chairman-to-be Janet Yellen’s interpretation of the underlying data. Despite recent improvement in job creation numbers, Yellen sees the job market as underperforming and inflation as staying stable. Those are some broad hints that the Fed will stay the course and keep buying $85 billion in bonds each month.
Next to no chance, though, of the central bank raising short-term rates soon. No matter when the weaning begins, no official hike is likely until sometime in 2015.
A Time Capsule on Kennedy's Presidency Opened-- From The Kiplinger Letter, Nov. 15, 2013
Lost in many dewy-eyed tributes 50 years after President Kennedy was killed: His presidency was bogged down as he made the fateful trip to Dallas. A sober assessment of Kennedy’s first three years in office was the planned front page for the Nov. 23, 1963, issue of The Kiplinger Letter. It cited the president’s troubles with Congress and loss of popular support for his legislative agenda. However, the article concluded, “The odds as of now still favor Kennedy for reelection.”
Kiplinger’s assessment was pulled after he was slain, and never published -- until now. You can read the original draft and the Letter that replaced it... four pages focused on President Johnson...at kiplinger.com/letterlinks/jfk.
Sebelius Likely to Resign Health Job in Early '14-- From The Kiplinger Letter, Nov. 15, 2013
The political sands have shifted for President Obama’s health care guru. Look for Health and Human Services Sec. Kathleen Sebelius to leave, perhaps early next year. She’ll offer to step down, and the president will accept. He turned her down before, but next time she offers to fall on her sword, she goes.
Obama won’t delay the coverage mandate for a year under any conditions, except for folks whose existing individual policies are being canceled by carriers because they don’t meet minimum coverage requirements in the law. They can keep the policies for a year if insurers agree, but won’t get a subsidy. Obama plans to order the change but will allow a vote if it gives Democrats cover in next year’s elections. They’ll say they forced the president to make the change.
He’s also likely to approve another delay in the effective date of penalties for those who choose not to buy insurance...for a month or two beyond March 31.
States Promoting Alternative-Fuel Vehicles-- From The Kiplinger Letter, Nov. 8, 2013 U.S. Winemakers Eager to Fill China's Glasses
Rising wine consumption around the world is good news for U.S. vintners, who will eagerly work to increase exports to fill the glasses of consumers everywhere.
China offers the richest growth market for the American wine industry. Calif., which exports 20% of its wine output, has high hopes of hiking export sales to increasingly affluent Chinese consumers, who already buy 5% of Calif.’s exports. Folks in Japan, South Korea and other Asian nations are also drinking more vino… a boon to makers of Zinfandel and other varieties that pair well with spicy food. And with European winemakers raising prices, U.S. wines are gaining in Europe, too.
Though growing ranks of wine sippers spark talk of a global wine shortage, we think such fears are overblown. Winemakers will keep up with demand.
States Promoting Alternative-Fuel Vehicles-- From The Kiplinger Letter, Nov. 8, 2013
Note a push by states to rev up demand for alternative fuel vehicles. California and seven other states want 3.3 million electric or hydrogen-fueled cars and trucks on their roads by 2025, and they’re rolling out plans to make that happen. Calif. would have the bulk, followed by Conn., Md., Mass., N.Y., Ore., R.I. and Vt.
Expect stepped-up tax credits for buyers who take the plunge, on top of aid from Uncle Sam for folks who purchase electric, fuel cell or plug-in hybrid vehicles.
An infrastructure build-out is also in the works. Calif. will spend $20 million per year on 100 hydrogen refueling stations. It also anticipates 2,500 new stations to quickly recharge electric cars. The other seven states are considering similar moves.
Federal Funds Going to Recreational Boating Facilities-- From The Kiplinger Letter, Nov. 8, 2013
Congress will pass and Obama will sign a bill benefiting boating enthusiasts and tourism-oriented businesses along many of the nation’s smaller harbors. The measure directs the U.S. Army Corps of Engineers to spend more of its resources on expanding “emerging harbors,” which handle less than 1 million tons of cargo a year and are also typically home to popular marinas and many water recreation activities.
Among harbors in line for dredging and expansion: Port Orford, Ore.; Monterey, Calif.; Tiverton, R.I.; Wells, Maine; Manistee, Mich.; and Hickman, Ky.
2013 Elections Have Few Lessons for 2014, 2016 Races-- From The Kiplinger Letter, Nov. 8, 2013
Hidden in the mixed bag of gubernatorial election results in N.J. and Va.:
A boost for Republicans. Disdain for the health law translated into votes. Big shares of voters in both states oppose President Obama’s health mandate… 50% in N.J., 53% in Va…and they overwhelmingly chose Republican candidates.
That dislike will probably linger, especially if the Obama administration can’t fix problems with the enrollment website anytime soon. On the other hand, voter frustration over the government shutdown...generally helping Democrats… is sure to fade by next fall unless more shutdowns occur, which is unlikely.
But don’t look for many other national lessons in the N.J. and Va. results. For starters, the outcomes don’t suggest anything at all new about 2016, despite what you may hear elsewhere about the impact on the presidential race.
N.J. Gov. Chris Christie is the GOP front-runner. But a question remains: Is he conservative enough to win the Republican nomination in 2016? To be sure, he’ll face opposition from the party’s right, just as Mitt Romney did in 2012. Even if he is the nominee, the primary fight will cost money and energy.
It’s also premature to read the results as a sign of tea party weakness. The tea party-backed candidate lost in Va., but by only a narrow margin. Though opposition for what that wing of the party stands for was above 40% in both states, much of it came from Democrats unlikely to back any GOPer.
U.S. Firms Could Help Clean China's Air-- From The Kiplinger Letter, Nov. 1, 2013
Thick smog in China spells business opportunities for U.S. companies. Beijing is rolling out a five-year, $270-billion plan to clean up dirty skies, and American firms that sell pollution control gear are poised to cash in on the push.
Already in high demand: Equipment to control nitrogen oxide, from buyers such as power plants and steelmakers. And more orders for smog-reducing filters and many other types of controls are a sure bet as the outcry over air pollution grows. But note that navigating the Chinese market can be tough for firms new to China.
Tax Credits for Private School Gain Favor-- From The Kiplinger Letter, Nov. 1, 2013
State programs offering tax credits for private school tuition will grow. Ala. and S.C. set up tax credit programs this year. Six other states…Ga., Ind., Iowa, Pa., R.I. and Va...are expanding existing programs, and more want to. The credits are nearly as controversial as vouchers. Backers say they’ll help students in areas where public schools aren’t up to snuff. Critics say they’ll hurt public schools even more and cut state tax revenues. Credits are typically $3,000 to $5,000 a year.
Why Elephants are Terrorists' New Target-- From The Kiplinger Letter, Nov. 1, 2013
Groups with terrorism ties in Africa have a new way to fund themselves: Killing elephants and selling their ivory tusks on the global black market, where a pair can bring tens of thousands of dollars. That’s an attractive bounty for radical anti-Western groups looking for a way to bankroll recruiting and training. Selling new ivory was outlawed by international treaty in 1989. The illicit market developed almost immediately, but till now has largely been the work of individuals. Without funds from the U.S. to battle poachers (unlikely), little progress is expected.
Government College Rating Won't Help with Tuition-- From The Kiplinger Letter, Nov. 1, 2013
Uncle Sam’s college rating system will prompt many to alter programs. But it may not meet its main goal: Slowing the pace of tuition increases. Under a plan pushed by Obama, federal loans would be tied to college performance, with higher-rated schools attracting more federal loans than average-rated schools. It’s a big business, so colleges and universities are sure to seek the best grades to grab a piece of the federal aid pie…once they know how they’ll be measured.
The plan: Have the system ready before 2015, with rating-based financial aid to follow two or three years later. The data should make students better shoppers. They can compare schools or even majors, including pay earned by graduates.
Software to Predict Your Future (and Destroy Your Privacy)-- From The Kiplinger Letter, Nov. 1, 2013
If the idea of Uncle Sam listening in on your phone calls spooks you… Get a load of this: Businesses will soon be able to forecast your future.
Already, cutting-edge predictive analytic technology, using publicly available data, can forecast where you’re likely to be…at home, the office, school, in the car, etc… on any given day a year or more in the future. Also…future income, illnesses, number of pregnancies, credit score, driving record, criminal activity and more.
Mash-ups of info from various sources will yield a detailed picture of you, surmising your Social Security number from bits of available data, for example. Also...discerning your identity by knowing four locations you’ve recently been at.
Promised anonymity will mean little. Software can tease out an identity by matching metadata…aggregated information about anonymous individuals… with other data specifically about you, revealing what was supposed to be hidden.
For now, most of this technology is in the research stage and not available. Within five years, it’s likely to be in business’s hands and widely used, sparking legal and technological measures intended to protect people’s privacy.
Regulation will come slowly, and private companies will likely delve deep before consumer resistance forces them to backtrack. They’ll become more open about what data is collected and how it is used. They may even pay for it.
Smart Phones to Pack Even More Brains-- From The Kiplinger Letter, Oct. 25, 2013
Don’t be surprised if smart phones and tablets start getting a lot smarter. The reason: Developers are noodling with software that works like a brain. It will allow apps to make swifter decisions, recognize objects seen by the camera, shut off message features when you’re driving and track vital signs when you exercise. Chip maker Qualcomm will give app developers access to its new software next year. Similar efforts by Apple and others will follow. In time, updated processors and chips that provide vast computational power but use little energy will be built into phones. The smarter phones will be able to “teach” your preferences to other electronic devices.
In three to five years, look for interactive holograms on your smart phone and tablet. They’re being tested in laboratories at Hewlett-Packard and other firms, but for now the technology is too expensive and needs too much energy for wide use.
The three-dimensional imaging will have practical business applications… making easier-to-understand data presentations, controlling devices remotely, etc. More-realistic online shopping, too, plus better gaming and entertainment applications.
Eventually the technology will be used on watch faces and other surfaces.
Small Fixes Only for Nation's Locks, Dams-- From The Kiplinger Letter, Oct. 25, 2013
A mixed outlook for inland shippers dealing with delays at locks and dams: New funding from Uncle Sam will take some time. Current funding levels cover just a fraction of the repairs on the Army Corps of Engineers’ to-do list... needed to speed traffic and avoid accidents at structures built decades ago. Many shippers are willing to pay higher U.S. diesel taxes to fund river repair projects, but Congress is in no hurry to increase federal matching funds allocated for the jobs.
So...many key projects will go wanting for now, including about two dozen that have received congressional approval but lack the money to finish the work.
Small improvements will be made, once lawmakers pass a measure to streamline processes for selecting and approving lock and dam projects. Both parties in Congress back such changes, which could come as soon as this fall.
National Guard, Coast Guard Upgrading Equipment-- From The Kiplinger Letter, Oct. 25, 2013
The National Guard is in line for secondhand gear and a refocused mission: Trying to slow the flow of narcotics into the U.S. Items from Afghanistan and Iraq…trucks, armor and artillery…will filter down to Guard units in the next year or two. In addition to the surplus, the Guard will receive communications equipment that will boost intelligence-gathering capabilities vital in the fight against drugs. The gear is coming at a key time: The Guard’s budget has been slammed by sequester.
The Coast Guard is bulking up, too. Its fleet expansion will come to an end by the middle of the next decade. Thanks to the expanded role of U.S. law enforcement following creation of the Dept. of Homeland Security, the Coast Guard’s inventory is growing quickly. In the mix: Eight Legend-class cutters, with extended ranges and the ability to launch helicopters, drones and smaller boats. Six smaller cutters, designed for fast response. Plus an icebreaker that will go into service next decade. About $8 million in start-up money for the polar ship is in the federal cash pipeline. The rest of the $852-million estimated cost will have to be allocated in coming years.
That’s good news for shipbuilders and subcontractors across the country.
How Janet Yellen Will Run the Fed-- From The Kiplinger Letter, Oct. 25, 2013
Expect incoming Federal Reserve Chm. Janet Yellen to be tougher on banks than her predecessor, Ben Bernanke, or the man she beat out for the job, Larry Summers. She’s likely to push for tougher standards as the remaining pieces of Dodd-Frank and other bank regulation measures are put into place. It’s also likely that Yellen will urge regulatory bodies to exceed internationally approved standards when it comes to supervision of U.S. banks. She’ll push, too, for keeping close tabs on money market funds and for closing loopholes that allow banks to skirt some rules.
Obamacare Deadlines Likely to Slip-- From The Kiplinger Letter, Oct. 25, 2013
Don’t be surprised if the sign-up deadlines for Obamacare are pushed back. Not for a full year, as Republicans want...no more than a month or two if the Obama administration can’t quickly repair computer issues that slow access to the federally operated insurance exchange. The exchange, a central marketplace, is being used by the 36 states that chose not to set up their own insurance centers. Exchanges run by 14 states and the District of Columbia are working reasonably well.
The goal of enrolling 7 million to 8 million individuals during 2014 is at risk, given the substantial technical defects that have marred the measure’s kickoff period. Frustrated consumers, especially those who are young and healthy, may give up on attempts to register for the mandatory coverage and pay the $95 first-year penalty. With fewer buyers, it’ll be difficult to lessen the risk and keep premium costs lower. To boost enrollment, a push is likely in big states with large numbers of uninsured.