Interesting stuff from WSJ:
Corporate America never was among those chanting "four more years."
Some business leaders had backed Mitt Romney hoping the Republican would pursue lighter regulation and business-friendly changes to the tax code. After President Barack Obama's victory, CEOs say they are looking for a softening of the standoff between Congress and the president that characterized much of his first term in office.
Here is a rundown of what a number of key industries may see during President Obama's second term:
Health Care
President Obama's re-election means the complex health-care overhaul—with its coverage-expanding benefits and new costs for the industry—is here to stay. But questions remain on how the law would be implemented.
That business in general performed better than the slumping broader market, helped by surging shares of hospital companies and insurers that manage Medicaid plans. Hospital companies such as HCA Holdings Inc. are expected to benefit when a projected 30 million Americans gain health coverage starting in 2014, which should lessen the burden hospitals bear from indigent patients. HCA surged 9% to $33.85 in 4 p.m. New York trading on Wednesday.
Managed-care companies also expect to benefit by gaining millions of new customers. But health insurers also face new challenges by 2014 with health-insurance marketplaces called exchanges. It is unclear precisely how these would work.
"There are still a lot of regulations to be proffered," Mark T. Bertolini, chief executive of Aetna Inc., said in an interview. "Now we'll see a flood of those coming out in the next three months."
Another looming challenge: new fees that take effect starting in 2014. Insurers have said they would be incorporating these into premiums. One tax starts out at $8 billion total that year and ramps up in future years. Another charge, tabbed at $25 billion over three years, is supposed to help defray the risk of covering high-cost consumers.
Medical-device companies such as Medtronic Inc. MDT -0.60%and Boston Scientific Corp. BSX -0.78%have been battling to try to do away with a 2.3% excise tax on revenue scheduled to start Jan. 1. They will have to flex their lobbying muscle now—and they do have some bipartisan support to do away with the tax—to try to push something through Congress.
Energy
Drilling won't slow, but the energy industry expects President Obama's re-election will mean a continuation of tighter environmental regulations and higher costs.
The president has repeatedly expressed support for natural gas as an alternative to coal. But the administration also has to take account of environmentalists' concerns that hydraulic fracturing—the drilling technique that sparked the boom in gas supply—could harm water supplies.
The Environmental Protection Agency is already developing tougher regulations on hydraulic fracking, related water use and air pollution emissions.
"It is our bet that we will witness more stringent regulation and greater friction—permitting challenges, environmental hurdles—in the system in order to appease the winning coalition," Bill Herbert and Jeff Dietert, analysts with energy research firm Simmons & Co. said in a note on Wednesday.
The Dow Jones U.S. Oil and Gas Index was down 3% on Wednesday.
Of course, the Obama administration put new offshore drilling safety rules in place following the 2010 Deepwater Horizon disaster. And off-shore drilling has rebounded and even expanded. What's more, with Royal Dutch Shell RDSB.LN -0.54%PLC attempting to explore for oil off the Alaska coast in the Arctic Ocean this summer Mr. Obama is expected to give his approval to extending a portion of the Keystone XL oil pipeline from Canada to U.S. oil refineries. The federal government may even permit firms to explore some areas off the East Coast in the coming years.
President Obama promised to take away some tax incentives from the energy industry during the campaign. Negotiations to reduce the deficit and head off the fiscal cliff could provide an opening, but getting higher energy company taxes through a politically divided Congress may not be easy.
Renewable energy projects, a priority during the president's first term, will likely remain a focus, though additional stimulus money for solar or electric-car batteries is considered highly unlikely in the wake of controversial investments in solar energy and electric-car battery makers.
Agriculture
Mr. Obama's re-election likely means four more years of policies that have benefited agribusiness. Those include support for corn-based ethanol and free-trade agreements that have expanded agricultural exports. In 2011, Congress passed a trade deal with South Korea providing greater access for U.S. pork and grain exporters, a significant win for the industry.
The second term, however, is also expected to present some challenges for the industry. The administration has already been criticized in the Farm Belt for its tougher line on environmental regulations, and it is seen as less friendly to mergers that could further concentrate segments such as meat processing.
The Obama administration aided farmers by supporting regulations that require refineries to mix billions of gallons of ethanol into their gasoline each year. The mandate has been a boon for corn growers and contributed to higher prices for the grain.
Some U.S. lawmakers and companies such as Smithfield Foods Inc., the world's largest pork processor, have called for an overhaul of the rules on the grounds that they drive up the cost of animal feed and other food products. But Obama may have come out of the election even friendlier to corn growers.
The Obama administration is "a big supporter of corn ethanol," said Bruce Babcock, an agricultural economist at Iowa State University. "Iowa, Minnesota, Illinois…They are all big corn-growing states and they went for Obama."
Manufacturing
Big employers like Honeywell International Co. and United Technologies Corp. hope for an end to the uncertainty that has left customers reluctant to expand capital investments in equipment like gas power generators, medical equipment, avionics equipment and air-conditioning compressors.
"I feel like for the last six months everybody has gone into the uncertainty cage," said David Cote, chief executive of Honeywell. "We're saying, let's see what happens."
The macroeconomic landscape has started to show improvements. The U.S. housing sector is showing signs of life and rising transportation costs and wages overseas have led some companies to move production back to the U.S. from China. Until the fiscal situation is resolved, executives at industrial companies say economic recovery and hiring won't soon take off.
David Farr, chief executive of Emerson Electric Co., which makes electrical and other equipment used in data centers, factories and energy production, said Tuesday that a new showdown would worsen already fragile business confidence. "I'm very nervous about the fourth calendar quarter," he said.
The election could also provide a boost to morale at unions, providing them hope that they can stop or slow down their loss of bargaining power and boost membership as the administration pushes incentives for job creation at home.
The president's first term featured a highly tense standoff between Boeing Co. and the National Labor Relations Board, which alleged the aircraft manufacturer illegally retaliated against its union by opening a production line at a nonunion plant in South Carolina. The complaint was dropped about a year ago after Boeing and the union struck a new contract.
Tougher environmental regulation expected by the energy industry could also benefit manufacturers able to supply newer and safer equipment. Manufacturers also plan to keep pushing the administration to help them on the export front.
Defense
Huntingdon Ingalls Inc. Chief Executive Mike Petters summed up the challenge for military contractors during the summer when he noted that you can't cut 10% off a ship.
The Obama administration's immediate challenge is to convince a divided Congress to avoid sequestration, most likely by postponing it while lawmakers hammer out a deal on broader entitlement and tax policy.
The defense industry has adapted to existing pressure on spending and the new military priorities laid out in the administration's 2010 budget review by focusing on cutting costs and winning sales overseas.
United Technologies has laid off workers at its Sikorsky and Pratt & Whitney units, and Boeing said Wednesday that it would trim its executive ranks by 30% at its defense, space and security business. Lockheed Martin Chief Executive Bob Stevens said the potential federal spending cuts could force the company to shed 10,000 jobs.
Three of the big five prime contractors, Lockheed Martin, Northrop Grumman Corp. and Raytheon Corp., have outperformed the S&P 500 this year. All were down between 3% and 4% on Wednesday.
The framework of Pentagon priorities is clear. It includes greater resources, mainly ships, for the Pacific region under the umbrella of a nimbler military able to deal with multiple, smaller threats backed by enhanced air power and electronic surveillance.
While the Obama budget would include a nominal rise in military spending, it still means continued pressure on the Army and the Marines, with the prospect of further reductions.
Telecom
The deal-hungry telecom industry plans to move gingerly in the next four years. It doesn't mean it will give up on deals.
Case in point: Sprint Nextel Corp is likely to continue evaluating acquisitions now that it has cash from Japan's Softbank Corp. that has agreed to acquire the No. 3 U.S. wireless carrier But Sprint has indicated it will move more cautiously under a Democratic regulatory regime.
In a recent interview, Sprint Chief Executive Dan Hesse said he expected merger activity in the wireless industry to continue, arguing the industry needs just three carriers that can afford to maintain their networks and still experiment with new services. But the regulatory environment for mergers "would most likely be friendlier" under a Republican administration, Mr. Hesse said.
Big investments are already coming. On Wednesday, AT&T Inc sent a message that it wouldn't shy away from spending more, making public a plan to spend $14 billion on modernizing and expanding its landline and wireless networks.
But telecom executives say they still fear uncertainty given the divisions in Washington, D.C. AT&T executives said Wednesday that business customers were avoiding big spending decisions because of lingering obstacles like the fiscal cliff.
But says AT&T CEO Randall Stephenson, the fiscal cliff must be addressed. "It is serving as a real throttle on this country's growth right now," he said of the potential for spending cuts and tax increases. "It needs to be resolved soon."
Technology
For technology companies, the president's second term brings hope an overhaul to the U.S. patent system would continue, and that Congress would push ahead with changes to tax and foreign-worker policies.
The president's first term presented a mixed bag. Tech firms won a revision of the patent code that will award patents based on a "first to file" system rather than the "first to invent" approach that some say favors small inventors, as well as set up a process to review patents before they result in legal challenges.
They successfully squelched the Stop Online Piracy Act, or SOPA, and Protect Intellectual Property Act, or PIPA, which sought to give the U.S. attorney general the ability to cut off money and access to websites deemed to violate copyrights.Facebook Inc. Chief Executive Mark Zuckerberg, Wikipedia Co-Founder Jimmy Wales and musician turned investor MC Hammer were among the tech executives who helped argue against the legislation as vague and restrictive, and the White House backed them.
But they also face more sparring with regulators over online protections for children. And they have struck out in recent years trying to change tax rules the industry says spurred them to park billions of dollars in cash in their overseas operations. Some tech companies believe they have a shot at getting through their foreign-cash repatriation agenda.
Companies such as Google Inc. also have been pressing for changes in immigration policies to let startup founders stay in the U.S. and bring in more technically savvy workers needed in fields such as engineering.
Media companies have had a mixed experience. Among sore points for broadcasters: a spectrum auction that would encourage TV stations to turn in their airwave licenses, which would in turn be sold off to telecommunication companies like Verizon and AT&T. Broadcasters see it as dismissive of the value of broadcast television.
Cable and satellite have had a slightly better experience. The FCC has listened to their concerns about rising programming costs as broadcasters demand payment to carry their networks. The FCC has initiated a discussion of proposed changes to the existing "retransmission" rules that has the industry is hopeful.
Traditional media companies also were disappointed by the collapse of SOPA and executives may push similar new legislation hoping Mr. Obama is more sympathetic, or doing outreach to the new media companies to find ways to work together.
Restaurants
The president's policies have helped small businesses obtain loans to expand and recover from the recession over the past couple of years, but restaurant operators are anxious changing tax rates and new health-care legislation.
Many of the nation's largest restaurant chains, such as McDonald's Corp. and Dunkin' Brands, are primarily operated by franchisees who have anywhere from a handful to a few hundred locations. As small-business owners, they complain excess regulations are squeezing their profits.
"There are a lot of issues restaurants face with regulation around health care, tax rates, immigration, credit- and debit-card interchange, and menu labeling," said Scott DeFife, the National Restaurant Association's executive vice president of policy and government affairs. "The pace of these regulations is likely to pick up now that the elections are over."
Mr. Obama's health-care law, for instance, is expected to increase labor costs and prevent expansion among smaller franchisees.
"The law is going to take effect, so we will have to focus on the things within it that we can change—the aspects that will make this law so onerous," the 30-hour threshold for full-time workers and some of the reporting requirements, said Judith Thorman, senior vice president for Government Relations for the International Franchise Association.
Restaurant chains won't know how much the legislation will cost them until states set up the exchanges through which coverage can be purchased. But they believe it is going to hurt.
McDonald's and Papa John's International Inc. have said they expect their franchisees to take a hit as they are forced to offer more expensive health insurance or pay a government penalty.
Darden Restaurants Inc., which owns Olive Garden and Red Lobster, is considering reduce its employee hours to minimize the impact. Other industry consultants expect food chains to raise their menu prices to offset the higher costs.
Autos
It's hard to name an industry that has benefitted more under President Obama than the U.S. auto industry, and it may well be the same during his second term, too.
Mr. Obama's bailout of General Motors Co. and Chrysler Group LLC saved those companies from collapse. Other initiatives by the administration helped stabilize parts suppliers, steadied banks and other lenders to auto dealers and consumers, and juiced auto sales with cash-for-clunkers rebates. This helped the industry weather the recession of 2008 and 2009.
The U.S. industry's recovery wasn't solely the result of government intervention. Ford Motor Co. turned around mostly on its own. Many companies in addition to GM and Chrysler made tough decisions to downsize. Outside factors helped, too. An earthquake in Japan hobbled Toyota Motor Corp. and Honda Motor Co. in 2011. The strong yen and euro make it attractive to make cars in the U.S.
And not all of the government's efforts have paid off. Hundreds of millions of dollars in aid for electric-car and battery makers haven't panned out as the president had hoped.
But what remains today is a lean, growing and profitable U.S. auto industry. Both the Detroit auto makers and many of their foreign-owned rivals are investing in their U.S. plants, adding jobs and increasing output. Over the next four years, Democrats and Mr. Obama are sure to claim credit, deserved or not, for having put the industry back on its feet.
The outlook is favorable, too. Auto makers are on track to sell about 14.5 million cars and light trucks this year, about a 14% rise. Next year, sales are expected to climb beyond 15 million next year, lifted by the slow but steady improvements in home values, employment and consumer confidence. And with sales up and costs down, auto makers are reporting record or near record profits in North America.
Now that the election is over, one visible remnant of the Obama bailout is likely to disappear soon—the Treasury's remaining 26% stake in GM. The Obama administration was leery of selling the stake at a loss before the election. Now it has no reason not to comply with the company's pleas to cash out.
