Blue Waves, Green Waves: How to Profit from the Money Flood

There’s a “Blue Wave” washing over Washington as Democrats take control of the appropriating and spending branches of the federal government, states Mike Larson of Safe Money Report.

That means more easy money for Wall Street—a “Green Wave” of easy money, if you will, that will also benefit agile individual investors who act smartly.

Indeed, you owe it to yourself to capitalize as best as you can today while keeping in mind the problems DC’s largesse will create for tomorrow.

You know the news by now: Democrats won both of the Senate runoff elections in Georgia earlier this month. That means the Dems control the presidency, the House of Representatives, and the Senate, by virtue of Vice President Kamala Harris’s tie-breaking vote.

Let’s think about this from a market participant’s perspective.

The election results mean President Biden will have a broad mandate to make sweeping changes to economic, tax, and spending policies. In fact, he wasted no time laying the groundwork for precisely that in a primetime speech last Thursday.

Biden’s $1.9 trillion “American Rescue Plan” takes aim at the COVID-19 outbreak and related economic problems. It also targets longer-term issues Democrats have wanted to confront for years.

It includes plans to...

• Pay out another $1,400 in stimulus on top of the $600 recently sent to tens of millions of Americans.

• Boost unemployment benefit checks by $400 per week through mid-September.

• Send $170 billion to colleges and other schools to help more of them open for in-class learning.

• Raise the minimum wage nationwide to $15 an hour from $7.25.

• Flood small businesses and state and local governments with another $440 billion in grants, loans, and emergency funding.

• Increase COVID-19 vaccination, testing, and healthcare hiring efforts via an infusion of $160 billion in cash; and

• Boost the childcare tax credit to as much as $4,000 per child, depending on income.

Those provisions (and others I didn’t mention) add up to around $1.9 trillion.

That’s an enormous figure, of course. But Biden himself indicated this stimulus program is just a “down payment”...with additional hundreds of billions of dollars in proposed federal spending coming down the pike later.

Biden’s incoming Treasury Secretary, former Federal Reserve Chair Janet Yellen, reinforced that messaging in congressional testimony yesterday.

Yellen urged lawmakers to “act big” when it comes to throwing money at the economy...despite the nation’s $21.6-trillion-and-growing national debt burden.

Economists, pundits, and politicians will spend countless hours debating the wisdom, goals, and timing of this mega-stimulus plan.

Let me cut through all that for you: This is an enormous “Money Flood” unlike anything we’ve seen in recent history.

Oceans of cash are going to wash over Wall Street in the next year or two; from the Federal Reserve; from Congress; from every official corner of Washington.

The downside, of course, is that this flood won’t come free. There are strings attached. It will be funded by the biggest surge in debt and deficits we’ve ever seen. The ramifications will hang over our republic for decades.

But that’s something to worry about down the road. Now is the time to capitalize on it, to make hay while the sun shines—using time-tested “Safe Money” strategies I’ve advocated for some time now.

Scaling out a bit, you should also consider lowering your exposure to things like long-term Treasuries or exchange-traded funds that invest in them.

At the same time, think about raising your exposure to gold, silver, and mining shares.

And perhaps it’s time to tilt more of your equity exposure toward sectors that will benefit from Washington’s largesse. Think infrastructure, construction, transportation, retail and the like.

Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and healthcare sectors. Visit Safe Money Report here.