The $1.9 trillion stimulus plan is nearing the finish line. House legislators just passed their version. The Senate is debating it now, and President Biden hopes to have a final bill to sign by March 14, asserts Mike Larson, editor of Safe Money Report.
Naturally, Wall Street is already focusing on what comes next. And the Biden administration’s answer appears to be something most Americans agree on. Infrastructure spending!
Technically, our nation’s roads, bridges, airports, power grids, broadband networks, and other forms of infrastructure earn a passing grade. But not much of one. We’re just skating by with a “D+”, according to the American Society of Civil Engineers.
If you’ve tortured your tires on Chicago-area “pothole-ways” ...cursed the travel gods when flying through New York’s LaGuardia...or wondered why even minimal tropical-storm-force winds just knocked your power out in Florida—as I have—you know exactly what I’m talking about.
But in the last couple of administrations, bad timing and politics always seemed to get in the way of infrastructure spending. President Obama struggled with Republican opposition after his first round of post-financial crisis stimulus, while President Trump’s efforts seemed unfocused and haphazard. That’s where the joke about “Here comes another ‘Infrastructure Week’” stemmed from, after all.
Yet President Biden’s experience over the decades in Congress plays to his advantage. So does the broad, bipartisan support of infrastructure spending that looks to be coming together. Remember that it directs billions of dollars of federal spending and thousands of jobs to the districts of both Democrats AND Republicans.
This administration clearly doesn’t fear pushing “borrow-and-spend” policies aggressively, either. The $1.9 trillion stimulus bill proves that. Media reports suggest infrastructure is next on the priority list.
So, what does it all mean for investors? A couple of things...
First, the downside of “borrow-and-spend” policies is that you have to borrow the money to spend it! That means selling boatloads and bucket-fulls of US Treasuries.
The bond market started to push back at the Biden team in February. Bidding at bond auctions tailed off, forcing the government to pay higher interest rates to borrow money. I doubt that pressure will ease up in the coming months.
My advice? Keep reducing exposure to government bonds. Put some of those funds in more appropriate, alternative stores of value—including cryptocurrencies and/or gold, silver, and mining shares.
Second, follow the money in your hunt for profits! Rotate more of your cash into cyclical sectors and stocks best poised to get their share of the spending.
You can find ETFs and other vehicles that invest in a broad swath of infrastructure stocks and projects. Two of the higher-rated ETFs in our Weiss Ratings database with solid one-year returns are the First Trust NASDAQ Clean Edge Smart Grid Infrastructure Index Fund (GRID) and Global X U.S. Infrastructure Development ETF (PAVE).
Don’t sit on these opportunities for too long, though. Washington isn’t waiting when it comes to infrastructure...and neither are the markets!
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.