Brooksie’s Daily Stock Market blog - an edge before the market opens
Thursday, September 1, 2011 9:09 am EDT
DJIA: 11,613.53 S&P 500: 1218.89
Wall Street’s current focus is on President Obama’s speech next Thursday, and on the Fed’s meeting on the 20th. These two events offer hope for reviving the economic recovery that started in late 2009, but has lagged recently.
One problem for buying today is the fact the DJIA is already up 860 points in less than two weeks. Another problem is, no matter what the President proposes, there is no assurance he will get the support from the Republican controlled House needed to implement his recommendations.
With a long weekend looming, and the President’s speech a week away, I expect the market to sell off by the close Friday, even though the Jobless Claims reported this morning were down and in line with projections and institutions have cash that must be invested for clients.
Infrastructure Spending :
(note: for new readers who visit every day, I will repeat this section on the infrastructure from time to time).
As the recession and bear market were intensifying in the fall of 2009, I speculated that infrastructure spending would get a high priority for a recovery. I wrote articles for Equities Magazine and compiled information I anticipated would be useful.
I was wrong, infrastructure spending got a low priority, and today I am sure the administration has its regrets.
Infrastructure may yet get a play.
What is attractive about this kind of spending is it stands to employ a lot of people and it can be funded by some government spending, but to a greater degree by private investment.
When I did my initial research on the nation’s infrastructure, I was surprised to find it encompassed 15 different categories: Aviation, Bridges, Dams, Drinking Water, Energy, Hazardous Waste, Inland Waterways, Levees, Public Parks and Recreation, Rail, Roads, Schools, Solid Waste, Transit, Wastewater.
In 2009, the American Society of Civil Engineers (ASCE) gave each category a “grade” (A through D-)
I was shocked to learn the GPA for all categories averages a “D,” with an estimated need for an investment of $2.2 trillion !
Their 140 page study is available on the following web site. (Some pages are in full color, so copy with care or it’ll chew up your color ink)
http://www.infrastructurereportcard.org/sites/default/files/RC2009_full_report.pdf
These infrastructure categories encompass most of the United States. Addressing their vast deficiencies would employ a significant number of workers at all skill levels for many years. Every politician in both Houses should drool at the potential in the districts they serve.
With all categories of our infrastructure begging for attention, it is beyond comprehension that our nations priorities are squandered abroad. Time to come home.
There is a move afoot to establish a facility for funding infrastructure projects sponsored by Senators John Kerry (D), Mark Warner (D) and Kay Bailey Hutchison (R). The vehicle would be the BUILD Act, introduced earlier this year by Senator Kerry and modeled after the Export-Import Bank Created during the Great Depression.
Whether this will be a facility for funding infrastructure investments is unknown. Whether Congress approves additional infrastructure spending is unknown. I thought the following information would be helpful in the event our government decides to pursue this route for job creation while addressing an enormous need.
So what’s the best play ? An ETF may sound like an easy answer, however one of the problems with Infrastructure ETFs is they are generally loaded with utility stocks, ergo not pure plays.
I compiled a list of 39 stocks (not recommendations) with exposure to various categories of infrastructure spending. but have not crunched numbers – a massive job and I currently don’t recommend stocks. But, this is a start.
There is no guarantee that the government will address the issue, or that any of these companies will benefit enough to have a significant impact on its stock. Eight of the ten largest highway builders are privately owned.
For the most part, these are meat and potatoes companies, NOT alternate energy companies.
ABB Ltd. (ABB), Aecom Tech (ACM), Alamo Gp (ALG), Ameron Int’l (AMN), Astec Inds. (ASTE), AZZ Inc. (AZZ), Caterpillar (CAT), Chicago Bridge & Iron (CBI), Cemex (CX), Colfax (CFX), Deere (DE), Dover (DOV), Eaton (ETN), Emcor Gp. (EME), Gardner Denver (GDI), General Electric (GE), Gorman-Rupp (GRC), Granite Const’n (GVA), Idex (IEX), Insituform Tech. (INSU), Jacobs Eng. (JEC), Joy Global (JOYG), KBR (KBR), Layne Christensen (LAYN), Lindsay (LNN), Manitowoc (MTW), Martin Marietta (MLM), Mastec (MTZ), MYR Gp (MYRG), Pike Electric (PIKE), Primoris Svcs (PRIM), Shaw Gp.(SHAW), Sterling Const’n (STRL), Terex (TEX), Thompson Creek Metals (TC), Transcanada (TRP), Unites States Lime & Mnrls (USLM), URS Corp. (URS), Valmont (VMI), Vulcan Materials (VMC).
George Brooks
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The writer of Brooksie’s Daily Stock Market blog, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk
