Let’s Get in Front of Biden’s Next Spending Spree

Wednesday, March 03, 2021

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.

Naturally, Wall Street is already focusing on what comes next. 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 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 Airport ... or wondered why even minimal tropical storm force winds knocked your power out in Florida ... you know exactly what I’m talking about.

During the last couple 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-Global Financial Crisis stimulus, while President Trump’s efforts seemed unfocused and haphazard. That’s how the phrase “Infrastructure Week” became the butt of late-night jokes and social-media memes, after all.

But President Biden’s experience over his decades in Congress should play to his advantage. So does the broad, bipartisan support for 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. And infrastructure is next on the priority list.

So, what does it mean for investors? A couple 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 buckets-full of U.S. Treasuries.

The bond market started to push back at Biden in February. Bidding at bond auctions tailed off, forcing the government to pay higher interest rates to borrow. I doubt that pressure will ease in coming months.

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 exchange-traded funds (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 (Nasdaq: GRID) and Global X U.S. Infrastructure Development ETF (BATS: PAVE).

I also like to drill down to identify promising individual companies. One of our biggest current winners in Safe Money Report is a Canada-based consulting, engineering, design and planning firm that’s in the catbird seat when it comes to capitalizing on infrastructure spending.

The stock keeps hitting new all-time highs, and sizable double-digit gains are piling up as a result. I’m confident more are coming.

Click here to learn more about how to invest the Safe Money way.

It appears Washington is no longer waiting when it comes to infrastructure. Neither are markets, and nor should you ...

Until next time,

Mike Larson

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