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I’ve been providing economic opinions to both sides of the political aisle since the 2008 financial crisis.
I’ve walked the halls of the Senate and the House of Representatives discussing two main topics with elected officials.
The first is that Wall Street needs to be reined in for the sake of Main Street. If you’ve read my earlier emails, you’ll know that I have a unique insight into the disconnect between the markets and the real economy. You’ll be hearing a lot from me and my team over the coming months about this.
But today, I want to talk to you about another topic that regularly comes up in my conversations with high-level players across the divide in the Capitol. That is the urgent need to build and invest in the future.
It’s not often that such investing is green-lighted in a solid, bipartisan way. Even when that does happen, it can take forever. So the passage of a marquee infrastructure act is a rare political moment that deserves applause.
On November 15, President Biden signed the $1 trillion Bipartisan Infrastructure Law, or “Infrastructure Investment and Jobs Act,” into law. The act was supported across party lines, with the Senate passing the bill with a solid, bipartisan vote of 69 to 30.
That collaboration means that politicians on both sides of the aisle are committed to moving America’s infrastructure forward.
And more importantly, they’ve committed to the investment needed to make that happen. That means private investment will follow. And all of that spells opportunity for us as investors.
More on that opportunity below. But first, why is the Bipartisan Infrastructure Law so significant?
Ambitious Plans to Improve America’s Infrastructure
The act is ambitious, to be sure.
It seeks to make the U.S. more resilient to extreme weather and climate change, reduce greenhouse gas emissions, and create a clean power grid.
It includes more than $100 billion for clean energy development and grid reliability, plus funding for electric vehicle charging stations.
One compelling piece of this legislation for us is that it proposes to alleviate supply chain issues.
It will do this by improving U.S. ports, airports, bridges, rail, and roads to make transportation safer, cleaner, and more efficient. This should have the knock-on effect of alleviating inflationary pressures.
Another key element of the new law is the focus on clean air and new energy. Both of these areas fall nicely into the five main economic trends we see having the most potential for growth… and profits.
All told, $550 billion in new spending will be flowing into a plethora of infrastructure and clean energy projects over the next five years.
About two thirds of that will find its way into various forms of transportation infrastructure. This involves updating existing modes of transport to make them better, faster, and greener… as well as creating new modes of transport.
The other third will go towards other infrastructure, including communication, clean water, and energy.
Some projects, such as green energy and construction, straddle both of these arenas, and are excellent investment opportunities.
In a moment, we’ll share one simple action you can take to position yourself to profit as the funding gets rolled out. But first, let’s talk about where and how this $1 trillion will be invested.
Where Is the Money Going?
There are ten major areas of infrastructure renovation and new development that will receive funding from the Bipartisan Infrastructure Law. Many investments represent historic amounts.
Though every area represents investment opportunities that we will be monitoring, these are the ones we are most excited about in terms of making profits for you out of the gate:
$110 billion towards repairing roads and bridges and supporting transformational projects. This will be the biggest investment in repairing and reconstructing U.S. bridges since the construction of the Interstate Highway System that began under President Eisenhower. According to the American Society of Civil Engineers (ASCE), 46,154 bridges across the nation are structurally deficient. And Americans are crossing over these bridges 178 million times a day. That’s a lot of accidents waiting to happen.
$17 billion in port infrastructure and waterways and $25 billion in airports. This will be used for repairs and to address maintenance backlogs, reduce congestion and emissions near ports and airports, and drive electrification and other low-carbon technologies.
$66 billion in additional rail funding. Right now, according to the Global Railway Review, just 33.9 miles of the current U.S. passenger rail network is capable of supporting train speeds in excess of 150mph. China, which is approximately the same land area as the U.S., currently has 22,000 miles… and plans to double that by 2035. America must invest significantly in this area in order to remain competitive.
$65 billion in clean energy transmission and power grids. Again, this is the largest such investment in American history. It will promote the use of cutting-edge energy technology to reach a zero-emissions world.
$21 billion to address pollution, targeting the clean-up of Superfund (or the nation’s most hazardous manufacturing facilities, processing plants, and mining sites) and brownfield sites (abandoned industrial and commercial sites), reclaiming abandoned mines, and capping orphaned oil and gas wells.
We will watch with interest to see how these plans progress, and how we can invest to profit from this historic investment in America’s future. We’ll be sharing our investment recommendations with subscribers in due course…
Position Yourself Now to Profit on Infrastructure Spending
In the meantime, consider an infrastructure-oriented exchange-traded fund (ETF) as a portfolio staple.
The Global X U.S. Infrastructure Development ETF (PAVE) is a great option. It’s made up of 100 names that could benefit from the Bipartisan Infrastructure Law.
Most of PAVE’s holdings are in industrials and basic materials. That includes Deere & Company (which makes John Deere) and freight-hauling giant Union Pacific (the second-largest railroad in the U.S.).
But it also holds utilities, technology, and oil and gas names, all of which should see higher prices as a result of the new law.
Editor, Inside Wall Street with Nomi Prins
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