The Trend

Infrastructure Spending and the Economy

It happened again.

In late May 2017, we highlighted several instances of President Trump’s Midas touch.  Anything having to do with cement, cyber security, banks, infrastructure, and defense rocketed higher on the year all by simple mention from Trump.

By June 2017, he did it again.

This time, infrastructure stocks – like Vulcan Materials (VMC) and Jacobs Engineering (JEC) began to push higher simply because the President announced he would again push his trillion-dollar infrastructure program. 

Even members of the Congressional Progressive Caucus are asking for up to $2 trillion to improve upon the nation’s ailing issues, which would invest $200 billion a year over 10 years to rebuild roads, bridges, water systems, airports, schools, and transit systems.

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This would be a big, big deal for JEC and VMC.

Vulcan Materials for example provides the construction aggregates used to build roads.

From the crumbling dams of California to the potholes that fill U.S. highways, signs of decaying infrastructure are all around us.  Sadly, many of us don’t even care to notice the effects of inaction when it comes to infrastructure -- constant congestion, interrupted flights, closed roads, and bridges that are more than 50 years old. 

The American Society of Civil Engineers (ASCE) says we’ll need that much by 2020 just to bring roads, bridges, dams, ports, and airports up to safety standards.  What’s worse, the ASCE just gave current U.S infrastructure a D+ rating. That tells us we’re in desperate need of repair.

Then, according to the Federal Transit Administration (FTA), there’s an $808.2 billion backlog in deferred maintenance on the nation’s rail and bus lines. That doesn’t include the 56,000 structurally deficient bridges, according to the American Road and Transportation Association.

Each time Trump mentioned the word “infrastructure,” related stocks began to move higher.

The goal to making money from his Midas touch has been to just pay close attention to the news and what he’s likely to pitch.  We’ve already seen the rewards produced when he announced a multi-billion dollar deal with the Saudis, announced a defense-spending bill, and announced that he was getting a bit more aggressive on cyber security.

In short, it’s all about being in the right place at the right time, as well as paying attention.