Friday, September 2, 2011 9:19 am EDT
DJIA: 11.493.57 S&P 500: 1204.42
Yesterday’s decline was predictable after a 9-day, 860-point surge in the lethargic DJIA. A decline today would be understandable since we are faced with a three-day weekend and traders don’t like too much exposure for that long a time, especially in an era of global volatility.
But, institutional money managers will continue to accumulate targeted stocks, they just won’t be “reaching.”
Support for the DJIA is in the area of 11,310 – 11, 320 (S&P 500: 1180 – 1155).
The Employment Situation Report today was anxiously awaited by investors seeking a clue for the direction of our economy. It was unchanged as was the Unemployment Rate (9.1%).
Following the news at 8:30, the U.S. stock-index futures tanked, indicating disappointment.
Not sure I agree. At a time the Street is fearful of a recession, a “nothing has changed” indicator is better than negative numbers which aren’t bad news under these circumstances.
Many of today’s economic reports reflect consumer and business sentiments for July and part of August and do not accurately reflect the nation’s disapproval of Congress’ behavior surrounding the debt ceiling/deficit reduction debate that culminated in early August. risked default and contributed to S&P’s downgrade of our nation’s credit rating.
The perception that one’s government is dysfunctional is outright scary. Maybe an experienced “pol” is not so bad after all.
Nimble traders may want to do some buying today during the first 20 minutes or last 20 minutes of the day.
Infrastructure Spending :
Note: I will repeat this section from time to time for new readers.
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, clearly the action in infrastructure companies Monday indicates so. All 37 companies I identified as having exposure were up significantly.
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 great 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 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 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)
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).
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
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