All Aboard the Tax Bandwagon

Hey Influence Traders,

Infrastructure spending is going up!

Social safety net spending is going up!

So …

Taxes are going up!

The Tax Bandwagon

Everyone (well, almost everyone) is joining the call for higher taxes.

From Joe Biden and Janet Yellen to Bernie Sanders and Liz Warren — it’s tax time, baby!

Heck, even the United Nations Secretary-General is calling for more taxes.

Of course, some aren’t on the tax train. (Including you, probably.)

Among other things, taxes will disrupt corporate earnings — which causes ripples.

But let’s look at who is askin’ for taxin’ …

Joe Biden

The President has made it clear that he is hiking corporate taxes to pay for his massive infrastructure plan.

He intends to raise the corporate tax rate from 21% to 28%, which he believes will bring the U.S. in line with other countries.

That reasoning is based on a conclusion by the Organization for Economic Cooperation and Development that the U.S. raises less corporate tax revenue as a share of GDP than most other first-world economies.

And, fair enough, corporate tax receipts today are at their lowest levels as a share of GDP since World War II.

Through the 1970s, many corporations paid half their profits in federal taxes. But that percentage has been declining and it is putting U.S. companies in the crosshairs.

According to the Institute on Taxation and Economic Policy, at least 55 big companies paid zero federal income taxes last year.

That does not sit well with many politicians.

Those leaders see the drop in corporate tax rates as a de facto decline in the tax rates on wealthy Americans because much of their holdings are in stocks.

That’s also not popular among pols.

Janet Yellen

Through an intricate web of deductions, exemptions and offshoring, many corporations pay well below the 21% tax rate.

To offset that, Biden wants to impose a 15% minimum tax on “book income.”

Book income is profits that firms report to investors — but they aren’t used to calculate tax liability.

As such, companies can be profitable and reward shareholders and executives — but pay nothing in taxes.

The administration would require companies with $2 billion-plus in annual income to pay a minimum 15% on book income.

The ITEP estimated that 45 corporations would have to pay under the proposal.

Meanwhile, Treasury Sec. Janet Yellen would like to double the global intangible low-taxed income (GILTI) to 21%.

GILTI is the income earned by foreign affiliates of U.S. companies from intangible assets such as patents, trademarks and copyrights, per the Urban-Brookings Tax Policy Center

Furthermore, Yellen’s proposal would close the gap between what companies pay on overseas profits and what they pay on income earned in the U.S. She has also proposed calculating the tax on a per-country basis, which would subject even more overseas income to taxation.

Bernie Sanders

Sen. Sanders has proposed an estate tax bill, known as the “For the 99.5% Act,” that would reduce the estate tax exemption to $3.5 million per individual (down from $11.7 million) and $7 million per couple (down from $23.4 million).

The bill also adds higher tax brackets for larger estates:

        • Current 40% tax rate would be raised to 45%
        • Estates greater than $10 million would be taxed at 50%
        • Amounts greater than $50 million at 55%
        • Amounts greater than $1 billion would be taxed at 65%.

The proposal would apply the same rates to gift taxes, with the base threshold lowered to $1 million.

Sander’s bill also attempts to raise the corporate tax to 35%, but that part of the bill will not fly given the contradiction with Biden’s plan.

On the flip side of the aisle, Sens. John Thune (R-S.D.) and John Kennedy, (R-La.), introduced legislation to repeal the estate tax.

That will be an interesting debate.

Liz Warren

Sen. Elizabeth Warren has proposed a 2% annual tax on wealth over $50 million, rising to 3% for wealth over $1 billion.

Her bill is called the “Ultra-Millionaire Tax Act” and she believes that it will close the wealth gap.

Other Players

Even the United Nations Secretary-General Antonio Guterres is calling for more taxes, recently urging countries to institute wealth taxes to help mitigate inequity.

During a recent address at the U.N., Guterres said that the rich had a $5 trillion surge in wealth during the pandemic while those at the bottom became more vulnerable.

He believes that government debt hurts the poor and that nations need to offset that impact through taxes on the wealthy.

Counterpoint

Not everyone likes the idea of higher taxes, particularly corporate taxes.

Republicans are generally opposed, with Senate Minority Leader Mitch McConnell vowing to fight the plan “every step of the way.”

The Congressional Budget Office (CBO) is also not on board.

A CBO study indicates that federal investment financed by an increase in taxes would lead to lower economic output and personal consumption.

The CBO concluded that tax hikes would outweigh the economic impact of $2 trillion-plus being spent on infrastructure.

Taxes decrease private spending and private spending has a greater economic impact than governmental spending.

The CBO concluded that federal investments deliver only half the economic returns as private sector investments.

Taxes are going up – to what extent we will have to wait and see.

Cutting Through the Noise for You.


Frank

 

Weekly Roundup: Infrastructure = Taxes = Infrastructure

Hey Influence Traders,

 

It’s the weekend, which means it’s time for the Weekly Roundup.

 

This week we are back to the normal format — we’ve got winners and losers!

 

The Highlights

 

        • Stanford knocked off Arizona in a 1-point thriller to win the Women’s NCAA basketball tournament.
        • On the men’s side, Baylor thrashed Gonzaga to win the tournament and brutally end the Bulldog’s perfect season.
        • A massive infrastructure plan was announced that actually includes some infrastructure spending.
        • Taxes are going up.

        • We’ve got Power Movers and Power Losers. 
 

DC Action

 

The dust is still settling on the $2.4-trillion infrastructure proposal — nothing is finalized.

 

Yet the Biden administration is already talking about another $1.52 trillion in spending on discretionary programs to boost education, health research and the fight against climate change. 

 

The proposal aims to make climate programs part of every government agency, including the Agriculture and Labor departments. 

 

This is in addition to the green spending in Biden’s proposed infrastructure legislation for electric vehicle production and building climate-resilient roads and bridges.

 

The funding for the Energy Department includes $1.7 billion to research and develop new nuclear power plants and hydrogen fuels and $1.9 billion to make homes more energy-efficient.

 

All that has to be paid for …

 

And a fight on the Hill is looming.

 

Some administration officials are saying that certain taxes are “off the table.”

 

Others are saying game on!

 

Power Mover of the Week

 

ME & YOU: You heard it here first … Option Pit Director of Education Andrew Giovinnazi, and I are preparing to launch a new trading product. 

 

I love identifying themes and picking long plays …

 

Andrew is going to wrap some great trading ideas around those themes. 

 

There is money to be made in #PowerMoves!

 

S&P 500: The index set a record this past week when it closed above 4,128.

 

Crypto: Coinbase is going public and China announced a new digital currency. 

 

Coinbase, the popular trading app, is going public via a direct listing on Nasdaq. The crypto co. posted $1.2 billion in revenue in 2020 — and its first annual profit of $322 million. 

 

Its Q1 2021, revenue has already surpassed all of 2020 ($1.8 billion), with $800 million in estimated profit. 

 

Not too shabby.

 

This should help bring more attention to cryptocurrencies such as Bitcoin (Ticker: BTC).

 

Meanwhile, China has launched the first central-bank-controlled digital currency.

 

It will stray from the traditional notion of anonymous crypto and give China’s government yet another tool to monitor both its economy and its people. 

 

Beijing already deploys hundreds of millions of facial-recognition cameras to track its population, sometimes using them to levy fines … 

 

A digital currency would make it possible to both identify and collect fines as soon as an infraction occurs.

 

China is positioning the digital yuan for global use and intends to challenge the U.S. dollar’s dominance. The dollar makes up 88% of international foreign-exchange trades, while the yuan is used just 4%.

 

The U.S. has taken  note. Both Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell say they are studying China and whether a digital dollar makes sense here.

 

Central America: As part of his $1.52 trillion discretionary spending proposal, Biden intends on “investing” $861 million in Central America.

 

It is part of a four-year, $4-billion package to improve the economy and quality of life in the region.

 

But my Power Mover of the week is, once again – Infrastructure

 

We are beginning to get details on the first part of Biden’s infrastructure plan.

 

It is massive and will create trading opportunities.

 

More on that in a minute.

 

Power Loser of the Week

 

Unions: Amazon workers in Alabama voted decisively against forming a union.

 

The Retail, Wholesale and Department Store Union, which led the drive, got less than 30% of the vote.

 

The union blamed its defeat on claims of anti-union tactics and pledged to challenge the result.

 

But employees said that the union failed to convince them it could improve their working conditions. Amazon provides good benefits, pay starts at $15 an hour, and employees are given opportunities to advance

 

Also, employees, a majority of whom are black, did not like that the union tried to cast the vote as a Black Lives Matter issue when they say they’ve never felt harassment.

 

Emergent BioSolutions: The government contractor had to dispose of 13-15 million doses of Johnson & Johnson’s Covid-19 vaccines because of contamination.

 

An official assessment determined that it was risky for the Biden administration to rely on Emergent to handle the production of vaccines developed by both J&J and AstraZeneca.

 

It was determined that Emergent lacked enough trained staff and had a record of problems with quality control.

 

The fate of another 62 million doses of the vaccine produced at the plant is unclear.

 

Unemployment: Applications for U.S. state unemployment insurance rose unexpectedly for a second week.

 

Claims increased by 16,000 to 744,000, which was higher than the 680,000 claims estimated.

 

California and New York saw the biggest increases. Meanwhile half of all states posted declines, led by Ohio and Alabama.

 

The overall increase shows that the labor market has a long way to go to recover the jobs lost during the pandemic.

 

But my Power Loser of the Week is Your Wallet, particularly if you’re a New Yorker.

 

Biden’s infrastructure plan needs to raise $2.5 trillion in revenue over 15 years.

 

Taxes are going up.

 

The corporate tax rate is going from 21% to 28%. And a de facto global minimum tax will be doubled to 21% percent with tougher enforcement mechanisms.

 

In a speech this week, Treasury Secretary Janet Yellen said that we need to “stop the race to the bottom” on corporate taxes and argued that a global minimum corporate tax will prevent companies from evading taxes.

 

The Biden administration has to raise revenue to pay for its multi-trillion-dollar infrastructure package …

 

But the administration has been emphatic that taxes would not impact the middle class.

 

Apparently Secretary of Energy Jennifer Granholm didn't get the memo, because she failed to deny claims during an interview that tax hikes associated with the infrastructure plan could economically devastate middle-class Americans.

 

New York taxes are going way up

 

Not to be outdone by the Feds, New York state leaders announced a $212 billion state budget that includes tax increases on the wealthy as well as substantial relief for renters, undocumented immigrants and business owners.

 

      • $2.3 billion in federal funds to help tenants late on rent
      • $1 billion in grants and tax credits for small businesses that suffered from the economic downturn
      • $2.1 billion fund to provide one-time payments for undocumented workers

While Gov. Cuomo has long fought raises in taxes on individuals making over $1 million annually, he is in a weakened political position due to all his scandals and caved to demands.

 

The changes mean wealthy residents of New York City will be subject to the highest combined local and state personal income tax rates in the nation.

Expect to see more wealthy New Yorkers flee the city to sunnier, lower-tax states.

 

Infrastructure Plays

 

In a speech promoting his $2.25 trillion infrastructure plan, President Biden described the bill’s passage as urgent to keep the U.S. competitive with China.

 

He emphasized that the plan is “a once-in-a generation investment in America … the single largest investment in American jobs since World War II.”

We know we are getting infrastructure spending, and we can guess as to where the money is going … but it is still early to make definite picks.

 

There will be a long, drawn-out fight over this plan that could see it go through many iterations. 

 

One way to place an early bet on infrastructure is through an infrastructure ETF.

 

The two largest are the iShares Global Infrastructure ETF (Ticker: IGF) and the Global X U.S. Infrastructure Development ETF (Ticker: PAVE).

But all infrastructure ETFs are not created equal, and I like PAVE.

 

PAVE is up 37% over the past six months and 5.7% this past month.

 

It has been down slightly since the infrastructure announcement while the market figures out where money is going, so it is still reasonably priced.

PAVE takes a broad-based approach to government infrastructure spending, recognizing the emphasis on clean energy, reducing carbon emissions and electrical grid modernization.

 

It also factors in the coming 5G network buildout.

 

IGF is the largest infrastructure ETF, but has a global focus (just 34% of assets are in U.S. companies), whereas PAVE holds only U.S.-listed companies.

 

That plays nicely into Biden’s Buy America executive order.

 

Cutting Through the Noise for You,

 

Frank

Hey Influence Traders,


It’s the weekend, which means it’s time for the Weekly Roundup.


This week we are back to the normal format — we’ve got winners and losers!


The Highlights

  • Stanford knocked off Arizona in a 1-point thriller to win the Women’s NCAA basketball tournament.

  • On the men’s side, Baylor thrashed Gonzaga to win the tournament and brutally end the Bulldog’s perfect season.

  • A massive infrastructure plan was announced that actually includes some infrastructure spending.

  • Taxes are going up.

  • We’ve got Power Movers and Power Losers. 


DC Action


The dust is still settling on the $2.4-trillion infrastructure proposal — nothing is finalized.


Yet the Biden administration is already talking about another $1.52 trillion in spending on discretionary programs to boost education, health research and the fight against climate change. 


The proposal aims to make climate programs part of every government agency, including the Agriculture and Labor departments. 


This is in addition to the green spending in Biden’s proposed infrastructure legislation for electric vehicle production and building climate-resilient roads and bridges.


The funding for the Energy Department includes $1.7 billion to research and develop new nuclear power plants and hydrogen fuels and $1.9 billion to make homes more energy-efficient.


All that has to be paid for …


And a fight on the Hill is looming.


Some administration officials are saying that certain taxes are “off the table.”


Others are saying game on!


Power Mover of the Week


ME & YOU: You heard it here first … Option Pit Director of Education Andrew Giovinnazi, and I are preparing to launch a new trading product. 

I love identifying themes and picking long plays …


Andrew is going to wrap some great trading ideas around those themes. 


There is money to be made in #PowerMoves!


S&P 500: The index set a record this past week when it closed above 4,128.


Crypto: Coinbase is going public and China announced a new digital currency. 


Coinbase, the popular trading app, is going public via a direct listing on Nasdaq. The crypto co. posted $1.2 billion in revenue in 2020 — and its first annual profit of $322 million. 


Its Q1 2021, revenue has already surpassed all of 2020 ($1.8 billion), with $800 million in estimated profit. 


Not too shabby.


This should help bring more attention to cryptocurrencies such as Bitcoin (Ticker: BTC).


Meanwhile, China has launched the first central-bank-controlled digital currency.


It will stray from the traditional notion of anonymous crypto and give China’s government yet another tool to monitor both its economy and its people. 


Beijing already deploys hundreds of millions of facial-recognition cameras to track its population, sometimes using them to levy fines … 


A digital currency would make it possible to both identify and collect fines as soon as an infraction occurs.


China is positioning the digital yuan for global use and intends to challenge the U.S. dollar’s dominance. The dollar makes up 88% of international foreign-exchange trades, while the yuan is used just 4%.


The U.S. has taken  note. Both Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell say they are studying China and whether a digital dollar makes sense here.


Central America: As part of his $1.52 trillion discretionary spending proposal, Biden intends on “investing” $861 million in Central America.


It is part of a four-year, $4-billion package to improve the economy and quality of life in the region.


But my Power Mover of the week is, once again – Infrastructure


We are beginning to get details on the first part of Biden’s infrastructure plan.


It is massive and will create trading opportunities.


More on that in a minute.


Power Loser of the Week


Unions: Amazon workers in Alabama voted decisively against forming a union.


The Retail, Wholesale and Department Store Union, which led the drive, got less than 30% of the vote.


The union blamed its defeat on claims of anti-union tactics and pledged to challenge the result.


But employees said that the union failed to convince them it could improve their working conditions. Amazon provides good benefits, pay starts at $15 an hour, and employees are given opportunities to advance


Also, employees, a majority of whom are black, did not like that the union tried to cast the vote as a Black Lives Matter issue when they say they’ve never felt harassment.


Emergent BioSolutions: The government contractor had to dispose of 13-15 million doses of Johnson & Johnson’s Covid-19 vaccines because of contamination.


An official assessment determined that it was risky for the Biden administration to rely on Emergent to handle the production of vaccines developed by both J&J and AstraZeneca.


It was determined that Emergent lacked enough trained staff and had a record of problems with quality control.


The fate of another 62 million doses of the vaccine produced at the plant is unclear.


Unemployment: Applications for U.S. state unemployment insurance rose unexpectedly for a second week.


Claims increased by 16,000 to 744,000, which was higher than the 680,000 claims estimated.


California and New York saw the biggest increases. Meanwhile half of all states posted declines, led by Ohio and Alabama.


The overall increase shows that the labor market has a long way to go to recover the jobs lost during the pandemic.


But my Power Loser of the Week is Your Wallet, particularly if you’re a New Yorker.


Biden’s infrastructure plan needs to raise $2.5 trillion in revenue over 15 years.


Taxes are going up.


The corporate tax rate is going from 21% to 28%. And a de facto global minimum tax will be doubled to 21% percent with tougher enforcement mechanisms.


In a speech this week, Treasury Secretary Janet Yellen said that we need to “stop the race to the bottom” on corporate taxes and argued that a global minimum corporate tax will prevent companies from evading taxes.


The Biden administration has to raise revenue to pay for its multi-trillion-dollar infrastructure package …


But the administration has been emphatic that taxes would not impact the middle class.


Apparently Secretary of Energy Jennifer Granholm didn’t get the memo, because she failed to deny claims during an interview that tax hikes associated with the infrastructure plan could economically devastate middle-class Americans.


New York taxes are going way up

Not to be outdone by the Feds, New York state leaders announced a $212 billion state budget that includes tax increases on the wealthy as well as substantial relief for renters, undocumented immigrants and business owners.


  • $2.3 billion in federal funds to help tenants late on rent

  • $1 billion in grants and tax credits for small businesses that suffered from the economic downturn

  • $2.1 billion fund to provide one-time payments for undocumented workers


While Gov. Cuomo has long fought raises in taxes on individuals making over $1 million annually, he is in a weakened political position due to all his scandals and caved to demands.


The changes mean wealthy residents of New York City will be subject to the highest combined local and state personal income tax rates in the nation.

Expect to see more wealthy New Yorkers flee the city to sunnier, lower-tax states.


Infrastructure Plays


In a speech promoting his $2.25 trillion infrastructure plan, President Biden described the bill’s passage as urgent to keep the U.S. competitive with China.


He emphasized that the plan is “a once-in-a generation investment in America … the single largest investment in American jobs since World War II.”


We know we are getting infrastructure spending, and we can guess as to where the money is going … but it is still early to make definite picks.


There will be a long, drawn-out fight over this plan that could see it go through many iterations. 

One way to place an early bet on infrastructure is through an infrastructure ETF.


The two largest are the iShares Global Infrastructure ETF (Ticker: IGF) and the Global X U.S. Infrastructure Development ETF (Ticker: PAVE).


But all infrastructure ETFs are not created equal, and I like PAVE.


PAVE is up 37% over the past six months and 5.7% this past month.


It has been down slightly since the infrastructure announcement while the market figures out where money is going, so it is still reasonably priced.


PAVE takes a broad-based approach to government infrastructure spending, recognizing the emphasis on clean energy, reducing carbon emissions and electrical grid modernization.


It also factors in the coming 5G network buildout.


IGF is the largest infrastructure ETF, but has a global focus (just 34% of assets are in U.S. companies), whereas PAVE holds only U.S.-listed companies.


That plays nicely into Biden’s Buy America executive order.


Cutting Through the Noise for You,


Frank

Supply Chains and Plastics

Hey Influence Traders,

President Biden pitched his infrastructure bill again yesterday.

He promoted his $2.25 trillion proposal by arguing that it is urgent to keep the U.S. competitive against China.

Some soundbites included:

        • “It’s a once-in-a generation investment in America.”
        • “It is the single largest investment in American jobs since World War II.”
        • “China and the rest of the world” are “attempting to own the future — the technology, quantum computing.”

Green Infrastructure

The Biden infrastructure plan will be heavily focused on promoting green energy. That will most certainly include green infrastructure plans to build more wind turbines.

And wind turbines require tons of plastic.

Literally!

I’ve noted before that it takes 900 tons of steel to build just one wind turbine.

It also takes about 2,500 tons of concrete and 45 tons of nonrecyclable plastic.

And what does plastic require – polyethylene (PE), polypropylene (PP) and monoethylene (MEG).

A standard 5-megawatt turbine has three 60-meter-long blades, each weighing 15 metric tons. Much of the material for the blades is made from ethylene.

Supply Chain Challenges

Ripples that have recently collided are working to disrupt many of the world’s supply chains.

The Wall Street Journal went with this dour headline: “Everywhere You Look, the Global Supply Chain Is a Mess.”

It’s spot on.

For years now, China has been reaping the benefits of controlling a good number of supply chains, from semiconductors to rare earth.

The pandemic, severe winter weather in some parts of the world and the recent blockage of the Suez Canal by a container ship longer than the Empire State Building is tall have compounded those problems.

We’ve seen a lot of headline news about the supply chain disruptions having led to a global shortage of semiconductors.

In addition, recent supply chain disruptions of PE, PP,and MEG have caused issues in the production of plastics:

        • Covid-19-related lockdowns have caused inventory levels to fall
        • Covid-19 shutdowns caused production to slow and created shipping disruptions
        • In August, Hurricane Laura forced petrochemical factories in Louisiana and Texas to shut down
        • The winter storm in February that hit Texas shuttered some of the largest petrochemical companies
        • The container ship blocked the Suez Canal

The disruption of these raw materials is leading to factory shutdowns, sharp price increases and production delays.

This will have an impact as the Biden administration rolls out its infrastructure plan because plastics are critical to both traditional and green building materials, particularly the construction of wind turbine blades.

Plastics Companies

There are a number of great plastics manufacturers, such as Chevron Corp (Ticker: CVX).

General Electric (Ticker: GE) and Siemens (Ticker: SIEGY) are two of the biggest producers of wind turbine blades.

But there are also some smaller names to keep an eye on.

One of those names is LyondellBasell Industries (Ticker: LYB).

LYB is the largest licensor of polyethylene and polypropylene technologies. It also produces ethylene, propylene, polyolefins and oxyfuels.

It recently expanded its polyethylene capacity with a new plant in Texas

All of these companies could benefit from green infrastructure spending.

Cutting Through the Noise for You.


Frank

Tech Breakups and Cyber Warfare

Hey Influence Traders,

The last week of March the CEOs of Facebook, Google and Twitter were once again called to testify in front of Congress.

They are under the gun for, among other things, issues of antitrust and cybersecurity.

Antitrust

Biden is such a fan of Franklin D. Roosevelt that he wants to be the next FDR.

Biden believes the FDR’s focus on antitrust enforcement helped usher in an era of entrepreneurship and small-business growth.

As such, he’s been putting the pieces in place to reinvigorate antitrust laws. And new US Attorney General, Merrick Garland, has pledged to “vigorously” enforce them.

On top of that throw in Lina Khan and Tim Wu, and you have an antitrust tech tsunami.

Columbia Law professor Lina Khan has been nominated for the Federal Trade Commission. She is a leader in the progressive movement known as “hipster antitrust,” which calls for new ways of reviewing companies’ market control, including how that affects people’s “roles as citizens.”

Kahn is a staunch antitrust advocate and her nomination signals an intent by the administration to be aggressive on antitrust enforcement. She has been known to call out Amazon and other major tech platforms and advocate for an overhaul of competition law.

She will be paired with her Columbia Law colleague, Tim Wu, who was recently named to the National Economic Council and who has been vocal about attacking consumer welfarism in antitrust.

This spells trouble for tech firms, which are already under the microscope.

Data Breaches

American business is under constant attack.

China, Russia and other bad actors are engaging in daily incursions into US tech.

On top of the ongoing scrutiny, it was announced this week that data from more than 500 million Facebook users was found on a website for hackers.

According to Business Insider, the information included phone numbers, Facebook IDs, full names, locations, birthdates and email addresses.

Even Mark Zuckerberg’s personal cell phone number!

The announcement highlighted the vast amount of information collected by Facebook and other social media sites, and the ongoing concerns as to how secure that information is.

This is not the first time Facebook has faced security issues. In 2019, the names, phone numbers and unique user IDs of more than 267 million Facebook users were found in a database on the open Internet.

This is not just an issue for big tech but for all companies.

Companies are under constant attack from foreign powers, such as China and Russia, and they need to be able to respond in a nimble fashion.

Cybersecurity firms are going to grow in demand and impact as time goes on.

A recent survey found that nearly 75% of tech leaders think the government’s response to the SolarWinds hack and its aftermath has been average or fair. Not a single respondent said the response was excellent.

And 33% of respondents said that the chief technology priority for the Biden administration should be defining a national cybersecurity protocol.

That caused me to look at cybersecurity opportunities.

Cybersecurity

U.S. companies have to beef up their cyber protocols.

Enough red flags have gone up indicating that we need to better ensure security.

Defense in the years ahead will be more about computers than tanks.

China and Russia have made it clear that we need to expect constant threats to our tech infrastructure.

Those threats can be countered through strong cyber programs.

That got me looking at a number of strong cyber companies like:

        • CrowdStrike Holdings (Ticker: CRWD)
        • Ping Identity Holding Corp. (Ticker: PING)
        • CyberArk Software (Ticker: CYBR)
        • Proofpoint (Ticker: PFPT)

But one that I really like is Palantir (Ticker: PLTR).

It is the type of nimble company with solid tech that can pivot to address ongoing threats.

PLTR has a history of engaging in counterterrorism, and according to its website was “founded on the conviction that it's essential to preserve fundamental principles of privacy and civil liberties while using data.”

PLTR spent the past month slowly sliding in stock price, but just announced that the National Nuclear Security Administration awarded it a five-year contract.

The contract is valued at $89.9 million.

PLTR will provide the NNSA with a platform for effective knowledge management and data-driven decision making.

And it could provide a profit platform for #PowerMovers …

Cutting Through the Noise for You.


Frank

 

Infrastructure Update – The Nuclear Option

Hey Influence Traders,

A quick note on this Easter Sunday …

Infrastructure

As you know (I hope), the big news of the week was infrastructure. 

President Biden’s $2.3 trillion infrastructure plan touches a broad swatch of American business.

Many sectors will benefit from the bill, including auto manufacturers, semiconductor makers and fiber-optic companies. 

But renewable-energy producers deemed vital to addressing climate change might also get a windfall. 

Renewable energy

The proposed infrastructure bill, known as the American Jobs Plan, is President Biden’s attempt to make a lasting impression on the economy — and the nation — by revamping the energy sector.

He wants to cut down on fossil fuels and transition the country to green energy and the use of renewables.

Part of the plan includes the formation of a “clean electricity standard” that would force utilities to cease the use of carbon fuel sources by 2035.

In addition to ordering federal buildings to use clean power, he will be asking for money to promote research and development for clean forms of energy generation and storage.

To fast track his plans, Biden will also eliminate “billions of dollars in subsidies, loopholes, and special foreign tax credits for the fossil fuel industry.”

Nuclear Power

As I noted during the Option Pit Round Robin, many people pushing a climate change agenda do not support nuclear power, including AOC and her Green New Deal.

But John Kerry does, and Kerry is running climate point for the Biden administration as its czar. 

It’s all about who’s in what position folks!

Back in 2017, Kerry did a very public about-face on nuclear power …

He stated, while recalling his own opposition to nuclear power during the first Earth Day in 1970, that addressing the challenge of climate change will require greater use of nuclear power plants in addition to wind and solar energy sources.

Now, pushing nuclear might not take center stage so as not to alienate the climate base, but you will see some subtle, behind-the-scenes #PowerMoves.

For example, just this week, Nuclear Fuel Services, Inc., a subsidiary of Lynchburg, Va.-headquartered BWX Technologies, Inc. (Ticker: BWXT), was awarded a $57.5 million contract from the National Nuclear Security Administration to convert natural or depleted uranium to purified highly enriched uranium metal.

Nuclear Fuel Services will provide a bridge for the NNSA until the Y-12 National Security Complex re-establishes a future oxide conversion capability.

Nuclear is coming!

Cutting Through the Noise for You.

Frank

Milestones and COVID Tests

Hey Influence Traders,

It’s the weekend, which means it’s time for the Weekly Roundup.

A Changeup

Easter occurs at the start of Spring. 

Spring is a time of hope and new beginnings, so in that spirit we’re going to forgo the usual Weekend Round Up format and focus on a positive.

And perhaps stimulate a trading idea.

Milestones

The S&P 500 Index hit the 4,000 milestone for the first time this past week, and has now been up 4 out of the past 5 weeks.

The markets continue to roar.

The Labor Department noted in its monthly report that the U.S. added 916,000 jobs in March and the unemployment rate dropped to 6%.

      • The addition of 916,000 jobs beat the expectation of 850,000.
      • Many analysts are anticipating that more American workers are returning to the workforce and that the numbers will be even better in April and May.
      • According to the report the “job growth in March was widespread, with the largest gains occurring in leisure and hospitality, public and private education and construction.”
        • 110,000 additional construction jobs
        • 66,000 additional services sector jobs
        • 53,000 additional manufacturing jobs
        • 50,000 additional transportation and warehousing jobs

Despite the gains, the economy has a long way to go to reach the historically low pre-COVID unemployment rate of 3.5%.

Infrastructure

The big news of the week was infrastructure. 

President Biden’s proposed $2.3 trillion infrastructure plan touches a broad swatch of American business.

Many sectors will benefit from the bill, including auto manufacturers, semiconductor makers and fiber-optic companies. 

Pharmaceutical developers are also going to do well particularly those deemed vital to addressing the pandemic and helping the country open back up. 

Pharmaceutical companies

The proposed bill includes $30 billion in funding aimed at reducing the risk of future pandemics.

Part of that measure will be to fast track the development of new technologies deemed critical to such efforts.

Many experts agree that mass, on-going testing is critical to controlling the spread of the virus and allowing people to move about more freely and confidently.

That has been difficult seeing that most testing is done through a medical provider and/or with a prescription.

But this week Abbott Laboratories (TICKER: ABT) received an FDA Emergency Use Authorization for its BinaxNOW™ Rapid Antigen Self Test.

That authorization permits the test to be used for asymptomatic, over-the-counter, non-prescription use.

The test can be used on adults and kids as young as 2 and will come in a two-count box, which allows test tracing.

Not only does the test allow for frequent testing, the results are available in 15 minutes.

The BinaxNOW self-test is identical to ABT’s professional-use test, which has been in use since August 2020, and which the U.S. Department of Health and Human Services has ordered 150 million units.

Abbot can now distribute its test to major food, drug and mass merchandiser retailers.

Abbott plans on producing 50 million tests per month.

Another benefit of the authorization is that the professional test will no longer require a prescription, which means that workplaces, schools and other organizations no longer need to work through a medical provider.

Cutting Through the Noise for You.

Frank

FDR, LBJ … JRB?

Hey Influence Traders,


Well, it’s finally here, the unveiling of Joseph R. Biden’s initial infrastructure bill.


He’s made no bones about wanting to be the next FDR or LBJ, and he took a step in that direction today.


Power Movers


One of my Power Moves pillars is that there’s a revolving door of insiders moving between the public and private sectors.


Sometimes those movements get truly circular.


Readers often ask me for examples, and a great one came up this week …


BlackRock named Paul Bodnar to lead sustainable investing.


Normally, that might not raise many eyebrows, but a couple of things stand out:


        • First, he will be based in Washington, D.C. … Makes for a cozy relationship with the administration.

        • BlackRock CEO Larry Fink has pledged that BlackRock will push the economy to eliminate greenhouse gas emissions by 2050.

        • Moreover, Blackrock’s Aladdin Climate service provides climate risk data for portfolio managers to incorporate into their trading … that will increasingly influence a large swath of the asset management industry.

        • Second, Bodnar is a former Obama administration aide who was a senior director for energy and climate change on the National Security Council. In that role he developed strategy for the 2015 Paris Climate Conference.

        • One of Biden’s priorities is green energy and addressing climate change.

        • The infrastructure bill leans towards promoting green initiatives.

        • Third, he is replacing Brian Deese, with whom he worked in the Obama administration.

        • Deese is leaving BlackRock because he has been tapped by Biden to be director of the National Economic Council.

They will literally pass each other in the hallway!


These maneuvers demonstrate both the tangled movement of insiders between K Street and Wall Street, as well as how that movement marries K Street goals to Wall Street.


These players will allow the administration to more easily use the private industry to assist in achieving its policy goals.


Infrastructure Bill Unveiled


The talk of the day, of course, was the unveiling of the Biden infrastructure plan.


Joe Biden has not been shy about wanting to impact the nation’s economy and social fabric to an extent similar to FDR … and he did not disappoint.


At yesterday’s announcement, he described the proposal as a once-in-a-generation plan for the U.S.


He went so far as to compare the money that will be spent under his plan to the spending on the 1950s interstate highway system and the 1960s race to the moon.


Titled the American Jobs Plan, the more than $2 trillion proposal is intended to aggressively improve the nation's infrastructure and shift to greener energy over the next eight years.

The plan, among other things, promises to modernize highways and fix bridges.


It will also replace thousands of buses and rail cars, repair hundreds of stations, renew airports and expand transit and rail into new communities.


In addition, it will deliver clean drinking water, a renewed electric grid and high-speed broadband to all Americans — including bringing affordable, reliable, high-speed broadband to every American, particularly those in rural America who lack access.


Bill Specifics


Before I dive in, as I previously stated, what was laid out today is part one of a two-part proposal, with the second part coming in mid-April.


Part two will focus on “helping families with challenges like health care costs, childcare  and education,” the White House said, and will be called the “American Family Plan.”


Transportation


Part one, though, includes $620 billion for transportation. Biden stated that improving roads, bridges, railways and other infrastructure will create “really good-paying jobs” and help the nation to better compete.

Biden is calling for $115 billion to modernize 20,000 miles of highways, roads and main streets, and $20 billion to improve road safety, specifically fixing the “most economically significant large bridges” and repairing the worst 10,000 smaller bridges.


He wants to use $85 billion to modernize existing transit, particularly in disadvantaged areas, and $80 billion to modernize and expand Amtrak.


He will spend $25 billion on airports and $17 billion on inland waterways, ports and ferries.


Manufacturing


The bill includes $580 billion for manufacturing, including $180 billion for non-defense research and development, such as climate science.


To ensure that the U.S. stays competitive with China, the bill proposes $50 billion for domestic semiconductor manufacturing and $40 billion to upgrade laboratory research.


Home Health


$400 billion will go to how care workers to bolster wages and caregiving for aging and disabled Americans.


Water


$111 billion will rebuild the country's water infrastructure.


Biden wants to replace all of the nation's lead pipes and service lines in order to improve the health of American children and communities of color.


Schools


$100 billion will build new public schools and upgrade existing buildings.


100% Digital Coverage


$100 billion will ensure that every American has access to affordable, reliable and high-speed broadband.


Biden wants to build a network that provides 100% coverage across the nation.


Climate is Front and Center


Biden wants to accelerate the shift to electric vehicles, so $174 billion will be invested in the electric vehicle market, including rebates and tax incentives to buy American-made electric vehicles and building a national network of 500,000 charging stations by 2030.


Biden also wants to replace 50,000 diesel transit vehicles and electrify at least 20% of yellow school buses.


The plan also calls for $213 billion to go towards building, renovating and retrofitting more than two million homes and housing units.


What About Laid Off Workers?


The proposal allocates $100 billion to workforce development, including $40 billion to retrain dislocated workers in high-demand sectors such as clean energy, manufacturing and caregiving.


The administration claimed that the plan will put hundreds of thousands of people to work laying thousands of miles of transmission lines and capping hundreds of thousands of orphan oil and gas wells and abandoned mines.


It’s a clear nod to the understanding that many in the fossil fuel industry could be laid off.


Corporate Taxes are Rising


Biden wants to pay for this bill with taxes, not debt, and that means the US corporate tax rate is going from 21% to 28%. 


I saw one “news” publication naively refer to that hike as a 7% rise in the corporate rate …


To be clear, it is a 33% hike in corporate taxes. 


The rate might be moving 7 percentage points, but it’s a 33% hike.


In addition, the plan will create a 21% global minimum tax on US corporations to deter companies from sheltering profits in international tax havens.


The plan will also levy a 15% minimum tax on the income the largest corporations report to investors, known as book income, as opposed to the income reported to the IRS.


None of this is a done deal … an epic battle is lining up in Congress … on all sides of the aisle.


Senate Minority Leader McConnell described the bill as “a Trojan Horse that’s called infrastructure,” and that “inside the Trojan Horse is going to be more borrowed money and massive tax increases on all of the productive parts of our economy.”


But don’t worry, individual taxpayers, Part 2 will be paid for with tax hikes on wealthy Americans!


Cutting Through the Noise for You.


Frank

Let’s Get Windy

Hey Influence Traders,

What a weekend – I hope that everyone had a great one!

Highlights

        • The NCAA basketball tournament saw upsets – I love upsets.
        • I built new bedroom furniture. Apparently my wife didn’t read the fine print about assembly required. I didn’t love that.
        • The Suez Canal is unplugged, which means goods can start flowing, and that’s a relief to oil companies and those relying on global supply chains.
        • The fallout from this boating debacle on supply chains and the world economy has yet to be seen.
        • In case you didn’t notice, the announcement came just in time for Monday morning’s market open.
        • Convenient!
        • Bitcoin and other cryptos rose after Visa (Ticker: V) announced that it will use a stablecoin backed by the U.S. dollar to settle transactions on its payment network.

Infrastructure Bill Confirmed

The Biden administration confirmed what I mentioned on last week’s Option Pit Round Robin – its infrastructure plan will be released in two parts.

Part 1 will include at least $1 trillion for roads, bridges, rail lines, electric-vehicle charging stations, and the cellular network, with a focus on a shift to “green” programs.

Part 2 will propose benefits for workers, including free community college, universal pre-kindergarten and paid family leave.

To pay for the plan, the administration has floated issuing a new set of bonds, a carbon tax and an increase in gasoline taxes …

Transportation Secretary Pete Buttigieg has put forward an idea to tax Americans for each mile they drive as a way to fund infrastructure spending.

While Republicans have indicated they will oppose the plan, Democrats are willing to use their control of both houses to pass bills on their own.

Green Infrastructure

The administration has made it clear that infrastructure spending will be used as a catalyst to transition America to a green economy.

Infrastructure Spending will Include Wind

Wind farms and solar panels are key components to building out a clean energy grid.

The first commercial offshore wind farm in the U.S. was the Block Island Wind Farm, a five-turbine project located off Block Island, R.I, in the Atlantic Ocean. 

On Monday, the administration announced a plan to expand the use of offshore power along the East Coast.

The plan designates an area between Long Island and New Jersey as a priority offshore wind zone and sets a goal of installing a farm large enough to power 10 million homes. 

This follows last month’s approval by the administration to build the nation’s first large-scale offshore wind farm off Massachusetts, which will include 84 large turbines.

A number of other offshore projects have been proposed that could see 2,000 turbines installed in the Atlantic.

The farms will need to be installed and connected to the energy grid, of course. And there are leaders in the space that should benefit from a large infrastructure spend.

I’m keeping my eye on these names …

        • General Electric Co. (Ticker: GE) and Siemens A.G. (Ticker: SIE) are two of the world’s largest installers of wind turbines. SIE has installed over 100 gigawatts worldwide through 29,000-plus turbines.
        • TPI Composites Inc. (Ticker: TPIC) manufactures and services composite wind blades for turbines. TPIC reported a 30.6% increase in operating income in Q4 2020 on a 10.3% year-over-year increase in sales.
        • Ørsted Offshore North America (Ticker: ORSTED) develops, constructs, and operates offshore wind farms. ORSTED operates the Block Island Wind Farm and has a good shot of getting other East Coast projects.

Cutting Through the Noise for You.

Frank