Turmoil in the Swamp

Hey Influence Traders,

Your Capitol Gains hedge fund trading guru Andrew Giovinazzi was taking some time off this past week, but that didn’t stop him from hosting a kick-off event on Thursday.

In short, he crushed it – our event was a massive success.

D.C., on the other hand, did not have a good week.

It’s a mess down there … ok, everywhere!

All I can do is RANT.

Highlights

      • The Luv Guv is out of NY State, and the first women governor in history is moving in, Kathy Hochul.
      • The U.S. pulled out of Afghanistan after 20 years and the Taliban retook the country in a hot minute. 

Fortunately, we left them lots of weapons to help assure that they hold onto it in the future.

      • After cancelling the Keystone pipeline and gutting many drilling and exploration permits in the U.S., the Biden administration is now pleading with foreign entities to increase oil and gas production to meet our needs.

Can’t make this stuff up.

      • The $1.2 bipartisan infrastructure bill was passed by the Senate but its fate is not clear in the House.

The Sanders camp brought forth a $3.5 trillion “human” infrastructure bill.

The House is vowing not to vote on the $1.2 trillion bill unless it is tied to the $3.5 boondoggle bill.

Believe it or not, some on the Hill aren’t happy.

      • And if all that potential spending wasn’t enough, the Biden administration permanently raised the spending under the food stamp program. 

The administration is giving an additional $36 per month to 42 million program members.

      • On the House side, Speaker Pelosi is handing out raises like your tax dollars grow on trees. 

She apparently found some of our tax dollars lying around and decreed that House staffers can now be paid a maximum of $199,300 – a 15% bump! 

Thanks Grandma Nancy!

The State of the Bills

Trouble is brewing within the House Democratic Caucus. Speaker Pelosi is holding firm that the House will not act on the $1.2 trillion bipartisan infrastructure package until Senate Democrats vote on the $3.5 trillion “human” infrastructure bill, kowtowing to the wishes of the progressive wing.

This is putting her in conflict with moderate Democrats who want an immediate vote. 

The current bill is full of pork – the $3.5 trillion is all pork. It is nothing more than a wealth redistribution plan aimed at solidifying the Dem’s voting base. Nothing more, nothing less. 

It is billed as a social safety net bill. Safety nets are not meant to be permanent. 

Some are arguing that the House majority is so slim that if centrist Democrats stand strong, Pelosi can’t pass a budget measure since all Republicans will vote no.

But also remember – Pelosi is a great vote counter. 

Meanwhile, before the House can even weigh in on a potential reconciliation offering, Senate Majority Schumer has work to do in order to keep all 50 Senate Democrats in line. And with regard to the $3.5 trillion plan, Joe Manchin ain’t having it.

Manchin’s issue is that the Congressional Budget Office found that the $1.2 trillion legislation alone will add $256 billion to the federal deficit over a decade. They haven’t even done the math on the $3.5 trillion bill.

The progressive wing of the party disagreed with the CBO’s conclusion.

What’s in the Infrastructure Bill

      • $110 billion will go toward roads and bridges
      • $66 billion to rail and nearly $40 billion to transit
      • $65 billion infusion will fund an expansion of access to broadband, including by providing low-income households a $30 monthly voucher to pay for internet service

The bill also includes several measures aimed at climate change:

      • $65 billion allocated for improving the electrical grid and energy production
      • $50 billion to make infrastructure more resilient to both cyberattacks and natural disasters
      • $7.5 billion dedicated to building additional charging stations for electric vehicles
      • $7.5 billion to swap current school buses and ferries with lower-emission replacements

Some Additional Ideas

Broadband

A lot of folks are getting fired up over it, and there are some good plays (like copper), but a lot of broadband is going to be directed towards NGOs and circumvent private suppliers.

But one play I’m watching is American Tower Corp (TICKER: AMT)   a REIT and an owner and operator of wireless and broadcast communications infrastructure in several countries.

Transportation

The Biden admin wants to make it difficult to drive, be it EV requirements, breathalyzers, or mileage taxes. For example, the infrastructure bill funds a pilot program to tax all drivers on a per mile basis (don’t even get me started on the tracking aspect from a privacy standpoint).

Page 513 of the proposal says that the “Secretary of the Treasury shall establish, on an annual basis, per-mile user fees for passenger motor vehicles, light trucks, and medium- and heavy-duty trucks.”

That should help rail. Andrew and I discussed CSX Corporation (Ticker: CSX), but I’m also watching Siemens AG (Ticker: SIEGY) – not only is the German conglomerate a builder of rail cars, particularly high-speed trains, but it is also one of the largest wind farm installers.

Breath Testing

The 2,700 page infrastructure bill would require automakers to equip all new vehicles with an advanced alcohol monitoring system. If someone blows .08 or higher, their car won’t start.

Lifeloc Technologies, Inc. (Ticker: LCTC) is a global leader in the development and manufacturing of breath alcohol and drug testing devices. The company survived the COVID downturn, effectively took PPP money to reduce structural costs and retain critical personnel, and is in a good position for future growth.

Solar

The bill includes money to upgrade the energy efficiency of commercial and residential buildings. At the same time, California has passed a measure to require many new commercial structures, along with high-rise residential projects, to have solar power and battery storage.

Enphase Energy (Ticker: ENPH) is an American technology company headquartered in Fremont, California that designs and manufactures software-driven home energy solutions that span solar generation, home energy storage and web-based monitoring and control.

SolarEdge Technologies, Inc. (Ticker: SEDG) is an Israel-headquartered provider of power optimizer, solar inverter and monitoring systems for photovoltaic arrays. It is incorporated in Delaware, and its products increase solar energy output.

The Capitol Gains Roundup

Andrew will be back in the saddle this week!

Cutting Through the Noise for You.

Frank

 

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