It’s the largest infrastructure investment since Eisenhower’s Federal-Aid Highway Act of 1956, which created the U.S. interstate highway system.

Infrastructure investment – under-funded since the 1960s – will be unprecedented over the next three to five years, and let’s face it: the need is huge.

According to the National Surface Transportation Policy Review Study Commission, $225 billion needs to be spent annually for the next 50 years… that’s over $11 trillion, and that’s just for the transportation sector.

Of course, public infrastructure projects such as roads, bridges and water and sewer systems are by their very nature huge, expensive undertakings, requiring massive amounts of capital and manpower.

But very little actual construction activity is getting underway. Here’s why, and what you can do about it in the meantime.

What’s Going on in Big Infrastructure Project Financing?

So, why is little construction happening? Simple.

The current economic environment has upset the applecart with regards to funding these capital-intensive projects. As tax revenue continue to plummet, over 30 states have serious budget shortfalls, and most have shutdown funding for large capital projects. Most municipalities aren’t in any better shape.

At the Federal level, Congress is transfusing the Highway Trust Fund every year – last year it was $8 billion – as consumers drive less and switch to more fuel-efficient cars and trucks.

Clearly, new and innovative ways to fund infrastructure projects are needed. Last week, the fourth annual U.S. Infrastructure Investment Summit was held in New York to address this issue, and I was delighted to be in attendance at this important two-day event.

This high-level gathering annually brings together a small, but influential group of individuals in the world of infrastructure finance and investing.

In addition to yours truly, attendees included directors and managers of a number of infrastructure investment funds, together with those from Barclays Capital, UBS, the Blackstone Group, Jolene Molitoris (Ohio DOT). Several managers of large pension funds rounded out the group.

This year, the discussions and panel sessions focused on several key areas. Below are a few of the highlights:

• The Federal Infrastructure Spending Bill

Besides the $120 billion earmarked for infrastructure in the stimulus bill, the Federal Transportation Authorization bill provides for an additional $450 billion of funding over six years, in the form of a national infrastructure bank.

It accomplishes two things: It relies on bonds to provide the necessary funding for major infrastructure projects and it eliminates the huge, upfront payments. Clearly, there will be plenty of capital available from the government for infrastructure projects.

• The Impact of the Global Financial Crisis on Infrastructure Spending

The global financial crisis has changed the financial landscape for the foreseeable future. Retail lenders are far more conservative, warning potential homebuyers that they will need “serious skin in the game” in order to qualify for a mortgage.

The same thing is happening with infrastructure, according to Ben Heap, Executive Director of Infrastructure Asset Management at UBS, and Stephen Howard, a Director at Barclays Capital.

Most of the deals being done right now are more like partnerships with other investors and pension funds. And they have much more equity in them today as opposed to those done several years ago. The reason is that traditional debt financing is hard to come by with state budgets in crisis mode.

As a result, political acceptance of private funding deals is warming fast (money talks) – especially at the municipal level – where partisan politics is often non-existent. At the local level, most deals are small, bottom-up deals involving a few million dollars.

• The Current Lending Environment and Infrastructure Valuation

“Not all infrastructure is the same… many perform differently from an investment standpoint”, says Michael Dorrell, Senior Managing Director of Blackstone Group. Toll roads have very low earnings volatility, airports are higher and seaports are the highest.

According to Dorrell, earnings for infrastructure are off only 3% to -5%, versus the S&P index that’s off nearly 85%. Even infrastructure stocks are off 35% to 40% from their highs. His main criteria for valuing good infrastructure assets?

Making sure the capital structure of the underlying asset is durable and robust. In the past, over-enthusiasm on the capital structure side has had a significant impact on asset valuation.

• What it Takes to Create Public-Private Partnerships (P3s)

People don’t want to pay twice for infrastructure. They think it should be free, given that they’ve already paid taxes. The federal gas tax – due to its fixed nature – has lost much of its value as a proxy for the use of roads and bridges.

Paying for use is coming as a result of all of this. Proper tolling is a way for people to understand the value of the asset they are using. Expect toll roads to proliferate across the country.

States and municipalities will partner with private equity funds and pension funds as a means of raising capital and reducing annual budgets. These P3s will proliferate at the local level, where partisan politics is relatively absent. Some state deals will happen, particularly in those states with budgetary crises, where raising capital by any means is paramount.

What it All Means for Investors

The bottom line is this: The funding issues are being solved, albeit slower than initial expectations.

Dorrell said it best: “Now is a terrific time to buy infrastructure assets. They are extremely undervalued.” Of course infrastructure stocks are good buys as well… and for all the same reasons: nobody likes them.

Jacobs Engineering Group, Inc. (NYSE: JEC), Fluor (NYSE: FLR) and Foster Wheeler AG (Nasdaq: FWLT) are three great examples of companies that stand to benefit as the infrastructure cash gets deployed this year and next.

As credit markets loosen, it will begin to free up billions in capital that will be put to work on infrastructure projects all across America, creating hundreds of thousands of jobs in the process.

As most of you know, I’ve been following the energy and infrastructure sectors for some time now for both Investment U and The Oxford Club – I believe that in the next three to five years there will be incredible investment opportunities in these two sectors.

And the prospects are exciting enough that we’re looking to devote an entire service to profiting from them. So stay tuned for more information as things unfold.

Source: Stalled Infrastructure Projects: What it Means for Investors

This from David:

A few weeks ago, during a particularly bad cold snap, we had a pipe freeze underneath our 200-year-old farmhouse, causing us to go without water for a few days. I eventually managed to unfreeze the pipe, but there was no question it was disruptive for a busy household of four.

Here in the United States, we don’t realize how much we take our fresh water supply for granted, until it’s suddenly cut off. We’re used to turning on the faucet and there it is.

But for the folks in California, 2009 is shaping up to be a big fresh water disaster in the making. Last Thursday, state water officials reported that the snow pack in the Sierra Nevada Mountains is only 61% of what is considered normal for this time of year.

An with only eight weeks left in the rainy season, significant rain and snow is needed for the next two months in order to divert a disaster.

That’s on top of back-to-back dry years in 2007 and 2008. The situation is so bleak, officials may be forced to ration water on a statewide basis for the first time since the 1990s.

Lester Snow, the Director of California’s Department of Water Resources, put the situation in perspective: “We may be at the start of the worst California drought in modern history. It’s imperative for Californians to conserve water immediately – at home and in their businesses.”

The fallout has already hurt the wild salmon population, and if the drought continues, it will get even worse. Farmers, who use 80% of California’s water for irrigation, will have to cutback on the number of acres they plant. That will have a devastating impact, as agriculture is one of the most important sectors of California’s economy.

Fresh Water: The New Oil

Fresh water has been talked about as the “new oil,” but it’s far more important. The human race can survive without crude oil, but not without water. We can’t live more than a week without it.

And for that reason – unlike oil – it is completely immune to demand destruction. We need a pint a day, on average, to maintain a healthy existence. If you include the amount used to produce our food, the number jumps to nearly 1,000 gallons per day per person, and even more in countries whose citizens eat a lot of meat.

The main problem with oil is finding more of it. With water, it’s the distribution system that’s the issue, as it primarily flows through pipes. Many were installed when Edison was fooling around with electricity.

While California has its own set of special problems when it comes to water and its distribution, the problem is monumental nationwide:

• 650,000 miles of antique water pipes are in need of repair or replacement.
• Nearly 30% of the water infrastructure in New York City – and most other big metropolitan areas in the east – dates back to when Lincoln was president.
• Many of the nation’s water purification facilities are more than 50 years old, and completely outdated.

But don’t think the United States is alone in this dilemma. China has lots of water, but much of it is polluted or untreated. Roughly 300 million of its 1.3 billion people don’t have access to clean drinking water out of the tap.

China is spending tens of billions of dollars annually to try to fix the problem.

2 Ways to Play the Coming Water Boom

While the recession has consumers hunkering down – and cutting back their purchases of computers, cell phones, toys and other discretionary items – it hasn’t decreased their demand for clean, fresh water.

And one of the biggest companies in the world that’s able to provide the infrastructure to deliver it is Veolia Environment (NYSE: VE). It provides bumper-to-bumper environmental management services for both water and wastewater.

Whether it’s supplying clean water, recycling wastewater, or developing waste conservation systems, Veolia has a solution.

In China, it’s operating freshwater plants, wastewater decontamination and recycling plants and sewerage treatment facilities.

And now you can add some shares to your portfolio at more than a 75% discount to what they were trading a year ago. Veolia currently trades with a P/E of 8.8 and sports an 8.1% dividend yield.

A different, but no less lucrative, way to invest in water stocks is the Calgon Carbon Corporation (NYSE: CCC). Calgon is a manufacturer of activated carbon granules, a material that’s essential in many of the world’s water purification systems and over 700 other liquid purification and odor control applications.

Carbon granules remove impurities from water, air and many industrial processes.

And business is booming for Calgon:

• The company’s shares are up over 200% since September 2006, and worldwide demand is continually increasing for its products.
• Sales in 2008 were $351 million, with roughly 62% of that coming from the Americas, and only 7% coming from Asia.

Clearly the opportunities for the company are enormous. This past year, the company signed a contract with the Jiaxing Jiayuan Water Company to provide 1.1 million pounds of carbon granules for water purification.

James Fishburn, Calgon Senior Vice President, commented on the significance of the order: “Over the last 40 years, Calgon Carbon has supplied millions of pounds of activated carbon to municipalities all over the world, and we are committed to serving the rapidly growing markets in China.”

In summary, both companies mentioned above are addressing a market that will be rapidly expanding for the foreseeable future. Fresh water is clearly the new oil. And now’s a great time to make it part of your infrastructure and energy portfolio.

Source: Fresh Water: California Drought Reveals the “New Oil”

This from Taipan Daily:

If you drive on U.S. roads, you probably don’t need to be told – the country’s infrastructure is in pretty bad shape.

As a nation, Americans like to look forward. We prefer to spend our money building new things (rather than fixing up old things). Issues like repair and maintenance are back-burnered for other priorities in state and federal budgets. Over time, the cost of neglect rises.

In 2007 we were hit with a long overdue wake-up call: a Minneapolis bridge collapsed. Thirteen drivers were killed.

A Serious Problem

I don’t know about you, but I routinely drive over bridges and interpasses without worry (just as 200 million other U.S. drivers do). The bridge collapse was seen as a freak occurrence, a one-off… but imagine if that changed. The climate of fear could cripple our roadways, and that would be disastrous.

Dale Reiss, vice chairman of the Urban Land Institute in Washington, believes that “at some point, the system could grind to a halt” if we don’t do something about the crumbling state of our highways, roads and bridges.

In Atlanta, Ga., for example – the city where your humble editor went to high school – rush-hour trips are projected to take 75% longer by the year 2030. (If you’ve ever braved Atlanta traffic, you know that’s no joke.)

The estimated repair bill is staggering. A report titled “Infrastructure 2007: A Global Perspective” argues that the U.S. faces a $1.6 trillion deficit for repair and maintenance through the year 2010.

It may not seem like it these days, but $1.6 trillion is still a serious chunk of change. (Unless your name is Hank Paulson or Ben Bernanke, that is.)

Keep in mind, too, that the $1.6 trillion repair bill estimate is only through 2010. When you look at the long-term estimates for needed infrastructure and repair costs – stretching out into decades – you get a repair bill in the tens of trillions.

Keynes to the Rescue!

So, given the above news, the logical John Q. Taxpayer reaction would be something like, “Holy smokes, that’s a lot of dough to spend on repairs.”

But in Washington, D.C. – where everybody and their brother is a John Maynard Keynes fan – the reaction is “Hooray! Something huge to throw money at!”

Deflation fears are all the rage now as you know… the Fed just cut rates to zero… Chrysler is hurting so bad it’s shutting down operations for a month… and President-elect Obama is getting ready to swoop in with the mother of all stimulus plans. Money needs to be spent… and by gum, we’re gonna spend it on infrastructure.

The total amount of “Obama stimulus” seems to yo-yo up and down, like a mood ring attuned to the general anxieties of U.S. taxpayers. The initial amount being bandied about was $600 billion. In recent days the whispers have expanded it to a cool trillion – the big T word – or maybe even more.

On Dec. 6, President-elect Obama put some flesh on the bones of his stimulus plan, pledging “the largest new investment in roads and bridges since President Dwight D. Eisenhower built the interstate system in the 1950s” (according to the Wall Street Journal).

President-elect Obama also promised, in his own words, to “launch the most sweeping effort to modernize and upgrade school buildings that this country has ever seen.”

(Side note: why do most public schools look like prisons? Have you ever noticed that? I don’t get it.)

“Use It or Lose It”

When Obama unveiled his five-point plan earlier this month – encompassing energy, roads and bridges, schools, broadband and electronic medical records – the thing that really made my ears perk up was the “use it or lose it” provision.

Here is the President-elect, again in his own words:

We’ll invest your precious tax dollars in new and smarter ways, and we’ll set a simple rule – use it or lose it. If a state doesn’t act quickly to invest in roads and bridges in their communities, they’ll lose the money.

Have you ever seen the movie Brewster’s Millions? It’s a classic 80s comedy in which Richard Pryor, a minor league baseball player, has to blow 30 million dollars in thirty days – without telling anyone why – in order to inherit $300 million more from an eccentric relative.

The use-it-or-lose-it provision made me think of Brewster’s Millions… perhaps updated here as Obama’s Trillions. In order to meet the stimulus-driven desires of Washington, the states are going to have to shovel this road-and-bridge cash out the door, pronto.

You can almost hear the CEOs of the big construction companies doing a Homer Simpson: Woo-Hoo!

How to Play It?

So we know that the state of America’s infrastructure is a real and serious problem – one that will take years, if not decades, to fully put right.

We also know that Washington is bound and determined to drop a money bomb on that problem, in order to stimulate our sagging economy and create millions of new jobs.

So the obvious question is, how to play it?

Here’s a quick look at some of the major players that could benefit (all traded on the New York Stock Exchange).

Name	Symbol (all NYSE)	P/E Ratio	Market Cap
Fluor Corporation	FLR	11.52	8.98B
Jacobs Engineering Corp.	JEC	14.35	5.98B
Caterpillar Inc.	CAT	7.16	26.16B
The Shaw Group Inc.	SGR	12.47	1.74B
Chicago Bridge & Iron	CBI	n/a	1.13B
URS Corporation	URS	16.03	3.34B
McDermott International	MDR	4.20	2.27B
Perini Corporation	PCR	6.10	1.16B

If you pull up charts for the above names, you’ll see that every single one is in some form of uptrend – as is wholly to be expected, given the Obama news and the longer-term prospects for fattened construction company coffers.

Which of them to buy, though? Another option is just to go with an ETF, like the PowerShares Dynamic Building & Construction ETF (NYSE:PKB).

As you can see, PKB is headed in the right direction. The ETF saw a surge in volume on the “Obama breakout” when the stimulus plans were announced, and the price action is strong.

But PKB has a few problems that make it a less than ideal choice.

For one, PKB’s average volume isn’t so hot at less than 100K shares per day. The volume is doable from a trading standpoint, but getting down to where lack of liquidity starts to be a concern.

Even more of a concern, from our perspective, is the fact that PKB’s top 10 holdings include Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW). We’re not interested in DIY (do-it-yourself) retail or anything aimed at the consumer here, so that’s a real drawback.

Here’s where I turned to the man with the micro plan, Zach Scheidt (a.k.a Cash McDash), to get his take on how to play the Obama infrastructure boom.

Smaller Is Better

The first thing Zach pointed out to me is that, in terms of getting the most bang for one’s trading and investing buck, smaller is better as a rule of thumb.

Here’s what he means…

The major go-to names (the ones in the list noted above) should do well as a result of Obama’s big plans. In fact, they could very well offer double-digit returns in the coming years – nothing to sneeze at.

But, in Zach’s view, most of those multi-billion-dollar market cap names are too big to see the needle really move as a result of this road-and-bridge cash flood… the way it could with some of the smaller, less well-known infrastructure names.

“Think of an 18-wheeler semi-tractor trailer versus a sports car,” Zach told me.

“You can certainly cover ground in a big rig… but you just can’t get up to speed all that fast. So just as a fully loaded 18-wheeler can’t accelerate all that quickly (even on a brand new Obama highway), the big, well-known infrastructure names aren’t set to deliver the velocity of returns that some of the smaller names can.”

This program – which I call the “13F Disbursement Plan” – allows you to legally skim money from the cutthroat Wall Street firms who’ve gotten obscenely rich at the expense of ordinary folks like you and me.

By following the detailed instructions outlined in this letter, you’ll learn how to add $4,570 to $11,450 to your bank account every month, courtesy of the U.S. Government.

Read on for more information…

“Think of a Porsche,” Zach continued, “or maybe a Corvette, out of respect for the ailing Big Three. An infrastructure play with a market cap of just a few hundred million – as opposed to billions – is like the Corvette. The Obama plan’s impact on revenues will be that much greater for these smaller players… and in terms of shareholder return, the Corvette should leave the 18-wheeler in the dust.”

I asked Zach if he had any names in mind. He responded as if I had just insulted his honor. Of course he had some names on his roster – what self-respecting trader wouldn’t want a piece of this trend?

“In particular, I’m looking at one company that has a market cap of less than $300 million,” Zach said. “I haven’t pulled the trigger on it for Taipan subscribers yet, but my preliminary research suggests it could be a double or a triple within the next 12 to 18 months.”

Lawyers and Bulldozers

I then asked Zach what readers should look for as they scout for these infrastructure “Corvettes” themselves.

His response: “One thing that’s really important is to look at the lines of business. In particular, I like names that have the ability to make money on the construction side and the consulting side.”

“You can think of the two lines – construction and consulting – as the ‘bulldozer team’ and the ‘lawyer team.’ Before a structure can be upgraded or a new bridge can be built, a number of assessments have to be made. Sometimes there’s a lot of red tape – especially when NIMBY interests (the ‘Not In My Back Yard’ people) get involved.”

“So the smaller infrastructure names with dual lines of business – like the one I’m zeroing in on for Taipan subscribers – can make money on both sides of the coin. During the assessment period, while the project is being held up by red tape, they send in the lawyers and the guys with the clipboards. This allows them to make fat profit margins on their consulting fees.”

“Then, when the project actually gets underway, the ‘lawyer team’ packs up and the ‘bulldozer team’ rolls in… allowing the company to make another big chunk of profits on the construction side. Nobody likes red tape, but it’s a beautiful racket – a way to make money coming and going.”

Source: How to Play the Obama Infrastructure Boom

This from Sovereign Society:

We’ve just learned that President-elect Barack Obama’s economic team is considering an economic-stimulus program that will be far larger than the two-year, half-trillion-dollar plan under consideration last week.

Obama aides and advisers now say US$600 billion over two years is “a very low-end estimate”. The final number is expected to be significantly higher, possibly between $700 billion and $1 trillion over two years.

I wonder what the number will be next week…two trillion?

Today I want to talk about some of the other sectors that will benefit big when Obama is sworn in next month, and how you can benefit from one simple investment as this money begins flowing.

Obama said the package will include an initial tax cut and a massive infusion of funds for a number of things; roads, bridges, water systems, school repair, spreading broadband access, promoting health-care information technology, improving energy efficiency in buildings, renewable-energy projects, and assisting struggling state and local governments.

While campaigning, Obama often pledged, “To renew our information superhighway”.

By following through on this promise – which I believe he will – he can help stimulate the national economy, inject capital in the struggling state and local coffers and appease his “green constituents”.

Check, check, check…three more off his list.

Let’s start with increasing our broadband access. This would include huge projects to bring broadband into many rural areas of the U.S., funding for new computers for schools and technologies that can help reduce medical costs.

Broadband expansion is likely to be a priority for Obama’s administration. Although the U.S. currently has about 75 million broadband users, it is a pitiful 15th out of 30 industrialized countries on broadband adoption. In a recent speech, Obama called the level of access in the U.S. “unacceptable,” going on to say:

“Here, in the country that invented the internet, every child should have the chance to get online, and they’ll get that chance when I’m President – because that’s how we’ll strengthen America’s competitiveness in the world.”

The plan’s overall cost is expected to be in the hundreds of billions of dollars, so the amount of money that will be made available for IT-related investments could be quite large.

Obama also said he wants to ensure that every hospital and doctor in the U.S. “is using cutting-edge technology and electronic medical records, so that we can cut red tape, prevent medical mistakes and help save billions of dollars each year.”

“In addition to connecting our libraries and schools to the internet, we must also ensure that our hospitals are connected to each other through the internet. That is why the economic recovery plan I’m proposing will help modernize our health care system – and that won’t just save jobs, it will save lives..”

Remember, the printing presses are primed and running. He has told us all that deficits will just have to wait a few years, stimulating this economy is the most important thing.

“We’ve got to make sure that the economic stimulus plan is large enough to get the economy moving,” Obama said last week on “Meet the Press.” Even with the country $1 trillion in debt, Obama said, “We can’t worry short-term, about the deficit.”

So where should we look to benefit from this huge investment in broadband and medical information technology?

iShares runs a good ETF that focus exactly on this sector – S&P North American Technology – Multimedia Networking Index Fund (NYSE:IGN) This index was created as a benchmark for U.S. traded multimedia networking stocks and includes companies that are producers of telecom equipment, data networking and wireless equipment…making it a perfect fit for this part of Obama’s plan.

The share price and performance of the fund have been less than stellar, but I believe this is finally going to change. Its top 10 holdings include: Qualcomm, Cisco, Juniper Networks, Foundry Networks, F5 Networks, Motorola, Harris Corp, Tellabs, Polycom and Corning.

These companies make the equipment and are leading providers of high-performance enterprise and service provider switching, routing and Web traffic management solutions. They are leaders in communication and collaboration, tele-presence, video conferencing, wired and wireless voice conferencing…exactly what we need to achieve Obama’s stated goals.

If President Obama is true to his word – and again, I believe he will be – then these companies will benefit from the billions and billions to be spent in their areas of expertise.

A buy at these levels could reap you huge returns in the coming year. Hold on tight, as the ride won’t be an easy one. Big money is going to flow into this area and these companies will benefit from it.

Source: Big Profits are Going to be Made… if you  Just Read Obama’s “Fine Print”

This from The Sovereign Society:

Often it’s the fine print that makes all the difference in the world. If you need any more proof of that fact, just ask the millions of Americans trapped in a sub-prime, Adjustable Rate Mortgage.

With half a million jobs lost in November alone and no one predicting an end to this recession any time soon, Mr. Obama hinted (read “fine print”) that $500 billion in spending is not out of the question.

He would like to see a plan that creates 2.5 million jobs. His interview on Meet the Press this past Sunday indicated that he wasn’t afraid of big spending to stimulate the economy, but that mindless spending should be avoided…

“We are not going to simply write a bunch of checks and let them be spent without some very clear criteria as to how this money is going to benefit the overall economy and put people back to work”. The new administration’s plans will be based on what is “going to make the biggest difference in the economy and what will have some long-term benefits.”

Obama emphasized that the spending will be on “infrastructure” – projects to build roads, modernize schools, expand Internet access, improve buildings’ energy efficiency, put better technology in hospitals.

“We’ve got to make sure that the economic stimulus plan is large enough to get the economy moving,” Obama said in the interview. And even with a $1 trillion budget deficit, Obama said, “We can’t worry short-term, about the deficit.”

This perspective is clearly shaped by the experience of the pre-Roosevelt Depression years, when (as some economists believe) stinginess in monetary policy and a failure to effectively target government spending led to disastrous results.

Infrastructure spending has a further advantage, in that it will direct the fiscal expansion to state treasuries. Most states are required to run balanced or almost-balanced budgets. Many states, without help from the federal government, will have to cut spending or raise taxes next year. The federal fiscal stimulus needs to deliver enough help to the states to offset this.

State-directed infrastructure investments, which are “shovel ready”, are a fitting part of the mix. Last week, the nation’s governors presented $126 billion in highway, public transportation, airport and waterway ready-to-go projects to Obama.

So where should we look to profit from this huge amount of money that is going to “stimulate” the economy? Just look at the fine print…here that means all the highways, bridges, airports and waterways. These will be major construction projects that will use a lot of steel, concrete and equipment.

There are a number of good infrastructure ETFs out there, but most of them are global in scope. Reading “the fine print” you have to guess that President Obama will make sure that our public tax dollars will flow to U.S. companies. If you want an all-domestic infrastructure play, the closest you can get is the PowerShares Dynamic Building & Construction Portfolio ETF (NYSE:PKB).

The index bottomed twice last month at about $7.50 per share and has recently rallied above its 50-day moving average to about $11.50. If you were to decide to buy in, do not chase it…$10 looks to me like a price that could yield you some big returns and as always keep you stops pretty tight.

Source: Want to make Big Bucks off Obama’s Stimulus Plan? Just read the fine print…

Speaking at a Sunday news conference and on”Meet the Press,” Obama didn’t specify projects beyond roads, bridges and”other traditional infrastructure.” Nor could he give a price tag. But just his mention of the infrastructure projects was enough to kick start the markets Monday.

On”Meet the Press,” Obama said his transition team and advisers are”busy working, crunching the numbers, looking at the macroeconomic data to make a determination as to what the size and the scope of the economic recovery plan needs to be. But it is going to be substantial,” Bloomberg reported.

Obama also referred to his meeting with U.S. governors last week, saying that many job-producing state projects are”shovel ready.”

The auto industry, Obama said, had made”repeated, strategic mistakes,” but allowing it to go under would only add to our 12-month-running recession and the millions of jobs it’s taken from the U.S. economy.

Obama also said that his economic team is coming up with solutions to the housing crisis.

If there’s a common thread between his opinions on what to do with each troubled industry, it’s that Obama is trying to create a broad economic package that both creates jobs and fills in the holes where the U.S. economy had been falling short – as opposed to writing a check to taxpayers and hoping it adds to the gross domestic product (GDP).

While he expects to deliver change, it might take another year for it to show, statistically speaking, the Chicago Tribune reported.

“I am absolutely confident that if we take the right steps over the coming months, that not only can we get the economy back on track, but we can emerge leaner, meaner and ultimately more competitive and more prosperous,” Obama said at his news conference, The New York Times reported.

Source: Obama’s Talk of Infrastructure Investment Moves Monday Markets

This from The Rude Awakening:

In the market, of course, we have endured a sort of destructive khamsin blowing through the market and economy in recent months. The longer it blows, the more it seems to make brittle and destroy. The severe drop in commodity prices, for example, is worrisome for commodity investors. But more worrisome is how long it goes on.

Financial strength is not an unlimited reservoir, and many companies never had much to begin with. Even those that looked okay months ago are now scrambling. So even though the market crash has created a lot of bargains, I think the market still looks treacherous. The biggest risks now are financial, such as the inability of a company to finance itself through this crisis.

Something might look dirt-cheap, but if it can’t make it through the credit crisis, it’ll get a lot cheaper…and might even go out of business. So investors should be looking to buy stocks that are like camels – creatures that can cross the desert without needing to refuel. At least with these stocks, even if the prices go down a bunch, you have a good shot at making your money back, and then some, later. You could still wind up with a good return over a period of years. You can’t do that if the thing dies in the desert.

So financial strength is going to be very important in 2009. I also think it will be crucial to stay in essential industries and/or industries that have a well defined, long-term future, as opposed to businesses that can grind to a near halt.

One such company is Astec Industries (Nasdaq:ASTE). It has no debt at all. And it’s in an area — infrastructure — in which there are clear needs and a bright future. Astec, like most of the stocks of companies that build highways, bridges, water pipes and wind towers, should perform very well, even in a sluggish economic environment.

Astec Industries is in great position to benefit from the rebuilding effort just announced by President-elect Obama. The company just released an outstanding earnings report, posting a 39% increase in earnings per share. Backlog remained healthy. Astec’s “green” lineup of products, like its asphalt recycling equipment, plays well to politically minded buyers – besides saving folks some money and making better asphalt. And remember, Astec is also an international story. Overseas sales grew 37% in the third quarter and made up 43% of total sales.

Then there are natural gas pipelines that require products from Astec. Gas pipelines are not suffering from years of neglect or poor maintenance. Rather, the building boom in natural gas pipelines reflects all the new supply from America’s new shale regions and the nation’s growing appetite for natural gas. This year, we added some 4,400 miles of new pipeline. That’s more than 2.5 times last year’s figure. It is the biggest addition to the network in the 10 years in which we have data.

Those additions help meet a greater reliance on natural gas for fuel. But the pipeline companies are struggling to keep up. It’s not easy building new pipelines, especially in the dense and developed Northeast. Earlier this year, El Paso Corp. canceled plans for a 7.8-mile pipeline in Massachusetts because it couldn’t win approval from local authorities.

Other companies have had similar problems. Take Islander East Pipeline. Local authorities rejected its 50-mile pipeline that was to stretch across the Long Island Sound. Where folks expect to get natural gas, I’m not sure. No one seems to want to build anything, but people complain when prices rise. Anyway, this situation makes existing right of ways and pipelines enormously valuable.

In addition to repairing roads and bridges, the Obama plan will almost certainly direct funding toward water infrastructure projects as well. That’s just one more reason to like a company like Northwest Pipe (NASDAQ:NWPX), which makes large-diameter water pipes.

But even without any help from Obama’s new infrastructure spending plan, Astec and Northwest Pipe are two solid examples of companies that can withstand the khamsins that stock market blow our way.

Source: Shooting Stocks in a Barrel

The dollar fell against other major currencies apart from the yen while demand for government bonds dropped.

European shares jumped, led by banks and oils, tracking gains in the United States and Asia.

The FTSEurofirst 300 index of top European shares traded 5.8 percent higher. Earlier, Japan’s Nikkei  climbed 5.2 percent to its highest close in a week.

U.S. president-elect Barack Obama said on Saturday that his plan to create at least 2.5 million new jobs included the largest infrastructure investment since the 1950s and a huge effort to reduce U.S. government energy use.

Lawmakers in the U.S. Congress are also working on draft legislation to help out the embattled auto industry.

“The central banks have done their job and now the focus is on governments — in addition to Obama’s plan we have stimulus packages from India, Australia and China,” said Thierry Lacraz, strategist at Pictet in Geneva. “While this will not avoid a recession, investors at least have the feeling that the people in charge are doing the right thing.”

Global stocks as measured by MSCI were up more than three percent. For the year to date, however, they remain down more than 46 percent.

HIGHER YIELDS

The dollar fell broadly, hitting its lowest against the euro and a basket of major currencies in more than a week as the steep rally in European shares indicated renewed risk appetite and boosted higher-yielding currencies.

The euro rose 1.1 percent to $1.2877 while the dollar index fell 1.1 percent.

However, the yen tumbled, hitting its lowest level against higher-yielding currencies including the Australian dollar, the euro and sterling in roughly a week due to the slight pullback in risk aversion which boosted European shares.

The dollar rose roughly 1 percent to 93.91 yen.

“Higher stocks are driving everything at the moment and currencies are trading in line with this, with higher yielders gaining and lower yielders on the defensive,” said Adam Cole, global head of FX Strategy at RBC Capital Markets in London.

Euro zone government bond yields rose sharply.

The interest rate-sensitive two-year Schatz yield was up 14.6 basis points at 2.226 percent. The Schatz is also sensitive to gains by equities as the short-end of the yield curve is more liquid and a gateway for equity investors to return to the stock market.

The 10-year Bund yield was up 13.2 basis points at 3.160 percent, as the yield curve flattened.

Jeremy Gaunt, Sitaraman Shankar, David Stamp
LONDON, Dec 8 (Reuters)