A Powerful 'Mega-Trend' Wrapped in a Washington Debate

Let the infrastructure debate begin... The bill won't be as big as proposed... A powerful 'mega-trend' wrapped in a Washington debate... DailyWealth Trader on the green-energy story... Our inflation discussion of the week... It all adds up...

Well, that didn't take long...

On the same day that President Joe Biden proposed a roughly $2 trillion infrastructure plan on stage in Pittsburgh last week, we wrote in the Digest that the massive proposal was likely to face significant pushback in Congress. As we said...

The discussions will probably start with public calls for bipartisanship... but we're willing to bet that path won't be realized.

By the weekend, this bet already paid off... most notably with Republican Sen. Roy Blunt of Missouri going on TV to call for a "smaller" $615 billion bill that would cover only physical infrastructure like roads and bridges.

A rebuttal like this from the opposite side of the political aisle from Biden was to be expected. But as it turns out, not just Republicans oppose the deal as is...

At least a few Democrats are also voicing their concerns...

Specifically, they're concerned over the higher corporate tax rate proposed to fund the spending...

This tells us there's a possibility for enough division within the Democratic party that the bill might not even be passed eventually through the "budget reconciliation" process... As we've described before, that's the political move that would require no Republican support at all.

Stansberry NewsWire analyst Nick Koziol reported earlier today...

In comments over the weekend, Energy Secretary Jennifer Granholm said that President Biden would push the bill through using budget reconciliation...

[But] this may not be an easy path either. Some Democrats are reportedly looking for other ways to fund the bill instead of a corporate tax hike. This could further delay the bill until Democratic leaders know exactly who is on board with the bill.

And this could also lead to concessions to drum up more support for the bill.

In sum, if it passes at all, Biden's infrastructure bill might not be as big as first proposed...

As NewsWire editor C. Scott Garliss told us in a phone call today...

I don't think it will be the layup that they say it is. It's going to take a lot more work.

The Democrats have one more opportunity to use reconciliation before mid-term elections next year. If you can get a pet project in, you're going to fight hard for that...

At the same time, tax hikes going into a mid-term election isn't going to be a popular topic.

We're still willing to bet, though, that a significant amount of spending, if not higher corporate taxes, will become law around October. That's when the new fiscal year starts for Congress... and when it can officially "reconcile" budget-related legislation again.

So with that said, we'll reiterate our conclusion from last Wednesday's Digest...

With the plans being unveiled today, the last day of March, we don't think Biden and the Democrats want the conversation to drag on for six months... But there's a good chance that is precisely what happens.

In the meantime, the Biden infrastructure proposal provides some other telling information...

DailyWealth Trader editors Ben Morris and Drew McConnell picked up this part of the story in their issue last Wednesday.

They noted that the fact sheet on "The American Jobs Plan" – which included all the relevant details on Biden's infrastructure proposal – mentioned the term "clean energy" a remarkable 17 times.

The specifics include a goal for net-zero carbon emissions by 2050... $174 billion to support the electric-vehicle market... and a call to mandate the amount of U.S. electricity production that comes from sources like wind and solar power.

More from Ben and Drew's issue last week...

Under the heading "Reenergize America's power infrastructure," the fact sheet says that "President Biden is proposing a ten-year extension of an expanded direct-pay investment tax credit and production tax credit for clean energy generation and storage."

That's a long-term commitment to investment in and tax credits for the clean-energy industry... And it would be a major boost for the firms in this sector.

Biden's infrastructure proposal faces plenty of challenges... And it will surely change before it goes through Congress, if it gets through at all. But this is a major trend that's being supported by communities, municipalities, and states around the U.S. and in countries around the world.

Ben and Drew noted that Biden has been consistent in his messaging about transitioning the U.S. to clean energy... and not having the country fall behind Europe or the rest of the world in the space.

In DailyWealth Trader, Ben and Drew have been covering the green-energy story for a while...

As they wrote back in October 2020, the green-energy push has been well underway in Europe for years...

The European Commission, which is the executive branch of the European Union, has created a "European Green Deal." This is a major plan with the primary goal of eliminating Europe's greenhouse gas emissions by 2050.

In 2018, 18% of the European Union's total energy consumption came from renewable sources like wind and solar power. This is already significant. But as part of the European Green Deal, the EU plans to nearly double that figure over the next decade.

Not at all unlike what is going to be debated in the months ahead in Congress in the U.S... last July, EU leaders agreed on a $1.17 trillion stimulus effort called NextGenerationEU to aid with the COVID-19 recovery.

The top priority was "environmental sustainability"... And at least 37% of the funds must be allocated to "green investment and reforms," Ben and Drew said.

In parallel, Europe's top energy companies – including oil majors Royal Dutch Shell (RDS-B), Total (TOT), and BP (BP) – are already spending a combined $5 billion per year on clean energy.

All of these moves, along with green energy's large presence in the Biden infrastructure proposal, tell Ben and Drew one crystal clear thing. More from last week's issue...

Clean-energy stocks will benefit from one of the strongest tailwinds we've ever seen...

Major governments around the world are working toward reducing greenhouse gas emissions like carbon dioxide – a byproduct of burning coal, oil, and natural gas. And they're spending hundreds of billions of dollars to further that goal.

Loads of money will flow into the clean-energy sector for years to come.

Even if as much green-energy spending isn't included in a final infrastructure bill here in the U.S., we don't think it will be the first thing to be totally cut from the legislation. Plus, these trends are at work elsewhere, too.

As we said, European nations are spending a ton of money on green energy...

For all of these reasons, Ben and Drew currently recommend a pair of green-energy-related companies in DailyWealth Trader. And they say right now could be a great opportunity to buy and hold these stocks for a year or two...

One company creates and sells solar systems to both residential and commercial customers around the world. And there might be much more to this business than you think, which is part of the opportunity in owning shares.

This company does more than just provide solar panels that you might see on your neighbor's roof... It also provides the tools that store and distribute the energy that is created. It's sophisticated technology.

Ben and Drew also suggested buying shares of a leading wind-turbine company with strong strategic and financial footing back in October 2020, when they talked about the clean-energy initiatives already underway in Europe.

In the "growth sell-off" at the start of 2021, these two stocks pulled back sharply from their highs. But lately, they've started to turn around near their long-term price trendlines.

For all these reasons, right now could turn out to be the ideal time to buy these stocks, according to Ben and Drew. If you're a DailyWealth Trader subscriber or Stansberry Alliance partner, be sure to check out Ben and Drew's work on this mega-trend right here.

One way or another, it will be wrapped in what will likely be a long Congressional debate over the infrastructure bill.

(And if you're not already signed up for DailyWealth Trader, you can learn more right here.)

Moving on to our inflation discussion of the week...

We're not planning to make this a formal weekly feature in the Digest right now... but it might become one. Inflation has been a hot topic (and a nightmare-inducing subject) in these pages over the past month or so.

For now, we'll simply call this our inflation discussion jumping-off point for this week...

It starts with the Institute for Supply Management's ("ISM") Prices Index, which tracks price trends across 18 different industries and directly surveys business owners across the U.S.

In March, this index registered 85.6%. That's high... And in the past two months, the index has been at its highest levels since July 2008, when it registered 90.4%.

All 18 industries reported paying increased prices for raw materials in March – with apparel, leather, furniture, and wood topping a long list. Tim Fiore of the ISM, who runs the survey, said...

Aluminum, copper, chemicals, all varieties of steel, plastics, transportation costs, wood and lumber products all continued to record price increases as a result of product scarcity.

Note the important phrase "product scarcity."

The reason for price increases – according to this survey, at least – is lower supply coupled with strong demand. In short, businesses are having trouble keeping up for whatever reasons...

We see a little bit more detail about those reasons in business owners' individual feedback. These are particularly revealing and published in plain English each month, which is nice.

In March, the concerns and problems ranged from the deep-freeze conditions in Texas to labor shortages and general supply-chain issues that started last year when the COVID-19 pandemic and the ensuing lockdowns struck.

You can look at these numbers and feedback from a few different angles...

On the surface, they might not support the claim of inflation in the sense of the government inflating prices over time, especially with demand high.

But everything is connected...

COVID-19... the shutdowns... supply-chain issues... Federal Reserve "easy money"... stimulus checks... extended unemployment... labor shortages... less supply... the same or more demand.

It all adds up...

But you still might not see it in the official data from the Fed, which the central bank uses to dictate big money policy. The Fed says it's aiming for 2% inflation, but not in houses... or financial assets.

So that brings us to the moral of the story, at least for today...

Real life will keep on happening. And central banks are going to keep juicing their paper money. Inflation may keep ticking higher with near-zero benchmark interest rates still in place, pushing people into stocks... But the party won't last forever.

This context, once again, proves the case for diversification, proper asset allocation, and portfolio management. A critical part of this approach, of course, is owning high-quality, capital-efficient stocks and having pre-determined exit plans from positions in many cases. As we wrote in the February 23 Digest...

Inflation threats are another reason why investors should own good businesses. These companies can react to higher prices by charging more and still see consistent demand, and continue to grow... As always, though, you want to heed your stop losses, too.

If you're concerned about inflation, you also want to own "hard assets" like gold or silver, real estate, and other inflation-protected securities... or even bitcoin, given its fixed supply nature and its underlying code designed specifically to prevent its price inflation.

On this point, our colleague Crypto Capital editor Eric Wade has more details about how bitcoin, the world's most popular cryptocurrency, fits in with the real story of what's going on in the economy and markets today.

If you missed Eric's "Beyond Bitcoin" event that debuted last week – where he covered ideas in the cryptocurrency space beyond the headliner – be sure to click here to watch the free replay. We believe his message is well worth your time.

A Debt Catastrophe

The economy isn't healthy like the markets are showing, says Brent Johnson of Santiago Capital. Joining Daniela Cambone, he examines the catastrophic consequences of U.S. debt... and breaks down his "dollar milkshake theory" predicting a bull market littered with major caveats.

Click here to watch this video right now. For more free video content, subscribe to our Stansberry Research YouTube channel... and don't forget to follow us on Facebook, Instagram, LinkedIn, and Twitter.

New 52-week highs (as of 4/1/21): American Homes 4 Rent (AMH), Eagle Materials (EXP), Expeditors International of Washington (EXPD), SPDR Euro STOXX 50 Fund (FEZ), Comfort Systems USA (FIX), Alphabet (GOOGL), Home Depot (HD), Invitation Homes (INVH), IQVIA (IQV), iShares U.S. Home Construction Fund (ITB), Lennar (LEN), LGI Homes (LGIH), Markel (MKL), NVR (NVR), Invesco S&P 500 BuyWrite Fund (PBP), Scotts Miracle-Gro (SMG), ProShares Ultra S&P 500 Fund (SSO), Seagate Technology (STX), and Vanguard S&P 500 Fund (VOO).

In today's mailbag, a case of déjà vu all over again and feedback on Dan Ferris' Thursday Digest, which in part featured Deere (DE) tractors as spacecraft. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Corey, In the March 31st Digest you reported about Joe Biden's visit to Pittsburgh to tout his infrastructure bill. You stated some excerpts from Stansberry Newswire analyst Nick Koziol where he quoted Transportation Secretary Pete Buttigieg as saying Biden wanted to first wipe out some of the Dept. of Transportation back-log that would likely provide thousands of 'shovel-ready' jobs to boost the economy.

"Let's see now, where did I hear that phrase 'shovel-ready' jobs before? Hmmmm, that's right, that same phrase was touted about 10 or 11 years ago by then-President Obama for his infrastructure bill called the American Reinvestment and Recovery Act, which cost the American people $787 billion, of which $50 billion was to be earmarked for infrastructure projects.

"There is little evidence for any correlation between infrastructure spending and short term-job growth. This statement is backed up by a January 12, 2010 Associated Press article by Matt Apuzzo and Brett J. Blackledge. They wrote...

A federal spending surge of more than $20 billion for roads and bridges in President Obama's first stimulus has had no effect on local unemployment rates... it didn't matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry.

"On June 13, 2011, Obama quipped, 'Shovel-ready wasn't as... uh... shovel-ready as we thought.' So this is what we're dealing with... AGAIN!

"This is 'Going down the same rabbit hole again,' or 'Deja vu all over again.' You can use any expression you want. This administration IS the definition of insanity: 'Doing the same thing over and over again expecting a different result.' And WE THE PEOPLE are going to be paying for it for generations to come." – Stansberry Flex Alliance member K. S.

"Dan, C'mon, what wisdom or caution would come from the Bible that LaGrande [sic] and her ilk would see as relevant, yet believe? To the globalists, the toast is there is no God... I traded on the floor of the CBOT for many years. On the train on the way into town, I'd read a chapter of Proverbs, one for each day of the month, every day. It saved my neck and some money on many occasions. Glad to see there is someone at Stansberry who regards the spiritual. Don't lose hope. I was a piano major in college too." – Paid-up subscriber Joseph C.

"Hilarious article. Loved the 'evolution of space flight' with the tractor at the end." – Paid-up subscriber M. S.

"This was the best! When you can make me chuckle while imparting wisdom you've got my number. If only all education could be this much fun." – Stansberry Alliance member Paul A.

All the best,

Corey McLaughlin
Baltimore, Maryland
April 5, 2021