The White House has announced that it has struck an infrastructure deal with a bipartisan group of 10 Senators.
There are almost no details on the deal and it’s not at all clear that President Biden will be able to convince the progressive wing of his own party to support the deal. On the other side of the aisle, Republican Senate Minority Leader Mitch McConnell has not endorsed the deal. As I do the math, if only the 5 Republican Senators who were part of the negotiating group vote for the deal in the Senate, it will fail to clear the 60-vote threshold necessary for passage if McConnell and other Republicans decide to filibuster the legislation.
We do know that the agreement will spend $973 billion over five years, with $579 billion of that being new spending that was not already allocated through other projects, according to details released by the White House. That $579 billion figure includes $312 billion for transportation projects, $55 billion for water infrastructure and $65 billion for broadband.
Obviously the package is much smaller than that introduced by the Biden administration in April and it contains none of the spending on climate change, child care, and other non-traditional infrastructure programs in the White House proposal. President Biden will have to convince progressive Democrats to vote for the bill using a promised to move a package with that spending in it using the budget reconciliation process in the Senate.
All that aside, today the usual infrastructure stocks gained. As of 2 p.m. New York time, Vulcan Materials (VMC) and Martin Marietta Materials (MLM), two makers construction aggregates, were up 3.16% and 2.69%, respectively. Caterpillar (CAT) had climbed 3.58% and Deere (DE), which has a large construction unit next to its iconic farm machinery business, was up 1.79%. United Rentals (URI), which rents construction equipment, had gained 3.67%.
Deere, Caterpillar, and Vulcan Materials are members of my Jubak Picks Portfolio. Deere is also a member of my long-term 50 Stocks Portfolio.
Full disclosure: I own shares of Deere in my personal portfolios.
