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Biden’s Big Bill & Big Bets

Updated: May 29, 2022

Recently dominating headlines across all major outlets has been Biden’s two-part infrastructure plan, a goliath of a bill destined to move markets; it is touted to total over $4 trillion dollars when all is said and done and includes 9 figure spending on the domestic front. Stemming from this, a couple key sectors and industries can be expected to benefit more than others as it relates to this increased government expenditure on a range of real assets and infrastructures.

Here’s a visual breakdown of the targeted spending included in the bill's most recent 2,702-page iteration.


While the infrastructure rollout is planned to come in two parts, with this bill focused on the above categories and the next to have more of an emphasis on ‘human infrastructure’ spending - the flow of capital into these sectors is sure to breed new investment opportunities.

Opportunity #1 - 5G Technologies

As denoted within the above graphic, ‘broadband’ is slated to get a spending boost through this bill - all is mainly directed towards updating the current telecommunication infrastructures from 4G capabilities to 5G.

What does this mean?

In short, 5G means materially-faster communication speeds delivered to the end consumer and more importantly, a high forecasted adoption rate (modelled right).

There are more than a few ways to invest in this trend, with the most obvious of which being to take a position in big telecom - however, the companies postured for the highest growth are chipmakers; as a direct production input to 5G smartphones, computer chip manufacturers are a corollary that has already experienced a triple-digit rally across the board but stemming from the shortage of chips in the market and the impending increases in demand, further upside is to be expected. A top pick to gain exposure is Qualcomm Inc. ($QCOM), as a well-diversified leader on the playing field they have the resources and contacts to appreciate on-chip & semiconductor demand. Furthermore, $QCOM’s P/E of 18x places them at a discount to the peer group average of 21x. 1YR performance (+27%) is pictured below.

Option #2 - The Green Energy Transition

A significant point of this bill was to advance clean energy adoption within the United States, a phenomenon that actually has bipartisan support and will breed lucrative opportunities for industry players. Spending on the power grid in this first bill as part of Biden’s infrastructure plan actually accounts for the second-highest portion of spending, rounding out at $100B over the next several years aimed at modernizing the US grid with clean energy initiatives such as solar, wind, hydro and advanced battery technologies.

While there are a couple of focus names that come to mind, a recommendation to make use of this new wave of demand in the sector is the First Trust Nasdaq Clean Edge Green Energy Index Fund ($QCLN) - 1Y performance pictured below, this ETF has rallied +75% and is down just over -20% from it’s all-time-high, possibly signalling an entering opportunity for potential investors interested in the US clean energy market specifically.


All-in-all, this is a two-part bill and Biden has not left any part of his agenda ambiguous, in order for this physical-infrastructure centred measure to be passed, the next one has to as well; the bottom line means that even more spending, in amounts that will eclipse the trillion spent here will flow into the economy in the future and positioning oneself within any of the names mentioned above can help make use of this windfall to the market.

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