Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
The Cost: "Trump's estimates that the wall can be built for around $10 billion have been widely disputed. The cost to build the 'easiest' sections of the existing fence were between $2.8-3.9 million per mile according to the US Government Accountability Office. However, given that these figures exclude labour costs, land acquisition costs and relate to construction in accessible areas with favourable construction conditions, the cost of Trump's Wall is widely expected to be greater than $15 billion and perhaps as much as $25 billion." (from Bernstein Materials): http://fronterasdesk.org/sites/default/files/field/docs/2016/07/Bernstein- The Trump Wall.pdf
The first column is starting from a false premise (it was written pre-election):
Donald Trump wants to build a 40ft high concrete wall along the border between the US and Mexico. If elected as US President later this year, and if Trump follows through on his plan, The Trump Wall will represent a major construction project requiring millions of cubic metres of concrete.
In his 60 Minutes interview Trump already walked that back, saying that part of it could be a fence, or as Gail Collins and likely others have called it, the Great Wence.
Real Estate Review Dec. 3, 2016 8:00 AM ET Hoya Capital Real Estate The ongoing shortage of construction labor is the biggest issue that nobody’s talking about. Tougher immigration policies will exacerbate the shortage and continue to drive up construction costs. Construction Employment The NFP jobs report was generally in-line with expectations, but showed a disappointing 0.1% decline in weekly earnings. We dig deeper into the numbers to see the impact on real estate. We continue to emphasize that the shortage of construction workers is the biggest issue that nobody seems to be discussing. We believe that this will be a significant issue if the new administration pursues an aggressive infrastructure spending plan combined with a tougher immigration stance.Pew Research estimates that 15% of the construction workforce are undocumented workers, and other firms estimate that number may be as high as 25%. With an already tight labor market for construction workers, a significant increase in public demand combined with a decrease in supply could drive up wages to levels that "crowd out" private projects. This would be good for commercial real estate asset values. http://seekingalpha.com/article/4027909-real-estate-review-reits-mixed-home-prices-rise-construction-sluggish
And Trump's Navy. Can you say Military Industrial Complex
Politics | Sun Dec 4, 2016 | 1:57pm EST U.S. Navy, shipbuilders ready for Trump's expansion plan By Andrea Shalal and Mike Stone | SIMI VALLEY, Calif. Reuters The U.S. arms industry is ready and capable of boosting production of new ships if President-elect Donald Trump makes good his vow to expand the U.S. Navy to 350 ships, Chief of Naval Operations Admiral John Richardson told Reuters. "If it's resourced, it's a matter of working closely with the industrial base, and they definitely are ready to do that," he said, adding the only limiting factor would be hiring and training workers to build the new ships.
"If I do not have that capacity, I can create it faster than you can appropriate the money," Mike Petters, chief executive of Huntington Ingalls Industries Inc (HII.N), the largest U.S. military shipbuilder, said in a separate interview with Reuters. http://www.reuters.com/article/us-navy-shipbuilding-idUSKBN13T0U3
U.S. Navy aims to buy more Boeing F/A-18E/F Super Hornets By Andrea Shalal | SIMI VALLEY, Calif. Reuters Sat Dec 3, 2016 If implemented, the plan would provide dozens of new orders for Boeing and keep its St. Louis production line running for several more years.
"We would welcome an opportunity to develop a plan, with the Navy, that would allow us to continue providing the robust capabilities of the Super Hornet well into the future," said Boeing spokesman Todd Blecher.
The company had suffered a setback last month when Congress failed to include 12 Super Hornets in the fiscal 2017 defense authorization bill, opening a potential gap in the Boeing production line until several foreign orders for Kuwait and Canada are finalized. The $618.7 billion bill was passed Friday by the U.S. House of Representatives, and the Senate is expected to vote on the measure next week.
From the same conference ,the annual Reagan National Defense Forum. Sun Dec 4, 2016 | 11:45pm EST Reuters "Russia is the No. 1 threat to the United States. We have a number of threats that we're dealing with, but Russia could be, because of the nuclear aspect, an existential threat to the United States," Air Force Secretary Deborah James told Reuters in an interview at the annual Reagan National Defense Forum.
James, Chief of Naval Operations Admiral John Richardson and Pentagon chief arms buyer Frank Kendall, all voiced growing concern about Russia's increasingly aggressive behavior in interviews late on Saturday.
Their comments come as the Pentagon finalizes a classified security assessment for President-elect Donald Trump, who has promised to both pump up U.S. defense spending and build closer ties to Russian President Vladimir Putin. http://www.reuters.com/article/us-usa-military-russia-idUSKBN13U0CX?il=0
Re profiting from the wall, instead of the obvious plays maybe one should look at the second- or third-order beneficiaries. E.g., real estate plays that might benefit, companies that might benefit from less Mexican competition, etc.
Yes, but as I asked in my earlier post, is this a supposed 40 foot high concrete wall or merely a cheap fence? Even Frost starts with his wall but ends with "Good fences make good neighbors"
@msf - Stay tuned. The way commodities have been moving, I'm inclined to think it will be a huge wall.
My favorite part of Frost's poem:
He moves in darkness as it seems to me, Not of woods only and the shade of trees. He will not go behind his father's saying, And he likes having thought of it so well He says again, "Good fences make good neighbours".
As you have no doubt observed, it's hard to shake people from their long held (intuitive) beliefs - even when the (stubborn) facts prove otherwise.
Mark, How do you VAT it (if you have one), I wonder? Anyway, I'm sure it is not a worry since Mexico is footing the bill and doing the construction. We are only supervising.
Mexico doing the construction? Certainly not. This is a jobs creation act for American workers like Keystone, only bigger.
Have Mexico pay for the wall, but make sure that it exports those jobs to the US. At $7.25/hr of course. Unless Puzder thinks the rate should be lower. That wouldn't be used to temper the bill to Mexico but to increase the profits for the American companies running the construction.
Which gets us back to the original question - how do investors profit from the wall?
Something very futile about walls. Described here by one of the best.
Mending Wall - Poem by Robert Frost
Something there is that doesn't love a wall, That sends the frozen-ground-swell under it, And spills the upper boulders in the sun; And makes gaps even two can pass abreast. The work of hunters is another thing: I have come after them and made repair Where they have left not one stone on a stone, But they would have the rabbit out of hiding, To please the yelping dogs. The gaps I mean, No one has seen them made or heard them made, But at spring mending-time we find them there. I let my neighbour know beyond the hill; And on a day we meet to walk the line And set the wall between us once again. We keep the wall between us as we go. To each the boulders that have fallen to each. And some are loaves and some so nearly balls We have to use a spell to make them balance: "Stay where you are until our backs are turned!" We wear our fingers rough with handling them. Oh, just another kind of out-door game, One on a side. It comes to little more: There where it is we do not need the wall: He is all pine and I am apple orchard. My apple trees will never get across And eat the cones under his pines, I tell him. He only says, "Good fences make good neighbours." Spring is the mischief in me, and I wonder If I could put a notion in his head: "Why do they make good neighbours? Isn't it Where there are cows? But here there are no cows. Before I built a wall I'd ask to know What I was walling in or walling out, And to whom I was like to give offence. Something there is that doesn't love a wall, That wants it down." I could say "Elves" to him, But it's not elves exactly, and I'd rather He said it for himself. I see him there Bringing a stone grasped firmly by the top In each hand, like an old-stone savage armed. He moves in darkness as it seems to me, Not of woods only and the shade of trees. He will not go behind his father's saying, And he likes having thought of it so well He says again, "Good fences make good neighbours." Robert Frost
Invest in Mexican helium distribution points which will spring up near the border in order to fill the balloons that will be used to carry people over the new wall.
He moves in darkness as it seems to me, Not of woods only and the shade of trees. He will not go behind his father's saying, And he likes having thought of it so well He says again, "Good fences make good neighbours."
Bloomberg is reporting that a tweet war erupted over past 24-hours between DT and Mexico's President AND that the Mexican President has now tweeted that he will not attend next week's planned meeting with Trump in DC.
"Something there is that doesn't love a wall" (especially if you're being coherced to pay for it).
... what do we know about the Trump infrastructure plan, such as it is? Crucially, it’s not a plan to borrow $1 trillion and spend it on much-needed projects — which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects — with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.
You should immediately ask three questions about all of this. First, why involve private investors at all? It’s not as if the federal government is having any trouble raising money — in fact, a large part of the justification for infrastructure investment is precisely that the government can borrow so cheaply. Why do we need private equity at all? One answer might be that this way you avoid incurring additional public debt. But that’s just accounting confusion. Imagine that you’re building a toll road. If the government builds it, it ends up paying interest but gets the future revenue from the tolls. If it turns the project over to private investors, it avoids the interest cost — but also loses the future toll revenue. The government’s future cashflow is no better than it would have been if it borrowed directly, and worse if it strikes a bad deal, say because the investors have political connections. Second, how is this kind of scheme supposed to finance investment that doesn’t produce a revenue stream? Toll roads are not the main thing we need right now; what about sewage systems, making up for deferred maintenance, and so on? You could bring in private investors by guaranteeing them future government money — say, paying rent in perpetuity for the use of a water system built by a private consortium. But this, even more than having someone else collect tolls, would simply be government borrowing through the back door — with much less transparency, and hence greater opportunities for giveaways to favored interests. Third, how much of the investment thus financed would actually be investment that wouldn’t have taken place anyway? That is, how much “additionality” is there? Suppose that there’s a planned tunnel, which is clearly going to be built; but now it’s renamed the Trump Tunnel, the building and financing are carried out by private firms, and the future tolls and/or rent paid by the government go to those private interests. In that case we haven’t promoted investment at all, we’ve just in effect privatized a public asset — and given the buyers 82 percent of the purchase price in the form of a tax credit.
Again, all of these questions could be avoided by doing things the straightforward way: if you think we should build more infrastructure, then build more infrastructure, and never mind the complicated private equity / tax credits stuff. You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it’s not about investment, it’s about ripping off taxpayers.
I looked at infrastructure last week when seeking some places to stow the 39% gain from PRAFX. But infrastructure's been hot too. And most carry a hefty ER. I don't like buying hot funds or any with ER's much over 1%, In the end decided just to shave off about 20% and invest it in cash.
David's correct, The post was in December (probably quite early) when the wall seemed more real. In light of Mexico's absconding last week on their responsibility to pay for it, a lot of us are wondering now if it will ever come about.
Comments
Real Estate Review Dec. 3, 2016 8:00 AM ET Hoya Capital Real Estate
The ongoing shortage of construction labor is the biggest issue that nobody’s talking about. Tougher immigration policies will exacerbate the shortage and continue to drive up construction costs.
Construction Employment
The NFP jobs report was generally in-line with expectations, but showed a disappointing 0.1% decline in weekly earnings. We dig deeper into the numbers to see the impact on real estate.
We continue to emphasize that the shortage of construction workers is the biggest issue that nobody seems to be discussing. We believe that this will be a significant issue if the new administration pursues an aggressive infrastructure spending plan combined with a tougher immigration stance. Pew Research estimates that 15% of the construction workforce are undocumented workers, and other firms estimate that number may be as high as 25%. With an already tight labor market for construction workers, a significant increase in public demand combined with a decrease in supply could drive up wages to levels that "crowd out" private projects. This would be good for commercial real estate asset values.
http://seekingalpha.com/article/4027909-real-estate-review-reits-mixed-home-prices-rise-construction-sluggish
Politics | Sun Dec 4, 2016 | 1:57pm EST
U.S. Navy, shipbuilders ready for Trump's expansion plan
By Andrea Shalal and Mike Stone | SIMI VALLEY, Calif. Reuters
The U.S. arms industry is ready and capable of boosting production of new ships if President-elect Donald Trump makes good his vow to expand the U.S. Navy to 350 ships, Chief of Naval Operations Admiral John Richardson told Reuters.
"If it's resourced, it's a matter of working closely with the industrial base, and they definitely are ready to do that," he said, adding the only limiting factor would be hiring and training workers to build the new ships.
"If I do not have that capacity, I can create it faster than you can appropriate the money," Mike Petters, chief executive of Huntington Ingalls Industries Inc (HII.N), the largest U.S. military shipbuilder, said in a separate interview with Reuters.
http://www.reuters.com/article/us-navy-shipbuilding-idUSKBN13T0U3
U.S. Navy aims to buy more Boeing F/A-18E/F Super Hornets
By Andrea Shalal | SIMI VALLEY, Calif. Reuters Sat Dec 3, 2016
If implemented, the plan would provide dozens of new orders for Boeing and keep its St. Louis production line running for several more years.
"We would welcome an opportunity to develop a plan, with the Navy, that would allow us to continue providing the robust capabilities of the Super Hornet well into the future," said Boeing spokesman Todd Blecher.
The company had suffered a setback last month when Congress failed to include 12 Super Hornets in the fiscal 2017 defense authorization bill, opening a potential gap in the Boeing production line until several foreign orders for Kuwait and Canada are finalized. The $618.7 billion bill was passed Friday by the U.S. House of Representatives, and the Senate is expected to vote on the measure next week.
Navy officials say the jets could still be added to the fiscal 2017 budget as part of a supplemental budget that lawmakers are urging Republican President-elect Donald Trump to submit after he takes office.
http://www.reuters.com/article/us-boeing-fighters-idUSKBN13T05S?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed: reuters/topNews (News%20/%20US%20/%20Top%20News)
From the same conference ,the annual Reagan National Defense Forum.
Sun Dec 4, 2016 | 11:45pm EST Reuters
"Russia is the No. 1 threat to the United States. We have a number of threats that we're dealing with, but Russia could be, because of the nuclear aspect, an existential threat to the United States," Air Force Secretary Deborah James told Reuters in an interview at the annual Reagan National Defense Forum.
James, Chief of Naval Operations Admiral John Richardson and Pentagon chief arms buyer Frank Kendall, all voiced growing concern about Russia's increasingly aggressive behavior in interviews late on Saturday.
Their comments come as the Pentagon finalizes a classified security assessment for President-elect Donald Trump, who has promised to both pump up U.S. defense spending and build closer ties to Russian President Vladimir Putin.
http://www.reuters.com/article/us-usa-military-russia-idUSKBN13U0CX?il=0
Nick de Peyster
- Trump to unveil plans for wall around noon Wednesday at the Department of Homeland Security http://www.usatoday.com/story/news/politics/2017/01/24/reports-trump-announce-border-wall-plans/97020670/
- Related News - Congress begins search for funds to help pay for the wall http://www.latimes.com/politics/la-na-pol-border-wall-20170106-story.html
- Allegorical Walls (symbolic only) http://www.alamy.com/stock-photo-allegorical-wall-painting-of-summer-from-the-east-of-the-atrium-of-62874643.html
- Poetic Walls "Something there is that doesn't love a wall ..."
https://www.poetryfoundation.org/poems-and-poets/poems/detail/44266
My favorite part of Frost's poem:
He moves in darkness as it seems to me,
Not of woods only and the shade of trees.
He will not go behind his father's saying,
And he likes having thought of it so well
He says again, "Good fences make good neighbours".
As you have no doubt observed, it's hard to shake people from their long held (intuitive) beliefs - even when the (stubborn) facts prove otherwise.
Have Mexico pay for the wall, but make sure that it exports those jobs to the US. At $7.25/hr of course. Unless Puzder thinks the rate should be lower. That wouldn't be used to temper the bill to Mexico but to increase the profits for the American companies running the construction.
Which gets us back to the original question - how do investors profit from the wall?
Mending Wall - Poem by Robert Frost
Something there is that doesn't love a wall,
That sends the frozen-ground-swell under it,
And spills the upper boulders in the sun;
And makes gaps even two can pass abreast.
The work of hunters is another thing:
I have come after them and made repair
Where they have left not one stone on a stone,
But they would have the rabbit out of hiding,
To please the yelping dogs. The gaps I mean,
No one has seen them made or heard them made,
But at spring mending-time we find them there.
I let my neighbour know beyond the hill;
And on a day we meet to walk the line
And set the wall between us once again.
We keep the wall between us as we go.
To each the boulders that have fallen to each.
And some are loaves and some so nearly balls
We have to use a spell to make them balance:
"Stay where you are until our backs are turned!"
We wear our fingers rough with handling them.
Oh, just another kind of out-door game,
One on a side. It comes to little more:
There where it is we do not need the wall:
He is all pine and I am apple orchard.
My apple trees will never get across
And eat the cones under his pines, I tell him.
He only says, "Good fences make good neighbours."
Spring is the mischief in me, and I wonder
If I could put a notion in his head:
"Why do they make good neighbours? Isn't it
Where there are cows? But here there are no cows.
Before I built a wall I'd ask to know
What I was walling in or walling out,
And to whom I was like to give offence.
Something there is that doesn't love a wall,
That wants it down." I could say "Elves" to him,
But it's not elves exactly, and I'd rather
He said it for himself. I see him there
Bringing a stone grasped firmly by the top
In each hand, like an old-stone savage armed.
He moves in darkness as it seems to me,
Not of woods only and the shade of trees.
He will not go behind his father's saying,
And he likes having thought of it so well
He says again, "Good fences make good neighbours."
Robert Frost
Derf
He moves in darkness as it seems to me,
Not of woods only and the shade of trees.
He will not go behind his father's saying,
And he likes having thought of it so well
He says again, "Good fences make good neighbours."
(Love those lines)
Mark Twain: "But I repeat myself"
Bloomberg is reporting that a tweet war erupted over past 24-hours between DT and Mexico's President AND that the Mexican President has now tweeted that he will not attend next week's planned meeting with Trump in DC.
"Something there is that doesn't love a wall" (especially if you're being coherced to pay for it).
http://www.investopedia.com/articles/etfs/071416/top-3-infrastructure-etfs-emlp-igf.asp
+++
Don't know if this qualifies as political BS, but the real doubt is that there will be such a proposal as would actually benefit investment:
1) http://krugman.blogs.nytimes.com/2017/01/14/infrastructure-delusions/
And what was known of the "plan" as of a couple months ago:
2) http://krugman.blogs.nytimes.com/2016/11/19/infrastructure-build-or-privatization-scam/ :
... what do we know about the Trump infrastructure plan, such as it is?
Crucially, it’s not a plan to borrow $1 trillion and spend it on much-needed projects — which would be the straightforward, obvious thing to do. It is, instead, supposed to involve having private investors do the work both of raising money and building the projects — with the aid of a huge tax credit that gives them back 82 percent of the equity they put in. To compensate for the small sliver of additional equity and the interest on their borrowing, the private investors then have to somehow make profits on the assets they end up owning.
You should immediately ask three questions about all of this.
First, why involve private investors at all? It’s not as if the federal government is having any trouble raising money — in fact, a large part of the justification for infrastructure investment is precisely that the government can borrow so cheaply. Why do we need private equity at all? One answer might be that this way you avoid incurring additional public debt. But that’s just accounting confusion. Imagine that you’re building a toll road. If the government builds it, it ends up paying interest but gets the future revenue from the tolls. If it turns the project over to private investors, it avoids the interest cost — but also loses the future toll revenue. The government’s future cashflow is no better than it would have been if it borrowed directly, and worse if it strikes a bad deal, say because the investors have political connections.
Second, how is this kind of scheme supposed to finance investment that doesn’t produce a revenue stream? Toll roads are not the main thing we need right now; what about sewage systems, making up for deferred maintenance, and so on? You could bring in private investors by guaranteeing them future government money — say, paying rent in perpetuity for the use of a water system built by a private consortium. But this, even more than having someone else collect tolls, would simply be government borrowing through the back door — with much less transparency, and hence greater opportunities for giveaways to favored interests.
Third, how much of the investment thus financed would actually be investment that wouldn’t have taken place anyway? That is, how much “additionality” is there? Suppose that there’s a planned tunnel, which is clearly going to be built; but now it’s renamed the Trump Tunnel, the building and financing are carried out by private firms, and the future tolls and/or rent paid by the government go to those private interests. In that case we haven’t promoted investment at all, we’ve just in effect privatized a public asset — and given the buyers 82 percent of the purchase price in the form of a tax credit.
Again, all of these questions could be avoided by doing things the straightforward way: if you think we should build more infrastructure, then build more infrastructure, and never mind the complicated private equity / tax credits stuff. You could try to come up with some justification for the complexity of the scheme, but one simple answer would be that it’s not about investment, it’s about ripping off taxpayers.
I looked at infrastructure last week when seeking some places to stow the 39% gain from PRAFX. But infrastructure's been hot too. And most carry a hefty ER. I don't like buying hot funds or any with ER's much over 1%, In the end decided just to shave off about 20% and invest it in cash.
David's correct, The post was in December (probably quite early) when the wall seemed more real. In light of Mexico's absconding last week on their responsibility to pay for it, a lot of us are wondering now if it will ever come about.
Well, stranger things have happened.
Thanks for getting the thread back on track.
say what?