In listening to the specifics of the first-round of the Chinese bailout of $550 billion, the premier receiving entities were all based in various infrastructure components. I believe Obama will head in the same direction as his administration begins to spend billions in varying stimulus packages.
Here’s why; you get three for one.
One; the infrastructure in the U.S. is crumbling in its old age, Two; Capital Goods, such as turbines and cranes and heavy equipment will have to be purchased or fixed to get the jobs done (and that’s good for U.S. companies. Incidentally, that sector is our leading export business to China), and Three; jobs. Lots of infrastructure jobs (just like the Great Depression that offered public works employment to tens of millions and lots of small companies).
Within the Industrial Equipment and Components Industry, I like American Science and Engineering (NASDAQ:ASEI) a structural inspection company, Omega Flex Inc., (NASDAQ:OFLX) a company that makes flexible metal hoses (found at every construction site). I also like Parker Hannifin (NYSE:PH) an electromechanical controls company and Caterpillar (NYSE:CAT) which makes those monster earth moving machines.
As tax payers begin to realize the consequences of ‘rescue’ plans, we’re also beginning to ask for some accountability and the essential question: “Does it work?” Infrastructure repair will work and produce tangible elements.
I think the financial brain-trust that is advising Obama will watch the Chinese at the G-20 summit this weekend and come to a quick understanding that the Chinese ‘hate’ to throw away money.
MarketMan
