What is the impact from Biden’s $1t infrastructure bill on the stock market?

After months of back and forth, the White House and a bipartisan group of senators did the near-impossible – agree on a $1.2t infrastructure bill. Here’s what it means and the potential market impact…

“It’s about damn time” – Flint, Michigan

Although the bill agreed upon was only a fraction of the $2.3t bill Biden originally proposed, it is still large enough to make a serious difference in the lives of Americans and their trading accounts. The highlights include:

• $110b towards roads and bridges – focusing on climate change mitigation.
• $55b invested in clean drinking water – replacing the nation’s lead pipes.
• $7.5b towards EV charging stations – adding more stations in less densely populated areas.

Other projects include clean energy, modernizing rail services, and improving public transit. These initiatives will be funded with:

• $205b from repurposing unused Covid relief dollars.
• $50b from recovered fraudulent unemployment pay during the pandemic
• $28b from stronger enforcement of cryptocurrency taxes – which sent the crypto market lower during the weekend.

As for the rest, the goal is to have the bill pay for itself through increased spending in the economy and more taxes in the long run.

One hurdle down, many to go

The bill passed the Senate by a vote of 67-32. But this is only the first step in passing the bill, with no shortage of roadblocks:

• Democrats and Republicans on both sides of the bill are angry that President Biden compromised so much.
• Democrats are trying to push a separate $3.5t package through, but Republicans are pushing back – and some Democrats say they won’t vote for one without the other.

The bill now moves on to the house, which will be reviewed and evaluated in September.

Investors: EV stocks might be getting supercharged

The proposed bill could benefit the following industries:

• Electric vehicle and charging station companies – and ETFs such as Global X Autonomous & Electric Vehicles (NASDAQ:DRIV) and Global X Lithium & Battery Technology ETF (NYSE:LIT).
• Construction equipment firms and road repair companies – and ETFs such as the iShares U.S. Home Construction ETF (BATS:ITB) and the Invesco Dynamic Building & Construction ETF (NYSEARCA:PKB).

Although the $15b investment in EVs is far from the original $174b proposal, it’s still better than nothing. See here for other industries that could be impacted.