Category Archives: Rebuilding America

Ep 11.  Think that’s clean water you’re drinking? Guess again

Ep 11. Think that’s clean water you’re drinking? Guess again

On this episode of the Thematic Signals podcast, we’re tackling an aspect of our Cleaner Living investing theme that most people tend to take for granted – clean water. To dig into the subject, we speak with Dr. Roy Speiser of water and air filtration company CWR Environmental Products, who for over 35 years has championed the cause to mitigate air and waterborne toxins. As you’ll hear, because of environmental abuse, industrial greed and governmental neglect, the harsh reality is out water supply is not as clean or as safe as we think it is. Dr. Speiser explains how you can find out the state of your own water supply, what common contaminants you’re likely to find, and offers some helpful suggestions on how to ensure you have a clean water supply. He also shares exactly what kind of portable drinking water bottle you should be using, and it’s not likely that metal one you might be carrying around.

Have a topic or a conversation you think we should tackle on the podcast, email me at cversace@tematicaresearch.com

And don’t forget to subscribe to the Thematic Signals Podcast on iTunes!

 

Resources for this podcast:

A Look Below the Headlines Reveals a Rebuilding America Thematic Signal

A Look Below the Headlines Reveals a Rebuilding America Thematic Signal

Earlier this week the Commerce Department released its April construction data, which the Associated Press reported with the headline, “US construction spending was flat in April as housing fell.” Of course, being the thematic investors that we are, we immediately looked beneath the headlines to dig into the data, mostly because of the obvious point — if the overall construction spending was flat, yet housing construction fell for the month, something else must have increased, right?

Well, what we find beneath the headline figures is a significant thematic signal for our Rebuilding America theme:

Those declines [in housing construction] were offset by a 4.8% surge in government construction spending to a record high of $299.4 billion, led by big gains in state and local government spending, which also rose to a record high.Spending on highways and streets jumped 6.8%, while school construction rose 2.1%. Federal spending rose to $24.5 billion, the highest since July 2013.

Source: US construction spending was flat in April as housing fell

We’ve long written that when it comes to the need for Rebuilding America’s infrastructure, a Federal spending bill passed by Congress would go long way to jump-starting projects and provide a clear catalyst from an investment perspective. No one can argue against that. However, given the current partisan bickering on all fronts, that catalyst doesn’t appear to be coming around the bend anytime soon.

The reality, however, is that the bridges, roads, tunnels and schools are in dire need for upgrades and repairs. They’re not getting any younger as the folks in Washington D.C. fight over who hurt whose feelings. As such, we are increasingly seeing states, counties and local municipalities moving forward on their own accord, securing the financing through bond referendums or simply using the extra tax revenues coming in from economic expansion or imposing revenue generating policies such as new tolls or gas taxes.

What our approach is from an investment standpoint when it comes to the infrastructure sector — and the central point of the Rebuilding America Index we have constructed — is to focus on the US companies participating in the rebuilding and restoration of US infrastructure. Specifically, we look at the companies that provide the products and services that stand to benefit from the focus on upgrading infrastructure to satisfactory levels by 2025. It’s the engineering firms planning the projects, the cement and asphalt companies supplying the materials for building the roads, bridges and tunnels, the equipment companies who supply the tools and vehicles for putting it all into place, and finally, the construction companies that are winning the bids and contracts for the projects. It’s the folks focused on putting the shovel in the ground and making things happen.

Americans Hit the Road in Record Numbers in 2018

Americans Hit the Road in Record Numbers in 2018

One might think that today’s Digital Lifestyle would have lead to an overall reduction in traffic on the roads as more folks work for home or in their leisure time choose to stream movies via Netflix (NFLX) and order food via food delivery services. That notion couldn’t be further from reality however.

According to new data from the Federal Highway Administration (FHWA), motorists in 2018 logged a record-setting 3.225 trillion miles in 2018 — that’s 12.2 billion MORE miles than they did in 2017. This increase in traffic has Secretary Elaine Chao stating the obvious, that all this traffic leads to more wear and tear on existing roads while also placing greater demand for upgrading, expanding and replacing much of the surface transportation network across the country, the main catalyst behind our Rebuilding of America investment theme.

“Record-setting vehicle miles traveled reflects a robust economy, lower gas prices, and is another reason to ensure that America’s roads and bridges are well-maintained and modernized to improve safety,” the Secretary said in a release. In December 2018, the Freight Transportation Services Index (TSI) was up 2.9% from December 2017 and up 9.8% from December 2016,” the agency states, citing the Bureau of Transportation Statistics.“The U.S. Department of Transportation remains committed to investing in improvements to infrastructure, and furthering the department’s ongoing efforts to reduce the federal regulatory burden so that road and bridge projects can be delivered more quickly,” the release states.

Source: 12.2 Billion More Miles Driven in 2018 | IBTTA | International Bridge, Tunnel and Turnpike Association

Trump’s 2020 Budget Cut to DOT Not What it Seems

Trump’s 2020 Budget Cut to DOT Not What it Seems

The ins and outs of Washington, DC politics and fiscal maneuvering is oftentimes like a watching a shell game in Times Square — what you think you see, isn’t exactly what is happening.  This is the case with President Trump’s proposed 2020 Budget plan, which includes a 22% decrease in discretionary funding for the Department of Transporation (DoT). At first glance, this plan seems to be at odds with the realities of the country’s fragile infrastructure, but the folks at ConstructionDive.com looked below the headlines to see what this really means for construction projects going forward:

Highway spending was slightly lifted by 2% to $46.4 billion.In a fact sheet accompanying the budget proposal, the White House points to an 11% boost to DOT’s Better Utilizing Investments to Leverage Development (BUILD) grant program for surface transportation projects, as well as the $1 billion it budgets for the next round of Infrastructure for Rebuilding America (INFRA) grants, as part of its commitment to addressing critical infrastructure needs. The budget includes $200 billion in grants and other incentives to this end, the administration said, an amount aimed at stimulating a $1 trillion total investment via private funding and other means.

See full article: By the numbers: How Trump’s proposed 2020 budget affects construction | Construction Dive

 

So while it is accurate that the discretionary spending is slated to go down in the budget for the DoT, it clearly doesn’t mean that infrastructure spending, and in fact, the strategy is to create an environment for private money to come in participate in the desperate need to rebuild the country’s bridges, roads, tunnels and airports. From our point of view, and that of investors looking opportunities to invest in this “rebuilding of America” that will be taking place over the next decade, where the money comes from is somewhat irrelevant. Instead, we’re more focused on when the money starts flowing and to which specific projects it flows to. Stay tuned . . .

Facebook Exploring Getting Involved in Rebuilding America’s Infrastructure

Facebook Exploring Getting Involved in Rebuilding America’s Infrastructure

 

In an unprecedented move, social media giant Facebook is exploring the possibility to rebuild a now-defunct railway that used to connect two parts of the San Francisco Bay area:

Facebook and a private investment firm are teaming up with a public transit agency to potentially deliver a dream commuters have held for decades: a new southern crossing to connect the East Bay and the Peninsula. The proposed transit connection, which estimates indicate could cost nearly $2 billion to build, would use an existing —  but now-defunct — freight corridor to whisk commuters past stop-and-go traffic on the Dumbarton Bridge that regularly leaves motorists slogging at speeds that average under 20 mph. The Cross Bay Transit Partners, a collaboration between Facebook and the Plenary Group, a private-investment firm specializing in infrastructure projects, began gathering input on the plan with public meetings late last week and two more events are planned for Thursday and Saturday. While the details are far from finalized, the idea is to reopen the old rail corridor for passenger service, said Dale Bonner, the executive chairman of the Plenary Group, speaking on behalf of Cross Bay Transit Partners. He said the group is months away from selecting potential station sites or even determining what type of service — train, bus or some other mode of transportation — might be offered. A map on the group’s website, however, illustrates one possibility, a rail connection between the Union City BART station and Redwood City Caltrain station.

Source: In ‘unprecedented’ partnership, Facebook-funded trains could one day cross the bay – East Bay Times

 

The need to updated and expanding the Nation’s infrastructure is has been well-documented through Thematic Signals such as these. Washington seems to be talking the talk about a federal infrastructure bill, but there has been no “walk” yet. But that hasn’t been stopping local governments from getting creative in finding new ways to fund much-needed infrastructure repairs and we are seeing more and more where corporations are stepping in to relieve the financial pressures.

What’s in it for private companies such as Facebook — beyond just good will? (Something the Mark Zuckerberg very much needs, given his company’s struggles on the privacy front as of late.) Well, in this case with Facebook, the ability to tap into a wider talent pool is likely top on the list. Opening up a new commuting avenue would allow potential employees who just would not make the commute across the Dumbarton Bridge today to suddenly consider joining the team at Facebook. Plus, it could relieve congestion for those making the getaway on Friday afternoons for the trek up to Tahoe for sking!

Tolls Could Be Returning to CT to Pay for Rebuiding Infrastructure

Tolls Could Be Returning to CT to Pay for Rebuiding Infrastructure

If you were a resident of the New England prior to 1985, you remember the amount of long backups at the many toll booths installed along the I-95 corridor to help pay for the buildout of this vital roadway.  In the days well before EZPass and automated, truck drivers and communters needed to keep a roll of quarters in the car to pay the $0.25 tolls along the numerous gated toll booths throughout Connecticut.

In 1985 those booths were elminate following a 1983 truck crash that killed seven people at the Stratford toll plaza. 30 years later, those tolls could be coming back to Connecticut as Gov. Ned Lamont searches for funds to help repair the crumbling bridges and roads of the Nutmeg state.  Governor Lamont has proposed to toll all cars and trucks on Connecticut’s roadways, which is estimated to generate nearly $800 million in annual revenues for the state:

Trucks-only tolling is estimated to bring in $45 million to $200 million, Drajewicz said, and the state Department of Transportation projects $500 million a year is needed just to repair bridges.Even more is needed for improvements and upgrades to highways and other transportation systems. Moreover, Lamont has pledged to borrow less money than former Gov. Dannel P. Malloy, and the gasoline tax is projected to decline because of fuel efficiency.

Source: Lamont’s highway toll option could raise $800M a year

Fortunately, given the technology of contactless and digital payment systems that are part of the Digital Infrastructure investment theme, the impact of such tolls should only be felt in drivers’ wallets, and not a return to the miles long congestion at the old-fashion toll booths on a holiday weekend.

 

Canada Infrastructure Bank offers an alternative to government funding on infrastructure

Canada Infrastructure Bank offers an alternative to government funding on infrastructure

The Rebuilding of America focuses on the need to address the grumbling of the bridges, roads and tunnels that have received failing grades in The American Infrastructure Report Card from the ASCE. Of course, it’s important to remember that the state of the nation’s infrastructure hasn’t reached its current state because of apathy or lack of interest in addressing the issue — every politician knows building a new bridge or road that eases congestion is a great way to get elected. No, the country is in this current predicament because of money and strained regional and local budgets that have diverted money to other interests and project.

Up in Canada, they’ve created something called the Canada Infrastructure Bank to address the funding component of infrastructure projects by creating public-private-partnerships. Of course, like any type of new government program, it’s not without its controversy, but this article in the Calgary Herald provides a view into how it is unfolding:

OTTAWA — The federal agency built to find new ways to pay for new Canadian infrastructure says it is deep in talks on over a dozen projects.In the fall, officials with the Canada Infrastructure Bank had more than 120 meetings about more than 60 projects across the country, including some that came unsolicited from the private sector. The bank’s mission is to find ways to get private money to pay for public projects that will produce revenue, such as toll roads and transit systems and trade portals.Officials have narrowed their focus to about a dozen possibilities for serious consideration, but details about them will only become public if the agency agrees to back work with loans or equity stakes.The bank’s political critics say the bank is acting in secret with billions of public dollars and hasn’t gotten much done anyway. The agency says making the projects public before deals are signed could cause financial harm to their public owners and private backers.Infrastructure Bank CEO Pierre Lavallee says there is a negotiation process for any projects under serious consideration that includes the sharing of confidential financial information that can’t be made public.

Source: Infrastructure bank narrows gaze to more than a dozen projects, CEO says | Calgary Herald

Rebuilding America isn’t just repaving roads and rebuilding bridges . . . it’s about tech too

Rebuilding America isn’t just repaving roads and rebuilding bridges . . . it’s about tech too

The state of America’s infrastructure is clearly in need of much attention and repair, something that is obvious to any traveler up and down the I-95 corridor along the East Coast, no matter your mode of transportation — car, rail or air. But it’s more than just repairs that are needed — we’re on the brink of needing to completely rethink how these bridges and roads are upgraded to incorporate the various type of digital infrastructure that will be required. The drivers behind this new demand are two aspects of our Disruptive Innovators theme: electric vehicles and autonomous vehicles.

Given that in many parts of China surface infrastructure and transportation isn’t being rebuilt, but rather built for the first time, the country has the opportunity to integrate technology with the full knowledge of what the next generation of cars and vehicles will demand.  A recent article in Tech Crunch digs into how “smart highways” are taking shape not just in China, but also Dubai:

 

The rise of automated vehicles throughout the world has also given rise to the idea of smart highways, encompassing all sorts of technologies such as sensors, solar panels and software to create a safer and more efficient driving environment. While nations such as Dubai have announced plans to develop and integrate existing smart technologies into their traffic systems, China is one of the first, if not the first, to announce plans to build a projected 161 kilometer-long smart road in its eastern Zhejiang province, integrating safety features to support autonomous driving tracked with sensors, an Internet-of-Vehicles system and solar panels.Chinese scientists also continue to innovate in the solar sector, a key component of smart highways, achieving a record 17.3 percent power conversion efficiency rate on organic solar cells. Therefore, we can only conclude that the world’s first true smart highway will be in China, leading the way to fully integrate smart technology with current traffic infrastructure.

Source: Why the world’s first smart highway will most likely be in China | TechCrunch

State and Local Governments Look to Technology to Bridge Infrastructure Revenue Gap

State and Local Governments Look to Technology to Bridge Infrastructure Revenue Gap

 

The main question related to the desperate need to rebuild the bridges, roads, tunnels and other aspects of the United States’ transportation system isn’t when the task should be undertaken, but how to pay for it. The headlines and media tend to focus on Washington, DC for the solution to that funding question — a solution that isn’t coming anytime soon amid the current partial government shutdown and gridlock in Congress.

As the roads continue to crumble and more and more of the country’s bridges are deemed structurally unsafe , state and local municipalities are looking to new and alternative means for generating much need revenue to address these concerns. Increasingly, we are also seeing the use of technology to — pardon the pun — bridge the gap, which is a tailwind for the Tematica Research Digital Infrastructure theme.  Case in point is this article on Transport Topics about automated weight stations that can enforce trucking regulations without slowing traffic or require large amounts of manpower to manage:

 

Automated weigh station technology can generate money for state transportation and law enforcement agencies, according to Andrew Martin, a senior research scientist at the University of Kentucky’s Transportation Center.Automated screening technologies can photograph and record a truck’s license plate or U.S. Department of Transportation registration number. Martin delivered a presentation estimating the benefits of automated commercial vehicle enforcement at the Transportation Research Board’s annual meeting Jan. 14.

Using data from Kentucky Automated Truck Screening (KATS), as well as information gathered from screening services like PrePass and Drivewyze, Martin said that such technologies could generate millions of dollars for state agencies by helping auditors spot non-compliant carriers. There are KATS systems stationed at 17 sites throughout Kentucky.

These technologies can improve auditors’ efforts to spot offending trucks, such as ones operated by a person without an active tax license. Martin explained that, in Kentucky, auditors sample a few trucks, but don’t look at the entire population of carriers in the state. Automated technologies that collect information on trucks can offer auditors a more complete picture of the fleets that operate within a state.

Source: Infrastructure Funding: Can Automated Weigh Station Screening be a Revenue Source? | Transport Topics

Local Infrastructure Spending Not Waiting for Washington

Local Infrastructure Spending Not Waiting for Washington

While the media and analysts are fixated on the likelihood of a Federally-funded infrastructure spending bill moving through Congress in 2019, state and local governments aren’t sitting around and waiting for that money to flow. Instead, they are turning to the bond markets and borrowing for such projects at a rate not seen since the 2007-2009 recession:

In all, state and local construction spending was up 9.7% in October from a year earlier to an annual rate of $288 billion, still shy of the $296 billion pace reached in March 2009. Borrowing is supporting the pickup. State and local governments issued $228.45 billion in bonds for new projects in the 10 months through October, a 19% increase from the same period a year earlier, according to data compiled by Citigroup Inc. Some borrowers want to lock in loans now, before interest rates go much higher.

Full Article: State and Local Investment Gets Lift From Rising Revenues – WSJ

Of course, as Tematica cites often, the American Society of Civil Engineers’ Report Card for America’s Infrastructure gives a cumulative grade of a D+, with over a $2 trillion investment gap to sure up the sorry state of our bridges, roads, tunnels and airports. So the quarter of trillion dollars committed by local governments in the first 10 months of 2018 is just a drop in the bucket for what is required just to bring things up to par.