It doesn’t matter what’s happening around the world, U.S. markets want to rally.
Sure, coronavirus cases are spiking.
Authorities in Beijing say the latest situation is “extremely severe” with dozens more cases emerging from the city. The resurgence is highlighting the need for greater vigilance among those easing COVID-19 restrictions.
Sure, North Korea is itching for war after blowing up a South Korean liaison office.
According to Fox News, “The provocative move comes at a time of increased tensions between the two nations and stalled nuclear negotiations between North Korea and the United States, which at their high-points led to two peace summits and an in-person meeting between President Trump and Kim Jong Un in the Korean Demilitarized Zone (DMZ).”
But markets are rocketing – all thanks to President Trump and the Federal Reserve.
The Fed will now buy individual corporate bonds, on tops of the exchange-traded funds it’s been buying. The program has the ability to buy up to $750 billion worth of corporate credit.
“The decision to buy a broad portfolio of corporate bonds represents a shift to a more active strategy for the secondary market corporate credit facility, rather than the passive approach originally envisioned,” said Steven Friedman, senior macroeconomist at MacKay Shields, as quoted by CNBC.
Two, President Trump just ignited the market with a $1 trillion infrastructure proposal. According to CNBC, reports say, “a preliminary version being prepared would set aside the majority of the money for traditional infrastructure projects such as roads and bridges, though funds would also be reserved for 5G wireless infrastructure and rural broadband.”
As we hear more on the plans, keep an eye on infrastructure stocks involved with steel, cement, and heavy equipment that’ll be needed, including Vulcan Materials (VMC), Nucor (NUE), and Caterpillar (CAT).
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