Which Companies Are Set to Benefit from the Obama Response?

I just finished listening to Obama’s press conference announcing the new economic team, and the market seems generally disappointed by the lack of juicy details. We wanted to hear how big the stimulus package would be, and we secretly hoped to hear that capital gains rates would be preserved to expiration.

We didn’t get either, but between the lines the strategy has been set. In his resume read-off of the economic team, Obama made several glowing mentions to the Larry Summers ideology. He even went so far as to say in essence, “I’m going to take Larry’s brain and turn it into economic policy…the debate on what to do right now starts with Larry Summers.”

The Race is On

That’s enough for us to head off to the races with, as Larry’s philosophy is well-documented. His recent piece in the Washington Post made it clear that he wants to see us spend, and spend big. Summers could easily push for a stimulus package equal in size to the original TARP layout of $700 billion. More specifically, Mr. Summers has pinpointed energy, healthcare, and education as immediate targets for heavy stimulus.

Alternative energy is getting a huge boost today, such as SunPower Corp. (SPWRA), with shares up over 35%. Soon we’ll see selective speculation within industrials, materials, medical devices, and selected infrastructure names. Setting up a framework for a Summers-induced stimulus landscape is officially the top research priority on my list.

Ideally I’ll be able to identify several companies that are already undervalued and set to benefit from the Obama Response. Caterpillar (CAT), the top holding in the Secular Trends Portfolio, is one company primed to benefit from global infrastructure stimulus.

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Disclosure: author does not hold positions in the companies mentioned.

Comments

[Steven Hansen:]

cannot see cat benefiting much unless there is a lot of infrastructure work. cat will benefit when commodities take off.

2008 Nov 25 03:50 AM

[jsampson:]

I dont see any real actions for at least the first yr for any of the solar company stocks, but then again, who am I, my company didn't get a bailout in our troubled times!

2008 Nov 25 08:08 AM

[jsampson:]

Geithner, same ole same ole here we go again

2008 Nov 25 08:09 AM

[Perry B:]

I am new to stocks and trading what is wrong with Geithner? blanket statements of discontent don't help. What has he screwed up to give you this opinion of the man?

2008 Nov 25 09:24 AM

[Road Runner:]

Ryan, why are you disappointed with no details in the Obama speech? There shouldn't be any details. He just appointed his economic team and he wants them to be totally free to do the best thing for the economy. This is the best way to manage this situation, and Obama, like usual, does a great job of managing. Everyone, stop expecting details before the appropriate time.

2008 Nov 25 10:16 AM

[Road Runner:]

There is nothing wrong with Geithner. In fact, he is a very good person for the job. He has been on top of this crisis all along. He argued against letting Lehman fail. It was the Lehman failure that started this crash. If Lehman didn't fail, the world economy would not have gone into this tailspin.

2008 Nov 25 10:20 AM

[Ryan Barnes:]

Hi Runner,

I agree with your comments...I tend to say "We" in the voice of the market, but I don't always agree with the market or its expectations. I think Geithner is a fine choice; at the end of the day I just want the sharpest knives in the drawer...and Geithner/Summers are two of the sharpest.

The only information I was hoping to glean was where the stimulus pressure points would be. Obama's not-so-subtle anointing of Summers as Economic Brain-in-Chief was all I need to hear. We all have to tread patiently until Jan. 20, as unfortunately we can only have one POTUS at a time.

Best, RB

2008 Nov 25 10:29 AM

[riversedge:]

Capstone Microturbine is the kind of company that will benefit both from the emphasis on infrastructure and energy efficiency...likely to be a much better bump than CAT than from today's lows. Featured on Minyanville this morning...


On Nov 25 08:08 AM jsampson wrote:

> I dont see any real actions for at least the first yr for any of
> the solar company stocks, but then again, who am I, my company didn't
> get a bailout in our troubled times!

2008 Nov 25 02:20 PM

[Socialism c...:]

Wrong -- CAT will have to pay higher input costs for steel when commodities take off.


On Nov 25 03:50 AM The hand wrote:

> cannot see cat benefiting much unless there is a lot of infrastructure
> work. cat will benefit when commodities take off.
>
>

2008 Nov 26 02:25 PM

[lesamis:]

How is gold faring in all of this?

Iron ore?

2008 Nov 27 08:08 PM

[lesamis:]

vale and rio?

2008 Nov 27 08:10 PM

[kris23:]

I think CAT will benefit from it. Already there stock gained almost 12% on the news and we don't even know how big the package is. Not to mention sentiment for this company is becoming more bullish (predictwallstreet.com/...) after being pretty bearish for awhile.

2008 Dec 08 03:27 PM