Alf Landon

Dennis Gartman: Go Long Infrastructure, Short Everything Else

A few ideas need to be addressed by the experts. First, the infrastructure plan, regardless of eventual size, will not replace the demand that has been lost from China and the rest of Asia. Asia, afterall, has been the driver for metal and scrap metal price and volume increases over the last few years. Those markets are decreasing not increasing and rapidly. A real blowout in China, although not seemingly contemplated at this point, would accelerate commodity declines. Second, not all of the touted plan's money is going to roads and bridges nor is its future certain. Republicans are already talking filibuster. In my mind this infrastructure plan smells of political posturing, unreasonable expectations and inevitable pork. Third, it is probably priced in the stocks. Fourth, no consideration for price gouging by foreign suppliers is considered. Foreign suppliers with stockpiles tend to slash prices based on more favorable production costs and government subsidies. Also, favor in rising protectionism and the winners will be strictly domestic metals traders getting a bump in volume.