The stock market was supposed to have a major beef with Donald Trump’s election.

Now that Mr. Trump is the president-elect, market-watchers are asking, “Where’s the beef?”

Well, as far as stocks are concerned, as I see it this afternoon, there looks to be a lot of red meat in the economic future President-elect Trump’s proposing, and as U.S. investors start to “get it,” they’re rotating into select stocks instead of shedding portfolios as everyone expected.

[ad#Google Adsense 336×280-IA]Now, it’s still a little too early to tell what investors are or aren’t going to fully embrace, since we don’t know who President-elect Trump will surround himself with, or what his agenda will be.

But this is no time for investors to stand by with their “wait-and-see” glasses on, not when there’s this much money to be made (and we’re so well positioned to do it)…

Smart Investors Will Key In on This Right Away

There’s one arena of investing opportunity in our future that’s a no-brainer, because it is the central pillar of Donald Trump’s economic plan.

In a word, it’s “infrastructure.”

America’s infrastructure is in deplorable condition. Politicians have wasted all the resources at their disposal for decades and not attended to modernizing infrastructure since the late 1960s.

That’s going to change under President Trump, and you can take that to the bank.

It’s simple, really. It’s not just not about modernizing airports and highways and bridges and ports and schools and everything else that needs rebuilding. It’s about everything that rebuilding our infrastructure has to start with, what it produces and how it all benefits America’s economy, that matters.

We already know the Federal Reserve’s economic health prescriptions have done everything for the benefit of the big banks they set out to save and make profitable again and almost nothing in trickle-down terms for America’s hollowed out middle class and the country’s underserved lower socioeconomic classes.

With the Fed out of effective ammo, fiscal stimulus is going to be the new gunpowder.

Investors, worried that fiscal spending, amounting to hundreds of billions – if not trillions – of dollars, are understandably nervous about infrastructure spending pushing interest rates higher, rising deficits, and busted budgets.

Actually, none that has to happen. In fact, there’s a lot of good that Mr. Trump’s team can effect on all those fronts.

Use Offshore Cash to Fund the Boom

First of all, spending on infrastructure can be substantially funded by some of the 2 trillion dollars of corporate cash nestled overseas right now. It could be repatriated at a discounted tax rate of 10% to 15% and setting that tax windfall aside into an infrastructure pool.

Second, proposed corporate tax cuts from 35% down to 15% can and should be phased in, while at the same time eliminating tax deductions and adding the additional taxes collected resulting from reduced deductions to the infrastructure pool.

In effect, corporate taxes would be lowered, but the net effect of corporations losing deductions at the same time would result in a slower reduction of net taxation. That’s precisely where more infrastructure money should come from.

Additionally, increased investment spending on the part of corporations knowing their net tax rates will fall over a phase-in period, of say four years, and will help stimulate economic growth.

Third, and this is important, rising interest rates aren’t a bad thing.

The Fed’s been so worried about deflation, it’s been pouring money into banks. That’s why rates haven’t been rising. The perception that fiscal spending will put upward pressure on interest rates is correct.

What the Fed doesn’t get, frighteningly, is that rising rates create inflation, allowing us to reach the 2% inflation prescription the Fed’s been dangling in front of us all along.

Deficits don’t have to rise and budgets don’t have to blow up. Though they may for a year or two, they will quickly be brought down by the economic growth.

Putting so many people back to work in good paying jobs, especially the army of workers looking for jobs with benefits to lift them out of poverty, will ease the burden of our growing social safety net costs. It will help balance budgets and eventually lower the deficit.

This has to be done right, as I’ve suggested here, but infrastructure spending could be the panacea that cures many of America’s economic and social-stratification ills and lifts all boats in its rising tide.

That’s what the markets should be looking at today; it’s what investors should be looking at today. Whether they’ll see this or not in the next couple of days is anyone’s guess.

— Shah Gilani

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Source: Money Morning