| Sam Volkering | 30 June 2020 |
Will "Project Speed" spark the British market boom we've been waiting for?
The big question for UK investors
Do you believe the Bank of England will move into negative interest rates? Because the bond market believes it will. To which asset classes will yield investors turn as a result?
| | In today's Exponential Investor
- Keanu Reeves in another remake?
- The old playbook and a good old moan
- Five key industry to watch over
"Project Speed" sounds like the name of a Hollywood remake of the 1994 edge-of-your-seat thrill ride, Speed.
My bet though is that Keanu Reeves and Sandra Bullock might not sign up for a remake of that one. Besides we all know the more interesting Keanu Reeves remake – Bill & Ted Face the Music is going to be much better anyway, I hope.
Alas, "Project Speed" has nothing to do with the soon-to-be influx of Hollywood movies that we'll get when lockdown properly ends.
"Project Speed" is far more boring than any of that.
Well, boring in the sense of it just being a fancy name for a new task force. The government no doubt workshopped this snazzy name over a few days. Or at the very least contracted out a strategy think tank to come up with one while it was pondering just what to do next.
"Project Speed" is going to be the great, fast rebuilding exercise about the sweep through the UK to rectify the wrongs of the government over the last six months.
If we build it, they will…? £250 billion is the number that's being bandied about.
Money to rebuild schools. Money to rebuild and build roads. Money to get the HS2 rail up and going. Money for hospitals. Money for hyper-connectivity and world-class communications tech.
Money for UK all kinds of infrastructure to get the economy firing on all cylinders again.
You get the gist of it. When it's time to get the economy cracking again, spend, spend, spend. And spend big.
It's a playbook from governments around the world. And if the money doesn't exist to spend up big, they'll do whatever it takes to get it (namely print it).
That's your tax money going to great use folks – oh sorry, no it's not. That's already been spent, this is just magic internet money the government decided to make for itself.
Of course none of this exists, if the economy weren't shut down in the first place. If you're going to impose economic catastrophe on the people, and then print beyond control inflating the currency into oblivion over the coming years, well, you're unfit for purpose really.
But either side of the political landscape, all are unfit for purpose. Welcome to the kakistocracy folks. As the kids on Love Island (often) proclaim in all their infinite wisdom… it is what it is.
As such, if the prophetic ripped kids on Love Island can take a philosophical approach to life like this, so can we.
And it stands to reason that you, I, we might not have any choice in the matter whatsoever about "Project Speed". You'll get your chance at a ballot box soon enough (again). But remember the grass isn't always greener…
Nonetheless whoever has been, is or will be in government, they'd all have played this out with the same outcome. And the playbook dictates that money is going into infrastructure because, well, they don't know about, can't think about, anything else beyond the tip of their noses.
And if there's about to be an additional influx of a quarter-of-a-trillion pounds thrust deeply into the economy, you've got a reasonably simple decision to make.
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Moan about it, or get on with it I do love a good moan. Perhaps the above paragraphs would indicate this. But I also have to take a step back to consider the question, "Now what?"
I encourage everyone to have a good moan about the world from time to time. There's plenty to moan about. Particularly now!
But once you've got that moan out of your system, then ask yourself, "Now what?"
Now what? As in, now what are you going to do about it?
Most people, the people stuck in the cycle of moaning and groaning, will continue to moan on their merry way. And good luck to them. The others, like you, will then do something about it with the powers that you have.
And in our very centralised authoritarian states that we live in, there's little you're really going to do about things like "Project Speed". Sorry, but for now that's just how it is (those Love Island kids are on to something…).
But you can have ultimate control over your existence and how you look at situations like this. And what we know is a truck is about to back up to infrastructure projects across the UK and dump piles of cash into it.
And that means there's a truck-load of companies listed on the UK markets that are primed to, a) deliver these infrastructure projects and, b) soak up that cash.
That is after all the desired outcome from these sorts of projects. They say this is to get the economy pumping again. And to an extent it is. But it really means to get the markets pumping again.
That is a good outcome if you see through the noise. When you know who and what will build out "Project Speed" you could be looking at a tasty time to be a British investor.
In fact, dare I say this could actually be extra tinder to get the UK markets really raging over the next few years. A boom that's been years in the making.
Five key industry that could win big I've held a strong stance on the idea that UK markets are primed to boom off the back of independence from the EU. Plenty disagree with that. But the proof will be in the pudding. And the random occurrence of the Covid-19 crisis and the absurd response to it economically might have put a six-month temporary hold on that, but it's a view I still stick by.
Now, with rampant money injection on the very near horizon, plus the bouncebackability (yes it's my new word of the day), plus the chance for the UK to be a master of its own destiny – it all sets up for what I see as perfect market boom conditions.
There will be stocks in industry like engineering, communications and networking, infrastructure services, waste and environmental services, transport and logistics that we are all going to find opportunity in.
In fact, it could quickly turn into a punters paradise once we forge through the couple of months while the public are still nervous and worried about Covid-19. The next few months will remain risky, volatile in the market – but I see it as entry points to great opportunities.
Which ones exactly? Well last week, "Project Speed" didn't exist. But now it does, those are just a few areas we're going to be concentrating on. We've already been on top of the communications and networking industry and the huge potential that exists there.
But the others now come to the front as a priority. As I say, it is likely going to tap several industries and opportunities. A true punters' paradise, a market up for grabs to those who are prepared to get on with it… once we've all had a good moan of course.
Regards,
Sam Volkering
Editor, Exponential Investor
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