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Yahoo Breakout: There's Money to Be Made From a Do-Nothing Congress

By    |   Thursday, 22 May 2014 01:11 PM

A New York investment firm has produced the Congressional Gridlock Index, a group of securities to own or sell short assuming Congress is too bogged down to act on issues such as oil exports, the Keystone pipeline and a minimum wage hike.

Yahoo Breakout talked to the firm, Strategas Research Partners, about how federal gridlock could affect U.S. stocks.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

“Gridlock is creating an investable theme for investors to be long Washington dysfunction,” said Daniel Clifton, chief of policy analysis at Strategas.

The fact Congress is unlikely to undertake mortgage finance reform is a positive for shares of Fannie Mae, the quasi-public entity that guarantees a substantial percentage of U.S. residential mortgages.

Clifton said lawmakers are not expected to overturn the ban on U.S. crude oil exports despite mushrooming domestic production. Strategas recommends shorting the producer-heavy U.S. Oil Trust ETF, while buying domestic refiner Valero Energy.

A delay on the Keystone XL Pipelne decision is bad for pipeline builder Quanta Services, but good for existing pipelines operator Enbridge.

Strategas says continued implementation of Obamacare is favorable for profits at health insurer WellPoint.

"It is possible Congress passes a minimum-wage increase later this year, but for now the two parties are not in the mood to compromise," Clifton told Yahoo. YUM Brands, operator of Taco Bell and KFC, is one stock that could benefit from inaction on that issue.

Lack of immigration reform is good for outsourcing firm Cognizant, but a negative for Accenture, which has a thriving “border and identity management practice,” according to Clifton.

The deluge of political advertising surrounding the upcoming fall elections was viewed as a likely boon for broadcaster CBS.

CBS News reported that because of Congressional gridlock, the nation’s road and bridge infrastructure is beginning to suffer and fray. The American Society of Civil Engineers in 2013 gave the nation’s public infrastructure a grade of D+ and estimated it needs $3.6 billion in outlays by 2020.

Vox reported that out of 7,207 bills and joint resolutions introduced during the current Congress, only 103 have become law, the fewest since at least the 1970s.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

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A New York investment firm has produced the Congressional Gridlock Index, a group of securities to own or sell short assuming Congress is too bogged down to act on issues such as oil exports, the Keystone pipeline and a minimum wage hike.
money, Yahoo, Congress, KFC
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2014-11-22
Thursday, 22 May 2014 01:11 PM
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