According to Fitch Ratings, global infrastructure and project finance rating outlooks in 2010 for most sectors are stabilizing and improving, writes Brian Bertsch for RiskCenter. The outlook is dependent on the anticipated gradual global economic recovery through the year. [Why 2010 Could Be Infrastructure's Year.]

Other interesting points noted by Fitch include:

• Infrastructure assets with structurally low volatility, like availability payment structures for social infrastructure or transportation, and contracted power and energy assets, have remained relatively stable.
• Companies with considerable market exposure, including merchant power, and those engaged in discretionary spending like airports, maritime ports and pub companies, have been negatively impacted. [Infrastructure ETFs: The Consequences of Not Spending.]
• The speed of the economic recovery and inflation, along with the disparity between revenue and cost growth, will determine credit quality. Additionally, the volatility of commodity prices will affect energy and transportation projects. Counterparty risk still remains a factor.

Investors should keep an eye on how infrastructure assets in developing economies perform compared to those in developed economies. Emerging markets have shown strength during and after the financial crisis, and they are expected recover faster than developed markets.

In the last few months, the number of infrastructure ETFs has ballooned from a few broad ones to six such funds that range from all-encompassing to a fine-tuned focus on single countries. You can spot opportunities in these funds by watching the 200-day moving average (or waiting until a 200-day moving average has been established in newer funds). [Read More About Trend Following in The ETF Trend Following Playbook.]

For more information on infrastructure, visit our infrastructure category.

• SPDR FTSE/Macquarie Global Infra 100 (NYSEArca: GII)
• PowerShares Emerging Markets Infrastructure (NYSEArca: PXR)
• iShares S&P Global Infrastructure Index (NYSEArca: IGF)
• iShares S&P Emerging Markets Infrastructure (NASDAQ: EMIF)
• Emerging Global Shares INDXX China (NYSEArca: CHXX)
• Emerging Global Shares INDXX Brazil (NYSEArca: BRXX)

Max Chen contributed to this article.

Governments around the world need to increase their spending on agriculture, energy, water, transport and information technology infrastructure. But where will the money come from? [What is holding back infrastructure spending?] In the United States, stimulus money is still being deployed. [Will 2010 be the year for an infrastructure boost?]

Lloyd’s reports that underinvestment in infrastructure is one the most highly interconnected risks, among others such as:

• Telecommunications systems are heavily relied on by many industries, most importantly emergency services.
• Power grids are vulnerable; failures have impacted more than 50 million people in North America since 2003.
  
• A lack of infrastructure spending means that disease spreads more rapidly.
  
• Major port closures could occur, which would choke off world trade and have widespread consequences at a time when we need world trade most.

Shawn Langlois and William Spain for MarketWatch report that Caterpillar (NYSE: CAT) wrapped up what it said was the worst economic year it had faced in generations. This year could be better -  the heavy-machinery giant is signaling a cautious outlook for 2010, after a steep drop in fourth-quarter profit.

For more stories about infrastructure, visit our infrastructure category.

• iShares S&P Global Infrastructure Fund (NYSEArca: IGF)

• SPDR FTSE/Macquarie Global Infrastructure 100 (NYSEArca:GII)

• PowerShares Emerging Markets Infrastrucutre (NYSEArca: PXR)

• iShares S&P Emerging Markets Infrastructure (NYSEArca: EMIF)
  

The White House is coming out in favor of yet more infrastructure spending on roads, bridges, water systems and other projects. [Why government spending didn't affect projects to begin with.]

Although Obama played devil’s advocate, make no mistake: he wants to spend more on what he deems “worthy projects,” reports Alec MacGillis for The Washington Post.

The White House noted hat most spending so far has gone toward assisting states and paying for social welfare programs. In 2010, look for most of the remaining money to be allocated to building roads, high-speed rail, broadband installations and research at health institutions, reports Jennifer Liberto for CNN Money. [Infrastructure spending roadblocks.]

Many believe that this spending will help create more jobs in the private sector.

For more stories about infrastructure, visit our infrastructure category.

• iShares S&P Global Infrastructure Fund (NYSEArca: IGF): up 18.5% year-to-date



• SPDR FTSE/Macquarie Global Infrastructure 100 (NYSEArca:GII) up 4.9% year-to-date

Under the Recovery Act, counties are allocated large sums of low-interest bonds to give to private projects.  However, there are pros and cons to the Obama administration’s efforts to stimulate the economy.  Investment projects — especially for infrastructure and new technologies — produce limited, delayed results. Programs intended to keep people afloat seem to do the most to lift the economy, states Charles Euchner of The New York Times.

Additionally, the program gives priority to shovel-ready projects, but these take a long time to get going and positively influence the economy.  Infrastructure projects are beneficial because they not only put construction workers on the job, they also create a foundation for new waves of economic growth. Additionally, highways, airports and rail lines could increase the efficiency of local economies, and research and development could lead to innovation.  (Where infrastructure ETFs go from here).

Another problem with stimulus funding, experts say, is that dubious projects too often jump to the head of the line.  Projects with political backing win funding, regardless of merit, while more worthwhile projects languish for decades.  (The stimulus effort has its critics.)

For more stories on infrastructure, visit our infrastructure category.

Two ETFs that have been hindered by this lag is the SPDR/FTSE Macquarie Global Infrastructure Fund (NYSEArca: GII) up 2.7% year-to-date; and iShares S&P Global Infrastructure (NYSEArca: IGF), up 12.4% year-to-date.

Kevin Grewal contributed to this article.

The Obama Administration has announced that it’s investing $3.4 billion in order to fund this project. Through the plan, 100 private companies, utilities, cities and manufacturers will receive grants ranging from $400,000 to $200 million in order to build a smart energy grid, reports Lynn Sweet for The Chicago Sun-Times. So far, these awards are the largest Recovery Act awards ever made on one day. (Nine things that could affect alternative energy).

Analysis shows that by getting smart grid technology off the ground, it could reduce electricity use by at least 4% by 2030. This would result in savings of $20.4 billion for both businesses and consumers. (Does this mean alternative energy is not so alternative anymore?)

The Senate environment committee also released details of its climate change legislation, which includes the share of “emissions allowances,” which is revenue that comes from regulation of a cap-and-trade system – once it’s in place. The Senate has nearly tripled the share of allowances set aside by the House for transit, inter-city rail, and other efforts to trim transport-based emissions. Elana Schor for Streetsblog reports that the Senate measure would set aside more than 3% of allowances in the first two years of the cap-and-trade system for limiting pollution from the transportation sector.

For more stories about clean energy, visit our alternative energy category.

• First Trust NASDAQ Clean Edge Green Energy (Nasdaq: QCLN)
• iShares Dow Jones U.S. Utilities (NYSEArca: IDU)
• iShares S&P Global Infrastructure (NYSEArca: IGF)
• iShares S&P Global Clean Energy (NYSEArca: ICLN)
• PowerShares WilderHill Clean Energy (NYSEArca: PBW)
  
• PowerShares Global Clean Energy (NYSEArca: PBD)
• PowerShares Cleantech (NYSEArca: PZD)
• PowerShares Dynamic Utilities (NYSEArca: PUI)
• Utilities Select Sector (NYSEArca: XLU)
• Vanguard Utilities (NYSEArca: VPU)
• SPDR FTSE/Macquarie Global Infrastructure 100 (NYSEArca: GII)

Despite global infrastructure promises, deals aren’t materializing and the infrastructure industry is discovering that money is still hard to come by, writes Richard Barley for The Wall Street Journal. According to researcher Preqin, a record 94 infrastructure funds are out seeking capital.

Up until 2030, annual requirements for spending on electricity, roads, rail, telecommunications and water will be around 3.5% of global GDP. Developed countries will need to monetize infrastructure assets by privatization or by tolling, while infrastructure projects will likely cost even more in emerging markets.

Some countries have generated projects large enough to produce enough new jobs to syndicate guarantees from the state government while some corporate infrastructure operators gained funding through bonds and private debt placements. A few developing countries have the benefit of strong domestic growth, which would support financing projects internally.

Sen. Benjamin L. Cardin has asked the Senate to invest more in domestic infrastructure, and has proposed a Water Infrastructure Financing Act to give more than $35 billion in funding for both improving the water supply and basic infrastructure, reports the Associated Press.

• SPDR FTSE/Macquarie Global Infra 100 (NYSEArca: GII)

iShares S&P Global Infrastructure Index (NYSEArca: IGF)

Fore more information on infrastructure, visit our infrastructure category.

Max Chen contributed to this article.

President Barack Obama and Congress prescribed a $787-billion dose of tax cuts and spending increases six months ago, reports David Wessell for The Wall Street Journal. Today, U.S. citizens seem doubtful that the plan is working, but it was never intended to hit the economy as quickly as possible.

Roughly one-third was tax cuts, which were quick-acting. One-third was aid to state and local governments and individuals, which were only slightly slower. But one-third was infrastructure, education and other spending that won’t show up for many months, or even years.

While it’s still relatively early in the game, the stimulus effort is not without its critics. David Frum for National Post reports that the stimulus package is not being used as quickly or as responsibly as it could have been. Banks also tightened lending in the second quarter, rather than picking it up.

The United States also had the biggest stimulus package, as a percentage of GDP, but has so far seen some of the fewest results, Frum says.

Part of the problem, Wessell says, may have been in the marketing. Promises were made that the stimulus would save or create 3.7 million jobs. That backfired, and now it’s far from being seen as a success.

Infrastructure ETFs have all topped their 200-day moving averages this year. Will they remain there as spending continues? Watch them closely to see what happens.

• SPDR/FTSE Macquarie Global Infrastructure Fund (GII): down 0.8% year-to-date

• iShares S&P Global Infrastructure Fund (IGF): up 9% year-to-date

For more stories about infrastructure, visit our infrastructure category.

The American Recovery and Reinvestment Act of 2009 provides $111 billion for infrastructure and science projects, report Kevin L. Kliesen and Douglas C. Smith for St. Louis Fed. States are scrambling to get a piece of a slated $27.5 billion set aside for spending on highway construction alone.

The United States’ 2009 report Card for America’s Infrastructure is a cumulative D. The ASCE says the U.S. needs $1.1 trillion in spending over the next five years to bring infrastructure up to “good condition.” The Congressional Budget Office calculated that spending on the U.S. transportation infrastructure was about $16 billion below spending needed to maintain service levels.

Macroeconomic determinants of infrastructure spending include:

• Growth of per capita income and technical change. As a country gets wealthier, the spending habits change along with the necessary infrastructure needed to facilitate that change.
• Population growth. More people means more public schools, hospitals, fire stations and other basic infrastructures.
• Higher costs. Increase in commodity prices also increases costs to construction, which means less infrastructure projects.

Microeconomics factors at the state and local levels include political considerations, engineering assessments and local economic performance. Other determinants include:

• Budgets. Local governments have to stick to a balanced budget, which limits funding to projects based on revenue.
• Net Benefits. Projects are deemed economical if the benefits exceed costs.
• Rate of return. Projects are also economically feasible if real rate of return exceeds estimated real interest rate earned on revenue invested elsewhere.

Infrastructure trends will vary across the board. The two largest categories are in education facilities and highways while industrial structures, health care structures and military structures are all dropping in priority. The government will also have to take into consideration the changing dynamics of technology and the way it influences infrastructure. For example, e-commerce reduces the need for traditional infrastructure and energy infrastructure will begin shift as society embraces alternative fuels.

• iShares S&P Global Infrastructure (IGF): down 0.1% year-to-date

• SPDR FTSE/Macquarie Global Infrastructure 100 (GII): down 6.1% year-to-date

For more information on infrastructure, visit our infrastructure category.

Max Chen contributed to this article.

In the next decade, building and renovation of highways and utilities will be a prominent theme in many countries, remarks Roger Nusbaum for TheStreet.

Infrastructure refers to the things we rely on to get by and get around: water, roads, bridges, wastewater treatment, electricity, airports, hospitals, schools and so on.

Emerging nations will have a slowly emerging middle class and they will need all that and more. They’ll need running water, electricity, cars and roads on which to drive them. Developing nations will be spending money to build roads, or update old infrastructure as the case may be in the United States.

The total amount of worldwide infrastructure spending over the next 20 years could amount to $35 trillion, writes Eric J. Gerritsen for The Journal of Commerce. Around $3 trillion worth of this fiscal spending could be put into the global economy within the next 24 months.

• China has pledged $585 billion
• India is expected to spend $500 billion by 2015
• Japan may spend $129 billion

It isn’t all just government money, either. Private companies are expected to contribute to much of this spending, too.

The infrastructure investment theme is likely to remain a compelling venture as emerging markets continues grow.

• SPDR FTSE/Macquarie Global Infra 100 (GII): down 8.4% year-to-date. GII invests in foreign utilities.

• iShares S&P Global Infrastructure Index (IGF): down 2.4% year-to-date. IGF has a mix of utilities and industrial companies.

• PowerShares Emerging Markets Infrastructure (PXR): up 43.3% year-to-date. PXR holds mostly materials and industrial stocks.

• First Trust ISE Global Engineering And Construction (FLM): up 14.7% year-to-date. FLM has a narrow focus on engineering and construction.

For more stories on infrastructure, visit our infrastructure category.

Max Chen contributed to this article.

Agencies are required to present specific spending plans for the stimulus money and exactly how it will be spent over the next several months. The goal of the money is to create jobs and get the citizens of the United States back to work, explains Ashley Milne-Tyte for Marketplace. The unemployment rate has come in at 9.4%.

Over the summer, an additional 600,000 jobs should be created, as the stimulus money is pumped into the economy and every effort is made to to get on the way to recovery. A web page has been posted to track the spending which will also track people affected by stimulus spending and trace their stories, report Kate Phillips and Ashley Southall for The New York Times.

The $787 billion in economic stimulus money is set to go to Federal agencies such as Department of Health and Human Services to the Department of the Interior, which is intended to accelerate spending on 10 major projects this summer, according to Reuters. Ron Scherer for The Christian Science Monitor reports that spending the stimulus money will not prove to be either easy or quick. Rather, there are competitive bidding rules, and provisions within legislation that are causing confusion and delay.

Some of these 10 projects include infrastructure improvements. Keep an eye on infrastructure funds and watch the trend lines to see if signs of improvement materialize. Companies such as Caterpiallar (CAT) and Deere & Co. (DE) could benefit from the federal contracts.

• iShares S&P Global Infrastructure (IGF): down 1.8% year-to-date

• SPDR FTSE/Macquarie GI 100 ETF (GII): down 7.3% year-to-date