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.

Investors still have to decide on which industries are best positioned to perform well in the recovery, remarks Matt Krantz for USA Today. Possibly the worst thing any investor could do is jump in after sectors that have already gained, continually chasing performance.

After betting on financials and tech companies, investors are now looking for actual economic growth in the second half of the year, especially in consumer discretionary companies that make big-ticket items such as automobiles and appliances. Krantz notes, however, that investors are applying prudent techniques when picking out future winning sectors:

History. Certain sectors and certain companies do better at certain points of an economic cycle. If the past repeats itself, solid performance could come out of consumer discretionary stocks, along with materials and industrial companies. These “cyclical” sectors could gain as demand for goods picks up. Later, energy stocks could gain as companies expand to cover all the demand.

• Consumer Direct Select Sector SPDR (NYSEArca: XLY): up 30% year-to date
• iShares Dow Jones U.S. Basic Materials (NYSEArca: IYM): up 55% year-to-date
• SPDR Select Sector Fund- Basic Industries (NYSEArca: XLB): up 43% year-to-date
• Energy Select Sector Energy Fund (NYSEArca: XLE): up 17.7% year-to-date

Cycles. Growth in revenue is still down and may continue to be so in the third quarter, but some businesses could show early growth. The businesses that will perform will be the ones to stop cost cutting and start expanding. This is one of the reasons why financials may continue to benefit as demand for loans increases.

• SPDR Financial Select Sector (NYSEArca: XLF): up 23.3% year-to-date

Diamonds in the rough. Some small banks and brokers may stand out by enticing customers who have become estranged from large financial firms. Modernization of bridges and roads will lead to a boom in the infrastructure industry. Government investment into green tech will also likely help the alternative energy industry. As more companies use the internet to conduct business, business that build internet networking systems may also become in demand.

• iShares S&P Global Infrastructure (NYSEArca: IGF): up 13.8% year-to-date
• PowerShares Wilderhill Clean Energy Portfolio Fund (NYSEArca: PBW): up 28.9% year-to-date
• iShares Networking Fund (NYSEArca: IGN): up 61.7% year-to-date

Not so good. Sectors dependent on consumers may not see previous cash flows for awhile yet. Businesses such as retailers, restaurants and casinos may also continue to struggle.

Watch the trends. There’s no such thing as a “sure thing” in the markets, otherwise no one would ever lose anything. We can all guess which sectors will perform and which won’t, but reality could bear out differently. Watch the trend lines to spot the true opportunities, and have a stop loss in place, as well.

Max Chen contributed to this article.

Specialty-sector ETFs, or “thematic” ETFs, have become a hit with investors, covering more than 40 unique themes in the market with more than $10 billion in assets under management, according to IndexUniverse.

While some consider thematic ETFs “gimmicky” and believe these forms of ETFs are only popular when the media is hyping the sector, they have their advantages and an investor should be aware that such options are available.

Specialty ETFs can help round out a portfolio and allow investors to take advantage of different segments of the market. To spot opportunities, watch the trend lines.

Alternative energy. Skyrocketing energy prices have brought more investor interest to all sorts of energy investments. The largest alternative energy ETF is PowerShares WilderHill Clean Energy Portfolio (NYSE Arca: PBW), currently up 23.4% year-to-date, with $743 million in assets under management. PBW is more focused on U.S.-listed companies.

Coal. The cheapest energy source of BTUs. Ever-increasing oil prices are encouraging the development of the coal. The largest coal ETF is Market Vectors Coal ETF (NYSE Arca: KOL), currently up 1.3.4% with $277 million in assets. KOL primarily includes mid-cap miners, weighted 49% in U.S. companies, 23% in China and 15% in Indonesia.

Nuclear. Once operational, nuclear power is seen as the cheapest kind of energy, but the industry is still grappling with the issue of nuclear waste. The largest nuclear ETF is Market Vectors Nuclear Energy ETF (NYSE Arca: NLR),  currently up 21.7% year-to-date, with $166 million in assets. NLR has a 40% allocation to uranium miners, with other weightings in power generation and plant construction firms.

Commodities. ETFs are an easy way for a commodity trader to access this area of the market. The largest hard asset commodity ETF is Market Vectors Agribusiness ETF (NYSEArca: MOO), currently up 40% year-to-date, with $1.5 billion in assets. Other areas include water resources, steel, timber and broad-based commodities.

Infrastructure. Infrastructure covers companies involved in construction and repair of roads and bridges, building and maintaining power grids, telecommunication networks and sewage systems. Worldwide stimulus funds have been steadily injecting more money into the sector. The largest infrastructure ETF is iShares S&P Global Infrastructure Index Fund (NYSE Arca: IGF), currently up 12.9% year-to-date, with $267 million in assets.

Transportation. There’s no denying the economic impact of transport systems. The Claymore/Delta Global Shipping ETF (NYSE Arca: SEA) is currently up 25.9% year-to-date, with more than $70 million in assets. SEA is a good indicator for economic activity and commodities demand.

Green. The green sector provides environmentally-friendly technology for an evolving society. The largest green ETF is PowerShares Cleantech Portfolio (NYSE Arca: PZD), currently up 29.8% year-to-date, with $145 million in assets. PZD tracks the performance of companies whose products improve productivity while reducing consumption of natural resources.

Other. Or “miscellaneous” category that includes gaming, luxury items and Chinese real estate to name a few. The largest ETF in this area would have to be Market Vectors Gaming ETF (NYSE Arca: BJK), currently up 46.7% year-to-date, with $108 million in assets. BJK tracks global gaming companies.

Max Chen contributed to this article.

The infrastructure sector has a certain appeal for investors, especially since in the United States alone, $80 billion has been allocated to build or repair new bridges, tunnels and roads.

Murray Coleman for Index Universe reports that sovereign wealth funds around the world have been busy doling out billions more to revive markets outside the United States, leading to prospects of an international infrastructure boom.

Analysts feel that this investment in infrastructure projects both in developed and emerging markets will be a driver of continued economic expansion. ETFs can help give the desired exposure, but with the safety in numbers approach, of a mixed bag of a number of companies. Two to consider are:

• PowerShares Emerging Markets Infrastructure ETF (PXR): up 62.8% year-to-date

• iShares S&P Global Infrastructure Fund (IGF): up 6.8% year-to-date

• SPDR FTSE/Macquarie Global Infrastructure 100 (GII): up 0.7% year-to-date

PXR’s portfolio is investing in raw materials producers who are positioned to benefit from shovels-in-the-ground projects, which is directly related to the commodities markets. Industrials and utilities play another huge role in this fund.

IGF divides the sector into three component groups: energy, transportation and utilities. When it rebalances once a year, the weightings are adjusted to 40% each for utilities and transportation, with 20% going to energy. Lately, utilities have dominated the mix. The developed markets are more of a focus within this fund.

GII has 107 components, divided among utilities, energy and industrials. Utilities clock in at 87.2% of the fund, while energy and industrials are respectively 5.7% and 2.8%. Developed markets make up most of the fund, but Brazil, Korea and China are components.

Before investing in an infrastructure ETF, be sure to do your homework and figure out exactly what “infrastructure” refers to according to each fund.

For more stories about global infrastructure, visit our infrastructure category.

Although there are various ways to diversify, Roger Nusbaum, a contributor at TheStreet, follows a Mohammed El-Erian type portfolio with allocations in equity, bonds and real assets. El-Erian is the CEO and co-CIO of PIMCO.

Nusbaum took a look at ETF choices that fit in with El-Erian’s concept:

In the equity portion, he suggests allocating 10% to the PowerShares S&P 500 Buy Write Portfolio (PBP) and 5% to the iShares S&P 600 Small Cap ETF (IJR) which enables investors to benefit from fact that small-cap stocks generally lead the way in the early stages of a stock market cycle.

Additionally, he suggests allocating 10% of a portfolio to the WisdomTree International Large Cap Dividend ETF (DOL) and 5% to the SPDR S&P International Small Cap Index Fund (GWX). In regard to gaining access to emerging markets, Nusbaum suggests looking at the PowerShares BLDRS Emerging Market 50 Index Fund (ADRE).

Next, he suggests adding fixed-income ETFs to a portfolio. In this portion, he states one should look at the iShares Barclays Agency Fund (AGZ) or iShares S&P/Citigroup 1-3 Year International Treas (SHY). PIMCO also offers a PIMCO 1-3 Year U.S. Treasury Index Fund (TUZ).

To wrap up fixed income, he suggests the use of iShares S&P Citigroup International Treasury (IGOV).

In regard to real assets, Nusbaum suggests utilizing the WisdomTree International Real Estate ETF (DRW) the SPDR Gold Trust (GLD) and the PowerShares DB Agriculture Fund (DBA). Additionally, he suggests gaining exposure to infrastructure through the iShares S&P Global Infrastructure Fund (IGF).

Lastly, he states that one should allocate 8% to special opportunities like the PowerShares Water Portfolio (PHO).

In addition to this, we suggest that one utilize a strategy when investing, such as monitoring market trends using the 200-day moving average.  More on the trend following strategy can be found in our new book.

For more stories on portfolio construction and the use of ETFs, visit our ETF education category.

Kevin Grewal 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.

The Labor Department reported that new jobless claims unexpectedly increased last week by 15,000 to a seasonally adjusted 627,000, surprising most economists, who expected the number to drop to 600,000.  This increase added to the total number of Americans receiving unemployment benefits shooting the number up to 6.74 million.

On a positive note, a revised reading on gross domestic product indicated that a turnaround in the economy is not a far-fetched idea. The broadest measure of the nation’s output suggested the economy posted an annualized decline from January through March by 5.5%, a bit better than the 5.7% estimated a month ago, and economists think that the economy is shrinking at a slower pace, states the Associated Press.

To add to today’s good news, consumers boosted their spending at a 1.4% rate, down from a 1.5% growth rate estimated last month.  This sent the Retail HOLDRs (RTH) up nearly 2% in intraday trading.

In the financial world, Bank of America (BAC) has managed to raise more money than the government has said it needed to withstand a deepening recession.  Bank of America is expected to raise a whopping $38 billion worth of capital, $4.1 billion more than the $33.9 billion the government said it needed to raise, surprising most in how quickly the bank was able to do it.  This is all despite the controversy stirred up that the Fed may have halted a possible merger between Bank of America and Merrill Lynch.  The news sent the Financial Select SPDR (XLF) up nearly 1% in morning trading; BAC is 7.9%.

The wheels seem to be turning in Washington. Vice President Joe Biden recently announced that more than half of economic stimulus money set aside for highway projects has already been allocated.  In more detail, he stated that $19 billion has been set aside for 5,300 transportation projects.  The news sent the iShares S&P Global Infrastructure Index (IGF) up nearly 2% in morning trading.

Overall, all three major indices are up in morning trading.  The Dow Jones Industrial Average is up 1.8%, the S&P 500 is up 1.8% and the Nasdaq gained nearly 1.6%.

For more stories on financials, visit our financial category.

Kevin Grewal 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.