Business & Market Report - February 2024

Big Money Move to Infrastructure

In prior Market Alerts, we provided you with an update in 2022 of what the real causes were for the cement shortages. In August of 2023 we gave our thoughts on the dire influences cast upon the concrete markets by the Federal Reserve policies and the unprecedented interest rate hikes. And within the August 2023 update, we mentioned that “amidst the cement shortage, inflation, and interest rates there is a market shift in progress. Well, unfortunately our intel was accurate and now we find the markets in a full shift.” So, in the midst of this shift back to somewhat normal market conditions more indicative of pre-Covid, what additional influences are occurring? Well, if we “follow the money” it does not take long to see that Wall Street is providing some clues.         

As we mentioned in August 2023, your local market is probably getting more competitive “If your End-User Market Segmentation has been weighted more toward Residential and Commercial segments, you are feeling the squeeze from the Ready-Mix industry attempting to retake territory and market share.” Remember the illustration below? Ready-mix producers have to forage for more, not so easy, projects and opportunities to keep up their volume and production levels.

 What is Wall Street signaling?

 The Fed Will Continue to Unwind the Balance Sheet Till it Hurts! 

“When the Fed sells bonds, it puts upward pressure on the 10-year interest rate. They can make a big announcement about lowering the overnight rate, but if they keep selling bonds, the 10-year rate will keep moving up. And it is the rising 10-year rate that negatively affects stocks, bonds, and real estate. If the Fed is reluctant to stop selling bonds, it might let the 10-year rate rise to 4.5% or 5% or 5.5% before there is enough pain out there for them to stop.”

David Wiedemer-Economist, PhD 2-5-24

BlackRock to Buy Global Infrastructure Partners for $12.5 Billion

“Infrastructure is one of the most exciting long-term investment opportunities, as a number of structural shifts re-shape the global economy,” BlackRock Chief Executive Larry Fink said in a statement. “Policymakers are only just beginning to implement once-in-a-generation financial incentives for new infrastructure technologies and projects.”

WSJ 1-12-24

Swiss Building-Materials Giant Plans Separation of U.S. Business

"Increased government spending on infrastructure in the U.S. has bolstered companies in the building-products sector like Holcim that play a key role in efforts to transition to cleaner energy and to rebuild the nation’s roads."

"The decision by CRH, a Holcim rival, to list in New York shows the perks of going public here. The Dublin company previously had its primary listing in London but switched it in September because the company generates most of its operating profit in the U.S., a market that offers more acquisition opportunities. CRH’s stock is up more than 24% since then."

WSJ Updated Jan. 28, 2024

CRH Ventures Invites Roads of the Future Accelerator Program Applications

“Roads form the arteries of our society, and the Roads of the Future accelerator is our commitment to driving further innovation across this vital area of infrastructure, says CRH Ventures Head Eduardo Gomez.”

Concrete Products Magazine 2-7-24

As you know, we have deeply espoused the importance of building your business around the proper “End-User Market Segmentation” that is weighted toward the Infrastructure/Public Works segment. This segment is filled with concrete applications that fit Repair, Remodel, and Retrofit (“3-Rs”) all of which support the strengths and the attributes of the Mobile Mixer platform. Again, such a mix of customers and business within this segment will help your company to “Play Thru the Cycle” counteracting the downturn in private funding for commercial projects while creating insulative and competitive barriers.

Are you prepared to fend off these challenges? As we have stated in the past maybe you need an objective “look under the hood” to make sure your team is maximizing the opportunities. Give us a call to see how we can help you.