“There are people who make things happen, there are people who watch things happen, and there are people who wonder what happened. To be successful, you need to be a person who makes things happen.”

– Jim Lovell

Attention business owners and managers: It is crucial that you thoroughly investigate the background of every supervisor within your organization, regardless of their level. Your objective should be to uncover their humble beginnings and their journey to management. In the construction industry, you will likely find that a staggering 99% of supervisors lack a college or trade school education. They have earned their stripes through the school of hard knocks. It takes an extraordinary amount of time for individuals like these to ascend to the position of manager, long after they have proven their ability to lead teams. Unfortunately, these individuals are rarely provided with a clear roadmap on how to become effective people managers. Consequently, they often wander aimlessly until someone from the management team recognizes their exceptional abilities. Let me make this abundantly clear: these individuals are discovered because they are the ones who make things happen. Business leaders, listen up: the process of developing a supervisor should begin on their very first day of work. Allow me to share a true story: during my field visits with powerline construction crews, I observed a field foreman hastily folding up work order drawings when he noticed his apprentices glancing at them. He insisted that they had "important work" to attend to, rather than wasting time on plans they didn't understand. I seized this opportunity to intervene. I opened up the plans and invited the apprentices to take a closer look. I explained the significance of each line on the drawings and pointed out the various objects in the area that were represented. I emphasized that these were the things they would need to manage in order to ensure a successful project. It is of utmost importance to let every new worker on their first day know that their foreman was once in their shoes. They all had a first day, just like the one they are experiencing. It has always been evident that young individuals entering the construction or any other industry need to be encouraged from day one to strive for excellence, as exemplified by their supervisors. It is imperative that you intentionally map out the path to management, so that each person who aspires to become a foreman knows precisely what steps they need to take.

— Wayne Jensen

The Commerce Department reported that construction spending rose 0.4% in September. August's data was revised higher, showing a surge of 1.0% instead of the previously reported 0.5% increase. Economists had predicted a 0.4% climb in construction spending. On a year-on-year basis, construction spending increased by 8.7% in September. Private construction projects saw a 0.4% rise, following a 1.0% increase in August. Spending on private non-residential structures, such as factories, edged up 0.1%, while manufacturing construction projects fell 0.4%. Residential construction investment grew by 0.6%, with spending on new single-family projects soaring 1.3%. However, the shortage of previously owned homes on the market and high mortgage rates limit further gains. Multi-family housing projects saw a slight dip of 0.1% in September, as the stock of under-construction multi-family housing remains high. Public construction projects increased by 0.4%, with state and local government spending rising by 0.9% and federal government outlays dropping by 5.3%.

Energy infrastructure worldwide has failed due to unpreparedness for extreme weather events. Energy companies are seeking ways to weatherproof infrastructure to protect it and provide power during critical moments. The poor state of U.S. energy infrastructure has been criticized for years. Aging infrastructure failures are becoming more apparent as states face severe weather events. Pacific Gas and Electric aims to move power lines underground in fire-prone areas to reduce ignition risk. Undergrounding activities are costly, and funding will be shifted to consumers. This project could serve as a blueprint for other countries. Remote control operations and automatic shut-offs are important for infrastructure safety. Laki Power in Iceland integrates climate technology to protect power grids. Energy companies must prepare for severe weather events by weatherproofing infrastructure. More needs to be done to accelerate the rollout of these technologies and protect people in vulnerable situations.

The U.S. electric grid needs investment to support the transition to electric vehicles. Outdated software and aging infrastructure are hindering progress. The government has set a goal for EVs to make up 50% of car sales by 2030 and requires chargers to meet strict standards by February 2024. However, most software does not meet these standards, causing companies to struggle to qualify for funding. The grid's age and technology also pose reliability concerns. To support the planned rise in EVs, 1.2 million chargers are needed. Upgrading the grid and software is crucial, as EV chargers require robust software for communication and payment processing. Many charging stations do not work properly due to outdated charge management software. The OCPP 2.0.1 standard is mandated for government funding but requires a major software overhaul. Open source software and interoperability are key strategies for modernizing infrastructure. The U.S. aims to reach net-zero emissions by 2050, but progress is threatened by outdated proprietary solutions. Collaboration between the government and tech industry is necessary to achieve reliable infrastructure for EVs and the grid. 

Last year, the US experienced 18 natural disasters, causing power outages and costing businesses $150 billion annually. To address this, President Biden's Investing in America agenda is investing over $30 billion in the largest electric grid infrastructure project in history. This includes a $1.3 billion commitment to three transmission lines across six states, creating over 13,000 jobs. The Department of Energy is also releasing a National Transmission Needs Study to identify areas that would benefit from increased transmission. Additionally, the Department of Energy has announced $3.5 billion in investments to strengthen grid reliability and resilience, bringing 35 gigawatts of renewable energy online. The Biden-Harris Administration is working to expand capacity for renewable energy, reduce power outages, and mitigate the risk of wildfires. They are also accelerating transmission projects through modernized permitting and launching new programs.

In bottom-up fundamental research for corporate credit selection, analysts may struggle to recommend high-quality corporate bonds with tight spreads because they may only outperform if riskier bonds perform poorly. Investment managers tend to be overly optimistic about their ability to forecast performance, leading to a bias towards riskier credit holdings. This bias can result in higher portfolio risk and exposure to excess return volatility. By hiring active managers, clients acknowledge the inefficiencies of indexes and financial markets. The value of active management lies in taking advantage of these inefficiencies to generate additional alpha and produce better risk-adjusted outcomes. Franklin Templeton's credit research team ranks securities based on quality and projected spreads relative to peers. Different issuers within the same sector have varying risk profiles, so the team tri-furcates the sector universe into low-beta, mid-beta, and high-beta buckets based on historical spread volatility. This approach allows for better risk allocation and portfolio construction. Instead of increasing duration risk, the team focuses on strategic placement along the yield curve to maximize returns. The credit curve shape across sectors and ratings determines the optimal placement of bond positions. The portfolio construction method incorporates idiosyncratic security selection ideas, achieves beta neutrality, and strives for duration neutrality. The resulting portfolio aims to take advantage of inefficiencies, offer downside protection, and provide diversification for investors.

Overthinking is the biggest cause of unhappiness. Don't get stuck in a never-ending thought loop. Stay present and keep your mind off things that don't matter, and never will.