LARRY KUDLOW: More on the Bessent economic boom story

The article argues an “economic boom” is underway, citing regulatory burden cuts and tax incentives such as the permanent restoration of 100% bonus depreciation (full cost deducted in year one) to spur investment. It points to energy and demand tailwinds—U.S. oil production near 14 million barrels/day and record LNG exports—alongside macro momentum like nonfinancial corporate productivity running at 3.1% annually over two years (best since the 1990s), with ISM manufacturing up 8 straight months and services up 15 months, and about $300B in individual refunds. Overall, the news frames these developments as broadly supportive for growth and AI/data-center investment.

Analysis

The actionable read-through is not broad-market ‘boom’ rhetoric; it is a tax-and-regulatory multiplier for capital-intensive, cash-tax-paying businesses that can convert depreciation into near-term free cash flow. That favors service providers and equipment lessors with long-lived assets and pricing power more than commodity producers, where the benefit is diluted by higher reinvestment needs and cyclical cost inflation. NGS looks cleaner than the headline energy trade because compression demand can rise with both production growth and LNG buildout, while its economics are more levered to utilization than to spot hydrocarbon prices.

Second-order effects matter more than the macro headline. If data-center construction really accelerates, the bottleneck shifts to electrical gear, switchgear, compressors, wire, and skilled labor, which usually means margins expand first for suppliers with backlog and constrained capacity, then for pure-build contractors. That also implies some of the upside is already implicit in larger mega-cap AI names; the less obvious winners are the industrial picks-and-shovels names with shorter book-to-bill cycles and immediate tax shields. For TSTS, unless the business is directly tied to power, cooling, or infrastructure for these builds, there is no clean signal yet.

The main risk is that bonus depreciation and deregulation are timing accelerants, not demand creators. If rates stay high, gas prices fall, or LNG/export volumes plateau, the capex wave can fade faster than the policy narrative. Over 1-3 months, watch backlog growth, utilization, and management commentary on customer spend; over 6-18 months, the thesis weakens if fiscal support gets diluted or if grid/permitting friction slows actual project starts.

Key Decisions for Investors

• Long NGS on weakness; use a 3-6 month horizon. Best case is multiple expansion plus estimate revisions as gas throughput and compressor utilization inflect. Falsify if next earnings show flat utilization or no improvement in fleet demand.
• Pair trade: long NGS / short XOP. This expresses a preference for infrastructure/service torque over commodity beta; it works best if policy drives capex rather than a large move in crude. Cut the trade if energy prices rip higher and XOP begins to outperform on pure commodity leverage.
• No-trade on TSTS until the business mix is confirmed. Put it on a watchlist for backlog, order growth, and exposure to data-center or industrial power buildout; if those metrics do not show up in the next print, the policy read-through is probably overstated.
• If you want broader exposure, use XLI calls instead of chasing crowded AI mega-caps. The second-order winner is industrial execution capacity, not the headline beneficiary names; a 1-3 month move in backlogs can re-rate the sector before the macro data catches up.