OCEAN CITY – Alternative energy is at the beginning of what BofA Merrill Lynch Global Research Analyst Steven Milunovich calls "the Sixth Technology Revolution," a 30-to-50-year cycle in which the U.S. and the world remake their energy infrastructure.
In fact, he projects global industry revenues will reach $1 trillion in 2014, five times 2009’s estimated revenues of $200 billion.
"There are studies that suggest that, in the U.S., wind could provide up to 20% of our electricity needs if we invest in the transmission," says Milunovich. "Longer term, many people are even more bullish on solar."
In a video available at www.totalmerrill.com, Milunovich explores how this growth trend in cleantech — as it’s also called — may create investment opportunities as more and more large corporations and governments around the world move toward more low-carbon economies.
While profitability in many areas of the industry is still likely years away, he forecasts that a number of key technologies — including solar power, electrification of transportation and the creation of a smart grid — will likely provide investors with significant long-term growth opportunities.
As always, before you make any investment decisions, discuss them with your financial advisor.
In another video that can be found at www.totalmerrill.com, Ethan Harris, Head of North America Economics for BofA Merrill Lynch Global Research, says reliable indications are that we’ll see continued moderate improvement in the economy in the near future.
While Harris acknowledges that significant headwinds could hold back some areas of the economy in 2010, he argues that the tailwinds are even more powerful and should lift U.S. GDP growth throughout next year. The first of these tailwinds is "the most aggressive monetary and fiscal stimulus in history," Harris notes. "This stimulus has stopped the capital markets crisis and, with the usual lags, the economy is responding." In addition, hard-hit sectors such as housing, consumer durables and inventories, should begin to pick up through the normal forces of the business cycle.
The second tailwind is low inflation — Harris projects that it will fall to 0.8% by 2011, well below the Fed’s target of 2%. And in this environment of low inflation and steady but moderate growth, Harris anticipates that the third tailwind will take effect — in the form of a hold on interest rate hikes from the Fed for "a very long period of time."
(A Merrill Lynch Wealth Management Advisor. She can be reached at 410-213-8520.)