When Does A Correction Become A Bear Market?
It's the middle of the month. That means my favourite investor sentiment indicator is out. It's the Bank of America Global Fund Manager survey, which tells us each month where the world's money managers are directing their capital flows (or at least, where they wish they were directing them).
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Yahoo
an hour ago
- Yahoo
More outages, aging infrastructure, and a bicoastal dysfunction: BofA warns America's grid is 30%-46% ‘beyond its useful life'
The electrical grid is the backbone of modern America. It powers powers everything from homes and hospitals to data centers and electric vehicles. But according to a detailed analysis from Bank of America Institute, the grid is straining under the pressures of surging demand, chronically aging infrastructure, and a growing east-west divide, leaving 31% of transmission lines and an even more alarming 46% of distribution infrastructure 'beyond its useful life.' The implications are stark: more outages, higher prices, and a heightened risk of dysfunction at both ends of the grid. The most alarming fact from BofA's deep dive is just how much of the grid is overdue for replacement. In 2024, 67% of utility spending on transmission and distribution—$63 billion—went to replacements and upgrades, dwarfing the $32 billion allocated to new lines and substations. This lopsided investment signals a network fighting to keep up, not just with basic maintenance, but with the exponential strain of new users and devices. The consequences are already being felt by everyday Americans: power outages are occurring more frequently, with transmission failures climbing steadily. Data from the North American Electric Reliability Corporation (NERC) points to a clear decline in grid reliability, leaving many consumers with a system less dependable than the one their parents knew at the start of the millennium. Put simply, BofA says, 'grid reliability is worse today than in the early 2000s.' A surge in demand—from EVs to AI Why is demand rising so sharply? The BofA report identifies four main forces pushing load growth into uncharted territory, projecting that overall U.S. electrical demand will grow at a 2.5% compound annual rate through 2035, far outpacing the 0.5% annual growth seen in the previous decade. First is building electrification. As cities across states such as California, Massachusetts, and Colorado ban fossil fuels in new construction, homeowners are using far more electricity for heating and hot water. Second is the boom in data centers, super-charged by the thirsty AI sector. In a world driven by cloud computing, artificial intelligence, and streaming services, data centers are emerging as 'super-consumers' of energy. These facilities already account for up to 2% of global electricity, but BofA projects them growing into the 15%-23% range annually by 2030. Thirdly, after years of offshoring, American manufacturing is in comeback mode. Driven by domestic and federal policy support, construction spending on factory infrastructure hit $234 billion in 2024—a 21% jump over the prior year, and double the average of previous years. Finally, electric vehicles are changing the game for both residential and public grid demand. Nearly 5 million EVs are already on American roads, a figure that represents 2% of the total passenger vehicle fleet. BofA notes EVs were 9.7% of new vehicle sales in 2024 and, even if this figure remains flat, the number of EVs in use will rise at a roughly 15% compound annual growth rate to 22 million on the road by 2030. Not only are these vehicles likely to be charged in residential areas, which have little spare capacity on substations, but BofA notes more public EV charging stations will be needed, and 'that will require significant grid investments.' If every US household went 'all-electric'—replacing gas-powered heating, hot water, and vehicles—the monthly consumption would triple, from 875kWh to 2,803kWh. Such a seismic shift would overwhelm large swaths of the existing grid without massive upgrades. Geography matters: West makes, East takes A less-discussed but critical issue is the split in production and consumption between the east coast, the west coast, and the southwest. While the grid is a national asset, its parts don't always match up with population centers. Most renewable energy is generated in states including Texas, California, and Oklahoma, and their neighbors. These 'energy-producing states' deliver over half the country's wind and solar power, yet the consumption hot spots are overwhelmingly on the East Coast. This geographic mismatch means long-distance transmission lines are under mounting pressure. Many are aging, and few are being replaced at the pace required. Long-distance, high-voltage transmission lines—already old and unreliable—must bridge this gap, compounding the strain as demand grows. Outages and reliability: Why Americans should care The net result of all these factors? More outages and less reliability. Even as utilities invest almost $100 billion a year in basic infrastructure, BofA's analysis shows customer satisfaction is likely to hit new lows if the current pace of replacement and expansion isn't accelerated. Transmission outages have become more frequent, and the resiliency of the grid—especially against weather events or cyber-attacks—is declining. Notably, the Department of Energy's National Transmission Needs Study warns U.S. transmission capacity must grow 64% by 2040 to meet 'moderate' load forecasts, assuming the country continues targeting ambitious clean energy adoption. While national prices for electricity have stayed mostly stable after inflation adjustments, California offers a glimpse of what happens when infrastructure stress meets rising costs. Over the last seven years, retail electricity prices in the Golden State have soared by 68%, now averaging nearly twice the national norm. This has led to a 5% drop in demand as consumers and businesses adjust, highlighting the real-world elasticity of energy use in response to price spikes and reliability concerns. The political response: deregulation vs. investment Policymakers are keenly aware of the tightrope the grid is now walking. On the first day of his term, President Trump declared a national energy emergency, aimed at streamlining infrastructure permitting and accelerating grid modernization—especially for traditional energy projects like natural gas. While this marked a pivot from the climate-focused policies of the previous administration, funding for the grid remains bipartisan, in BofA's view: the Grid Deployment Office, formed under President Biden, awarded $14.5 billion in grants through 2023 and 2024, matched by $36.9 billion in private investment. Artificial intelligence, which powers everything from chatbots to autonomous vehicles, poses a unique challenge. The International Energy Agency estimates that AI servers used around 63TWh of electricity in 2024, or 15% of total data center demand—a number anticipated to surpass 300TWh by 2030 as the technology scales. But most data up till now has been used on AI training, whereas running models, also known as 'AI inference' or Gen Z's well-known love of talking to their chatbots all day as a kind of intimate companion, is projected to overtake it in coming years. The verdict from BofA's research is clear: without sweeping upgrades and expansion, America's grid will buckle under the weight of growing demand and obsolete hardware. 'Gigawatt-scale growth' will necessitate increased investment not just in new capacity, but in modernizing transmission and distribution channels. Until then, expect more outages—and a widening gap between where power is produced and where it's needed most. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
2 hours ago
- Bloomberg
Fed Portfolio Shift Could Hand Treasury $2 Trillion, BofA Says
A possible shift in the composition of the Federal Reserve's portfolio of Treasury holdings could result in the central bank buying nearly $2 trillion of bills over the next two years, enough to absorb nearly all of the Treasury's issuance during that period, according to Bank of America Corp. Strategists Mark Cabana and Katie Craig expect the Fed to adjust its portfolio to better match assets and liabilities in a move that will protect against interest-rate risk and negative equity while bringing down the duration of their liabilities. It would also end up being a much-needed windfall for the Treasury Department, which has been issuing billions of dollars in short-term debt to fund a growing deficit and replenish its cash balance following last month's increase of the debt ceiling.
Yahoo
2 hours ago
- Yahoo
Why UnitedHealth Stock Is Skyrocketing Today (Hint: Warren Buffett)
Key Points Berkshire Hathaway's latest SEC filing revealed that the company has taken a $1.6 billion stake in UnitedHealth Group. Berkshire added a few others while reducing stakes in both Apple and Bank of America. UnitedHealth has faced several challenges this year, including the revelation of multiple DOJ investigations and the resignation of its CEO. 10 stocks we like better than UnitedHealth Group › Shares of UnitedHealth Group (NYSE: UNH) are jumping on Friday, up 13.8% as of 2:14 p.m. ET. The spike comes as the S&P 500 (SNPINDEX: ^GSPC) declined 0.1% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) fell 0.3%. The troubled health insurance giant is finally seeing its stock rebound after months of trouble, thanks to the purchase of 5 million shares by Warren Buffett's Berkshire Hathaway. Berkshire buys UNH Berkshire Hathaway's latest regulatory filing revealed that the company took a considerable stake in UnitedHealth. The 5 million-share, $1.6 billion stake makes the massive health insurer the 18th-biggest position in Berkshire's portfolio. Buffett's company also trimmed its positions in Apple and Bank of America. The move took Wall Street by surprise, given the many issues UnitedHealth faces, and the revelation sent shares soaring immediately. UnitedHealth is struggling The company's most recent quarterly report revealed a darkening financial picture, including a significant miss on earnings per share, as costs from medical care continue to balloon. The company was also forced to suspend guidance as it tries to adapt to the shifting market. Its financial woes are far from the company's only issues, having recently suffered the sudden departure of its CEO for "personal reasons." The departure comes as the company faces two Department of Justice (DOJ) probes -- one criminal and one civil -- into its Medicare billing practices. Buyer beware It's hard to disagree with the Oracle of Omaha, but there are just too many issues facing UnitedHealth at the moment and with no clear picture of an imminent turnaround. I would stay away from the stock. Should you invest $1,000 in UnitedHealth Group right now? Before you buy stock in UnitedHealth Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and UnitedHealth Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $663,630!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,115,695!* Now, it's worth noting Stock Advisor's total average return is 1,071% — a market-crushing outperformance compared to 185% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 13, 2025 Bank of America is an advertising partner of Motley Fool Money. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool recommends UnitedHealth Group. The Motley Fool has a disclosure policy. Why UnitedHealth Stock Is Skyrocketing Today (Hint: Warren Buffett) was originally published by The Motley Fool
