Q: What were some of the surprising equity market reactions to the new escalations in the ongoing trade battle with China?
Q: Since April, what do the current economic results potentially tell investors?
Q: In the recent Artificial Intelligence (AI) datacenter build out, which companies are spending capital, and which companies are profiting?
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Headline Round Up!
*Texas! Giant New AI Data Center Coming to the Epicenter of America’s Fracking Boom!
*Texas! Austin Based Oracle Cloud to Deploy 50,000 AMD AI Chips Signaling Nvidia Competition.
*OpenAI & Broadcom Forge Multibillion-Dollar Microchip Development Deal.
*OpenAI Brings ChatGPT to Walmart For Shopping?
*Beware of Energy Stocks without Earnings or Revenue!
*Rare Earth Stocks Surge After China Tightens Grip on Global Supplies.
*Hailey Bieber’s Brand rhode Acquired by e.l.f. Beauty for up to a Billion Dollars in Cash & Stock!
*Goldman Sach’s Profit Surges Beating Estimates Fueled by Rebound in Dealmaking!
*JPMorgan Profit Jumps as Business Booms on “Main Street”.
*JPMorgan Makes $10 Billion Investment in U.S. National Security as Part of $1.5 Trillion “Security & Resiliency” Pledge!
*Wells Fargo Stock Spikes This Week After Q3 Profit Increase and Strong Credit Performance Surpassing Analyst Estimates!
*New York City Office Market Roars Back to Record Prices in 2025!
*Billionaire Investor Paul Tudor Jones Sees Nasdaq Higher By Year End and The Federal Reserve Cutting Interest Rates to 2.5% – 2.75% Range in 2026.
*The “$400 Billion Bottleneck” as Natural Gas Turbine Shortage is Driven by Demand from AI Datacenters!
*U.S. Auto Delinquencies on Subprime Loans Hits Record Highs.
*U.S. Army Announces the Janus Program for Next Generation Nuclear Energy.
*Silver and Gold Reach Record Highs This Week!
Profit Report
Why Delaying Your Social Security Benefits May Not Make Sense?
SPDR Dow Jones Industrial Average ETF (Exchange Traded Fund) Trust – Daily (12/31/2024 – 10/16/2025)
– Courtesy of Bloomberg LP
BWX Technologies, Inc. – Daily (12/31/2024 – 10/16/2025)
– Courtesy of Bloomberg LP
CoreWeave, Inc. – Daily (12/31/2024 – 10/16/2025)
– Courtesy of Bloomberg LP
Dell Technologies, Inc. – Daily (12/31/2024 – 10/16/2025)
– Courtesy of Bloomberg LP
Flowserve Corp. – Daily (12/31/2024 – 10/16/2025)
– Courtesy of Bloomberg LP
S&P 500 Index – Quarterly Earnings Analysis by Sector (08/16/2025 – 11/15/2025)
– Courtesy of Bloomberg LP
Atlanta Federal Reserve’s GDPNow Real GDP Estimate for 2025 Q3 (10/07/2025)
– Courtesy of The Federal Reserve Bank of Atlanta
McGowanGroup Wealth Management
Q4 2025 Updates
For You, New Client Portal, State of the Art Applied Technology
Our performance tracking for clients started in the 1990’s along with customer relations management software. Each designed for relentless pursuit of reliable, superior client profits and excellence in service. We have great feedback on the new Black Diamond Client Portal including the mobile app. Just call or email if you would like a refreshed link. The past year we devoted the extra resources to upgrade to the state-of-the-art financial software including the document vault. Special recognition: All Hail Scary Smart Joyce Cheng for her devotion!
Equity Market Melt Up & Overvaluations?
Bull Market Case:
Paul Tudor Jones: “ingredients are in place for massive rally before a “blow off” top to Bull market.
Morgan Stanley: Free cash flow yield for the median large cap stock is almost triple what it was in 2000.
Bear Market Case:
Goldman Sach’s boss David Solomon: “Next 12 to 24 months. . .we see a drawdown with respect to equity markets. . .I think that there will be a lot of capital that’s deployed that will turn out not to deliver returns”
GMO.com: 2025 7-Year Forecast U.S. Large (Cap Equity) Real Return Forecast, negative, similar to 1998. U.S. Deep Value, positive.
Potential Solutions For Investors?
• Is The Portfolio Set Up For Cash Flow?
• Harvest In the Money Positions While Looking for Deep Value Stocks and Dividend Paying Equity?
• Should Investors Look to Discounted High Yield Bonds?
• Are Floating Rate Loan Funds a Viable Option Now?
The First 3 Quarters of 2025
Administration Tariff Chaos, Inflations Concerns & Current High Economic Growth
Reasonable investor concerns regarding current chaotic administration tariff policies include higher prices, inflation, disruption of positive economic activity & Recession. However, inflation is near four year lows with PCE as of August 2025, 2.7%, Personal Consumption Expenditures. In addition, The Atlanta Federal Reserve’s Real GDPNow number estimates Q3 2025 Gross Domestic Product (GDP) at 3.8% as October 7th, 2025.
Brief Bear Market and Tactical Allocations
This past April delivered the official definition of a Bear Market as the S&P 500 Index reached a 20% decline from its Q1 2025 peak. Yet, a recovery driven largely by unexpected lower inflation, higher growth, and artificial intelligence optimism drove the S&P 500 back to near all-time highs at the time of this writing. During the declines, McGowanGroup deployed accumulated tactical safety, dry gun powder, to add attractive, high dividend, blue chip holdings that currently have our portfolios tracking above our targets for the year so far.
Expected Profit Growth
The most current S&P 500 consensus analyst estimates for profit growth are 9% between now and the end of 2025 plus another 16% for 2026. (This link leads to a spreadsheet and not a webpage, FYI) This potentially means a full 25% growth between now and the beginning of 2027!
Energy and Artificial Intelligence
The recent rally in U.S. equity indexes was driven, in part, by rapid recovery in Artificial Intelligence (AI) related companies. The AI revolution is already increasing productivity and profitability for many companies similar the roaring 1990’s PC/Internet driven boom.
Data center expansion is likely the first phase of capabilities to improve efficiency. The initial wave of upgrades delivered attractive growth for the AI technology supply chain. The resulting increases in electricity demand have led to rallies in the Utilities Sector, Nuclear, and Natural Gas. Current capital expenditures appear unsustainable.
Energy Infrastructure
Pipelines: Rising dividends and stock buybacks underscore attractive opportunities for investors. Deregulation possibly leads to increased business productivity and profit growth. Liquid natural gas export capacity is on track to double by the end of 2028 according to the U.S. Energy Information Administration. Currently, the pipelines and export facilities still appear underpriced relative to other sectors. In our estimations, Data Center electricity demand is an obvious choice for natural gas power generation.
Global High Yield Bond Fund prices and Floating Rate Loan Funds remained resilient during the long rate spike with a current overall yield near 8%. Premium prices could result in gain harvesting to increase “dry gun powder” for bargains in other areas of the markets. The higher, longer yields likely create more choices in other parts of the bond market like Tax Free Municipals. Meaningful deficit reduction could result eventually in lower long-term rates and potential gains in longer duration bonds.
Our Next Steps
The McGowanGroup Investment Committee (IC) meets each Wednesday morning to review and upgrade the model portfolios using an impressive, evolving, research process. Equity market rallies provide investors the opportunity to raise Tactical Safety for future resilience especially as valuation targets and underperformers are harvested systemically. Pullbacks in market values for equity provides the opportunity to add high cash flow assets at attractive prices.
Our efforts to raise Tactical Safety during rallies allows the IC to allocate to great cash flowing assets in the next correction, gaining potential advantages for the long term. Our wealth managers and the team remain committed to helping you evolve your financial plan!
Tax Planning 2025-2026
October: Realized Gains and Loss Reports through 09/30/2025 for taxable accounts will be uploaded to your Black Diamond Portal. If we do not have your CPA’s email on file, please provide.
January-March: Realized Gains and Loss reports for taxable accounts, 1099’s, and K-1’s if applicable will be uploaded.
We remain committed to the mission of Superior Client Profits Through Excellence in Service. Thank you for allowing us to serve you and your family!
Spencer McGowan and The Team That Cares,
McGowanGroup Wealth Management
