New Team Member
Please welcome Allen Marin! He brings great enthusiasm and joins us from California because he wanted to be Texan! His prior firm was also a large Registered Investment Advisor fiduciary like McGowanGroup with deep experience delivering excellence in financial services. His addition is a tangible demonstration of our commitment to your future success.
Bond Market Shock Waves
At this writing the 20-year US Treasury has fallen 11% in value since the start of the year increasing the yield to 5.75%, a 25 year high. The results include discounts below par-value and higher forward cash flows.
The ripple effect creates lower prices and better bargains in global high yield bonds, mortgage bonds, as well as municipal bonds.
The MGWM investment committee has already started allocation updates for the portfolios designed to increase forward, reliable income.
AI The Greatest Capital Spending Boom in US History
Current levels of AI spending are 3.6% of the US economy, GDP, according to Brookings. Railroads were capital spending of 2.2% of US GDP. Telecom and fiber were 1.1% of GDP in the 1990’s. The demand for more capital contributed to this year’s spike in bond rates.
As with the railroads, not all participants will avoid bankruptcy. As with telecom and fiber the boom can last longer than projected.
Four steps the investment committee takes to grow and protect: profitable companies only, reasonable valuations, partial harvests after large spikes in price, and building more conservative income allocations.
Energy Infrastructure and Deep Value
The frenzy of buying tech companies is a contrast to areas left behind including profitable software, payment processors, dividend companies, and energy infrastructure. Even with the AI buying frenzy, the S&P Oil and Gas Index has outperformed the Nasdaq 100 index.
Record refining margins and depleted storage including strategic petroleum reserves are likely to extend the positive revaluations for oil and gas companies. In our estimations, data center electricity demand is an obvious choice for natural gas power generation.
Research and Allocations
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 with the opportunity to raise Tactical Safety for future resilience as underperformers are harvested systemically. Pullbacks in market values for equity provide the opportunity to add high cash flow assets at attractive prices.
We remain committed to the mission of dedication to Superior Client Profits and Excellence in Service. Thank you for allowing us to serve you and your family!
Financial Headline Roundup!
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Texas continues to cement its role as a premier corporate hub as Devon Energy and Expand Energy move to the Lone Star State, while earnings season launches with strong corporate profit growth amidst persistent rate pressures.
- Major corporate migrations to Texas alongside surging state factory output and shifts in real estate valuations.
- Q3 earnings season kicks off with strong profit momentum against macro headwinds of elevated borrowing costs.
- Navigating real estate cap rate expansions, mortgage rate spikes, and key wealth management priorities for Q4.
Financial Headline Roundup! Here is a comprehensive breakdown of this week’s key market developments, energy dynamics, and macroeconomic trends.
- Texas Corporate Migration: Devon Energy and Expand Energy officially relocate headquarters to Texas.
- Texas Real Estate Shifts: Foreclosures tick upward while land values adjust downward across select regional markets.
- Texas Manufacturing Acceleration: State factory output surged in September driven by a growing backlog of incoming orders.
- Earnings Season Profit Momentum: Q3 corporate earnings kick off with robust corporate profit growth expectations.
- U.K. Wealth Exodus: High-net-worth individuals shift an estimated $160 billion out of the United Kingdom.
- AI Capex Debate: Industry analysts weigh whether massive generative AI capital expenditures are yielding sufficient returns.
- Valuation Multiples Under Pressure: Rising long-term Treasury yields continue to compress equity market valuation multiples.
- Morgan Stanley Bond Veteran Turns Bullish: Top fixed-income strategist adopts a bullish stance on bonds for the first time in a decade.
- Commercial Real Estate Deal Flow Stalls: Rate spikes force cap rate expansions, disrupting commercial property transactions.
- S&P 500 Correction Forecast: Veteran strategist Jim Paulson warns of a potential 15% drawdown in the S&P 500.
- Tax-Loss Harvesting Opportunities: Elevated bond yield losses create strategic rebalancing and tax-offsetting opportunities.
- Mortgage Rates Hit 7.49%: Home financing costs jump higher, dampening residential purchase activity.
- Semiconductor Debt Financing: Major tech entities take on massive leverage to fund high-end AI chip acquisitions.
- Strait of Hormuz & Refining Tightness: Maritime shipping traffic recovers to early-year levels as refined diesel shortages project into 2027.
- Youth Sports Industry Boom: Specialized youth baseball analytics and training drive equipment costs past $500 per bat.
Wealth Management Topic of the Week
- Navigating Trustee Selection: Essential criteria, fiduciary roles, and structural options for appointing the right trustee to manage family assets.
The Charts and Graphs Featured in This Week's Show
iShares 20+ Year Treasury Bond ETF Monthly Candlestick Chart (Monthly 07/31/2002 – 10/08/2026)
Courtesy of Bloomberg LP
10-YR Note Rate Monthly Candlestick Chart (Monthly 01/31/2001 – 10/08/2026)
Courtesy of Bloomberg LP
US Treasury Actives Curve Mid Yield to Maturity (As of 10/08/2026 at 13:01:07)
Courtesy of Bloomberg LP
State Street SPDR S&P 500 ETF Trust Daily Candlestick Chart (Daily 12/31/2025 – 10/08/2026)
Courtesy of Bloomberg LP
Invesco QQQ Trust Series 1 Daily Candlestick Chart (Daily 12/31/2025 – 10/08/2026)
Courtesy of Bloomberg LP
State Street Energy Select Sector SPDR ETF Daily Candlestick Chart (Daily 12/31/2025 – 10/08/2026)
Courtesy of Bloomberg LP
NYMEX First Month 321 Crack Spread Weekly Candlestick Chart (Weekly 10/14/2016 – 10/08/2026)
Courtesy of Bloomberg LP
Financial Research Round Up!
Valuable Research Reports Just Click on the Links
BlackRock: Infrastructure For Portfolios
AllianceBernstein: Deep Value Stocks: Cashflow Driven Continuing Comeback.
Cohen and Steers: Today’s Retirement Portfolios Need a New Inflation Playbook.
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