NetWorth Radio Advance Report - June 17, 2019

In this NetWorth Radio Advance Report, Spencer McGowan, President of McGowanGroup Asset Management, delivers financial news and intelligence with insights you can act on for June 17, 2019.

Advance Report

Radio Show

I founded NetWorth Radio in 2001, nearly two decades ago, with 2 clear missions for Investors:
  • Present the important Financial News with meaningful Research for Investment strategy to increase listener performance and understanding.
  • Highlight and advance the extraordinary Business Leadership skills of North Texas’s Entrepreneurs and Executives.
Each week our team of 10 dives into the News and Research to find those golden nuggets of empowering insights for you the listener. The results of that collective wisdom await you today as we dispel prevailing myths, arm you with understanding of Texas’s unique role for investors, and uncover the trends that can define superior profits over the next decade.
Put your seatbelt on, grab a pen, and prepare to be motivated with another fast paced episode of NetWorth Radio nearly two decades in the making!
Dow Jones Industrial Average Index (2 Years)

– Courtesy of Bloomberg

U.S. Consumer Price Index – Urban Consumers Year Over Year, Not Seasonally Adjusted, & U.S. Producer Price Index – Finished Goods, Not Seasonally Adjusted, Year Over Year (Approx. 10 Years)

– Courtesy of Bloomberg

U.S. Retail Index – Automotive Gasoline Total Regular Average Spot (Approx. 3 Years)

– Courtesy of Bloomberg

World Interest Rate Probability – U.S. (06/19/2019 – 06/10/2020)

– Courtesy of Bloomberg

U.S. Consumer Price Index – Urban Consumers Year Over Year, Not Seasonally Adjusted, & U.S. Producer Price Index – Finished Goods, Not Seasonally Adjusted, Year Over Year (Approx. 50 Years)

– Courtesy of Bloomberg

Bloomberg Economics U.S. Forecast Table – Full Year GDP Growth Rates are 4th Quarter/4th Quarter, Unemployment and Inflation Rates Annual Forecasts are 4th Quarter Averages, Fed Funds Values are upper bound of Target Range – As of 06/07/2019 (1st Quarter 2018 – 4th Quarter 2019/ Year 2018, 2019, 2019)

– Courtesy of Bloomberg

EIA – U.S. primary energy supply and disposition (1950-2018) & U.S. primary energy production by source (1950-2018)

EIA 1of2 05312019
– U.S. Energy Information Administration

Headline Round Up!

*Dow Sticking Point 26,000?
*Fed Cut Highly Likely This Summer??? Then an Air-pocket for Markets? At high points dump the losers without Cash Flow!
*Refi Heaven for Mortgage Lenders and Homeowners! 10 Year US Treasury 2.1%. Go lock that rate?
*Inflation Tamed: CPI Below Fed Target for Consumers and Producers at 1.8%.
*Market Numb to Negative Trade War Headlines!
*Paul Tudor Jones, Legendary Trader, “We should be long stocks right now.”
*Raytheon and United Technologies Announce a Big Wedding. What should RTN team members do now?
What are we doing for our clients? Come get a plan!
*Huawei Delays Taking the Crown After Being Smacked Around by Trump! Slaps a Demand Letter on Verizon!
*Another Canadian Cannabis IPO?
*Zuckerberg Admits “Spectre” Is the Key to His Success? Where is the real James Bond when you need him?
*Watch Out Bloomberg: Symphony Wants to Take Your Limelight!
*Beyond Meat is Now “Beyond our Price” for JP Morgan and Others.
*HOT YOGA! Lululemon Same Store Sales Skyrocket 16%, Stock in Up Dog!
*Trump’s Net Worth Tops $3 Billion! Putin is Already Over $200 Billion.
*Book It Major Tom! How Much Will it Cost to Go to Space Station?
*Oil Spikes After Attack on Two Tankers Using a Torpedo!

Texas Black Gold Rush!


*The Texas Based Shale Revolution
*Congratulations Texas and USA! 2019 on Track to be the First Year Since the 1950’s that the USA is Energy Independent. Production on track to top consumption at just over 100 Quadrillion British Thermal Units!
*Coal: The Real Culprit Lives in Asia!
*Natural Gas! The Story of the Decade – The Carbon Reduction Miracle of our Generation!
*The Real Growth Story from Data Wizard, Harrison Smith, Director of Client Support at The McGowanGroup.

 

Profit Report!

Myths of Modern Finance!
MPT, Modern Portfolio Theory
Asset Allocation optimization: Expected Return, Correlation, Standard Deviation.
Monte Carlo is a casino!
Richard Golad upsets Wharton Business School in 2003.
The Black Swan that upset everyone.
The story of two bears, and Harry Markowitz’s very bad cold in 2009.
Common sense cash flow solutions to Harry’s common cold.
MMT, Modern Monetary Theory
The Miracle tested in Germany and Argentina!
Beta tested by Jimmy Carter and Treasury Secretary Miller.
What could go wrong?
Don’t chase waterfalls. Be smart!
Your Estate Plan and what happens after you’re gone?
Surviving your first Bear Market in retirement: Ronnie’s retirement reserves plan!

 

McGowanGroup 2019 Mid-Year Client Update

Our last client update was January and pardon me for leaving it up so long. I just wanted to remind you of what we were doing through last year’s mini panic. We bought high cash flow bargains with our excess cash flow.
Range Bound Equity Markets Rebound!
In early 2018, Alex and I covered on the program that equity appeared to enter an extended trading range instead of the raging bull of 2016 and 2017. That range appears to be about 27,000 on the Dow to the 22,000 set at last Christmas.
What’s the strategy?
Near the upper end of the range, we have harvest points established and, near the lower end, we have bargains picked out to redeploy cash in a potentially gain enhancing strategy.
Energy Infrastructure 2019, based upon EIA data, appears to be the year that the United States reaches overall energy independence including natural gas production. 7% is better than 2%. The dividends available in the pipelines and other Energy Infrastructure companies, in many cases provide near 7%. A very attractive proposition compared to the near 2% yield on 10 year U.S. Treasuries that leaves room for capital gains on top of the yield. Controlling value at risk of loss through a harvesting and redeployment strategy is our intention consistent with the past 18 months.
Safety and Income!
The 30 year U.S.Treasury yield has fallen from the highs last year to just over 2.5% at this writing. The world appears flat at 2% or less for higher quality global government bonds. The premise that risk free rate should be the rate of inflation or lower appears to be repeating the 2012 forecast for rates: “Lower for Longer.” Remember 2013? The Taper Tantrum rate spike reversed the Bond markets and reintroduced Duration Risk as the 30 year U.S. Treasury spiked to 4%.
For the Safety and Income allocations we are gradually removing premium priced Duration Risk and building dry gun powder at 2% or better in Money Markets or short term reserves.
High Cash Flow!
Global High Yield Bonds – 7% is better than 2%. Many portfolios run by established global bond managers with diversification are still trading at a discount to the estimated par value of the underlying bonds. Further, yields near or above 7% from interest are worth more by the measure of aggregate future cash flows versus the government bond alternatives underscoring appreciation potential with this week’s Federal Reserve discussion of potentially cutting cash rates.
With regard to the trade negotiations we offer a recent Wall Street Journal commentary:
“There’s a simple solution to the Huawei issue: It is welcome to do business in the U.S. as long as it forms a joint venture with an American company that will hold a 51% interest in the entity as well as unrestricted access to its technology.” – Michael Choquette, WSJ June 1st, 2019.

Research Round Up!

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*U.S. China Trade War: Understanding the New Long March!
*Energy Infrastructure Discounts!

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