The Financial Sense Strategy Conference – Part One

7/23/2019 The Financial Sense Strategy Conference – Part One

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PFS GROUP : THREE COMPANIES SHARING THE SAME VIS

We’d like to welcome you to PFS Group’s first Financial Sense Strategy Conference. PFS Group is

a family of three companies—Puplava Financial Services, Inc. (Registered Investment Advisor),

Puplava Securities, Inc. (broker/dealer, member FINRA/SIPC), and Financial Sense® (investor

education)—each sharing the same goal: to provide exceptional asset management and

educational resources that help investors build, maintain, and preserve their wealth.

At PFS Group, we are committed to providing asset management and educational resources that

help investors build, maintain and preserve their wealth.

Puplava Financial Services, Inc Registered Investment Advisor

Puplava Securities, Inc Broker/Dealer Member FINRA/SIPCFinancial Sense Investor Education

Post Office Box 50314710809 Thornmint Road 2nd Floor

(888) 486-3939 Toll Free · (858) 487-3

www.puplava.co



LEGAL NOTICES

Forward-looking statements do not relate strictly to historical or current facts. This

presentation may contain certain forward-looking statements within the meaning

of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the

Securities Exchange Act of 1934, as amended, including, but not limited to,

statements as to future operating results and plans that involve risks and

uncertainties. We use words such as “expects”, “anticipates”, “believes”,

”estimates”, the negative of these terms and similar expressions to identify forward

looking statements. Such forward-looking statements involve known and unknown

risks, uncertainties and other factors which may cause the actual results,

performance or achievements of the companies or events discussed to differ

materially from any future results, performance or achievements expressed or

implied by those projected in the forward-looking statements for any reason.



LEGAL NOTICES

Past performance is not necessarily indicative of future results.

While PFS Group strives for accuracy in its reading of the market, the

market environment, and individual stocks’ potential, please be aware

and be informed that all statements and assertions made in this

presentation are merely the opinions and beliefs (albeit well-researched)

of the PFS Group staff and should be evaluated as such.



Welcome Becki Sutton, CFA

Becki joined PFS Group in 2015. He

eduction includes a MBA from Univ

San Diego and a B.S. in Business

Administration Finance from San D

State University. Becki earned the

Chartered Financial Analyst designa

2000. She has over twenty years ofexperience in the investment mana

industry, which includes 15 years a

Portfolio Manager with Brandes Inv

Partners, Inc. Becky’s role with Pup

Financial Service Inc. is managing

portfolios and serving our clients.

PORTFOLIO MANAGER



Welcome Paul Horn, CFP

Paul joined PFS Group in 2015. He

M.S. of Investment Management an

Financial Analysis from Creighton

University. Paul earned the Certified

Financial Planner designation in 20

professional designations include F

Series 7, Series 66, Uniform CombinState Law Exam; and Life-Only, Acc

and Health, and Variable Contracts

insurance licenses (California insur

license #0E60881). Mr. Horn has ov

decade of experience with financial

planning and wealth management s

He oversees the Financial Planning

activities of the firm.

FINANCIAL PLANNER



Agenda

Hour 1

Macro

Hour 2

Preparing for the Final Phase of the Bull Market

Hour 3

Financial Planning Education



Themes From Prior Meetings

2009 - “Lessons From History, Lessons for Today”

2010 - “Inflation/Deflation - Which Is It?”

2011 - “We’ve Been Here Before”

2012 - “Don’t Fight the Fed”

2013 - “More Things That Are Right Than Wrong”

2014 - “Stay In Our Own Backyard”



THE MESSAGE OF THE MEETING

PREPARING FOR THE FINAL PHASE OF THE BULL



MacroA) Where Are We in the Business Cycle?

B) What to Expect When You Are Expecting

C) Overview of Global Monetary Policy



A) Where Are We in the Business Cy

2Mid

1

3

4Early

La

Re



Mid-Cycle Characteristics

Source: Fidelity Capital Markets



Economic Growth Peaking

• Personal income less trans

• Non-farm payroll employm

• Industrial production

• Real Retail Sales

• Recent string of consecutiv

months of growth in consu

credit longest since 2003.

• Auto loans continue to expa

consumer take advantage o

cheap rates.


Credit Growth Is Strong

Source: Bloomberg

Source: Bloomberg



Profit Growth Peaks

• McDonalds

• Aetna

• Walmart

• T.J. Max

• Target

• Starbuc

• Costco

• GAP

• The Fed hasn’t raised internearly a decade.

• First step at getting off zerremoving QE, raising rates


Policy Is Neutral

Source: Bloomberg

Source: Bloomberg



Growth Moderating

• Average workweek

• Jobless claims

• Non-defense capital goods o

• Building permits

• 10-yr UST and Fed Funds rate

• M2 growth

•S&P growth

• ISM Manufacturing Index

• Banks raising credit standard

• Banks require larger down pa

• Raise interest rates on loan p

Late-Cycle Characteristics

Credit Tightens

Source: Bloomberg

Source: Bloomberg



Policy Contractionary

Late-Cycle Characteristics



There is Still Life in This EconomicRecovery and Bull Market

The two most cyclical areas of the economy have yet to peakHome builder confiOctober 2005

J.D. Power and Asssales of new cars arecord of 13.8 millio

Source: Bloomberg



Housing Snapshot - Affordability

Historically mortgage

payments average just under

20% of household incomes.

Currently mortgage payments

average just 12.4% of

household incomes.

30-Yr FRM rates currently below4% near generational low levels

Source: JP Morgan Asset Management



Housing Snapshot - Supply & Deman

Supply Low investment (construction) relative tothe size of the economy

Demand Household formation rates remain e

Source: Bloomberg Source: Bloomberg



Housing Snapshot - Health of the Consu

• Consumer balance sheets are

• Payroll job growth strong

• Employers raising wages

• Lowest mortgage rates in deca



Auto production Likely to remain strong while U.S. demandgives motors a boost.

U.S. Consumer Miles Driven Reaching record levels

11.4

Auto Snapshot




Recession Assessment is Paramounfor Risk Management

Sales Peak -> Profits Decline -> Layoffs Occur -> Economy Cont

Source: Bloomberg



Why We Are Not in the Recession Cam

Durable Goods Consumption andPrivate Investment Still Rising

Jobless Claims Fall Currently at lowest level since 1973.




Why We Are Not in the Recession Cam

Federal Reserve Bank of Philadelphia Produces leading indexes for each state.

Chicago Fed National ActivitWeighted average of 85 existing mo




Broad-Based National Economic Grow



B) What to Expect When You Are Expec

R a t e H i k e

I n t e r e s t R a t e s

Fede ra l R ese r ve

FOMC Mee tin



Broad-Based National Economic Grow

Median Performance During Fed Tightening Cycl

Asset Class 3 Months Prior 6 Months Prior 12 Months

U.S. Equities 7% 9% 10%

DM Equities 6% 7% 14%

EM Equities 5% 8% 16%

Commodities 3% 4% 7%

IG Bonds 0% 1% 3%

Early Mid Late

Source: Fidelity Capital Markets



Why the Fed didn’t Raise in Sept. or O

“Recent global economic and financial developments may restrainactivity somewhat and are likely to put further toward pressure on the near term.” - FOMC Sept. Statement

Not since the Asian crisis of the fall of 1998 has the Fed been so vocal about fo



When the Fed Begins to Raise Interest R

• Annrunn

• 80%

econ

are

• Curr

0.2%

globSource: Fidelity Capital Markets



Declining Global Inflationary Trends

Oil

Copper

Silver

Aluminum

67%

51%

71%

47%

From highs in 2011 to lows in 201

Dollar 38%

Source: Bloomberg



China’s Slowdown

Germany lowers its 2015

growth estimate. - CBS News, 10.14.2015

IMF lowers growth forecast.

- USA Today, 10.06.2015

Fitch lowers Global Growth

Due to Emerging Markets.- 247 Wall Street, 09.30.2015

Citi bank cuts 2016 global

economic growth forecast

for 5th straight month. - Economic Times, 10.21.2015

Sizable impact on global trade as it’s the world’s 2

Source: Bloomberg



China’s Importance



Emerging Markets & Their CurrencieFrom 2010 high relative to the USD

R

63%

36%

61%

Source: Bloomberg



Volatility Picked Up With a Stronger Dol

U.S. Dollar Credit to Non-residents ($Trillion) Brazil’s dollar-denominated debt:



FOMC Minutes for Sept.

•Foreign economic growt

• Domestic economy wea

• Increased financial mar

• Global stock markets sh



The Stock Market and Fed Tightening Cy

Source: BCA Research



• Phase IV is the best for stocks followed by phase 1

• With the Fed expected to begin raising interest rates next year we are likely moving from

• From 03.06.09—10.21.15 has had 16.8% returns, close to the median 18.2%




• Moving into Phase 1 still bullish for stocks

•Transition from Phase IV to Phase I to create more volatility


C) O i f Gl b l li



Big Picture View of Macro Headwinds FaDeveloped Economies

C) Overview of Global Monetary Polic

The Yin & Yang of Monetary Policy

T illi f Fi C i C d



Trillions of Fiat Currencies Created…So Where’s the Inflation?

Demographics TechnologicalDisruptions

Deleveraging

Demographics Headwinds Facing



Demographics Headwinds FacingMost of Developed World

Working age population

Source: BlackRock

The Disruptive Power of Technology




Source: BlackRock





LinkedIn - Cut down recruit costs

iPhone - Is making the digital camer

Digital Music - Cheaper than buying

Uber - Cutting the cost of transporta

AirBNB - Cutting the cost of hotel ac

Source: BlackRock





Source: BlackRock





U.S. Oil Production Rapid growth not scene since the 1970s.

Oil Trade Deficit Has ShruFewer USD’s being sent abroad.


No Cost of Living Adjustments in 20



g j

Source: Bloomberg

Q tit P i



Quantity vs. Price

• Dollar volume of t

• Unit volume of tra

Source: BlackRock

Quantity vs. Price



y

Source: BlackRock

Th Yi & Y f M t P li



The Yin & Yang of Monetary Policy& Activist Central Banks

U.S. Fed

ECB

Bank of Japan

Comme

Broad M

Aging Japan

Fed Prints When Commercial Bank Credit W



Fed Prints When Commercial Bank Credit W

Source: Bloomberg

ECB Increases Its Balance Sheet



When European Money Supply Weakens

Source: Bloomberg

China Stimulus



• Slashed len

• Devalued c

• Cut taxes o

purchases

adoption o

vehicles

• Eased mort

• Adds a two

4.3500

6.9

Source: Bloomberg

Summary and Conclusion



Summary and Conclusion

A) Where Are We in the Business

• Mid cycle• Late stage cycle ahead of us

B) What to Expect When You Are• Monetary policy - slow and gradual

C) Overview of Global Monetary P• Emerging markets weakening



Break

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The Financial Sense Strategy Conference – Part One

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