Calm before the storm?

As-salamu alaykum everyone, I hope you are doing well. Today is Tuesday, May 14th, and Bitcoin is trading just under 62,000. We had a really interesting day in the markets wherein we saw the producer price index numbers come out hotter than expected by a lot, so was expected plus 0.3 percentage points, but we got 0.5, plus 0.5 that is. So the market started reacting negatively to the news and then downward revisions happened to the March numbers, so that cheered the market up and we saw a rebound and basically a pretty good day for many stocks. Our PII portfolio did exceptionally well, so that was good. Now the question that poses itself is, is this a calm before the storm? What lies ahead here? I suppose that's the question always in the markets. So what I do think is that regardless of tomorrow's numbers, the CPI numbers, which are much more anticipated than the PPI numbers that we got today, the CPI numbers will cause a regime change. It will cause us either to say, okay, the coast is clear in terms of risk assets, and we could be at the start of a major bull run, or it's going to cause a lot of revisions for a lot of people's outlooks. Now, my personal opinion is that inflation is going to come down, especially in the second half of 2024, and that will be good for interest rates, which should follow, and it will be good for risk assets. So let's look at these few data points from today, and then I'll let you get back to your day. Now, financial advice, be sure to do your own due diligence before making any investing decisions. So as I mentioned, PPI was hotter than expected today. So inflation is proving to be sticky. We made a great deal of progress when we compare the numbers that we have today with the numbers at their peak in March of 2022, when the Fed started raising interest rates for the first time. So you can see, regardless of CPI, PCE, or PPI, regardless of the measure that you use, we came down considerably. But as of late, since early the start of 2024, the progress has been limited and in some cases reversed, as you can see with the core PPI. Will this trend continue with tomorrow's number? No one really knows. But generally speaking, I think that if you drill down into the numbers, so what are the actual drivers of these hotter than expected inflation prints? I tend to think that a lot of these drivers will cool down, just as an example, auto insurance. I don't think it's going to continue inflating in the way it has been for the first three months of this year. That's going to cool down considerably. And it was a big part of the CPI hotter than expected numbers that we got. In other news, GameStop saga continues. And this is quite interesting considering the monetary policy is supposed to be restrictive at this point. Last time this happened was in 2021 when people were awash with stimulus money. Monetary policy was the loosest it has been in a long time. But now the financial conditions are completely different and yet we see the same appetite in the market for these types of meme plays. And the sort of sister stock to GameStop, AMC, has also for the second day in a row seen pretty head turning returns. Kind of makes you scratch your head as an investment manager when you're doing your due diligence, really going over 10Qs and 10Ks with a fine tooth comb to get these types of returns. And someone on Twitter makes a roaring kitty tweets out something and all of a sudden here we are. So a very interesting world that we live in. Now, in 2021, when the GameStop and AMC saga reached its peak, this preceded a rather robust bull run by Bitcoin and the asset making new all-time highs. So history does rhyme often. So perhaps this is a leading indicator for Bitcoin. There's no logical reason to think that it is. But then again, the markets are, especially nowadays, are not beholden to any type of logic, are they? Now, in other Bitcoin news, we've seen Bitcoin equities are finding their way into indexes. I think this is probably the most under the radar news item from today. So the MSCI ACWI, which is the All Country World Index, by the way, this index, for those who are unfamiliar, has around $4 trillion in assets benchmarked against it. This index has added coin-related equities like MicroStrategy to it. So every quarter, they'll delete some companies, add other companies. So they added some Bitcoin-related equities to it. And what this means, why this is significant is because asset managers are judged against these indexes. And a lot of times what asset managers will do in order to not lag the index or ensure that they're not lagging the index by a lot, they'll have a lot of commonality between their own portfolios and the index. And this means that since Bitcoin equities are now being included in these indexes, this means that there's a more motivation, even more motivation for fund managers to include Bitcoin-related equities in their portfolios. Now, fun fact, I was actually born in the state of Wisconsin. And it turns out with all the 13F filings that have been released as of late, the deadline for them is tomorrow. This is where investment funds actually disclose their significant holdings. So the state of Wisconsin Investment Board disclosed$162 million Bitcoin investments. So when the state of Wisconsin is in on Bitcoin ETFs, you can start to grasp the breadth of adoption and the breadth of appetite for these Bitcoin ETFs. It actually has investment in BlackRock and Grayscale. If I was advising them, I would tell them to dump Grayscale and load up on something with smaller fee. But this is an anecdote that is basically telling us Bitcoin ETFs are gaining widespread adoption. They're gaining institutional adoption. And even the funds that are not necessarily considered to be on the bleeding edge of the investment world or very high risk in terms of their investment profile are starting to look at Bitcoin as a serious asset and adding it to their portfolios. So food for thought if you're still on the fence about this asset. Now, speaking of GBTC, Grayscale Bitcoin Trust, the outflows which have been counteracting the inflows that have been going into the new Bitcoin ETFs and the outflows that have been producing a lot of selling pressure for Bitcoin, those outflows have been tapering off as of late. So the amount of GBTC selling has tapered off to a large extent. And I think this trend will continue into the future. GBTC selling is not over, but I don't think you'll see it as dramatic as it was in the first four months since the BTC ETFs have gone online. So this should bode well for the price of Bitcoin. If we get a good CPI print tomorrow, I think this will be very bullish for risk assets, including Bitcoin. I think we're getting to that point where I think Bitcoin is very close to being due for another leg up. When you look at the average price for short term holders of Bitcoin, that average price is close to $60,000. Typically, the average price for short term holders acts as a floor on the price. And that's actually what we've seen. I mean, the dips below $60,000 have been very short lived, quickly bounces back to about $60,000. So I think we're very close to the floor. We're due to our support. We're due for the next leg up here in Bitcoin. That being said, with Bitcoin, most of the action happens in a very few number of days. So I would highly advise not to try and time the market. I think now is a good time to go in. Not financial advice, of course, but I do think that the technical indicators, fundamental indicators, suggest that this is probably a good time to get in if you haven't gotten in already. As I mentioned, I think that the minimum price for Bitcoin for this year is probably$100,000. Will be more than that next year. And with that being said, if you haven't become a PIF member yet, be sure to become a PIF member and follow our portfolios, Move4Move, Growth, Dividend, and Crypto. And we may be adding another portfolio soon. So do check our membership out, link in the description. With that, let's take some questions. As-salamu alaykum everyone. Nice to see you, Rashad. It's been a while. What's your take on JP comments today? Do you think he knows what are the numbers that will be released tomorrow? No, I don't think he does. I think that his comments were basically in line with, you know, what he's always been saying. I think that what was good about his comments was that he didn't really, he didn't really open the door for speculators to start speculating as to whether there's going to be an interest rate hike. That was good. But his message has been rather consistent. We're going to be patient with regards to inflation. We're not going to cut before the data tells us to cut, but we're going to be patient in the meantime. We understand that there are lagging impacts to the interest rate hikes that we did. And I think that recent economic numbers suggest that the impact of the interest rate hikes are actually starting to take hold in the economy. And therefore I think there's merit to his position that, hey, let's just wait and see the impact of the rate cuts that we've already done. We don't think that there's additional rate cuts that need to happen, but we won't be rate hikes that need to happen, but we won't be making rate cuts until the data suggests that we should. Brother Shawak, Kashif, what about altcoins? It's definitely not alt season yet, but if you have the stomach for that type of volatility and you know what you're doing in terms of what you're buying, now may not be a bad time to load up on your highest conviction ones, although they should be few and far between considering most of the tokens in the space are complete garbage. GameStop back on the menu, it was never on the menu. It's on the menu for people who are looking for a rush, perhaps they want to experience playing the lottery without having to buy a lottery ticket. But I think most people who play this game will end up worse off because of it. I wouldn't advise people to risk their money with GameStop or AMC. The fundamentals of these companies is quite poor. Actually, management, I think really dropped the ball in terms of, I think they could have used the appreciation in their share price to actually turn their companies around, but they haven't done so. If you look at their recent earnings, been pretty poor and going in the wrong direction, even though they had that sort of lifeline from 2021 in terms of their share price, but they haven't really taken advantage of it. So I think there are enough fundamentally sound investments that are extremely promising to not waste one's time with these plays, which are completely mania driven, not fundamentals driven. Since they revised the March data, how does that make the April data look compared to the March data? Wouldn't that make the April data worse? It's a good question. So I think what happened was the March data was revised. This is my understanding. The March data was revised downward. And then the April data was in relation to that revision downward. So let's say, March was zero and we were expecting 0.3. If March was revised downward 0.1, and we got April plus 0.5 compared to that 0.1, we actually ended up at 0.4, whereas we were expecting 0.3. So I think that was how it worked. And that's why the market was like, well, close enough. What's your using altcoins for, or do you want to speculate on price movement? Yeah. So you bring up a good point, Ahmed, which is that altcoins are the only use case so far for altcoins has been a means for transferring value. If I want to pay someone in some other place of the world, I can send them some altcoins. That's a legitimate use case. And I think that's the most common use case. And that's why, look at my investments in crypto, they're basically 90% focused on that use case. I have some dabbling in other things, but that's the main thing. Do you have an idea how high MCA can go? I do not. MCA is for clowns. Okay. Yeah. I do sympathize with people who want to get back out Wall Street, want to get back at short sellers, but I don't really think this is doing any of that. I think a lot of investors are shooting themselves in the foot. Do you recommend buying Bitcoin for 2x during the bull run, selling after the bull run, then loading up on Tesla for a 10x within five years? It's a good question. I was actually thinking about this this morning and trying to figure out which asset I thought had more X's left in it. And I do think that probably Tesla has more X's left in it considering how much it has been chopping for the last three years versus Bitcoin has reached all time highs not too long ago. So I think actually now may not be a bad time to load up on Tesla because I do think that we're at the dawn where perhaps we've seen the break of dawn, perhaps we are right before it, but the dawn of a very robust run in Tesla stock driven by robotaxis and investment analysts, perhaps after August, having to include robotaxis. This will largely depend on how much specification and details are included in the August presentation. But a lot of investment analysts who haven't been including robotaxis at all or self-driving at all in their models for valuation of Tesla will end up having to do that once they get more details about how exactly that's going to work and the economics of it. And then the big one are the humanoid robots, which I think will transform our life as just a human species and perhaps will be, you know, the biggest product humanity has ever created. And I think Tesla has a lead in that because of their neural network that they have developed when they were developing full self-driving and the applications of that to humanoid robots. So basically just in order to train a humanoid robot, you just have to show it videos of humans, you know, doing the tasks that you want it to do. And then it will be able to do them and it will be able to do them better than most humans, better than all humans probably in later stages. But the rate of development here is quite is quite astonishing. And so I really think that you won't regret buying Tesla stock today if you're able to hold it for the next 12, 24, 36 months. You won't regret it. Your future self will thank you. I hope that was useful to you. If it was, do leave a like. I'd really appreciate that. It helps other people see this video as well. When you leave a like, it helps boost our video and the YouTube algorithm and grows our community of highly conscious investors trying to do the right thing and also do well for themselves. So do leave a like, subscribe for more content so we can see each other more often. And until next time, make sure to take care of yourself. Assalamu alaikum and peace be upon you all.