We're Back!

Asalaamu Alaikum everyone. I hope you are doing well. Today is Monday, May 27th and Bitcoin is back above 70,000. So today we're going to talk about the indicators that point to what I think is a healthy near term future for Bitcoin and some of the economic readings that I think we should be paying attention to. So without further ado, let's get started. Not financial advice, do your own due diligence before making any investing decisions. My goals are not yours. So let's look at the major factor influencing markets right now. And that is inflation and the expectation for rate cuts or lack thereof from the feds. So if we look at June for the first time ever, we see for the first time since the beginning of the year at least that we see a probability for a rate. Hike, yes, that probability is just shy of 1%. So very small probability, but that is being priced in the markets right now. So that is a new development will obviously have another recalibration by the market on Friday when the PCE numbers come out, which is one measure, one of the major measures of inflation. And that's a set to come out this Friday. In September, the market is basically pricing in coin toss with regards to whether or not we get a rate hike. So currently we're at the 500 to 525 points mark. So there's a 50% chance that actually, I'm sorry, 525 to 550 50% chance that we go that we either stay or go higher 50% chance that we go lower. So this will and the probabilities that the market assigns here will have a very significant impact on the pricing of risk assets, the higher the interest rate, the more money flows out of equities into fixed income instruments, the lower the interest rate, the more attractive equities and risk assets generally appear to be compared to the alternatives. So this is really the elephant in the room. And my, I mean, there's a lot of, as always with the macro economy, there's a lot of competing influences and sometimes those influences will be moving in different direction and sort of sort of hard to gauge which influence is going to have the bigger impact. But there are some things that I think are relevant to be looking at. So for example, we've had since 1950, this metric has been rather reliable. So whenever we've had a growth in the unemployment rate of more than 10% year over year. So it's, I'm not saying unemployment to reach 10%. But the growth and unemployment has reached more than 10% year over year. Then a recession followed around one to seven months later. And we actually had that in the April reading, we had a growth of unemployment of more than 10%. And this has been a pretty reliable indicator since 1950s. So every time we had that we had a recession within one to seven months. And so will this repeat, it seems to be based on historical precedent that the likelihood of this is high. We can also see other indicators, such as a spike in consumer loans and defaults, that is on consumer loans. Now, we've seen higher rates of defaults previously. We've seen lower rates in terms of coinciding with a recession in the coronavirus scare, basically. But that was, I think, an outlier circumstance that wasn't related to economics per se. But if you go to, for example, the 2008, 2009 recession, we've had much higher defaults in consumer loans. But it does seem like the trajectory is a phenomenal one for the economy and for consumers. So this points to pressure on the Fed to actually lower interest rates. And not to mention the public debt, it has surpassed the GDP and is now currently at around 120% of GDP, which is extremely worrisome for the state of the United States. And has implications, obviously, on the solvency. And the obviously interest expense has increased substantially because of the increase in interest rates. So there is pressure, I believe, on the Fed to lower interest rates. So you have the public sector basically reeling from these higher interest rates. You have the private sector reeling as well with defaults climbing. So there is pressure on Fed to lower interest rates. And I think that the Fed is in a position where it's just looking for a reason to cut interest rates. So if we get positive readings for inflation, two or three positive readings for inflation, we're getting in the probability of a rate cut at a higher and higher rate. Now, in order to navigate these very uncertain times, I think it is prudent to be part of a community like we have at PIF. Halal conscious investors trying to do good and do well at the same time. You can follow our portfolios move from home by becoming a member. Now, you may be asking, when do I think the switch is going to happen between the impacts of the rate cut and the impacts of the recession? Well, it will happen when the top sort of concern for investors switches from inflation to the economy. And that's when I think the pullback in the market may likely come is when, so initially, I think we'll have a slowing down of the economy. We'll have optimism operate cuts. But then windows, windows, newer probabilities, higher probabilities for rate cuts get priced in. What's going to happen is we're going to have economic indicators and earnings come in slowing down. And then that may pull stocks and risk assets lower. I think that's a good time to sell some of the riskier side assets and move into less risky assets. So we'll probably have a blow off top before that happens. Let's talk about Bitcoin, which we mentioned is now hugging the 70,000 price. The Bitcoin MVRV score is rather healthy at this point and points to additional potential upside here. So the MVRV score compares the market value to the realized value and the variation between them. So how many standard deviations there is difference between them. And the market values, what Bitcoin is being priced at realized values, what people paid for. And when the standard deviation reaches something on the order of seven or eight, then we're in the clearly at a danger zone. You want to get out before them once we're approaching that red banner at the top here. But we're well below that and we have room to run. So I think this is a healthy indicator for Bitcoin at the moment. Relative strength is in neutral territory. I would say with a bias towards overbought, everything above a 70 is considered overbought. And for me, we're right around 70. So I would, then you can see every every dot here on this chart is a different month. And so you can see that there's still a lot of room upwards in this bull cycle to go if you compare with historical patterns before we top out for this run. So this is, I think, another, I would categorize this as perhaps neutral indicator, but definitely something that's not telling us that we're at a top yet. And also, I would refer to the fact that the thesis for Bitcoin, obviously as a hedge against inflation as a hedge again as a way to store your purchasing power over time. That thesis is stronger on account of just the printing and the forecasted printing that is in store for not just the US dollar for all major fiat currencies. So that thesis is intact. But the sort of criticism that Bitcoin often gets is that it has too much volatility. It's not a stable asset. Well, when you look zoom out and look at the volatility, realize volatility over time, that number is going down. So the attractiveness, I think, of this asset is increasing with time. And Bitcoin minor revenues have been recovering. Obviously, we got the drop in Bitcoin minor revenues. That's that yellow line at the bottom. The black line is the price. We saw the drop after the having, which was expected. And there was a drop in Bitcoin minor stocks prior to the having in anticipation of this drop in revenue. But now we're seeing a recovery in Bitcoin minor revenue and should add in Bitcoin minor stocks, including the ones that we have in our portfolios, which is a good thing. To follow our portfolios, as mentioned, and to become a PI of member link in the description, we'll go to questions very quickly. Who did the hair transplant her hair implant rather? I'll probably make a video about it upcoming in chocolate. I did want to wait just to see how it actually ends up being a year after I did the implant so that I don't tell people, okay, it's great. I had a good experience. And then a year later, something happens. So I just wanted to take my time before actually sharing my experience. I think it looks good low risk investment. So generally speaking, when things are fixed income, they are indicating that there is some type of debt involved and interest on debt. Typically, when things are profit and loss sharing, which is what Islam espouses, the income is not fixed and it's possible for the income to vary without the without the payer being in default. So typically fixed income options are not halal, they're pretty much, you know, and just paying debt. Salam al-Shad, nice to see you. Do you think the weakness of commercial real estate is not a good reason for rate cuts? I think that, like I said, there's a confluence of different factors that are sort of hitting against one another and it's really hard to figure out, you know, what's, what is the impact of each one of them. So then which one will win out? I don't think commercial real estate is the, you know, one of the most important factors. I think that the solvency of banks is an extremely important factor and definitely rate hikes would drive the value of the fixed income securities that banks hold on their balance sheets down and make them even more insolvent, for example. So that's a more, I think, pressing influence on the Fed, one of the top pressing influences on the Fed that makes a rate hike, I think, highly unlikely. If you look at the state of banks in the United States, there are hundreds of them that are not in a healthy position. And by the way, I would say if you have a substantial amount of money in a smaller bank, I would probably move that to a bank that's considered too big to fail, something like a JP Morgan or a bank of America. Because a lot of these banks have taken a really big hit on the, we already know that banks because of fractional reserve banking are insolvent. And I saw in normal cases, they're insolvent. These banks ended up stacking a lot of fixed income securities when money was cheap. And these fixed income securities had very low interest rates. Then when interest rates rose, the value of those income securities fell because they're paying a lower rate. And so the assets on the balance sheets of banks had to be marked down, which made them even more insolvent. So I don't really, aside from the factors that I mentioned, don't really see the Fed being influenced by commercial real estate specifically. Do you think it's too late to invest in Bitcoin or Dogecoin? We do have the buy prices on our watch list and PIF, so I would consult those. I think you remember, so consult those to see where our latest buy below sell above prices are. So I'm not actually withholding information, I just don't like walk around memorizing those prices at every given time they do change. So I'm not a company from Sweden, I need all to Bitcoin or ease. Well, I do have Dogecoin and I'm talking about that a lot on this channel. So I think there's a lot of merit there. Well, I think a lot is a relative term, but I think there's a non-trivial chance that the coin performs well in this ballroom. So I'm not even bothered to say you're expected below 16 upcoming weeks, probably not for I'm assuming you're referring to Bitcoin, probably not. I think there's a lot of positive pressures that pointing upwards that I've went through some of them in this life. Thank you. I really appreciate the well wishes. Will you tell us why you went back from Turkey in China in the same video? I will. Any thoughts? I'm going to a Muslim country in China. I will share those. I haven't really looked at Al-Barka Turk, perhaps something in the future, but I will say something that I'm very bullish about is investing in Muslim countries. In China, we'll be doing a lot more of that in PIF. I think there are a lot of good deals for companies that are undervalued in places like Turkey and Indonesia and Malaysia and other Muslim countries that I think are on the rise and have a lot of undervalued opportunities. So we'll be in China focusing or putting more focus on them in the coming days and weeks and months at PIF in China. If you did enjoy this live, do leave a like. Hit the notification bell so you know when we go live and you don't miss any. And yeah, let me know what you think about the live. If you have any questions or topics that you'd like to discuss in future lives, leave them in the comments. Until next time, take care of yourselves. I'm Alaykum and peace be upon you all.