This Will Flip Markets

As-salamu alaykum everyone, I hope you are doing well. Today is Monday, June 24th, Bitcoin is at just above 60,000, so we may see the 5 handle on the price of Bitcoin soon. That being said, maybe time to do some heavy buying. This live I'm going to go over some major macroeconomic indicators that we got recently, what they're telling us about the state of the market, and then I'm going to tell you where I think the inflection point will be for the markets and why I remain bullish. So without further ado, let's get started. Not financial advice, be sure to do your own due diligence before making any investing decisions. So we got retail sales numbers and they didn't meet expectations, so they increased 0.1% in May versus 0.3% expected, so the economy is cooling down. This we knew, there were a number of other indicators that were suggesting the same. If you look at new US home construction, it's now at the slowest pace since June 2020, which is the year that Biden came into power, so this will probably not bode well for him in the upcoming elections. Not only starts were down, but also permits were down, which is a leading indicator for future starts, so housing permits were down as well. So that sector is really suffering under current conditions and current monetary policy. Not all economic indicators were down, so US industrial production rose 0.9%, it was expected to be 0.3%. We notched a 10 month high there for industrial production, and perhaps this is a function of lower input prices, so more production makes sense at lower prices. So this may also be telling us something about inflation and its trajectory. The current deficit widened in Q1, so we had the difference between exports and imports. So the current account is basically exports minus imports. Widening for a deficit means that our imports grew at a faster rate than our exports did, but in our case in the US, both actually grew. Initial jobless claims are near post-pandemic highs, and they're not near historical highs by any stretch, we've seen much higher levels before. But if you're limiting your analysis period to just post-pandemic period, we're close to the highest we've seen after the pandemic, although we did see a small pullback in recent data in the initial jobless claims. The leading economic index, and this is an index that actually is used as a leading indicator, and it takes into account 10 different economic indicators, and is used as a means to forecast the future economic activity. That's been either flat or down for 26 straight months now. So if you needed any more evidence that there is an economic slowdown underway, then there you have it. 26 straight months of a lower or same reading here, although the rate of change in terms of downward movement for this particular index has actually decreased. So it's still headed in the wrong direction, but the rate of change has decreased recently. For this week, however, I think there is reason for optimism, although we started quite weak in the markets today. So we get new home sales, initial jobless claims, and the most important, we get the PCE, which is the Fed's favored inflation metric. We get that on Friday. And so a softening in inflation numbers, a cooling in inflation may cause a shift in sentiment in the market, wherein the market starts forecasting an easing of monetary policy, more dovishness from the Fed. And that's really what's going to determine the market's fate, I believe, in the second half of the year. Where do we think we are with the battle against inflation? And where do we think we will be with regards to monetary policy? Is approaching increased restrictiveness or dovishness? And I think that even if the market doesn't react to the data that comes out on Friday, I think if the inflation number is sufficiently cooler, and I do assess that there is a good probability that inflation numbers will not be hot on Friday, although those can be famous last words. But from the data that I'm seeing, it does seem like inflation is on its way down. Keep in mind, the inflation prints that were hotter since the beginning of the year, they came from primarily two sources, auto insurance and housing. And basically everything else was below its historical average. So people just see the headline and they assume that inflation is out of control everywhere. That's simply not the case. We had two sectors that were basically causing the inflation prints to be hotter than expected. And I think housing is cooling off and auto insurance is cooling off as well. And so there's reason to believe that the inflation prints will be more favorable moving forward. And this is where the market will flip, I believe. And if you take a longer term perspective, I definitely think that there's reason for optimism here. So Tom Lee, who manages Fundstrat, he's been right on this issue for many years. And he mentioned his prediction today in a podcast that the market could 3x in the next six years. This implies a 20% growth between earnings and the price of those earnings. So this doesn't seem too far-fetched, to be honest. And he mentions three reasons for bullishness on U.S. equities in particular. So he mentions U.S. demographics, particularly the fact that we still have a healthy rate of immigration to the United States that's providing labor at attractive prices. But also the millennial generation is entering that period of peak productivity between ages 30 and 48. So that has typically corresponded when you have a big chunk of the population entering that phase of their life that has typically corresponded with stronger markets. The advantage that the U.S. has in AI, this, I mean, AI has, or the introduction of AI into companies has been compared to the introduction of the internet. And the way AI is sort of different one way from the internet and the impact that it had is that it was conceivable even from the early days that you could have a company basically anywhere in the world with a proper internet compete with any other company in the United States. However, with AI, if you're looking at, for example, NVIDIA chips that are, you know, go for between 20 and $50,000 per chip, it's take billions and billions and years of research to produce. It's unlikely that there's going to be some other startup in some other place in the world that competes with NVIDIA anytime soon. So the lead that the U.S. has in AI, and I believe it does have a lead, the companies that are in the U.S., the lead that they have in AI versus global companies, that is unlikely to shift in the near term. And so that is going to bring a lot of wealth to U.S. equities. So that's another reason to be bullish on U.S. equities. And there's 6 trillion in cash sitting on the sidelines. So there actually hasn't been a lot of money sloshing around in the stock market as of late, even though the indexes have been at all-time highs and are reaching new all-time highs all the time. There's still 6 trillion cash on the sidelines. And I think once we have more favorable monetary conditions, a lot of the stocks that have been sucking air and the industries that have been sucking air up until now will recover rather aggressively. So I always say, you know, when you're investing, always ask yourself, what is not in favor right now? And perhaps now more than ever, asking yourself that question may pay off in a big way in the near to medium term. So with that, let's come to our summary key observations. So there's many key indicators, as I mentioned, that are pointing to economic slowdown. This economic slowdown precedes cooler inflation prints, which precedes monetary easing. Many stocks and industries have been sucking air, but stand to benefit immensely from a change in the Fed posture, which I think will come with one or two more cooler inflation prints. Long-term asset market prospects remain compelling, especially in the US. And with that, if you would like to get more Halal Alpha, be sure to become a PIF member. A link to do so is in the description where you can follow our portfolios move for move. And let's take some questions. Assalamu alaikum, wa alaikum salam. What's your honest opinion on XRP? I mentioned, and inshallah all my opinions will be honest. I mentioned I was uncomfortable with the amount of dilution and also that is forecast for XRP. And the fact that I don't really see its technology as being that novel and having much of a motor around it. So not really interested. Hey, Salam Rashad, nice to see you. This puzzle just puzzles me with all these uncertain data and the Fed goes like, let's wait for more confirmation. Yeah, the Fed is not a stranger to being wrong. You can just look at their last call on the inflation being hotter than, or inflation being transitory when inflation was, you know, at eight, nine, 10% and the backtracking you had to do. And that's why I focus on the data. I don't really focus on what the Fed says. Do you think it's wise to continue buying altcoin and Bitcoin? I think now this is objectively a better time to buy than when their prices were higher because you get more per dollar in such a dollar more. That being said, the timing of the recovery, while I think it is definitely coming, the timing of the recovery, only Allah knows. So you have to have patience. If you put money behind a stock or a crypto, then first you have to know what you're buying and have patience for your thesis to play out. If you don't have either of these things, it's very likely that you sell at the wrong time. When will be the right time to put money into BTC again? I think we're getting pretty close. So I've been holding off on buying as PIF members know, I've been holding off on buying for the last two or three weeks because I kind of saw this coming. But now may be the time to this week. I'll probably be doing some buying. And there's one name in mind where I might be doing some really serious buying on. So we'll see. Is there an alternative to Nvidia since Nvidia has strong ties with Israel? Yeah, Abdullah, good question. So we actually were going to invest in Nvidia, but then we didn't because of its ties with Israel. So we're looking for an alternative and we'll find one soon. But I think on a percentage basis, even though you're not going to find a company, I don't think that can compete with Nvidia, but we're not investing for that purpose. We're investing to profit and do good at the same time. And in terms of the profit part of that equation, I think there are absolutely companies that will appreciate more than Nvidia moving forward, even though I think Nvidia has a chance to become a $1 trillion revenue company with time. So maybe it reaches a valuation of $10 trillion. I think that's very reasonable and doable if it maintains its trajectory and the seriousness in which it approaches its market advantage and maintaining it. It absolutely can reach that. But there are other fish in the sea that have, even brighter prospects. And so, inshallah, we'll be able to find some of them. I always appreciate your questions. Thank you all for tuning in. Leave a like. Thank you so much, by the way, for all of the people leaving a likes. I think we have at least three in a row that have at least a hundred likes on them. Let's try and get this one to a hundred as well. I'd really appreciate that. Make sure to take care of yourself and until next time, Asalaamu Alaikum and peace be upon you all.