The Practical Islamic Finance Podcast

🌟 The Best Market Recap: 12-20-2024 🌟

• Rakaan Kayali

â–º If you enjoyed the episode, please leave us a good review!

â–º More from PIF: https://linktr.ee/practicalislamicfinance


🌟 The Best Market Recap: 12-20-2024 🌟

In this episode, we will cover:

  •  Intro and Market Overview
  • Core Inflation Data Surprises
  • Fed Comments and Market Reactions
  • Stock Market Performance Today
  • Bitcoin and Solana Updates
  • Harvesting Tax Losses: Tips
  • Viewer Q&A and Closing Thoughts 


CONTACT US
salam@practicalislamicfinance.com

ABOUT OUR PODCAST
Our podcast is about helping people ethically build wealth. We cover a broad range of topics including stock and crypto investing, product reviews, and general financial well-being.

DISCLAIMER
Anything you hear in this video is an opinion. It is not personalized financial advice. Make sure you do your due diligence before making any investment decisions.

Assalamualaikum everyone I hope you are doing well Jamal Mubarak inshallah today is Friday December and we did get a bit of a rebound today not really unexpected the big news from today was that the inflation numbers the core PCE which is the fed's preferred inflation metric actually came in cooler than expected I said yesterday if we got a cooler than expected number The market would probably react very positively to that. That seems to be playing out. That being said, I don't think the market has forgotten completely the stinker that JP left on the stage behind him on Wednesday. And so there's still, I mean, I'm optimistic, but I don't necessarily think that today is you know, marks the end of the downward pressure that we've seen. I understand that, you know, we're now, you know, higher than the lowest point that we've been in the last, you know, we could justify backing up to truck on any of our positions or convictions. I think it would be a good idea to nibble when we get some of the price reductions that we've seen. But backing up to truck, I think, should be reserved for lower prices. Now, markets are still open, but Right now, the Nasdaq is up one and a half percent. Dow Jones is up one and a half percent. S&P is up one and a half percent. Russell is up one point three percent. So Russell continues to lag. I mean, it's doing worse than everyone else when things are bad and then it doesn't do as well when things are good. The VIX is down twenty two percent. That's the market's volatility or fear index. So people are feeling a bit more upbeat today than they were yesterday and the day before. Tesla's flat. Bitcoin miners got a bit of a reprieve and Bitcoin is up close to thirteen percent. Looking at gold, it's up one percent. Bitcoin is still well below one hundred thousand at ninety seven thousand. Now, keep this in context and zoom out. Ninety seven thousand only a couple of months ago would have been. you know fantastic amazing we're actually predicting a hundred thousand before the end of the year so we're basically there so oftentimes it really matters that the path you take to get to the number in terms of investor sentiment then the number itself and so we're seeing this right now because we were at a hundred and eight you know a few days ago and now we're at ninety seven All of a sudden, ninety seven doesn't feel as good. But if you zoom out, I think you can appreciate that ninety seven is a very high number historically for Bitcoin. Doge is at thirty one cents. Solana is at one ninety. Really took it on the chin. Solana has went from two sixty to one ninety in a matter of days, basically. And so this is something to keep an eye out for. I do expect a recovery in Solana. I just think that there was a lot of levered positions that were wiped out and the leverage in the crypto markets is very extreme. And so you can expect extreme volatility as a result. So in some of the details of what I mentioned, Dow bounces Friday on encouraging inflation data. And so what was that encouraging inflation data? November's reading of the personal consumption expenditures price index, the Federal Reserve's preferred inflation metric, increased two point four percent year over year. So we can basically see the white in the eyes of the target. That was a tad less than economists expected and helped diffuse some of the bearishness that arose earlier this week when the Fed said it would dial back future rate cuts in part because of stubborn inflation. Like I said initially, my initial reaction to JP's comments on Wednesday is that nothing has fundamentally changed just because this guy decided to say what he said in the press conference. Nothing has changed. The guy doesn't know anything about the future any more than anyone else knows about the future. And he has historically proven that time and time again, whether you go to the time when he said inflation was transitory to the time where he said I don't think we're going to cut four times. We're only going to cut two times two days ago. This person's ability to forecast the future is quite limited. And today, Austin Goolsbee, who I think is better at forecasting the future than his boss is, went on CNBC to basically clear up the air with regards to what was said by JP. He did actually say this is why he was appearing, but it did seem like kind of a cleanup job to some of the things that were said on Wednesday. And perhaps the market in part reacted positively today in response to the Austin Goolsbee's comments. So let's listen in on what he said. Thank you. Yes, we are joined as we often are on the first Friday after the Fed meeting by Chicago Fed President Austin Goolsbee. Austin, thanks for joining us this morning. Yeah, great to see you again, Steve. And it just so happens, I guess this happens around December every now and then, that we have your favorite inflation gauge out this morning. It surprised the market a little bit to the downside. What's your takeaway, Austin? Well, that's the it's coming into the Christmas season and it's a nice to get a number that's better than expected and. I've been feeling that we're still on path to get to two percent. And at least for this new month, you don't want to make too much out of any one month. But I'm hopeful that this suggests that the couple of months of firming were more of a bump than a change in path. So right there, just to tell you how, you know, not fundamentals related, the market's reaction was on Wednesday and Thursday. If Jerome Powell came out and said what Austin Gillespie just said, which is that, you know, we had a bump in a couple of readings, but we're on path to two percent. If he just said that, then the entire correction that we saw wouldn't have happened. So this just goes to show The market's reaction was based on words coming out from the mouth of someone who, like everyone else, cannot predict the future. And this is why I told you guys that this was not something that I was necessarily losing sleep about. If we got to the type of price targets that... made it really enticing for me to back up the truck on any one position, then I would absolutely do so. Yeah, I asked the Fed chairman about this earlier this week in D.C., whether or not he was looking through it. You had some maybe some hurricane effects in there, some other things. Were you among the committee members, Austin, who raised his or her outlook for inflation next year? For next year, as you know, the dot plots are anonymous, but I have been feeling like there's a little more uncertainty, there's a little more noise. And so I raised a bit the, what do you want to call it? The shallowness. I made the rate path a little more shallow in twenty twenty five, but. I've been saying that the overall thread is that inflation is way down I believe we're on path to two percent and over the next twelve to eighteen months rates can still go down a fair amount and whether and that's really all we uh need to know and I think this is zach so we're on the right path race can go down a significant amount from where we are right now probably a hundred basis points in the next twelve to eighteen months Whether that happens in six months or twelve months or eighteen months doesn't really matter. The part of the cycle that we're in is what matters. And the part of the cycle that we're in is one where rates are generally going down. The speed at which they go down, only Allah knows. the future. But the speed at which they go down is not really that consequential for you know, where we end up eventually with regards to the markets. I think if we go down at a slower rate, this may be better for investors as opposed to, you know, getting really big drops in interest rates, really big reactions in the market, which will inevitably be followed by, you know, retracements that are a lot more severe in their magnitude. that happens three months earlier or three months later I don't think is the most material thing the thing that's material is we've gotten inflation down we need to keep making some progress we've gotten unemployment to a kind of a stable full employment basis we want to keep that stabilized and the way to do that is to have the rates come down to something like neutral The chairman on Wednesday, Austin, said the following thing. I think one thing that may have happened, so I've been predicting sort of a January, beginning of January pullback. What may have happened in the last, you know, we may have front run that pullback a bit in the markets, which means that, you know, whatever pullback we were scheduled to have maybe a bit, you know, less severe than had we just been, you know, chugging along uninterrupted until the end of the year. Not together, but separately. He said, the Fed is significantly less restrictive than it had been, but it's still meaningfully restrictive. Where do you come in on both of those sides? Where do you put us between... Yeah, I agree with both of those. Okay, give us an idea. I agree with both of those. You think we're still meaningfully restrictive, putting downward pressure on inflation, and yet we're significantly less restrictive than we were, which means you still think we're far from the neutral rate. Yeah, all three of those. I don't think those are contradictory in any way. We were. We had raised rates, five hundred basis points in a year. If you looked at just the real federal funds rate, it was the highest in decades. We're now down one. We've cut one hundred basis points. And so we're significantly less restrictive than we were. But if you just take a as an approximation, where is the longer run neutral? Something like the median. uh of what comes out of the out of the dot plots on the committee they think that the ultimate rate is around three percent with inflation of two percent a real rate of one percent we're still above that so I still think so yeah that's really the bottom line we're at uh four and a quarter we need to be at three so there's a hundred hundred twenty five basis points left to cut That's really the bottom line, whether it happens entirely in twenty twenty five or it takes twenty twenty five and half of twenty twenty six. I don't think it's necessarily that consequential for investors in terms of where the where the peak of the current cycle ends up being. I think it's meaningfully restrictive, and that's why I say over the next twelve to eighteen months, if conditions keep on the way that they have over the last eighteen months, I think rates come down a fair bit more. So, yeah, guys, I think that's the most important clip that you're going to see on TV today with regards to the markets. And I wholeheartedly agree with what was said, I think. The market's reaction was not really justified. I think that a lot of the market's reaction can be chalked up to leverage in the system. So it's not that investors didn't know any better. It's that a lot of investors didn't really have a choice with regards to the selling that ensued. They were caught offsides, a bit too leveraged, and market makers took advantage and wiped out a lot of people. So with that being said, let's go to questions. Salam Khalid nice to see you hope you're feeling better well thank you JazakAllah for the lives keeping us informed shows your commitment well thank you Khalid I really appreciate that this reminds me please leave a like guys if you enjoyed these lives if you're finding them beneficial if there's any way to improve them do let me know in the comments and become a PIF member if you haven't already Salam, Brother Khan and Jamal Mubarak to you as well. Salam, Chocolate. Nice to see you. Harvest losses before December, I think definitely with regards to positions that, you know, you no longer, you know, have strong conviction in the thesis for them. You know, tax loss harvesting makes a lot of sense. Rashad says, here we go again. I told you guys. I think I only said I told you guys once, so I didn't go overboard with that. But yeah, I did say I told you guys. Thanks, Rashad. I appreciate the well wishes. Thanks, Abdullah. Yeah, I am benefiting. The markets, they took advantage of me being under the weather the last few days, and they did what they did. But now I'm back, and they're behaving again. So that's good. I hope you feel better. What are your thoughts on staking? No, I don't think staking is in any way the equivalent of receiving interest. I would take a listen, have a listen to my video on staking where I explain why. Do one on options trading. Watch my video on options. I think you'll find it useful. If TikTok gets banned, do you have anything in mind we can consider to invest in? It's really hard to invest in social media because a lot of it is garbage and people walk away from their experience with regretted minutes. And so it's not a product, even though I think it's a product that has done a lot of good, but it also has done a lot of harm. Yeah. it's very hard to, you know, be a conscious investor having a position in social media companies. Well, so it's free cereal. Alhamdulillah, it is Alhamdulillah, we have achieved that target. Now the task at hand is to maintain the freedom that that was. I have to say that Muslims in Syria had the lion's share in terms of credit, deserving credit for achieving for the Syrian people. We have to make sure that we give credit where credit is due. And I think that we have to make sure to discount the or to make sure that we are holding to account all of those people that were pro-regime before the regime fell and now are acting like they're somehow proponents of a free Syria. These people need to be held accountable for their actions, especially if they were encouraging killing people, encouraging violence, even with their words, even with their social media posts, these people need to be held accountable for what they did, and not just be allowed to blend black back into society. Because they'll end up doing a lot of damage. And we've seen that in other countries. Trump will eradicate the legacy and the existence of the Fed if he makes it to the presidency. Well, I think eliminating the Fed would be a great step on the path of liberating the United States from monetary enslavement. think trump will bring austin as fed chair I actually think that would be a great move I think austin is actually quite a a smart person and I always enjoy him talking malik says if you were to buy a stock what would you buy now well peep this segue into a shameless plug of mine, which is to become a PIF member to see exactly what I buy. Khaled says, thanks for sharing. I'm sorry. Thanks for Ken for the assurance. Oh, thanks Khaled. I appreciate that. Using app like Zoya for compliance stocks, trading halal. Are you saying using apps like Zoya? Is that halal? Yeah, absolutely. Just understand, you know, the reasoning for every rating that you see. Well, it says, alhamdulillah. Well, check out our buy below, sell above prices for things like Iris Energy on our watch list. Yeah, the Trump rally took a bit away from the Santa Claus rally. That's true. I saw your question, brother, with regards to MicroStrategy. I think that it needs to be reviewed, but I'll tell you that I'm not comfortable with MicroStrategy because it uses leverage, it uses debt as part of its business model. And so any form of debt that doesn't use, that is not as an act of charity is something that I like to avoid. Bye, guys. Leave a like if you enjoyed the live. Become a PIF member if you haven't already. Until next time, make sure to take care of yourself. As-salamu alaykum and peace be upon you all.