Turning the corner?

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Turning the corner?

In this episode, we will cover:

• Macroeconomy and bullish assets 
• Discussion on major macroeconomic data points: inflation and PPI index 
• Fed's meeting and stance on interest rates
• Consumer sentiment and its historical context 
• Digital asset outflows and Bitcoin ETFs
• Elon Musk and Tesla pay package approval 
• Tesla's upcoming catalysts and market cap predictions 
• Summary of macroeconomic conditions and investment strategy
• Explanation of asymmetric trades and Tesla's future
• Q&A session

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salam@practicalislamicfinance.com

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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.

Chapters

• 0:22 Macroeconomy and bullish assets
• 2:00 Discussion on major macroeconomic data points: inflation and PPI index
• 3:00 Fed's meeting and stance on interest rates
• 5:00 Consumer sentiment and its historical context
• 6:00 US debt and budget deficits
• 7:00 Digital asset outflows and Bitcoin ETFs
• 9:00 Elon Musk and Tesla pay package approval
• 10:00 Tesla's upcoming catalysts and market cap predictions
• 12:00 Summary of macroeconomic conditions and investment strategy
• 13:00 Explanation of asymmetric trades and Tesla's future
• 15:00 Q&A session

Transcript

[00:00:00] Assalamualaikum everyone. Eid Mubarak, Inshallah. I hope your Eid was a blessed one with family and friends. And today we're going to talk about the macroeconomy and some assets that I am obviously bullish on and whether or not they are turning the corner. So without further ado, let's get started.

As always, this is not financial advice, so be sure to do your own due diligence before making any investing decisions. And thank you very much for getting our last live to a hundred likes. Really appreciate that. Let's, let's do an incremental goal. Actually, let's keep it at a hundred likes. So let's try and get this video to a hundred likes.

And then once we think we have that. Under our belts comfortably we'll increase the target. Inshallah. So yeah, thank you for doing that. If you haven't become a PIF member yet, be sure to do [00:01:00] so. It's paying for itself in a big way. We actually did a survey last Friday and we had more than 50 responses from our PIF members.

We asked them whether or not the members who have, have been a member for more than one year, whether or not the profits that they got from being a member more than made up for the cost of membership. And all but one, there was only one person who said no, and everyone else said yes. So I think that really speaks for itself.

So do become a member, do believe that it pays for itself many times over. And this one member mentioned thank you guys for what you do and what you are doing. I made more than 20 times the amount I paid for the membership. And this is not uncommon. All right. So let's talk about some major macroeconomic data points that we got recently.

Inflation cool down in May of 2024 actually cool down to 0 [00:02:00] percent on a month over month basis, which puts us at 3. 3 percent annually, we're still above the 2 percent target for the Fed. However, we are making progress. We're going in the right direction. So that's great. The PPI index, the producer price index fell by 0.

2 percent in May, which is a leading indicator for consumer prices. Eventually the prices of producers gets passed on to consumers. So a cool down there is a reason for optimism about the future picture for inflation. And the Fed met, met last week and did. Unsurprisingly decided to keep rates where they are.

So while core CPI and CPI have been resuming their downward March, the rates have remained where they are, which means that eventually the fed [00:03:00] will have to give if the direction of inflation remains what it is, which is going downwards, the fed will have to give, and it will end up having to cut that being said, despite the positive inflation numbers that we got last week.

The Fed struck a hawkish tone regarding interest rates. And I've mentioned before that I don't really pay much attention to what the Fed says. I pay more attention to the data because by the Fed's own admission, they are data dependent. So regardless of what they say, how they're feeling that day, It doesn't matter.

Eventually the data is going to dictate what happens. And I believe the data is pointing towards an eventual dovish position by the fed and rate cuts when the market reacted to the fed the fed's comments a lot more than it reacted to the data. And so we saw pullback [00:04:00] after the feds comments, but I think actually the opposite happening would be true, but that's why it would be more accurate.

But that's why we invest. That's why we actively invest because the market doesn't always get it right. And I believe they didn't get it right in their reaction to last week's events, the speaking of the feds hawkishness, they Actually increase their fund rate projections for 2024 from 4. 6 to 5.

1. That really did its number on the markets. However this does imply at least one rate cut in 2024. And a lot of investors were sort of losing hope of getting a rate cut in 2024. I think I've been pretty. Consistent and saying, I thought that there would be a rate cut this year. And still think there will be one especially if the data continues as it is in the same direction.

Consumer sentiment came out on Friday [00:05:00] and it was at its lowest point in seven months. And a lot of people. I think that this is very bearish for markets. However, consumer sentiment historically has not been a good predictor of what the market is going to do in the next six months. In fact, in many cases, it has acted as a contraindicator, although consumer sentiment is justified by the fact that.

We have seen an uptick in layoffs, so initial jobless skip, initial jobless claims increased in June. And this means that the economy is slowing down, which further adds a substance to the position that inflation is going down, the economy is cooling off, inflation is going down, which means that the interest rates will likely have to.

Follow and come down in order to support growth [00:06:00] in the economy again. Now the sort of overarching cloud over the U S economy. And not that just the US economy, but, but most global economies is the fact that debt is increasing and US debt is no exception. So you can see that the treasury recorded a 347 billion budget deficit in May, 2024.

You can see in April, we had a surplus and guess why that was, that was tax season. That's when all the taxes get collected here in the United States. And when you look at the bump that we got in April versus the pretty consistent deficits we have in every other month and the magnitude of these deficits, you almost wonder why even collect taxes.

I mean, why even collect taxes at all? Why not just make them? Taxes [00:07:00] zero because basically we're not spending based on how much we're collecting. We're spending based on how much debt we can issue and how many investors will buy that debt from us. So why even collect taxes? I think, I mean, there's an argument to be made here that you know paying taxes is playing less and less of a role in Any spending decisions,

they, they are a huge impact on individuals, but not a huge impact on the government. So make of that what you will digital asset outflows reach 600 million again, here in response to the feds hawkish tone, which again, I don't pay much importance to what matters is the data. The data was important. It was the data is important and it was bullish for the markets.

All right. If you were trading based on that data, however, the markets did not [00:08:00] trade based on that data and instead focused on what the fed had to say and it's level of hawkishness, which I think is a pretty silly disposition to have but, you know, at least to the tune of 600 million. People thought, Hey, let me, let me get out of this Bitcoin.

Most of these digital assets, when we say digital assets, we're talking about Bitcoin because Bitcoin is the only digital asset with serious ETFs. So most of this outflow came out of Bitcoin ETFs. So I guess. At least 600 million worth of Bitcoin holders said, Hey I don't want to be in Bitcoin. Let me put my money in cash instead.

This is pretty ridiculous. But that will eventually turn around. This was the biggest outflow since March. And you saw this reflect itself in the price of Bitcoin and other digital assets, which in sympathy fell along with Bitcoin. We're still [00:09:00] at the 65, 000, 66, 000 range, which You know, a year ago would have been would have been quite the accomplishment.

And as it relates to Tesla last week, Elon Musk won his Tesla. Pay package that was approved and re approved and the most recent vote, as I suspected the shareholders decided not to shoot themselves in the foot, which was probably a smart idea not approving Elon Musk's, I think well deserved pay package would have tanked the price of Tesla in a big way.

Tesla shareholders don't want that to happen to their shares for sure. And the stock has been on somewhat of a rebound. Today it was up 5 percent and I think there's a lot more to come. There's a lot of exciting things to come down the pipe here for Tesla. And we may have turned a corner here with regards to the stock.

It's [00:10:00] been basically chopping for the longest and actually going downwards for a long period of time. But I think we may have turned a corner. We have a number of catalysts coming up, including the August 8th, our RoboTaxi unveil event. Which is quite exciting. There was the hinting at additional product lines and the Tesla shareholder meeting last week.

It was quite an exciting meeting. Actually. Elon Musk mentioned that he thought Tesla's market cap could eventually reach 25 to 30 trillion. He agreed with ARK Invest Tesla. Price for the robo taxis. And he thought humanoid robots could add another 20 to 25 trillion to that market cap. I've long mentioned that.

I thought humanoid robots were going to be by far their biggest product. And so when you take that into consideration, yes, it may [00:11:00] not happen, you know, in the next 12 to 24 months, maybe I need five to 10 years, but still, if you're talking about a 40 to 60 X return, that's not bad. And I think it's quite plausible as it relates to Tesla.

And as I mentioned, exciting times ahead. So Elon Musk revealed today, not too long ago, actually, that he was working on the Tesla master plan for, so details of that master plan will likely excite investors for sure. So to sum things up, inflation is cooling. But still above the feds 2 percent target rate energy prices are coming down, which typically indicates that the economy is slowing down producer price.

Price inflation is pointing to lower future consumer prices and the fed is. Cautious regarding interest rates. It doesn't want to junk the gun here, but eventually the data is going to have its way. [00:12:00] And so regardless of the feds cautiousness or lack thereof, eventually, if inflation continues to fall, the, the fed will.

Government deficit and debt is high. So you need to escape with yourself into assets that can hold their value. We all know how this is going to end and it's probably not going to end. Well, I mean, when you spend more than you take in for long enough, well, we know how that ends now. So you want to make sure that your purchasing power is in assets that can maintain their value.

And the best way to do that is to be an owner and things that are useful to people. When you do that, regardless of what happens in the monetary system, you'll do quite all right. Tesla market cap of 25 trillion, just to put some numbers [00:13:00] here. Tesla market cap of 25 trillion, assuming no dilution. And in fact, in the last earnings call, Elon Musk mentioned that after the Tesla vote, Tesla would be in a position if the pay package was approved, Tesla would be in a position to start buying back Tesla shares.

So I think within the next 12 months, we'll probably hear something to that effect where Tesla is buying back Tesla shares. This makes a lot of sense to me considering how undervalued Tesla shares actually are. So Tesla market cap 25 trillion and computes a share price of 7, 800. So that takes into account robotaxis and humanoid robots and all of the other different businesses that tesla is in keep in mind The range given by elon musk was 25 to 30 trillion.

So Maybe looking at a 10, 000 Tesla share price sometime in the [00:14:00] future. So, yeah, this is definitely an asymmetric trade if there ever was one. Now we're not just invested in Tesla, we're invested in other assets. And mainly what we do is we take our profits from there and we put them in Tesla. Because there are often faster horses at any particular point in time.

If you'd like to follow our strategy. So we have growth, crypto and dividend portfolios. Which you can follow by becoming a PIF member. Our course is available to elite members. And we do plan on adding another portfolio soon. I'm very excited about that. So do become a PIF member if you haven't already.

We have a lot of new members now, so our community is a lot stronger. And the value from that community is that much greater. So with that, let's take some questions very quickly.

Holly says in trading, you're here to tell him your profits are someone else's loss. [00:15:00] Do they mean that the loss is someone else's money because he predicted the market incorrect? That's actually, that's actually not correct in trading. It's possible for both parties to walk away as winners. Just the the relative importance of different assets for different people is different.

So if I gave you a very simple example, let's say you have an extra car. You have a second car. You don't need it. You sell it for 10, 000. You get the 10, 000. The, the buyer of that car gets a car. And let's say that buyer didn't have a car before he purchased it. So he's actually better off. The car is more valuable to him than it would have been with you.

The 10, 000 is more valuable to you than the car would have been had it stayed with you. So you can both walk away from this transaction as winners. [00:16:00] You're both better off trade. Actually, this is why Islam focuses on trade. And Prevents or prohibits things that are zero sum games where one party's gain is the other party's loss.

And those are things that basically gambling. So it's not true that trade in trade, you know, one person's gain is the other person's loss. And so you should not think of it like that. Like I'm Salam Abdullah. Sorry, we don't have monthly subscription. The reason why we don't have monthly subscription is because investing requires patience.

If you're in it month to month. And I've seen so many people subscribe for a month and then they don't get the returns that they want. And then they leave. With perhaps a, you know a bad impression about investing and perhaps coming out with the wrong [00:17:00] conclusions about investing. Whereas if they just stayed a year, which which our survey, recent survey corroborates, if they just stayed a year, they would have made up for their made up for their subscription costs.

And much more than that. So investing is a longer term game. It's not, you know, you're not going to get, we don't do trades. We're not day traders. We have investment horizons of 12 to 24 months on the moves that we make. And so you really have to be in it for a year in order to actually get the results.

And the longer you stay in it, the more your results will compound. And this is why we only have annual subscriptions. You have to have a commitment for a year. And believe that if. You know, the, the annual fee, [00:18:00] which is currently 300, but may increase soon. If the current fee of 300 is, is unaffordable, then I don't think it's necessarily a good idea to be focused on investing right now.

What you should be focused on are things like increasing your income, earning potential, paying down debt. Once you, once you've done that and you're more comfortable financially, then you should start to think of thinking of investing. So I think it's for the, in the best interests of our customers and to make sure that they have positive experiences that we have annual subscriptions as opposed to monthly ones.

So. Just a bit of background on that. How do you explain a crypto miners doing great like Iris while crypto itself is getting hit? Well, with Iris energy, there's this wrinkle that has been added, especially with Iris energy, and this is perhaps why it has [00:19:00] outperformed other miners, the wrinkle with regards to their data center business, even though it's a small percentage of their overall business, their data center and the possibility of leveraging that.

To to be used for artificial intelligence generative AI purposes, which is these data centers are now a bottleneck in that AI progress. So it's being valued at increasingly higher prices because of this bottleneck. And we, we saw core scientific, for example be offered to be bought out entirely by an AI company because of their compute power.

So the same valuation is being applied to iOS energy. That's why it's doing well. In my humble opinion, how much is high inflation related to mass layoffs? So the actual, both of them would move opposite to each other, at [00:20:00] least historically, so more layoffs would lead to lower inflation. Because there's less movement of money, all my stocks waiting for the dilution, but it's still going up.

Hamdulillah.

Do you think I should get in again or wait? Well just follow Hiba, just follow our you can follow our trades to, to know what I do with you know, my own money. So I communicate those, or you can look at our buy and sell prices. As salamu alaykum, do you think Elon will reach the 25 percent ownership of Tesla?

Yeah, I do think so. There's a good shot that he does. So, and he'll be able to do that through buying back shares. That's why, I mean, with the combination of the pay package approval, plus buying back shares will increase every shareholders percentage of the pie and including Elon Musk, and he should get to that 25%.

We're not invested in Elon Musk. We're invested in Tesla. [00:21:00] So Tesla is bigger than just Elon Musk. And I think Tesla, the company is actually having a positive impact on humanity.

I have a question about options, perhaps in a different video. I do have a pretty detailed blog post and associated video about options.

Yeah. And so

yeah, so someone was asking about, I was going to sign up, but got busy with a prep, can we still use the discount code? Just email me, email me if you want to use the discount code and I'll you, you have to email me by the end of today, okay? And and Shaah ALAH, good things will happen. So just email me salam@practicalislamicfinance.com.

We'll take care of you Alah, but you have to do it today. I'm not gonna leave this open-ended. Just do it today. All right. With that do leave a like, subscribe, hit the notification bell. Hope to see you soon. Alsalamu Alaykom, peace upon you all.