LAST WEEK IN REVIEW
Shoppers Hit the Brakes: Retail sales for September rose a meager 0.2%, missing the 0.4% forecast, while the "control group" (a key metric used to calculate GDP) contracted by 0.1%. This slowdown signals that high interest rates and lingering inflation are finally forcing consumers to tighten their belts right before the critical holiday season, prompting retailers like Target and Home Depot to flag pressure on middle-income households.
Consumer Confidence Plummets: The Conference Board’s Consumer Confidence Index tanked to 88.7 in November, with expectations for the future dropping to levels that typically signal a recession is near.
Wholesale Inflation "Sticks" Upward: The Producer Price Index (PPI)—which measures inflation at the wholesale/business level—rose 0.3% in September, hotter than the -0.1% dip seen in August. This suggests that businesses are still facing rising input costs, particularly in energy.
The "Silent" Holiday Hiring Freeze: Retailers are planning the lowest level of seasonal hiring in over 15 years (down to ~265k-365k workers). With job seeker interest up 27% but openings flat.
Markets Bet Big on December Cut: Following the weak retail data and rising unemployment concerns, Wall Street is now pricing in an 85% chance that the Federal Reserve will cut interest rates in December (up from ~50% last week).
YOUR WEEKLY FORECAST
Monday, Dec 1
Data: S&P Final U.S. Manufacturing PMI, ISM Manufacturing, Fed Chair Jerome Powell Speaks
Summary: The S&P PMI is coming off a reading of 51.9, indicating modest expansion, while the widely-followed ISM reading has been stuck in contraction at 48.7%. A move back above 50 for ISM would be a major positive signal. The main event, however, arrives after hours when Chair Powell speaks.
Investor Take:
- The Powell Put: Markets will hang on every word. If Powell sounds dovish (concerned about growth), expect a relief rally in futures. If he emphasizes "sticky inflation," expect a sell-off.
- Industrial Weakness: Continued sub-50 readings in ISM would remain a headwind for industrial stocks ($XLI), confirming that high interest rates are still choking off manufacturing activity.
Wednesday, Dec 3
Data: ADP Employment, Import Price Index, S&P Services PMI, ISM Services
Summary: The previous ADP reading shocked markets with just 42,000 jobs added—significantly below the typical 150k+ pace. Investors are anxious to see if this was a blip or the start of a trend. Meanwhile, the services sector (restaurants, tech, travel) has been the economy's saving grace, with recent readings (S&P 55.0, ISM 52.4%) holding firmly in expansion territory.
Investor Take:
- Bond Bull: If ADP prints another weak number near 42k, expect bond yields to drop ($TLT up) as traders bet the Fed must cut rates to save the jobs market.
- Stagflation Fears: Watch the Import Price Index (previous 0.3%). Weak hiring combined with rising import prices is a "stagflation" mix that is historically tough for small-cap stocks ($IWM).
Thursday, Dec 4
Data: Initial Jobless Claims
Summary: With the labor market under a microscope, the Jobless Claims report becomes a critical confirmation point. The market is looking to see if claims remain low or if they begin to spike, validating the weakness seen in recent hiring data.
Investor Take:
- The "Soft Landing" Test: If jobless claims remain low despite weak hiring data, the "soft landing" narrative survives. If claims start to spike, recession fears will quickly take over market sentiment.
Friday, Dec 5
Data: PCE & Core PCE Index, Personal Income & Spending, Consumer Sentiment, Consumer Credit
Summary: A chaotic end to the week as the government releases delayed September inflation data (PCE) alongside December's consumer sentiment. The Fed finally gets its preferred inflation report card, albeit months late. Crucially, traders will be watching the Consumer Sentiment reading, which was last seen at a dismal 51.0.
Investor Take:
- Sentiment Watch: A reading stuck near 51.0 is recessionary. It implies consumers are ready to snap their wallets shut, which is bearish for retail ($XRT) heading into the holiday season.
- Fed's Dilemma: The Fed is looking at stale inflation data (PCE) that likely remains sticky, while real-time data (Sentiment, ADP) screams "slowdown." This increases the risk of a policy error, leading to elevated volatility ($VIX).
HALAL STOCK SPOTLIGHT*
All stocks are screened for sharia-compliance on Musaffa. We also exclude companies in the following three databases: WhoProfits.org, The Official BDS Targets, The American Friends Service Committee Database
Intuitive Surgical is highlighted as the dominant "800-pound gorilla" in the robotic surgery space, offering significant long-term growth potential despite its currently high valuation.
1. Reliable Recurring Revenue Model
The company operates a highly attractive business model where only about a quarter of revenue comes from selling systems. The vast majority consists of dependable, recurring revenue generated from servicing and the disposable supplies used during procedures.
2. Unmatched Global Scale
Intuitive Surgical has established a massive competitive moat with over 9,900 da Vinci systems installed in 72 countries. These systems have collectively performed more than 16 million procedures, cementing the company's leadership position.
3. Strong Momentum and Premium Valuation
Shares recently surged 23% following a strong earnings report, pushing the forward-looking P/E ratio to 59. While this valuation is steep, it reflects the market's confidence in the company's continued impressive growth.
*READ OUR DISCLAIMER AT THE BOTTOM OF THE NEWSLETTER BEFORE MAKING ANY INVESTMENTS
MOVERS & SHAKERS
Farooq Kathwari and Vertical Integration
Farooq Kathwari has served as the CEO of Ethan Allen for over three decades, a tenure that is almost unheard of in the volatile world of public retail companies. His longevity isn’t due to luck, but to a radical shift in strategy: Total Vertical Integration. While nearly every other American furniture retailer outsourced manufacturing to the lowest bidder overseas, Kathwari bucked the trend by keeping significant manufacturing in North America and owning the entire logistics chain—from the sawmill to the design studio to the retail showroom. This "contrarian control" allowed him to maintain quality, pivot designs faster than competitors, and survive supply chain shocks that bankrupted his rivals. He didn't just sell furniture; he sold a service level that only an integrated ecosystem could guarantee. Control the difficult parts of your value chain. When you own the means of production, you don't just protect your margins; you protect your ability to deliver on your promises when the world goes sideways.
Read more about Farooq on his website
MONEY TALKS
Turn Your Child Into a Tax Haven
You give your teenager $50 for a movie night. It seems harmless, but financially, it’s a disaster. To put that $50 in their hand, you had to earn roughly $80 and pay tax on it first. You are effectively paying a 40% markup on your child’s lifestyle.
Stop giving them an allowance. Hire them.
If you own a business, a consulting practice, or even a serious side hustle, employing your children is one of the most effective tax shelters available.
Here’s how:
The Write-Off: You pay your child a legitimate wage for legitimate work (filing, cleaning the office, social media management, data entry). Your business deducts this wage, lowering your taxable income.
The 0% Bracket: Here is the magic. In 2025, the Standard Deduction is projected to be around $15,000. This means your child can earn up to that amount and pay $0 in federal income tax. You move money from your 37% tax bracket to their 0% tax bracket.
The "Dynasty" Move: Since your child now has "earned income," they are eligible for a Roth IRA. You can take that tax-free money they just earned and put it directly into a Roth. A 12-year-old with a fully funded Roth IRA compounding for 50 years isn't just "ahead"; they are mathematically set for life.
The Rules (Read Carefully):
Real Work, Real Pay: This isn't charity. They must do actual work, and you must pay them a market rate. You can't pay a 7-year-old $500 an hour to "shred paper."
Age Matters: If your business is a Sole Proprietorship (or a partnership between you and your spouse) and the child is under 18, you generally don't even have to pay Social Security or Medicare taxes on their wages. (S-Corp owners need a slightly different setup to get this specific payroll tax perk, but the income tax benefits remain).
Paper Trail: Create a job description, log their hours, and pay them via check or direct deposit. Treat them like an employee, not a dependent.
It’s the ultimate two-for-one deal: you lower your tax bill today, and you build their tax-free wealth for tomorrow.
In today’s world, who you know is becoming more important than what you know. Join the largest online community of Muslim professionals in North America at muslimprofessionals.us.
That's all for this week. Make it a great one.
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5. Disclaimer on "Halal" and Shariah Compliance The term "halal stock picks" refers to securities that have been screened against certain publicly available, third-party Shariah-compliance criteria at the time of publication. These standards can vary among different scholars, organizations, and screening services. The Shariah-compliant status of a company can change over time. We make no guarantee or warranty as to the Shariah-compliant status of any security mentioned. It is your sole responsibility to conduct your own due diligence and consult with your own qualified religious scholar to determine if an investment aligns with your personal Islamic principles.
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