LAST WEEK IN REVIEW
Federal Reserve Cuts Rates; Signals Support for Liquidity: The Fed lowered the benchmark interest rate by 25 basis points to a range of 3.50-3.75% and announced plans for technical Treasury buying to manage market liquidity.
AI 'Capex' Shock Hits Big Tech: Oracle and Broadcom Plunge Oracle (-11%) and Broadcom (-11%) suffered steep sell-offs as earnings reports revealed skyrocketing capital expenditures and compressing profit margins due to AI infrastructure build-outs. The market has shifted its focus from "AI hype" to "AI costs"; investors should be prepared for volatility in tech portfolios as companies spend billions to build systems that have not yet fully monetized.
Medical Inflation Expectations Hit Decade High New York Fed data indicates consumers expect medical costs to rise 10.1% over the next year—the highest reading since 2014—largely due to fears regarding expiring ACA subsidies.
Labor Market Remains Surprisingly Tight Job openings (JOLTS) unexpectedly rose to 7.67 million, and continuing jobless claims dropped significantly to 1.838 million, contradicting fears of a hiring freeze.
Small Business Optimism Rises, but Prices Follow The NFIB Small Business Optimism Index rose to 99.0, but the percentage of owners raising selling prices jumped to a massive 34%.
Tariff Revenue Dips as Consumer Staples Exempted Treasury data shows tariff revenue fell to $30.76 billion in November after the administration rolled back duties on grocery items like coffee and bananas to curb inflation.
YOUR WEEKLY FORECAST
Monday, December 15
Data:
- Empire State Manufacturing Index
- NAHB Housing Market Index
The Advisor's Take: We start the week with a look at regional manufacturing and builder sentiment. The Empire State Index is notoriously volatile, but it gives us a clue about December's industrial health. Investors will also pay close attention to the NAHB Index. With mortgage rates fluctuating, confidence among homebuilders acts as a leading indicator for future construction. If builders are gloomy, expect weakness in housing stocks ($XHB) and potential softness in raw materials like lumber ($WOOD).
Tuesday, December 16
Data:
- Labor: Nonfarm Payrolls, Unemployment Rate, Avg. Hourly Earnings
- Consumer: Retail Sales
- Industry: Industrial Production, Housing Starts, Building Permits
The Advisor's Take:
The "Goldilocks" Scenario: The market ($SPY) is hoping for a specific balance: Nonfarm Payrolls that are solid (but not overheating) and Retail Sales that show the consumer is still spending.
The Risk: If Average Hourly Earnings spike unexpectedly, it signals wage inflation, which could force bond yields ($TLT) higher. Conversely, if Retail Sales disappoint, recession fears could resurface, hitting consumer discretionary stocks ($XLY).
Wednesday, December 17
Data:
- Business Inventories
- MBA Mortgage Applications Index
The Advisor's Take: High business inventories can signal that demand is drying up (bearish), or that supply chains are finally normalized (bullish). We check the MBA Mortgage Applications to see if recent rate moves are scared off homebuyers. This is a direct real-time pulse on the real estate sector ($XLRE).
Thursday, December 18
Data:
- Consumer Price Index (CPI)
- Initial & Continuing Claims
- Bank of Japan (BOJ) Policy Meeting Begins
The Advisor's Take: CPI is the headline event. While the Fed prefers PCE (coming Friday), the market trades violently on CPI. Do not ignore the Bank of Japan. The BOJ begins its meeting today. If they signal an interest rate hike, it could strengthen the Yen and unwind the "Carry Trade" (where investors borrow cheap Yen to buy U.S. stocks). A surprise here could trigger global volatility, weighing on tech stocks ($QQQ) that often benefit from global liquidity.
Friday, December 19
Data:
- PCE Prices (Personal Consumption Expenditures)
- Q3 GDP (Third Estimate)
- University of Michigan Consumer Sentiment
The Advisor's Take: We end the week with the PCE Price Index, the Federal Reserve’s preferred inflation gauge. If Thursday’s CPI was hot, a cooler PCE number today could "save" the week's rally. However, if both inflation reports are high, expect the market to price out future rate cuts rapidly. Finally, Consumer Sentiment will tell us if inflation headlines are starting to impact the mood on Main Street. A drop in sentiment often foreshadows a drop in spending, which matters for upcoming earnings.
HALAL STOCK SPOTLIGHT*
All stocks are screened for sharia-compliance on Zoya. We also exclude companies in the following three databases: WhoProfits.org, The Official BDS Targets, The American Friends Service Committee Database
Micron Technology (MU)
The Business Model Micron Technology designs and manufactures memory and storage solutions, primarily generating revenue through the sale of DRAM, NAND, and High Bandwidth Memory (HBM) products to data center, PC, and mobile markets.
The Bull Case Bulls argue that the company is benefitting from an AI-driven supercycle, evidenced by HBM and server DRAM revenue exceeding $10 billion in FY25 and supply being largely sold out through 2026. Optimism is further supported by the consolidated nature of the memory oligopoly and high barriers to entry, which proponents believe will support structurally higher margins and pricing power compared to previous cycles.
The Bear Case Risks include the inherent cyclicality of the memory industry, where aggressive increases in capital expenditures—such as Micron's doubled FY25 capex—could lead to oversupply and significant price compression if AI demand moderates. Furthermore, cautious observers note that the stock is trading significantly above its 10-year median price-to-earnings ratio, suggesting that valuation is stretched and downside volatility remains a key concern.
*Please read the disclaimer at the end of this email before forming any opinions on the stock.
MONEY TALKS
Q: Inflation is eating my cash, but High-Yield Savings Accounts (HYSAs) pay interest. Where am I supposed to park my emergency fund?
This is the hardest part of halal financial planning: the "Cash Drag." You see your colleagues getting 4-5% risk-free in a HYSA while your checking account sits at 0%.
Do not be tempted by the "inflation adjustment" argument—interest is prohibited, regardless of the inflation rate. You cannot use a conventional savings account.
So, where does the money go?
Checking Accounts: Keep 1-2 months of expenses here for liquidity. Yes, it loses value against inflation. Consider that the "cost" of compliance.
Islamic Savings Accounts: If available in your region, look for banks offering Shariah-compliant savings that pay a "profit rate" based on backend investments, not interest.
Ultra-Conservative Halal Funds: For the bulk of your emergency fund (months 3-6), look for short-term Sukuk (Islamic bond) ETFs. They aren't risk-free like cash, but they are low volatility and offer a yield that can help offset inflation without crossing the line into Riba.
Disclaimer: I don’t get compensated for the links I share in this section, nor do I ever share affiliate links in my posts.
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That's all for this week. Make it a great one.
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IMPORTANT LEGAL DISCLAIMER*
Please read this disclaimer carefully before proceeding. By reading and using the information provided in this newsletter, you acknowledge and agree to the terms outlined below.
1. Not Financial or Investment Advice The content provided in this newsletter, including all articles, market analysis, economic news, stock picks, trading plans (including entry prices, stop losses, price targets), catalysts, and risk assessments, is for educational and informational purposes only. It should not be construed as financial, investment, tax, legal, or any other form of professional advice. No fiduciary relationship is created by your subscription to or use of this newsletter.
2. Consult a Professional Advisor The author(s) and publisher of this newsletter are not licensed financial advisors, registered investment advisers, or broker-dealers. You should not make any investment decision based solely on the information presented here. It is imperative that you consult with a qualified and licensed financial professional to determine if a particular investment or strategy is suitable for your individual financial situation, risk tolerance, and investment objectives.
3. Inherent Risk of Investing All forms of investing carry significant risk. The stock market is volatile, and you may lose some or all of your invested capital. There is no guarantee that any of the strategies or stock picks discussed will be profitable. Past performance is not indicative of future results. Never invest money that you cannot afford to lose.
4. No Guarantee of Accuracy or Completeness While we strive to provide accurate and up-to-date information, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information in this newsletter. We are not liable for any errors, omissions, or for the results obtained from the use of this information. All information is provided on an "as-is" basis.
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.
6. Separation from Muslim Professionals of the Americas This newsletter is an independent publication. The views, thoughts, and opinions expressed herein belong solely to the author(s) of the newsletter and do not represent the views, policies, or official positions of the nonprofit organization Muslim Professionals of the Americas, its board of directors, officers, or members. Muslim Professionals of the Americas is a separate legal entity and assumes absolutely no liability or responsibility for the content of this newsletter, any financial losses, or any other damages incurred from its use.
7. Personal Holdings The author(s) of this newsletter may, from time to time, hold positions in the securities mentioned herein. The presentation of any stock is not a solicitation or direct recommendation to buy or sell that security.
