Dubai TV Interview, Dec 6, 2021

Speaking on Dubai TV, Monday, Mohamed Hashad, Director of Research and Development at Noor Capital and member of the American Association of Professional Technical Analysts shed light on a number of developments in the markets this week

Firstly, on the relationship between the Federal Reserve’s decision and Omicron strain, and whether we can say that Fed’s decision to reduce asset purchases is linked to the risks of the new coronavirus variant, Hashad pointed out that this link was real and was evident in Jerome Powell’s tone and language during the previous meeting.

However, Hashad noted, all indications and speculation point to a continued reduction in the pace of the asset purchases program, with Congress demanding that the program be completed in April instead of May. Consequently, speculation is growing that the Fed is approaching an interest rate hike.

Markets have also priced the Fed’s interest rate hike at least twice and may reach three times a year the inflation rate, which has reached its highest level in three decades, Hashad explained.

The impact of these speculations has been crystal clear on the performance of the US dollar, and Omicron-related concerns continue to affect monetary policy. Hashad believes that raising interest rates and reducing asset purchases is the best solution to avoid inflationary pressures.

Secondly, regarding Goldman Sachs’ Outlook on the U.S. Economy, asked whether Goldman Sachs’ expectations of the U.S. economy could be realized as growth is seen declining, Hashad said that last year and this year the U.S. economy was one of the best performing economies, even much better than China, the Eurozone and the United Kingdom.

Hashad also noted that a series of positive economic data have emerged, most notably the decline in the trade deficit and the expansion of retail sales.

The addition of 210,000 jobs to the U.S. economy coincided with a rise in average wage income and a decline in unemployment rates, which in his personal view, Hashad believes that the view of the U.S. economy remains positive.

Thirdly, as for Oil, and whether oil prices ignored fears about the impact of the new Omicron variant on global demand, Hashad said that oil prices have not ignored the variant as we have seen them fall to their lowest levels in several years, losing more than 16%, but there is a host of positive news that supported the current situation, where Saudi Arabia, the world’s largest oil exporter, raised the prices of its crude exported to Asia and the United States.

Moreover, Washington-Tehran talks, which have hampered some bullish momentum on oil as well as some technical corrections that could push oil to the $70-80 per barrel levels. Thus, the scenario of the rise of oil remains surrounded by negative pressures according to Hashad.