Noor Capital | Interview with Muhammad Hashad on Dubai TV – May 15, 2023

Dubai TV interviewed Mohammed Hashad, Director of Research and Development at Noor Capital and the member of the American Society of Technical Analysts, to comment on the most important developments in the financial markets and their impact on assets that are widely traded.

Asked about raising the US debt ceiling, as it is a major concern in the United States in particular, and the world in general, especially since it is linked to the risk of losing confidence in the US economy and the US dollar in particular, and about his opinion on the spending cuts that the Republicans are also calling for, as well as what its implications could bring about in general, Hashad replied: “Indeed, we can say that the American debt has become one of the most prominent headlines on the economic scene now, and this scenario was repeated in the year 2011, but under conditions that were significantly different.

Debt Ceiling

“The debt, as I mentioned, reached thirty-one and four out of ten trillion dollars, and the main idea revolved around Congress and I think, from my point of view, that Congress will not abandon the US Treasury Department and that failure to reach an agreement between the two parties, I believe, will lead to It will lead to a catastrophic outcome for the US economy, unemployment rates will rise, the US economy will lose millions of jobs, and confidence in the dollar and the US economy will decline as well”, Hashad added.

Democrats vs. Republicans

Commenting on the existence of a disagreement between Republicans and Democrats, and the Republicans’ demand to cut spending as a practical option, and commenting on this option and what its implications could be, Hashad replied: “I think the ongoing debate, in general, may be positive and may lead the two parties to reach an agreement, but the main problem is that markets are becoming more afraid that there will be no agreement between the two parties, but I believe that the matter will not end in a deadlock in the end, as the probability of failure to reach an agreement between the two parties in the markets now does not exceed two percent, and Congress will not abandon the Treasury Department, because, if this happens in fact, the US economy will fall in a recession, because with high debts and in light of high interest levels, this will lead to a decline in the investments needed for production, and thus may lead the markets in general to a recession”.

Why has debt ceiling accelerated?

In the last decade, US debt accelerated to levels exceeding thirty-one trillion dollars, and on the reasons for the acceleration in a decade specifically, Hashad answered that the reasons stem from “the political situation and geopolitical developments that the markets were going through during the past periods, and the crisis of the banking sector contributed to the rise in debt levels in The United States of America, and we can count the recent banking crisis as one of the reasons that led to this crisis”.

Gold’s Performance

With regard to gold, and how it took advantage of the uncertainty surrounding the global economic scene, and about expectations that an ounce of gold might record a jump of about a hundred dollars, and whether this is possible, when the markets can see this development, Hashad confirmed: “Almost all scenarios are on the cards, but it is too early to say that gold may rise by one hundred dollars an ounce, first because this is a very large number in light of the current data in the markets”.

Hashad added: “All negative factors are existent in the markets, but we see a decline in gold prices or a marginal decline in gold prices to the level of two thousand and sixteen dollars per ounce, and its performance is still effective as a safe haven for investment and a tool for hedging against market fluctuations and against inflation, but with regard to the possibility of a rise; namely the possibility for the price of the precious metal to increase by one hundred dollars, as I think that it may be ruled out in the current period, and I believe that we still see gold in a downward trend, or as we can say a corrective downward trend, after touching the historical levels during the past weeks”.

Asked whether the complexities of the economic landscape in the United States of America, especially with regard to the debt ceiling, could push towards new record levels; Hashad replied: “In the event that the Republicans fail to reach an agreement, the markets may witness record levels, of course, and this will lead to an increase in gold prices as one of the tools to provide a safe haven in the markets.”

OPEC+, Oil performance

On commodity markets, specifically oil, after the Iraqi Oil Minister, for example, ruled out that his country could vote for new oil production cuts, and what alternative options for OPEC+ could be, if a decision is not taken to cut production, Hashad believes that energy in general is witnessing a state of uncertainty, similarly, the prices of American WTI crude oil are uncertain, and therefore we see the decline in the price of oil for the fourth consecutive session to the level of sixty-nine dollars and forty cents per barrel, and the recent decision regarding the voluntary reduction of OPEC last month, from my personal point of view, was only a maneuver and did not bring about positive results up till now.

Hashad added, “From my personal point of view, OPEC, at the next meeting, will not change production policy in an attempt to maintain supply and demand levels in light of political and geopolitical tensions, especially the Russian-Ukrainian conflict.”

Asian, US Stocks

Regarding the stock markets, and how the Asian market achieved the highest level at the Japanese and Chinese markets and reached heights in light of the ambiguity of the economic scene, and how these heights recorded in the Asian region can be interpreted, Hashad replied: “The markets move in both upward or downward directions from time to time. We can also apply the matter to US stocks, but the movement in the markets, especially the stock markets, which is still not good, and stocks may have benefited from some positive data for China and some positive data, including the jobs of the agricultural sector last week, but in general, the bearish trend is likely for the stock market. That was obvious from the stock performance in the technology sector stocks, which declined significantly or exhausted the strength to rise, and stocks in particular are still waiting for a quick solution to the US debt ceiling crisis.