Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

Macroeconomics

<div>The recent departures of the Federal Reserve Bank Presidents of Boston and Dallas due to their trading activity has raised questions about the integrity of the Fed, but greater scrutiny is unsurprising given the importance of US monetary policy in shaping financial asset prices since the global financial crisis. The departed Federal Reserve Bank Presidents were not voting members of the Federal Open Market Committee (FOMC) in 2021, while two looming vacancies on the Board of Governors next year mean that four new members will be joining the FOMC in the next 12-months.</div>
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<div>The trading scandals that have engulfed the FOMC could complicate the renomination of Chair Powell, despite support from Treasury Secretary Yellen, while Progressive Democrats are pushing the promotion of Governor Brainard, a renowned dove, to potentially succeed Chair Powell. Meanwhile, the outlook for President Biden's domestic economic agenda has become more uncertain, while the continued debt ceiling impasse could still threaten US financial conditions due to political gamesmanship.</div>
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<div>The US economy slowed during Q3, but it has hitherto not adversely impacted corporate profit expectations due to higher energy prices. Meanwhile, continued supply chain issues, rising labour costs and stalling economic growth in China pose potential headwinds for US corporate performance in Q3 and beyond. Prospective unit labour costs will be crucial in determining profitability, particularly in those sectors that enjoy lower-than-average operating margins.</div>
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<div>Further interruptions to economic activity in China stemming from power shortages could prolong the impact of dislocated supply chains on product availability and prices. Meanwhile, China fell short of the promises embedded in the Phase One Sino-US trade deal signed with President Trump, thereby setting the stage for an increase in trade tensions with the Biden Administration ahead of next year's mid-term elections.   </div>
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The recent departures of the Federal Reserve Bank Presidents of Boston and Dallas due to their trading activity has raised questions about the integrity of the Fed, but greater scrutiny is unsurprising given the importance of US monetary policy in shaping financial asset prices since the global financial crisis. The departed Federal Reserve Bank Presidents were not voting members of the Federal Open Market Committee (FOMC) in 2021, while two looming vacancies on the Board of Governors next year mean that four new members will be joining the FOMC in the next 12-months.

The trading scandals that have engulfed the FOMC could complicate the renomination of Chair Powell, despite support from Treasury Secretary Yellen, while Progressive Democrats are pushing the promotion of Governor Brainard, a renowned dove, to potentially succeed Chair Powell. Meanwhile, the outlook for President Biden's domestic economic agenda has become more uncertain, while the continued debt ceiling impasse could still threaten US financial conditions due to political gamesmanship.

The US economy slowed during Q3, but it has hitherto not adversely impacted corporate profit expectations due to higher energy prices. Meanwhile, continued supply chain issues, rising labour costs and stalling economic growth in China pose potential headwinds for US corporate performance in Q3 and beyond. Prospective unit labour costs will be crucial in determining profitability, particularly in those sectors that enjoy lower-than-average operating margins.


Further interruptions to economic activity in China stemming from power shortages could prolong the impact of dislocated supply chains on product availability and prices. Meanwhile, China fell short of the promises embedded in the Phase One Sino-US trade deal signed with President Trump, thereby setting the stage for an increase in trade tensions with the Biden Administration ahead of next year's mid-term elections.   



Unexpected FOMC Changes Loom Just as Corporate Profits Outlook Requires Greater Scrutiny

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Technical Analysis

<p>The short-term pain for bulls may have a little more to run following the bearish monthly reversals seen on the SPX and NDX.</p><p>However, support levels are not far on these indices, while on others we are already testing support levels e.g. German DAX and Dow Industrials.</p><p>Overall the picture does not look so different to the last time the market prepared for Fed tapering</p>

The short-term pain for bulls may have a little more to run following the bearish monthly reversals seen on the SPX and NDX.However, support levels are not far on these indices, while on others we are already testing support levels e.g. German DAX and Dow Industrials.Overall the picture does not look so different to the last time the market prepared for Fed tapering

US Equities - How Similar to the Last Taper?

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Thomas Schroeder

Chart based progressive global trading strategies

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<p>Call to sell risk on September 27 has rewarded. The rejection at the underside of broken trendline will dominate risk in October. Fresh SPX sell resistance outlined for a slide into a primary cycle low to buy in October ahead of a Q4 rally.</p><p>RSI did not confirm Friday's low as bull divergence takes shape.</p><p>A key low in October due to re test the SPX high in November.</p>

Call to sell risk on September 27 has rewarded. The rejection at the underside of broken trendline will dominate risk in October. Fresh SPX sell resistance outlined for a slide into a primary cycle low to buy in October ahead of a Q4 rally.RSI did not confirm Friday's low as bull divergence takes shape.A key low in October due to re test the SPX high in November.

<p>US equities faced headwinds in September, but compression in valuations has been difficult due to the relatively benign action in US Treasury bond yields up until the final week of the month. The Q-ratio has surged to an all-time high due to abundant liquidity, thereby imparting a potential warning signal to investors.</p>
<div>The ability of the Q-ratio to remain above 1 raise questions about the ability of new entrants into industries to overcome barriers to entry and to withstand the risk of being taken over by existing firms. Leadership of the US equity market by dominant technology companies has raised the issue about abuse of market power via anti-trust practices. The latest Economic Census by the Census Bureau does not appear to validate the popular perception that the technology sector has become concentrated in terms of market structure, while the data also indicates that low concentration industries have boosted their share of aggregate output since 2002.</div>
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<div>Equity investors do not need to fear Fed policy next year, but testing times will emerge once short-term interest rates offer compelling competition to dividend yields, an outcome expected in 2024. Delays in resolving fiscal policy issues could impact the timing of asset tapering by the Fed, particularly if there is tightening of US financial conditions due to political gamesmanship over fiscal policy.</div>
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<div>Labour dominates corporations' production costs and the case for sustained higher inflation hinges critically on lacklustre labour productivity, particularly in manufacturing as imports become less of a safety valve. The return of productive manufacturing capacity to the US and slowing labour force growth increase the incentive for companies to invest in productivity-enhancing combinations of capital and labour to bolster productivity in order to reverse the prolonged period of malaise since 2000.             </div>

US equities faced headwinds in September, but compression in valuations has been difficult due to the relatively benign action in US Treasury bond yields up until the final week of the month. The Q-ratio has surged to an all-time high due to abundant liquidity, thereby imparting a potential warning signal to investors.
The ability of the Q-ratio to remain above 1 raise questions about the ability of new entrants into industries to overcome barriers to entry and to withstand the risk of being taken over by existing firms. Leadership of the US equity market by dominant technology companies has raised the issue about abuse of market power via anti-trust practices. The latest Economic Census by the Census Bureau does not appear to validate the popular perception that the technology sector has become concentrated in terms of market structure, while the data also indicates that low concentration industries have boosted their share of aggregate output since 2002.

Equity investors do not need to fear Fed policy next year, but testing times will emerge once short-term interest rates offer compelling competition to dividend yields, an outcome expected in 2024. Delays in resolving fiscal policy issues could impact the timing of asset tapering by the Fed, particularly if there is tightening of US financial conditions due to political gamesmanship over fiscal policy.

Labour dominates corporations' production costs and the case for sustained higher inflation hinges critically on lacklustre labour productivity, particularly in manufacturing as imports become less of a safety valve. The return of productive manufacturing capacity to the US and slowing labour force growth increase the incentive for companies to invest in productivity-enhancing combinations of capital and labour to bolster productivity in order to reverse the prolonged period of malaise since 2000.             

Liquidity Drives Q-Ratio to Record High, as Manufacturing Productivity Becomes Crucial for Inflation

Korea Stock Exchange KOSPI 200 / Technical Analysis

<p>Monday's turn call to sell down longs and put on additional shorts panned out. Now we are positioning for a mild bounce into the month/quarter end to lean on shorts. October still expected to see another leg down. Bigger cycle date comes in near October 7-8th.</p><p>Top shorts in Asia are Korea (due to undershoot on the back of SEC) and HSI (nearing a low) and Taiwan as the recent addition to our short conviction group.</p><p>A50 flirting with big breakout resistance at 15,500 and will drive H share direction. A shares show potential to buck the region negative trend if the A50 clears 15,500 pivot.</p>

Monday's turn call to sell down longs and put on additional shorts panned out. Now we are positioning for a mild bounce into the month/quarter end to lean on shorts. October still expected to see another leg down. Bigger cycle date comes in near October 7-8th.Top shorts in Asia are Korea (due to undershoot on the back of SEC) and HSI (nearing a low) and Taiwan as the recent addition to our short conviction group.A50 flirting with big breakout resistance at 15,500 and will drive H share direction. A shares show potential to buck the region negative trend if the A50 clears 15,500 pivot.

SPX Trendline Rejection/Asia Short Targets

United States

The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.

S&P 500 INDEX (SPX INDEX)

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SPX October Buy Level

Call to sell risk on September 27 has rewarded. The rejection at the underside of broken trendline will dominate risk in October. Fresh SPX sell...

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Liquidity Drives Q-Ratio to Record High, as Manufacturing Productivity Becomes Crucial for Inflation

Generous liquidity from the Fed pushed the Q-ratio to a record high, while there is little evidence of the influence of market structures....

DeSaque Macro Research

SPX Trendline Rejection/Asia Short Targets

Monday's turn call to sell down longs and put on additional shorts panned out. Use a month/quarter end bounce to lean on shorts. October to see...

Thomas Schroeder