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 weaker-than-expected <em>Employment Situation</em> report for non-farm payrolls in August has raised expectations that the Fed could delay tapering asset purchases, but investors need to discern whether the outcome was due to an underlying slowing in labour demand or merely statistical noise. Estimates for Q3 real GDP growth have been revised down in recent weeks, while labour market data in September will be impacted by people returning to the workforce, thereby providing more time for the Fed to deliberate over the timing of tapering asset purchases.</div>
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<div>The Great Lockdown has imparted scars on US labour supply by amplifying the declining working age population via a sharp fall in the participation rate. Elevated measures of job openings and underemployment paint a paradoxical overview of the US labour market, while elevated unemployment in certain demographic cohorts raises questions about the decision to taper asset purchases.</div>
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<div>The Fed will assess if slowing employment reflects softening aggregate demand or supply-side damage to the labour market, but elevated job openings suggest the latter, an outcome that implies limited efficacy for monetary policy in dealing with this issue. Labour supply has been impacted by enhanced unemployment insurance benefits, the rise in home schooling due to the pandemic, as well as the prevalence of so-called long COVID.</div>
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<div>Continued slowing growth of the workforce will lower potential GDP growth and the required neutral level for the federal funds rate, but the key issue for investors is whether slower growth produces higher inflation. The unwinding of supply chain dislocations is crucial behind the Fed's transient inflation thesis, but the prospective trend in productivity will be vital in determining whether there is a risk of slower growth being associated with higher inflation.</div>

The weaker-than-expected Employment Situation report for non-farm payrolls in August has raised expectations that the Fed could delay tapering asset purchases, but investors need to discern whether the outcome was due to an underlying slowing in labour demand or merely statistical noise. Estimates for Q3 real GDP growth have been revised down in recent weeks, while labour market data in September will be impacted by people returning to the workforce, thereby providing more time for the Fed to deliberate over the timing of tapering asset purchases.

The Great Lockdown has imparted scars on US labour supply by amplifying the declining working age population via a sharp fall in the participation rate. Elevated measures of job openings and underemployment paint a paradoxical overview of the US labour market, while elevated unemployment in certain demographic cohorts raises questions about the decision to taper asset purchases.

The Fed will assess if slowing employment reflects softening aggregate demand or supply-side damage to the labour market, but elevated job openings suggest the latter, an outcome that implies limited efficacy for monetary policy in dealing with this issue. Labour supply has been impacted by enhanced unemployment insurance benefits, the rise in home schooling due to the pandemic, as well as the prevalence of so-called long COVID.

Continued slowing growth of the workforce will lower potential GDP growth and the required neutral level for the federal funds rate, but the key issue for investors is whether slower growth produces higher inflation. The unwinding of supply chain dislocations is crucial behind the Fed's transient inflation thesis, but the prospective trend in productivity will be vital in determining whether there is a risk of slower growth being associated with higher inflation.

Has COVID-19 Damaged US Labour Supply and Potential GDP Growth? Big Implications for Fed Policy

Founder & Chief Market Strategist - SAV Markets, SAV Markets

Shyam Devani

Founder & Chief Market Strategist - SAV Markets

Technical Analysis

<p>The <strong>S&amp;P 500</strong> looks a little stretched in the short term with the market also appearing to be indecisive over the past week. Another short pullback seems to be on the cards which should lead to another buying opportunity.</p>

The S&amp;P 500 looks a little stretched in the short term with the market also appearing to be indecisive over the past week. Another short pullback seems to be on the cards which should lead to another buying opportunity.

Cross Asset Strategy

<p><em>For some time one of the favourite trends here has been the bullish one on the Nifty Index. There were numerous targets in mind including 17,400 on the Nifty Index itself and 240 on the Nifty in USD terms</em></p><p><em>This week we met the 17,400 target. At the same time the bulk of the move down on USDINR looks to be behind us. </em></p><p><em>Looking at the relevant charts below it is prudent at this stage to expect a consolidation or correction down and possibly opportunities to re-engage in the Nifty Index at better levels later.</em></p><p>Charts: Nifty Index | USDINR | Nifty in USDs | Nifty Index versus S&amp;P 500 Ratio</p>

For some time one of the favourite trends here has been the bullish one on the Nifty Index. There were numerous targets in mind including 17,400 on the Nifty Index itself and 240 on the Nifty in USD termsThis week we met the 17,400 target. At the same time the bulk of the move down on USDINR looks to be behind us. Looking at the relevant charts below it is prudent at this stage to expect a consolidation or correction down and possibly opportunities to re-engage in the Nifty Index at better levels later.Charts: Nifty Index | USDINR | Nifty in USDs | Nifty Index versus S&amp;P 500 Ratio

India’s Nifty Target Met - Time for a Consolidation

Shanghai Stock Exchange Composite Index / Technical Analysis

<p><a target="_blank">China’s markets are again on the rise and showing a strong breakout this week . Furthermore, the ratio verses the S&amp;P 500 suggests it (China) is likely to outperform in the near term.</a></p><p>Hong Kong’s Hang Seng is showing a setup that may provide a platform for a rally to the tune of 9% from current levels</p><p>Overall, instead of a worrying September, Asian markets are presenting opportunities. There seems to be a rotation of sorts from the Far West, where markets had outperformed for much of this year, to the Far East where markets had underperformed and where sentiment (especially regarding China) seems too negatively stretched.</p>

China’s markets are again on the rise and showing a strong breakout this week . Furthermore, the ratio verses the S&amp;P 500 suggests it (China) is likely to outperform in the near term.Hong Kong’s Hang Seng is showing a setup that may provide a platform for a rally to the tune of 9% from current levelsOverall, instead of a worrying September, Asian markets are presenting opportunities. There seems to be a rotation of sorts from the Far West, where markets had outperformed for much of this year, to the Far East where markets had underperformed and where sentiment (especially regarding China) seems too negatively stretched.

China: Shanghai Breakout and Hong Kong's Bullish Setup

<p><em>Japan’s Nikkei 225 has finally rebounded from the support zone and is now trading above key levels suggesting a retest of the February highs if not beyond</em></p><p><em>This looks good also for a USD denominated foreign investor as US yields remain low and the USD on the back foot thereby keeping a lid on USDJPY.</em></p>

Japan’s Nikkei 225 has finally rebounded from the support zone and is now trading above key levels suggesting a retest of the February highs if not beyondThis looks good also for a USD denominated foreign investor as US yields remain low and the USD on the back foot thereby keeping a lid on USDJPY.

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)

Has COVID-19 Damaged US Labour Supply and Potential GDP Growth? Big Implications for Fed Policy

COVID-19 will leave legacies, some of which could impact Fed policy. Potential GDP growth could be adversely impacted by labour supply damage which...

DeSaque Macro Research

S&P 500: Another Pullback?

A short term pullback appears to be the risk on the S&P 500 which should ultimately be short lived and likely turn in to a buying opportunity

Shyam Devani

India’s Nifty Target Met - Time for a Consolidation

India's Nifty Index has met the topside target in Rupee terms and almost in USD terms. Recent price action suggests it is prudent to step back and...

Shyam Devani

China: Shanghai Breakout and Hong Kong's Bullish Setup

Tables are turning in China - the Shanghai Composite not only looks bullish but starting to look like it will outperform the S&P 500 in the near...

Shyam Devani

Nikkei 225 Shows a Solid Break

The rally in the Nikkei 225 looks very constructive and a retest of the year's highs seems to be on the cards. there are also good signs that the...

Shyam Devani