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.

Cross Asset Strategy

<p>The magnitude of anticipated borrowing by the US Treasury in H1 has been dramatically reduced compared to estimates released in November, partly due to the looming expiration of legislation that suspended the debt ceiling in 2019. Currently, the Treasury's cash balance is forecast to fall by $1.5 trillion by the end of June, thereby imparting significant consequences for the level of reserves in the banking system and, consequently, financial market conditions.</p>
<p>Despite the continuation of uncertainty about the magnitude of supplementary fiscal stimulus, continued quantitative easing by the Fed and a lower Treasury cash balance will be supportive for risky assets. The aggressive expansion of the Fed's balance sheet in the aftermath of the arrival of the COVID-19 pandemic was able to offset large Treasury borrowing demands, thereby helping to support easy financial conditions and, therefore, US equities.</p>
<p>The arrival of quantitative easing heralded the onset of a new era, whereby reserve and deposit growth both consistently outstrip loans. Given the likelihood of extremely large increase in reserves, banks could become an even more important source of demand for Treasury securities, an outcome that could potentially create problems for the Fed if the risk of portfolio losses on bond holdings rises significantly.</p>
<p>Continued strong demand for Treasuries from banks will suppress the term premium embedded in yields, thereby boosting financial accommodation. Potentially lower capital buffers after 31 March could temporarily impact banks' ability to expand deposits and repo financing.  </p>

The magnitude of anticipated borrowing by the US Treasury in H1 has been dramatically reduced compared to estimates released in November, partly due to the looming expiration of legislation that suspended the debt ceiling in 2019. Currently, the Treasury's cash balance is forecast to fall by $1.5 trillion by the end of June, thereby imparting significant consequences for the level of reserves in the banking system and, consequently, financial market conditions.
Despite the continuation of uncertainty about the magnitude of supplementary fiscal stimulus, continued quantitative easing by the Fed and a lower Treasury cash balance will be supportive for risky assets. The aggressive expansion of the Fed's balance sheet in the aftermath of the arrival of the COVID-19 pandemic was able to offset large Treasury borrowing demands, thereby helping to support easy financial conditions and, therefore, US equities.
The arrival of quantitative easing heralded the onset of a new era, whereby reserve and deposit growth both consistently outstrip loans. Given the likelihood of extremely large increase in reserves, banks could become an even more important source of demand for Treasury securities, an outcome that could potentially create problems for the Fed if the risk of portfolio losses on bond holdings rises significantly.
Continued strong demand for Treasuries from banks will suppress the term premium embedded in yields, thereby boosting financial accommodation. Potentially lower capital buffers after 31 March could temporarily impact banks' ability to expand deposits and repo financing.  

Dramatically Rising US Bank Liquidity in 2021: Supportive for Treasuries and Risky Assets

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Nasdaq-100 Stock Index / Technical Analysis

<div>Markets are now overdone on a short term basis and once again kissing the topside of the SPX rising wedge where we are selling some risk and layering into protection.</div><div>
<br>Bull momentum call to push toward the rising resistance at the top of the wedge near 2,930 but with time translation would shift right/up toward 3,940. Bet is to lock in some long gains into this zone and put on a few shorts for a minor pullback ahead of a fresh rally into late Feb. The directional bet is to buy equities on weakness (given SPX 3,800 holds) for a bigger cycle peak due in late Feb. Late Feb peak would usher in a harder corrective cycle into late March but let's see how the late Feb timeline unfolds first.</div><div></div><div>Spaces to short are outlined with entry, stops and PT's. We like buying our bull group again on a pullback into late February.</div>

Markets are now overdone on a short term basis and once again kissing the topside of the SPX rising wedge where we are selling some risk and layering into protection.
 Bull momentum call to push toward the rising resistance at the top of the wedge near 2,930 but with time translation would shift right/up toward 3,940. Bet is to lock in some long gains into this zone and put on a few shorts for a minor pullback ahead of a fresh rally into late Feb. The directional bet is to buy equities on weakness (given SPX 3,800 holds) for a bigger cycle peak due in late Feb. Late Feb peak would usher in a harder corrective cycle into late March but let's see how the late Feb timeline unfolds first.Spaces to short are outlined with entry, stops and PT's. We like buying our bull group again on a pullback into late February.

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

<div>The action we are seeing in broad indexes, Sectors, and in market dynamics continues to support our overall bullish outlook. Additionally, the mild deterioration in market dynamics that we discussed the past two weeks is now much less of a concern. Continue to buy dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Energy, and Health Care.</div>

The action we are seeing in broad indexes, Sectors, and in market dynamics continues to support our overall bullish outlook. Additionally, the mild deterioration in market dynamics that we discussed the past two weeks is now much less of a concern. Continue to buy dips. In today’s report we highlight attractive Groups and stocks within Consumer Discretionary, Energy, and Health Care.

U.S. Equity Strategy: Bullish Outlook Intact

<p>US corporations are already planning for the arrival of a new business environment after COVID-19, but the timing and its exact structure will depend heavily on the success of vaccine rollouts. The pandemic has imparted deep wounds in some sectors of the economy that will impact companies for many years, thereby additionally forcing them to address lingering secular challenges.</p>
<p>Any additional short-term fiscal boost by the Biden Administration should be supportive for aggregate demand, but the overall impact will depend on being able to abolish social restrictions. Economic uncertainty still lingers due the unknown size of additional stimulus as well as the timing of its implementation due to the budget reconciliation process.</p>
<p>President Biden's economic agenda goes beyond short-term stimulus to embrace infrastructure programmes, corporate tax changes, and a potential resetting of trade relations with China. Companies with high foreign-sourced profits will experience the largest increase in their effective tax rate if corporation tax is raised to 28% from 21%.</p>
<div>Tougher regulations in the realm of climate change under the Biden Administration and the continued rise of environmental, social and governance (ESG) factors in asset allocation spell tougher times ahead for the oil and gas sectors, as well as automotive. Reducing US technology companies' reliance on China in their supply-chains cannot be remedied quickly, along with issues about intellectual property, thereby making a resetting of trade relations more complex. The health care sector does not face risks of regulatory reforms in the near-term, but the outlook could change if the number of uninsured Americans continues to rise as the economy recovers. </div>
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<p>The influence of ESG factors in asset allocation during the Biden Administration will continue to rise, given their importance in providing the plans to build a sustainable economic recovery. Mergers and acquisitions will feature prominently as companies respond to the challenges of new legislation, ESG-driven asset allocation affecting the cost of capital and secular changes to the business environment.</p>
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US corporations are already planning for the arrival of a new business environment after COVID-19, but the timing and its exact structure will depend heavily on the success of vaccine rollouts. The pandemic has imparted deep wounds in some sectors of the economy that will impact companies for many years, thereby additionally forcing them to address lingering secular challenges.
Any additional short-term fiscal boost by the Biden Administration should be supportive for aggregate demand, but the overall impact will depend on being able to abolish social restrictions. Economic uncertainty still lingers due the unknown size of additional stimulus as well as the timing of its implementation due to the budget reconciliation process.
President Biden's economic agenda goes beyond short-term stimulus to embrace infrastructure programmes, corporate tax changes, and a potential resetting of trade relations with China. Companies with high foreign-sourced profits will experience the largest increase in their effective tax rate if corporation tax is raised to 28% from 21%.
Tougher regulations in the realm of climate change under the Biden Administration and the continued rise of environmental, social and governance (ESG) factors in asset allocation spell tougher times ahead for the oil and gas sectors, as well as automotive. Reducing US technology companies' reliance on China in their supply-chains cannot be remedied quickly, along with issues about intellectual property, thereby making a resetting of trade relations more complex. The health care sector does not face risks of regulatory reforms in the near-term, but the outlook could change if the number of uninsured Americans continues to rise as the economy recovers. 


The influence of ESG factors in asset allocation during the Biden Administration will continue to rise, given their importance in providing the plans to build a sustainable economic recovery. Mergers and acquisitions will feature prominently as companies respond to the challenges of new legislation, ESG-driven asset allocation affecting the cost of capital and secular changes to the business environment.





Outlook for US Corporations: Greener Pastures Not Guaranteed Under Biden Administration Agenda

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Macroeconomics

<p><strong><em>December economic pause was followed by a US$900 billion stimulus that will largely be spent in 1Q 2021. The output gap (still 2.8% of potential GDP in 4Q 2020) will narrow sharply this quarter, making it impossible for the Fed to sustain US$120 billion of monthly QE. Whether Biden pushes through a US$1.9 trillion stimulus (without GOP votes) or a more modest US$1.5 trillion one with some GOP votes, it will prove inflationary by 3Q 2021. With the public debt soaring toward 120% of GDP, Biden's corporate tax hike from 21% to 28% will likely be announced (even if conditionally) at his 23 February 2021 speech to a joint session of Congress. We recommend being underweight equities, and long US$ on a 6-month view. </em></strong></p><p>The renewed surge in Coronavirus infections in the last two months, and related restrictions on economic activity, contributed both to the December decline in non-farm payrolls and a relatively weak print for real GDP growth in 4Q 2020 (+4%QoQsaar, -2.5% YoY). The output gap, which was 3.5% of potential GDP in 3Q 2020, only improved to 2.8% of potential GDP in 4Q 2020, delaying the onset of inflation risks, keeping both core inflation gauges at 1.5-1.6% YoY at end-2020. </p><p>However, the US$900 billion fiscal stimulus was only enacted on 27 December 2020, and hence began to boost the economy only in 1Q 2021. If the full Biden stimulus of a further US$1.9 trillion is passed via a reconciliation process (without GOP support), the total of US$2.8 trillion will add 13.3% of GDP to the deficit for FY2021 (already estimated by the CBO at 9% of GDP before the two stimulus packages). That would be more than sufficient to close the output gap by mid-2021. Even a more modest stimulus (US$1.5 trillion) passed with some Republican support, would suffice to close the output gap by July 2021, pushing core CPI inflation above 2% YoY by 3Q 2021. M2 growth (which has plateaued around the 24% YoY handle over the past 8 months) will likely need to be reined-in by 2Q 2021, even if the FOMC is not immediately obliged to raise rates.</p><p>Biden has already tightened environmental regulations, as promised, by rejoining the Paris Climate accord, imposing a moratorium on oil/gas drilling on federal land and water and revoking the Keystone XL pipeline permit. The two stimulus packages will boost EPS and economic growth. But with the public debt already above 100% of GDP, Biden will likely announce his promised hike in corporate taxes (to 28% from 21%) at his speech to the joint session of Congress on 23 February 2021. That too will slash EPS growth in FY2022 (Oct 2021 to Sep 2022). We recommend staying Underweight Equities, and de-risking portfolios. On a six-month view, we would be long US$.    </p>

December economic pause was followed by a US$900 billion stimulus that will largely be spent in 1Q 2021. The output gap (still 2.8% of potential GDP in 4Q 2020) will narrow sharply this quarter, making it impossible for the Fed to sustain US$120 billion of monthly QE. Whether Biden pushes through a US$1.9 trillion stimulus (without GOP votes) or a more modest US$1.5 trillion one with some GOP votes, it will prove inflationary by 3Q 2021. With the public debt soaring toward 120% of GDP, Biden's corporate tax hike from 21% to 28% will likely be announced (even if conditionally) at his 23 February 2021 speech to a joint session of Congress. We recommend being underweight equities, and long US$ on a 6-month view. The renewed surge in Coronavirus infections in the last two months, and related restrictions on economic activity, contributed both to the December decline in non-farm payrolls and a relatively weak print for real GDP growth in 4Q 2020 (+4%QoQsaar, -2.5% YoY). The output gap, which was 3.5% of potential GDP in 3Q 2020, only improved to 2.8% of potential GDP in 4Q 2020, delaying the onset of inflation risks, keeping both core inflation gauges at 1.5-1.6% YoY at end-2020. However, the US$900 billion fiscal stimulus was only enacted on 27 December 2020, and hence began to boost the economy only in 1Q 2021. If the full Biden stimulus of a further US$1.9 trillion is passed via a reconciliation process (without GOP support), the total of US$2.8 trillion will add 13.3% of GDP to the deficit for FY2021 (already estimated by the CBO at 9% of GDP before the two stimulus packages). That would be more than sufficient to close the output gap by mid-2021. Even a more modest stimulus (US$1.5 trillion) passed with some Republican support, would suffice to close the output gap by July 2021, pushing core CPI inflation above 2% YoY by 3Q 2021. M2 growth (which has plateaued around the 24% YoY handle over the past 8 months) will likely need to be reined-in by 2Q 2021, even if the FOMC is not immediately obliged to raise rates.Biden has already tightened environmental regulations, as promised, by rejoining the Paris Climate accord, imposing a moratorium on oil/gas drilling on federal land and water and revoking the Keystone XL pipeline permit. The two stimulus packages will boost EPS and economic growth. But with the public debt already above 100% of GDP, Biden will likely announce his promised hike in corporate taxes (to 28% from 21%) at his speech to the joint session of Congress on 23 February 2021. That too will slash EPS growth in FY2022 (Oct 2021 to Sep 2022). We recommend staying Underweight Equities, and de-risking portfolios. On a six-month view, we would be long US$.    

Delayed Inflation Risks to Be Re-Ignited by Biden Stimulus as Output Gap Closes

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)

Dramatically Rising US Bank Liquidity in 2021: Supportive for Treasuries and Risky Assets

The US Treasury's cash balance will drop sharply in H1, boosting bank reserves. Thus, cash at US banks will rise significantly in 2021, thereby...

DeSaque Macro Research

SPX Top of Wedge Sell Zone

Markets are now overdone on a short term basis and once again kissing the topside of the SPX rising wedge where we are selling some risk and...

Thomas Schroeder

U.S. Equity Strategy: Bullish Outlook Intact

The action we are seeing in broad indexes, Sectors, and in market dynamics continues to support our overall bullish outlook. Continue to buy dips.

Vermilion Research

Outlook for US Corporations: Greener Pastures Not Guaranteed Under Biden Administration Agenda

Greener pastures for corporations under the Biden Administration's agenda are not guaranteed. Measures to support aggregate demand will be bullish,...

DeSaque Macro Research

Delayed Inflation Risks to Be Re-Ignited by Biden Stimulus as Output Gap Closes

Covid hurt in Dec20, but the $900bn stimulus kicked in this month and will be concentrated in 1Q21. Biden stimulus will close output gap by mid...

Prasenjit K. Basu