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.

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Fed Policy Outlook: Political Pressures and Fast Track Business Cycle Present Major Challenges

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

Despite strong current labour market conditions, incoming US economic data over the next two months will still be closely monitored by the Federal Open Market Committee (FOMC) to determine whether a change to current policy settings is warranted. Ideally, members would like to witness a reduction in labour supply constraints and, consequently, a slowing rate of decline in the civilian unemployment rate in the next six months.
The strong July Employment Situation report has not shattered the pessimistic growth outlook embraced by bond investors. Meanwhile, critics of the Fed's current posture cite plenty of scope for unintended fallout the longer highly accommodative policy settings remain unchanged. 
Sustained quantitative easing by the Fed and other central banks produced rising wealth inequality that resulted in political populism. The persistence of large-scale Fed asset purchases will continue to distort investment decisions that will ultimately not improve the supply-side of the economy. Meanwhile, rising wealth inequality has become increasingly evident by the deterioration in housing affordability that could boost inflation by increasing primary rents as would-be home buyers are forced to rent for longer.
Excessive focus has been placed on making comparisons between the current environment and the taper tantrum during the summer of 2013, but the current fiscal policy backdrop is fundamentally different. Fiscal policy support is unlikely to totally vanish overnight due to pending infrastructure programmes and other potential spending initiatives before the mid-term elections. Consequently, the Fed can scale back policy accommodation without major downside economic risks, while fiscal policy will be better-placed to enhance supply-side improvements in the economy.

Despite strong current labour market conditions, incoming US economic data over the next two months will still be closely monitored by the Federal Open Market Committee (FOMC) to determine whether a change to current policy settings is warranted. Ideally, members would like to witness a reduction in labour supply constraints and, consequently, a slowing rate of decline in the civilian unemployment rate in the next six months.
The strong July Employment Situation report has not shattered the pessimistic growth outlook embraced by bond investors. Meanwhile, critics of the Fed's current posture cite plenty of scope for unintended fallout the longer highly accommodative policy settings remain unchanged. 
Sustained quantitative easing by the Fed and other central banks produced rising wealth inequality that resulted in political populism. The persistence of large-scale Fed asset purchases will continue to distort investment decisions that will ultimately not improve the supply-side of the economy. Meanwhile, rising wealth inequality has become increasingly evident by the deterioration in housing affordability that could boost inflation by increasing primary rents as would-be home buyers are forced to rent for longer.
Excessive focus has been placed on making comparisons between the current environment and the taper tantrum during the summer of 2013, but the current fiscal policy backdrop is fundamentally different. Fiscal policy support is unlikely to totally vanish overnight due to pending infrastructure programmes and other potential spending initiatives before the mid-term elections. Consequently, the Fed can scale back policy accommodation without major downside economic risks, while fiscal policy will be better-placed to enhance supply-side improvements in the economy.          

Case for Lower Fed Policy Accommodation Becomes More Compelling, but Bond Investors Still Disagree