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.

The Fed Throws in the Powell (Err Towel) ... QE4 Is Here!

Trade War/Huawei/GDP/Hong Kong/Macau Nasdaq

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

Markets are pricing in another 25 basis points reduction in the federal funds rate later this month due to rapidly weakening manufacturing activity last month according to the Institute for Supply Management (ISM), notably new export orders have surpassed their previous low reached during the Asian financial crisis. The current global slowdown is geographically more dispersed and, consequently, it is likely to have a greater impact on US manufacturing than President Trump's trade policies, at least for the time being.
Evidence of a stalling US expansion was captured last month by seemingly disappointing auto &amp; light truck sales, although the timing of the Labour Day weekend significantly reduced the number of selling days in the month. Meanwhile, expansion in the service sector continues its deceleration which could have a detrimental impact on future S&amp;P500 revenue growth.
The Employment Situation report for September indicated respectable labour demand as testified by a large decline in the unemployment rate to 3.5%, which also raises pressure on the Federal Open Market Committee (FOMC) to reduce its estimate of the natural rate. Meanwhile, the two insurance policy rate cuts engineered by the Fed with the unemployment rate below its natural rate raises the ante on the FOMC to further cut their estimated terminal level for the federal funds rate.
The lack of consistent support that central banks have received from fiscal policy to support aggregate demand since the financial crisis has put monetary policy conduct into a straight jacket, whereby normalisation becomes virtually impossible. Meanwhile, the FOMC has lowered its estimate of the terminal level of the federal funds rate since 2012 by nearly 2 percentage points, but they still do not fully subscribe to the secular stagnation thesis embraced by bond investors.
Further global monetary easing will be supportive for risky assets, but ultimately the magnitude of any rally will be affected by the behaviour of baseline valuations that investors are willing to embrace. US corporate profit expectations remain too sanguine for 2020 by assuming speedy resolution of trade-related uncertainties, an outcome that may not transpire.

Markets are pricing in another 25 basis points reduction in the federal funds rate later this month due to rapidly weakening manufacturing activity last month according to the Institute for Supply Management (ISM), notably new export orders have surpassed their previous low reached during the Asian financial crisis. The current global slowdown is geographically more dispersed and, consequently, it is likely to have a greater impact on US manufacturing than President Trump's trade policies, at least for the time being.
Evidence of a stalling US expansion was captured last month by seemingly disappointing auto &amp; light truck sales, although the timing of the Labour Day weekend significantly reduced the number of selling days in the month. Meanwhile, expansion in the service sector continues its deceleration which could have a detrimental impact on future S&amp;P500 revenue growth.
The Employment Situation report for September indicated respectable labour demand as testified by a large decline in the unemployment rate to 3.5%, which also raises pressure on the Federal Open Market Committee (FOMC) to reduce its estimate of the natural rate. Meanwhile, the two insurance policy rate cuts engineered by the Fed with the unemployment rate below its natural rate raises the ante on the FOMC to further cut their estimated terminal level for the federal funds rate.
The lack of consistent support that central banks have received from fiscal policy to support aggregate demand since the financial crisis has put monetary policy conduct into a straight jacket, whereby normalisation becomes virtually impossible. Meanwhile, the FOMC has lowered its estimate of the terminal level of the federal funds rate since 2012 by nearly 2 percentage points, but they still do not fully subscribe to the secular stagnation thesis embraced by bond investors.
Further global monetary easing will be supportive for risky assets, but ultimately the magnitude of any rally will be affected by the behaviour of baseline valuations that investors are willing to embrace. US corporate profit expectations remain too sanguine for 2020 by assuming speedy resolution of trade-related uncertainties, an outcome that may not transpire.

Fed Response to Slowing US Growth Supports Risky Assets, but Profit Expectations Become Critical Too