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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Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

The better-than-expected performance of the US economy since the fiscal cliff raises an issue as to whether the Federal Open Market Committee (FOMC) has been too pessimistic in their assessment of the economic outlook. Different dynamics have unfolded since the arrival of the COVID-19 pandemic to those envisaged by the FOMC.
US households deployed stimulus payments to repair balance sheets during Q2, and could repeat the process if more fiscal easing is introduced. The decline in households' net worth during the COVID-19 recession was short-lived in stark contrast to the protracted period experienced in the aftermath of the Great Recession, thereby sowing the seeds for a faster economic recovery in 2020 H2.
Repeated calls by Chair Powell for further fiscal stimulus have resulted in some commentators to claim the Fed has embraced so-called Modern Monetary Theory (MMT), whereby policy settings are dictated by the fiscal stance embraced by the government. Chair Powell believes easier fiscal and monetary policies will reduce downside risks for the economy, while there are currently limited negative consequences for excessive stimulus.
Hard-core advocates of MMT claim there is little risk of inflation due to the ever-present threat of higher taxes, thereby implying that bond yields should not be too adversely affected by rising inflationary expectations.  Under MMT, the Fed would aim to cap a dangerous rise in long-term interest rates via yield curve control, something which has yet to happen in 2020. 
The arrival of large federal budget surpluses in the late-1990s raised the spectre of a shrinking supply of Treasuries onto the open-market, thereby incurring implications for the equity risk premium and US equity valuations. Current US equity dynamics are similar to the late-1990s, but, despite large federal budget deficits, quantitative easing has succeeded in reducing the supply of Treasuries, thereby forcing investors into riskier assets due to lower-expected returns on risk-free instruments.

The better-than-expected performance of the US economy since the fiscal cliff raises an issue as to whether the Federal Open Market Committee (FOMC) has been too pessimistic in their assessment of the economic outlook. Different dynamics have unfolded since the arrival of the COVID-19 pandemic to those envisaged by the FOMC.
US households deployed stimulus payments to repair balance sheets during Q2, and could repeat the process if more fiscal easing is introduced. The decline in households' net worth during the COVID-19 recession was short-lived in stark contrast to the protracted period experienced in the aftermath of the Great Recession, thereby sowing the seeds for a faster economic recovery in 2020 H2.
Repeated calls by Chair Powell for further fiscal stimulus have resulted in some commentators to claim the Fed has embraced so-called Modern Monetary Theory (MMT), whereby policy settings are dictated by the fiscal stance embraced by the government. Chair Powell believes easier fiscal and monetary policies will reduce downside risks for the economy, while there are currently limited negative consequences for excessive stimulus.
Hard-core advocates of MMT claim there is little risk of inflation due to the ever-present threat of higher taxes, thereby implying that bond yields should not be too adversely affected by rising inflationary expectations.  Under MMT, the Fed would aim to cap a dangerous rise in long-term interest rates via yield curve control, something which has yet to happen in 2020. 
The arrival of large federal budget surpluses in the late-1990s raised the spectre of a shrinking supply of Treasuries onto the open-market, thereby incurring implications for the equity risk premium and US equity valuations. Current US equity dynamics are similar to the late-1990s, but, despite large federal budget deficits, quantitative easing has succeeded in reducing the supply of Treasuries, thereby forcing investors into riskier assets due to lower-expected returns on risk-free instruments.    

Has the Fed Embraced Modern Monetary Theory? Calls for Fiscal Backup Despite Economic Resilience