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.

Despite Excessive Optimism on US-China Trade Deal, US Equities and Credit Risk Further Melt-Up

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

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<div>The rally in US equities continues, but investors have been forced to negatively revise their assessment of the chances for a Phase One trade deal being signed between the US and China. Meanwhile, a comprehensive agreement, involving US agricultural exports and intellectual property protection, is still a long way from any semblance of conclusion.</div>
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<div>The biggest risks to US equities emanate from domestic sources, notably the threat of an anti-business agenda via changing  leadership at the White House in 2020. Furthermore, the arrival of a Democratic President is unlikely to alleviate anti-China sentiment in Congress, as both political parties view Beijing as a strategic and economic threat to the US.</div>
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<div>Hitherto, Beijing has not responded to trade-related economic headwinds with major monetary or fiscal stimulus. Progress in resolving the US-China in trade dispute 2020 H1 will, however, probably determine the magnitude of future economic policy adjustments.</div>
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<div>Residential real estate deflation poses a far greater threat of damage to China's economy and social order compared to a protracted US trade dispute due to the sector's significant contribution to economy activity, as well as the rise in leverage. Efforts to reduce leverage must avoid triggering firewall sales by property developers that, in turn, could produce a sharp reduction in the quality of bank collateral. </div>
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<div>China has asserted that Japan's malaise after the bursting of its bubble economy was the result of capitulation to US demands in the Plaza Accord, an outcome they are determined not to replicate in any future US trade deal. China can avoid the fate of Japan by further reducing reliance on external demand, thereby making monetary policy settings less dependent on exchange rate considerations.   </div>
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The rally in US equities continues, but investors have been forced to negatively revise their assessment of the chances for a Phase One trade deal being signed between the US and China. Meanwhile, a comprehensive agreement, involving US agricultural exports and intellectual property protection, is still a long way from any semblance of conclusion.


The biggest risks to US equities emanate from domestic sources, notably the threat of an anti-business agenda via changing  leadership at the White House in 2020. Furthermore, the arrival of a Democratic President is unlikely to alleviate anti-China sentiment in Congress, as both political parties view Beijing as a strategic and economic threat to the US.


Hitherto, Beijing has not responded to trade-related economic headwinds with major monetary or fiscal stimulus. Progress in resolving the US-China in trade dispute 2020 H1 will, however, probably determine the magnitude of future economic policy adjustments.


Residential real estate deflation poses a far greater threat of damage to China's economy and social order compared to a protracted US trade dispute due to the sector's significant contribution to economy activity, as well as the rise in leverage. Efforts to reduce leverage must avoid triggering firewall sales by property developers that, in turn, could produce a sharp reduction in the quality of bank collateral. 

China has asserted that Japan's malaise after the bursting of its bubble economy was the result of capitulation to US demands in the Plaza Accord, an outcome they are determined not to replicate in any future US trade deal. China can avoid the fate of Japan by further reducing reliance on external demand, thereby making monetary policy settings less dependent on exchange rate considerations.   










Risky Assets Too Optimistic for Quick US Trade Deal, As Housing Presents Big Challenge for China