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.

Misguided US Stimulus Offers Little Help to Supply-Side to Offset Potential Inflation Risks

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

Based on the Federal Open Market Committee's (FOMC) estimate of the natural rate of unemployment, the current state of the US labour market should not present supply-related constraints to economic growth. President Bullard of the St. Louis Fed believes, however, that the labour market is tighter than popularly perceived due to people permanently leaving the workforce over the past year, as well as competition to attract workers in low value-added services.Supply-chain issues have been impacted the housing sector by reducing the available inventory of new homes for sale and raising  construction costs. Existing home prices have surged given the supply shortage of new homes, an outcome compounded by chronic labour shortages in the market for entry-level housing stock.Deteriorating housing affordability could eventually impact consumer price inflation (CPI) by persuading potential buyers to rent for longer, thereby driving up primary and, subsequently, owner-imputed rents. The FOMC will insist that any uptick in inflation is transient and, consequently, their focus will be on reducing unemployment, thereby potentially imparting the impression to investors that members are becoming more tolerant of higher inflation.Cyclical risks to the US economy have receded since the start of the year and equity market dynamics have discounted this outcome via the outperformance of value stocks versus their growth counterparts, particularly financials and energy. The continued ability of value to outperform growth will depend on the economy returning to the best possible semblance of pre-pandemic normality, but rising inflation could eventually pose a risk to the P/E multiples of all equities, irrespective of value and growth classifications.

Based on the Federal Open Market Committee's (FOMC) estimate of the natural rate of unemployment, the current state of the US labour market should not present supply-related constraints to economic growth. President Bullard of the St. Louis Fed believes, however, that the labour market is tighter than popularly perceived due to people permanently leaving the workforce over the past year, as well as competition to attract workers in low value-added services.Supply-chain issues have been impacted the housing sector by reducing the available inventory of new homes for sale and raising  construction costs. Existing home prices have surged given the supply shortage of new homes, an outcome compounded by chronic labour shortages in the market for entry-level housing stock.Deteriorating housing affordability could eventually impact consumer price inflation (CPI) by persuading potential buyers to rent for longer, thereby driving up primary and, subsequently, owner-imputed rents. The FOMC will insist that any uptick in inflation is transient and, consequently, their focus will be on reducing unemployment, thereby potentially imparting the impression to investors that members are becoming more tolerant of higher inflation.Cyclical risks to the US economy have receded since the start of the year and equity market dynamics have discounted this outcome via the outperformance of value stocks versus their growth counterparts, particularly financials and energy. The continued ability of value to outperform growth will depend on the economy returning to the best possible semblance of pre-pandemic normality, but rising inflation could eventually pose a risk to the P/E multiples of all equities, irrespective of value and growth classifications. 

Sector-Specific Labour Constraints Make Their Mark, as Fed Sticks to Policy Narrative