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.

Fed Watchers Beware: Debt Ceiling and Fiscal Policy Standoffs Could Impact US Monetary Policy

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

<div>The recent departures of the Federal Reserve Bank Presidents of Boston and Dallas due to their trading activity has raised questions about the integrity of the Fed, but greater scrutiny is unsurprising given the importance of US monetary policy in shaping financial asset prices since the global financial crisis. The departed Federal Reserve Bank Presidents were not voting members of the Federal Open Market Committee (FOMC) in 2021, while two looming vacancies on the Board of Governors next year mean that four new members will be joining the FOMC in the next 12-months.</div>
<div></div>
<div>The trading scandals that have engulfed the FOMC could complicate the renomination of Chair Powell, despite support from Treasury Secretary Yellen, while Progressive Democrats are pushing the promotion of Governor Brainard, a renowned dove, to potentially succeed Chair Powell. Meanwhile, the outlook for President Biden's domestic economic agenda has become more uncertain, while the continued debt ceiling impasse could still threaten US financial conditions due to political gamesmanship.</div>
<div></div>
<div>The US economy slowed during Q3, but it has hitherto not adversely impacted corporate profit expectations due to higher energy prices. Meanwhile, continued supply chain issues, rising labour costs and stalling economic growth in China pose potential headwinds for US corporate performance in Q3 and beyond. Prospective unit labour costs will be crucial in determining profitability, particularly in those sectors that enjoy lower-than-average operating margins.</div>
<div></div>
<div>
<div>Further interruptions to economic activity in China stemming from power shortages could prolong the impact of dislocated supply chains on product availability and prices. Meanwhile, China fell short of the promises embedded in the Phase One Sino-US trade deal signed with President Trump, thereby setting the stage for an increase in trade tensions with the Biden Administration ahead of next year's mid-term elections.   </div>
<p></p>
</div>

The recent departures of the Federal Reserve Bank Presidents of Boston and Dallas due to their trading activity has raised questions about the integrity of the Fed, but greater scrutiny is unsurprising given the importance of US monetary policy in shaping financial asset prices since the global financial crisis. The departed Federal Reserve Bank Presidents were not voting members of the Federal Open Market Committee (FOMC) in 2021, while two looming vacancies on the Board of Governors next year mean that four new members will be joining the FOMC in the next 12-months.

The trading scandals that have engulfed the FOMC could complicate the renomination of Chair Powell, despite support from Treasury Secretary Yellen, while Progressive Democrats are pushing the promotion of Governor Brainard, a renowned dove, to potentially succeed Chair Powell. Meanwhile, the outlook for President Biden's domestic economic agenda has become more uncertain, while the continued debt ceiling impasse could still threaten US financial conditions due to political gamesmanship.

The US economy slowed during Q3, but it has hitherto not adversely impacted corporate profit expectations due to higher energy prices. Meanwhile, continued supply chain issues, rising labour costs and stalling economic growth in China pose potential headwinds for US corporate performance in Q3 and beyond. Prospective unit labour costs will be crucial in determining profitability, particularly in those sectors that enjoy lower-than-average operating margins.


Further interruptions to economic activity in China stemming from power shortages could prolong the impact of dislocated supply chains on product availability and prices. Meanwhile, China fell short of the promises embedded in the Phase One Sino-US trade deal signed with President Trump, thereby setting the stage for an increase in trade tensions with the Biden Administration ahead of next year's mid-term elections.   



Unexpected FOMC Changes Loom Just as Corporate Profits Outlook Requires Greater Scrutiny