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.

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

Much of the economic commentary about the implications of the COVID-19 pandemic on US activity has centred on consumer spending, while relatively little attention has given to prospective capital spending trends. The dramatic collapse of corporate profits will clearly squeeze company spending, but other factors could also constrain business investment.
Corporate America has operated with higher levels of liquidity since the financial crisis, but the COVID-19 pandemic came as a massive shock despite higher cash buffers. Elevated uncertainty about second wave infection rates and the continuation of fiscal policy support will boost the incentive for companies to maintain high cash balances, including via external funding sources.
The unprecedented level of uncertainty about the economic outlook has prompted companies to raise record levels of cash via corporate bond issuance during H1, including borrowing by speculative-grade rated companies. Meanwhile, US equity investors have been rewarding those companies with higher cash buffers with better market performance since the onset of the COVID-19 pandemic in contrast to what prevailed prior to its arrival.
High levels of corporate cash are no longer regarded as a headwind to faster profits growth for companies since the arrival of the Great Lockdown. Sufficiently high liquidity buffers are currently viewed as essential to ensure corporate survival in an environment of virtually zero revenue predictability and, consequently, cash burn rates will closely monitored moving forward.
S&amp;P500 dividends were cut in Q2 from a record level in the previous quarter and could sink lower depending on the duration and depth of the Great Lockdown. Meanwhile, the need to undertake strategic changes to business models to adjust to a "new normal" environment will dilute the short-term importance of share buybacks. Notwithstanding the uncertain economic outlook, the pending squeeze on S&amp;P500 operating margins and depressed levels of capacity utilisation both suggest capital spending will remain weak for the foreseeable future.

Much of the economic commentary about the implications of the COVID-19 pandemic on US activity has centred on consumer spending, while relatively little attention has given to prospective capital spending trends. The dramatic collapse of corporate profits will clearly squeeze company spending, but other factors could also constrain business investment.
Corporate America has operated with higher levels of liquidity since the financial crisis, but the COVID-19 pandemic came as a massive shock despite higher cash buffers. Elevated uncertainty about second wave infection rates and the continuation of fiscal policy support will boost the incentive for companies to maintain high cash balances, including via external funding sources.
The unprecedented level of uncertainty about the economic outlook has prompted companies to raise record levels of cash via corporate bond issuance during H1, including borrowing by speculative-grade rated companies. Meanwhile, US equity investors have been rewarding those companies with higher cash buffers with better market performance since the onset of the COVID-19 pandemic in contrast to what prevailed prior to its arrival.
High levels of corporate cash are no longer regarded as a headwind to faster profits growth for companies since the arrival of the Great Lockdown. Sufficiently high liquidity buffers are currently viewed as essential to ensure corporate survival in an environment of virtually zero revenue predictability and, consequently, cash burn rates will closely monitored moving forward.
S&amp;P500 dividends were cut in Q2 from a record level in the previous quarter and could sink lower depending on the duration and depth of the Great Lockdown. Meanwhile, the need to undertake strategic changes to business models to adjust to a "new normal" environment will dilute the short-term importance of share buybacks. Notwithstanding the uncertain economic outlook, the pending squeeze on S&amp;P500 operating margins and depressed levels of capacity utilisation both suggest capital spending will remain weak for the foreseeable future. 

US Corporate Balance Sheet Management:  Dedicated to Preserving Cash as King