Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

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.

Macroeconomics

<ul>
<li>The media are universal in their belief that a second Trump presidency will produce higher inflation. Fed Chairman Powell would serve the remaining segment of his current term if elected. </li>
<li>A further reduction in corporation tax and making the 2017 personal income tax cuts permanent are key fiscal policy goals of President Trump if elected for a second term.</li>
<li>Import substitution will raise inflation pressures unless there is supply-side transformation in the economy. Protectionism will reduce capital flows to the detriment of long-term interest rates and dollar exchange rate.</li>
</ul>


The media are universal in their belief that a second Trump presidency will produce higher inflation. Fed Chairman Powell would serve the remaining segment of his current term if elected. 
A further reduction in corporation tax and making the 2017 personal income tax cuts permanent are key fiscal policy goals of President Trump if elected for a second term.
Import substitution will raise inflation pressures unless there is supply-side transformation in the economy. Protectionism will reduce capital flows to the detriment of long-term interest rates and dollar exchange rate.


US Financial Markets: Preparing for a Changing of the Guard

Cross Asset Strategy

<ul>
<li>European financial markets have been remarkably calm in the wake of political upheaval, particularly in France. Continued weak potential GDP growth lays the foundations for capital migration to the US.</li>
<li>US political turbulence has not unnerved financial markets, despite inflationary implications of President Trump's agenda. High retail investor participation in the rally in US equities is sending a warning signal.</li>
<li>US equities are priced to perfection in absolute valuation and relative to inflation. Secular valuations appear rich relative to history, suggesting a period of consolidation would be a welcome development. </li>
</ul>


European financial markets have been remarkably calm in the wake of political upheaval, particularly in France. Continued weak potential GDP growth lays the foundations for capital migration to the US.
US political turbulence has not unnerved financial markets, despite inflationary implications of President Trump's agenda. High retail investor participation in the rally in US equities is sending a warning signal.
US equities are priced to perfection in absolute valuation and relative to inflation. Secular valuations appear rich relative to history, suggesting a period of consolidation would be a welcome development. 


Political Upheavals Fail to Curb Markets’ Appetite for Risk

<ul>
<li>Consumer confidence measures have been generally weaker in H1, thereby suggesting a major improvement in underlying spending trends is unlikely in the near-term. </li>
<li>House price inflation has moderated due to lower demand, while banks have not loosened lending standards across all categories of mortgage loans. </li>
<li>Recently released minutes of the latest FOMC meeting indicate that members expect the economy and inflation to cool, but they are in no hurry to lower the federal funds rate.</li>
</ul>


Consumer confidence measures have been generally weaker in H1, thereby suggesting a major improvement in underlying spending trends is unlikely in the near-term. 
House price inflation has moderated due to lower demand, while banks have not loosened lending standards across all categories of mortgage loans. 
Recently released minutes of the latest FOMC meeting indicate that members expect the economy and inflation to cool, but they are in no hurry to lower the federal funds rate.


Fed Sees Economy Cooling as Leading Indicators Also Suggest Softer Looming Trend

<ul>
<li>The People's Bank of China (PBoC) is studying the efficacy of buying and selling government bonds in the secondary market for liquidity management as opposed to introducing quantitative easing (QE).</li>
<li>China's government bond market has increased significantly in size since 2008, but the PBoC has not, unlike the Fed, bought sovereign debt in over two decades.</li>
<li>Monetary policy conduct could be streamlined as the number of policy benchmark lending rates is reduced. Hopes of aggressive QE by the PBoC are far-fetched given its balance sheet structure.</li>
</ul>


The People's Bank of China (PBoC) is studying the efficacy of buying and selling government bonds in the secondary market for liquidity management as opposed to introducing quantitative easing (QE).
China's government bond market has increased significantly in size since 2008, but the PBoC has not, unlike the Fed, bought sovereign debt in over two decades.
Monetary policy conduct could be streamlined as the number of policy benchmark lending rates is reduced. Hopes of aggressive QE by the PBoC are far-fetched given its balance sheet structure.


PBoC Examines Overhaul of Monetary Policy Framework, but Quantitative Easing Appears Unlikely

<ul>
<li>US equities have discounted the arrival of a lower federal funds rate (FFR). Upbeat corporate profit expectations and a lower FFR could easily produce an H2 equity market melt-up.</li>
<li>Financial markets have largely ignored geopolitical risks. Holding assets in Western financial institutions now has counterparty risks. High budget deficits driven by defence spending are bearish for productivity and profitability.</li>
<li>The appetite of private investors to buy longer-dated Treasuries will be tested by the arrival of persistently large budget deficits. Notably, the outlook for foreign participation is less certain. </li>
</ul>


US equities have discounted the arrival of a lower federal funds rate (FFR). Upbeat corporate profit expectations and a lower FFR could easily produce an H2 equity market melt-up.
Financial markets have largely ignored geopolitical risks. Holding assets in Western financial institutions now has counterparty risks. High budget deficits driven by defence spending are bearish for productivity and profitability.
The appetite of private investors to buy longer-dated Treasuries will be tested by the arrival of persistently large budget deficits. Notably, the outlook for foreign participation is less certain. 


US Financial Markets Underprice Geopolitical Risks as Equities Flirt With Another Melt-Up

Said DeSaque is a  professional economist with over 35 years of experience covering the global economy, with significant expertise in the US, China, Japan and emerging markets. He worked with US investment banks for over 25 years  covering institutional investors in Europe, Middle East, Far East and Australia. Covers financial markets on a multi asset basis. Said has been an independent economist covering the global economy and financial markets for over 10 years since founding DeSaque Macro Research in London.