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.

Trade War/Singles’ Day/Pork/Steel/Hong Kong

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

Despite the calm reaction of financial markets to the Fed's policy pause, some commentators are still calling for further easing to support global growth. Unlike the late-1990s, the Fed faces a tougher task boosting global growth due to over-reliance on monetary policy to support domestic growth since the financial crisis and a reluctance by politicians, particularly outside of the US, to ease fiscal policy.
Historically, Fed policy conduct has been driven by domestic considerations, although settings were eased whenever overseas events threatened to undermine US banks and investors, as demonstrated by Mexican sovereign debt default concerns in 1982 and 1995. Despite criticism that the 1995 Tequila Crisis bailout created moral hazard, the Fed has continued to respond to external events that threaten to undermine the health of the US banking system and investors.
Various headwinds have contributed to slowing US export growth over the past 12-months, notably declining shipments to China due to the imposition of tariffs, as well as weaker foreign economic growth. Meanwhile, the Trump Administration has incorrectly cited a strong dollar as a hindrance to US exports when the real trade-weighted measure has been flat for the past year.  
Globally-linked financial markets have increasingly impacted the conduct of Fed policy due to their influence of US financial conditions, particularly during periods of risk-aversion. Meanwhile, the arrival of negative sovereign bond yields has increased the relatively attraction of US Treasury securities and foreign capital inflows have reduced term premia and, consequently, boosted financial accommodation. Lower potential growth GDP in advanced economies has intensified global disinflationary forces that have helped to lower central banks' policy rates, including the Fed's. 
The Fed's decision to engage in insurance policy rate cuts was aimed at easing US financial conditions to offset headwinds emanating from trade-related uncertainties and to mitigate potential slowing of the domestic economy. Recent Fed easing was not undertaken to assist the People's Bank of China (PBoC) even though the PBoC has a higher policy interest rate buffer to draw down. Boosting short-term growth via reckless credit expansion, in any case, is not the PBoC's primary policy objective. The lagged impact of monetary easing by the Fed will be felt in 2020 and could coincide with full resolution of the US-China trade dispute, thereby imparting a double-whammy to the global economy and, consequently, negating the need for further Fed easing measures next year.

Despite the calm reaction of financial markets to the Fed's policy pause, some commentators are still calling for further easing to support global growth. Unlike the late-1990s, the Fed faces a tougher task boosting global growth due to over-reliance on monetary policy to support domestic growth since the financial crisis and a reluctance by politicians, particularly outside of the US, to ease fiscal policy.
Historically, Fed policy conduct has been driven by domestic considerations, although settings were eased whenever overseas events threatened to undermine US banks and investors, as demonstrated by Mexican sovereign debt default concerns in 1982 and 1995. Despite criticism that the 1995 Tequila Crisis bailout created moral hazard, the Fed has continued to respond to external events that threaten to undermine the health of the US banking system and investors.
Various headwinds have contributed to slowing US export growth over the past 12-months, notably declining shipments to China due to the imposition of tariffs, as well as weaker foreign economic growth. Meanwhile, the Trump Administration has incorrectly cited a strong dollar as a hindrance to US exports when the real trade-weighted measure has been flat for the past year.  
Globally-linked financial markets have increasingly impacted the conduct of Fed policy due to their influence of US financial conditions, particularly during periods of risk-aversion. Meanwhile, the arrival of negative sovereign bond yields has increased the relatively attraction of US Treasury securities and foreign capital inflows have reduced term premia and, consequently, boosted financial accommodation. Lower potential growth GDP in advanced economies has intensified global disinflationary forces that have helped to lower central banks' policy rates, including the Fed's. 
The Fed's decision to engage in insurance policy rate cuts was aimed at easing US financial conditions to offset headwinds emanating from trade-related uncertainties and to mitigate potential slowing of the domestic economy. Recent Fed easing was not undertaken to assist the People's Bank of China (PBoC) even though the PBoC has a higher policy interest rate buffer to draw down. Boosting short-term growth via reckless credit expansion, in any case, is not the PBoC's primary policy objective. The lagged impact of monetary easing by the Fed will be felt in 2020 and could coincide with full resolution of the US-China trade dispute, thereby imparting a double-whammy to the global economy and, consequently, negating the need for further Fed easing measures next year.     

Global Influences on US Monetary Policy Easing Have Grown, but the Fed Will Not Assist the PBoC