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.

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Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

Hitherto, the recovery in US economic activity since 2020 H1 should not have imparted sufficient strains on the labour market or capital stock to produce sustained inflationary pressures. Fiscal and monetary stimulus have spooked markets into expecting rising inflation, but the spike in April is firmly at odds with historic experiences during the early stage of an economic recovery.
Rising service sector activity has boosted prices for this important component within the consumer price index (CPI), as effective capacity struggles to keep pace with increased consumer spending. Goods inflation, notably for autos, has also risen due to supply constraints, but upward pressure on automotive prices could be sustained due to lingering production problems and low inventories.
Rising US import prices for industrial supplies reflect dislocations where production has failed to keep pace with strong US domestic demand. Tight shipping capacity has produced unprecedented freight rates from Asia to the US that are being passed onto customers via higher prices.
The Biden Administration has begun to impose higher wage costs on companies who act as federal government contractors by instructing them to pay workers a minimum of $15 per hour after February 2022. Higher costs will be inflicted on the corporate sector by more federal government regulations that could be detrimental to innovation and ultimately productivity, analogous to what occurred in the late-1960s and 1970s. Lower degrees of monetary accommodation will, however, pose challenges for financial markets.
In responding to any impending inflation threat, the risks of the Fed mis-communicating future policy have been enhanced by the democratisation of the Federal Open Market Committee (FOMC).  Fed Chair Powell will need to assert leadership, but he is not immune to communication gaffes, as testified by the events of October 2018. Talk of scaling back asset purchases could begin in Q4, but much will depend on the rate of labour market healing over the next 3 months.

Hitherto, the recovery in US economic activity since 2020 H1 should not have imparted sufficient strains on the labour market or capital stock to produce sustained inflationary pressures. Fiscal and monetary stimulus have spooked markets into expecting rising inflation, but the spike in April is firmly at odds with historic experiences during the early stage of an economic recovery.
Rising service sector activity has boosted prices for this important component within the consumer price index (CPI), as effective capacity struggles to keep pace with increased consumer spending. Goods inflation, notably for autos, has also risen due to supply constraints, but upward pressure on automotive prices could be sustained due to lingering production problems and low inventories.
Rising US import prices for industrial supplies reflect dislocations where production has failed to keep pace with strong US domestic demand. Tight shipping capacity has produced unprecedented freight rates from Asia to the US that are being passed onto customers via higher prices.
The Biden Administration has begun to impose higher wage costs on companies who act as federal government contractors by instructing them to pay workers a minimum of $15 per hour after February 2022. Higher costs will be inflicted on the corporate sector by more federal government regulations that could be detrimental to innovation and ultimately productivity, analogous to what occurred in the late-1960s and 1970s. Lower degrees of monetary accommodation will, however, pose challenges for financial markets.
In responding to any impending inflation threat, the risks of the Fed mis-communicating future policy have been enhanced by the democratisation of the Federal Open Market Committee (FOMC).  Fed Chair Powell will need to assert leadership, but he is not immune to communication gaffes, as testified by the events of October 2018. Talk of scaling back asset purchases could begin in Q4, but much will depend on the rate of labour market healing over the next 3 months.  

US Monetary Policy Outlook: Fed Faces Challenges from Regulatory-Induced Inflation