US Equities: Solid Fundamentals Hindered by Protectionism and Liquidity Outlook
Fears of protectionism have been periodically presenting headwinds for US equities, but the real test may still lie ahead with protectionists in the ascendency within the Trump Administration.
Buoyant earnings and revenue expectations provide solid fundamental support for US equities, suggesting that corporations will still benefit the most from future economic activity.
Global provision of liquidity is becoming more nuanced as the Fed shrinks its balance sheet, while the Peoples’ Bank of China will emerge as the key marginal future supplier in 2018 and 2019.
US corporate liquidity remains exceptionally high, thereby continuing to support equity buyback activity and valuations.
The Fed is on the cusp of changing forward guidance to incorporate more interest rate increases in 2018, but policy gradualism remains at the heart of its normalisation conduct.
Financial conditions will be an important factor in the pace of monetary normalisation as the Fed responds to cyclical and structural forces affecting its policy rate.
DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the intention of delivering independent global macro investment insights and new thematic long-term ideas to investors, along with an agnostic opinion of the markets.
Said DeSaque has over 29 years of experience working as a professional economist in financial services, primarily based in London. His working role has involved extensive travel around the world, bringing him into contact with investors of different cultural backgrounds and investment requirements. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist and Investment Strategist at US banks Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he became Head of the London Economics Department in 1996. This role allowed him to engage with senior investment professionals, alongside regulators and provided a unique perspective of market intelligence at work.
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