A well-known US economist ? and one not afraid to go up against the opinion of Federal Reserve chairman Alan Greenspan ? was on the Island last week to offer timely investment advice and speak to the latest macro-economic trends.

HSBC's chief US economist Ian Morris flew into Bermuda last Thursday night for a whirlwind schedule of meetings with senior managers and clients at one of the multinational banking giant's latest acquisitions, the Bank of Bermuda.

The deal between HSBC and Bermuda's largest bank ? which was sealed in February for a price tag of $1.3 billion ? is referred to in banking circles as an "amalgamation" but last week there was a little more shine put on the merger with Mr. Morris calling it a "marriage" and "a very exciting one; certainly both sides will be able to flourish from the relationship as time goes on," he said.

Mr. Morris, a native of Australia who is based in New York with subsidiary HSBC Securities (USA) Inc., is often quoted in the international news media for his economic views on behalf of HSBC ? especially when it counters the views of the de facto voice of economic reason, the Federal Reserve, with its voice most often being Mr. Greenspan.

During his visit to Bermuda, Mr. Morris made no bones that his take on the US economy is that the outlook may not be as rosy as the Federal Reserve is telling Americans.

And bank CEO Philip Butterfield cautioned that Bermuda could be impacted by the economic climate in the US, including it possibly precipitating a fall in the number of Americans travelling abroad.

Mr. Morris said: "Certainly the expansion in the US has been pretty good so far this year," he said, but cautioned: "We hit a soft patch in June, unfortunately, and right now the two threats are the falling stock market and the high cost of oil. Both of those things create some doubts on whether the third quarter can be particularly strong.

"We see growth continuing but perhaps by less than the consensus (of investment analysts and economists) is thinking and certainly by less than the Federal Reserve is thinking.

"We are just a little bit more cautious," Mr. Morris said.

He added: "We think that the Feds will continue to raise interest rates but given that we feel that the amount of leverage, especially on the consumer side is very high, we suspect we won't need too many rate hikes before the economy slows. We suspect the Fed funds rate will get up to about three percent by the middle of next year, and that will be about it."

In recent weeks, Mr. Morris has also taken an opposing view to the Federal Reserve on the US housing market, which he says is in a bubble, or over-inflated.

A report put out by Mr. Morris last month, entitled 'The US Housing Bubble ? The case for a home-brewed hangover' drew wide attention in numerous news reports based on HSBC's view that a bubble does exist in the American housing market and that prices are likely to deflate over a few years, triggered by Fed interest rate increases.

The view goes against what the Federal Reserve has been saying for some time, that it does not see a bubble.

Mr. Morris, who has been with HSBC for about ten years, said he was in Bermuda to offer bank clients and employees the benefit of the research that the multinational banking giant puts an emphasis on.

"In my capacity as a US economist based New York, I am part of HSBC's global strategy and economic team. And we are, from my perspective, offering the Bank of Bermuda's clients and the bank itself our outlook on the US economy going forward.

"It is a very interesting time with a lot of change with the US Federal Reserve starting to raise interest rates, and that is something they are likely to do for the next few quarters," he added.

Recognising the influence that the US economy has on Bermuda, Mr. Morris said: "Understanding the risks and opportunities and likely outlook is something on everybody's mind right now at this very important turning point."

Mr. Morris said that US economic outlook had definitely been a feature of his conversations in Bermuda but there had also been strong interest in other parts of the world, including Europe and particularly Asia.

"China has been a big focus point. The relationship between Bermuda and the Asian region; there are opportunities out there that we have been looking at. And it is also an opportunity for both the bank and HSBC to offer Bermuda the global advantages that HSBC has to offer," he said.

Mr. Butterfield added that bank clients now had a much higher level of access to Asian markets and investment opportunities.

"Our presence in Asia (previous to the bank's sale to HSBC) consisted of some 650 individuals in Hong Kong and another 125 in Singapore. We are now part of a family that has 25,000 employees in Hong Kong and another 600 or so in Singapore...We now have much greater leverage in terms of the information we can share with our local clients about the Far East and the kinds of investments that might make sense.

"We now have access, through Ian, to much more timely information that clients can avail themselves of when they look to areas like Asia for future investments."

Mr. Butterfield added: "Lots of our insurance clients see China as an investment opportunity."

Speaking of the economic influence that America has in Bermuda, Mr. Butterfield said: "We need to be very cognisant of what is happening in that economy because it will have a knock on effect here locally. And this is an area that Ian represents...having the benefit of his advice puts us in a place that we can that much more careful with the macro-economic decisions that we make for our business and in the advice that we offer our clients."

Speaking of what some of the knock-on effects might be in the current economy, he said: "It might affect the interest of (American) consumers that could be thinking about Bermuda as a tourist destination. If they are dealing with more challenging times the choice might be to stay at home rather than to travel. So we need to be cognisant of all of those types of macro-economic trends..."

There is also the possibility of Bermuda seeing interest rate hikes on the back of increases in the US.

Mr. Butterfield said: "Absolutely; our interest rate structure is tied to events in the US, so as we see rates rising there it is not unreasonable to assume that you would see a companion change here locally."