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 Swiss and Canadian central banks cut their respective policy rates by 50 basis points. The former faces currency appreciation and deflationary risks. Canada faces higher unemployment and deteriorating growth.</li>
<li>The European Central Bank is taking a gradual policy easing path in 2025. Policy outlooks for the Reserve Bank of Australia and Bank of England are more data dependent.</li>
<li>The Fed cut its policy rate by 25 basis points as expected, but fewer reductions are now expected in 2025 due to a more robust economic outlook compared to September.</li>
</ul>


The Swiss and Canadian central banks cut their respective policy rates by 50 basis points. The former faces currency appreciation and deflationary risks. Canada faces higher unemployment and deteriorating growth.
The European Central Bank is taking a gradual policy easing path in 2025. Policy outlooks for the Reserve Bank of Australia and Bank of England are more data dependent.
The Fed cut its policy rate by 25 basis points as expected, but fewer reductions are now expected in 2025 due to a more robust economic outlook compared to September.


Global Monetary Easing Cycle Becomes More Idiosyncratic

Cross Asset Strategy

<ul>
<li>Narrow leadership in the S&amp;P500 has evoked memories of the conditions that prevailed in the late-1990s. US history is littered with periods of even greater concentration of equity market leadership.</li>
<li>Narrow leadership of the S&amp;P500 reflects the shift in the distribution of corporate profits in favour of larger companies as important sectors within the US economy have become more concentrated. </li>
<li>Current valuations of the top 10 S&amp;P500 stocks are lower than the 2000 peak. Exuberant profit expectations present the biggest threat to US equities as opposed to narrow leadership.</li>
</ul>


Narrow leadership in the S&amp;P500 has evoked memories of the conditions that prevailed in the late-1990s. US history is littered with periods of even greater concentration of equity market leadership.
Narrow leadership of the S&amp;P500 reflects the shift in the distribution of corporate profits in favour of larger companies as important sectors within the US economy have become more concentrated. 
Current valuations of the top 10 S&amp;P500 stocks are lower than the 2000 peak. Exuberant profit expectations present the biggest threat to US equities as opposed to narrow leadership.


US Equity Outlook: Leadership Concentration Has Been Higher and Valuations Still Matter

<ul>
<li>The Fed's latest report on financial stability indicated elevated valuations for risky assets versus Treasuries, while valuations for residential and agricultural properties are also historically high.</li>
<li>Residential mortgage and company debt do not pose major risks to financial stability due to high levels of equity in owner-occupied real estate and robust corporate profits. </li>
<li>Continued fiscal profligacy poses the greatest threat to the US financial system via the banking system and raising the cost of capital for the corporate sector. </li>
</ul>


The Fed's latest report on financial stability indicated elevated valuations for risky assets versus Treasuries, while valuations for residential and agricultural properties are also historically high.
Residential mortgage and company debt do not pose major risks to financial stability due to high levels of equity in owner-occupied real estate and robust corporate profits. 
Continued fiscal profligacy poses the greatest threat to the US financial system via the banking system and raising the cost of capital for the corporate sector. 


Fed's Latest Financial Stability Report Highlights Pitfalls of Fiscal Profligacy

<ul>
<li>President-Elect Trump has threatened to impose 25% tariffs on imports from Canada and Mexico and an additional 10% tariff on China. Hitherto, US financial markets have remained relatively calm.</li>
<li>The relationship between the incoming Trump administration and the Fed could be  contentious by tariffs reducing the scope for monetary policy easing due to higher inflation.</li>
<li>The long-term outcome of tariffs depend on exchange rate movements and willingness of foreign producers to accept lower profit margins. Tougher export conditions could force the Fed to ease policy.</li>
</ul>


President-Elect Trump has threatened to impose 25% tariffs on imports from Canada and Mexico and an additional 10% tariff on China. Hitherto, US financial markets have remained relatively calm.
The relationship between the incoming Trump administration and the Fed could be  contentious by tariffs reducing the scope for monetary policy easing due to higher inflation.
The long-term outcome of tariffs depend on exchange rate movements and willingness of foreign producers to accept lower profit margins. Tougher export conditions could force the Fed to ease policy.


Trump Tariff Plans and Fed Policy: Dovish Twist in the Tail?

<ul>
<li>While US equities have already discounted better times under a second Trump administration, the dollar is continuing to appreciate based on better growth expectations, particularly versus the UK and Eurozone.</li>
<li>After years of excessive regulatory requirements on banks, rumours are abound that the new Trump administration will revoke Basel 3 capital requirements to boost lending to the real economy.</li>
<li>The Trump administration will face legislative barriers via filibusters. Financial markets will not give the second Trump administration an indefinite carte blanche with respect to any profligate fiscal policy conduct.</li>
</ul>


While US equities have already discounted better times under a second Trump administration, the dollar is continuing to appreciate based on better growth expectations, particularly versus the UK and Eurozone.
After years of excessive regulatory requirements on banks, rumours are abound that the new Trump administration will revoke Basel 3 capital requirements to boost lending to the real economy.
The Trump administration will face legislative barriers via filibusters. Financial markets will not give the second Trump administration an indefinite carte blanche with respect to any profligate fiscal policy conduct.


Trump Trades Remain Intact, but Markets Will Not Offer Total Freedom on Fiscal Policy

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.

Said Desaque
Global Economist
• DeSaque Macro Research

Global Monetary Easing Cycle Becomes More Idiosyncratic

The global monetary easing cycle has become more idiosyncratic, as central banks face differing risks, ranging from deflation to potential...

DeSaque Macro Research

US Equity Outlook: Leadership Concentration Has Been Higher and Valuations Still Matter

S&P500 leadership is very concentrated, but previous peaks have been higher compared to present levels and the dot-com boom. Unrealistic earnings...

DeSaque Macro Research

Fed's Latest Financial Stability Report Highlights Pitfalls of Fiscal Profligacy

The Fed's latest Financial Stability Report conveys high financial asset and real estate valuations. Private sector debt was not deemed to pose...

DeSaque Macro Research

Trump Tariff Plans and Fed Policy: Dovish Twist in the Tail?

President-elect Trump announced 25% tariffs on imports from Canada and Mexico and an additional 10% tariff on China. Fed policy could be impacted....

DeSaque Macro Research

Trump Trades Remain Intact, but Markets Will Not Offer Total Freedom on Fiscal Policy

Trump trades remain intact, notably a rising dollar, despite recent pauses in US equities. Financial stocks are braced for lighter regulation, but...

DeSaque Macro Research