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>Respectable labour market data and strong service sector activity have forced US Treasury investors to soberly revise their expectations of Fed policy rate reductions in 2025 to one cut. </li>
<li>Recoveries in corporate sector sentiment since the presidential election suggest a robust economic growth outlook, making it tough to justify meaningful Fed policy easing.</li>
<li>Strong capital inflows will boost the dollar exchange rate. Deflation risks in China have risen, raising the attraction of weakening the yuan and risking the ire of the Trump administration.</li>
</ul>


Respectable labour market data and strong service sector activity have forced US Treasury investors to soberly revise their expectations of Fed policy rate reductions in 2025 to one cut. 
Recoveries in corporate sector sentiment since the presidential election suggest a robust economic growth outlook, making it tough to justify meaningful Fed policy easing.
Strong capital inflows will boost the dollar exchange rate. Deflation risks in China have risen, raising the attraction of weakening the yuan and risking the ire of the Trump administration.


Hawkish Fed Policy Outlook Brings External Consequences

FX & Rates

<ul>
<li>The continuation of large budget deficits under the second Trump administration is causing concerns amongst investors about interest rate implications, but Treasury yields are determined by a multitude of factors.  </li>
<li>High government borrowing will typically impart greater stress on financial markets if private sector borrowing is also strong. Long-end yield curve steepening may reflect funding issues due to buyer shortages.</li>
<li>Current expected returns on Treasuries (both nominal and real) are highly elevated compared to recent history and should offer decent protection for investors. </li>
</ul>


The continuation of large budget deficits under the second Trump administration is causing concerns amongst investors about interest rate implications, but Treasury yields are determined by a multitude of factors.  
High government borrowing will typically impart greater stress on financial markets if private sector borrowing is also strong. Long-end yield curve steepening may reflect funding issues due to buyer shortages.
Current expected returns on Treasuries (both nominal and real) are highly elevated compared to recent history and should offer decent protection for investors. 


High Government Borrowing: Nuanced Implications for US Treasuries

<ul>
<li>Surprises in the global economy were limited in 2024.  The second Trump administration aims to enact significant economic transformation, increasing the chances of major divergence between the US and Europe.</li>
<li>President-Elect Trump promised higher oil output to lower energy prices, although US production is already at an all-time high.  Restrictions on technology exports to China are likely to remain intact. </li>
<li>The prospect of significant US economic disruption raises the chances of the Fed having to reduce its policy rate more aggressively in 2025 than currently discounted in financial markets.</li>
</ul>


Surprises in the global economy were limited in 2024.  The second Trump administration aims to enact significant economic transformation, increasing the chances of major divergence between the US and Europe.
President-Elect Trump promised higher oil output to lower energy prices, although US production is already at an all-time high.  Restrictions on technology exports to China are likely to remain intact. 
The prospect of significant US economic disruption raises the chances of the Fed having to reduce its policy rate more aggressively in 2025 than currently discounted in financial markets.


Trump 2.0: Transformation and Disruption Present Economic Policy Challenges

<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

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

Hawkish Fed Policy Outlook Brings External Consequences

Respectable US economic data and upbeat corporate sentiment have blunted the case for aggressive Fed policy easing in 2025. Dollar appreciation...

DeSaque Macro Research

High Government Borrowing: Nuanced Implications for US Treasuries

Elevated government borrowing has become normal, but the impact on financial markets also depends on private sector activity. Yields do offer...

DeSaque Macro Research

Trump 2.0: Transformation and Disruption Present Economic Policy Challenges

The second Trump term promises to be transformative and disruptive. There will be implications for the real economy, potentially forcing the Fed to...

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