Hello and welcome to Macro Notes, your go-to source for the latest macroeconomic trends, market-moving news, and key indicators to watch. We cut through the noise to bring you actionable insights in just a few minutes.

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The Big Picture

International Relations

U.S. Secures Tariff Concessions in Breakthrough UK Trade Deal

The United States and the United Kingdom have finalized a new trade agreement, adjusting tariffs on a range of goods as both countries seek to stabilize trade flows amid shifting global economic conditions.

This deal leaves a 10% baseline tariff on U.S. imports from the UK, while Britain agreed to reduce its tariffs on U.S. goods from 5.1% to 1.8%, providing greater market access for American exporters.

This agreement, the first major U.S.-UK trade pact under the current administration, comes as the United States seeks to reduce trade tensions and secure more favorable terms for its exporters.

The deal is expected to benefit a wide range of U.S. industries, including agriculture, manufacturing, and automotive, by reducing tariff barriers that have added costs for American businesses.

For U.S. exporters, the lower UK tariffs could provide a competitive edge in the British market, potentially boosting sales and improving trade balances. However, U.S. manufacturers face rising costs from other tariffs, including those on Chinese imports.

Analysts note that while this deal offers immediate tariff relief, the broader economic impact will depend on how quickly U.S. companies can capitalize on these reduced barriers. The U.S. has also been negotiating trade adjustments with other major partners, including China and the EU, as it seeks to stabilize global trade relationships.

Currency Markets

Ukraine Signals Shift to Euro, Raising Questions for U.S. Dollar

Ukraine is exploring a potential shift from the U.S. dollar to the euro as its primary currency benchmark, which could impact U.S. financial influence in Eastern Europe.

The National Bank of Ukraine is assessing the feasibility of linking its currency more closely to the euro, reflecting its deepening economic and political ties with the European Union.

For the U.S., this move could have broader implications. The dollar’s role as the world’s dominant reserve currency has long been a pillar of U.S. economic strength, providing significant advantages in trade, debt financing, and global financial stability.

A gradual pivot away from the dollar by regional economies like Ukraine could reduce demand for U.S. assets, weaken the dollar’s pricing power, and complicate global trade.

This potential shift also comes when transatlantic economic ties are under pressure, adding another layer of complexity to U.S.-Europe financial dynamics. If other countries in Eastern Europe follow Ukraine’s lead, the cumulative effect could reshape regional trade flows and create new challenges for U.S. monetary policy.

While the immediate impact may be limited, the broader trend of dollar diversification could introduce long-term risks for U.S. investors and policymakers as global financial power evolves.

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Energy

Global Energy Markets Reshuffle as U.S. NGL Exports Set New Record

U.S. natural gas liquids (NGLs) exports reached a record high in April, even as trade tensions with China shifted key export flows. According to ship tracking firm Kpler and Vortexa data, U.S. NGL exports hit approximately 2.9 million barrels per day (bpd) last month, underscoring the country’s expanding role as a leading global supplier of ethane, butane, and propane.

While overall U.S. exports surged, shipments to China, a critical market for ethane, fell by 35% to around 619,000 bpd, the lowest level since late 2023. The decline follows a temporary waiver on China’s 125% tariff on U.S. ethane, reflecting the complex trade dynamics between the world’s two largest economies.

Despite this drop, other major buyers stepped in to absorb the excess supply. India, for example, tripled its U.S. NGL imports to a record 179,000 bpd, while Brazil more than doubled its purchases, hitting a five-year high.

This rapid adjustment in global energy flows highlights the resilience of the U.S. energy export sector, which has found alternative markets despite shifting trade policies.

With U.S. ethane production expected to rise by 3.6% this year, exporters are likely to face continued pressure to diversify their customer base as global energy markets remain volatile.

Metrics to Watch

• Used Car Costs: The Cox Automotive Used Vehicle Value Index spiked 4.9% in April, pointing to downstream tariff effects from higher new imported auto pricing.

• U.S. Trade Deficit: The deficit hit an all-time high of $140.5 billion, mainly driven by importers getting ahead of tariffs in March. Expect April’s deficit to begin tightening as trade slows. 

• DOGE Targets the Fed? The Fed released plans for a $2.5 billion HQ expansion, and DOGE head Elon Musk called it an “eyebrow raiser,” implying it may become a target of cost-cutting initiatives.

• Fed Fund: Rate cuts aren’t on the menu following this week’s FOMC, and the Fed’s target rate will remain in the 4.25% - 4.5% range.

Market Movers

🎬 Foreign Film Tariffs: Trump recently added foreign-made films to the trade tax list, assessing 100% tariffs on “any and all Movies [...] that are produced in Foreign Lands.” The usual media suspects are most at risk, including Disney (NYSE: DIS) and Paramount (NASDAQ: PARA), but even Netflix (NASDAQ: NFLX) feels pressured, considering that more than half of its annual content expenses come from outside the U.S.  

💰Helping Hedge: HSBC Holdings (NYSE: HSBC) is flexing its creative muscles as it devises new ways to “help” business owners mitigate increased import costs due to tariffs. Specifically, the banking giant launched a new credit product to help “[settle] import duties directly and frictionlessly through HSBC TradePay” and let “clients have more visibility and control over their working capital.”

Nothing is structurally unique about the new product - it’s just a rebranded business line of credit - it underscores how much of a long-term impact institutions like HSBC expect tariffs to have.   

🚗 Automaker Troubles Continue: Though used car retailers may celebrate the increased pricing, manufacturers are feeling the pressure. Ford (NYSE: F) announced this week that it plans to hike prices on Mexico-produced automotives by $2,000 or more, while Rivian (NASDAQ: RIVN) slashed delivery guidance in its earnings report and increased capex guidance to $1.9 billion, up from $1.6 billion anticipated in 2024.

✂️ Rate Cuts are a Long Way Off: One remark from Jerome Powell’s post-FOMC presser isn’t getting as much attention as expected, despite its wide-ranging ramifications. In the first 15 minutes of his speech, the Fed Chair said that tariffs could create a “delay at least for the next, let’s say, year,” as the trade taxes increase the likelihood of elevated inflation moving forward.

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*Disclaimer: All individual claims are independent views, and the result may vary as per potential & caliber
(from person to person). Results may not be typical nor expected for every person. This is not a "get rich quick" scheme. All information provided on this website and webinar is based on best practices and for educational-purposes only. We are publishers, not licensed financial advisors. Information provided is for informational purposes only and is not intended as financial advice. Always consult a professional advisor for personalized financial guidance.

Market Impacts

While we’re seeing a lot of commentary about “stocks shrugging off tariffs,” there’s also a lot of commentary missing. Specifically, these market-level analyses are looking solely at major indices like the S&P 500 and NASDAQ 100, both of which increased by double-digit percentages over the past month.

However, a more accurate headline would be “mega-cap tech stocks shrug off Trump tariffs,” considering their relative overrepresentation in the indices. Other stocks, especially small-caps, remain grossly oversold and due for a rebound. For example, the Morningstar U.S. Small Cap Index is lagging large caps by 300 basis points on the year.

Investors looking for an opportunity to catch the rebound momentum in small-cap stocks would do well to consider the Dimensional U.S. Small-Cap ETF (NYSEARCA: DFAS), an actively-managed quantitative fund blending core, stable sectors like financial services (20% weight) and industrials (19%) with enough growth industries like tech (15%) to capture long-tail upside.

Top holdings in the fund include recession-proof consumer picks like Sprouts Farmers Market (NASDAQ: SFM), its highest-weighted holding at 0.55%, alongside stable industrial giants like United States Steel (NYSE: X) and small-cap tech stocks with oversized potential like EdTech stock Stride (NYSE: LRN). 

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Key Indicators to Watch

• 📅 A Slew of Speeches – May 9th: Fed Presidents will begin a panel of speeches on Friday at 6:45 AM EST. Expect to hear dissenting opinions from Powell’s presser (if any) and some insight into what’s driving the Fed’s decision-making process.

• 📅 Monthly U.S. Federal Budget (April) – May 12th: We’ll see the expanded impact of Musk’s DOGE cuts in the first major budget release since he began wrapping up his federal agency attacks.

• 📅 NFIB Optimism Index (April) – May 13th: The National Federation of Independent Business should rename it the “NFIB Pessimism Index,” considering how bearish outspoken small business owners have been as import costs take effect.

Everything Else

• Trump plans to ease chip export restrictions, boosting manufacturers like Nvidia. 

• Cargo inflow continues slowing as the Port of Los Angeles reports a 35% drop.

• Dollar depreciation may be on the horizon as Asian currencies spike. 

• Trump implied that the next big trade move on the horizon will be a UK deal.

• Creditors are taking a hit as equity holders begin forcing restructuring initiatives.

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