Macro & Market Musings are weekly insights on Growth, Inflation, Policy and Looking Ahead from Annex Wealth Management’s Chief Economist, Brian Jacobsen. Brian, a frequent contributor on CNBC and Fox Business News, hosts regular updates on the economy and markets. Check our events page for Brian’s next live event.
Comments based on information available as of 7:15am CT on 5/9/2025
Growth: Beware The Bullwhip
The bullwhip effect is when a small change somewhere along the supply chain gets amplified in other parts of the supply chain. Usually it is when a small change in demand affects retailers, then wholesalers, then distributors, and then manufacturers. But it can go other directions, too. In today’s environment, stopping shipments from China to the US can have big downstream effects that last longer than expected. Trade can’t be turned off and then on like a light switch.
Inflation: And So It Begins…
When you combine companies stocking up on inventory to get ahead of tariffs with consumers front-loading purchases to avoid tariff price hikes, pre-tariff inventory can deplete quicker than expected. Different companies will experiment with different approaches to dealing with tariffs. Competitive pressures can keep companies from passing on 100% of tariff costs to consumers, but it’s unlikely that the pass through will be 0%. The consumer price effects of tariffs will likely show up over time rather than all at once.
Policy: Blueprint Or Bespoke
The trade deal with the UK might not be a blueprint for other trade deals. The US runs a trade surplus with the UK, so, arguably, the US shouldn’t have tariffs on UK goods. The two main exports from the UK to the US are luxury cars and pharmaceuticals. While a trade deal is better than no deal, it might not be a model for what to expect from other deals.
Looking ahead: Securities Over Sectors
With many exchange traded funds, investors can get exposures to whole sectors of the market, but don’t investors want the best company within a sector instead of just owning the whole sector? Within any given sector there are lots of different industries. Within an industry there are lots of companies that fiercely compete with each other. Sometimes, every company within a sector can be affected by big macroeconomic forces, but the really interesting opportunities and risks come from microeconomic factors unique to each company.
