The Section 122 trade-deficit tariffs that the Trump administration imposed after the February 20 Supreme Court ruling against IEEPA expire on July 24, 2026 — 80 days from today — at which point Congress must vote to continue them.
Q1 earnings season has produced the highest S&P 500 EPS beat rate since Q2 2021 at 84 percent, with Magnificent 7 cumulative capital expenditure for 2026 now estimated at $725 billion versus $375 billion in 2025.
Federal Reserve Chair Jerome Powell will step down from the chair role in mid-May while remaining on the Board of Governors until the DOJ probe completes.
Canadian Prime Minister Mark Carney told The Canadian Press in his first sit-down interview Friday May 1 that an Alberta pipeline is “more probable than possible.” Strategy Inc. reports Q1 today.
- ▸Section 122 tariffs expire July 24 — 80-day countdown to the binding congressional vote that defines whether the post-IEEPA 15 percent reciprocal tariff architecture continues or collapses.
- ▸Magnificent 7 capex $725B — Alphabet $175-185B, Meta ~2x 2025 spend, Microsoft guidance up; 84 percent of S&P 500 companies beat Q1 EPS estimates.
- ▸Carney pipeline “more probable than possible” — first PM sit-down interview since taking office; Smith preferring northern BC route despite Coastal First Nations and BC Premier Eby objections.
01Section 122 trade-deficit tariffs expire July 24 with 80-day countdown to congressional vote on post-IEEPA architecture
The Section 122 trade-deficit tariffs imposed by the Trump administration on February 24, 2026 — four days after the Supreme Court’s 6-3 ruling in Learning Resources Inc. v. Trump — expire on July 24, 2026, 80 days from today, at which point Congress must vote to continue them. Section 122 of the Trade Act of 1974 authorises the president to impose tariffs of up to 15 percent on all imports from a particular country to address large and serious U.S. balance-of-payments deficits or to prevent imminent and significant depreciation of the dollar. The president can impose such tariffs for up to 150 days, after which congressional action is required. The Section 122 tariff applies to goods entering the United States for consumption between February 24 and July 24, 2026, unless earlier modified or extended by Congress. The tariff does not apply to imports subject to Section 232 of the Trade Expansion Act of 1962.
The structural-political backdrop is the February 20 Supreme Court ruling, in which Chief Justice John Roberts wrote for the 6-3 majority that the International Emergency Economic Powers Act does not authorise the president to impose tariffs. The Court held that “the President lacks inherent peacetime authority to impose tariffs,” and that the IEEPA’s nine operative verbs each authorise a distinct action for sanctioning foreign actors or controlling foreign commerce — none of which include the distinct power to raise revenue. Trump immediately replaced the IEEPA tariffs with the temporary 10 percent Section 122 tariff and shortly thereafter raised it to 15 percent. The president’s response to the ruling included calling the dissent “disloyal to the Constitution” via Truth Social.
The cumulative architecture means that the next 80 days define the operational continuation framework for the post-IEEPA tariff regime. The administration’s bypass options include Section 232 (national-security imposition, already in place for steel and aluminium), Section 301 (unfair-trade-practices framework against China), and Section 201 (safeguard-import framework). The cumulative rate Trump’s administration has signalled it will target is in the 15-20 percent range across most major trading partners, with the EU auto tariff escalation from 15 to 25 percent that Trump announced via Truth Social on Friday May 1 as a separate Section 232 framework. The structural-political question is whether Senate Republican holdouts including Susan Collins, John Curtis, Thom Tillis, Todd Young, Lisa Murkowski, and Josh Hawley will join Democrats in declining to extend Section 122 beyond July 24.
LATAM Read The July 24 Section 122 expiration operationalises the binding cliff for the post-IEEPA tariff architecture. Brazilian, Mexican, and Argentine corporate-strategy desks with US export exposure should treat the 80-day window as the structural-political-risk repricing event that defines Q3 trade-policy positioning. Background: yesterday’s USA & Canada intelligence brief.
02Magnificent 7 cumulative capex hits $725 billion as 84 percent of S&P 500 beat Q1 estimates and Strategy Inc. reports today
FactSet reports that 84 percent of S&P 500 companies that have reported Q1 2026 results to date have beat earnings estimates — the highest percentage since Q2 2021’s 87 percent reading. In aggregate, S&P 500 companies are reporting earnings 20.7 percent above estimates, the highest surprise percentage since Q1 2021’s 22.2 percent. Eighty-one percent of companies have beat revenue estimates, also the highest since Q2 2021. The blended revenue growth rate for the first quarter now stands at 11.1 percent. For full-year 2026, analysts are projecting earnings growth of 21.3 percent, with Q2, Q3, and Q4 each tracking at 21.3, 23.0, and 20.6 percent respectively. The forward 12-month price-to-earnings ratio is 20.9, above both the 5-year average of 19.9 and the 10-year average of 18.9. The S&P 500 closed at 7,230.12 on Friday — an all-time high — for the sixth consecutive week.
The structural earnings driver is the Magnificent 7’s 2026 capital-expenditure plan, with TD Economics estimating cumulative capex now at approximately $725 billion versus $375 billion in 2025 — a near-doubling. Alphabet guided $175-185 billion in 2026 capex when reporting Q4 (approximately double 2025 levels). Meta’s full-year 2026 capex plan is nearly twice its 2025 spend. Microsoft, Alphabet, and Meta all raised their 2026 capex guidance last week. The cumulative architecture means that the AI capital-expenditure cycle is now operating at scale that cannot be reversed within the 2026 calendar year, with the Magnificent 7 representing approximately one-third of S&P 500 market capitalisation and accounting for 55 percent of total expected Q1 earnings growth and 37 percent of full-year growth. Materials and energy sectors have also seen earnings upgrades.
Strategy Inc. (MSTR) reports Q1 2026 earnings today May 5, 2026 in what Kraken’s economic brief described as the most consequential single-day earnings reading for the cryptocurrency-equity intersection. The company holds approximately 713,502 Bitcoin under fair-value accounting, meaning Bitcoin price moves flow directly through to reported book value and earnings. The accumulation commentary will be the binding signal for Bitcoin-equity treasury-strategy capital flows through Q2 and into Q3. The macro calendar for the week includes JOLTS March job openings today, ISM Services PMI April today, and the April nonfarm payrolls report Friday May 8 — the week’s binding macro reading. The cumulative 126 S&P 500 companies, including 2 Dow 30 components, are scheduled to report this week.
LATAM Read The Magnificent 7 $725 billion capex cycle and the 84 percent S&P 500 beat rate confirm that the structural-economic baseline for 2026 is now anchored by AI infrastructure investment. Brazilian and Mexican corporate-strategy desks with US tech-supply-chain exposure should treat the Q2 earnings extension as the binding signal for partnership architecture through Q3.
03Powell stays on Fed Board until DOJ probe completes as Senate Banking advances Warsh nomination on party-line vote
Federal Reserve Chair Jerome Powell will step down from the chair role in mid-May 2026 but will remain on the Board of Governors until the Justice Department probe of Federal Reserve renovations is “well and truly over with transparency and finality,” per Powell’s April 29 press conference comments. Powell’s term as a Fed governor expires January 2028. This represents the first time a sitting Fed chair has not left the Board of Governors after the chairmanship since Marriner Eccles in 1948. The Eccles precedent is structurally significant: Eccles faced similar White House pressure from President Harry Truman, who pushed the Fed to keep rates low to reduce government borrowing costs. The Eccles-Truman clash led to the 1951 Treasury-Fed Accord, which formalised the Fed’s institutional independence by creating a clear barrier between the two institutions. U.S. Attorney Jeanine Pirro recently handed over the DOJ probe into Federal Reserve renovations to the central bank’s inspector general.
The Senate Banking Committee on April 29 advanced the Trump nomination of Kevin Warsh as the next Fed chair on a party-line vote, with the full Senate widely expected to follow. Warsh has spoken publicly of “reopening” the 1951 Treasury-Fed Accord and “modernising it for the current era where the central bank’s fixed-income holdings total some $6.7 trillion.” The phrase represents the most explicit signal yet that the incoming Fed leadership intends to revisit the structural-institutional framework that has anchored Fed independence for 75 years. Warsh’s framing has been characterised by some institutional observers as “regime change” for the Federal Reserve. The April 29 FOMC meeting itself produced four dissents — the first time since October 1992 — including Stephen Miran on the dovish side advocating for a 25 basis-point cut, plus Hammack, Kashkari, and Logan dissenting from the easing bias rather than the rate decision itself.
The cumulative architecture means that the May 15-22 transition window establishes the operational baseline for the structural-institutional-Fed-independence question that will define monetary-policy positioning through the rest of 2026. The June 17-18 FOMC meeting will be Warsh’s first as chair if confirmed by the full Senate. Markets are currently pricing the federal funds rate to remain in the 3.50-3.75 percent range through end-2026, per the U.S. Bank Asset Management Group April 29 update. The structural-political question is whether the Warsh-led Fed will accelerate the rate-cut cycle to satisfy Trump-administration political pressure, or whether the Treasury-Fed Accord reopening framework signals a more fundamental institutional restructuring.
LATAM Read The Powell-Warsh transition and the 1951 Treasury-Fed Accord reopening framing represent the most consequential US monetary-institutional shift since the 1971 Bretton Woods exit. Brazilian and Mexican fixed-income allocators with Treasury and corporate-bond exposure should treat the May 15-22 chair-transition window as the binding political-risk repricing event that will define Q3 dollar-and-yield positioning.
04April jobs report Friday closes data fortnight as JOLTS and ISM Services print today against ADP slowing trend
The April nonfarm payrolls report releases Friday May 8, 2026 and represents the most consequential macro data print of the week. The March payrolls report showed jobs growth of 178,000 versus consensus expectations and a 4.3 percent unemployment rate. ADP weekly private payroll growth has averaged approximately 40,000 in April per CNBC’s tracking — a meaningful deceleration from March’s pace and the indicator that has prompted some economists to expect a sub-150,000 April nonfarm print. JOLTS March job-openings data and the ISM Services PMI for April both print today May 5, providing the first activity readings since the FOMC’s April 29 hold decision. The structural-economic baseline is what U.S. Bank Asset Management Group described as “a softer labour market” in which “slower hiring can cool the labour market without creating the widespread job losses that often hurt consumer spending quickly.”
The structural-economic backdrop is that Q1 2026 GDP grew at a respectable 2.0 percent annualised rate per the Commerce Department’s preliminary release April 30, with business investment remaining a bright spot per TD Economics. AI was a significant driver underpinning investment growth, though there was also evidence of broadening to more traditional areas. The March CPI registered at 3.3 percent year-on-year, with core CPI excluding food and energy at 2.6 percent and shelter costs at 3.0 percent. Core PCE inflation was 3.0 percent in February — down from a peak above 5.5 percent in 2022 but still well above the Fed’s 2 percent target. The Q1 Employment Cost Index, released April 30, showed wage-growth pressure consistent with the persistent core-services inflation framework that has prompted the Fed’s hold posture.
Oil prices rose more than 76 percent from late February to early April per the U.S. Bank tracking, with the structural backdrop providing a near-term inflation headwind. Bill Merz, head of capital markets research for U.S. Bank Asset Management Group, told the bank’s research team: “Inflation may temporarily accelerate. But factors beyond energy costs determine inflation over the medium-term.” The cumulative architecture means that Friday’s April nonfarm-payrolls print, combined with today’s JOLTS and ISM Services releases, will define the operational baseline for the June 17-18 FOMC meeting and the broader macro-political-economic positioning through Q3. The Polymarket-tracked end-2026 fed funds rate distribution continues to price the 3.50-3.75 percent range as the most likely outcome.
LATAM Read The April nonfarm-payrolls print combined with today’s JOLTS and ISM Services releases will define the most consequential single-week macro-data window of Q2. Brazilian and Mexican fixed-income desks with US-rate sensitivity should treat the Friday print as the binding signal for the June FOMC trajectory.
05Carney calls Alberta pipeline “more probable than possible” in first sit-down interview as Smith pushes northern BC route against Eby and Coastal First Nations
Canadian Prime Minister Mark Carney told The Canadian Press in his first sit-down interview as Prime Minister Friday May 1, 2026 that a new oil pipeline out of Alberta is “more probable than possible,” citing increased global demand for secure new sources of energy and Canada’s need to diversify exports to Asian markets. “It’s all part of a bigger package. We’re making progress on that bigger package,” Carney said, referring to the memorandum of understanding his government signed with Alberta Premier Danielle Smith on November 27, 2025. Carney added that “there are multiple routes where there could be a pipeline,” leaving the door open to alternatives despite Smith’s stated preference for a northern British Columbia coast route. Liberal Minister Steven Guilbeault resigned from Carney’s cabinet over the original MOU. Carney also clarified, per The Deep Dive’s reporting, that Canada will not use energy or critical minerals as bargaining chips in upcoming US trade negotiations.
The structural-political backdrop is the institutional opposition that the northern BC route faces. BC Premier David Eby has stated the project “isn’t grounded in reality.” Coastal First Nations including the Haisla Nation, with elected Chief Maureen Nyce telling CBC News Network that her community is “very disappointed that the federal government has committed to this agreement.” The Union of BC Indian Chiefs separately said it is “loudly objecting” to the MOU, noting that it was done without involvement from coastal First Nations in the province. Grand Chief Stewart Phillip continues to lead the institutional opposition. The Globe and Mail has separately editorialised in favour of a southern route, framing the northern BC option as institutionally non-viable. The Calgary Chamber of Commerce gave Carney a standing ovation in Calgary in early February — the first such reception for a Liberal Prime Minister in oil country in two decades.
The cumulative architecture means that no energy company has yet committed to building the pipeline, with the next steps hinging on securing private-sector backing and finalising a viable route by late 2026 per The Deep Dive’s tracking. Conservative Leader Pierre Poilievre has described the past year as one in which the government “wasted entire year” on the question. The structural-political question is whether the Liberal majority of 174 seats — the strongest mandate the party has held since 2015 — can absorb the institutional opposition from BC, Indigenous Nations, the federal NDP, and Greens, while delivering on the political-economic mandate that the Calgary Chamber and Alberta business community have endorsed.
LATAM Read The Carney pipeline framing operationalises the Canadian energy-export-diversification cycle that defines structural commodity positioning through 2027. Brazilian and Argentine commodity allocators with energy-sector exposure should treat the late-2026 financing-close timing as the binding signal for South-North energy-corridor positioning.
06Canada Spring Update delivers $11.5B fiscal improvement as exports to non-US markets surge 13.4% Q4 and Sheinbaum decrees universal healthcare for 120 million
The Canadian Federal Government’s Spring Economic Update, delivered late April per TD Economics’ May 1 Weekly Bottom Line, produced an $11.5 billion improvement in the projected deficit. The IMF expects Canada to post the second-fastest growth in the G7 over 2026 and 2027, with Canada continuing to enjoy the lowest average tariff rate among all major US trading partners at 5.2 percent. Since the start of 2025, Canada has added approximately three times as many jobs per capita as the United States — 3.4 per 1,000 of population versus 1.2 per 1,000 — with most of that growth concentrated in the private sector per Statistics Canada. The unemployment rate peaked in September 2025 at 7.1 percent before falling to 6.7 percent as of March 2026. Wage growth has now outpaced inflation for more than three consecutive years, supporting continued gains in real incomes per the Spring Economic Update.
The export-diversification cycle accelerated in Q4 2025 with Canadian exports to non-US markets up 13.4 percent — fully offsetting the 1.9 percent decline in exports to the United States and producing 0.7 percent total export growth for the year. A $7.6 billion surge in exports to the United Kingdom, largely reflecting higher gold shipments, anchored the non-US growth. Exports to China rose 18.4 percent and to the European Union 11.4 percent. Canada has secured $97 billion in foreign investment and more than 20 new economic and defence partnerships across four continents in the last year per the federal government’s Spring Update overview. Canada’s network of trade agreements now spans 51 countries representing nearly two-thirds of global GDP. The federal target is to double exports to non-US markets over the next decade.
The Canadian population declined by more than 76,000 between July 1 and October 1, 2025 — the first quarterly decline since 1946 (excluding the pandemic period) — mainly due to non-permanent residents leaving the country per Statistics Canada’s preliminary estimates. The decline is expected to continue over the next two years. Mexican President Claudia Sheinbaum decreed universal healthcare for 120 million Mexicans on May 1, per The Deep Dive’s coverage — the most consequential social-policy framework of the Sheinbaum administration’s first year. US farm bankruptcies separately rose 46 percent year-on-year, with the fertiliser crisis compounding years of agricultural-sector pressure per the same source. The cumulative architecture means that North American structural-political-economic positioning is operating across simultaneous fiscal-improvement, demographic-shift, and social-policy reset vectors.
LATAM Read The Canadian export-diversification surge to 13.4 percent Q4 growth in non-US markets and the Sheinbaum universal-healthcare decree confirm the North American structural-political-economic divergence cycle. Brazilian and Argentine corporate-strategy desks with North American partnership exposure should treat the Canadian trade-agreement network spanning 51 countries as the binding signal for Q3 South-North positioning.
| INSTRUMENT | LEVEL | MOVE | NOTE |
| S&P 500 | 7,238.40 | ▲ +0.11% | 7th-week ATH watch; 84% Q1 EPS beat highest since Q2 2021 |
| Nasdaq 100 | 25,182 | ▲ +0.27% | M7 capex $725B 2026; AI momentum continuing |
| Dow Jones | 44,610 | → +0.04% | Industrials lagging; rotation favouring tech-heavy names |
| TSX Composite | 25,870 | ▲ +0.42% | Energy outperforming; Carney pipeline framing supports |
| USD/CAD | 1.3704 | ▼ −0.18% | Loonie firming on trade-diversification framework |
| USD/MXN | 17.42 | → +0.06% | Sheinbaum healthcare decree absorbed; range-bound |
| 10Y UST Yield | 4.32% | → +1 bp | Pre-jobs; Powell-Warsh transition watch May 15-22 |
| 10Y Canada Yield | 3.18% | → flat | BoC pause through 2026 baseline; June 4 meeting watch |
| Bitcoin (USD) | $98,420 | ▲ +1.18% | MSTR Q1 today; 713,502 BTC fair-value accounting signal |
| VIX | 14.85 | ▼ −2.1% | Volatility compressed; pre-jobs Friday positioning |
When do the Section 122 tariffs expire and what happens next?
The Section 122 trade-deficit tariffs that the Trump administration imposed on February 24, 2026 expire on July 24, 2026 — 80 days from today. Section 122 of the Trade Act of 1974 authorises the president to impose tariffs of up to 15 percent for up to 150 days. After July 24, Congress must vote to continue them. The tariff replaced the IEEPA-based tariffs that the Supreme Court ruled unlawful on February 20 in Learning Resources Inc. v. Trump in a 6-3 opinion authored by Chief Justice John Roberts.
What is the Magnificent 7 capex plan for 2026?
TD Economics estimates Magnificent 7 cumulative capital expenditure for 2026 at approximately $725 billion versus $375 billion in 2025. Alphabet guided $175-185 billion in 2026 capex when reporting Q4 (approximately double 2025 levels). Meta’s full-year 2026 capex plan is nearly twice its 2025 spend. Microsoft, Alphabet, and Meta all raised their 2026 capex guidance last week. The Magnificent 7 represents approximately one-third of S&P 500 market capitalisation.
Why is Powell staying on the Federal Reserve Board after stepping down as chair?
Powell told reporters at his April 29 press conference that he plans to remain on the Board of Governors until the Justice Department probe of Federal Reserve renovations is “well and truly over with transparency and finality.” His term as a Fed governor expires January 2028. This is the first time a sitting Fed chair has not left the Board since Marriner Eccles in 1948. U.S. Attorney Jeanine Pirro recently handed the DOJ probe over to the Federal Reserve’s inspector general.
What did Carney say about the Alberta pipeline?
Canadian Prime Minister Mark Carney told The Canadian Press in his first sit-down interview Friday May 1 that a new oil pipeline out of Alberta is “more probable than possible,” citing increased global energy demand and Canada’s need to diversify exports to Asian markets. Carney said “there are multiple routes where there could be a pipeline,” leaving the door open to alternatives despite Alberta Premier Danielle Smith’s preference for a northern British Columbia coast route. BC Premier David Eby, the Haisla Nation, and the Union of BC Indian Chiefs continue to oppose the northern route.
When is the next US jobs report?
The April nonfarm payrolls report releases Friday May 8, 2026 — the most consequential macro print of the week. The March payrolls report showed jobs growth of 178,000 versus consensus and a 4.3 percent unemployment rate. ADP weekly private payroll growth has averaged approximately 40,000 in April. JOLTS March job openings data and the ISM Services PMI for April both print today May 5. The Federal Reserve held rates at 3.50-3.75 percent at its April 29 meeting with four dissents — the first time since October 1992.
What is Canada’s fiscal and trade-diversification position in 2026?
Canada’s Spring Economic Update delivered an $11.5 billion improvement in the projected deficit per TD Economics. The IMF expects Canada to post the second-fastest growth in the G7 over 2026 and 2027. Canada has the lowest average tariff rate among major US trading partners at 5.2 percent. Canadian exports to non-US markets surged 13.4 percent in Q4 2025, fully offsetting the 1.9 percent decline in exports to the United States. Canada has secured $97 billion in foreign investment and 20+ new partnerships across four continents in the last year.
Updated: 2026-05-05T07:30:00Z by yesterday’s USA & Canada intelligence brief