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Wall Street's TACO Trade Runs Into a Problem of Its Own Making
For some nine months now, the TACO trade has proven a reliably winning one on Wall Street.
Short for “Trump Always Chickens Out,” it emerged in the wake of the US president’s global tariff rollout — and rollback — last April. It quickly became the rallying cry for investors tuning out the more extreme White House threats as they kept buying risky assets.
There’s just one problem with the trade, though, as some on Wall Street are beginning to appreciate. If TACO means investors don’t need to panic when Trump signals aggressive policy action after another, then there are no market collapses violent enough to spook him into backing down like he did on tariffs last year.
Trump’s push to take over Greenland — complete with threats of tariffs against European allies — has brought a sense of urgency to the matter in markets. On Tuesday, they slumped, with the S&P 500 sinking 2.1%, the dollar tumbling and volatility climbing. With US stocks futures pointing to a mild rebound on Wednesday, the selloff may not have much staying power.
Short for “Trump Always Chickens Out,” it emerged in the wake of the US president’s global tariff rollout — and rollback — last April. It quickly became the rallying cry for investors tuning out the more extreme White House threats as they kept buying risky assets.
There’s just one problem with the trade, though, as some on Wall Street are beginning to appreciate. If TACO means investors don’t need to panic when Trump signals aggressive policy action after another, then there are no market collapses violent enough to spook him into backing down like he did on tariffs last year.
Trump’s push to take over Greenland — complete with threats of tariffs against European allies — has brought a sense of urgency to the matter in markets. On Tuesday, they slumped, with the S&P 500 sinking 2.1%, the dollar tumbling and volatility climbing. With US stocks futures pointing to a mild rebound on Wednesday, the selloff may not have much staying power.
https://www.bloomberg.com/news/articles/2026-01-21/wall-street-s-taco-trade-runs-into-a-problem-of-its-own-making?srnd=homepage-americas
I wouldn't bet on a mentally unstable trump backing down because he did it at a few things in the past is a prudent way to invest.
Right now they are assuming trump is going to moderate his position on Greenland.