How ‘Trump Always Chickens Out’ guides Wall Street

For some nine months now, the TACO trade has proven a reliably winning one on Wall Street.

- BY DENITSA TSEKOVA AND ISABELLE LEE

Short for “Trump Always Chickens Out,” it emerged in the wake of the 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 U.S. stocks futures pointing to a rebound on Wednesday, the selloff may not have much staying power.

For the TACO trade to live on, some say, there first needs to be a bigger, more chaotic rout that reminds Trump of the market pain he stirred up in April.

“Is this all just TACO again? Oh absolutely,” said Marko Papic, chief strategist at BCA Research. “But I think that we may have to have a Liberation Day-type of a downturn before we get to the bottom of it.”