Why Taco trade is no laughing matter for the global economy
Everyone loves a catchy acronym. In financial markets, investment analysts spend a lot of time trying to come up with initialisms that encapsulate a popular theme or trend.
A good example is FOMO, or
fear of missing out , especially when it comes to stock market rallies. Another one is Brics, first coined in 2001 by former Goldman Sachs economist Jim O'Neill to draw attention to opportunities in Brazil, Russia, India and China.
However, it is not often that a journalist coins an acronym that takes markets by storm. Last month, Financial Times commentator Robert Armstrong came up with Taco – which stands for '
Trump always chickens out ' – to describe the recent rally in global markets. He attributed the rally to investors 'realising that [US President Donald Trump] does not have a very high tolerance for market and economic pressure and will be quick to back off when [his trade] tariffs cause pain'.
The Taco trade took hold on April 9, the day Trump
suspended the 'reciprocal' tariffs he imposed on nearly all America's trading partners a week earlier. Since then, Trump has made a series of partial climbdowns that have convinced many investors that his bark is worse than his bite.
Having threatened to fire US Federal Reserve chair Jerome Powell, Trump backed down and said he
had no intention of seeking his ouster despite continuing to pressure the Fed to lower interest rates.
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