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Miami Herald
13 hours ago
- Business
- Miami Herald
Stock market whipsaws on latest tariff tirade, triggers TACO trade
Investors may not be fans of stock market volatility, but that doesn't bother President Trump. His back-and-forth trade and tariff war updates have sent stocks on a roller coaster ride since he announced tariffs on Canada, Mexico, and China in February. The stock market's nerve-racking swings include a 19% tumble from mid-February through early April, and a 20% rally since April 9, when Trump paused many reciprocal tariffs that rocked stocks after they were announced on April 2. Don't miss the move: Subscribe to TheStreet's free daily newsletter Investors have oscillated between pessimism that tariffs would send the U.S. into economic stagnation or recession, and optimism that negotiations would tame the worst of tariffs' bite. The seesaw pattern continued this week. Stocks tumbled on Friday, May 23, when Trump threatened 50% tariffs on the European Union, only to rally on Tuesday after Trump said he'd delay implementing them on the EU until July. The volatility continued on Friday, May 30. The S&P 500 lost over 1% at session lows after Trump made a bold accusation on China trade, only to recover most of the day's losses on hopes that cooler heads would again prevail over the weekend. Image source:The on-and-off again nature of Trump's trade war and the stock market's reaction to it has led to investors buying dips to profit from potential easing of rhetoric amid negotiations. Profitable dip buying has led to the coining of the "TACO" trade, where TACO stands for "Trump Always Chickens Out." The phrase is credited to Financial Times writer Robert Armstrong, who noticed the phenomenon. Related: Jamie Dimon sends terse message on stocks, economy The sell-off and rally from last Friday and Tuesday are perfect examples of the TACO trade in action. Trump made a huge, eye-popping threat, only to back away from it, claiming positive trade talk developments. Those who bought low on the S&P 500 last Friday and sold high on Tuesday pocketed a quick 2.7%. The returns were even better for those risk-tolerant enough to try their hands at technology stocks. Buying the dip in the Nasdaq 100 or high-flying artificial intelligence stock Palantir delivered 3.2% and 6%, respectively. Stocks' action on May 30 suggests many think that Trump's latest tough talk toward China may be similarly walked back, resulting in gains. The S&P 500 and Nasdaq finished May 30th up 1.3% and 1.5% from their intraday low. Palantir gained 6.1% from its low. President Trump kicked off a major trade war with China in April when he set reciprocal tariffs at 34%, bringing total tariffs to 54%, including the 'fentanyl' tariff. China responded in kind, and the tit-for-tat eventually left China's tariffs at 145% and China's US tariffs at 125%. Those rates were high enough to effectively shutter trade between the two economic giants, which caused ripples in supply chains, sending retailers heavily reliant on low-cost apparel and electronics scrambling. Related: Secretary Bessent sends message on Walmart price increases due to tariffs Absent relief, most began to assume a recession driven by tariff-driven inflation was inevitable. Those fears were mitigated when Trump surprised everyone, announcing he would roll back China tariffs to 30% on May 14 for 90 days in a sign of good faith after what appeared to be positive initial trade talks. Unfortunately, that optimism faded quickly after Trump delivered a stark rebuke of China on May 30. "Two weeks ago, China was in grave economic danger! The very high Tariffs I set made it virtually impossible for China to TRADE into the United States marketplace," wrote Trump on Truth Social. "I was what was happening and didn't like it, for them, not for us. I made a FAST DEAL with China... Everybody was happy!... The bad news is that China, perhaps not surprisingly to some, HAS TOTALLY VIOLATED ITS AGREEMENT WITH US. So much for being Mr. NICE GUY!" More Economic Analysis: Hedge-fund manager sees U.S. becoming GreeceA critical industry is slamming the economyReports may show whether the economy is toughing out the tariffs Trump's frustration with China is evident, and the implications for markets aren't great. China may be negotiating tough, like Trump, so it may take longer to seal a deal, or the final agreement may not include much more in tariff relief. If so, recession worry will escalate. Stock market participants, however, don't seem concerned, embracing the TACO trade fully on Friday. Will that bet pay off? We'll have to wait and see if Trump's rhetoric eases over the coming days. Related: Veteran fund manager unveils eye-popping S&P 500 forecast The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
The Independent
15 hours ago
- Business
- The Independent
TACO to FAFO: The secret insults investors are using to poke fun at Trump's policies
MAGA President Donald Trump might be known for his snappy acronyms, but now investors are using four-letter descriptors of their own to discuss Trump-era trade policies. Trump's shorthand for his administration's cost-cutting arm DOGE, the Department of Government Efficiency, as well as the slogan driving his public health department, 'Make America Healthy Again,' have become familiar jargon. Now, with the president's fixation on tariffs, Wall Street investors have developed their own abbreviations for Trump's trade policies. Asked about the acronyms, a White House spokesperson told Reuters: "These asinine acronyms convey how unserious analysts have consistently beclowned themselves by mocking President Trump and his agenda that've already delivered multiple expectation-beating jobs and inflation reports, trillions in investment commitments, a historic UK trade agreement, and rising consumer confidence." ICYMI: Here are some of the latest terms. TACO Some Wall Street traders have started using TACO — short for 'Trump Always Chickens Out' — a term coined by Financial Times columnist Robert Armstrong to describe the president's pattern of implementing trade policy threats that are likely to cause the market to tumble before he inevitably walks back on that policy, leading to a market rebound. For example, his so-called 'Liberation Day' tariffs caused the markets to hit historic lows before he ordered a 90-day pause one week later, leading to record highs. This week, when asked about the acronym, the president replied: 'That's a nasty question. To me, that's the nastiest question.' MEGA Viktor Orbán, the Hungarian Prime Minister and Trump ally, co-opted Trump's MAGA slogan last year, but added a European spin to it: 'Make Europe Great Again.' Now, investors have given the phrase yet another meaning. European stocks have outperformed their American counterparts as economic uncertainty reigns in the U.S., prompting some investors to choose to put their money in European interests rather than American. Some analysts have predicted that China could start exporting its goods to Europe, which could lower prices there, as tensions between China and the U.S. remain high. "It seems that MEGA trades are now rapidly replacing MAGA trades, which have lost their appeal," Mark Dowding, CIO at RBC's BlueBay fixed income team, told Reuters. Trump himself has actually used this four-letter term, which stands for 'F*** around and find out.' It's usually used to mean there will be consequences to one's actions. In January, after Columbia blocked the U.S.'s deportation flights, Trump posted a moody AI-generated image of himself wearing a fedora next to a sign reading: 'FAFO.' After the president threatened hefty levies, Columbia reversed course, prompting the Times of London to dub the exchange a 'FAFO diplomacy.' Some investors are also using the acronym to describe the market turbulence caused by Trump's sweeping trade policies, according to Reuters. Mark Spindel, chief investment officer of Potomac River Capital LLC, likened the stock market to being caught in a "pinball machine as a result of that policymaking process." FAFO Standing for 'Make America Go Away,' a report is Reuters cites one Canadian investor who says the quip is doing the rounds of trading desks in Toronto and Montreal, with many longingly thinking about simply boycotting U.S investment.
Yahoo
a day ago
- Business
- Yahoo
This week in Trumponomics: Too bad TACO isn't true
Traders have come up with a snarky shorthand for characterizing President Trump's trade policy: TACO. Trump Always Chickens Out. Trump has whipsawed markets by threatening tariffs, imposing tariffs, raising tariffs, lowering tariffs, and sometimes backing down from tariff threats. Stock values have followed the bouncing tariff in an inverse pattern: down when Trump's tariffs go up, and vice versa. Investors who have bought the dips, betting that Trump will relent on tariffs and stocks will go back up, have generally done OK. The only problem with the TACO trade is that the premise isn't true. Trump doesn't always chicken out. His threats are often worse than his actions, but five months into Trump's term, it is abundantly clear that taxes on imports will be considerably higher for as long as Trump is in charge. TACO joined the financial vernacular after Trump threatened a 50% tariff on imports from Europe, then backed down after European trade negotiators picked up the phone and started talking with Trump about a trade deal that might avert the tariffs. Financial Times columnist Robert Armstrong had used the phrase TACO in a May 2 opinion piece, but it was Trump's flip-flop on the Europe tariffs on May 26 that sent the acronym viral. Read more: What Trump's tariffs mean for the economy and your wallet As Armstrong explained, the TACO trade is a good thing and markets generally cheer when Trump dials back a tariff threat. Tariffs are a tax on imports that raises costs for everybody who buys an import, and higher costs mean more inflation and lower profits. When Trump backs down on a tariff threat, it means less tax money going to the US Customs Bureau and more staying in consumer and business bank accounts. Trump bristles at the taunt. When a reporter asked him about the TACO meme on May 28, Trump called it a 'nasty question' and said, "They'll say oh, we was chicken. He was chicken. That's unbelievable. Usually I have the opposite problem.'Trump squawking about whether he's a chicken is a priceless bit of ironical bravado, but in reality, Trump is right. He threatens absurdly high tariffs the way a homeowner might post an unrealistic asking price when first listing a house for sale. Trump doesn't do that because he wants to end up at the same tariff level he started at. He does it to end up at a higher tariff level and maybe get something in return. It would be more accurate to say Trump sometimes chickens out. But TSCO isn't a pithy acronym, and if Trump happened to deescalate a trade threat on a Tuesday, nobody would get the joke if you joshed about TSCO Tuesday. If Trump always chickens out, then he'd have the perfect excuse right now to wind down his trade war and move on to something else. Two federal courts recently ruled that Trump's claim of a 'national emergency' to justify most of his new tariffs is unconstitutional. If those rulings survive likely appeals to the Supreme Court, they will sharply curtail Trump's ability to impose any tariff he wants at any time. It's an ideal opportunity for Trump to say, well, I tried, and the courts won't let me do it. Instead, Trump is aggressively challenging both court rulings, with one appeals court finding in Trump's favor by saying the emergency tariffs can remain in effect until it hears the case. Trump, meanwhile, is preparing new tariffs under a wide range of different legal authorities that are more defensible. Those pathways require more prep work while giving Trump less leeway on tariffs, but they could still leave the US economy blanketed by punitive tariffs that suffocate growth. Read more: The latest news and updates on Trump's tariffs 'We continue to expect that the administration will prepare alternative means to implement its global reciprocal tariffs while the cases are being considered by the court,' Ed Mills of financial firm Raymond James wrote in a May 29 analysis. 'The on-again, off-again impact of the rulings and subsequent pause will continue to compound uncertainty and related market volatility.' Trump, so far, has raised the average tax on imported goods from 2.5% to about 18%, according to the Yale Budget Lab. That includes the emergency tariffs that the Supreme Court may or may not allow to stand, plus another set of tariffs on steel, aluminum, cars, and car parts that are on more stable legal footing. Trump's team is also working up the justification for new tariffs on imported pharmaceuticals and semiconductors, which Trump suggests will be coming soon. Most analysts think Trump will ultimately end up with an average tariff rate between 15% and 20%. At current levels, with the emergency tariffs in effect, the Yale Budget Lab estimates that Trump's tariffs will amount to an added tax of about $270 billion per year on American businesses and consumers, costing the average household roughly $2,800 in higher prices and foregone income. Trump has no problem with that. He has explained away the negative impact of his tariffs by saying the US economy needs 'medicine' and that Americans can buy less stuff if imported products get too expensive. By the time Trump's tariff regime is fully in effect, many Americans may wish that Trump had chickened out on his trade war. Higher prices and slower job growth, unfortunately, will prove that he didn't. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices. Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
This week in Trumponomics: Too bad TACO isn't true
Traders have come up with a snarky shorthand for characterizing President Trump's trade policy: TACO. Trump Always Chickens Out. Trump has whipsawed markets by threatening tariffs, imposing tariffs, raising tariffs, lowering tariffs, and sometimes backing down from tariff threats. Stock values have followed the bouncing tariff in an inverse pattern: down when Trump's tariffs go up, and vice versa. Investors who have bought the dips, betting that Trump will relent on tariffs and stocks will go back up, have generally done OK. The only problem with the TACO trade is that the premise isn't true. Trump doesn't always chicken out. His threats are often worse than his actions, but five months into Trump's term, it is abundantly clear that taxes on imports will be considerably higher for as long as Trump is in charge. TACO joined the financial vernacular after Trump threatened a 50% tariff on imports from Europe, then backed down after European trade negotiators picked up the phone and started talking with Trump about a trade deal that might avert the tariffs. Financial Times columnist Robert Armstrong had used the phrase TACO in a May 2 opinion piece, but it was Trump's flip-flop on the Europe tariffs on May 26 that sent the acronym viral. Read more: What Trump's tariffs mean for the economy and your wallet As Armstrong explained, the TACO trade is a good thing and markets generally cheer when Trump dials back a tariff threat. Tariffs are a tax on imports that raises costs for everybody who buys an import, and higher costs mean more inflation and lower profits. When Trump backs down on a tariff threat, it means less tax money going to the US Customs Bureau and more staying in consumer and business bank accounts. Trump bristles at the taunt. When a reporter asked him about the TACO meme on May 28, Trump called it a 'nasty question' and said, "They'll say oh, we was chicken. He was chicken. That's unbelievable. Usually I have the opposite problem.'Trump squawking about whether he's a chicken is a priceless bit of ironical bravado, but in reality, Trump is right. He threatens absurdly high tariffs the way a homeowner might post an unrealistic asking price when first listing a house for sale. Trump doesn't do that because he wants to end up at the same tariff level he started at. He does it to end up at a higher tariff level and maybe get something in return. It would be more accurate to say Trump sometimes chickens out. But TSCO isn't a pithy acronym, and if Trump happened to deescalate a trade threat on a Tuesday, nobody would get the joke if you joshed about TSCO Tuesday. If Trump always chickens out, then he'd have the perfect excuse right now to wind down his trade war and move on to something else. Two federal courts recently ruled that Trump's claim of a 'national emergency' to justify most of his new tariffs is unconstitutional. If those rulings survive likely appeals to the Supreme Court, they will sharply curtail Trump's ability to impose any tariff he wants at any time. It's an ideal opportunity for Trump to say, well, I tried, and the courts won't let me do it. Instead, Trump is aggressively challenging both court rulings, with one appeals court finding in Trump's favor by saying the emergency tariffs can remain in effect until it hears the case. Trump, meanwhile, is preparing new tariffs under a wide range of different legal authorities that are more defensible. Those pathways require more prep work while giving Trump less leeway on tariffs, but they could still leave the US economy blanketed by punitive tariffs that suffocate growth. Read more: The latest news and updates on Trump's tariffs 'We continue to expect that the administration will prepare alternative means to implement its global reciprocal tariffs while the cases are being considered by the court,' Ed Mills of financial firm Raymond James wrote in a May 29 analysis. 'The on-again, off-again impact of the rulings and subsequent pause will continue to compound uncertainty and related market volatility.' Trump, so far, has raised the average tax on imported goods from 2.5% to about 18%, according to the Yale Budget Lab. That includes the emergency tariffs that the Supreme Court may or may not allow to stand, plus another set of tariffs on steel, aluminum, cars, and car parts that are on more stable legal footing. Trump's team is also working up the justification for new tariffs on imported pharmaceuticals and semiconductors, which Trump suggests will be coming soon. Most analysts think Trump will ultimately end up with an average tariff rate between 15% and 20%. At current levels, with the emergency tariffs in effect, the Yale Budget Lab estimates that Trump's tariffs will amount to an added tax of about $270 billion per year on American businesses and consumers, costing the average household roughly $2,800 in higher prices and foregone income. Trump has no problem with that. He has explained away the negative impact of his tariffs by saying the US economy needs 'medicine' and that Americans can buy less stuff if imported products get too expensive. By the time Trump's tariff regime is fully in effect, many Americans may wish that Trump had chickened out on his trade war. Higher prices and slower job growth, unfortunately, will prove that he didn't. Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman. Click here for political news related to business and money policies that will shape tomorrow's stock prices.
News18
a day ago
- Business
- News18
TACO Trade: Wall Street Has A New Acronym To Rally Behind, But Donald Trump Thinks It's "Nasty"
Financial Times columnist Robert Armstrong coined a new terminology for US President Donald Trump - TACO or Trump Always Chickens Out. The new term describes how Trump's tariff policies rattled global markets, created a wave of uncertainty, and were eventually termed by a US trade court as illegal, paving the way for a prolonged court battle. Armstrong mentioned that Trump has a habit of announcing a new tariff policy, which takes the markets lower, and then backs out of those, leading to a rebound in the markets, and hence the TACO terminology. n18oc_world n18oc_crux
