\u2018Trump Always Chickens Out\u201d has been the glib phrase in financial markets to describe the president\u2019s first few months in office. Today, Taco sounds like a throwback to an innocent age after the US bombed Iran\u2019s nuclear facilities, and could trigger a regional war that the president can\u2019t control.<\/p>\n
Understanding what drives Trump has always been an exercise in human psychology more than it is conventional analysis of political or economic ideology. Taco<\/a>, which was first coined by Robert Armstrong at the Financial Times last month, was fast adopted by traders as a descriptor for the White House\u2019s flip-flopping over tariffs on China and the EU. The Taco thesis stuck and coincided with a broad stock market rally that pushed US indices back to their pre-\u201cliberation day\u201d highs.<\/p>\n The Taco trade also had a self-fulfilling quality, as markets shrugged off Trump\u2019s repeated attacks on Jerome Powell<\/a>, the Federal Reserve chairman, the fiscal implications of the big beautiful budget bill, and the administration\u2019s mostly empty \u201cdeals\u201d with China on raw materials and tariffs. Such has been the chokehold of the Taco maxim on Wall Street that little has disrupted the broad rally across US asset prices since May. <\/p>\n Getting back to the human psychology, the Taco thesis clearly stung a thin-skinned Trump. When first asked about it, the president was clearly irked by the \u201cnasty\u201d in-joke at his expense. In hindsight, Taco may have unwittingly emboldened the president into proving his doubters wrong. His bellicose bombing of Iran was an escalation that was anticipated by next to no one in the markets before this month. This is, after all, a man whose presidential ambitions were born out of revenge against Barack Obama who mocked Trump at the White House correspondents\u2019 dinner in 2011. <\/p>\n Trump doesn\u2019t always chicken out it seems. That\u2019s not to say the investor community is in any way responsible for Israel or the US\u2019s actions, but rather, it is an illustration of myriad unintended consequences of having a uniquely capricious president. <\/p>\n In some ways, little has changed for the Taco bulls since Israel\u2019s bombing of Iran<\/a> and the US\u2019s intervention on Saturday night. Oil prices, the main proxy for market jitters, touched a five-month high of $80 a barrel before falling back to about $77 on Monday. Oil has gained $10 this month and is trading at levels last seen in the aftermath of the April tariffs announcement. Over the year, Brent crude is still cheaper than it was in June 2024. <\/p>\n