Wall Street has coined the acronym TACO (Trump Always Chickens Out) to describe a new trading strategy capitalizing on President Trump's unpredictable trade policy. This trend has emerged as investors observe a pattern where Trump's tariff threats cause market downturns, subsequently followed by his retracting those threats, resulting in stock rebounds. Notably, recent behavior showcased this tactic, where a proposed 50% tariff announcement led to market plunges, only for Trump to pause it days later. Economists emphasize how this new approach is unique and unprecedented, deviating from historical presidential market impacts.
Trump's erratic trade announcements have led to a new trading strategy known as TACO, allowing investors to profit by predicting his reversals on tariffs.
The TACO strategy hinges on the pattern of Trump threatening tariffs, causing a market drop, followed by a quick reversal that allows investors to buy low.
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