Tom Essaye Says Markets Trust The Rally’s Core Pillars Despite Political Noise
Why Trump-Driven Selloffs Keep Becoming Buyable Dips
The TACO theory on Trump makes every ‘dip’ a buy, analyst says
“Trump is not going to willfully drive the markets or the economy into the ground. At least we hope not,” Tom Essaye, president and founder of Sevens Report Research, told Yahoo Finance’s Opening Bid.
The theory has become the defining feature of Trump’s current term, Essaye argues. The administration started the year laser-focused on Venezuela and has since taken aim at credit card companies over interest rates, healthcare providers over insurance costs, and even the Federal Reserve.
“The sheer volume will test the TACO theory,” Essaye said.
Despite the noise, the underlying “four pillars” of the market rally — earnings growth, stimulus, Fed support, and the AI boom — remain largely intact. Essaye suggests that while protection is “relatively cheap” and perhaps necessary for those with no hedge, the “buy the dip” mentality shouldn’t be abandoned just yet.
“One of the most important things in investing is being able to cut out the headline noise and stay focused on the big trends,” Essaye said. He points to financials and healthcare as prime examples and some of the best trades to make right now, as these sectors often sell off 3% to 5% on a single social media post, only for the threatened regulations to never materialize.
Investors should focus on earnings, underlying economic growth, and the likelihood the Fed will cut rates in the first half of the year, Essaye said. Not to mention, “AI enthusiasm is alive and well,” he added.
Ultimately, the TACO trade relies on the belief that the president’s greatest vanity is the stock market ticker. As long as that holds true, every policy-driven dip should not be viewed as a disaster, but as a tactical entry point, per Essaye.
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