The TACO trade is the new Trump trade. Here’s what to know about the meme ruling the stock market.

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  • A new acronym is making its rounds on Wall Street: TACO
  • “Trump Always Chickens Out” refers to markets betting on Trump walking back tariff proposals.
  • Trump called the TACO moniker “nasty” when asked about it on Wednesday.

With TACO, investors have a new guiding principle.

“Buy the Trump tariff dip. Essentially, Trump has proven to investors that he won’t actually follow through with draconian tariffs,” Tom Essaye of the Sevens Report wrote on Wednesday. “As such, any sell-off following a dramatic tariff threat should be bought.”

Retail investors have adopted the strategy, with dip-buying at historic levels recently. But how long the TACO trade will remain effective depends on what happens after the tariff delays unwind over the summer.

Click here to view the full article in MSN.com from May 29, 2025.

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Assessing Market Performance from the April Lows

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What’s in Today’s Report:

  • Assessing Market Performance from the April Lows

Futures are slightly lower following a night of mixed earnings and economic data.

Earnings after the bell were decidedly mixed with some positives (MCHP, DELL) being offset by negative results (NTAP, GAP) and earnings are slightly weighing on futures.

Economically, Italian CPI beat estimates (1.9% vs. (E) 2.0%), further increasing expectations for a rate cut.

Today focus will be on the Core PCE Price Index (E: 0.1% m/m, 2.6% y/y) and a weaker than expected number will be positive for stocks and bonds as it would push back on inflation concerns and make a Fed rate cut later this year slightly more likely.

The other notable events today include two more economic reports, Consumer Sentiment (E: 52.0) and the Chicago PMI (E: 45.0) and a few Fed speakers: Bostic (12:20 p.m. ET), Daly (4:45 p.m. ET).

Trump Branded With Embarrassing Nickname Over Tariff Confusion

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Wall Street is beginning to understand the president’s roller-coaster foreign trade decisions with the help of a trendy acronym: TACO—or “Trump Always Chickens Out.”

The TACO theory was coined earlier this month by Financial Times columnist Robert Armstrong, adding a catchy name to the practice of loading up on stocks when Donald Trump first announces the tariffs and then selling when he ultimately backtracks on enforcing them.

In a Wednesday note obtained by Market Watch, Sevens Report Research founder Tom Essaye insisted that Trump does, in fact, always chicken out. So far, that’s been true for enacting additional tariffs on Mexico and Canada, postponing his “reciprocal” tariff plan on dozens of countries after his “Liberation Day” announcement went south, delaying a tariff on imports from the European Union, and smashing his plan to fine China, temporarily decreasing tariffs on Chinese products to 30 percent from 145 percent. Click here to view the full article in The New Republic on May 28, 2025.

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Initial Thoughts on Tariff Suspension (Bullish, but not an All Clear)

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What’s in Today’s Report:

  • Initial Thoughts on Tariff Suspension (Bullish, but not an All Clear)
  • Credit Spreads Deterioration:  An Economic Warning?

Futures are sharply higher after the Court of International Trade invalidated the administration’s reciprocal tariffs.

The ruling means that most of the 2025 tariffs, including all the reciprocal tariffs and additional tariffs on China, Mexico and China, are suspended immediately.

Clearly trade headlines will dominate the news wires today in the wake of last night’s court decision, anything that is positive for tariffs will be negative for stocks and vice-versa.

Away from trade, there are several notable economic reports today including Jobless Claims (E: 230K), Revised Q1 GDP (E: -0.3%) and Pending Home Sales (E: -1.1%).  Again, the stronger the data (especially for claims and Revised GDP) the better for markets.

On the Fed front, there are a few speakers today and their commentary in the wake of tariff suspension will be notable (anything that implies sooner than expected rate cuts will be bullish).  Speakers today include Barkin (8:30 a.m. ET), Goolsbee (10:40 a.m. ET), Kugler (2:00 p.m. ET) and Daly (4:00 p.m. ET).

Finally, earnings remain important and names to watch today include COST ($4.25), DELL ($1.50) and MRVL ($0.44).

The ‘Trump always chickens out’ trade is the talk of Wall Street. Here’s one way to play it.

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Tariff threats may still offer near-term opportunity but won’t determine market’s next big move, strategist says.

Let’s hear it for the TACO trade.

Wall Street loves a catchy acronym, and the TACO trade, coined earlier this month by Financial Times columnist Robert Armstrong, has captured the mood as investors and analysts attempt to make sense of the roller-coaster market action that has followed President Donald Trump’s sweeping tariff threats and subsequent walk-backs.

It stands for “Trump always chickens out.” The idea is that investors have profited by buying the dip that has followed Trump’s tariff threats. Does Trump always chicken out on his tariff threats? So far, the answer is yes, said Tom Essaye, founder of Sevens Report Research, in a Wednesday note. Click here to view the full article featured in MarketWatch, published on May 28, 2025.

Get access to the full Sevens Report issue on this topic—plus two weeks of free, no-obligation market insights built for advisors.
📩 Start your trial here: click here.

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What Is the “TACO Trade?”

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What’s in Today’s Report:

  • The “TACO Trade” and Why It Matters to You
  • Durable Goods Orders Show Cracks Emerging in Business Spending
  • Consumer Confidence Rebounds – Chart

Equity markets initially traded with a risk-off tone overnight thanks to a rise in global bond yields on the back of a soft Japanese government debt auction, but futures are back to flat ahead of the Fed minutes this afternoon and NVDA earnings after the close.

There is one lesser followed economic report today: Richmond Fed Manufacturing Index (E: -9.0), but barring a major surprise, the releasee is unlikely to materially move markets given other catalyst in focus.

One of those catalysts will be the Fed minutes release this afternoon at 2:00 p.m. ET as traders will look for any fresh insight as to when the next rate cut will occur or clarity on the FOMC’s outlook for the economy/inflation in the quarters ahead.

As mentioned, a soft JGB auction overnight weighed on global risk assets. As such, today’s Treasury auctions, the first for 4-Month Bills at 11:30 a.m. ET and the second for 5-Yr Notes at 1:00 p.m. ET both have potential to impact equity trading today (recall it was a 20-Yr auction that sparked last week’s mid-week selloff).

Finally, one of the last major earnings releases of the season will hit after the close with NVDA (E: $0.80) reporting post-market. A few other noteworthy late-season reports today include:  DKS ($3.37), ANF ($1.36), M ($0.14), CRM ($1.87), and ELF ($0.57).

Reminder of Market Risks

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What’s in Today’s Report:

  • Reminder of the (Many) Risks

Futures are higher with global equities while overseas bonds are stabilizing amid easing U.S.-EU trade tensions.

President Trump delayed the implementation date of proposed 50% tariffs on the EU, which were first threatened Friday morning, from June 1 to July 9 which is being well received by global investors and supporting broad risk-on money flows across asset classes.

There were no material or market-moving economic reports overnight but there are several key reports to watch in the U.S. today including Durable Goods Orders (E: -8.1%), the Case-Shiller Home Price Index (E: 0.3%), and Consumer Confidence (E: 87.3).

Additionally, there are two Fed speakers to watch: Barkin (9:30 a.m. ET), Williams (8:00 p.m. ET) as well as a 2-Yr Treasury Note auction at 1:00 p.m. ET, all of which could shed light on Fed policy expectations for the months ahead.

Finally, a few more late season earnings releases continue to trickle in with PDD ($2.25), AZO ($36.78), and BNS ($1.14) all reporting today but the market impact should be limited.

Volatility Update

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What’s in Today’s Report:

  • Volatility Update

Futures are slightly lower following a mostly quiet night of news ahead of the holiday weekend.

Politically, the Supreme Court issued a ruling overnight that implies the President does not have the authority to fire the Fed Chair and this is a general positive for markets (it mostly removes Trump firing Powell as a threat).

Economically, data was better than expected as UK retail sales and German GDP both beat estimates.

Today focus will be on New Home Sales (E: 700K) and there is one Fed speaker, Cook (12:00 p.m. ET).  But, given the looming holiday weekend, expect trading to be quiet barring any surprises.

What Is the “Big, Beautiful Bill” and Why Is It Impacting Markets?

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What’s in Today’s Report:

  • What Is the “Big, Beautiful Bill” and Why Is It Impacting Markets?

Futures are slightly higher as markets digest Wednesday’s yield driven selloff.

Economically, EU and UK flash PMIs disappointed.  The EU flash PMI badly missed expectations (49.5 vs. (E) 50.9) while the UK reading was a slight miss (49.4 vs. (E) 49.5).

Today focus will be on economic data as well as political progress.  Economically, the key reports today are the May Flash Manufacturing PMI (E: 49.8) and Flash Services PMI (E: 50.6) as well as Jobless Claims (E: 230K).  As has been the case, the stronger those numbers, the better as they will continue to push back on stagflation fears.  There is also one Fed speaker, Williams at 2:00 p.m. ET, but he’s unlikely to move markets.

Finally, on the political front, the deficit implications of the “Big Beautiful Bill” are pushing Treasury yields higher and if the bill advances out of the House and is viewed as deficit negative, it will send yields higher again and pressure stocks.

The valuation is flawed by earnings per share

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The valuation is flawed by earnings per share: Sevens Report Co-Editor, Tyler Richey Quoted in S&P Global

S&P 500 valuations stumble on tariff uncertainty

While the forward P/E ratio is widely viewed as the best measure of a stock or index’s fair value, the valuation is flawed by earnings per share and assumptions of fair market multiples from Wall Street analysts, portfolio managers and strategists, said Tyler Richey, a co-editor with Sevens Report Research.

“So effectively, both sets of proverbial goal posts are constantly being moved amid earnings estimate revisions and shifting geopolitical and macroeconomic landscapes impacting multiples,” Richey said. “Specifically, when volatility picks up meaningfully, it is very challenging to recalculate multiples based on fluid fundamental changes impacting the markets.”

Also, click here to view the full article featured in S&P Global, published on May 20th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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