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.

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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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Moody’s downgraded U.S. sovereign debt

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Moody’s downgraded U.S. sovereign debt: Sevens Report Analysts Quoted in Investing.com

What the Moody’s downgrade means for markets

According to the latest Sevens Report, the move is unlikely to drive long-term market direction.

“Moody’s downgraded U.S. sovereign debt to Aa1 from Aaa. That downgrade boosted long-term Treasury yields, as some investors sold long-term Treasuries,” the analysts wrote.

Stocks opened lower Monday, but Sevens emphasized that the downgrade “revealed nothing new.”

But Sevens called the timing questionable: “Downgrading U.S. debt for larger deficits and rising interest costs is the financial equivalent to saying ‘water is wet.’”

Sevens said, “There’s been no dramatic deterioration lately,” and noted that speculative fears tied to potential legislation “don’t justify the downgrade.”

“The deteriorating fiscal situation hasn’t stopped stocks from rallying over the past few years and that’s unlikely to change anytime soon.”

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

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Sentiment Update: The Bulls Have Returned (Somewhat)

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What’s in Today’s Report:

  • Sentiment Update – The Bulls Have Returned (At Least Somewhat)
  • Chart: Sector Positioning Remains Cautious Despite Broad Market Rebound

Futures are lower as the rapid Q2 relief rally continues to be digested amid an ongoing sense of market uncertainty.

Economically, U.K. CPI spiked from 2.6% in March to 3.5% in April, topping estimates of 3.3% (y/y) which is putting upward pressure on bond yields as inflation concerns return.

There are no noteworthy economic releases to watch today but two Fed officials are scheduled to speak mid-day: Barkin & Bowman (12:15 p.m. ET), and there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET.

Strong demand for the T-Bonds and a more dovish tone out of the Fed speakers would be well received and likely to help stabilize equity markets today while weak demand metrics in the auction and/or hawkish Fed speak could further pressure stocks.

Earnings season continues to wind down, however there are some noteworthy companies reporting Q1 results today including: TGT ($1.65), TJX ($0.90), BIDU ($1.96), LOW ($2.88), SNOW (-$0.59). Investors will particularly like to see strength in the consumer names reporting today to quell worries of a slowdown in consumer spending in early 2025.