TACO Effect: Trump's Angry Response to Market's New Term - The Mystery of Trade Threats and Stock Market's New Highs

On June 1, within just a few weeks, “TACO” (Trump Always Chickens Out) quickly became a staple of conversation on Wall Street, and Trump’s reaction to “TACO” was nothing short of intense. At a White House press conference on Wednesday, when asked about the term, Trump angrily retorted, “Never say what you just said. That is a vile question… For me, that is the most vile question.”

According to media reports, Trump is not only angry about the term itself but also dissatisfied with his team for failing to inform him in advance that this term was becoming popular in the market.

A knowledgeable source revealed to the media: “What he cannot tolerate the most is the perception that his tariff adjustments are a sign of weakness. ‘TACO’ clearly touches on his core issue— as a president who prides himself on being a tough negotiator, any suggestion of weakness is unacceptable.”

It’s worth noting that despite Trump’s trade threats that often cause market volatility, U.S. equities have just completed their best May performance since 1997. This performance goes some way to confirming the “TACO trade” – market participants have begun to look for opportunities to rebound in the wake of Trump’s trade threat. However, analysts warn that a Trump who is eager to prove that he is not a coward may take a tougher stance in order to preserve his self-esteem and image, signaling more risks of uncertainty.