TACO script premieres as scheduled! Trump's "Declaration of Civilizational Collapse" turns into a two-week ceasefire. Tech stocks' super rebound is imminent.

Zhitong Finance APP learned that, just as investors in the stock market began making aggressive bets on Monday, another “TACO moment” that is driving a major rebound in global risk assets such as popular AI tech stocks, cryptocurrencies, and high-yield corporate bonds appears to have arrived as scheduled. After the normal trading close of U.S. stocks on Tuesday, U.S. President Donald Trump, in a post on a social media platform late Tuesday evening local time (before the 8 p.m. deadline ultimatum), wrote: “I agree to pause the bombing and attack operations against Iran for two weeks.”

As both the United States and Israel said they agreed to a temporary ceasefire, less than 12 hours after Trump issued an enraged threat to “let Iran’s entire civilization perish,” tensions between the U.S. and Iran have arguably undergone a dramatic reversal. After the latest ceasefire news was released, the decline in U.S. WTI crude oil futures widened across the board to 17%. But to keep the selloff going, traders may need to see that shipping through the Strait of Hormuz is genuinely and immediately restored. Meanwhile, after U.S. stock market close, all three major U.S. stock index futures surged strongly in after-hours trading; the Nasdaq 100 index, nicknamed a “bellwether for tech stocks,” briefly blasted up by nearly 3%.

Trump’s latest decision to extend the deadline fits his consistent pattern of “pushing pressure to the limit / issuing threats,” where he first sets a deadline and then postpones or relaxes it—what is known as the classic “TACO moment.” In his latest social media post, Trump wrote: “Pakistani Prime Minister Shehbaz and the country’s Army Chief Asim Munir requested in a conversation that we delay the action plan for the dispatch of ‘destructive military force’ from the United States to Iran scheduled for 7 p.m. Eastern Time on the U.S. East Coast. Based on our conversation with them, and given that the Iranian government has agreed to ‘fully, immediately, and safely’ reopen shipping in the Strait of Hormuz, I hereby agree to pause the bombing and attacks on Iran for two weeks.”

Then the post said that “this will be a bilateral-level ceasefire agreement.” Trump said he made the ceasefire decision because “we have reached and even exceeded all military objectives,” and he emphasized that, regarding “Iran establishing long-term peace” and the final agreement to achieve “peace in the Middle East,” substantial progress has also been made at this time.

Trump said that the U.S. side received a proposal put forward by Iran, containing ten items, and he believes that “this proposal provides a feasible framework and basis for negotiations between both sides.”

“This will be a bilateral ceasefire! The reason for doing this is that we have already reached and even exceeded all military objectives, and we have made significant progress on the long-term peace agreement with Iran and the Middle East peace agreement. We received Iran’s ten-point suggestions, and we believe this is a viable negotiating basis. Almost all of the past dispute points between the United States and Iran have been agreed upon, and the two-week timeframe will allow the agreement to be finalized and to take effect. As President of the United States and on behalf of countries across the Middle East, I am very honored to have made progress in resolving this long-standing issue.” Trump’s latest tweet shows.

Trump’s ultimatum turns into a “The Boy Who Cried Wolf” real-life reality show! The “TACO script” that the market is betting on plays out as scheduled

Historical experience tells investors that since March 23, Trump has repeatedly delayed Iran-related deadlines. Recent developments in geopolitics have made it clear that the White House’s real reaction function right now is more like “threaten hard, watch negotiation progress, and keep the option to delay”—and these seemingly contradictory signals are also why the market has started pricing in an additional short-term version of the “TACO moment” that will drive a major rebound in stocks and other risk assets—especially Trump’s recent “fighting with both left and right brains” remarks, which have made the market even more convinced that at least in the short term, a “TACO” trading moment is coming.

An increasingly popular trading strategy on Wall Street—TACO (Trump Always Chickens Out / Trump always chickens out): It was born during the period in April 2025 when Trump launched an unprecedented global “tit-for-tat tariff” campaign. At that time, traders bet that either the U.S. government would withdraw the threats of tariffs, or even if tariffs were implemented, they would be far less aggressive than Trump threatened and not enough to significantly drag down U.S. economic expansion.

The term TACO was created by a column writer at the Financial Times. It is used to describe Trump’s back-and-forth behavior on tariffs after his April 2, 2025 “Liberation Day” speech, but in the end he would choose to back down, and the stock market would then rebound strongly. When asked about “TACO” at a press conference, Trump became furious, saying that the question was “malicious.”

The “TACO ” strategy is now widely adopted by traders and is currently the hottest trading strategy. Whenever Trump issues new, even more aggressive tariff threats or throws out other major threats that trigger a market selloff, investors across the global stock and bond markets bet that he will ultimately back down or that the policies that actually land will be far less impactful than Trump’s verbal threats. They then choose to buy aggressively at the appropriate moment of weakness, placing big bets that the stock market will see a major rebound soon.

After U.S. President Trump agreed to pause the bombing of Iran for two weeks, oil prices promptly plunged, while U.S. market stock index futures surged sharply higher. This helped the market temporarily escape the sharp downward trajectory and rare volatility caused by the Middle East conflict that had been ongoing for six straight weeks.

Known hedge fund investor Thomas Hayes is one of the institutional investors who is betting at the start of this week that Trump’s “TACO moment” will return. “Asymmetric bullish tilt,” said Hayes, chairman of New York’s Great Hill Capital. “If Trump fumbles and ‘messes it up,’ the U.S. stock market ‘will retest recent lows, down another 4% or so,’” he said. “If we get a solution or a ceasefire agreement, then this market is like a spring that’s loaded and ready to go, with at least a 10% surge potential.”

In a report to clients, Pepperstone strategist Michael Brown wrote: “Just as we have pointed out multiple times, over the past few weeks, participants have been eager to hear any positive developments similar to ceasefire news, and even more eager to see concrete steps taken by both sides to ease tensions.”

A Super Rebound by Tech Stocks Is Building Up

For global risk assets such as stocks, the direct implication of this latest ceasefire news is that the tail-risk escalation concern has been sharply cooled in the short term, and risk assets have gained clearly bullish room to breathe. For global tech stocks, this type of easing is often more sensitive than the broader market; because the tech sector has been hit deeper by geopolitical risk, surging oil prices, and discount-rate pressure. Once the worst-case scenario temporarily recedes, risk appetite repairs often flow back first into high-Beta growth tech stocks.

A team of equity strategists from Wall Street giant Goldman Sachs said that as global tech stock valuations have fallen to levels below the valuation benchmark of the MSCI global stock market, the tech sector is becoming increasingly attractive to investors. Goldman Sachs has recently shifted from a cautious stance on the outlook for the stock market to a more bullish one overall. Earlier, a capital flows research report from Monday showed that the systematic selling pressure driving the decline is waning; over the next month, “fast money” (large-scale funds around CTA strategies) is likely to switch from passive de-risking to net buying. This means that the mechanical sell orders that have weighed on the market are gradually turning into a tailwind supporting the rebound.

In a research report written by a team of Goldman strategists led by Peter Oppenheimer on Tuesday local time, they wrote that amid the latest round of Middle East geopolitical turmoil severely hurting markets, the tech sector—one that has risen sharply in recent years and whose valuations are near historical highs—has recently underperformed overall. However, after the valuation decline caused by this round of geopolitical conflict, the tech sector is beginning to present very attractive long-term investment opportunities for investors. The strategists including Oppenheimer wrote that “relative to the consensus earnings growth expected by Wall Street analysts, its valuation has fallen below the level of the overall global stock market.”

At the start of this week, a research report issued by Goldman’s trading team on Monday showed that “one of the most important market marginal changes is actively evolving in a direction favorable to the bulls.” The bullish logic of Goldman strategists led by Oppenheimer is bullish on valuations and on the long- and medium-term allocation logic—emphasizing that after global tech stocks experienced a pullback, relative to growth prospects, they have become cheaper and more attractive. This systematic fund research, meanwhile, is bullish from a trading perspective within a short-cycle framework—emphasizing that if the rebound continues, “fast money” strategies such as CTA and volatility-target strategies may further chase buys, thereby amplifying the upward slope. So the former is more like the view of Wall Street’s “asset allocation committee,” while the latter is more like the latest view from the “tactical trading desk.”

Within tech stocks themselves, the stocks directly tied to AI computing infrastructure—namely the “AI computing supergroup” led by Nvidia, TSMC, and AMD and Broadcom—are often the most sensitive layer in the broader market and tech-stock rebound logic: they move first and with the largest push higher. The core logic behind it is extremely “hardcore”: this layer is directly tied to continuous, record-breaking AI capital expenditures by tech giants, rather than just telling a story.

In recent years, the sub-sector of the “AI computing industry chain” has been the most sensitive and quickest to respond to the market’s rebound logic, and has also seen the most violent rebound. This point is clearly demonstrated in the prior risk-asset rebounds on March 16 and March 31. In other words, in a “risk-calming type of rebound” scenario, technology stocks closely related to AI computing infrastructure are likely to be among the market’s most core bullish directions for offense. This potential trend also implies that sub-sectors with high earnings visibility and strong linkage to record AI capex—AI GPUs/ASICs, OCS switches and optical interconnects, optical modules and silicon photonics circuits, HBM/memory, 2.5D/3D advanced packaging, and data-center power chains—have the highest profit elasticity to changes in AI capital expenditures, and are also the most likely to be prioritized and replenished first when risk appetite rebounds.

Goldman’s trading team saw clear signs of a bottom-buying turning point in global equities at the level of short-term “fast money” fund flows such as CTA, while in the long-term asset allocation layer, Goldman strategists led by Oppenheimer believe that tech stocks themselves already have very solid valuation appeal.

In their latest research report, the Goldman strategists led by Oppenheimer said that if the Iran war causes any lasting impact on the global economy, it could also be a long-term positive for this sector, because the cash flows of the technology industry are less sensitive to economic growth. Analysts such as Oppenheimer emphasized that as valuations fall below the overall stock market, the tech industry is becoming increasingly attractive to investors.

“The Wall Street veteran” Yardeni and another Wall Street financial giant, Bank of America, also support Goldman’s bullish view that the tech sector has gradually returned from a “high-valuation crowded trade” to a “range with long-term allocation appeal.” Senior strategist Ed Yardeni emphasized that while tech stocks are still being suppressed in the short term by sentiment and geopolitical disruptions, based on earnings resilience, valuation digestion, and the logic of long-term AI penetration, long-term funds are moving into a more value-for-money positioning window.