"TACO Trading" Dominates the Market: Investors Bet that Trump's "Maximum Pressure Will Eventually Recede," Buying on Dips Becomes the Mainstream Strategy

ME News Report, April 9 (UTC+8), as the phase of US-Iran conflict eases, Wall Street is gradually forming a trading logic centered around Trump’s policy style—“TACO Trading” (Trump Always Chickens Out). The market generally believes that Trump’s tough stance on geopolitics often ends in compromise, so escalating the situation is seen as a buy signal. Data shows that before Trump announced a pause on military actions against Iran, the market had already positioned itself in risk assets. The S&P 500 index recorded its first weekly gain in six weeks, and the risk premium in the options market remained low, indicating limited investor reaction to extreme scenarios. Institutional views suggest that the current market is repeating a cycle of “conflict escalation—emotional pressure—cooling of the situation—asset rebound.” Some analysts point out that systemic investors are in “possibly one of the most profitable environments in history.” However, there are also warnings that this highly consensus expectation could weaken the market’s policy constraints. Once the market no longer reacts negatively to aggressive rhetoric, it may incentivize riskier policy actions, increasing potential tail risks. (Source: BlockBeats)