Group 1 - TACO trading, which stands for "Trump Always Chickens Out," is a policy arbitrage strategy based on predicting Trump's behavior of extreme pressure followed by compromise [2][3] - The essence of TACO trading is to capture and utilize market fluctuations caused by the classic "threat-compromise-repair" structure of policy, transforming highly uncertain political games into predictable financial returns [3][4] - The core assumption of TACO trading is that despite initially showing extreme hardline positions, the Trump administration will ultimately yield to more market-friendly stances when faced with significant pressures [4][5] Group 2 - TACO trading features a five-stage cycle: Threat & Pressure, Market Panic, Pressure Accumulation, Policy Shift, and Market Repair [10][11] - The first stage involves the Trump administration using tariff threats as negotiation leverage, while the second stage sees market panic leading to significant adjustments in risk assets [12][13] - The third stage accumulates pressure from declining stock markets and worsening economic data, leading to a policy shift in the fourth stage, where the administration releases signals to ease tensions [15][18] Group 3 - TACO trading has evolved from a simple 1.0 version focused on single tariff threats to a more complex 2.0 version that considers multiple dimensions of pressure [22][24] - TACO 2.0 requires simultaneous pressures from economic, political, and market factors to trigger a policy shift, with a more gradual adjustment process [25][32] - Key indicators for TACO 2.0 include non-farm employment data, unemployment rates, and market thresholds such as stock market corrections and bond yields [26][31] Group 4 - The effectiveness of TACO trading is currently facing three core risks: reduced internal and external constraints on the U.S., structural changes in China's economic fundamentals, and market path dependency creating a risk of inertia [47][48][51] - The U.S. has made progress in trade agreements with Europe and Japan, allowing for a longer maintenance of a hardline stance [48] - China's export dependence on the U.S. has decreased significantly, reducing the necessity for early compromise from the Chinese side [51][54]