Core Viewpoint - The recent trade tensions initiated by the Trump administration have led to increased economic growth concerns, prompting Wall Street strategists to explore trading strategies that capitalize on the volatility caused by fluctuating tariff policies before May 2025 [1][2]. Group 1: Trading Strategies - Nomura's strategist Charlie McElligott indicated that shorting S&P 500 futures following Trump's escalatory trade war comments could yield returns as high as 12% within five days [1]. - The "TACO" strategy, which bets on Trump's tendency to backtrack on aggressive tariff threats, has gained popularity among traders, who anticipate market rebounds after initial sell-offs triggered by his comments [5][6]. - Other investors have adopted similar strategies based on the assumption that the "escalation-de-escalation" cycle of the trade war will continue, although this approach faces market scrutiny as the S&P 500 appears to be desensitized to tariff changes [2][9]. Group 2: Market Reactions - The S&P 500 index has shown resilience, rebounding over 20% from its April lows after traders who followed the "TACO" strategy capitalized on Trump's less aggressive tariff measures [8]. - Market sentiment has shifted, with investors now more inclined to bet on a quick recovery during periods of volatility, as evidenced by the muted reactions to recent tariff announcements [9][10]. - The volatility previously associated with Trump's tariff announcements has diminished, suggesting that investors are adapting to his rhetoric and focusing on other market factors [10].