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]

Core Viewpoint - JPMorgan CEO Jamie Dimon expressed his disapproval of the term "TACO trading," stating that he believes Trump's retreat after Liberation Day was the correct choice [1] Group 1 - Jamie Dimon emphasizes the importance of terminology in trading practices, indicating a preference for clarity over colloquial terms [1] - The statement reflects a broader sentiment within the financial industry regarding the implications of political decisions on market strategies [1]

Core Viewpoint - The recent ruling by the U.S. International Trade Court blocking Trump's tariff policy has led to a surge in market optimism, with the emergence of a new trading strategy known as "TACO trading," which capitalizes on the expectation that Trump will backtrack on his aggressive trade policies [1][6][7]. Market Reactions - Major Asian stock indices and U.S. futures rose significantly following the court's decision, reversing previous declines [3][4]. - The Nikkei 225 index increased by 1.5% to 38,263.36 points, while U.S. futures for the Dow Jones, S&P 500, and Nasdaq rose by 1.2%, 1.6%, and 1.7% respectively [3][5]. - The U.S. 10-year Treasury yield rose to 4.508%, indicating a shift in market focus from monetary policy to fiscal concerns [5]. TACO Trading Strategy - The "TACO trading" strategy, which stands for "Trump Always Chickens Out," has gained traction among traders who anticipate that Trump will retract his harsh tariff announcements after initial market declines [6][7]. - This strategy was recently validated when Trump postponed the implementation of a 50% tariff on EU goods, leading to a rebound in U.S. stock markets [7][8]. - Analysts suggest that investors have begun to understand Trump's negotiation tactics, likening his approach to a poker game where he may bluff but ultimately retreats under pressure [7]. Economic Implications - The ruling and subsequent market reactions have implications for countries heavily reliant on exports to the U.S., such as Japan and South Korea, which also saw their stock indices rise [4][6]. - The Bank of Korea's decision to cut interest rates from 2.75% to 2.5% reflects efforts to alleviate economic pressures amid these trade uncertainties [4].