The return of the TACO trade

Welcome back to TACO Territory. As we explained in our last post, “TACO” stands for Trump Always Chickens Out—a pattern that has defined market behavior in 2025.

The term coined by the Financial Times captures a cycle investors have now grown too comfortable with: Trump issues threats (tariffs, firings, policy shocks), markets wobble, and then… he backs off. From steel tariffs to Powell’s firing threat, and now the China tariff delay, each episode has reinforced the same reflex: panic first, rally later. But here lies the real danger. The entire presidency so far has been a TACO. And the White House is starting to realize it’s losing its negotiating power—both with foreign counterparts and with markets. The TACO reputation risks making threats toothless. To counter this perception, we may soon face a moment where the President feels compelled to follow through—not pivot. That’s when volatility returns.

At ECP, we remain anchored in fundamentals. We don't trade noise. We invest in resilient companies with real earning power, not in presidential pivots.