The TACO trade

Welcome to Wall Street’s latest phrase: the “Taco Trade.” No, it’s not about lunch—it stands for Trump Always Chickens Out.

Last Friday, markets served up a familiar dish. An immediate 50% tariff threat from Trump triggered a sharp drop in the Euro STOXX-600. By the end of Friday, the index had already recovered about half of the losses, as investors bet on another walk-back. A phone call over the weekend with Ursula von der Leyen and a formal delay of the measures until July—to allow for further negotiations—further supported the rebound in European equities on Monday.

But here’s the real risk. If one day Trump takes beef as the main course and doesn’t back down from his initial threat, many investors will be caught off guard. The market has been conditioned to expect a pivot—but conditioning breeds complacency.

At ECP, we don’t trade on speculation or second-guess political theater. We invest in fundamentally sound companies with long-term earnings power and attractive valuations. No tacos, no tweets—just discipline and deep research.