Source: Fortune.com
Summary
President Donald Trump’s announcement of a two-week ceasefire with Iran led to a $1.5 trillion market rally, with the Nasdaq, S&P 500, and Dow Jones industrial average all surging. The rally was attributed to the so-called “TACO trade,” which refers to Trump’s tendency to backtrack on his threats. Online traders celebrated the trade, with some analysts agreeing that it could lead to a boom for tech stocks. However, others cautioned that the trade is not foolproof and investors should not over-extrapolate the pattern.
Our Reading
The numbers tell one story.
The TACO trade is alive and well, with traders cashing in on Trump’s about-face. The $1.5 trillion rally lifted all three major indexes, with the Nasdaq leading gains. Wedbush analyst Dan Ives sees opportunities for traders in the tech sector. However, Michael Reynolds of Glenmede Investment Management cautions against over-extrapolating the pattern. The TACO trade has been consistent, but investors should not be confident it’s foolproof.
Trump’s threats are becoming a predictable market phenomenon.
Author: Evan Null
