Wall Street Bets on Trump Backing Down, But The TACO Might Not Hold

Wall Street’s favorite acronym is back — but this time it might not save anyone. After Monday’s trading holiday, Tuesday delivered a rude awakening as the Dow, S&P 500, and Nasdaq each plunged ~2% amid renewed Greenland threats. Traders whispered of several legendary panic trades making a comeback — but after years of frothy double-digit gains, the market sits dangerously vulnerable.

• The Sell America movement picked up steam, with stocks, Treasuries, and the dollar all falling at the same time — extending to a broader risk-off shift overseas, dragging down European and Asian indices while gold climbed.
• The so-called “TACO” trade — Trump Always Chickens Out — also re-surfaced, and Wednesday’s rebound shows investors still question whether his threatened tariffs will actually happen.

Waiting for the blink: History suggests Trump retreats when markets revolt, but BCA Research warns of a self-defeating paradox. Chief strategist Marko Papic believes there may need to be a “Liberation Day-type downturn” before the President cedes, meaning if investors don’t panic, markets may not fall enough to force his hand. This time, ordering the TACO could cost investors more than the meal is worth.