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TACO Loco

TACO Loco

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Curve Advisor
Jun 02, 2025
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TACO Loco
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Today, I wanted to discuss a market reaction that has occurred the past 8 months in a row. But first, my thoughts on the previous week. Considering we had no meaningful data last week and it was a holiday-shortened week, there was an unusually large amount of news. We had some fixed income “bearish” news at the start of the week, and we had some bullish news later in the week. That could have been a coincidence. But in the middle of the week, Trump found out there was an acronym, “TACO” (Trump Always Chickens Out) that has been circulating in the media. I have been a little kinder, calling his deals “Cosmo Kramer coffee deals.” But it’s essentially the same thing. My thoughts on the events of last week:

· Trump pushed back the EU 50% tariff implementation until July 9. TACO! This brings more risk as we approach the July 9 “deadline.” Polymarket has a betting market on whether the “50% tariff goes into effect on the EU by July 9.” It is at 16%. TACO! That seems a little high, but Trump going loco can’t be ruled out.

· A trade court ruled that most of Trump’s tariffs were not legal. Trump managed to get a stay a few days later. It will be interesting to see what the appeals court says. The consensus seems to be that Trump has many other ways to get tariffs implemented. However, this ruling does have some implications for tariff outcome probabilities:

· The odds of some extreme tariff scenarios have probably been reduced. Trump can always increase the sector tariffs (as he did with steel and aluminum after the market close on Friday). But the days of crazy 145% tariffs are probably over.

· The timeline for tariff resolution has probably increased. There is less reason for countries to step forward with good trade deals soon, when the US courts may give a lending hand.

· The timeline of corporate uncertainty has probably increased if trade deals are further away.

· It’s likely that Trump is annoyed from TACO. It’s less clear if the hawkish policies later in the week are a TACO tantrum.

· Trump claimed China violated their mulligan deal. One of the reasons was China’s slow release of critical materials. As a result, Trump is looking to impose additional chip restrictions. Other moves could be forthcoming. It’s interesting that TACO Boy didn’t threaten tariffs again. Chicken tacos, anyone?

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