In addition to top-tier US macro data, traders will be compelled to grapple in the days ahead with what’s almost guaranteed to be another week of rapid-fire tariff headlines.
Last week’s trade war news included a court determination that many of Donald Trump’s second-term levies are illegal, a temporary stay that allowed the offending tariffs to remain in place pending appeal, a re-escalation of tensions with China and an announcement that the US will double tariffs on steel and aluminum to 50% starting Wednesday.
The situation’s — umm — fluid, to put it politely. Impolitely, it’s crazy. But there’s a method to Trump’s madness. Sort of.
As discussed here, the connection between US equities and tariff developments is difficult to ignore and by now so predictable as to be eminently tradable for those inclined (not investment advice).
The table below (it’s a backtest) from Nomura’s Charlie McElligott is pretty amusing. Actually, that doesn’t give Charlie enough credit. It’s highly amusing.
The first two rows give you a baseline for comparison. There’s the S&P and “The Perfect Trade” which assumes you knew, ahead of time, when Trump was going to escalate and capitulate. So, if you were just indexing, you’re down 1.4%. If you knew exactly what was going to happen and when, you’re up 26%.
I should note: This is one case where advance knowledge (i.e., perfect information) isn’t impossible to come by. Trump famously pre-announced the April 9 “pause” on TruthSocial and I don’t think I’m being needlessly derisive or political to suggest this administration isn’t especially diligent when it comes to ensuring no one with a heads up on tariff announcements trades on that information.
Editorializing around his handy work, McElligott noted that “if you ran ‘long spooz’ starting T+5 days after an ‘Art of the Deal’ Trump gets emboldened at local highs to lean in with fiery tariff rhetoric that creates a selloff entry-point and sold spooz starting T+5 days after he capitulates / TACOs and stocks rally [to a] short entry point, your performance would be +12.0% on a 1.5 Sharpe.”
And there you have it. The “‘TACO’ + Emboldened POTUS” trade.
I had a thought: I wonder if taco salad is still on the menu at Trump Tower? So I looked into it.
Everyone recalls Trump posting a pic of him eating a taco bowl on Cinco de Mayo back in 2016, along with the caption, “I love Hispanics!” Afterwards, MAGA-adjacent tourists to NYC kept going to eat at Trump Tower and ordering the taco bowl, so it became a permenant menu item. How funny would it be if this new nickname drove him to order it pulled from the menu?
The first thing my search turned up was that he re-posted that 2016 picture just this year. So we know the taco salad is still fresh in his memory. Next I found my way to the actual menu. Now, I have a lot of thoughts about this menu, but I’ll opt for brevity and keep them to myself for now. But the taco bowl?
It’s still there. Not under salads (in Texas, the bowl/salad terms are used interchangeably). It’s an entree, the “southwest taco bowl”, tucked between the penne alla vodka and the shrimp scampi, and can be yours for the surprisingly reasonable price of $25.
I’m not going dishonor this place by posting a link, but if you want to flagellate your eyeballs with some culinary horror, just google Trump Tower Grill Menu.
Too bad TACOs ? are only a Wall Street thing.