--- title: "As soon as Trump loosened his stance, the U.S. stock market rebounded: But this time, the 'TACO' trade might not be as effective as before." type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/39473818.md" description: "In the past two days, everyone has started paying attention to Trump again. Many people say they are cautious, but they can't help trying to catch the rebound with their hands. Doing the so-called "TACO" trade, Trump said he would temporarily suspend strikes on Iranian power facilities for 5 days and also mentioned having "productive contact" with Iran. As a result, U.S. stocks rebounded that very day. But why do I say this TACO trade isn't as effective this time? Listen to my detailed analysis. 一、Why does the TACO trade always bring a rebound? To put it bluntly, this trade isn't fundamentally based on fundamentals, but on "policy reversal"..." datetime: "2026-03-24T08:41:12.000Z" locales: - [en](https://longbridge.com/en/topics/39473818.md) - [zh-CN](https://longbridge.com/zh-CN/topics/39473818.md) - [zh-HK](https://longbridge.com/zh-HK/topics/39473818.md) author: "[James小韭日记](https://longbridge.com/en/profiles/25149055.md)" --- # As soon as Trump loosened his stance, the U.S. stock market rebounded: But this time, the 'TACO' trade might not be as effective as before. In the past couple of days, everyone has started paying attention to Trump again. Many people say they're being cautious, but their hands can't help but chase the rebound, engaging in the so-called **"TACO" trade**. Trump said he would temporarily suspend strikes on Iran's power facilities for 5 days and mentioned "productive engagement" with Iran. As a result, U.S. stocks rebounded that same day. **But why do I say this TACO trade isn't as effective this time?** Let me analyze it in detail. ### **1\. Why does the TACO trade always bring a rebound?** To put it bluntly, this trade is essentially **not based on fundamentals, but on "policy reversal."** As long as the market believes Trump will back down in the face of asset prices, public opinion, or political pressure, every time he talks tough and hammers risk assets, there will be people betting he'll change his tune later. This strategy worked well in the past because many shocks were more like "verbal threats" or "policy boundary testing," such as tariffs, diplomatic statements, and pressure on allies. The market would tremble, but it wouldn't necessarily immediately hurt the real economy. ### **2\. But the biggest problem this time is: Words can be taken back, but oil and supply chains may not be repaired immediately** I think this is the most critical divergence this time. The market rebounded as soon as it heard "possible easing"; but soon started to turn sour again because Iran denied negotiations with the U.S., and oil prices bounced back up. This shows the market is beginning to realize: **TACO can change sentiment, but it may not immediately change reality.** The Strait of Hormuz currently affects about one-fifth of global oil and LNG transportation. Even if Trump really pulls back later, the damaged energy facilities, shipping, insurance, and logistics costs cannot be restored by just one tweet. What the market is worried about now is not just an escalation of war, but that high oil prices and supply shocks will push global inflation higher again while dragging down growth. Goldman Sachs economists even estimate that high oil and gas prices could raise global inflation by 1 percentage point over the next year while lowering global GDP growth by 0.4 percentage points. ### **3\. What's the outlook? I think the "TACO" will keep recurring, but its sustainability will deteriorate** So my current understanding is that **the TACO trade won't disappear, but its win rate and sustainability are declining.** As long as Trump continues with this "pressure first, then observe market reaction" approach, intraday or overnight quick fixes will still happen. But the biggest difference this time compared to before is that there's an added layer of pressure from oil prices and stagflation behind the market. The money now is chasing more emotional volatility than trend reversal. **What really determines whether things can stabilize later, I think, still comes down to three things: First,** see if oil prices can truly return and stabilize below $100; **Second,** see if there is substantial progress in Strait of Hormuz navigation and energy facility repairs; **Third,** see if markets outside credit and stocks are willing to collectively believe "the risk has passed." If these three things don't improve in sync, then "TACO" is more like a short-term rebound trigger, not the starting point of a major market trend. So if I had to summarize in one sentence, it would be: **The "TACO" trade can still provide emergency relief this time, but it may not be able to save the trend anymore.** In the past, people were chasing the valuation repair brought by Trump taking a step back. The more troublesome issue now is that even if he takes a step back, oil prices, shipping, and inflation may not immediately follow. Therefore, this market movement is likely to remain "sharp rallies on news, quick givebacks on negative news." Timing will be more important than direction. **This article only reflects personal stock trading insights and does not constitute investment advice~**$S&P 500(.SPX.US) $NASDAQ Composite Index(.IXIC.US) $Dow Jones Industrial Average(.DJI.US) ### Related Stocks - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) - [DOG.US](https://longbridge.com/en/quote/DOG.US.md) - [.DJI.US](https://longbridge.com/en/quote/.DJI.US.md)