As investors aggressively bet at the start of the week, another "TACO moment," which drives rallies in popular AI technology stocks, cryptocurrencies, and high-yield corporate bonds among other global risk assets, arrived as anticipated. After the regular trading session closed on Tuesday, U.S. President Donald Trump stated in a social media post early Tuesday local time, "I have agreed to suspend bombing and attacks on Iran for a period of two weeks." Following announcements from both the U.S. and Israel agreeing to a temporary ceasefire, the U.S.-Iran tensions experienced a dramatic reversal less than 12 hours after Trump's furious threat to make "the entire civilization of Iran vanish." After the latest ceasefire news, the decline in U.S. WTI crude oil futures expanded to 17%. However, for the drop to be sustained, traders may need to see actual and immediate resumption of shipping through the Strait of Hormuz. Concurrently, futures for the three major U.S. stock indices rallied strongly in after-hours trading following the market close, with the Nasdaq 100 Index, often seen as a barometer for technology stocks, surging nearly 3% at one point. Trump's latest delay tactic aligns with his consistent pattern of maximum pressure and threats: setting a deadline first, then postponing or relaxing it—the classic "TACO moment." In his recent social media post, Trump wrote: "Following a request in dialogue from Pakistani Prime Minister Shehbaz Sharif and the country's Army Chief General Asim Munir to delay the plan to deploy 'devastating military force' to Iran by 7 PM Eastern Time, and based on their discussions, and given the Iranian government's agreement to 'comprehensively, immediately, and safely' reopen shipping through the Strait of Hormuz, I hereby agree to suspend bombing and attacks on Iran for two weeks." The post further clarified that "this will be a bilateral ceasefire agreement." Trump stated the decision for a ceasefire was made because "we have met and exceeded all our military objectives," and he emphasized that substantial progress has been made towards a final agreement concerning "long-term peace with Iran" and achieving "peace in the Middle East." Trump mentioned that the U.S. received a ten-point proposal from Iran and considered it "a viable basis for negotiations." The post continued: "This will be a two-way ceasefire! The reason for doing this is that we have reached and even surpassed all military objectives, and we have made significant progress on a long-term peace agreement with Iran and a Middle East peace agreement. We received a ten-point proposal from Iran and believe it is a workable basis for talks. Agreement has been reached on almost all past points of contention between the U.S. and Iran; the two-week period will allow for finalization and implementation of the agreement. As President of the United States and on behalf of the nations of the Middle East, I am greatly honored to make progress on this long-standing issue."
Trump's ultimatum turned into a "cry wolf" reality show! The market's heavily wagered "TACO script" unfolds as expected. Historical experience has shown investors that since March 23, Trump has repeatedly postponed deadlines related to Iran. Recent geopolitical developments suggest the White House's current reaction function more closely resembles "threatening while observing negotiation progress and retaining the option to delay." These seemingly contradictory signals are why the market began pricing in another short-term version of the "TACO moment" expected to propel a strong rebound in risk assets like stocks—especially as Trump's recent conflicting rhetoric has reinforced market conviction that, at least in the short term, a "TACO" trading moment is imminent. The increasingly popular Wall Street trading strategy—TACO (Trump Always Chickens Out)—originated during the period in April 2025 when Trump launched an unprecedented "reciprocal tariffs" campaign globally. At that time, traders bet either that the U.S. government would retract its tariff threats, or that even if implemented, they would be far less severe than threatened and insufficient to significantly hinder U.S. economic expansion. The term TACO was coined by a Financial Times columnist to describe Trump's vacillation on tariffs following his "Emancipation Day" speech on April 2, 2025, ultimately expecting him to back down, leading to a strong stock market rally. When asked about "TACO" at a press conference, Trump became furious, calling the question "vicious." The TACO strategy is now widely adopted by traders as one of the hottest strategies. Whenever Trump issues new, more aggressive tariff threats or other major threats causing market plunges, global stock and bond investors bet he will ultimately retreat or that the actual implemented policies will be significantly weaker than his verbal threats, leading them to buy the dip aggressively during appropriate lows, betting on a substantial market rebound shortly thereafter. Following President Trump's agreement to a two-week suspension of bombing Iran, crude oil prices plummeted, and U.S. stock index futures surged significantly, providing the market temporary relief from the intense downward trajectory and unusual volatility caused by six weeks of conflict in the Middle East. Notable hedge fund investor Thomas Hayes was among the institutional investors betting aggressively at the start of the week on the return of Trump's "TACO moment." "Asymmetric skew to the upside," said Hayes, Chairman of New York-based Great Hill Capital. If Trump "messes up," U.S. stocks "would retest recent lows, falling about another 4%," he stated. "If we get a resolution or ceasefire, this market is like a coiled spring, with potential for a violent 10% upside move." Pepperstone strategist Michael Brown wrote in a client note: "As we have noted repeatedly in recent weeks, participants have been eager to hear any positive developments resembling ceasefire news and even more eager to see concrete steps taken by both sides to de-escalate."
A super rally in technology stocks is poised to begin. For global risk assets like stocks, the direct implication of this latest ceasefire news is a significant short-term reduction in tail-risk escalation, providing a clearly bullish breathing space. For global technology assets, such de-escalation is typically more sensitive than the broader market because the tech sector has been hit harder by geopolitical risks, surging oil prices, and discount rate pressures. Once the worst-case scenario temporarily recedes, recovering risk appetite often flows back first into high-beta technology growth stocks. Equity strategists from Wall Street giant Goldman Sachs noted that as global tech stock valuations fall below those of the MSCI World Equity Index benchmark, the technology sector is becoming increasingly attractive to investors. Goldman Sachs recently shifted its overall stance on the stock market's future trend from cautious to bullish. A fund flows research report from Goldman on Monday indicated that the dominant systematic selling pressure driving the decline is waning. Over the next month, "fast money" (large-scale funds around CTA strategies) is likely to switch from passive selling to net buying, meaning the mechanical selling that has suppressed the market is gradually turning into a tailwind supporting a rebound. In a research report dated Tuesday local time, a team of Goldman Sachs strategists led by Peter Oppenheimer wrote that, battered by the latest Middle East geopolitical storm, the technology sector—which had seen significant gains in recent years and valuations near historical highs—has recently underperformed. However, following the valuation decline caused by this round of geopolitical conflict, the tech sector is beginning to present very attractive long-term investment opportunities. Oppenheimer and colleagues wrote, "Relative to consensus expected earnings growth, their valuations have fallen below those of the global overall equity market." At the start of the week, a report from Goldman's trading desk on Monday showed that "one of the most important marginal changes in the market is evolving positively in favor of the bulls." The bullish logic of Oppenheimer's team is based on valuation and medium-to-long-term allocation—emphasizing that global tech stocks have become cheaper and more attractive relative to growth prospects after the pullback. The systematic funds research, however, presents a bullish view from a trading, short-cycle perspective—highlighting that if the rebound continues, "fast money" strategies like CTA and volatility targeting could further chase the rally, amplifying the upward slope. Thus, the former resembles the view of a Wall Street "asset allocation committee," while the latter is more akin to the latest view from a "tactical trading desk."
Within the technology sector, stocks directly tied to AI computing infrastructure—namely the "AI computing power super group" led by Nvidia, TSMC, AMD, and Broadcom—are often the most sensitive, quickest to move, and exhibit the largest gains in both overall market and tech sector rebound logic. The core rationale behind this is exceptionally "hardcore": this segment is directly tied to tech giants' record-breaking AI capital expenditures, not just storytelling. This "AI computing power industry chain" segment has historically been the most sensitive, quickest to react, and most explosive in market rebounds—a trend vividly demonstrated in the risk asset rebounds around March 16 and March 31. This implies that in a "risk-easing rebound" scenario, technology stocks closely linked to AI computing infrastructure are highly likely to be one of the market's core offensive, bullish directions. This potential trend also suggests that sub-sectors with high earnings visibility and strong ties to record AI capex—such as AI GPU/ASIC, OCS switches and optical interconnects, optical modules/silicon photonics, HBM/memory, 2.5D/3D advanced packaging, and data center power chains—have the highest profit elasticity to changes in AI capex and are most likely to be prioritized for capital reinvestment when risk appetite recovers. Goldman's trading desk observes significant signs of a buying-the-dip inflection point in global equities from short-term "fast money" flows like CTA. Meanwhile, from a medium-to-long-term asset allocation perspective, Oppenheimer's team believes tech stocks themselves already possess substantial valuation appeal. In their latest report, Oppenheimer's team suggested that any lasting shock to the global economy from the Iran war could also be a long-term positive for the sector, as the tech industry's cash flows are less sensitive to economic growth. Oppenheimer and colleagues emphasized that with valuations below the overall stock market, the tech industry is becoming increasingly attractive for investors. Wall Street veteran Ed Yardeni and another financial giant, Wells Fargo, also support Goldman's bullish view that the tech sector has gradually moved from being a "crowded high-valuation trade" back to an "attractive medium-to-long-term allocation" range. Veteran strategist Ed Yardeni stressed that while tech stocks remain pressured short-term by sentiment and geopolitical disturbances, from the perspective of earnings resilience, valuation digestion, and the long-term penetration logic of AI, long-term capital is facing a more cost-effective window for positioning.
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