To The Moon

🌟🌟🌟Trump's tariff offensive is back with a vengeance.  This time it is aimed squarely at 3 of America's trading partners - the European Union, Canada and Mexico.  Effective August 1, the US will slap a 30% Tariff on EU goods, 35% on Canadian imports and 30% on Mexican imports, turning global trade lanes into a high stakes pressure cooker.

Fear, FOMO and opportunistic buying all collide as TACO Trade  braces for impact.

What is TACO Trade? 

TACO stands for Trump Always Chickens Out, a wry label coined by Financial Times columnist Robert Armstrong.  It captures a pattern :

1.  Trump announces punitive tariffs. 

2.  Markets swoon on growth fears. 

3.  Investors buy the dip, betting that Trump will blink. 

4.  Trump either delays or scales back, sending stocks, sometimes crypto and oil soaring again. 

In effect TACO Trade is a rules based playbook - treat bold tariff threats as buying opportunities because historically those threats have softened before they bite. 

TACO Trade Outkook

Investors live and die by this pattern but the latest rounds of tariffs adds fresh spice to the mix.  Here is how what may happen - 

Scenario A - Quick Chicken Out 

Trump pauses or cuts tariffs before August 1.

Markets rebound sharply, TACO Trade vindicated. 

Tech, Banks ETFs and even Euro exposed stocks rally. 

Scenario B - Tariffs Stick

No pause. EU, Canada and Mexico retaliate. 

Growth fear spikes, a broader sell off ensues. 

TACO Trade backfires, volatility climbs. 

Hedging the TACO Play

Buy VIX call options or short dated VIX futures.   This captures spikes in fear when tariff headlines hit. 

Shift 10% to 20% to short term US Treasury Bills (TBills) such as $iShares 0-3 Month Treasury Bond ETF(SGOV)$ or $SPDR Bloomberg 1-3 Month T-Bill ETF(BIL)$ .  These provide liquidity and a safe haven when equities drop.   

Have some cash ready to redeploy into TACO driven dips. 

Buy Gold ETFs like $SPDR Gold Shares(GLD)$  or $iShares Gold Trust(IAU)$  as Gold often shines as a Defensive anchor.  These Gold ETFs that track physical gold can give you instant, liquid exposure to gold without the hassles of storage and can be a powerful component of your anti tariff armour. 

Even if TACO has gone viral, markets remember that sometimes the chicken stays in the coop. 

Crypto Under the Tariff Hammer

Tariffs do not hit digital assets directly but they shake the macro foundation that crypto is tethered to. 

Short term fallout 

Risk off flight - Bitcoin and other cryptocurrencies may dip 5% to 10% on the initial tariff shock. 

Liquidations surge - Coinglass data shows USD 567 million wipe out in the past 24 hours when similar threats emerged. 

Dollar Strength - A stronger US Dollar to fund rising bond bids.  Crypto prices may weaken further against FIAT currencies. 

Medium Term Hedge Potential 

Inflation may surge as Tariffs act like hidden taxes pushing consumer prices higher. 

Bitcoin's limited fixed supply could reclaim its digital gold halo. 

Weakened Dollar Reserve Status - Prolonged trade war may dent confidence in the US Dollar dominance. 

Oil - Tidal Waves or Tariff Threats? 

Oil markets are not immune.  Levy on imports could ripple through crude oil demand and supply dynamics. 

Demand Side Slump 

Manufacturing Drag -  Hefty tariffs on machinery and parts could slow factories in affected countries.  This may lead to lower industrial output and reduced transport fuel consumption. 

GDP Headwinds - IMF has warned that trade wars can shave off global growth. Oil demand may fall by 0.7 to 1 million bpd in 2026 if escalation sticks. 

Supply and Geopolitics 

OPEC response - oil producers could dial back output to prop up oil prices. 

US Export Paradox - Tariffs could push countries to look for alternate suppliers such as Canada or Brazil. 

US LNG and crude oil exports could lose competitiveness, capping future growth. 

Concluding Thoughts 

The TACO Trade remains the market's favourite eating disorder - gorge on tariff fueled dips and expect Trump's appetite for pain to wane.  But the latest round of tariffs on EU, Canada and Mexico throws a new spice blend into the pot, one that could linger longer than expected.  

Crypto traders should buckle in for early chaos and mid term hedging cheer while oil bulls watch for demand drips and OPEC's next move.   Equities will be the hottest tacos on the menu, firing up losses if the tariffs blaze on, then dishing out gains if the White House flips course.  Investors should brace for sector rotations, lean into defensive hedges and keep cash dry for the dip buys that follow every Trump tariff twist. 

Buckle up -  This market fiesta is bound to be as dramatic as it is volatile. 

@Tiger_comments  @TigerStars  @Tiger_SG  @CaptainTiger  @TigerClub