Trump TACO Transaction Faces Severe Test from Iran Conflict, May Return to Fundamentals After Sentiment Desensitization

Reuters Finance App News — According to Reuters Finance App reports, TACO trading remains effective in the short term but is facing a severe test due to the Iran conflict. It has shifted from a “reliable” market consensus to a “conditional” high-risk strategy. Latest data shows that Nasdaq futures continue to decline by about 0.6%, S&P 500 futures down approximately 0.55%, with the overall US stock market retreating nearly 7-9% from recent highs, approaching a technical correction zone. This trend directly reflects geopolitical premiums and risk aversion sentiment.

The core logic of TACO trading is: investors buy risk assets on dips during panic caused by Trump’s aggressive policies, betting that market pressure or political costs will quickly soften his stance, triggering a rebound. This strategy has been repeatedly validated during the 2025 tariff events, but the Iran conflict has caused “irreversible damage”—infrastructure destruction, delayed reopening of key straits, and hardline postures from both sides—significantly weakening the “retreat” effect. Although Trump recently announced a five-day delay in military strikes on Iran’s energy facilities and described talks with Iran as “constructive,” oil prices remain high, and war premiums have not fully dissipated.

Currently, TACO trading still has short-term validity (about 60% probability), with markets highly sensitive to any signals of “Trump softening.” However, if the conflict drags into April, structural supply losses will dominate, and the TACO logic may face failure risks. Investors should be cautious: this situation differs from tariff events; it is a “real war” scenario, and even if Trump intends to de-escalate, multiple obstacles remain.

Latest oil price movements further confirm this assessment. Brent crude once plunged 11% after Trump delayed strikes, but overall remains high due to supply disruptions, highlighting the persistence of war premiums.

To visually illustrate trading paths under different scenarios, the following table compares the effectiveness of TACO trading:

This framework aligns closely with the logic of some market participants: geopolitical risks are currently in the tail risk stage, not fully cleared, but market sensitivity has gradually decreased through multiple cycles. After emotional oscillations, assets are waiting to de-sensitize and return to fundamental narratives—including Fed policy paths, corporate earnings growth, and AI capital expenditures as core drivers.

Summary

Latest futures trends and Trump’s statements indicate that TACO trading can still provide short-term rebound catalysts, but the structural impact of the Iran conflict has significantly increased medium-term uncertainty. Investors should operate with light positions, strictly set stop-losses, and closely monitor peace negotiations. Once sentiment de-sensitizes, fundamentals will take over and guide market direction.

(Edited by: Wang Zhiqiang HF013)

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