Donald Trump is known around the world for his aggressive rhetoric, whether it is war in the Middle East or calling cryptocurrency the biggest investment. But Wall Street (American Stock Market) has well understood the reality of his move and has named it ‘TACO’ (Trump Always Chickens Out) trade. This means that Trump makes big threats or shows great risk, but in the end he backs off from taking the risk. On the basis of this ‘TACO’ strategy, while on one hand the stock market is avoiding crashing due to fear of war, on the other hand Trump has earned a record of $ 1.4 billion (about Rs 11,500 crore) from his risky crypto projects and invested it in safe places.
What is Wall Street’s ‘TACO’ trade?
Due to increasing tension between America and Iran, the prices of crude oil (Brent crude) have crossed $ 86.5 per barrel. Generally, such geopolitical turmoil creates an uproar in the stock markets and panic selling starts. But this time investors are not panicking. Veterans like Kotak Mutual Fund MD Nilesh Shah believe that the market is betting on this ‘TACO’ (Trump Always Chickens Out) trade. Investors know that Trump threatens to tighten policies, but ultimately stops a major war from erupting. Due to this confidence, there has been only a slight decline in the Indian stock market (Sensex and Nifty) and no major selling was seen.
Crypto is only for others, self chosen safe investment
This ‘retreat’ or ‘TACO’ move of Trump is not limited to politics only, but is also clearly visible in his financial decisions. Trump and his sons (Eric and Donald Jr.) encouraged investors to invest money in crypto projects like ‘World Liberty Financial’ and ‘Trump Meme Coin’. His sons even claimed that Bitcoin would reach 1 million dollars. But when it came to his own money, Trump stayed away from the risky crypto market. According to Timothy Massad, director of Harvard University’s Digital Assets Policy Project, Trump’s strategy is to make quick money from crypto and invest those profits in safe assets, because he himself does not fully trust digital currencies for his wealth.
Investors lost billions, Trump’s portfolio quadrupled
Statistics testify to this dual policy. According to a report, common retail investors who placed bets in Trump-backed crypto projects suffered a huge loss of about $2.3 billion till April. On the other hand, Trump invested his crypto earnings of $1.4 billion in traditional and safe financial instruments like shares and bonds. His financial disclosures show that in the last two years his portfolio of safe investments has increased four times to $2.6 billion. The Trump Organization has also issued a statement admitting that its balance sheet is based on very strong and safe assets.
What does this mean for the Indian market?
From India’s point of view, the increasing cost of crude oil has definitely increased the concern, but the confidence of foreign investors (FIIs) in the Indian market is returning again. After selling Rs 2.71 lakh crore in the last four months, foreign investors made net purchases of Rs 11,605 crore in July. Leading brokerage firm Goldman Sachs also estimates that by June next year, Nifty may jump by 10 percent and touch the level of 26,500. The market is assuming that Trump’s ‘TACO’ trade will work, a big war will be averted and the markets will pick up their pace again. Now foreign investors can turn to India after withdrawing money from Taiwan and South Korea.
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