Robert Armstrong on coining the Taco trade

This episode of the FT News Briefing explores the aftermath of U.S. President Donald Trump's aggressive tariff announcements last year, which triggered a sharp market downturn before quickly reversing—a pattern that gave rise to the 'taco trade' phenomenon. Rob Armstrong, the FT's U.S. financial commentator and originator of the term, explains how investors quickly learned that Trump would retreat under political or economic pressure, leading to a predictable market rebound. The episode also covers the ongoing turmoil in the private credit market, focusing on Blue Owl Capital's massive investor redemptions and the resulting stock plunge, while highlighting concerns over valuation opacity and software lending risks. Despite the volatility, Armstrong notes that markets have largely moved on from tariffs, now focusing on war-related energy prices, inflation, and economic growth. European markets stood out in 2025, benefiting from expectations of greater fiscal independence from the U.S. under Trump’s anti-globalist stance. The episode concludes with a preview of tomorrow’s follow-up on the economic implications of the tariffs. Key takeaways include: 1) The 'taco trade' reflects a market strategy of betting on Trump’s policy reversals; 2) Private credit funds face liquidity stress due to investor panic, despite strong underlying asset performance; 3) Gold surged as a momentum-driven safe-haven trade, while treasuries remained constrained by inflation fears; 4) European markets gained traction amid expectations of U.S. disengagement; 5) Investors have shifted focus from tariffs to energy, inflation, and growth; 6) The U.S. Supreme Court’s ruling that emergency tariffs were illegal adds legal uncertainty; 7) Market resilience is being tested by geopolitical risks; 8) The episode underscores the importance of distinguishing between political bluster and economic reality.