Betting on Trump's Restraint Fails

Traders and political actors who build strategies assuming a leader will back down ('the TACO trade') face a distinct tail risk when that leader operates with minimal political consequences; when the foreign-policy shock also threatens chokepoints like the Strait of Hormuz, the financial and strategic costs can cascade quickly. The article reframes these bets as political heuristics rather than reliable market signals. — This reframes a common market and political assumption — that leaders will avoid escalation — as an actionable risk that can misprice geopolitically contingent assets and mislead policymakers.