"TACO Moment" is coming? As rumors of "ground forces taking the island" spread, Trump suddenly mentioned "downgrading military action."

President Donald Trump of the United States said to reporters on Friday that he is not interested in a ceasefire with Iran, but less than 24 hours later, Trump posted on the social media platform "Truth Social" that the US is considering gradually de-escalating all major military operations against the Iranian regime in the Middle East, and that they are very close to achieving their strategic goals. At the same time, just one second before Trump officially released the "de-escalation" signal, news about the US government soon sending ground troops to seize Iran's oil export hub on the island of Kharg caused a sharp drop in the US stock market, and the international oil benchmark Brent crude oil price briefly approached the $115 mark. However, there was a reversal in the news later on Friday evening, with sources saying that the US is developing a strategic plan to seize Iran's "nuclear reserves." As a new round of Middle East political conflicts enters its 21st day, global financial markets experienced a dramatic reversal from extreme pessimism to seeing a glimmer of hope in just one trading day on Friday. However, Trump's statements of "back and forth" have made the market increasingly convinced that the "TACO" trading moment is imminent in the short term. The trading strategy popular on Wall Street - TACO (Trump Always Chickens Out): originated in April 2025 when Trump launched an unprecedented global "tariff war." Traders were betting that either the US government would withdraw the threat of tariffs, or even if implemented, it would not be as tough as Trump had threatened and would not significantly hinder the expansion of the US economy. The term TACO was coined by a Financial Times columnist to describe Trump's wavering on tariffs after his April 2 "Liberation Day" speech, but in the end, he would choose to back down, and the stock market would rally. When asked about "TACO" at a press conference, Trump became angry and called the question "malicious." The "TACO" strategy is now widely adopted by traders as the hottest trading strategy, betting that whenever Trump issues new, more aggressive tariff threats or other major threats that lead to a market crash, investors wager that he will eventually back down or weaken the policy significantly from his verbal threats, and then choose to buy heavily at the right time, betting that the stock market will see a major rebound shortly. Trump's "back and forth" statements and the volatile market Before heading to Florida, Trump said at the South Lawn of the White House, "We can talk, but I don't want a ceasefire. You know, when you're actually demolishing the other side, you're not going to have a ceasefire." "They don't have a navy. They don't have an air force. They don't have any equipment," Trump continued. However, in a post later on Friday afternoon on Truth Social, Trump claimed that the US "is very close to achieving our goals, and at the same time, we are considering gradually scaling back our great military operations in the Middle East." He also asserted that the Strait of Hormuz, a key waterway for global oil and liquefied natural gas (LNG) trade, "will have to be patrolled and patrolled by warships from other countries using it when necessary - but America doesn't need to!" Trump wrote in the post, "If asked, we will provide some help in the actions in the Strait of Hormuz by those countries, but once Iran's threat is completely eliminated, it shouldn't be necessary. The important thing is that this will be an easy military operation for them." At the time of Trump's statements, the US-Iran war had been ongoing for nearly three weeks, evolving into a broader political conflict in the entire Middle East region. Earlier on Friday, Trump said the US can end the war "now," but he plans to continue the offensive. "I think we've won," he said later at the South Lawn, "What they're doing now is just blockading the strait. But militarily, they're finished." Since the start of the war, Iran has effectively blocked the strait. Trump has been criticizing NATO allies, trying to garner more support to help open the strait; and on Friday, he reiterated that this was not important for the US. Most of the energy products transported through the strait are destined for Asian and European markets. However, a report released by the Dallas Federal Reserve on Friday stated that the economic impact of the strait being continually closed by the Iranian military would have global repercussions, including for the US. Trump said during his speech to reporters on Friday that reopening the strait would be a simple matter as long as other countries come to support the US. "It's a simple military operation, relatively safe," he emphasized. "But you need a lot of help; meaning you need ships, you need a sufficient escort. NATO could help us, but so far, they haven't had the courage to do so." Just one second before Trump stated that the US is considering gradually de-escalating all major military operations against the Iranian regime in the Middle East, rumors about the US sending ground troops to seize an island in the Strait of Hormuz belonging to Iran were rampant. On Friday, media reports suggested that the White House was sending hundreds of Marines to the Middle East, while considering a plan to send ground troops to seize Iran's oil export hub on Kharg island. Brent crude oil has been hovering around $110 per barrel and has shown signs of stabilizing, no longer experiencing wild spikes - indicating that high oil prices may be a sustained significant threat, and investors, central bank policymakers, and corporate leaders are forced to face this reality. Iran has essentially "almost blocked" the Strait of Hormuz, meaning that about 20% of global energy flow is completely disrupted, accompanied by attacks on oil tankers and interruptions in shipping. A recent study report by the International Energy Agency (IEA) revealed that the US and Israel's military actions against Iran at the end of February led to the largest supply disruption in the global oil market in history; meanwhile, the US government is considering restoring shipping channels through military means (including potential ground or semi-ground control) and fully controlling the Strait of Hormuz. However, maintaining the blockade or competing for control requires a strong military presence, and reopening the passage is even more challenging (involving clearance, escort, air control, port control), which implies that if the US and Iran get into a "control battle" over the passage, this Middle East war may transition from airstrikes and naval blockades to a complete struggle for key points (such as Kharg island), ultimately leading to a long-term standoff with both sides' forces likely evolving into a similar situation as the "Iran-Iraq War" of the 1980s. During Friday's US stock trading session, the rumor of "ground troops seizing islands" catalyzed a 2% expansion of the Nasdaq index intraday, leading the three major indexes. Since the outbreak of the US-Iran conflict, the Dow Jones index and small-cap stock index have accumulated a drop of nearly 7%. Just as the market was digesting a day of escalation signals, Trump's post on "Truth Social" after Friday's close showed a clear shift in tone. Traders generally interpreted this post-market declaration as a reversal of the previous escalation signals. The S&P 500 ETF, code-named "SPY," accelerated in post-market trading, with the S&P 500 ETF rising more than 1% at one point - ultimately closing the session down 1.5%, and Brent crude oil fell back to around $108 per barrel from near $115. Short-term "TACO" moment approaching? The market may trade short-term on Trump's statement of "gradually reducing operations," but it may not truly believe that the conflict is entering a sustainable de-escalation path. While Trump publicly says he "doesn't want a ceasefire" and claims to be considering gradually reducing military operations, the US has increased its troops and warships to the Middle East; more importantly, several media outlets have revealed that more escalated options have been discussed internally in Washington, including sending ground troops to Kharg island in Iran and using US forces to control Iran's high enriched uranium stocks. For the macro market, this is not a consistent "policy shift," but rather verbal moderation and action readiness coexisting; therefore, the market may not take it as a definitive sign of conflict resolution, but may engage in short-term speculation driven by the TACO strategy. A short-term version of the "TACO moment" is likely to arrive next week, but it is definitely not the long-term version of "TACO trading" in reality. After-hours US stock futures and the S&P 500 ETF accelerated in the rebound, indicating that some funds are willing to continue to bet on the "temporary softening" of Trump's political position; however, the pricing of a broader range of assets actually shows that global investors do not truly believe in a ceasefire and the restart of the Strait of Hormuz narrative. For example, Bitcoin, a barometer of risk assets, continued to fluctuate on Saturday, with a slight decline of 0.1% below the latest trading price. From the linkage of oil, the US dollar, and the stock market, the market's core judgment right now is: Trump's remarks may change the sentiment overnight, but they cannot change the supply shock for a quarter. Brent crude oil prices have risen by about 50% since the outbreak of the war, reaching the highest level since July 2022; American Airlines Group Inc., a major US airline, has even made operational preparations for cutting flights if oil prices rise to above $175 per barrel and remain above $100 per barrel by the end of 2027. In addition, various contradictory short-term messages will also impact the TACO strategy. For instance, the latest news shows that sources say the US is developing a strategic plan to seize Iran's "nuclear reserves." The Wall Street financial giant Goldman Sachs Group, Inc. recently released a research report stating that in the short term, oil prices are likely to continue to rise, as the flow of the Strait of Hormuz remains extremely low. If the sluggish flow causes the market to focus on the risks of prolonging disruptions, Brent crude oil futures prices have the opportunity to surpass the historical high in 2008. The institution believes that given recent attacks on energy infrastructure, there is a high probability that the Iran war will drive oil prices to remain above $100 per barrel in the long term. Goldman Sachs Group, Inc.'s scenario analysis shows that whether in the short term or by 2027, the risk of oil prices remains biased towards an upward trend. The sustained impact of several large supply-side shocks in history, and the easy escalation of geopolitical conflicts into long-term standoffs, highlight that in scenarios where interruptions are prolonged and sustained losses of substantial supply exist, oil prices may remain above $100 per barrel for an extended period of time.