GlobalData TS Lombard: Perkins Vs Beamish The TACO Bull
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Jun 2, 2025 Dario Perkins and Freya Beamish, both economists at TS Lombard, dive into the eccentricities of the financial markets. They humorously explore whether the 'taco trade' could signal new highs for the S&P 500. The conversation shifts to the implications of rising bond yields linked to fiscal policies and Trump's budget expansion. Tackling government debt and inflation, they unravel the complexities of economic stability in a deglobalizing world, offering insights that reflect their distinct perspectives on future growth.
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Reflexive Cycle of Taco Trade
- The taco trade reflects a reflexive loop where Trump's crazy policies trigger market freak outs followed by pragmatic stabilizations.
- This pattern leads to policy uncertainty and a market flaw that prevents full recession but damages economy gradually.
10% Tariff: Crucial but Damaging
- The 10% tariff in Trump's tariff plan is key to Congress deal-making and won't be abandoned.
- However, tariffs increase uncertainty and risk, damaging growth and bounding the potential for a sustained bull market.
US Growth: Short-Term Rebound, Long-Term Damage
- US growth may rebound next year due to easing policy and election-driven demand positive shifts.
- Long term, secular factors like deglobalization and immigration restrictions will damage trend growth and profits.