Lunch with the man who coined TACO

Summary

Summary of "Lunch with the Man Who Coined TACO" Episode of The Indicator from Planet Money

Podcast Information:

• Title: The Indicator from Planet Money
• Host: Darian Woods
• Description: A bite-sized show about big ideas. From the people who make Planet Money, The Indicator helps you make sense of what's happening in today's economy. It's a quick hit of insight into money, work, and business. Monday through Friday, in 10 minutes or less.
• Episode: Lunch with the Man Who Coined TACO
• Release Date: July 22, 2025

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Introduction and Setting

The episode kicks off with host Darian Woods recounting a summer encounter with Robert Armstrong, a journalist from the Financial Times and host of the Unhedged podcast. They meet at a Mexican restaurant in Brooklyn, setting the stage for a discussion steeped in both economics and tacos.

Notable Quote:

"On a summer's day. I met Robert Armstrong at a Mexican restaurant in Brooklyn." —Robert Armstrong [00:12]

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The TACO Acronym Explained

At the heart of the conversation is the intriguing acronym TACO, coined by Robert Armstrong. TACO stands for "Trump Always Chickens Out," referencing former President Donald Trump's initial aggressive economic policies, specifically his threats of imposing high tariffs and taking extreme measures like firing the Federal Reserve Chair. However, historically, when markets react negatively, Trump has backed down from these extreme positions.

Notable Quote:

"Taco is basically this idea that Donald Trump threatens super high tariffs and also things like firing the chair at the Federal Reserve. But then he backs down on the more extreme policies when the markets freak out." —Robert Armstrong [00:40]

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Main Discussion: Why Is the Stock Market Performing Well?

Darian Woods and Robert Armstrong delve into the central question of the episode: Why is the stock market performing robustly despite concerns over Trump's tariff policies? They explore several hypotheses to explain this phenomenon.

1. The Stock Market vs. the Economy

The first hypothesis highlights the distinction between the stock market and the broader economy. While the economy encompasses all facets of buying, selling, saving, and borrowing, the stock market specifically reflects the future profit expectations of publicly traded companies. This disconnection means the stock market can thrive even when certain economic indicators suggest potential downturns.

Notable Quote:

"The stock market's not the economy. It's also not not the economy. It does cover a large swath of American businesses." —Robert Armstrong [04:10]

2. Enthusiastic Investors

The second hypothesis centers on investor sentiment. Currently, the market is experiencing a "risk on" period, characterized by optimism and a fear of missing out (FOMO). This buoyant mood drives stock prices upward, sometimes beyond what fundamentals would traditionally support. Additionally, robust corporate earnings and advancements in sectors like artificial intelligence contribute to this positive investor behavior.

Notable Quotes:

"It's a price that discounts the future profits of the publicly listed corporations. And those things can come apart." —Darian Woods [04:35]

"We're in what they call a risk on period in markets, the vibes are good. There is a little FOMO, too." —Darian Woods [05:25]

3. Trump's Policies and Market Reactions

The third hypothesis examines the impact of Trump's economic policies on the stock market. Despite significant tariff announcements that economists generally criticize, the market has shown resilience. One explanation is that investors anticipate Trump is more likely to back off from extreme measures when faced with market resistance, as encapsulated by the TACO acronym.

Notable Quote:

"Trump always chickens out. The idea is the guy talks big and then he doesn't follow through." —Darian Woods [08:19]

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Insights on Deficit Spending and Deregulation

Darian Woods further discusses how deficit spending and deregulation under Trump's administration have provided tailwinds for the stock market. Deficit spending injects money into the economy, which can bolster investor and corporate confidence in the short term. Additionally, deregulation reduces operational burdens for businesses, potentially enhancing profitability and, consequently, stock prices.

Notable Quote:

"Deficit spending markets generally like it until the moment that they really, really don't like it." —Darian Woods [06:16]

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The Paradox of Market Trust in the President

A particularly intriguing point raised is the paradoxical relationship between the market and the President. As the market increasingly doubts Trump's commitment to his tariff threats, it inadvertently provides Trump with greater leeway to implement these policies without immediate repercussions from the market. This dynamic creates a precarious balance where the markets' skepticism could embolden Trump to follow through on his promises.

Notable Quote:

"The markets not believing the president's statements make it more likely that those statements will turn out to be true because he's not being cautioned by the markets." —Darian Woods [09:05]

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Concluding Remarks

Darian Woods and Robert Armstrong conclude by acknowledging the uncertainty surrounding upcoming tariff deadlines and the future trajectory of the stock market. They caution that while current trends favor a robust market, unforeseen developments could rapidly alter this landscape.

Notable Quote:

"Any market trend has a beginning, a middle and an end. And the end sometimes comes up on you more quickly than you might expect." —Darian Woods [09:32]

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Production Credits

The episode was produced by Angel Carreras, engineered by Robert Rodriguez, fact-checked by Sarah Juan Juarez, and edited by Kate Concannon. The Indicator is a production of NPR.

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Conclusion

In "Lunch with the Man Who Coined TACO," The Indicator from Planet Money offers a nuanced exploration of the interplay between political policies and stock market performance. By dissecting the TACO acronym and examining investor psychology alongside economic fundamentals, Darian Woods and Robert Armstrong provide listeners with a comprehensive understanding of the current financial landscape. This episode underscores the complexity of economic indicators and the multifaceted factors that drive market behavior.

Transcript

[NPR Host]

NPR.

[Robert Armstrong]

On a summer's day. I met Robert Armstrong at a Mexican restaurant in Brooklyn.

[Darian Woods]

Okay, so should we order some tacos?

[Robert Armstrong]

Yeah, and I'll. Robert Armstrong writes for the Financial Times. He hosts the Unhedged podcast and we were there for one reason.

[Darian Woods]

I'm gonna have three tacos.

[Robert Armstrong]

Robert is famous for this acronym he coined Taco. Trump always chickens out al pastor.

[Darian Woods]

Grilled shrimp and fish.

[Robert Armstrong]

I got mushrooms, spinach and veggies, so you might remember tacos. Basically this idea that Donald Trump threatens super high tariffs and also things like firing the chair at the Federal Reserve. But then he backs down on the more extreme policies when the markets freak out.

[Darian Woods]

So for a while, Taco and I were the darling of tariff policy.

[Robert Armstrong]

And this is one explanation for why the stock market has been reaching new heights, despite a chorus of economists and many business leaders saying that President Trump's tariffs will hurt growth. This is the indicator. From Planet Money. I'm Darian Woods. Today on the show, why is the stock market doing so well? Aside from some recent bumps in the road, Wall street seems to be shrugging off chaotic economic poll policy making. We chew the whole enchilada after the break. All right, here are our tacos.

[Darian Woods]

Thanks very much. These look beautiful. This is very self referential. I enjoy this. You know, it's like my own tiny version of that scene in Being John Malkovich where he climbs inside of his own head and so forth.

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[Robert Armstrong]

There are a few hypotheses for why the markets don't seem to be that spooked by steep tariff threats and saver rattling by Donald Trump anymore away from the hot sauce in Mole. The FT's Robert Armstrong ran through a few of them.

[Darian Woods]

The first, and possibly the most important, is that the stock market is not the economy.

[Robert Armstrong]

This is a chestnut we always keep in mind when we're checking in on the health of the economy.

[Darian Woods]

So the economy is the sum of all our buying and selling and saving and borrowing and so forth. The stock market is something much more specific. It's a price that discounts the future profits of the publicly listed corporations. And those things can come apart.

[Robert Armstrong]

So the fortunes of companies like Target or Eli Lilly are part of the economy, but they don't say much about everything else, like sales at my corner store or whether nurses are getting jobs. So the stock market's not the economy. It's also not not the economy. It does cover a large swath of American businesses. So maybe it's. That's a partial explanation. I'm not sure if I see it as the whole explanation.

[Darian Woods]

Yes, and when things are very bad or very good, the stock market and the economy tend to come together. In other words, in a great boom, everybody has a job and is feeling good, and the stock market tends to be high. In a recession, everybody feels lousy, everybody's out of work, and the stock market is down. It's in those in between periods that one can be tracking one direction while one goes the other.

[Robert Armstrong]

And that brings us to hypothesis number two. Enthusiastic investors.

[Darian Woods]

In the short term, the market becomes very emotional because it's made of human beings who are emotional things. We kind of get good vibes, we get excited. Things are sort of tonic and bubbly and fun. Stock markets will go up, even in an unrealistic way.

[Robert Armstrong]

And so enthusiasm seems to be building on enthusiasm at the moment.

[Darian Woods]

Yeah, we are in what they call a risk on period in markets, the vibes are good. There is a little fomo, too, a little fear of missing out. That's. There's a flavor of that right now, for sure.

[Robert Armstrong]

I can buy that's a big explanation. However, company earnings have been okay, like, yeah, there are some fundamentals that could Justify this artificial intelligence A might indeed create a whole amount of new value that the US is on the frontier of.

[Darian Woods]

Quite right. In fact, just recently we had the reports from some of our largest banks, JP Morgan, Citigroup, and the news so far has been really pretty good. You know, they sort of hemmed and hawed and said we can't see the future, which of course they can't. But the hard numbers they put out suggest a pretty resilient economy. The fundamental picture to me looks okay.

[Robert Armstrong]

What about whether Trump's policies will actually supercharge growth? Corporate tax cuts are good for business investment, for example. What do you think?

[Darian Woods]

Let's start with deregulation. I'm in favor of it. That is helpful and hooray for it. We didn't see a lot of it in this particular budget bill, but to the degree you deregulate a somewhat over regulated American economy, good news. Second point, the budget bill itself, it creates bigger deficits, right? And in general, for a while, deficit spending is quite good for markets. What is the government doing when it's doing deficit spending? It's taking dollars and it's shoving them into the economy. And it should come as no surprise that some of those dollars will show up in investors pockets or on corporate balance sheets. So deficit spending markets generally like it until the moment that they really, really don't like it. Which comes when the debt becomes unmanageable, interest rates start to rise, the country's either forced into austerity or has to inflate its way out of its debts. That is on a day that we don't know sometime in the future. Until then, deficit spending markets like.

[Robert Armstrong]

So there is some wind puffing up the sales of the stock market. There is still the question of tariffs though. There have been really big announcements that have been almost universally condemned by economists. In April the stock market had fallen around 20% from its peak. Then Trump paused the biggest tariffs and markets recovered. And yet the deadline for the big tariffs is coming up soon, August 1st. And Trump keeps announcing new tariffs. What does the market do? It dawdles on what gives.

[Darian Woods]

Next hypothesis, My personal favorite markets don't believe the President. Okay, this is the Trump always chickens out hypothesis that he makes all this.

[Robert Armstrong]

And this is why we got those tacos together.

[Darian Woods]

Yeah, indeed. So this is this, this quite stupid acronym I came up with.

[Robert Armstrong]

Don't be so self effacing.

[Darian Woods]

Trump always chickens out. The idea is the guy talks big and then he doesn't follow through. And so far that's been the pattern. And the markets are basically saying, yeah, buddy, tell me another one. Right. And of course this creates a risk, right. That at some point maybe he does mean it. And, you know, I can't read the guy's mind. I don't know where that point comes or if it comes. But I'll tell you this, we're in a kind of weird dynamic or paradox, I would say, between in the relationship between markets and the president. Right. Where the markets not believing the president's statements make it more likely that those statements will turn out to be true because he's not being cautioned by the markets. So he might actually go for it in the end. Right.

[Robert Armstrong]

That's quite a paradox and really a reason to be a bit more cautious.

[Darian Woods]

I would think so. I would think so. I mean, I don't know what's going to happen on August 1st, but the market is giving the guy quite a lot of leash right now.

[Robert Armstrong]

Well, Trump sometimes chickens out is not quite as catchy indeed.

[Darian Woods]

But I will say it's been a good bet so far. But you know, any market trend has a beginning, a middle and an end. And the end sometimes comes up on you more quickly than you might expect.

[Robert Armstrong]

Taco Tuesday may be over soon.

[Darian Woods]

Yeah, it's Tariff Thursday. Maybe.

[Robert Armstrong]

This episode was produced by Angel Carreras and engineered by Robert Rodriguez. It was fact checked by Sarah Juan Juarez. Kate Concannon edits the show and the indicator is a production of npr.

[NPR Host]

This message comes from Bombas. Socks, underwear and T shirts are the top three requested clothing items by people experiencing homelessness. Bombas makes all three and donates one item for every item purchased. Go to bombas.com NPR and use code NPR for 20% off. This message comes from Mint Mobile. Mint Mobile took what's wrong with wireless and made it right. They offer premium wireless plans for less and all plans include high speed data, unlimited talk and text and nationwide coverage. See for [e-mail] Switch support for NPR and the following message come from Rosetta Stone. The perfect app to achieve your language learning goals no matter how busy your schedule gets. It's designed to maximize study time with immersive 10 minute lessons and audio practice for your commute. Plus tailor your learning plan for specific objectives like travel. Get Rosetta Stone's lifetime membership for 50% off and unlimited access to 25 language courses. Learn more at RosettaStone.com NPR.