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
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]
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]
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]
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]
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]
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]
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.
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.