Why the TACO Trade Matters — ft. Robert Armstrong

26:53That's high. We were basically going cold turkey with China. We were doing no business because of the tariff, because it was so high. But I knew that. But don't ever say what you said. That's a nasty question. Don't ever say what you said. And you created that term, Robert. What is your reaction? Look, I don't know why these things happen. You know, why? So actually, when I first coined the taco trade, nobody really took much notice. But slowly, it was sort of a month or five weeks ago, and slowly it started to appear in broker's notes. And, you know, it sort of got up a kind of small following in finance world.

27:32And then the New York Times used it in a headline a few days before that news conference. And that news conference happened. And something about that exchange at the news conference really captured the world's imagination. And now there's like songs on the internet and memes and all of this weird stuff. And I spent like two days of last week talking to people not unlike you who just want to talk about this phenomenon. And I honestly, I'm a bit taken aback by it. I mean, I have sort of a theory about it. But I have this friend who's a, my friend Dave is a comedy writer. And he says that hard K sound, like K or the hard C, is the funniest sound in the English language.

28:18And he has no idea why. But just like taco is an intrinsically funny word that has a Mexican flavor to it, which makes it even funnier because the president is obsessed with Mexico and the Mexican border. It seems like the kind of gag the president himself would make. So there's a little bit of turnabout is fair play here. And the final and possibly least important reason this has gone viral is because it's true, right? It's that Trump does, in fact, always chicken out. Now, you can call that negotiation as he does. I'm a little skeptical about that. But the empirical phenomenon is clearly there.

28:57And I think the other side to it is that it elicited this very strong reaction from him, where he called it a nasty question. He repeated that it was a nasty question. Don't ever say that ever again. And I guess something that I've been thinking about, I mean, now we know this is on Trump's mind and he's upset by it and people love that he's upset by it. And I just wonder from your view, do you think this could incentivize him to now be more aggressive, to not back down on tariffs, to prove to people that he doesn't chicken out? Now, I have gotten this horrifying question a lot in the last couple of days.

29:35And let me say for the record that I never expected this to get to the president's ears. And that taco for me was always a term of praise. The best thing about the president's tariff policy is the chickening out. Hooray for chickening out. I'm all for it. And I hope that it may continue forever. So the idea that I've made this stupid gag and I might actually, at the margin, make the president less likely to chicken out is a very negative, unintended consequence I wish, if possible, to wash my hands off of. now somebody would have called this out eventually right i mean at some point this these were bluffs that were going to get called and i just think like i came up with this label and cometh the hour cometh the acronym you know i'm not i'm not that much of a player here it's all your fault let's go what do you where do you want to start i just love that robert after working your ass off for 25 years you're an overnight success because of the term taco.

30:45But look, my understanding is you pointed out that he announces a tariff. The stock or stocks or indices take a hit. And then traders buy the dip or go long trusting or believing that this is all bluster. And the premise, as far as I can tell, was just confirmed by his response where he says that the tariff he came up with he decided before even a negotiation was too high. So he's negotiating against himself. He called his first offer ridiculous in that clip. And he made the offer. He's a guy who shows up to the poker table, goes all in, and before anyone responds, he goes, I fold. You make excellent points.

31:31I would just make two points about them. One, behavioral economics, concept of anchoring. This is a real thing. Scott, you and I are having a negotiation. I want to be the guy who talks first, So I get to say the first number, because that number is going to plan itself in both of our consciousness. I'm selling you a car, you're buying a car from me. I want to come in and just, because the first number mentioned creates a kind of gravity, pulling the negotiation in a certain direction. That is true. And when Trump says that's a principle of negotiation, that is correct. However, who is Trump negotiating with?

32:09it's not like he's putting these outrageous numbers out there and the Chinese or the Japanese or the Europeans are coming, uh, and saying, Oh no, no. Uh, you know, offering this, offering that making a counter offer. No, as you say, he folds before anybody else has had a chance to look at their cards because he's playing against the bond market and the stock market. And they're the ones who are calling his bluff before the negotiations with the trade partners even begin. right so at some point you got to wonder like how these big numbers what are they buying him or america or us but the alpha or the opportunity or the dislocation is that the markets at least initially take him somewhat seriously and they say when he says i'm imposing tariffs on apple the market takes him seriously and apple goes down two to four percent on the announcement And then as the market absorbs the information, they think, you know, this isn't going to happen, and the stock recovers.

33:13And the opportunity is to move in on that initial head fake because he is not, as Logan Roy said, serious people. My question is, is that delta, is that shrinking? I think it is. I think that's the right question. And you'd think the market would get wise, but it will never close altogether. Because the fact is, he is the president of the United States, which is an almighty powerful office. And if he gets in a mood where he doesn't chicken out, whoo boy, right? John authors at Bloomberg wrote a nice column about this, that you can't choke on your tacos, right? If, you know, my contention is that he's always going to chicken out, but you can't be sure, and he's the damn president.

34:04You know what I mean? So let me put it to you this way, Scott. There's two versions of the taco hypothesis. The first version is just the kind of market pattern that you're talking about, Scott. Market gets spooked. Market goes down by the dip. It goes back up. It's a pattern we've seen. That is kind of uncontroversially true. that this pattern exists. The stronger version of the taco hypothesis is this, and I believe this, but I think, you know, not with perfect confidence. Trump is not willing to absorb very much pain on behalf of tariff policy. With every political leader, there comes a moment where you have to decide, what am I willing to spend my political capital on?

34:53And my contention is that he actually won't spend very much political capital defending these tariffs. If they cause economic pain, if they prove to be unpopular, his threshold is low. It's the Logan Roy thing. It's fun to talk about tariffs on TV, He's just not that serious about it. That's the strong version of the taco hypothesis. I mean, let me be clear. Everyone wants to revere the office. I think this guy's a fucking idiot. I have never seen such incompetence. A 10th grader who's played poker and understands it would handle our trade policy more deftly. They put out all these sweeping tariffs and then give everyone a July deadline.

35:44And I don't know if you saw it, but today sent them a letter saying, hurry up and respond, reminding them, again, showing them how feckless, neutered and limp dick they are. I mean, that's, again, negotiating against themselves. I would use slightly less salty language. That's why you're at the FT and I'm in my studio podcasting. When it's your show, you can use that kind of language. You've got to spice it up. Yeah. Okay, but let me say this. In the poker analogy, what's tricky about this is that, yeah, I agree with you, he doesn't play his cards very well, but because he represents the United States, the game is stacked, so he always does get the strongest cards every time, and everybody knows it.

36:32So like he'll have victories because he has face cards every time because it's America, right? But that doesn't mean he's a brilliant negotiator. It means like you get something between a jack and an ace every time. You know, jacks and aces every time. And so like, oh, I'm brilliant. No, I'm with you. I just don't think there's great negotiating skill there. Well, a toddler with an AR-15 is still a threat, right? Indeed. The question or the – I want to propose a thesis and I want to understand if you've done any research along these lines. And we're actually trying to do some analysis here. My thesis is they can't be this stupid and that there's a second – there's a much more mendacious strategy here.

37:16And it's to create volatility purposely in the markets and wild swings such that they and the people close to them. An autocrat needs to create incentives both to the downside and to the upside. Support me no matter how ridiculous my statements are, and I will make you rich. That is the playbook of an autocrat. And the easiest way to make billions of dollars for you and your buddies is to create market volatility that you can anticipate and then trade against that market volatility. And I want to be clear, that is a serious accusation. But when the attorney general is selling stocks the day that Trump announces these tariffs, which take the market down, she's selling.

37:56It means it says to me there are no more insider trading laws or repercussions. The thesis is the following. I want you to respond to it. They are purposely creating market volatility such that they can trade against it and make billions of dollars for them and their acolytes. I don't know. And I haven't looked at the trading patterns of the people involved. So I just don't know. But I would say you don't have to go so far as to say they are actually, it's an actual trading strategy. I think there is reason to believe across the whole policy package that the chaos is the point, right? That this is a group of people who almost ideologically believe that the system is worthless, right?

38:58And that there is no downside to just shaking it as vigorously as you can and seeing what happens. And that's what you're seeing. For them, there just don't seem to be any downside risks. Or I should say, the downside risks don't seem to be considered in any of this stuff. I'll give you an example of that that's really weird. My colleague Martin Wolf pointed this out to me. if what you were really worried about was China, right? And there is a really respectable, intellectually respectable case for the U.S.'s economic relationship with China being so distorted that it's a threat to our national security in terms of what they control economically, our security industry, our telecoms industry, the chips industries, the imbalance are dangerous.

39:56I'm not endorsing this case. I'm just saying adults endorse this. If you were worried about China and you wanted to win a geopolitical and geoeconomic competition with China, would you start it by pissing off everyone who's on your side who isn't China? Yeah, exactly. Would you go to war? Would you go to trade war with the EU if you thought the world's biggest problem was really China? Would you go to trade war with your Asian allies? This is insane, right? Like, if China's the problem, you need Europe. See above, effing idiot. I mean, I just don't understand that, right? Even if you assume that what you want to do is you want to close the trade gap with China, you want to bring manufacturing from China home, you're not going to do that if you don't have friends.

40:48There is no one who has won declaring war on the world, and that's what it feels like he's doing. Anyways, there's very few powers in the world. There's Europe, which has problems. There's China merging. There's India. There's the US. Can't take them all on at once in economic terms. It just strikes me as so strange. But again, my working hypothesis about this administration is that from an economic point of view, they see the current status quo as worthless, and there is very little downside to damaging it on your way to achieving a better world. I think there's another side of this. I mean, we're using the toddler as an AR-15 analogy.

41:33Toddlers get bored very easily. To me, there's an element of boredom in this, and it's exciting, and it creates headlines, and it's a fun press release to go out and say, you know, I'm raising the tariffs. And it's also not that hard for him to do because he can just tweet it out. Like, it's basically he just gets bored, opens the phone, raising the tariffs by this amount. And this is actually how these tariffs are reported on. It's from Truth Social. So to me, it almost feels as if what's really happening, I agree with you, he believes the system is worthless, which is why it sort of emboldens him to believe that it's okay when you're bored, you decide, I don't really like China right now.

42:16I'm going to throw out a tariff threat. I feel like that's what it is. Yeah, and I think impulsiveness is an important theme, and I'll throw out to you a totally unscientific theory, but I think it might be relevant to what you just said. I do not think the president is senile. I think he's very mentally alert. Biden was clearly senile. That was a scandal. we can have another show about what the implications of all that were. I don't think the president is senile, but he is almost 80. And I don't know if you two have a lot of people around that age in your life. I do. And one characteristic of those people, whether they are senile or not, is that they are impulsive.

42:58They have arrived at the age of not giving a shit, right? And that's one of the wonderful things about old age, right? You know, something we have to look forward to. Your crazy grandpa, yeah. But the crazy grandpa thing is no joke when it's the President of the United States. We'll be right back.

43:38version of you. Like Birdhouse building you. Yeah. The birds are gonna love this. Or Dollhouse building you. Yeah. The kids are gonna love this. Or maybe House DJ track building to the bass drop you. Oh yeah. The kids are gonna love this.

44:07Do you love it? Oh, that's a good you.

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45:35We're back with Profity Markets. I'd love to get your take on this new big, beautiful bill, currently under review in the Senate, but it passed in the House. It's estimated it's going to add nearly$4 trillion to the deficit over 10 years, potentially more. Elon Musk recently came out and called it, quote, a disgusting abomination. He said, shame on those who voted for it. You know you did wrong. You know it. Give us your view on this new tax bill from the JRP. It is more fiscally stimulative and more deficit-driven than what was expected. I think that's a consensus view, right? That there's less cuts and more spending and less tax increases than were expected.

46:23Now, I think about this always in terms of markets. And for markets, as a general rule, deficit spending is good, right? When a country borrows money and spends it on the economy, that money tends to filter down and land on a corporate balance sheet. And so deficit spending tends to be good for earnings, tends to be good for economic growth, tends to be good for stocks. Up to a point, you are threading the needle. If you get so far that the bond market rebels and interest rates rise and the cost of capital becomes prohibitive, then what was medicine becomes poison. and I think what the market is telling us is not that we've reached the point where the medicine has become poison but we are approaching it and nobody I think we've talked about this before nobody knows what the magic number is right and and it is it's never it never comes to a default right you don't have to get to that point where a bill doesn't get paid but there comes a point where you are overdosing on the deficit drug.

47:40And I think the skittishness we see in bond markets is telling us it's not that far away. The equity markets are holding up for now, but if you see the 10-year yield get much higher from here, it's going to be hard for stocks to go up. And if it gets much higher than that, it's going to be easy for stocks to fall. I'm glad you're going right to what are the markets telling us. I take the same view, but I was almost a little surprised by how muted the reaction was to the bill. Even to, I mean, the Moody's downgrade was, that's not going to necessarily make everyone start panic selling, but it is a symbol of what's happening.

48:19And I guess I look at the bond markets and my read is, we're a little nervous, but not that nervous. And I'm wondering if you see that as well. I think that's a correct observation. I mean, again, this boy has cried wolf a lot historically. You know, as long as Scott and I have been alive, people have been saying, this is it. This is the moment, right? Look, interest rates have come a long way here, right? We were close to zero at one point. We're up to four and a half on the 10. It feels slightly different this time, but the repeated experience of investors is to take a deep breath and march through these moments.

49:06And in the past, that's worked out. But I share precisely your emotional response, which is, this seems more dangerous than markets are pricing in. What do you think it would look like if the bond markets were to tell us this is a serious problem. Like, we're not just skittish anymore, we're actually freaking out. What would that look like in a market scenario? What would happen to yields? What happens to countries that don't have the global reserve currency is that they are forced into austerity by their interest expense, right? So there's literally not enough money, and you have to start making, you have to close the deficit by spending less money, and you have a recession and markets crash and there is a great kind of purge, right?

50:01In America, we have the reserve currency. We have the most important currency in the world.

50:12Interest rates rise dramatically. Suddenly, interest expense is dominating the budget. What happens next in our country? Well, can the Fed be convinced to start buying massive amounts of our debt again? If they do that, we're going to inflate our way out of the debt crisis rather than austerity our way out of it. But it ain't much more fun.

50:45but like look the 10-year yield goes to six and a half percent the bill's getting expensive and people are going to be sweating and and marks are going to be falling already it's gonna it's gonna be bad but you know you have to make a bet about whether america will get budget religion which will be very painful for markets right or if uh america will try to inflate its weight out out, which will also be very painful for markets. Well, the third option that the Republicans are floating is that we'll grow our way out of it economically. Do you think the markets believe that? Well, it's happened before, right?

51:23Like the great Clinton budget balancing miracle was basically a miracle of economic growth. And it doesn't take loads and loads of economic growth to really help with this kind of thing. But that's not where the trend is right now. And if I was trying to grow my way out of a huge deficit, I might put the trade war on hold first. That's a good idea. So if you look at the markets, people who are not fans of the president, like myself, I don't know if you knew that, but I'm not a huge fan of the president, Robert. So we felt validated when the markets crashed. They didn't crash. They corrected a little bit.

52:08They've rebounded. And I'm trying to figure out one of two things. One, the thesis is his economic plan actually people overreacted and his economic plan makes sense. That's the taco trade right there. It makes sense or it's not real. This won't happen. The GOP tax bill won't go. Things will look remarkably similar to the way they did before because the adult in the room is the tenure and the markets. Or the other kind of thesis is that the administration and the government are actually much smaller compared to the economy and that the American economy grinds on. Regardless of what's happening in D.C., Americans and companies wake up every morning, innovate, become more productive, use AI, and the market churns on.

52:55In other words, there's more noise than signal here. And I'm curious, again, we climb a wall of worry, what you take away from the market's recovery in the last month and a half. The economy grinds on. There's a lot of truth to that. We are not that exposed to global trade as an economy. I forget the exact numbers here, but trade is like 15, 17 % of GDP. So, still, you could do some damage messing that up, but we're not the UK. The UK is like an open economy on an island. It's mostly trade. You start screwing around with this stuff there, as they do with Brexit, you have a real problem. That's why they had the trust incident and all that.

53:44So, that's the more noise and signal point. We actually are a reasonably closed economy that sort of supplies itself and so forth. a lot of our economy is services too, right? Which is not right in the crosshairs. This stuff grinds on. I'll make an even further point for you. I was looking today for my column at the great month that the S &P 500 has had. Since like the 1st of May, it's up 5-6%. It's done better than the global indexes. It's the best month we've had in 18 months or something like that. Now you decompose that 75 % of the gains or maybe 72 % of those gains, magnificent seven. Take out now it's a slightly new magnificent seven.

54:30Apple's doing like shit. Uh, but you take out Apple and you put in Broadcom and you've just explained three quarters of the gains over the last month. So it's big tech again. Right. And, uh, so why is that? I ask you this because I'm trying to think of something clever to say at the end of my column. And I'm hoping the two of you will provide it. It's the burrito trade. It's a striking pattern. It's a very striking pattern. So a lot of the bounce is investors coming back to this handful of massive, excellent companies, high growth, high barrier to entry, gigantic cash generating monstrosities.

55:14This for the last month, these have been the trade. So maybe that's like, I'll tell you why. Here's one story. One story is like when the main institution in the world is falling apart slightly at the margin, the United States, it's getting a little ragged around the edges. What is the second most important institution in the world that is easy to invest in and highly liquid? Maybe it's Microsoft. you know what i mean like maybe do you want what what do you think's going to do better a five-year treasury bond or microsoft over the next five years or microsoft debt as another example more microsoft's debt or whatever so that's one theory another theory is look these guys aren't serious these they make a lot of noise the economy churns on we're still the world leader we still attract a lot of capital yeah aspartum odren who we had on last week he's terrific is he terrific he had an interesting point where he was saying that he thinks that the markets are now actually more resistant to uh sensationalism and stories in the news and on cnbc and that what the market what he has found based on this what we've seen with this rebound and just the way the markets behaved.

56:41He thinks that 30 years ago, we would have seen actually like a massive crash in the stock market. But he believes that investors are so dialed into earnings today in a way that they haven't been in a long time, which would explain kind of what we're describing here with this almost an apathy to these headlines and to these executive orders that in any other world would be actually a huge deal. But instead, the market kind of digests it, and they go, well, all we really fucking care about is earnings. And so what do we think is going to happen to earnings? And earnings have been fine so far. Exactly.

57:18Q1 earnings season was fine. There were these little spooky bits where a company that's very dependent on Walmart would say, we can't really give targets right now. We don't know what it's going to be. But a lot of the comments from the companies that do import a lot, the retailers and the merchandisers and the distributors and so forth, was kind of like, at the current levels, we can manage this. And there was, of course, the funny question. Now we're getting into a discussion about price increases and what the consumer can absorb. And there was a kind of funny game going on. Well, because Walmart came out first and said, look, prices are going to go up with the tariffs.

57:58And the president tweeted about them. And after that, all the companies kind of equivocated on whether prices were going to go up. They talked about portfolio prices, which means, well, this will go up, then it'll go down. But the news from earnings has been good, just to reinforce your point. And to Scott's earlier point about Trump's huffing and puffing, having diminishing returns, you know, six months in, you know, truth social seems less scary now. All the noise seems less scary. I'd like to get your reaction on the new steel and aluminum tariffs. Trump has doubled steel and aluminum tariffs from 25 % to 50%.

58:43Why do you think he's doing this? And more importantly, do you think this might have anything to do with the taco trade? Somebody put it, and I should give credit to them, but I don't remember who it was, that steel tariffs are the wealth-destroying tax policy that makes the other wealth-destroying tax policies jealous. It's just the dumbest tariff because very few people work in the steel industry in the United States. It is not a big industry for us, and lots of U.S. industries buy steel. So the costs are overwhelmingly outweighed by, overwhelmingly outweigh the benefits. It's an astonishingly stupid tariff for us.

59:28But what is Trump's core product? Trump's core product is nostalgia. and there's something about a blast furnace that gets red-blooded Americans' hearts pumping. And you can kind of understand that. It's Bethlehem Steel. It's U.S. Steel. It's the metal of industry. So it's advertising for Trump's worldview and Trump's nostalgia, but it is paradigmatically destructive, the destructive tariff. So is he going to chicken out on this one? Who comes to the office? Are the car manufacturers, CEOs as a group going to march back into the Oval Office? Are the guys from the Whirlpool, I mean, maybe Whirlpool's factories are all in Mexico now.

1:00:23But is somebody going to get to him and say, this is hurting us, stop? And like I said, I believe if he finds himself in a position, if the president finds himself in a position where he's under proper pressure, when rich men are unhappy with him, he's going to fold. That's my bet. I think I agree with you. My final question, is there anything happening in the markets right now that's been on your mind that you think people are not paying enough attention to? Perhaps something that maybe we on this podcast should be paying more attention to. Well, I hate to stick to policy because we've been talking about policy, but 899 in the budget bill is a very, very, section 899 is a very bad, another very bad piece of policy news.

1:01:16So 899 says, if your country, I'm summarizing and we'll get some of this, you know, slightly wrong, but I think I'll get the big picture right. If your country has discriminatory tax policies, if you try to import capital into our country, you try to invest or buy US financial assets, we are going to tax those inflows. And if you think about that, It's exactly like a tariff. The fundamental issue is that America spends more than it earns, right? And that expresses itself as a high trade deficit and a high capital account deficit. Capital account deficit simply says more money coming in than is going out.

1:01:59The trade deficit just says more stuff coming in than is going out, but they have to be the same number, right? And so just as a tax on imports, a tariff, attacks the problem from one direction in a dumb way, a tax on capital inflows is another way to attack the problem. And I think when people want to give you money, you should take it. That's one of my main life rules. But if you wanted to raise revenue by taxing capital inflows, the last way in the world you want to do it is in an arbitrary way where you say, I'm just going to tax the inflows from the people I don't like, right? That I want to pick a bone with those people.

1:02:45Because then it's like spooky. Investors don't know what the rules are. And the first rule of markets, as both of you guys know, is clear rules make the whole game possible. So this is a tax on capital inflows where the rules are yet to be determined. This is a real nightmare as far as I'm concerned. Because who's flying the plane? Who are they going to pick on? And, you know, people who are going to invest in the United States, they got to make plans, right? It's not like one day you decide, you know, you got to have a capital expenditure program, right? And now there is a question mark tax on investing in the United States.

1:03:23One of our big themes coming into 25 was that this was going to be the year that the rivers of capital reverse flow and that the PE of 25 or 26, which I think went down to 23. Now, I think it's back up to 25 or maybe 26. Higher than other big markets. Much higher. A third higher. So you work for a British company owned by a Japanese company. What do you – and what's the correlation? Is it inverse? Is it not correlated between what's happening in the U.S. and international markets? And is our trade idea for our investment thesis for 25 losing its steam or still holding up? It's been a good trade, at least January, February, March, April, owning the world was a great trade, right?

1:04:09And so congratulations. And part of that was just like, you know, the old phrase, like, good things happen to cheap stocks, right? Meaning like, you don't know when it's going to happen, but it sets you up when there's some catalyst and there's a big valuation gap. When you do get the catalyst, something good will probably happen. But if you look at the numbers, flows into U.S. stock funds are still quite strong. So those are still going up. U.S. fixed income, less so. But there is something scary going on that is hard to interpret and that we're struggling with on the newsletter to interpret.

1:04:52because U.S. Treasury yields have been rising a little faster than the rest of the world. In other words, the gap in yields between the U.S. and the rest of the world, it was more earlier in the year less now, but it's been widening. And usually when that happens, the dollar has to get stronger, right? Because there's an arbitrage. If my country is paying much higher rates, you want to buy my currency and get some of them rates for yourself, right? So usually that gap and the dollar correlate. This year, they've been going the other directions. In other words, the yield gap and the dollar are coming apart, right?

1:05:27And the standard interpretation of that is people have had enough with these dollar assets. And there's global portfolios being rearranged to overweight the dollar assets less and put more money into the rest of the world. I would be very cautious with how quickly that process can happen. I think that is a drip, drip process. I don't know if you have ever spoken with a European insurance company or a Japanese insurance company, but what you know of bureaucratic process is a shadow compared to what goes on at the big real money investors worldwide. Turning those battleships is slow. So it's like at the margin, they're like, just.

1:06:20So it's going to, if I think the change that you're looking for, there has been a change in sentiment, but the change in capital flows is going to be a slow process, which as Americans, by the way, we should be glad about. That means maybe we have a different president in office when this stuff starts to really matter. But it's going to be glacial, the process that you're talking about. But to be clear, the drip has begun, right? I mean, I just look at what I've seen where you had in March the largest outflow of institutional capital in America into Europe. Also, the fact that you had the largest inflow into global non-US ETF funds ever.

1:07:14I mean, these are these little signs to me that the drip has begun. it has hasn't it correct the grip has begun and i think also what you're probably seeing is people are hedging the dollar and that's what's creating the down when people hedge the dollar it creates some downward pressure on it and i think you're saying that i think people are realizing they can't have unhedged u.s assets that's the name of my column so i would say that but You can't have, it's no longer a world in which you can look your board of directors in the eye and have a lot of unhedged dollar exposure in your portfolio.

1:07:55It's just too dangerous. And I think it's that hedging activity we're seeing now. And over a period of years, the drip, drip. If U.S. policy doesn't change, the drip, drip will continue. I was so excited. And by the way, Robert, I must occasionally will hear people ranging from senators to other thought leaders literally parroting our analogies, our jokes, and our terms. And I'm flattered. I'm flattered. But the narcissist in me says, well, at least they could occasionally say, oh, I heard this on Prop G Markets or Ed said this or Scott said this. I am making it my personal mission to every time someone says the taco trade, I say, you mean Robert Armstrong's thesis, his theory.

1:08:41Because not enough people are crediting you for coming up with this. Can I make an embarrassing admission to you, Scott? Of course. I called, this is terrible. It just shows you how greedy I am. I called an intellectual property lawyer. Did you see if you could trademark it? I did. And I was like, can I trademark this? Can I copyright this? And it's because my daughter, my daughter like keyed into this. And she's like, are people paying you? And I said, okay, okay. I call this lawyer, but you cannot copyright a phrase or small series of words. And if you are going to get a trademark, this was terrible news.

1:09:20And if you're going to get a trademark, you have to have a trade. In other words, you've got to build it into a brand. I can only trademark it if I start selling my taco hats or whatever. Well, there you go. Well, if you think I'm actually going to get up off my couch and step away from my keyboard and actually make something, you have me confused with someone else. So, uh, Yeah. Okay, how about this? We'll take the taco trade, we'll make the hats, and we'll pay you a little commission. Perfect. Sold. We're going to be rich as the king of Persia. Look forward to it. Robert Armstrong is the U.S.

1:09:55commentator for Financial Times and writes the Unhedged newsletter. I highly recommend it. Previously, he was the FT's U.S. financial editor and chief editorial writer. Before becoming a journalist, he worked in finance and studied philosophy. Robert, as always, a pleasure. Thank you for joining us. Congrats, Robert. Well done. A lot of fun, guys. See you next time. This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss. Mayor Silverio is our research lead. Isabella Kinsel is our research associate. Dan Shallan is our intern. Drew Burrows is our technical director.

1:10:28And Catherine Dillon is our executive producer. Thank you for listening to Profity Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.

1:11:06In love lies. In love lies.

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