SignalPlus Macro Analysis Special Edition: TACO

Earlier this month, Financial Times columnist Robert Armstrong first introduced the little-known acronym "TACO," which stands for Trump Always Chickens Out, mocking the president for often retreating after initially presenting a tough stance. Armstrong suggested that rival countries could simply "wait" to turn the trade threats from the Trump administration into non-issues.
The acronym TACO began to gain mainstream attention when the president was directly asked about it at a White House press conference, and it was naturally not welcomed by the Trump administration.
Perhaps in response to this mockery, the Trump administration's stance became noticeably tougher towards the end of last week, with escalating tensions between the U.S. and China making headlines:

• Trump accused China of "completely violating" the Geneva trade agreement.

• Treasury Secretary Bessent criticized China for deliberately obstructing the export of critical rare earth elements to the U.S.

• Trade Representative Greer accused China of intentionally delaying rare earth export approvals.

• Beijing retaliated by accusing the U.S. of "abusing" semiconductor export controls.

• The U.S. government further expanded technology licensing restrictions on China's tech industry.

• The U.S. Department of Commerce restricted the sale of chip design software and certain aerospace engine components to China.

• Following the ban on foreign students at Harvard, Secretary of State Marco Rubio announced plans to begin revoking student visas for Chinese students.

Overall, the market clearly shifted to a risk-averse mode late last week, despite the volatility of stocks and fixed income returning to cyclical lows, the stock market still failed to break new highs.

Concerns about uncontrolled bond yields have gradually eased, with the 30-year Japanese government bond yield declining in sync with U.S. Treasuries, making it difficult to determine which is leading the other. This further indicates that the recent overall rise in yields primarily stems from de-risking behavior in the fixed income market and concerns about the overall macro environment, rather than specific or structural issues, making us more confident that yields should steadily decline as we enter summer.

Aside from the daily tariff news (which the market has begun to take for granted), overall market sentiment still appears weak, with various assets lacking a clear direction. Market focus may shift to the non-farm payroll report later this week to see if it can continue to rise against weakening survey data and economic growth expectations. Considering the recent persistent weakness in employment surveys and initial jobless claims data, along with the current high level of the stock market, short-term risks may still lean towards the downside.

In the cryptocurrency space, despite recent positive news, price performance remains lackluster, with both BTC and MSTR failing to effectively break through upper resistance, and most major tokens dropping about 5-10% over the past week.

On a more positive note, Blackrock's IBIT ETF saw a record monthly inflow of over $6 billion; meanwhile, the open interest in ETH futures has continued to rise alongside the price rebound in the first quarter, indicating that new long positions are still entering the market.

In terms of news, Stripe is reportedly "seriously discussing" plans to use stablecoins for transactions with traditional banks; meanwhile, Trump Media has raised about $2.3 billion through equity and convertible bonds to further allocate to BTC. Additionally, the SEC has officially withdrawn its lawsuit against Binance (and cannot restart the case), symbolizing the end of one era in cryptocurrency and the beginning of a new one, although this comes with increased involvement from traditional finance and politics.
However, in such a positive environment, BTC still failed to maintain its upward channel last week, and when the market cannot respond positively to good news, it serves as an internal warning. Furthermore, BTC's recent strength has not been confirmed in cryptocurrency-related stocks; for example, MSTR has not moved upward in sync, and its leveraged ETF has seen outflows, showing a clear divergence from BTC and ETH ETFs.

Year-to-date, BTC has performed outstandingly among all macro assets, but short-term signs indicate that the market may face a more challenging phase, with OGs and native users continuing to take profits at highs while mainstream buyers step in.
If macro risks heat up again in the summer, will BTC also experience a correction? Our basic view is that the market may first trend towards calm in the second half of the year, no longer exhibiting the same volatility as in the first half.
Wishing everyone successful trading this week, and if possible, please try to avoid opening high-leverage BTC positions.