A current subtle point in the market is that everyone knows Trump is very TACO, so TACO itself might be a risk. Last time Trump said he wouldn't bomb Iran, and then he suddenly did, which could be seen as a small test of being anti-TACO. Trump, being someone who values his image, might initially present himself as weak in areas where he is very confident, and when the market thinks he is being TACO again, he might suddenly adopt a tough stance to restore his credibility. Once Trump takes strong measures, the market could experience significant volatility.

Although legally Trump indeed has no way to deal with Powell at the moment, he has been using underhanded tactics. Whether it’s through a shadow Federal Reserve chairman or having his subordinates launch fierce attacks on Powell. For example, Navarro just criticized Powell for the third time, claiming he made a big mistake and should have cut rates immediately in July.

The Federal Reserve's interest rate cuts have two dimensions of impact on the market: the virtual, which is expectation management, and the real, which is the reduction in social operating costs due to lower real interest rates. Trump's team’s hype around the shadow chairman can adjust expectations to capture the virtual part, while the implementation of the Big Beautiful Plan and the stablecoin legislation can partially address the real part.

This yin-yang strategy has effectively pre-released/overdrafted the benefits brought by interest rate cuts, smoothing out cyclical volatility.