Asia wrap: Welcome to TACO Tuesday

Welcome to TACO Tuesday( Or turnaround Tuesday) —but at this point, it feels like every day is a TACO. The calendar says Tuesday, but the market has long stopped waiting for a definitive outcome. What began as a snarky acronym for Trump Always Chickens Out has morphed into a standing operating assumption: tariffs go on, talks go on, tweets go out, and stocks tick higher. Rinse and repeat.

Asian markets treated today’s fresh round of “maybe talks, maybe not” as more background noise than breaking news. The won firmed, stocks in Seoul and Tokyo floated higher, and the euro managed a bounce on whispers of a softer US-EU deal. Traders aren’t pricing in resolution—they’re pricing in delay, maybe even dysfunction. However, a delay is sufficient to keep the tape bid.

Markets didn’t lurch because they’ve seen this show before. Tariff hike, rhetoric spikes, and then—like clockwork—comes the sudden pivot: "We’re still open to talks." This is policy by poker tell. And by now, investors are familiar enough with the bluff to call it and fade the fear.

Meanwhile, US equities haven’t just held the line—they’ve printed fresh interday highs.

Yes, the tariff suspension window officially closes tonight. But the running assumption—priced in across equities, FX, and vol desks for the past fortnight—is that Trump extends the deadline again or unveils a staggered menu of “reciprocal” deals. Japan and Korea are back on the hook for 25% come August, but for everyone else, the guess is somewhere in the soft 10–20% range. That’s not a ceasefire—but it’s also not a shock.

The deeper issue now isn't geopolitics—it’s margin math. Q2 earnings season is about to kick off, and with 73% of the S&P 500 reporting between July 11 and August 1, the market will finally get a look at whether companies are eating the tariffs or passing them along. The consensus says 4% EPS growth—down sharply from Q1’s 12%—but the Street expects the usual “better than feared” beat.

Tariffs, of course, don’t show up neatly on line items. They bleed into input costs, sourcing strategies, price elasticity, and—if the Fed is watching—expectations. Goldman thinks consumers are absorbing 70% of the burden. Fed surveys say more like 50%. Neither number aligns with the muted CPI prints so far.

Still, even with the tariff fog thickening, the real test lies ahead. Margin compression has begun to creep in. Valuations are stretched. Breadth is awful. And if a few earnings misses crack the veneer, those fragile internals could matter all at once.

Until then, though, every day’s a TACO. Not because Trump backs down, but because markets have learned to trade around the bark, and wait for the next bone.