Kamal Ghorui
Wall Street’s menu of market acronyms has officially moved from Tacos to nachos and investors are discovering this new trade comes with a much spicier aftertaste.After months of betting on the “Taco” trade — shorthand for “Trump Always Chickens Out” — traders are now embracing “Nacho”, or “Not A Chance Hormuz Opens”, as fears grow that the Strait of Hormuz crisis is far from over.The new buzzword captures mounting pessimism that oil flows through one of the world’s most critical shipping routes will resume anytime soon.The phrase reflects a broader shift in market mood as rising geopolitical tensions, stubbornly high oil prices and repeated ceasefire breakdowns push investors to rethink assumptions that the crisis would quickly cool down, keeping oil prices elevated and global markets on edge.The term marks a sharp shift from the earlier “Taco” trade, which emerged during Trump’s tariff battles and was based on the assumption that he would eventually soften his stance after aggressive threats.Now, according to analysts and traders, investors are increasingly betting that the Strait of Hormuz crisis will not see a quick resolution.
How ‘Nacho’ entered market vocabulary
The phrase gained attention after Bloomberg columnist Javier Blas posted on X in late April: “We thought we were getting a Taco (Trump Always Chickens Out). But so far we are getting a Nacho (Not A Chance Hormuz Opens)”.The shift in market mood comes as the fragile ceasefire between the US and Iran continues to face repeated strains, while disruptions around the Strait of Hormuz remain unresolved.According to CNBC, traders now view elevated oil prices and shipping risks not as a temporary geopolitical shock but as a longer-term market condition.“It’s essentially the market losing hope in the chance of a quick fix,” eToro analyst Zavier Wong told CNBC.“For most of this crisis, every ceasefire headline triggered a sharp selloff in oil, and traders kept pricing in a resolution that never came,” Wong said. “Nacho is an acknowledgment that higher oil isn’t a temporary shock to trade around, it’s the current market environment.”
Oil prices and shipping risks remain elevated
The Strait of Hormuz, a narrow waterway linking the Persian Gulf with the Gulf of Oman, handles more than 20% of the world’s daily oil and gas shipments.Iran had earlier threatened to target ships passing through the strait, prompting several companies to halt shipments. The US later imposed a naval blockade around the area, further escalating tensions.Crude transit insurance premiums through Hormuz have risen to more than eight times pre-conflict levels, indicating that markets are pricing in a prolonged crisis.Brent crude prices climbed above $100 per barrel this week, after briefly touching wartime highs of around $126 per barrel earlier in the conflict.The latest surge came after Trump rejected Iran’s latest counterproposal aimed at ending the conflict, calling it “totally unacceptable” on social media.Trump has also continued to issue warnings toward Tehran. He recently said Iran would face bombing “at a much higher level” if it failed to agree to a peace deal.
Xi-Trump meeting in focus
Investors are also closely watching the upcoming meeting between Trump and Chinese President Xi Jinping, where the Iran conflict is expected to be discussed.Beijing confirmed that Trump will visit China from Wednesday to Friday at Xi’s invitation, while a White House official said Trump would “apply pressure” on Xi regarding Iran.Analysts at Soochow Securities, quoted by the South China Morning Post, said markets may briefly improve if the talks proceed smoothly and China signals support for easing tensions.However, they warned that any optimism could remain limited, with investors still worried about oil-driven inflation and broader economic risks.
Markets divided over long-term outlook
Despite growing fears in oil and shipping markets, global equities have remained relatively resilient.Analysts at State Street Global Advisors told CNBC that the “Taco” and “Nacho” trades are currently unfolding side by side, with investors still hoping diplomacy could eventually reopen the Strait of Hormuz.But economists warned that a prolonged closure could trigger persistent inflationary pressures and increase the risk of a global economic slowdown.“The clearest signal has come from rates markets where the front end has repriced sharply higher,” Aviva Investors strategist Vasileios Gkionakis said, as per CNBC.He added that only some parts of the market are fully embracing the “Nacho” thesis, while stock markets continue to remain comparatively calm despite the worsening energy situation.Even Wong, while describing the market’s growing pessimism, said he ultimately expects the Strait to reopen eventually.“The blockade is hurting Iran’s own export revenues and China has been applying pressure to reopen it,” he said.“The path ahead will probably continue to be messy, but it seems the market is beginning to accept that”, he added.
