When uncertainty hits the markets, some people see an opportunity to start trading. Take the latest Wall Street phenomenon, the so-called “TACO trade,” for example.
Coined by Financial Times reporter Robert Armstrong, the term is short for “Trump Always Chickens Out,” and it’s a trade to buy stocks that fall when Trump announces punitive tariffs of one kind or another, and then sell them when, a few days later, Trump inevitably backs off on his tariff threat. Volatility, meet trading opportunity.
But. To make a speculative trade successfully, you still have to be able to time the market, something many professional investors tell you is very difficult indeed because to do it successfully you need to be able to predict the future. Trump’s chickening-out might be almost predictable at this point, but he was ever a mercurial fellow. Can you be sure it’ll happen next time? And with a ruling Wednesday that most of Trump’s tariffs are illegal, the only certainty in the economy right now is continued uncertainty.
Still, whatever you believe is going to happen in these uncertain times, speculative traders do need to buy and sell stocks somewhere to, er…taco-chance on the markets’ volatility. They might feel that this trade is, er…nacho average opportunity. You know?
There are a variety of platforms to trade on, but here’s one company that proves the old adage that in a gold rush, the people who really get rich are those selling the shovels: CME.
CME is the world’s largest derivatives marketplace, formerly known as the Chicago Mercantile Exchange. It has nearly cornered the derivatives and commodities markets, gobbling up a host of exchanges over the past decade or so. When volatility rises, so does the number of trades that take place, and CME makes its money on the trade volumes. That’s right: CME gets paid for every trade made on its exchange, no matter who wins or loses.
It makes for a lucrative business. For 2024, CME had revenue of $6.1 billion and a net profit of $3.5 billion, up from $5.6 billion in revenue and $3.2 billion in profit in 2023. In April, CME hit an all-time high monthly average daily volume (ADV) record of 35.9 million contracts, an increase of 36% year-over-year. All of that has analysts looking at CME to keep growing. Earlier this month, Argus Research analyst Stephen Biggar raised his price target on CME to $308 from $285, with a “buy” rating. He noted the company has kept a tight lid on costs, even as volumes rise.
(Full disclosure: I do hold some shares of CME in a diversified equity portfolio managed by an outside advisor.)
The Usual Suspects
- Southwest’s baggage: Bags fly free? Southwest $LUV says “Fuggedaboutit.” Now Southwest passengers will have to pay $35 for a first checked bag and $45 for a second one. That’s on par with what competitors charge, as the airline’s CFO said Southwest needs to become more like its competitors. That comes as its gross profit for the first quarter rose 22.27% over a year earlier to $1.26 billion. But the airline is concerned that its new fees may prompt more passengers to lug carry-ons, which can slow boarding and threaten Southwest’s legendary on-time performance, which is over 80%.
- Boeing cuts a deal: Remember those back-to-back Boeing 737 Max crashes in 2017 and 2018? When Boeing’s $BA automated flight systems malfunctioned (or pilots failed to understand them, depending on who you ask) and a pair of planes crashed, killing 346 people? Well, Boeing had agreed to plead guilty to a felony charge of conspiring to defraud the FAA, and to pay further compensation to the families of victims. That’s now been reversed, and Boeing won’t have to plead guilty to a crime. It’s still in the hole for a further $1.4 billion in fines, safety improvements, and payments to the victims’ families.
- Walt Disney and the Ukulele-playing Hawaiian Turtle: Nope, it’s not the latest Disney $DIS animated feature, it’s the abrupt end to a lawsuit from a Hawaiian artist who said Disney copied his blue-eyed tortoise, Honu, and used the image to promote its Hawaiian resort. Artist Johnson Enos created a turtle in 2006, and claimed he pitched the blue-eyed testudine to Disney in 2008, but U.S. District Judge Dale Fischer dismissed the case, noting that Disney created ‘Olu Mel before Enos began depicting Honu with a ukulele, and that the characters were not similar enough to show copyright infringement otherwise.
- Nvidia’s no longer feeling Nvincible: Jensen Huang, the leather-jacket-wearing founder of chipmaker Nvidia $NVDA , says rules meant to maintain America’s lead in the AI race by curbing China’s access to his company’s advanced AI chips have had the opposite effect. Now Chinese tech firms like Huawei have filled the gap with their own chips. The export controls gave Chinese companies “the spirit, the energy and the government support to accelerate their development,” Huang said at a Taipei conference this week. “All in all, the export control was a failure.”
- Car talk: Can Stellantis $STLA shine? The U.S./French/Italian carmaker which owns Chrysler, Peugeot and Fiat (as well as Dodge, Ram, Maserati, Jeep, Lancia, Alpha Romeo and Opel) has a new boss with a tough task: turn around a company whose U.S. market share has slipped to 8% from 12.5% in 2021, when FIAT/Peugeot bought Chrysler, and came up with the name. Antonio Filosa, 51, was most recently COO for the Americas. Supply chain woes, tariffs, high inventories and the headwinds slowing EVs are big problems, but a turnaround could come with a hefty rise in share prices: On an enterprise value to earnings before interest and tax, Stellantis has a multiple of 3.46, versus GM $GM at 2.71, Ford $F at 39.37 and Tesla $TSLA LA at 177.15. General Motors is also throwing in the towel on its $300 million plan to build EV’s in upstate New York, and instead will plow $888 million into making the latest V-8 engine in the same factory. Meanwhile, Stellantis is winding down its joint project with Amazon $AMZN to create in-car software that would automatically adapt key settings to each driver, and even let the driver turn on the lights in their home as they hit their driveway.
- Ground Control to Mickey D: McDonald’s $MCD is closing the remaining five outlets of its experimental eatery, CosMc’s, a vaguely space-themed restaurant that served mostly syrupy caffeinated drinks and punches and a pair of reworked Egg McMuffins. Apparently, no one was buying, and the original king of burgers says it may add the space drinks to the menu at its existing locations.
- Silver screen success: Hollywood is making better movies, and Americans are flocking to the theaters to see them. Last weekend, the top six new releases collected a record $326 million over the Memorial Day weekend. Disney’s live-action “Lilo & Stitch” ($183 million) and Paramount’s “Mission Impossible — The Final Reckoning” ($77 million), alongside holdovers Disney and Marvel’s “Thunderbolts*,” ($11.8 million), $WBD, “Sinners” ($11 million) and “Final Destination Bloodlines”($23.9 million ). Audiences (and theater owners) are juiced by the steady stream of new films, after years of studios focusing on series for their streaming services. Movie theater shares soared: AMC $AMC was up more than 23%, Marcus Theatres’ parent $MCS rose 10%, and Cinemark $CNK was up 4%.
Elon’s World
- Rocket go BOOM! A third SpaceX Starship, the largest rocket ever launched, and the key to Musk’s dream of landing on the moon and colonizing Mars, went down in flames on Tuesday, reaching space, but spinning out of control and breaking up as it re-entered the Earth’s atmosphere. “Big improvement over last flight!” Musk tweeted, promising at least a launch a month to fix the problems.
- No DOGE-dodging: Elon Musk may have announced that his scheduled time at DOGE is over, but a federal judge ruled that a lawsuit by 14 states can go ahead against Musk for illegally acting as a duly appointed federal employee and accessing government data systems, terminating federal employees, and canceling contracts at federal agencies. Musk said he quit DOGE several weeks ago to go back to running his companies, but on his way out the door, he took a swipe at Trump’s “Big Beautiful” budget bill: “I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing,” he told CBS News. Trump’s budget, which cuts both spending and taxes, mainly for higher-income individuals and for companies, will increase the national debt by $3.8 trillion by 2034, the Congressional Budget Office notes.
- Starlink goes South (Africa): South Africa’s government says it has begun approval for Elon Musk’s Starlink satellite, but it appears Musk, who was born in the country, won’t have to sell 30% of the equity in Starlink’s local subsidiary to a Black-owned company, one way the country has sought to reverse decades of economic segregation that favored the white minority.
- Setback: Tesla sales plummeted in Europe for a fourth straight month in April, with new-car registrations for Teslas down 53% over the previous year to 5,475 vehicles across the EU, according to the European Automobile Manufacturers’ Association. That comes as overall EV sales were up 26% in the first four months of the year over 2024. Cheaper Chinese rivals and Musk’s unpopularity are driving the decline.
Trumplandia
- Tariff tricks: As the tariff turmoil continues, evasion is on the rise. As the New York Times reports, many U.S. importers are getting offers from Chinese firms offering to massage product descriptions (or…outright lie) to bring goods into the U.S. under preferential tariffs, or even “transship” them through a lower-tariff country. Apparel manufacturer Leslie Jordan told the Times that the tariffs are making businesses like here far less profitable, and that they put “many honest companies at a competitive disadvantage.”
- Golden Shares: For all its insistence on the free market, the Trump administration is taking a leaf from Europe’s book of government-heavy business management, with the approval of the purchase of U.S. Steel by Japan’s Nippon Steel. Among the deal’s terms, ostensibly to ensure the U.S. can still make the steel it needs at home in case of a war or embargo, the CEO must be American, and the board must have a majority of U.S. directors. The government also gets a “Golden Share” to vote against board appointments or deals that could be perceived as being against the U.S. national interest. China, France, and Brazil all have these arrangements with strategically important firms. Could this be a test case for the control of TikTok?
- Cashing in. Again: Trump’s social media platform, Truth Social, and its parent company Trump Media & Technology Group, says it plans to raise $2.5 billion from institutional investors and a convertible bond sale to buy Bitcoin. It’s not clear how the company would make money, unless Bitcoin continues to rise in value, which it could if the U.S. Treasury follows through on Trump‘s plan for the government to buy Bitcoin and other cryptocurrencies. Last month, Trump Media said it would launch a set of exchange-traded crypto funds, and this week’s move looks like the company is no longer betting on the Truth Social platform for its future. Last quarter, Trump Media lost $32 million on $820,000 in revenue from advertising and other sources. Shares in Trump Media are down 37% this year. But the crypto strategy has not always been a winner: On Wednesday, GameStop $GME said it had bought half a billion dollars worth of Bitcoin, only to see its shares drop a whopping 10.9% on the news.
- That battle with Big Law isn’t going so well. This week, law firm Wilmer Hale had a court dismiss Trump’s efforts to cancel all government contracts with the firm and block its attorneys from federal buildings. The order would have massively undercut the firm’s Washington business, which involves negotiating with government regulators on behalf of its clients and being the government’s lawyer in other cases. Wilmer Hale got special attention for having employed former F.B.I. chief Robert Mueller. It’s the third Trump order against law firms that federal judges have overturned. But at least nine major law firms have agreed to donate hundreds of millions of dollars of free legal services to the Trump Adminsitration and its preferred causes. One of those firms, Paul, Weiss, Rifkind, Wharton & Garrison, saw backlash this week when four of its top lawyers left to form their own firm.
The Short Stack
- Only Private Fans: OnlyFans, America’s favorite online peepshow, is in talks to sell to a private equity group led by Los Angeles-based Forest Road Company, at a valuation of about $8 billion. The channel, famed for letting almost anyone star in their own porn show—and make money at it—saw revenue jump from $375 million in 2020 to $6.6 billion in 2023, thanks largely to the pandemic. The closely held pornsite appears to be owned by Leonid Radvinsky, a Ukrainian-American who bought the site in 2018. Big banks and investors won’t go near OnlyFans, Reuters reported, over concerns that due diligence might find child sexual abuse material, trafficking victims and nonconsensual porn.
- No more hook-ups? That’s the plan for Tinder, under new CEO Spencer Rascoff, who says in a memo seen by the Wall Street Journal: “Users don’t want more matches, they want better ones.” Rascoff, who is also CEO of Tinder parent Match $MTCH told the Journal users should see Tinder as “a bar where people come together to meet new people.” Cheers to that!
- Salesforce’s $8 billion leap into AI. The customer relationship software giant $CRM will buy Informatica $INFA, a data management and analytics company that caters to Fortune 500 companies. Salesforce is hoping Informatica will help improve its ability to link its data and services to AI agents for its customers.
- Die, DEI, die! Trump’s FCC chairman, Brendan Carr, approved Verizon’s $VZ’s $10 billion buyout of Frontier Communications $FYBR , after Verizon pledged to roll back its DEI initiatives, and also promised to invest in more fiber optic lines and pay more to cell tower maintenance firms. T-Mobile $TMUS already promised to roll back DEI efforts as it seeks FCC approval for a $4.4 billion deal to buy some assets from U.S. Cellular $USM.
Get Big Business This Week in your inbox every week—and read it before everybody else! Sign up today.
Peter S. Green is a veteran reporter and editor who has spent more than two decades covering business and finance from Eastern Europe to New York City, and has worked for Bloomberg News, The New York Post, The New York Times and The Messenger. He lives in New York City and is always looking for the next big story.
