For the past year and a bit, since Donald Trump came back into office, traders have pushed markets higher on the hopes of an AI-powered economic miracle and the TACO trade — Trump Always Chickens Out.

After feeling queasy, perched on a wall of worry over the weekend, many traders spat their tacos out as soon as possible on Monday morning.

Their unease stemmed from increasing signs that, far from chickening out, Mr Trump and Iran’s leaders were beefing up their rhetoric and actions.

Over the weekend Iran doubled down on its hardline Islamist regime by appointing Mojtaba Khamenei to replace his father, Ayatollah Ali Khamenei, as supreme leader, while the US…