Caco is a slur used to describe Puerto ricans in a derogatory way. Puerto Rican youths who dress and act 'gangsta' and drive tricked out import cars with loud sound systems blasting 'Reggaeton' (a type of music that is like hip-hop with heavy percussion sounds).
The word Caco is a racial slur that has been used historically to degrade and dehumanize puerto ricans. The word is still used by some people for this purpose, and it is seen as offensive and hurtful to puerto ricans. If you are unsure about whether or not it is appropriate to use the word Caco, it is best to err on the side of caution and avoid using it in any situation.