Wall Street is spotting the return of the “TACO” playbook.
“Trump Always Chickens Out” — a reference to the president’s habit of backing off policies that rattle markets— resurfaced last week when he extended a pause on strikes against Iran’s energy facilities to give time for negotiations aimed at reopening the Strait of Hormuz, the region’s critical oil waterway.
“From a market structure perspective, this looks very much like a classic ‘TACO’ dynamic with Trump signaling escalation, then stepping back when faced with the economic consequences,” wrote Daniela Hathorn, senior market analyst at Capital.com.
“That reinforces the idea that the US administration is actively seeking an exit, even if the path to get there remains unclear,” she added.
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Nancy Tengler, CEO of Laffer Tengler Investments, said her team sensed the administration was “getting a little weary” of the conflict and its impacts on the markets heading into last week.
Her firm bought S&P 500 calls on Friday, Mar. 20, positioning for a market rebound ahead of Monday. The trade paid off when President Trump announced on the morning of Mar. 23 that planned strikes on Iran’s power plants would be postponed amid “productive” talks, a reversal from threats made less than 48 hours earlier.
“This president — he pays attention to the stock market. He wants to win the midterms,” Tengler told Yahoo Finance. “I think he’s eager to put this behind him. And also, for the consumer, you know, the tax refunds are going to now be offset by higher gas prices at the pump.”
Wall Street knows the TACO playbook well.
Last April, stocks and bonds plunged after Trump unveiled sweeping tariffs, then rebounded when he paused the plan to instead negotiate with countries individually. The S&P 500 climbed roughly 37% by year’s end, hitting multiple all-time highs and extending gains into 2026.
Read more: The latest news and updates on Trump’s tariffs
The TACO pattern is so familiar that analysts devised tools like BCA Research’s “Trump Pain Point Index” to anticipate when a policy shift might occur.
The gauge tracks short-term stock market moves, long-term treasury yields, mortgage rates, gas prices, inflation expectations, and the president’s approval rating.
This past week, the index hit roughly two standard deviations above the average, its highest level yet. That raises the question of whether a TACO move this time around can calm the markets.
“He can TACO as much as he likes, but a reversal of this indicator ultimately depends on Iran engaging, and so far there has been little sign of willingness,” wrote Ole Hansen, head of commodity strategist at Saxo Bank on Thursday.