"Trump Pain Index" goes off the charts, Wall Street is betting on the next TACO-style turnaround.

"Trump always chickens out" - this saying refers to the president's habit of backing down when policies cause market volatility. Last week, as Trump extended the deadline for attacking Iranian energy facilities in order to negotiate for reopening the critical oil passage in the Strait of Hormuz, this saying resurfaced. Danila Hasoune, senior market analyst at Capital.com, wrote, "From a market structure perspective, this looks very much like a typical 'TACO' dynamic: Trump first signals escalation, then chooses to step back when faced with economic consequences," "This reinforces the view that the US government is actively seeking an exit path, even though the path to achieving this goal is not yet clear," she added. Nancy Tengler, CEO of Laffer Tengler Investments, said her team noticed last week that the government was tired of the impact of the Iran conflict on the markets. Her company bought call options on the S&P 500 Index on March 20 (Friday) in preparation for a market rebound before Monday. When President Trump announced on the morning of March 23 that the planned attack on an Iranian power plant would be postponed due to "productive" negotiations, the trade paid off. This was a reversal from threats made less than 48 hours before. "This president - he cares about the stock market. He wants to win the midterm elections," Tengler said. Wall Street is no stranger to the "TACO" script Last April, when Trump announced a large-scale tariff plan, both stocks and bonds fell; but when he suspended the plan and started negotiating individually with other countries, the market rebounded. By the end of the year, the S&P 500 Index had risen by about 37%, reaching several historical highs and continuing its upward trend into 2026. The "TACO" pattern is so well-known that analysts have developed tools like BCA Research's "Trump Misery Index" to predict when policy changes might occur. The index tracks short-term stock market volatility, long-term bond yields, mortgage rates, gasoline prices, inflation expectations, and the president's approval rating. In the past week, the index reached a level about two standard deviations above average, setting a historical high. This raises the question: will this "TACO" move calm the markets this time? "He can retreat in a 'TACO' style all he wants, but the ultimate reversal of the index depends on Iran's involvement, and so far, there is little indication that they are willing," wrote Ole Hansen, head of commodity strategy at Saxo Bank. Market concerns in deadlock Iran has rejected the US ceasefire proposal, which calls for the complete reopening of the strategically important Strait of Hormuz. With this crucial waterway still at a standstill, the US has deployed marines and paratroopers to the region, causing oil prices to rise. Felice-antoine Vizinapoly pointed out, "While the conflict appears to be moving towards some form of resolution, it is still too early to make aggressive layouts for lower oil prices." Since the outbreak of war, Brent crude futures have soared by over 40%, while the S&P 500 Index has fallen by about 7%. The Nasdaq index and the Dow Jones index have both entered correction territory, with declines of over 10% from their historical highs. "To be honest, I thought oil prices would rise more and the stock market would fall more," Trump said at a cabinet meeting last Thursday. With oil prices exceeding $105 per barrel and the yield on the 10-year Treasury bonds continuing to rise, some strategists are focusing on protecting their portfolios to cope with the possibility of escalating inflation and rising interest rates. "I think caution is necessary at this point," said Tim Urbanovich, chief investment strategist at Innovator Capital Management last week. "The longer oil prices remain high, the greater the potential for sticky inflation. We haven't yet seen a simple 'exit point'."