Wall Street has found a way to quantify the likelihood that President Donald Trump will abandon market-changing actions through “TACO“ (Trump always chickens out - Trump always fears), writes mediaite.com.
The so-called “Trump pressure index“ was created by Deutsche Bank strategist Maximilian Uhleer and outlines the degree of pressure the president is under to change course.
Axios explained the various variables outlined by Uhleer's index, as “it takes into account the month-over-month change in Trump's approval ratings, stock market performance and whether people and bond markets expect higher inflation. Armstrong was also the first to coin the term “TACO” for Trump’s policy shift under external pressure.
Axios’ Emily Peck noted that at this point “the index is higher than it was even on “Emancipation Day,” when the S&P 500 crashed after the announcement of massive tariffs on almost every country in the world.”
By the end of Thursday, the S&P 500 was down more than 1.7%, and the Nasdaq was down a whopping 2.38% – putting its recent losses in correction territory. Peck argues that the current situation is hitting Trump’s economy and political capital harder than the tariff chaos over the energy shock.
There is also a sentiment on Wall Street that Trump is likely to back down on his policies, if the stock market falls about 5% from its highs, Jose Torres, senior economist at Interactive Brokers, told Axios last week.
Trump announced an additional 10-day grace period to continue negotiations with Iran, promising to continue postponing attacks on oil facilities, but at the same time speculation that he might order a ground invasion has intensified.