The pattern of "Trump Always Chickens Out"—referring to the president's tendency to retreat when his policies trigger significant market volatility—has reemerged. Last week, as Trump extended a pause on strikes against Iranian energy facilities to allow time for negotiations aimed at reopening the critical Strait of Hormuz, the behavior drew renewed attention. According to Capital.com senior market analyst Daniela Hathorn, "From a market structure perspective, this closely resembles the classic 'TACO' dynamic: Trump signals escalation, then backs down when faced with economic consequences." She added, "This reinforces the view that the U.S. administration is actively seeking an exit path, though the exact route remains unclear."

Nancy Tengler, CEO of Laffer Tengler Investments, noted that her team sensed early last week that the government had grown weary of the market impact from tensions with Iran. Her firm purchased S&P 500 call options on March 20, positioning for a market rebound ahead of Monday. The trade paid off when President Trump announced on the morning of March 23 that planned strikes on Iranian power plants would be postponed due to "productive" negotiations—a reversal from threats issued less than 48 hours earlier. "This president watches the stock market. He wants to win the midterm elections," Tengler stated.

Wall Street is familiar with the "TACO" playbook. In April of last year, stocks and bonds sold off after Trump announced sweeping tariff plans; markets rebounded once he suspended the initiative and pursued separate negotiations with individual countries. By year-end, the S&P 500 had surged approximately 37%, repeatedly setting new record highs and extending gains into 2026. The "TACO" pattern is so well recognized that analysts have developed tools like BCA Research's "Trump Pain Index" to predict when policy shifts may occur. The index tracks short-term equity volatility, long-term Treasury yields, mortgage rates, gasoline prices, inflation expectations, and presidential approval ratings. In the past week, it reached a level about two standard deviations above average, hitting a new record high.

This raises the question of whether another "TACO"-style move will calm markets. "He can execute as many 'TACO' retreats as he likes, but a true reversal in the index depends on Iran's participation—and so far, there is little indication of willingness from the other side," wrote Ole Hansen, head of commodity strategy at Saxo Bank.

Amid the stalemate, market concerns persist. Iran has rejected a U.S. ceasefire proposal that required full reopening of the strategically vital Strait of Hormuz. With the crucial waterway near a standstill, the U.S. has deployed Marines and airborne units to the region, sustaining upward pressure on oil prices. BCA Research chief strategist Felix-Antoine Vézina-Poirier noted, "While the conflict appears headed toward some form of resolution, it is too early to aggressively position for lower oil prices." Since hostilities escalated, Brent crude futures have surged more than 40%, while the S&P 500 has fallen roughly 7%. Both the Nasdaq and Dow Jones indices recently entered correction territory, down over 10% from their peaks.

"Frankly, I thought oil would be higher and stocks would be lower," Trump remarked during a cabinet meeting last Thursday. With oil prices exceeding $105 per barrel and the 10-year Treasury yield climbing, some strategists are focusing on protecting portfolios against the possibility of heightened inflation and rising rates. "I think you have to be very careful here," Innovator Capital Management chief investment strategist Tim Urbanovich commented last week. "The longer oil stays elevated, the greater the risk that inflation becomes entrenched. We don't see an easy exit point yet."