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The S&P Presidency: Trading The 15,000 Target

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President Trump told the World Economic Forum on Wednesday that the U.S. stock market would double from here. He dismissed Tuesday’s 2% plunge as “peanuts” compared to gains during his term. Then he ruled out using force to acquire Greenland. The S&P 500 immediately rallied 1.2%, closing at 6,875.

If this sequence sounds familiar, you’ve been paying attention. Wall Street now has a name for it: the TACO trade. It stands for Trump Always Chickens Out.

The Pattern That Became a Strategy

The term was coined by Financial Times journalist Robert Armstrong in May 2025, after the Liberation Day tariff meltdown. Trump announced sweeping tariffs on April 2. Within four days, the S&P 500 dropped more than 12%, one of the worst stretches outside of the pandemic and the 2008 financial crisis. Then Trump announced a 90-day pause, and the index soared 9.5% in a single session, its biggest one-day gain since 2008.

Traders who bought the chaos made money. Those who shorted the provocation phase got crushed by the pivot.

The Greenland episode this week followed the same script. Trump threatened tariffs on European nations unless they supported his bid to acquire the Danish territory. He declined to rule out military force. Tuesday’s sell-off was the worst since October. Then came Wednesday’s Davos speech, where Trump said he would not use force. Stocks immediately rebounded. By the close, the Dow had surged 588 points.

Treasury Secretary Scott Bessent told reporters in Davos that the administration was “not concerned” about Tuesday’s losses. That’s consistent with the pattern: the market pressure forces the retreat, which then becomes the rally catalyst.

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Why the Index Matters More Than GDP

What makes this administration different is how explicitly it has tied its success to stock prices. Evercore ISI strategist Julian Emanuel noted this week that Trump “often refers to the stock market as a barometer of his success.” Emanuel identified 6,500 on the S&P 500 and 4.5% on the 10-year Treasury yield as the pain thresholds that would likely force a policy reassessment.

We’re nowhere near those levels. The S&P 500 closed Wednesday around 6,875, near its all-time high. The median Wall Street forecast for 2026 is about an 11% gain. Trump’s prediction of a doubling would require roughly 100% returns, which is not something any serious forecaster is modeling.

But the direction of his thinking matters more than the math. This is a president who views a 2% daily drop as a personal crisis requiring immediate damage control.

The Paradox of TACO

The problem with a widely recognized pattern is that it can become self-defeating. If everyone expects Trump to back down when markets drop, then markets may not drop enough to trigger the backdown.

Bloomberg reported this week that some strategists are concerned the TACO trade has become too crowded. Marko Papic of BCA Research told the outlet that the Greenland situation “may have to have a Liberation Day-type of a downturn before we get to the bottom of it.”

Columbia Threadneedle portfolio manager Ed Al-Hussainy pointed out that investor confidence in the TACO pattern is keeping volatility suppressed. If traders didn’t expect Trump to retreat, Treasury yields would spike on safe-haven demand and volatility measures would be much higher.

For now, that hasn’t happened. The VIX remains well below the peaks seen in April, October, and November. Skew, the premium investors pay to insure against sharp declines, is only modestly elevated.

What This Means for Your Money

The TACO pattern is not a guarantee. Trump could eventually follow through on a threat just to prove a point. The Supreme Court is also weighing whether his tariff authority under the International Emergency Economic Powers Act is even constitutional. A ruling against the administration could change the calculus entirely.

But the pattern has held for nearly a year. The S&P 500 reached a new all-time high in June 2025, less than three months after Liberation Day. It is trading within 2% of its January 2026 record.

For investors, the practical takeaway is straightforward. The Trump administration has demonstrated that it will retreat when markets react violently enough to threaten the index. That creates buying opportunities in the dips, particularly in sectors like technology and industrials that benefit from the underlying trends in AI and infrastructure spending.

The volatility is not a bug in this system. It is the engine that creates the entry points. Traders who understand that the provocation phase is temporary have consistently outperformed those who panic.

Trump’s 15,000 target is a boast, not a forecast. But the floor under this market is set by a president who treats a red screen as a personal failure. Until that changes, the TACO trade remains the definitive guide to navigating the noise.

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Sources

  1. Trump Davos speech predicting market will double, dismissing sell-off as “peanuts” — Yahoo Finance, January 21, 2026 https://finance.yahoo.com/news/trump-says-recent-market-sell-170021977.html
  2. S&P 500 closes at 6,875.62, Dow surges 588 points after Trump backs off Greenland tariffs — CNBC, January 21, 2026 https://www.cnbc.com/2026/01/20/stock-market-today-live-updates.html
  3. Trump rules out using force on Greenland at Davos — CBS News, January 21, 2026 https://www.cbsnews.com/live-updates/trump-greenland-davos-2026-world-economic-forum/
  4. S&P 500 2% drop Tuesday, worst day since October — NBC News, January 21, 2026 https://www.nbcnews.com/business/markets/markets-stocks-turn-sharply-trump-eu-greenland-rcna255168
  5. TACO term origin and definition by Robert Armstrong — Wikipedia (citing Financial Times, May 2, 2025) https://en.wikipedia.org/wiki/Trump_Always_Chickens_Out
  6. Liberation Day tariffs: S&P 500 dropped more than 12% in four days, then 90-day pause triggered 9.5% single-day gain — Fortune, May 4, 2025 https://fortune.com/2025/05/04/stock-market-rebound-sp500-trump-trade-war-liberation-day-tariffs/
  7. Treasury Secretary Bessent “not concerned” about Tuesday sell-off — CNBC, January 21, 2026 https://www.cnbc.com/2026/01/20/stock-market-today-live-updates.html
  8. Evercore ISI Julian Emanuel on S&P 500 6,500 and 10-year yield 4.5% as policy reassessment thresholds — CNBC, January 21, 2026 https://www.cnbc.com/2026/01/21/the-sp-500-and-10-year-yield-pain-levels-that-could-cause-trump-to-rethink-greenland-push.html
  9. Wall Street median forecast for S&P 500 in 2026 approximately 11% gain — Yahoo Finance, January 21, 2026 https://finance.yahoo.com/news/trump-says-recent-market-sell-170021977.html
  10. TACO trade paradox and strategist concerns — Bloomberg, January 21, 2026 https://www.bloomberg.com/news/articles/2026-01-21/wall-street-s-taco-trade-runs-into-a-problem-of-its-own-making
  11. Marko Papic (BCA Research) quote on needing “Liberation Day-type downturn” — Yahoo Finance/Bloomberg, January 21, 2026 https://finance.yahoo.com/news/wall-street-taco-trade-runs-094500191.html
  12. Ed Al-Hussainy (Columbia Threadneedle) quote on volatility suppression — Yahoo Finance/Bloomberg, January 21, 2026 https://finance.yahoo.com/news/wall-street-taco-trade-runs-094500191.html
  13. S&P 500 all-time high of 6,986.33 reached January 12, 2026 — TradingView https://www.tradingview.com/symbols/SPX/
  14. Supreme Court weighing tariff authority constitutionality — Fortune, January 20, 2026 https://fortune.com/2026/01/20/wall-street-banking-taco-trade-greenland-tariffs/