By: Steve Sosnick,Chief Strategist
Another day, or in this case, another weekend (a long one, at that) of bluster and battle in the Persian Gulf. All of us are of course glad that both downed pilots were safely rescued, but that newsworthy event was not market moving. Instead, the back-and-forth between the President and Iran is highly relevant to markets, yet there is a perceptible change in investor perception. Quite frankly, stock traders, and to a lesser extent, oil traders, seem to be putting less emphasis on the comments coming out of either side. Let’s examine the data…
The two tables below highlight a series of pronouncements by President Trump and/or Iranian official sources and the reactions of the S&P 500 Index (SPX) and June Brent Futures (COIL). Bear in mind that headlines are streaming by as I type this, though at noon EDT both SPX and COIL are up (+0.3 and 0.4%, respectively) and yields are essentially unchanged despite a renewal of rhetoric from both parties:
I have tended to refrain from the term “TACO” in favor of “Trump Put” because the former can be interpreted as pejorative. Both refer to a concept that I believe is accurate – that the President would like to see higher stocks and lower bond yields. Throughout his terms in office, he has either altered policies or used rhetoric to influence those numbers. It is widely perceived that he views the level of major stock indices as a barometer of his economic performance, and as a long-time real estate developer who socializes with others in that field, he is keenly aware of the cost of funding projects and how rates affect their affordability to buyers. That is why when we have discussed the “Trump Put” recently, we have asserted two possible strike prices: 6,500 for SPX and 4.45% on the 10-Year.
There is of course another market-determined price that the President desires to influence, and that is the price of energy. Trump used the phrase “drill, baby, drill” throughout his 2024 campaign as a simple reminder that he wanted lower oil prices and saw increased domestic production as a means of achieving that outcome. Unfortunately, his administration’s moves against Iran have created the opposite outcome. We can debate the cost/benefit analysis of the Iran conflict and the goals of de-nuclearizing that country versus the costs of a closure of the Strait of Hormuz (and I’m sure many of you will in the comments below), but from a global market viewpoint, the situation in the Gulf is highly detrimental in the short-term to keeping pump prices lower. The timeline of extracting and delivering crude oil, refined products, and liquefied natural gas is long and slow and unable to quickly change the supply/demand imbalance that world markets currently face.
Nonetheless, stock traders have switched their mindset. On Friday, March 27th, stocks sold off hard after Thursday afternoon’s announcement that the President extended the 5-day ceasefire he announced on Monday. Stocks plunged for the second day in a row while short-term rates tumbled on a flight-to-safety bid. Since then, however, stocks have bounced and seem relatively impervious to the latest series of pronouncements. Those include threats of a bombing campaign that is set to begin as early as this evening, which was ameliorated overnight by news reports of talk of a 45-day ceasefire. A cynic would note that the bluster occurred on a Saturday, when markets are closed, and that the ceasefire discussions were leaked after overnight index futures had opened lower, but the bigger “tell” was that stocks barely budged when Iran rejected the latest ceasefire proposal.
Stock traders are implicitly betting that the goalposts will move once again amidst some market-friendly statements. Call it what you will, “TACO” or “Trump Put”, but either way, on a day when almost all of Europe and much of Asia were closed for Easter Monday, US investors are tacitly acknowledging their belief that one will be arriving in short order.
Originally posted on April 6, 2026 on Traders’ Insight
PHOTO CREDIT: https://www.shutterstock.com/g/Irfy01
VIA SHUTTERSTOCK
FOOTNOTES AND SOURCES
‘Drill, baby, drill’: The surprising history of Donald Trump’s fossil-fuel slogan
https://www.cbc.ca/news/world/ceasefire-proposal-reopening-strait-of-hormuz-9.7153910
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