This metric has a 100% success rate of forecasting future stock market returns when back-tested over more than 150 years.

Markets had dismissed tariff risks under the assumption that Trump would follow an earlier pattern and back off, in what became known as the so-called TACO trade. That allowed stocks to reach new record-high territory recently, marking a stunning rebound from the collapse triggered by his “Liberation Day” reciprocal tariffs in April.

President Donald Trump’s escalating tariff threats have not deterred Wall Street, with the stock market continuing to rise despite trade policy uncertainty.