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.

U.S. stock indexes are hanging near their records following President Donald Trump’s latest updates to his tariffs, as speculation continues that he may ultimately back down on them