Battle-Hardened Wall Street Bulls Are Proving Very Hard to Scare

Kutin says the administration’s habit of backing off when markets react badly to trade policies keeps him calm — and on the lookout for tactical opportunities to add equity exposure. Indicators across several portfolios continue to flash bullish signals, he says, driven by strong momentum and relatively low volatility. And while acknowledging the current state can feel “toppy,” he believes the rally has room to run.

The view reflects an increasingly common bet across Wall Street, known as the “TACO” trade, for Trump Always Chickens Out. The wager is that either the administration will walk back its tariff threats, or the upshot of the offensive simply won’t be enough to derail the expanding US economy. Whatever the reasoning, bullishness is prevailing.

Trump took to social media this week to celebrate record highs in tech and industrial stocks, as well as an unstoppable crypto runup that sent Bitcoin soaring to $118,000. That market confidence — forged in an environment that has repeatedly punished skeptics — has made some investment pros queasy.

“People are getting a little bit too comfortable with this idea that Trump’s always going to back down,” said David Lebovitz, the global strategist of multi-asset solutions at JPMorgan Asset Management. “We’ve gone from a world where nobody knew anything to everybody knows something. It’s almost like the market’s going to go through this stress test where they see how far they can push it until they begin to see those cracks.”

Complacency was also invoked by his boss, JPMorgan’s Dimon, as stocks hit record highs amid the deluge of tariff news this week. He said a trade framework with Europe still “needs to get done,” and that the Federal Reserve is far more likely to raise interest rates than is generally believed in markets.

“The rally has gone way too far,” said Kristina Hooper, chief market strategist at Man Group. “The tariff situation is far from resolved. It’s absolutely difficult for investors to model this out, so it’s easier to ignore it than think about the consequences.”

Hooper advises reallocating to equity markets that offer better diversification and more attractive valuations — including Europe, the UK and even China.

“I’m a sober realist,” Hooper said. “We have valuations that are at historically high levels. And so when stocks are priced at a near perfection, it’s a lot easier for disappointment to occur.”

Despite concerns over potentially stretched valuations and mixed economic signals, bulls say it’s a mistake to get in the way of markets rolling with this much momentum.

Kettner, for his part, believes the US exceptionalism will continue as he ratchets up HSBC’s overweight, particularly to US equities. This week’s erratic tariff announcements may end up being a bullish catalyst if walked back, he says. With a weaker dollar and lowered earnings expectations, the upcoming reporting season could provide further support for equities.

“We also strongly disagree with the idea of complacency,” he said. “Equities and risk assets are well positioned to climb the wall of worries further in the coming weeks.”

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