"TACO Index" Prediction: No Later Than July 30, Most Likely on Sunday

The U.S. strikes against Iran have continued for nearly two weeks. Amid ongoing conflict, geopolitical consulting firm Signum has built a mathematical model in an attempt to quantify Trump's decision-making threshold in the Iran crisis.

According to China Central Television News, on July 24 local time, President Trump spoke at the White House regarding the U.S. "exit strategy" from the war with Iran, stating that the United States has two options: One is to continue current military operations and possibly intensify strikes, gradually destroying Iran's military capabilities; the other is to reach an agreement through negotiations.

Wallstreetcn noted that earlier that same day, according to sources cited by Reuters, Pakistan is seeking to restart the stalled U.S.-Iran negotiations.

Following the news, markets briefly bet on a diplomatic breakthrough in the Middle East conflict. Brent crude oil once fell below $95.20, dropping over 5% intraday, while U.S. WTI crude oil fell below $87.70, down about 4.9% on the day.

Analysts at the geopolitical consulting firm Signum found that whenever the combined stress of key market indicators reaches around 2.9 standard deviations, Trump historically has taken actions to de-escalate.

According to current trend linear extrapolation, this "TACO moment" could come as early as July 22, no later than July 30, with the most probable date being July 26.

This model is known as the "TACO Index", a name derived from the market catchphrase "Trump Always Chickens Out".

The analysis team led by Andrew Bishop used Brent crude oil prices, the U.S. 10-year Treasury yield, the number of vessels passing through the Strait of Hormuz, and the S&P 500 Index as variables for backtesting Trump’s behavioral patterns on the Iran issue.

Backtesting showed that the index coincided closely with several of Trump's past policy reversals. Analysts noted that, while the index has yet to reach the trigger threshold, it is steadily approaching it.

The analysis team at Signum Global Advisors used March 7 of this year as the baseline—that is, about a week after the U.S. and Israel initially launched strikes on Iran.

The model weights and combines Brent crude oil, the 10-year U.S. Treasury yield, Hormuz Strait vessel traffic, and the S&P 500 Index, assigning different weights based on Trump’s sensitivity to each indicator.

The analysts then input three subsequent key policy moments into the model for validation: shifting to ceasefire negotiations on March 22, accepting the ceasefire agreement on April 7, and focusing on a memorandum of understanding on May 18.

Backtesting concluded that the combined market pressure needed to trigger Trump’s action ranged from 2.3 to 3.4 standard deviations, averaging about 2.9 standard deviations.

Based on a linear extrapolation of current market conditions, Signum analysts have provided a relatively clear time window.

According to Andrew Bishop’s team, at the current pace, "TACO" could occur as early as July 22, with historical patterns pointing to July 26 as the highest-probability date.

July 30 is regarded as the latest possible trigger date, provided market conditions don’t materially improve. Analysts believe this scenario is "unlikely".

Although the model has shown a degree of historical accuracy in backtesting, the analysts themselves remain cautious about its limitations. "TACO" has long been a widely referenced market prediction framework among investors, but its effectiveness is unstable.

Trump is now leading a military campaign against Iran that is widely believed outside the administration to be unwinnable, with external variables far more complex than simple market stress.

Signum's model essentially systematizes Trump’s past sensitivity to financial market signals. However, the non-linear nature of political decision-making means that any historical-based extrapolation is highly uncertain, and investors should maintain a healthy sense of risk when referencing this framework.