NEW YORK — A small team of quantitative analysts on Wall Street has created what it calls the “TACO Index,” a composite gauge designed to anticipate sudden market moves triggered by statements from former U.S. President Donald Trump, according to people familiar with the project.
The index — short for Tariff Announcement & Cancellation Oscillator — tracks minute-by-minute changes in poultry and corn futures, option volatility on restaurant chain Del Taco (NASDAQ: TACO) and a machine-learning readout of Trump-related keywords appearing on X, Telegram and Truth Social. Back-tests show the model correctly signaled 11 of 14 large intraday reversals in U.S. equities that followed Trump’s trade-policy tweets between 2018 and 2020, the developers said.
“It started as a joke about tacos and chicken — Trump talks tough, then chickens out,” one strategist at the mid-size hedge fund Holbrook & Pierce Management told SourceRated, requesting anonymity because the methodology is proprietary. “But the correlations were sticky enough that we now publish the feed every hour for our traders.”
Market technicians stress that causation is far from proven. “You still need a fundamental view; otherwise you’re trading memes,” Victoria Greene, chief investment officer at G-Squared Private Wealth, said in an interview. Nonetheless, several prime-brokerage desks confirmed they have fielded client inquiries about licensing the data.
Trump campaign officials did not reply to emails seeking comment. In past statements the former president has said his tariff threats were a negotiating tactic to secure better trade terms, adding that markets ultimately benefitted from his approach.
Regulatory experts note that because the TACO Index draws on publicly available information, it does not violate securities-law restrictions on material non-public data. Still, the Securities and Exchange Commission declined to comment on whether the product might face closer scrutiny should it gain wider distribution.
Looking ahead, index creators plan to add variables tied to Trump’s ongoing litigation calendar and betting-market prices for the 2024 election. “If he re-enters the Oval Office, his words will matter for asset prices again,” said the Holbrook & Pierce strategist. “We’re just trying to quantify that fear factor before everyone else.”