For years, market watchers spoke of the ‘Powell Put’ or the ‘Fed Put’ – the implicit belief that the Fed would step in to support markets during a significant downturn.
But, as events in 2025 have shown, that ‘Put’ or a ‘Back-Stop’ has been eclipsed.
Since the ‘Liberation Day’ tariffs announcement in April, we have entered the era of the ‘Trump Put’.
The pattern is striking:
1. a market-jolting policy threat ….
2. …is followed by a swift, clarifying statement that backstops the sell-off.
Rinse and repeat.
Social media derides this as ‘TACO’ (Trump Always Chickens Out), but that misses the point.
This is not about cold feet or chickening out; it needs to be looked at for what it is:
A PUT – a price floor under the market, activated by political and policy rhetoric.
To be clear: backstops are not inherently great for equity markets (or for that matter outright bans on short-selling, as the US temporarily did in 2008. I found it difficult to understand that then and even after all these years think of that one event as a Top 5 Absurd Market Event. See image).
Equities are meant to price in risk and uncertainty freely. By their nature, they are not supposed to have price floors (except at zero).
The only legit backstops we should celebrate are those driven by corporate share buybacks (while debatable they are grounded in fundamental value and cash flow).
The jolt-and-then-provide-a-backstop, on Oct 10th, was particularly chilling: a flash crash on tariff-related anxieties, followed by an almost immediate recovery on reassuring comments.
The finesse around the execution was particularly unsettling.
There is no other way to say this except acknowledge that The Efficient Market Hypothesis, which posits that prices fully reflect all available information, is under siege.
