"From ICU to KTV," have the bulls in the U.S. stock market become "fearless"?

Wall Street investors' tolerance for shocks has become exceptionally resilient, from inflation worries to tariff threats and the Middle East war, it seems that nothing can truly shake investors' confidence.

Even as Trump escalated threats against major trading partners this week, including a 35% tariff on Canadian goods and a 50% tariff on copper, market speculation remains high. Bitcoin surged above $118,000, bond volatility has subsided, and the stock market remains near record highs.

According to CCTV News, Trump stated on Thursday that he plans to impose a uniform tariff of 15% or 20% on most trading partners and a 35% tariff on goods imported from Canada.

For traders sitting on substantial profits in areas like cryptocurrencies, tech stocks, leveraged ETFs, and commodities, this feels like a validation. Max Kettner, Chief Multi-Asset Strategist at HSBC, stated:

"We absolutely believe that the recent bullish price trend in risk assets is justified. Remember, this is no longer just about stocks; it has almost spread to all risk assets. If there is any difference, we believe investors are under-allocated again and continue to fight against the uptrend."

Analysis indicates that this investor resilience has formed after facing threats and becoming stronger, even as the prospect of a U.S.-led trade conflict has been set aside in favor of supporting broad bullish bets. However, JPMorgan CEO Jamie Dimon describes this differently: complacency.

Traders "Fearless"?

Even as indicators that signaled past market pressures rise, traders have become harder to scare. Bloomberg's Global Trade Policy Uncertainty Index is on the rise, similar to the months leading up to the global market crash in April. However, market traders seem no longer "panicked":

The S&P 500 closed slightly below its record high on Friday. The risk premium tracking U.S. corporate bonds hovers near its lowest level of the year. Bitcoin exchange-traded funds continue to see inflows. Volatility has receded, with the U.S. Treasury volatility index hitting its lowest level in nearly three and a half years, while the turbulence indicators for stocks, oil, and gold remain moderate.

Josh Kutin, Head of North America Multi-Asset Solutions at Columbia Threadneedle Investments, stated:

"The market has been indifferent to any issues, including tariffs, and even the brief conflict between Israel and Iran. If the market overall does not react negatively to these issues, I find it hard to see how this situation will change in the short term."

"TACO Trading" Prevails on Wall Street

Kutin noted that the government's habit of retreating when the market reacts poorly to trade policies keeps him calm and looking for tactical opportunities to increase stock exposure. He mentioned that multiple portfolio indicators continue to flash bullish signals, thanks to strong momentum and relatively low volatility This viewpoint reflects the increasingly common bet on Wall Street, known as the "TACO" trade, which stands for "Trump Always Chickens Out." This bet suggests that either the government will retract its tariff threats, or the results of the offensive will not be sufficient to undermine the expanding U.S. economy.

According to a previous article mentioned by Wall Street Watch, Trump stated on social media on Thursday that since he took office and introduced the tariff policy, Nvidia's stock price has risen by 47% to date. He also praised that tech stocks, industrial stocks, the Nasdaq index, and cryptocurrencies have all reached new highs.

Analysts pointed out that this market confidence has been forged in an environment that repeatedly punishes skeptics, making some investment professionals uneasy.

Market Resilience or Dangerous Complacency?

David Lebovitz, a strategist for global multi-asset solutions at JPMorgan Asset Management, stated:

"People have become a bit too comfortable with the idea that Trump will always back down. We have moved from a world where no one knows anything to a world where everyone knows something. It's almost as if the market is undergoing this stress test to see how far they can push until they start to see those cracks."

JPMorgan's Dimon also mentioned complacency when stocks hit record highs this week amid a flood of tariff news. He stated that the trade framework with Europe still "needs to be completed," and the likelihood of the Federal Reserve raising interest rates is much higher than the market generally believes.

Kristina Hooper, chief market strategist at Man Group, stated:

"The rally has gone too far. The tariff situation is far from resolved. Investors absolutely find it difficult to model this, so it's easier to ignore it than to think about the consequences."

Hooper suggested reallocating to stock markets that offer more diversified and attractive valuations, including Europe, the UK, and even China