Where’s the so-called “Trump put” struck? Said differently, what’s the pain threshold for equity losses beyond which a president enamored with stock prices will dial down trade tensions?

That’s the big question with US stocks having erased almost all of their post-election gains amid a cacophony of recriminatory tariff bombast which crescendoed Tuesday in accusations that Trump’s attempting to collapse the Canadian economy on the way to annexing the country.

Some argue the “Trump put”‘s still way out-of-the-money, which is to say stocks would need to sell off much harder to prompt a policy reversal from The White House. But if you ask SocGen’s Manish Kabra, the sudden spike in bearish retail sentiment suggests the mood’s too fragile for Trump to safely gamble.

As the figure shows, the AAII bearish share surged 20ppt over the last week, a towering spike suggestive of a dramatic shift in retail psychology.

To Kabra, that’s evidence that “the pain threshold for [an] S&P drop is much smaller.” Just a 5% pullback was enough to trigger a sharp bearish sentiment turn which, he remarked, suggests the transmission channel between a stock correction and consumer confidence could be quite efficient. Indeed, confidence and sentiment were poor in the University of Michigan and Conference Board readouts for February.

The figure on the left, below, just shows the category-specific EPU for US trade policy uncertainty. It’s off the charts. On the right, you can see the modeled impact of tariffs on corporate bottom lines.

“S&P 500 profits are typically impacted by 2.8% for every 10% additional blanket tariff, and tariffs are a ‘lose-lose’ game,” SocGen’s equities team went on.

Importantly, the sequencing of tax cuts and tariffs during Trump’s first term helped cushion the blow. That may not be the case this time around, depending on how fraught budget talks in Washington progress.

“Under Trump 1.0, the tax bill was passed before the tariff war started in 2018, but this pattern has likely switched under Trump 2.0 [as] tariffs will likely kick in before the tax bill is passed,” Kabra went on. “We were wrong-footed on the timing here, and had expected the tax bill before tariffs.”

The silver lining is that the Fed has a lot of room to cut, and could, in theory anyway, pivot dovish in a hurry, even as inflation concerns linger.

For what it’s worth, SocGen reckons the strike on the “Trump put” at ~SPX 5555, which would equate to around half of the drawdown witnessed during 2018’s late-year, mini-bear market.