Wall Street often seems to have the memory of a goldfish. Just a few short months ago, the market was convulsing in its worst tariff-induced panic since the pandemic, all thanks to a dramatic “Liberation Day” announcement from the President. Now, after a dizzying rebound, investors appear to have collectively decided the pain wasn’t so bad after all, cautiously defaulting to a state of hazy optimism.

The evidence for this newfound resilience is, admittedly, all over the charts. The S&P 500, after staring into the abyss of a bear market in early April, has clawed back nearly 20%. Volatility, which had spiked to five-year highs, has retreated to its quiet place. Even options traders are showing a level of bullishness not seen in years, snapping up calls with abandon. In a classic case of positive reinforcement, the market even managed to end a recent session higher after the administration announced it was doubling down on steel tariffs. See? It doesn’t hurt anymore.

Naturally, the analyst choir is singing in harmony. Big banks are tripping over themselves to raise their year-end S&P 500 targets. Deutsche Bank, for instance, sees another 10% upside from here, though they casually note this rosy path will be “punctuated by sharp pullbacks.” It’s a wonderfully hedged bet: the forecast is sunny, with intermittent, market-cratering thunderstorms.

Perhaps the most telling sign of the market’s current headspace is the widespread belief in a curious acronym: “TACO,” or “Trump Always Chickens Out.” This bit of trader folk wisdom suggests that no matter how harsh the rhetoric, the administration will eventually back down, making it safe to ignore the threats. It’s a comforting bedtime story — but as some strategists warn, relying on the “TACO backstop” is a flimsy investment thesis.

So, while the market pats itself on the back for weathering the storm, it’s standing on ground that still and increasingly looks shaky. Stock valuations have swelled to levels well above their historical average, making them exquisitely sensitive to the next piece of bad news. The market isn’t healed; it’s simply developed a high tolerance for pain and a dangerous reliance on political goodwill.

As we head into a summer of critical trade deadlines, we should be wary. Complacency is a luxury few can afford — and that TACO might just fall apart at the worst possible moment.