Iran: Deal, No Deal, Maybe Deal

It’s SpaceX IPO day. As of 1:25 pm ET, stocks are up. And so is SPCX.

But there’s palpable tension in the air. Behind all the excitement, everyone knows reaching a deal with Iran remains critically important for the world economy, and stocks.

Every time President Trump makes an announcement about Iran, markets react violently. Up and down, depending on the message and tone.

Forgive me for imitating a broken record, but if the Strait of Hormuz remains closed much longer, economic chaos will be unleashed on the world. Inflation is jumping, and the effects of shortages have only just begun to hit.

So those of us hoping stocks continue to rise should still be paying close attention to the Iran issue.

Here’s where we stand today.

Optimism, But Little Trust

Yesterday, the market soared after President Trump canceled his planned strikes on Iran, and said a deal was (once again) right around the corner.

The President went so far as to say, “Time and place of the signing to be announced shortly”.

Source: Truth Social

That sounded extremely confident. But apparently, the deal still has kinks to be worked out.

This morning President Trump posted another message about the Iran situation. If it sounds familiar, it should.

Source: Truth Social

“Very dishonorable people to deal with.” There is little trust here, on either side. And that’s going to make a real, lasting peace deal very tricky. Especially one that re-opens the Strait soon.

Update From the Iranian Side

There is some reason for optimism about a deal. For the first time, an official Iranian government news outlet has stated the following. From the Islamic Republic News Agency (IRNA):

The general outline and text of the memorandum of understanding to end the war between Iran and the United States have been almost finalized and are awaiting the final decision of the decision-making bodies in Iran.

Ok, interesting. That’s the headline that’s floating around social media and getting everyone bulled up. And it does represent real progress.

However, I read the entire article (translated from Persian to English via Google). And there are… caveats:

It is clear that simply signing an agreement to end the war does not mean that the American and Israeli sides will abide by it…

In this regard, the possible signing of the memorandum of understanding to end the war is being carried out in complete suspicion of the other side and with the Iranian armed forces and people fully prepared to confront any breach of promise and deception. Officials of the Islamic Republic of Iran have repeatedly emphasized that “they have no trust in the American side and the signing of the memorandum does not mean the removal of suspicion and the abandonment of the country’s combat and defense readiness.”

Combined with Trump’s new post from this morning (second image from the top), I remain skeptical that a real deal will be signed soon.

We may get a ceasefire extension, or an agreement to “end the war” while negotiations are ongoing. But who knows when the Strait is going to open back up.

The Strait of Hormuz Issue

Both sides want a peace deal. But we both want our own version of a long-term agreement.

We keep hammering this point home. So forgive me for sounding repetitive.

We are still a long way from a real, lasting deal on the Strait of Hormuz and other key disputes. We know Trump wants total freedom of passage, and possibly even a role controlling the chokepoint.

But here’s what that Iranian state media article says regarding Hormuz:

Contrary to some strange claims in the media, Iran does not make any commitment in this text to hand over management or return the Strait of Hormuz to the other side before the US and Israeli military aggression.

The only issue mentioned is the normalization of passage through the Strait of Hormuz in the event of an end to the war, the establishment of maritime security by the coastal countries, the end of the illegal blockade and the removal of threats to the passage of commercial ships by the US and Israel.

So it sounds like if the war does end, Iran is willing to begin normalization of the Strait of Hormuz.

BUT that depends on Iran’s other demands being met. Including sanctions relief, frozen funds being released, and the U.S. leaving bases on Iran’s borders.

That’s a tall order. And I don’t see Trump agreeing to those terms.

Don’t get me wrong, some progress has been made. At least a deal is circulating and going back and forth. But we’re not on the verge of a miraculous resolution.

We remain in a similar situation as last month. Negotiations are ongoing (through proxies, not directly).

Trust is non-existent. And the world’s most important naval chokepoint, Hormuz, remains closed.

We’ll keep a close eye on this situation. If we move back into an escalation phase, it could certainly derail bullish action in stocks. And that remains a real possibility. In time, the Strait remaining closed could crush markets by itself.

In my most optimistic case, I could see Hormuz reopening in a month or so. But that will require compromise from both sides. And until we see otherwise, I’m highly skeptical on that front.