Let’s dive into the state of play in markets today.
It’s the aftermath of yesterday’s announcement from Donald Trump that there is a tentative peace deal with Iran. What’s worrisome is that the 14-point plan isn’t a win for Trump in any sense and will kick off 60 days of tough nuclear negotiations. The Strait of Hormuz also may not be opened for 30 days, which could further tighten the oil market and Iran may be inclined to slow roll it in order to hold leverage. That said, I can’t see them firing on ships in order to stop anyone from the transit.
For what it’s worth, here are the 14 points that Iran published (with the caveat that they may not be entirely true):
- Full and immediate cessation of the war on all fronts, including Lebanon
- Commitment by the United States to the principle of non-interference in Iran’s internal affairs and respect for the country’s sovereignty
- Complete lifting of the naval blockade within 30 days
- Resumption of operations in the Strait of Hormuz within 30 days, taking into account agreements with Iran
- Commitment by the United States to withdraw troops from territories bordering Iran
- Suspension of sanctions on the sale of oil, petrochemical products and derivatives, as well as full access for Iran to its financial resources
- The United States and its allies must present a plan to restore Iran worth at least $300 billion
- Within 60 days, negotiations must be held to reach a final agreement on nuclear issues and the complete lifting of all sanctions, as well as UN Security Council and IAEA Board of Governors resolutions
- Confirmation of Iran’s commitment to the Nuclear Non-Proliferation Treaty and renunciation of nuclear weapons production
- Commitment by the United States not to increase the number of troops in the region or impose new sanctions during the negotiations
- Unfreezing of $24 billion in Iranian assets within the 60-day period of final negotiations, with half the amount to be provided to Iran before they begin
- Creation of a monitoring mechanism to implement the agreement;
- Approval of the final agreement by a UN Security Council resolution
- Final negotiations will not begin until half of the Iranian assets are unfrozen, oil sanctions are suspended, and the naval blockade is lifted.
In any case, the negotiations themselves are unlikely to be a market mover. The only question right now is how quickly Hormuz opens within that 30 day period and when will the agreement be signed. That might reflect some skepticism that the deal will hold or profit taking on a ‘sell the fact’ trade after weeks of front-running the Trump TACO.
Spots to watch include energy stocks and travel stocks. Gold initially rallied strongly but it’s down $15 today as it hasn’t been able to follow through.
The other big event today is the SpaceX IPO. It’s unusual in that a hard price of $135 was set for pricing shares. Of course, that’s not where it will open as bids come in. Because of that, I would expect an instant strong gain and then we will see what happens with the momentum. The retail madness that’s ongoing should be helped by the end of the war as well so Musk’s timing is great.
One thing that I want to highlight again is the nature of expiring lockups for SpaceX shares
