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This week’s HotCopper Wire geopolitics chat landed on a market caught mid-flinch: A U.S.–Iran “peace deal” is on the table, the ASX clearly likes it, and yet nobody – dual Wire hosts Isaac McIntyre and Jonathon Davidson included – quite believes it yet. McIntyre and Jonathon’s read is the real relief rally we’re expecting is still ahead. It’s just waiting for everyone to get over disbelief.
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The doubt isn’t hard to understand. McIntyre’s base case is another bout of Trump brinkmanship that fizzles into a possible backdown more than a breakthrough, and the larger optics don’t help the believers either.
“My first feeling here is this will be another Trump posturing run ending in a big ‘TACO’ more than anything else, especially because it set up a good optic for his UFC thing at the White House, to be waving the peace flag,” McIntyre said. “And, the FIFA World Cup’s on there in the States now, too.”
Davidson piled on, noting the UFC bash doubled as Trump’s 80th birthday and that the President was, let’s not forget, “very happy with his FIFA peace prize.”
The deal itself doesn’t help the believers either, he pointed out. “Insane as an Australian market watcher to use the term peace deal MOU,” Davidson said of the agreement between Trump and Iran’s president. “It sounds like a rare earth announcement — but, as you say, Isaac, the market likes it.”
And like it the market has, even mid-disbelief. The XJO is “nearly back to 9,000 points for the first time in months,” in Davidson’s words, and traders are voting with their wallets: gold ticking higher and helping the index along, uranium and copper names having a run, and BHP printing a fresh record high this week. The cherry on top for locals — “Down Under, Isaac, we did not get a rate hike either.”
What keeps the Wire cautious is the questions the market is quietly treating as already answered. Whether both sides stick to the deal past the first 48 hours is the immediate test, but the bigger ones loom larger.
“What’s going to happen with Iran’s nuclear tech ambitions? That’s what started the war in the first place,” Davidson said, before rattling off the rest: The truth about United States reparations to Iran, and the wildcard of “what is Israel going to do?” His verdict: “These questions remain on notice.”
The most delicate factor, McIntyre said, is the reopening Strait of Hormuz, where reports are mixed, and the Ayatollah is reportedly angling to charge transit fees through the chokepoint that carries so much of the world’s oil.
For now, the honest read is Davidson’s: “I think we’re in suspended disbelief right now. Everybody wants this to be true, myself included.”
You can listen to the full HotCopper Wire episode below.
You can also find the POD to listen to and download over on Spotify.
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Disclaimer, as spoken by Isaac McIntyre in the HotCopper Wire episode: Any information or advice in this HotCopper podcast recording is intended for education and entertainment purposes. Any advice is general in nature and does not take into consideration your objectives, financial situation or needs. Before acting on general advice, you should consider whether it is relevant to your needs and read the relevant Product Disclosure Statement. And if you are unsure, please speak to a financial professional.
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