US stocks soared on hopes & hype of an imminent Iran peace deal
● Although
the war of attrition of Iran may be over,
the SOH double blockade is not, and lingering
elevated energy (oil & gas) may drag Wall Street & Main Street down.
● Apart
from Iran war ceasefire optimism, earnings & AI/big tech optimism are also helping Wall Street.
● At
around $1642 EPS for CY25 (GAAP) and 50000 levels, the current PE is 30 for
DJ-30, at the historical
bubble zone.
Wall Street
futures surged over 10% in April on hopes & hype of an imminent peace deal
between Iran and the US. The US-Iran peace talks remain stalled in a tense
"no war, no peace" standoff, now roughly 60+ days into the conflict.
The core dispute is Iran's nuclear program: the US (under President Trump)
demands a comprehensive deal that permanently prevents Iran from developing
nuclear weapons, while Iran wants to de-escalate other issues first and
postpone nuclear discussions.
Key Recent
Developments
● Ceasefire
Extended but Fragile: A temporary ceasefire (agreed
earlier in April) has been extended for an unspecified period
until a deal is reached with Iran (as per Trump), but
it remains shaky. Talks mediated in Pakistan
(including rounds involving US envoys) have
repeatedly stalled or been called off. Iran’s leadership is fractured, with
internal tensions between hardliners and moderates complicating negotiations.
Iran’s Ghalibaf
and Pezeshkian said to seek Araghchi’s removal.
Iranian President
Pezeshkian and Parliament Speaker Ghalibaf may be looking to remove Foreign
Minister Araghchi from his post. According to Iran International, citing two
sources with knowledge of the matter, the move is due to allegations that
Araghchi conducted nuclear talks with the US without properly informing
President Pezeshkian. The report states that Ghalibaf and Pezeshkian raised
concerns that Araghchi consulted the Islamic Revolutionary Guard Corps (IRGC)
head Ahmad Vahidi rather than the president before negotiating with the US.
This initiative
comes amid President Pezeshkian’s broader frustration over being left in a
“complete political deadlock” and having limited ability to appoint new
officials. The reported internal rift surfaces as US President Trump has
repeatedly claimed there are deep divisions within the Iranian leadership,
which he blames for Tehran’s failure to reach an agreement with Washington. Iran
has dismissed Trump’s comments on the divisions and has signaled its readiness
to negotiate if the US first lifts its naval blockade.
●
Trump Rejects Iran's Latest Proposal:
●
The SOH Naval Blockade Remains in
Place: Trump has stated the US naval blockade of Iranian ports
will not be lifted until Iran agrees to a full non-nuclear deal. He described
the blockade as "more effective than the bombing," saying Iran is
"choking like a stuffed pig" and that pressure will only increase. He
urged Iran to "get smart soon" and sign a proper deal, conceding
defeat to the US.
Trump warns of
escalation if Iran ceasefire ends: Last week, Trump said if the Iran
ceasefire expires, “lots of bombs start going off.” He said the US demand in
ongoing talks is simple: Iran must give up any nuclear weapons ambitions. If
diplomacy fails, he signaled immediate escalation.
Trump tweeted,
urging Iran to ‘give up’ (surrender)
● Iran
has just informed us that they are in a “State of Collapse.” They want us to
“Open the Hormuz Strait,” as soon as possible, as they try to figure out their
leadership situation (Which I believe they will be able to do!). Thank you for
your attention to this matter! President DONALD J. TRUMP
● I
have ordered the United States Navy to shoot and kill any boat, small boats
though they may be (Their naval ships are ALL, 159 of them, at the bottom of
the sea!), that is putting mines in the waters of the Strait of Hormuz. There
is to be no hesitation. Additionally, our mine “sweepers” are clearing the
Strait right now. I am hereby ordering that activity to continue, but at a tripled-up level! Thank you for your attention to this matter.
President DONALD J. TRUMP
Trump has posted
on Truth Social, urging Iran to “just give up” amid the ongoing conflict and
stalled negotiations. Trump stated that the US naval blockade of Iranian ports
is working effectively and is putting severe pressure on Tehran. He warned that
Iran “can’t get their act together” and “doesn’t know how to sign a non-nuclear
deal.” In the post, Trump added, "They better get smart soon!” and
included an AI-generated image of himself holding an assault rifle in front of
explosions, captioned “NO MORE MR. NICE GUY!”
Trump weighs Iran
war options as China trip approaches.
Several US media
outlets are reporting that President Trump’s upcoming visit to China may
influence his decision-making regarding the ongoing conflict with Iran. An
unnamed White House official told NBC News that the China trip is among the key
factors Trump is considering as he weighs his options on Iran. The visit, now
scheduled for May 14 and 15 after being delayed earlier due to the start of the
war, is described as a “priority” that the White House does not want to
postpone again. The New York Times reports that the twin blockades—on the
Strait of Hormuz and Iran’s ports—are complicating matters ahead of this
high-stakes trip to China.
Beijing has
expressed its desire to play a “constructive role” in ending the war. However,
the Trump administration has imposed sanctions on several Chinese oil
refineries and shipping companies accused of trading in Iranian oil that is
under US sanctions. Like many of its neighbors, China imports a significant
portion of its oil through the Strait of Hormuz, which has largely remained
closed since the beginning of March.
Trump posted on
his Truth:
● For
those people, fewer in number now than ever before, who are reading The Failing New York Times, or watching Fake
News CNN, who think that I am “anxious” to end
the War (if you would even call it that!) with Iran, please be advised that I
am possibly the least pressured person ever to be in this position. I have all
the time in the world, but Iran doesn’t—the clock is ticking!
● The
reason some of the media are doing so
poorly with subscribers and viewers is that they no longer have
credibility. Iran’s navy is lying at the
bottom of the sea, its air force is demolished, its
anti-aircraft and radar weaponry is gone, its leaders are
no longer with us, and the blockade is airtight and strong,
and, from there, it only gets worse. Time is
not on their side! A deal will only be made
when it’s appropriate and good for the United States of America, our allies, and, in fact, the rest of the world. President DONALD J. TRUMP
Ahead of the
midterm elections, Trump is now in the doldrums.
As the US media
and the public are still not believing that the US (Trump) has "won"
the war against Iran, any ‘undue concessions’ to Tehran may further damage
President Trump's political prospects going forward. The prolonged conflict,
now in its third month, has failed to deliver a clear and decisive victory in
the eyes of many Americans. Despite Trump's repeated claims that the naval
blockade is "incredible" and devastating Iran's economy, polls show
low public approval for the military action and widespread skepticism that the
administration has achieved its main goals—particularly the permanent
dismantling of Iran's nuclear program.
Rising oil and
gasoline prices due to the disruptions in the Strait of Hormuz have added to
domestic frustration. With the 2026 midterm elections approaching, Republicans
are increasingly concerned that the unresolved Iran situation, combined with
economic pressures, could hurt their chances of holding Congress. This has put
Trump in a difficult position: continuing strong pressure or military
escalation risks further war fatigue, while making significant concessions to
Iran could be portrayed as weakness and damage his image of strength.
Trump remains
confident Iran will eventually make a deal on his terms.
US President
Trump has repeatedly stated that Iran will ultimately be forced to make a deal.
For a long time, he has claimed that Iran has been effectively destroyed and is
under immense pressure. Trump continues to insist that he can wait as long as
necessary, or as long as he decides. He remains firmly convinced that the
combination of the US naval blockade on Iranian ports, the closure of the
Strait of Hormuz, and the harsh economic sanctions will intensify pressure on
Tehran to the point where Iran will have no choice but to return to the
negotiating table on America’s terms.
Despite signs
that Iran is continuing to hold out, President Trump maintains — at least
publicly — that the strategy is working and that Iran will eventually
capitulate. He has also emphasized that the current ceasefire is open-ended and
that the decision to continue or end it rests solely with him. According to
reports, Trump has been presented with multiple scenarios by his military and
intelligence advisers outlining possible next steps if the ceasefire is not
extended. These include renewed armed action or further intensification of
economic measures. However, Trump has made it clear that the final decision on
what happens next will be made by him alone.
Iran is not ready
to negotiate under Trump’s “gun at the head”.
Iran appears
unwilling to enter serious negotiations while the US maintains its current
hardline pressure, including the naval blockade and sanctions. Iran may be
deliberately holding out, waiting for the outcome of the upcoming US midterm
elections in November 2026. Iran is reportedly hoping that a weaker political
position for President Trump and the Republicans could force Washington to
offer more favorable terms or reduce pressure. This strategy comes amid deep
internal divisions within Iran’s leadership and its refusal to accept a deal
that fully dismantles its nuclear program under the current US demands.
Meanwhile, President Trump continues to insist that the economic blockade and
sanctions will eventually break Iran’s resistance, stating he is prepared to
wait as long as necessary.
Current Stance
from Both Sides
Trump/US
Position: No deal without ironclad guarantees that Iran will never acquire
nuclear weapons. The blockade is the primary leverage tool, combined with
sanctions that are severely damaging Iran’s economy (oil revenue collapse,
hyperinflation, and frozen assets). Trump has signaled he is not under pressure
and is prepared for a prolonged blockade or "short and powerful"
military options if needed. He has also spoken with Putin about the issue, but
prioritized other matters like Ukraine.
Iran’s Position: Willing to
de-escalate in the Gulf (Hormuz reopening) but resists immediate concessions on
its nuclear and missile programs. Iranian officials insist they will safeguard
these capabilities. The regime is under heavy economic strain but has not fully
capitulated.
Overall tensions
remain high across the region as the US, Iran, and Israel continue to trade
warnings amid a fragile ceasefire that has been extended since April 7, despite
reported violations. President Trump has signaled that Washington “might need”
to restart the war with Iran. He stated that he has not ruled out resuming
military action, while claiming that Iranian leaders “want to make a deal
badly.” Trump added that only a handful of people know the real status of the
ongoing talks. Iran’s President Masoud Pezeshkian has described the ongoing US
naval siege of Iranian ports as an “extension of military operations” that is
“intolerable.” The US naval blockade of Iranian ports and the disruption in the
Strait of Hormuz continue, contributing to oil prices surging to four-year
highs, with Brent crude briefly rising above $126 per barrel.
Both sides are
replenishing munitions.
As the fragile
ceasefire enters Day 63, both the United States and Iran are actively working
to replenish and restore their munitions and military capabilities.
On the Iranian
side, Tehran is using the pause in major hostilities to reconstitute its
missile and drone forces. Iranian officials claim they are replenishing missile
launchers and boosting drone production at a faster rate than before the war,
recovering hidden launchers from caves and bunkers, and attempting to restore
operational units despite significant damage to their production
infrastructure.
On the US side, the Pentagon and
military leadership are accelerating efforts to rebuild depleted stockpiles.
The intense fighting has consumed large quantities of key munitions — including
Tomahawk missiles, Precision Strike Missiles (PrSM), THAAD interceptors, and
Patriot missiles — with reports indicating that more than half of pre-war
inventories of several critical systems have been expended. US officials state
that munitions stocks are being rushed to the region and production is being
ramped up.
This mutual
rearming is occurring while the naval blockade remains in place and diplomatic
talks stay stalled, raising concerns that both sides are preparing for the
possibility that the ceasefire could collapse. Iran appears prepared for the
prolonged blockade, having stockpiled oil and relying on its large domestic
market, making it resistant to quick concessions.
Trump has also
highlighted the damage inflicted on Iran’s drone and missile capabilities and
predicted that petrol prices will fall once the conflict ends. A senior US
administration official stated that hostilities with Iran have “terminated” for
the War Powers Resolution, following the agreed ceasefire. The situation
remains deadlocked, with both sides maintaining their positions — the US
insisting on a comprehensive nuclear deal, and Iran resisting negotiations
under current pressure.
Talks are ongoing
indirectly (via mediators like Pakistan), but no breakthrough is imminent. The nuclear red
line remains the main obstacle. Trump appears confident in the US position of
strength via the blockade and sanctions, while Iran is trying to separate
immediate de-escalation from its long-term strategic capabilities.
On May 1, 2026,
Iran says it has sent its latest proposal to the US via Pakistani mediators. Iran has
delivered its latest proposal to the United States through Pakistani mediators,
according to Reuters. The proposal focuses on reopening the Strait of
Hormuz, ending the war, and includes a suggestion to postpone nuclear
negotiations to a later stage. This move comes as indirect talks remain
stalled, with Pakistan continuing to play a key mediating role between the two
sides. The latest Iranian offer essentially seeks an end to the US naval
blockade and hostilities in exchange for reopening the Strait of Hormuz, while
deferring the core issue of Iran’s nuclear program.
No immediate
response from the US side has been reported. President Trump and his
administration have previously rejected similar proposals that delay nuclear
discussions, insisting on a comprehensive deal that addresses Iran’s nuclear
ambitions upfront. This development occurs on Day 63 of the conflict, amid
ongoing mutual re-arming, internal Iranian political tensions, and growing
pressure on both sides due to the economic impact of the closed Strait of
Hormuz.
Iran’s Foreign Minister Araghchi: Tehran is ready to pursue diplomacy
Iran’s Foreign
Minister Abbas Araghchi stated that Iran’s armed forces remain fully vigilant
amid the ongoing tensions. During a phone call with EU Foreign Policy Chief
Kallas, Araghchi discussed the regional situation and broader international
issues. Araghchi said Tehran is ready to pursue diplomacy, but only if the
United States changes its “excessive demands,” stops its threatening rhetoric,
and halts provocative actions. He also accused the United States of being “the
main source of insecurity” in the Strait of Hormuz. These comments reflect
Iran’s firm stance that it will not negotiate under pressure while maintaining
military readiness.
On May 1, 2026,
Trump spoke on Iran: Rejected Iran’s latest peace proposal. He stated that
when the war ends, oil, gas, and energy prices will come tumbling down. Trump
described the US naval blockade as "powerful" and said it has been
highly effective. He noted that negotiations with Iran are not
progressing well right now, adding, “I just had a conversation with Iran. I am
not happy. Let’s see what happens.” Trump expressed dissatisfaction with
Iran’s latest proposal, saying, “I am not satisfied with the latest proposal.”
He said Iran “wants to make a deal,” but added that “we made strides in
talks, but I’m not sure we’re going to get to a deal.”
On Iran’s
leadership, Trump remarked that “Iranian leaders don’t get along with each
other” and claimed that even the hardliners in Iran want to make a deal. He
reiterated that “Iran has no military left.” On potential military options,
Trump said the choice is simple: “Either blast them away or make a deal.” When
asked about possible strikes, he replied, “Why would I tell you that?” Trump
expressed confidence in US military resources, saying he is “not worried about
the US missile inventory” because the country has ample supplies worldwide.
These comments come amid stalled negotiations, with the fragile ceasefire still
in place and the naval blockade continuing.
On May 1, 2026,
Trump notifies Congress that US hostilities with Iran are over — for now.
According to
Semafor, President Trump informed congressional leaders on Friday — the 60th
day of the Iran war — that US ‘hostilities’ with Tehran have ended for the time
being, and therefore do not require congressional authorization. The move comes
amid growing debate over the War Powers Resolution, which requires the
President to seek approval from Congress for any military conflict lasting
longer than 60 days. Several Republican senators have warned that if the
conflict continues beyond the 60-day mark, Congress must formally authorize it.
However, Trump has argued that the war is effectively over, and that the
60-day clock would restart if hostilities resume. The position has created
confusion and pushback even within his own party. Some lawmakers are concerned
that this interpretation could set a dangerous precedent, potentially weakening
Congress’s constitutional power to authorize — or stop — future wars.
Trump says he is
not satisfied with Iran’s latest proposal.
US President
Trump stated that he is not satisfied with Iran’s latest proposal aimed at
permanently ending the war between the two countries. Speaking to reporters
outside the White House, Trump said: “They want to make a deal, but I’m not
satisfied with it.” He added that while Iran has “made strides” in the
negotiations, he is “not sure if they ever get there.” Trump once again
described Iran’s leadership as “disjointed,” repeating his earlier claim that
the Iranian side is internally divided and struggling to present a unified
position.
Trump confirms
military briefing on Iran and outlines two clear options.
US President
Trump has confirmed that he was briefed this week by US Central Command chief
Admiral Bradley Cooper on potential military options against Iran. Speaking to
reporters outside the White House, Trump said: “Do we want to go and just blast
the hell out of them and finish them forever, or do we want to try and make a
deal — those are the options.” He added that, on a “human basis,” he would
prefer not to bomb Iran, but stressed that he also does not want Iran to
possess a nuclear weapon. Trump once again described Iran’s leadership as
“disjointed,” saying different factions within Iran want different types of
deals with the United States. “They’re not getting along with each other, and
it puts us in a bad position,” he remarked. When asked what specifically he is
unhappy with in Iran’s latest proposal, Trump replied: “They’re asking for
things that I can’t agree to.”
On a separate
matter, Trump confirmed that he still plans to host the leaders of Israel and
Lebanon, despite limited progress so far. Lebanese President Joseph Aoun has so
far resisted direct engagement with Israeli Prime Minister Benjamin Netanyahu
due to strong domestic pressure and threats from Hezbollah.
Trump says he's
‘not going to leave’ Iran conflict early
Continuing his
remarks in Florida, Trump said he will not end the conflict with Iran
"early" without achieving US objectives. “We’re not going to leave
early and have this kind of problem arise in three more years,” Trump said.
Iran rejects
Trump’s claims of leadership fracture, calls it “psychological warfare,” and
demands a permanent end to the war with guarantees.
Iranian officials
have stated that they want a permanent end to the war on all fronts, along with
firm guarantees that attacks will not resume. Citing deep mistrust toward the
United States — especially after being attacked twice in less than a year — Iran
is linking any meaningful progress in negotiations to the immediate lifting of
the US naval blockade on its ports. Iranian officials have signaled they are
open to further negotiations, but only if the issue of the blockade is resolved
first.
China says an
Iran war ceasefire must be maintained.
China’s
ambassador to the UN says it is of crucial importance that the ceasefire in the
US-Israel war on Iran remains in place. Fu Cong told reporters at the UN that
the Strait of Hormuz needed to be reopened as quickly as possible. He said
China was very concerned about remarks it had heard recently about the
ceasefire being temporary and the need to initiate another round of attacks.
“Iran needs to lift its restrictions on the Strait of Hormuz, and the US needs
to lift its naval blockade,” he said. “The most urgent issue is to keep the
ceasefire. And the ceasefire needs to last, and there has to be a good-faith
negotiation between the two sides,” he said. “I think the international
community should be mobilized and raise our voices against the resumption of
fighting.”
Asked about
Trump’s visit to China scheduled for this month, he said, "I'm sure if [the
Strait of] Hormuz is still closed by the time President Trump goes to China,
this issue will be high on the agenda of the bilateral talks." The
ambassador rejected allegations from some US officials about military
cooperation between China and Iran as “false.”
Conclusions
Trump is demanding a 20-year nuclear enrichment
ban for Iran, while Iran is now offering 5 years for that. Although Iran and
the US may agree on a 10-year nuclear enrichment ban (middle ground), Iran may
not compromise with its missile programs and the SOH leverage. It will ensure joint ownership along with
Oman for the SOH toll tax system for the reconstruction effort. But Trump may
not be in a position to accept such concessions for Iran, as it may further
damage his political prospects ahead of the November '26 mid-term election,
which Trump is set to lose pathetically despite another ‘attempt on his life’
on April 25 in the WHCD programs.
Trump is now seeking an immediate face-saving
exit from his Iran war mess. President
Trump is reportedly looking for a quick and face-saving way to end the ongoing
conflict with Iran, as the war has become increasingly problematic for his
administration. According to sources close to the situation, Trump may have
initiated the military campaign against Iran partly under pressure from Israeli
Prime Minister Benjamin Netanyahu. Some observers have even speculated that the
Epstein files could have played a role in influencing Trump’s decision.
The war was also seen as a potential strategy to
divert growing public attention away from the ongoing trade and tariff
disputes, as well as the recent Supreme Court controversies, ahead of the
critical November 2026 midterm elections. However, the plan appears to have
backfired. While the conflict initially boosted military-industrial production,
the sharp rise in energy prices — particularly gasoline — has fueled higher
inflation, which is now causing more economic damage to the United States than
the short-term benefits gained from increased defense manufacturing. As a
result, Trump is said to be actively seeking an honorable exit from his “Iran
war mess.”
Trump may extend the Iran ceasefire by up to 3
months, potentially until the November 2026 midterm elections. President Trump is reportedly considering
extending the current ceasefire with Iran for another 90 to 180 days. This
would likely push any major decisions or potential resumption of hostilities
until closer to or after the November 2026 midterm elections. Analysts believe
Trump is not in a strong position to launch another full-scale military
campaign ahead of the elections. Instead, he is expected to use the period
until October 2026 to push aggressively for what he calls a “great Iran deal” —
a comprehensive nuclear agreement that he can present as a major diplomatic
victory.
However, a significant trust deficit exists
between Iran and the United States. Iran is unwilling to surrender under direct
American pressure, particularly by allowing the continued US naval blockade or
handing over its highly enriched uranium (the so-called “nuclear dust”)
directly to Washington. One possible middle path being discussed involves China
playing a mediating role. Under this scenario, China could take delivery of
Iran’s highly enriched uranium stockpile as a third-party guarantor. The Strait
of Hormuz remains almost completely closed under a double blockade — the US
blocking it from the outside and Iran maintaining restrictions from within.
This has caused oil prices to surge again, putting immense pressure on Trump
both domestically and internationally to reach a fair deal and reopen the vital
waterway.
With gasoline prices rising and inflation
concerns growing, Trump is under heavy pressure to secure a face-saving exit
from the Iran conflict. Despite strong performance in the stock market, lower
energy prices are seen as politically critical ahead of the midterms. Many
observers believe Trump may ultimately be forced to blink first to bring down
oil and gasoline prices for American voters.
As both Trump and
Iran are also seeking a face-saving deal to satisfy respective domestic
political compulsions, both may approach China (as a neutral, reliable
superpower) to take care of Iran’s so-called ‘nuclear dust,' which may pave the
way for a durable nuclear deal between the US and Iran. This may also lead to
the reopening of the SOH (Chinese interest) and help to lower energy costs for
Trump (ahead of the November '26 midterm election).
In reality, even
if the SOH reopens immediately, it may take at least 6 months for the
restoration of the supply chain of Middle East oil & gas, as the underlying
infrastructure needs time for restoration from Iran's war-related damages.
Thus, oil may not dip much below $88-85 in the coming days, which may not be
good for net oil-importing countries and even the US, the biggest producer
& consumer of oil in the world now. Lingering elevated oil/energy/gasoline
prices and a higher cost of living may affect US discretionary consumer
spending, economic growth, and employment. In such a scenario, both Main Street
and Wall Street are bound to suffer, and Trump is bound to capitulate first
from his warmongering to his Nobel Peace Prize narrative (‘peace through strength’).
The Iran war may have already cost the US exchequer at least $100B directly and
indirectly, much more in 5 weeks of active conflict.
Trump’s Iran war
may be over, but the SOH blockade is not until Iran signs a favorable
(face-saving) peace deal. Trump may not launch another full-scale Iran war
ahead of the midterm election (November '26) and the FIFA World Cup
(soccer/football) in June-July '26. But Trump is also seeking a face-saving
exit from his Iran war mess. He is now basically demanding that Iran surrender
and acknowledge 'defeat,' as they now have no military, air force, air defense,
or naval force. Trump likes to see an acknowledgement from the US media &
public that he has ‘won’ the Iran war. In the absence of that ‘winning’
narrative, Trump may again try to lift out the ‘nuclear dust' from Iran and
declare 'victory.' But Iran may not oblige so easily this time, and if Trump/Iran
does not agree to shift the ‘nuclear dust’ to a neutral & responsible
superpower like China, then Trump may try to ‘snatch’ the nuclear dust.
Market impact
After a terrible
March amid Iran war panic, Wall Street futures recovered fully and surged in
April on hopes & hypes of an imminent Iran peace deal, a permanent
ceasefire, and the full reopening of the SOH. The broader SPX-500 rose over
+10% after losing almost 6% in the last two months. Similarly, tech-heavy
Nasdaq-100 surged almost 16% in April against a 7% plunge in March &
February, while blue-chip DJ-30 soared over 10%. In April, after plunging
almost 6% in the last two months. Apart from hopes & hypes of an Iran peace
deal, earnings optimism also helped. Overall, industrials led by Caterpillar
helped amid war stimulus, while techs dragged to some extent on valuation
concerns. Gold tumbled -11.17% in March, following +11.00% rallies in February,
and slipped -0.69% in April. Oil (WTI) gained +3.64% after zooming +51.27% in
March and +17% in January & February. The 10YUST gained around +11% in
March & April, followed by a -6.58% fall in February.
The traditional
relationship between gold vs. DXY (inverse) and UST (direct) has almost broken,
and gold is now not acting as a safe haven asset that should rise along with a
higher intensity of war; it’s moving inversely to oil. This may be
because oil-heavy Middle East investors/sovereigns were selling gold (at huge
profit after accumulating it post-2022 Ukraine war) to fund the rising deficit
and lower revenue from oil. Middle East/GCC oil & gas producers are not
being able to sell/export sufficient oil due to the Strait of Hormuz (SOH)
double blockade. But if the Iran war finally ends along with the double
blockade in the SOH, oil should fall to at least $80-70 levels, and gold may
recover from around $4400-4100.
Fair Valuation of
DJ-30: Is it running much ahead of the underlying fundamentals at the current
PE of around 30?
The CY25 EPS
(GAAP) of the DJ-30 was around 1642 vs. 1509 in CY24 and 1470 in CY21. (index
weightage average). The average run rate is around 7.4%; assuming a 10%
projected rate for CY 26-28, the projected fair value may be around
40639-44703-49173. At around 50000 (CMP), the YE PE was around 30. The Dow
Jones Industrial Average (DJ-30) should correct going forward as it reaches the
historical bubble zone. Lingering Iran war & trade/tariff war tensions;
higher oil; the potential stagflation/recession; gradual de-dollarization; a
multipolar world (led by China/the Yuan); and the AI bubble (GCC investors may
back off after the Iran war tragedy) might be some of the potential triggers,
along with Trump’s chaotic policies. Also, Trump’s Iran war may result in another
9/11-type incident (Laden & Co.) in the U.S., and it may be an easy target
of terrorism.
Technical
outlook: DJ-30, NQ-100, SPX-500, oil, and Gold
Looking ahead,
whatever may be the narrative, technically Dow Future (CMP: 49900) now
has to sustain over 50700 for a further rally to 51000-51500 in the coming
days; otherwise sustaining below 50500/50000-49500/48600, DJ-30 may fall to
47600/46600 and 46000/45700*-45200*/45000 and 43800/43000-42000/39000-36800 in
the coming days (base-to-worst-case scenario).
Similarly, NQ-100
Future (27800) now has to sustain over 28200 for a further rally to
28500-26000 in the coming days; otherwise, sustaining below 28100-27800 may
fall to 27400-27000 and 26600/26300-26000/25600, NQ-100 may again fall to
24600/24400-24000/23900, and further to 23600/23300-22800/22400 and 21900-21000
in the coming days.
Looking at the
chart, technically SPX-500 (CMP: 7300) now has to sustain over 7600 for a
further rally to 8000-8300 in the coming days; otherwise, sustaining below
7550/7500-7300/7200 and 7100-6900, it may fall to 6835/6700 and further
6600-6500/6450 and 6350/6300-6250/6180 and 5860-4800 in the coming days.
Looking ahead,
whatever may be the narrative, technically oil (CMP: 102) now
has to sustain over 80/87-112/115 for a further rally to 121/125-130/155 and
even 185-200 in the coming days (best-case bubble scenario—if the Iran war
escalates further into a major global war or the SOH blockade lingers further).
On the flip side, if oil sustains below 112/110-105/98, it may again fall to
94/90-84/80* and 70/67-64/60 and 54/50 in the coming days.
Bottom Line:
Summary
The worst of the
Iran war may be over, but the SOH double blockade is not, and the overall
uncertainty remains. Although Trump may not launch an all-out Iran war again
due to various reasons, he may launch another surgical strike on Iran’s nuclear
facilities to snatch out the ‘nuclear dust’ and declare a unilateral 'victory.'
As the largest producer of oil and military equipment (industrial goods), the
US may be the biggest beneficiary of the Iran war. Also, the global reserve
currency status of USD (unlimited printing without any big devaluation risk)
and AI optimism are helping Wall Street, although Main Street may face
stagflation due to higher energy prices (oil & gas). The lingering blockade
of the SOH is more harmful for oil-importing economies like the EU, Asia
(India, Japan, and SK), and even China (despite its huge strategic reserve and
EV dominance).
Disclaimer:
• I have no position or plan to have any position in the above-mentioned financial instruments/assets within the next 72 hours.
• I am an NSE-certified Level-2 market professional (Financial Analyst- Fundamental + Technical) and not a SEBI/SEC-registered investment advisor. The article is purely educational and not a proxy for any trading/investment signal/advice.
• Please always consult with your personal financial advisor and do your own due diligence before any investment/trading in the capital market.
• I am a professional analyst, signal provider, and content writer with over ten years of experience.
• All views expressed in the blog are strictly personal and may not align with any organisation with which I may be associated.
• If you want to support independent & professional market analytics, you may contribute to my PayPal A/C: asisjpg@gmail.com
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