The next week for the stock market could be brutal with the odds of a cease fire deal being low even as the U.S.seeks an exit with Iran's Speaker Ghalibaf.
I had posted an interesting report from Heisenberg, suggesting that a possible deal could be made with Bagher Ghalibaf. The Wall Street Journal had reported that there were off ramp negotiations of a deal between the US and Iran to install Ghalibaf as a leader possibly acceptable to the U.S. Given that the Israeli Defense Force has assassinated the vast majority of the Iranian Revolutionary Guards, Ghalibaf remains the last man standing. Apparently the IDF had him under sight, but held off because the US stated that they didn't have anyone else to talk to.
He’s not a cleric, but has strong ties to Mojtaba Khamenei, the assassinated Ayatollah’s son, (reportedly incapacitated but alive), and even though his title is the Speaker of the parliament, he has roots in the IRCG. He could run the country as a quasi-elected,military-aligned, non-clergy hardliner with enough clout and political capital to keep the situation from unraveling, further.
These are the main demands from the U.S.:
Nuclear program dismantlement, an enrichment ban, a handover of stockpiles, restriction of its missile program, a permanent reopening of the Strait of Hormuz to international shipping, with Iran renouncing its claim of sovereignty over the passage, and ending support to Permanent regional proxy groups, such as Hezbollah.
What is Iran proposing?
A complete halt to aggression by the U.S. and Israel, non-aggression guarantees, war reparations, a formal termination of the war across all fronts, sovereignty over the Strait of Hormuz, and full relief from sanctions.
As you can see they are galaxies apart - wishful thinking on both sides, and it would be a really herculean task taking this further.
Why would the Iranians trust the US? In prolonging the conflict, Iran continues to gain the upper hand by inflicting economic pain on the rest of the world with control of the Straits of Hormuz. Oil is about 30-40% higher, 17% of the world’s LNG facilities have been destroyed, inflation could reach up to 4% in the US, and there are massive shortages of oil, diesel and LNG in several parts of Asia. In Europe, all petroleum resins and naphtha prices have shot up dramatically again with no supply clarity. Hardly 150 ships have pass the Straits of Hormuz since the war began compared to about 140 ships passing per day!
Giving in now weakens its upper hand, and why on earth would they give up their nuclear ambitions after so much damage, and a very strong chance of getting attacked with any deal getting reneged upon. They had a meeting just two days before the US and Israel decided to bomb Iran! I would be surprised if they would trust the U.S. / Israel. Ghalibaf will also be exposed to Iranian’s who’ve died for a cause only to see the old guard replaced by a U.S. puppet continuing to brutalize the Iranian people. And even with a deal a shadow war with skirmishes could continue forever, a quagmire without any solutions. Where would Israel draw a line in a possible deal - a hardliner like Ghalibaf will continue to bait Israel, at least as a survival tactic to remain in power in Iran.
I think the odds of even a cynical, self-serving deal like this are low, unless Ghalibaf really fears for his life, and the U.S. desperately needs a face saving measure to walk away, realizing that the quagmire is impossible to stomach.
The next week in the stock market could be brutal. The Nasdaq Composite has corrected with an 11% drop from its high, and the S&P 500 at 6.368 after breaching its 200 Day Moving Average of around 6,570 is teetering on the edge of a 10% correction at 9% off its high.
