Market's Next Steps at End of Trump’s 5-Day Iran Pause

Trump White House

And just like that, the market is back where it was earlier this week as oil prices bounce back as we approach President Trump’s five-day pause with Iran nears its end.

Amid headlines raising questions over the prospect of a peace deal, given comments on Thursday from Trump that he was not sure he was "willing to make a deal with them to end the war," reports indicate that more shipping traffic movement in the Strait of Hormuz. Not surprisingly, this is becoming a nail-biter of a situation as we approach the end of the week, and we would not be surprised to see Trump extend his five-day pause to give more time for talks.

That thinking meshes with the comment we shared on Thursday morning from Trump, “that he wants to avoid a protracted war in Iran and that he hopes to bring the conflict to an end in the coming weeks.” Call us cynical, but with Trump’s approval rating falling, polling is also showing scant support for the conflict.

On Tuesday, a Reuters/Ipsos poll found that 61% of respondents disapproved of the U.S.’s strikes against Iran. Similarly, 61% disapproved of Trump’s performance as president.

A Quinnipiac University poll released Wednesday also found that 42% of registered U.S. voters believe the war makes the world less safe. Even a survey by Fox News found 58% of American voters oppose the war.

Layer in the conversation we’ve been having about inflation pressures, and the prospect of at least short-term supply disruptions in certain sectors, and we suspect the president is doing some quick calculus about the upcoming mid-term elections. We won’t even mention the Democrats flipping the Republican-held Florida state House district that includes Trump's Mar-a-Lago.

While Trump isn’t one to admit defeat, our thinking is that he is looking for a soft off-ramp to limit the potential damage to the economy and the midterms. Iran, meanwhile, is likely doing its own assessment of the landscape, with indications pointing to the potential for a toll system, where ships would need to pay for safe passage through the strait. The same reports indicate that a completed draft bill will be completed by next week, which gives us another reason to think in weeks, not days. It’s also another reason why we could see Trump extend his current pause.

If Trump delivers such an extension, odds are that the market will find that reassuring that a path to a peaceful resolution is in the cards. Even if that is what happens, we recognize the market will likely continue to trade day to day based on the latest headlines, much the way it has this week, until a final agreement is reached and the details are shared.

In that environment, we will continue to flesh out our shopping list for the Portfolio and new candidates for the Bullpen. If you missed my comment on the Bullpen in Thursday's video, we shared that we are starting to do some work on Boeing (BA) shares. We also discussed the share price to net asset valuation gap between SuRo Capital (SSSS) shares and those for the Fundrise Innovation Fund (VCX). If you missed that, I’d recommend checking it out.

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At the time of publication, TheStreet Pro Portfolio was long SSSS.