Regarding US-Iran talks, Wall Street has some "cold water" to pour!

Why Wall Street is cautious about the prospects of US-Iran talks ahead of the 15-point peace plan?

Cailian Press, March 26 (Editor: Huang Junzhi) In recent days, news about the US-Iran peace talks has been frequently reported, and market optimism appears to be returning. The three major US stock indices have risen together for two consecutive days this week. However, Wall Street experts are not as optimistic, instead warning that the uncertainties surrounding the war and its impacts may continue to cast a shadow over investors.

As background: on February 28, the United States and Israel launched airstrikes on Iran, and the situation quickly escalated into a regional war. Iran attacked energy infrastructure in neighboring countries, severely disrupting the transportation of vital waterways for oil and natural gas—namely, the Strait of Hormuz.

Goldman Sachs: Damage will last longer

Lloyd Blankfein, senior chairman and former CEO of Goldman Sachs, warned on Wednesday that even if a “peaceful resolution” could be achieved “by tomorrow,” the damage caused by the Iran conflict “will still persist,” and urged investors to prioritize contingency plans amid the turbulent situation.

In his latest interview, he stated that some market participants may be overly complacent about the outlook of this conflict. He also added that trading based on “everything will be resolved” and trading based on “it will never be resolved” are equally risky.

“People know that even if the war stops tomorrow, the infrastructure has already suffered such extensive damage. Even if a resolution is reached tomorrow, this pressure will last longer—and there’s no reason to believe a resolution can be achieved tomorrow,” he said regarding the Middle East conflict.

Blankfein also pointed out that in recent weeks, energy markets have experienced significant volatility. Investors have been trying to hedge against the shocks from the conflict and digest the long-term impacts of disruptions to global oil supplies. Against this backdrop, he emphasized that investors should avoid blindly following the crowd in trading, adopt a more cautious stance, and “remain flexible and tightly guard” their positions.

“If you set up hedges today, and the situation changes tomorrow, those hedges could become worthless,” he said. “I believe people should have contingency plans in place now.”

JPMorgan Chase: Expect the market to trade sideways

Strategists from JPMorgan Chase’s market intelligence team announced that they have ended their previous tactical bearish outlook on the stock market and shifted to a neutral stance. However, the bank still expects volatility to intensify further.

“We believe that the escalation of the situation is the main reason behind the market’s further decline,” the strategists wrote in a client report. “Without escalation, we expect the market to consolidate sideways, but more likely, we will soon see a decisive move—either toward a ceasefire or toward a new escalation.”

JPMorgan also highlighted concerns related to the “15-point peace plan” proposed by the United States, noting that the plan does not seem to address how to reopen the Strait of Hormuz. It remains unclear whether Iran will drop previous demands, such as compensation claims.

Bespoke Investment Group: Stock market will continue to be volatile

Paul Hickey, co-founder of Bespoke Investment Group, stated that after markets digested the news of the peace plan, global equities appeared to enter a “relief rally,” but due to ongoing uncertainties, upward momentum has begun to weaken.

In a report on Wednesday, he wrote: “However, as we write, reports indicate that Iranian officials rejected the conditions proposed by the US through Pakistan, casting a shadow over the prospects for negotiations. Currently, we have no clear understanding of the actual progress of the talks, and as events unfold, more volatility and reversals are expected.”

Tom Lee: The peace plan could be a turning point for the stock market

Tom Lee, known as “Wall Street’s weatherman” and co-founder and head of research at Fundstrat Global Advisors, said that if reports about the plan are accurate, this could mark a “turning point” for the stock market.

However, he also warned that significant uncertainty remains. He added that investors seem to be adopting a “cautious” attitude toward the development of the war.

“We are in the fog of war, so I’m not entirely sure which information is credible,” Lee stated in a Wednesday release. “I expect to hear all kinds of conflicting claims and reports.”

David Rosenberg: Broader war risks still exist

U.S. economist and president of Rosenberg Research, David Rosenberg, said that broader risks related to the war will continue to weigh on the markets.

In a client report, he wrote: “Despite ongoing peace efforts, the risk of war persists. The White House has delivered a 15-point peace plan to Iran via Pakistan, but Iran’s response so far has been to launch more attacks on Israel and other Gulf countries.”

Trade Nation: Oil prices may show signs of stabilization

David Morrison, senior market analyst at Trade Nation, noted that crude oil prices fell sharply after the announcement of the “15-point plan.” In a report on Wednesday, he stated that if West Texas Intermediate (WTI) crude drops below $80 per barrel and Brent crude falls below $90 per barrel, it would be a “healthy first step,” indicating that oil prices are stabilizing.

He mentioned that it is currently unclear how much Iranian officials know about the plan, and whether Israel will support it. Nonetheless, this news sends the “most explicit signal” to the market that Trump is working toward a resolution with Iran. He also believes that whether the war ends quickly or the US and Israel carry out a full-scale military invasion, neither outcome is desirable.

Oxford Economics: Oil prices may continue to rise due to uncertainty

John Canavan, chief analyst at Oxford Economics, pointed out that the “15-point plan” proposed by the US and recent comments by Trump about the war suggest that progress is being made toward easing tensions between the US and Iran.

“Despite President Trump’s recent remarks, there are no clear signs that the US-Israel-Iran conflict is about to end. Given this uncertainty, oil prices could continue to rise, which would further increase inflation expectations and put upward pressure on interest rates,” he wrote in a Wednesday report.

(Cailian Press: Huang Junzhi)