The Iran “Deal” Isn’t What It Seems

**Ed Elson** (0:00)
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**Ed Elson** (2:05)
Thank you.
Welcome to Prof G Markets. I'm Ed Elson. It is June 16th. Let's check in on yesterday's market vitals.
The major indices rallied on news that the US and Iran have an agreement. More on that in a second. The Dow hit a fresh high. Brent Crude fell below $80 on hopes that the straight will finally and truly reopen. Meanwhile, Treasury yields and the dollar fell. SpaceX shares soared 20% in their first full day of trading. And Fox tumbled 15% after announcing its acquisition of Roku for $22 billion.
OK, what else is happening? The US and Iran have reached a deal again. After 107 days of war, the two sides agrees to a memorandum of understanding. It includes a 60-day ceasefire, the reopening of the Strait of Hormuz, and a halt to fighting in Lebanon. A formal signing is set to take place on Friday in Geneva, but the big negotiations like Iran's nuclear program, sanctions relief and frozen assets are all deferred to the next two months. Meanwhile, Israel says it is not bound by the deal, and its forces will stay in Lebanon indefinitely. Still, Brent Crude fell more than 5% on the news of the pending peace deal. Here to help us unpack what this deal actually means, we're speaking with Karim Sadjadpour, Senior Fellow at the Carnegie Endowment for International Peace. Karim, thank you so much for joining us on the show today. This is really important news. I think the place I'd like to start is a place of skepticism. That is, we've had deals with Iran before. Trump said we had a ceasefire back in April, then he said we had a framework of a ceasefire. He said that the deal was in its final stages in May. He said it was all largely negotiated. We've had plenty of alarms. The question on this news is, is this also a alarm or is this different?

**Karim Sadjadpour** (4:20)
I'm not going to try to disabuse you of your skepticism because I share it. I think there's a couple of big questions. Number one is whether indeed we do have a memorandum of understanding. At the moment, you could call it a memorandum of misunderstanding because the US version of this MOU is very different than the Iranian version of this MOU in terms of what kinds of economic relief are going to be provided. What are Iran's nuclear commitments going to be? The future of the Strait of Hormuz? Virtually every single major issue appears at the moment unresolved. So that's one of the big questions.
The second is if indeed the two sides can agree on a common memorandum of understanding, what happens next? The most difficult questions have been deferred for future negotiations. The two sides have given themselves 60 days to resolve those issues of tension, like most notably the nuclear issue. But there's very little chance that those issues are going to be resolved over 60 days. So bottom line for me, this isn't a resolution of the US-Iran conflict. We may have temporarily paused a hot war and gone back to a Cold War.