Peace in Iran – but for how long?

Markets are decidedly relieved at news that despite unhinged threats from the orange occupant of the White House, a civilisation has not in fact been wiped out and the US reached a temporary ceasefire with Iran. 

But as Trump gets around the negotiating table – let’s hope he can stay awake – how certain can investors be that he will hammer out a more permanent peace deal?

As one Washington correspondent put it yesterday: “Of course, this is just the starting point for the negotiation. But the gap between the Iranian view of a final peace agreement and the American view is so wide that imagining a settlement in two years, much less two weeks, requires some diplomatic jiu jitsu,” he wrote.

Washington and Tehran are still miles apart on what the terms of a permanent settlement would look like. Among other things, Iran has demanded reparations for the damage caused by US attacks, and wants its own army to have the final say on who gets to pass through the Strait of Hormuz, conditions which are a non-starter for Trump.

Trump wants to emerge from the war with a list of concessions from Iran that will please his base. But time is not on his side – he could get punished in the coming midterm elections if rising inflation persists.

So is it really time to pile back into the stock market? There could be many more twists to this saga yet.

In any case, even if a long-term deal is reached, it will not be back to business as usual. Yes, the worst fears of massive fuel shortages have been placated, but the hit to energy plants in the region will take months to repair and years to get back up to normal production levels. Inflation is already making its way through supply chains, irrespective of yesterday’s reprieve. 

The global oil price, while down on last week, is still well above where it was when this conflict began, and regardless, the market price is very different to the sums being exchange when it reaches British shores.

As Peel Hunt’s Kallum Pickering notes: “Even if this truce marks the genuine end of fighting, some economic damage is already baked in – expect higher inflation in the second half of the year and slower growth for major parts of the global economy compared to the pre-war outlook.

The impact on energy production and manufacturing capacity “means some lasting supply-side damage that will only be gradually recovered.”

So despite this week’s balmy weather, it may be premature to start popping the prosecco.

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We are so Back

Makes you proud to be British, doesn’t it? 

An 18-month investigation into the identity of Satoshi, the inventor of Bitcoin, by the New York Times has concluded that it is in fact British computer scientist Adam Back.

Extensive back-and-forths with Back and reporter John Carreyrou had “removed any lingering doubt in my mind that I had the right man,” Carreyrou wrote, despite lacking irrefutable proof.

55-year-old Back is a balding, scrawny-looking nerd. He wears boxy spectacles and worn-out shirts. He would not look at all out of place at a model train convention, nor at the back of a Wetherspoons on an overcast Tuesday morning, nursing a lukewarm bitter. He is, in other words, a quintessentially British middle-aged man, and for that we should be grateful.

To make things better, Back refuses to acknowledge that he has anything to do with Bitcoin. Despite having been asked a million times – by the New York Times, the Financial Times and just about everyone else – Back issues the standard refrain: “Me? Oh don’t be silly. Couldn’t possibly be.” Maybe they all have the wrong guy – or maybe he just has some good old-fashioned British modesty.

Back is a reminder that not all inventors love the limelight. The media often fixates on a handful of mouthy tech entrepreneurs – the Elon Musks, the Mark Zuckerbergs – as though they are the blueprint for what innovators look like. But the reality is for every Elon there are a thousand Adam Backs, quietly tinkering around in the background, without demanding a $100bn compensation scheme for their trouble.

We don’t need to look to Silicon Valley to find the next entrepreneurial flourish. There is plenty of opportunity in London, the city of Back’s birth, as well as deep pools of capital. And there are plenty of bright people like Back, hiding in plain sight. The next one you spot may be sat opposite you in a Spoons.