An Iran Peace Deal Could Be Getting Close — and Here’s the Case for Another Bullish Trump Rally

Broad markets got a nice boost going into the midweek as hopes for an Iran-U.S. peace deal spiked. Undoubtedly, things could go either way as the U.S. awaits Iran’s response to its one-page proposal. While much of the market has already moved on from the conflict, I do think that a peaceful resolution would probably drag down oil prices further and add even more enthusiasm to a market that’s been going into overdrive of late.

In any case, investors clearly weren’t willing to wait for the next big move before getting back into the AI trade, which is leading the way again.

The market’s running hot. A peace deal could help extend this wartime rally

Timely peace deal or not, it might be tough to stand in the way of the latest leg of this tech-driven bounce. And with oil back on the descent, perhaps investors could have another shot at punching their ticket at an energy bargain now that the fear-driven buying from a few weeks ago has turned into a profit-taking opportunity.

As capital rotates out of energy and risk-off plays and back towards the same risk-on trade in anticipation of a peace deal, I think there’s also an opportunity to step in and snag value in some names that might be poised to lead the market’s leg higher if a peace deal gets inked and the Strait of Hormuz gets on the path to opening back up for business.

Of course, early flows through Hormuz could be slow, even after the green light is given. But, for the most part, it’s the news of a deal that could be a needle-mover for the firms that stand to benefit from a peace deal. Indeed, shares of some affected names have already been marked down for the headwinds to come.

The “peace deal” winners look buyable right here

So, what are the “peace plays” that could pick up traction if things finally do go well with talks between Trump and Iran?

It’s not just the airlines, which took a heavy blow during the earlier days of the Iran war due to soaring jet fuel prices. Other transports, retailers, and even consumer discretionary stand to catch a bid higher once the end of the war comes into sight.

Take shares of McDonald’s (NYSE:MCD | MCD Price Prediction), which has already felt a bit of the sting from the conflict in the Middle East.

Indeed, the struggles at the Golden Arches began well before the war. But after revealing a new slate of pressures facing the consumer, including “anxiety” over the Iran war, as well as a one-two hit of inflation (higher input costs plus higher prices scaring off some consumers), it’s clear that McDonald’s might be the big winner, given the disproportionate hit it’s suffered since the war began.

The end of the war might take a bit of weight off McDonald’s shoulders. Indeed, it’s certainly acted as salt in the wounds of a company that seems to be treading water amid the K-shaped economy. The low-income consumer is under pressure, but, at the same time, the company must prioritize value that goes beyond the “value menu.”

There’s a lot McDonald’s can do in the meantime

I think McDonald’s might want to take a page out of the Burger King playbook. In a market that demands a beefier high-value proposition, the new-and-improved Whopper is tough to stack up against. While the war in Iran is a harder-hitting headwind for McDonald’s, there are areas in which it can improve as it looks to pick up its value game. In any case, look for a relief rally in the coming weeks as the markets look forward to a peace deal.