Your Money: Munich Pact Versus Iran Nuclear Deal

Is an Iran nuclear deal now a fait accompli?

In light of what appears to be a nuclear deal with Iran that likely will be approved by Washington in one way or another, the adage of ‘if we don’t remember history then we are doomed to repeat it’ immediately comes to my mind!

But ignoring for a second what I feel about the virtues of the plan as the details have so far been reported, how did the markets reaction over the past few days compare to another diplomatic deal from history, the Munich Pact?

The answer is similar although to be fair, in percentage terms, today was not quite as euphoric.

For those not clear on the details of the Munich Pact signed on September 30, 1938, ‘Adolf Hitler, Benito Mussolini, French Premier Edouard Daladier, and British Prime Minister Neville Chamberlain sign the Munich Pact, which seals the fate of Czechoslovakia, virtually handing it over to Germany in the name of peace. Upon return to Britain, Chamberlain would declare that the meeting had achieved “peace in our time.” (Source)

I think that we all know how that one turned out.

Today, the day after the signing of an ‘historic’ deal with Iran over that country’s nuclear ambitions, one can only hope that the result will be vastly different from 1938!

That said, it is somewhat interesting to compare investor reaction now versus then to what was and is significant geopolitical news.

It’s often said that the scourge of the markets is uncertainty and in 1938 the reaction of the markets on the day of the signing of the Munich Pact and the days that followed was nothing but positive.

The same calm is occurring today with the signing of a nuclear deal with Iran although to be fair there are many other geopolitical issues on the table now (i.e. Greece, China) that most likely were not present in 1938.

Stock Market Performance!

Munich Pact signed September 30, 1938:

Dow Jones Industrial Average

September 29, 1938 Close 137.16 +2.6%

September 30, 1938 Close 141.45 +3.13%

October 3, 1938 Close 144.29 +2.01%

Iran nuke deal signed July 14, 2015:

Dow Jones Industrial Average

July 13, 2015 Close 17,977 +1.1%

July 14, 2015 Close 18,053 +.42%

July 15, 2015 ?

So is the Iran pact a good deal or bad deal? I have my opinion but at this point only time will tell!

____________________________________________________

Article author Michael Haltman is the President of Hallmark Abstract Service in New York.

HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.

Leave a Reply

Your email address will not be published. Required fields are marked *