{"id":201088,"date":"2024-01-12T11:15:00","date_gmt":"2024-01-12T16:15:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=201088"},"modified":"2024-01-15T03:04:55","modified_gmt":"2024-01-15T08:04:55","slug":"the-red-line","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/the-red-line\/","title":{"rendered":"The Red Line"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\" id=\"h-what-s-going-on-here\"><strong>What\u2019s going on here?<\/strong><\/h2>\n\n\n\n<p>The US and UK commenced&nbsp;<a href=\"https:\/\/www.cnbc.com\/2024\/01\/12\/us-uk-strike-houthi-targets-in-yemen-in-response-to-attacks-in-the-red-sea.html\" target=\"_blank\" rel=\"noreferrer noopener\">strikes<\/a>&nbsp;against the Houthi militant group in Yemen.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-does-this-mean\"><strong>What does this mean?<\/strong><\/h2>\n\n\n\n<p>Many of the world\u2019s most powerful armed nations have been at loggerheads over the last couple of years. So these days, the slightest threat of conflict can make folk call up a nuclear-bunker specialist. Thing is, the Iran-backed Houthi movement isn\u2019t exactly popular in the Middle East. In fact, Saudi Arabia waged its own unsuccessful war against the group in 2015. So this pushback from the West isn\u2019t likely to spill over into the region at large \u2013 but with the Houthi group vowing to keep targeting freight ships in the Red Sea, the battle won\u2019t be quickly won or lost.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-why-should-i-care\"><strong>Why should I care?<\/strong><\/h2>\n\n\n\n<p><strong><em>For markets:<\/em><\/strong>&nbsp;<em>This is our issue.<\/em><\/p>\n\n\n\n<p>The US and UK are making it clear that their red lines aren\u2019t just written in ink. But no matter how much they reinforce their boundaries, the Houthis aren\u2019t guaranteed to respect them. If the militant group keeps compromising cargo ships and oil tankers, goods traders will need to take longer \u2013&nbsp;read: pricier \u2013&nbsp;detours around Africa. That\u2019ll make the contents of every precious shipping container more expensive. And don\u2019t count on retailers to take the hit: they\u2019ll pass on every cent they can to their customers, potentially stoking up inflation just when it\u2019s showing signs of losing steam.<\/p>\n\n\n\n<p><strong><em>The bigger picture:<\/em><\/strong>&nbsp;<em>The new normal.<\/em><\/p>\n\n\n\n<p>Naturally, higher prices for oil and commodities will make just about everything on a store shelf more expensive. But no company wants to keep prices up for too long, otherwise budget-conscious shoppers could take their business elsewhere. That means they\u2019ll cut costs elsewhere in their supply chain or switch to cheaper suppliers. So while conflict can spike costs at the time, the effects tend to level off after a few weeks or months. Just think: despite two wars raging, today\u2019s oil price is lower than it was right before Russia invaded Ukraine.<\/p>\n\n\n\n<p>&#8212;<\/p>\n\n\n\n<p>Originally Posted January 12, 2024 &#8211; <a href=\"https:\/\/finimize.com\/content\/the-red-line\">The Red Line<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The US and UK commenced\u00a0strikes\u00a0against the Houthi militant group in Yemen.<\/p>\n","protected":false},"author":1283,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18,6,8,9,26,3],"tags":[3876,1685,52,271],"contributors-categories":[13597],"class_list":{"0":"post-201088","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-macro","7":"category-north-america","8":"category-region","9":"category-securities","10":"category-text-articles","11":"category-traders-insight","12":"tag-geopolitics","13":"tag-macro","14":"tag-us","15":"tag-war","16":"contributors-categories-finimize"},"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The Red Line | Traders&#039; 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