Real Vision: Finance & Investing
Steno's Signals: What the Red Sea Crisis Means for Inflation
Feb 11, 2024
Crypto expert Andreas Steno Larsen analyzes the risk factors for rising inflation due to the Red Sea crisis and increasing freight rates. They discuss the implications of attacks on ships, potential large-scale attacks, and the failures of US reassurance. They also explore the impact of the crisis on inflation, retail spending, and financial markets.
30:15
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Quick takeaways
- The crisis in the Red Sea, fueled by the Houthi militia's attacks on ships, disrupts shipping routes and increases freight rates, potentially leading to higher consumer inflation.
- The divergence in inflation and demand between the US and Europe favors US equities but not US Treasuries, highlighting the need for a combination of US equities and European fixed income for investment strategies.
Deep dives
The Houthis and the Red Sea Troubles
The podcast discusses the troubles in the Red Sea and the role of the Houthi militia. The Houthis, a clan-based militia in Yemen, control parts of the country and have close ties to Iran. They have been attacking ships in the Red Sea, fueled by Iranian support and domestic popularity in Yemen. These attacks have caused disruptions in the Swiss canal, leading to a decrease in shipping and a rerouting of container ships. The podcast also mentions the possibility of the Houthis targeting tankers in the Strait of Hormuz but concludes that such a scenario is unlikely. The situation in the Red Sea has global implications for freight rates, shipping routes, and inflation, with increasing costs impacting consumer prices.
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