Red Sea Alert

Happy New Year... What's top of mind entering 2024... Escalations in the Middle East... A gunfight in the Red Sea... Why it could matter to the markets... An emergency briefing tomorrow... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Digest] Happy New Year... What's top of mind entering 2024... Escalations in the Middle East... A gunfight in the Red Sea... Why it could matter to the markets... [An emergency briefing tomorrow](... --------------------------------------------------------------- And away we go into 2024... I (Corey McLaughlin) hope you had the best holiday season you could have. Today, the markets are back open for business in the new year... and there's plenty for investors to consider – right now and as 2024 continues. Among the things on the top of my mind... - Whether new all-time highs for the major U.S. stock indexes – which have been within reach for weeks but still haven't yet been hit – are in the cards for 2024. - The next developments in the ongoing wars in the Middle East and Eastern Europe... and their impacts on inflation. We'll talk about this today. - The influence of a presidential election year – and polarized politics in general – in the markets. - Whether the now widely expected Federal Reserve "pivot" – to cutting interest rates – actually happens... or investors are left disappointed at some point(s) ahead. Things aren't off to a great start. The expected "Santa Claus rally" – a phenomenon in which the market has risen between Christmas and New Year's nearly 80% of the time since 1950, for an average 1.5% gain – didn't materialize. Instead, the benchmark S&P 500 Index is down slightly since December 22's close. Perhaps another rally was asking too much after stocks had already soared 15% off a low in late October. What's more, geopolitical risks appear to be weighing on the markets as 2024 begins... Fireworks in the Red Sea... The war in the Middle East has escalated... and associated inflation risks have risen, too. Over the weekend, a U.S. destroyer ship along with helicopters and military personnel clashed with Iranian-backed Houthi militants from Yemen, resulting in U.S. forces sinking three Houthi boats and killing 10 fighters. The Houthis have been fighting a civil war with the Yemeni government for years... But now they've also begun attacking commercial freight ships in the neighboring Red Sea and Gulf of Aden in support of the Hamas group fighting Israel in the Gaza Strip. The U.S. is part of a coalition of nations, with the United Kingdom, France, Italy, Canada, and others, that started patrolling these international waterways critical to global trade a few weeks ago. According to The Hill... Houthi rebels have plagued the Red Sea since the Israel-Hamas war broke out, firing sometimes a dozen rockets at U.S. ships. They seized a merchant ship in November and damaged another one last month. The U.S. task force, made up of several nations primarily in Europe and the Western world, seeks to deter the Houthi threat by patrolling the Red Sea and defending merchant ships, many of which have canceled trips through the transit corridor near Yemen, hiking up prices. Cut to Saturday night in the Red Sea... First, the USS Gravely shot down a pair of missiles from Houthi-controlled areas of Yemen while the ship was responding to a report about a commercial ship being struck by a missile itself. As CBS News reported... According to U.S. Central Command, the container ship Maersk Hangzhou – which is Danish-owned but sails under a Singaporean flag – reported at 8:30 p.m. local time that it had been struck by a missile in the Southern Red Sea. No one was hurt and the ship remained seaworthy, CENTCOM reported in a social media post. However, while responding to assist the Maersk Hangzhou, the USS Gravely shot down two anti-ship missiles which had been fired from Yemen, CENTCOM said. The missiles appeared to have been directed at the USS Gravely and the USS Laboon, which was also responding to the Maersk Hangzhou, CENTCOM said. A few hours later, four boats tried to attack the same Maersk ship. Then things got really heated. According to CBS News... The container ship issued a second distress around 6:30 a.m. local time on Sunday, CENTCOM said, with boats originating from Houthi-controlled areas in Yemen, fired crew served and small arms weapons at the Maersk Hangzhou. CENTCOM said the small boats got within 20 meters of the Maersk Hangzhou, and attempted to board the vessel, leading to a contract security team to return fire. U.S. helicopters from the USS Eisenhower and Gravely responded to the distress call and in the process of issuing verbal calls to the small boats, the small boats returned fire upon the U.S. helicopters and crew, CENTCOM said. The U.S. Navy helicopters returned fire in self-defense, sinking three of the four small boats, and killing the crews. The fourth boat fled the area. In the days since, an Iranian warship has entered the Red Sea. In an announcement of that move, Iranian media tried to play it off as no big deal. As the state-run Islamic Republic News Agency put it... The Iranian Navy's 94th flotilla of warships, comprising of Alborz destroyer, entered the Red Sea on Monday amid heightening tensions in the strategic maritime route. Since 2009, Iranian warships have been operating in open waters to secure shipping lines, fight against pirates and carry out other missions... The flotilla's arrival in the Red Sea comes amid rising tensions following Yemen's retaliatory attacks on Israeli-owned and -bound vessels in support of the Palestinians in the Gaza Strip. Believe Iran's take as you wish... But obviously, the presence of U.S. and Iranian ships closer to each other than a few days ago raises the risk of direct conflict, in addition to the militants from Yemen already creating impacts. (A separate escalation came today in Lebanon, where a blast killed a Hamas leader in territory controlled by the Hezbollah militant group, which is also clashing with Israel.) Today, a Houthi official vowed revenge on the U.S. and the United Kingdom for the attack on boats that "were in the Red Sea to conduct a military operation against the Maersk Hangzhou vessel that was heading for the ports of occupied Palestine." The Houthis have reportedly found the Red Sea attacks politically popular for their own civil war, promising recruits they'll fight in Gaza (which hasn't happened)... The group might also be using the attacks to raise the stakes in other negotiations with Saudi Arabia – Iran's rival in the region, which was discussing a partnership in Israel months ago – according to some analysts. Why this matters to markets and businesses... You might be wondering why we're spending all this time on the policy aims of a Yemeni rebel group. Now, I can't tell you exactly what's going to play out in this multifaceted Middle East war in the next few weeks and months or years... But I do know that it's going to matter. With violence in the Red Sea, formerly routine major shipping channels and businesses at the heart of global trade are being disrupted. Freight prices have been on the rise for weeks as shippers have been adjusting plans to go around the southern tip of Africa instead. That takes about nine days and costs at least 15% more than going through the Red Sea to ship cargo between Europe, Asia, and beyond. Some shipping industry sources say redirecting ships around Africa costs up to $1 million extra in fuel for every round trip between Asia and Northern Europe. Rates for some freight from China to the United Kingdom have doubled since October to around $4,400 per container. According to global news service Reuters... Vessel owners already have begun rationing the less expensive, contract-rate space they reserve for customers, said Anders Schulze, head of the ocean business at digital freight forwarder Flexport. For example, he said, a customer who delivers five containers a month versus the 10 promised in their contract may only get five containers at contract rates. The remainder would be subject to expensive spot market rates. This has set off a scramble to reserve space ahead of the early February deadline to get goods out of China before factories there close for the extended Lunar New Year celebrations, logistics experts said. "Every single booking (out of China) now needs to be reconfirmed. The dates could change, the routing may change," said Alan Baer, CEO of OL USA, which handles freight shipments for clients. OL has contracts with ship owners and is part of the rush to secure spots on ships. Small shippers are most at risk of being elbowed out. Marco Castelli, who has an import/export business in Shanghai, has been trying to rebook three containers of Chinese-made machinery components bound for Italy after the shipments were cancelled due to the crisis. "Transfer my situation to a large corporation and you get what's going on," he said. I don't need to remind you how important global supply chains and freight ships are... Pandemic disruptions illustrated how limited supply and steady demand can drive prices higher (especially when paired with government stimulus and ultra-low interest rates). A global chokepoint... As much as 15% of global trade moves through the Red Sea, U.S. officials said last month. That's when they announced "Operation Prosperity Guardian" to serve as "highway patrol" of the Red Sea and Gulf of Aden (two bodies of water between Africa and the Middle East connected by the Bab el-Mandeb Strait). Roughly 10% of the world's oil and liquefied natural gas moved by ship goes through the area, mostly headed to Europe. As Stansberry Research analysts Brian Tycangco and Bill McGilton [wrote in the latest issue of their Commodity Supercycles newsletter]( that includes nearly 5 million barrels of oil per day through these waterways... and more nearby. Here's a graphic they shared... Brian and Bill explained the dangers of these "chokepoints"... In March 2022, well before this war was raging in Gaza, Houthi militia launched booby-trapped boats from Yemen's coast toward oil tankers passing through the Bab el-Mandeb Strait. And in May 2017, the same group fired rocket-propelled grenades at a Marshall Islands-flagged crude tanker. In July 2018, Saudi Arabia was forced to temporarily suspend all oil shipments through the Bab el-Mandeb Strait after Houthi militia attacked two of the kingdom's very large crude carriers ("VLCCs"), threatening to sink a combined 4 million barrels of oil into the sea. These were sporadic attacks meant to harass Western allies in the region. And they involved relatively simple weaponry that lack the firepower capable of doing real damage to VLCCs. But this time around, the Houthis have a vast arsenal of long-range weapons that includes several different kinds of cruise missiles, like the Quds guided missile. If the Houthis launch them, they could easily sink a handful of these massive seagoing oil tankers in both [the Bab el-Mandeb and Hormuz] straits and close off 21 million [barrels per day] of oil from the world market almost overnight. Cutting off even one of these chokepoints would potentially knock off more oil from the world market than has ever been done since the Arab oil embargo in 1973. That crisis sent oil prices quadrupling in less than a year. At least a dozen shipping companies had already suspended travel through the Red Sea before this weekend. If they haven't already, we suspect they'll be on alert even more. Just today, shipping giant Maersk – whose ship was targeted in the recent Houthi attack – announced to customers it will pause all shipping through the area "until further notice." The growing risks... When we first reported on Hamas' attack on Israel and the potential influence on global markets, we explained how the risk of the conflict expanding would matter more than the trigger point itself... Also, we explored how war is inflationary in general. In [the October 9 Digest]( we wrote... As we said when Russia invaded Ukraine, and now can sadly repeat 18 months later, war is ultimately an inflationary pressure – for myriad reasons depending on the context, including creating commodity-supply issues. Russia and Ukraine, for instance, are tied to global supplies of food and oil. And in the Middle East, many battles have been fought over the decades... with oil concerns squarely in the middle of many disputes. And then there's the knock-on effects... Developments in Israel's war against Hamas in Gaza will likely change the calculus of relationships not just between the enemies, but also among global powers like the U.S., Saudi Arabia, Iran, and others in ways that we can't predict. Already today, for example, Germany and Austria announced they are suspending aid worth tens of millions of euros to Palestinians – drawing battle lines in their association with the conflict. The U.S. has moved warships closer to Israel and is promising to help by providing resources to the Israeli Defense Force. The gunfight in the Red Sea over the weekend marked the most significant U.S. military engagement in the waters since the war broke out in Gaza. Like they did after Hamas attacked Israel in October, oil prices rose this morning... but then traded lower throughout the day. The energy sector of the S&P 500 was in the green all day and closed 1% higher. Of course, we'll keep an eye on oil and other commodity prices... A meaningful rise in prices in the weeks or months ahead, for Red Sea-related or any other reasons, could change the discussion around the Federal Reserve and other central banks possibly cutting interest rates in 2024. In other words, central banks won't be as likely to cut interest rates if inflation risks remain high. And that could change market expectations for stocks, bonds, and other rate-sensitive assets. Or it could all be much ado about nothing... After all, maybe the peace-loving Iranian military sent a warship to the Red Sea for well-intentioned reasons... Tomorrow, don't miss an emergency update... Maybe this all sounds bearish to you. These days, it may feel like every twist and turn in the global and U.S. economy is an urgent development. Once again, that's why we urge you to have a plan, know your goals, and position your portfolio accordingly. That'll boost your chances of what could be a chaotic 2024 and perhaps allow you to take advantage of opportunities when it seems everyone else is running scared... To this point, our team is always on the lookout for opportunities to make money and protect wealth – no matter what is going on in the Red Sea, or anywhere else in the world. Tomorrow morning, at 10 a.m. Eastern time, one of our most popular analysts is going live with an emergency briefing about one of these opportunities – which he says could end up being the most lucrative research we bring you all year. This is an analyst who has posted more than a dozen 1,000%-plus winning recommendations since 2020... which is more than anyone else in our firm's history. For the first time, he says three major profit catalysts are converging for one specific asset class – leading to a possible sector-wide boom that would be a generational wealth-building opportunity. If you're interested, [click here to get access to this free briefing tomorrow](. --------------------------------------------------------------- Recommended Links: [Major Announcement for 2024]( With uncertainty on our readers' minds, we're calling everything else off to begin the new year with an extremely time-sensitive warning from the analyst who has posted over a dozen 1,000%-plus winners since 2020. He'll reveal what to expect in 2024 and exactly what you should be doing with your money to prepare. [Click here for the details](. --------------------------------------------------------------- [Gold Is Headed Above $3,000 per Ounce... Here's How to Play It]( With so many strange events happening across the economy – the longest bear market for bonds since the Civil War... unprecedented bank closures... and soaring prices – it's no wonder the richest investors are loading up on gold. But what you might not realize is there's a much better way to profit from rising gold prices – WITHOUT ever touching an exchange-traded fund, mining stock, or even bullion. [Get the full details here](. --------------------------------------------------------------- New 52-week highs (as of 12/29/23): ABB (ABBNY), Ansys (ANSS), A.O. Smith (AOS), Cencora (COR), Huntington Ingalls Industries (HII), Sprott Physical Uranium Trust (U-U.TO), Vanguard Short-Term Corporate Bond Fund (VCSH), and Waste Management (WM). In today's mailbag, feedback on [the "$100 Challenge" suggested by our Dan Ferris on Friday](... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com. "I appreciate you sharing that story. It has been enlightening to me and I'm going to use it with my kids. Both are out of college and living at the house they grew up in with their mother. I had a discussion with her today as while they both do work it seems they are quite comfortable with this arrangement and we have both inquired on what they plan on doing with their lives as she wants to downsize... "Instead of the usual argument that comes with that question, I'm going to suggest this and see what happens. I have nothing to lose as not much has worked so far. Thanks for the idea." – Subscriber James S. "I'm not convinced about the $100 challenge, but I would like to witness a few dozen acts. *smirk*" – Subscriber N.B. "I am retired and am fortunate enough to be in a solid financial position, but I still pick up coins I find in the street, so I don't see myself tossing out C-notes anytime soon. Still, I get the concept, and at the very least, it makes for a great story." – Subscriber Frank R. "I've been driving down the investor highway and have thrown hundreds of thousands out the window. Does that count? It may have been cheaper if I had taken [Mark] Minervini's advice a couple decades ago. Have an outstanding 2024!" – Subscriber Greg M. "My $100 Toss adds a little twist: All I do is think to myself 'I have the ability to make this money back. And this person probably doesn't.' Or 'this Veteran deserves a tribute.' "I then anonymously pay for something, like groceries for the person in line behind me, or a Veteran sitting nearby in a restaurant. It's fun to watch them react, when they can't figure out who paid their bill." – Anonymous subscriber Happy New Year, Corey McLaughlin Baltimore, Maryland January 2, 2024 --------------------------------------------------------------- Stansberry Research Top 10 Open Recommendations Top 10 highest-returning open positions across all Stansberry Research portfolios Stock Buy Date Return Publication Analyst MSFT Microsoft 11/11/10 1,287.7% Retirement Millionaire Doc MSFT Microsoft 02/10/12 1,189.1% Stansberry's Investment Advisory Porter ADP Automatic Data Processing 10/09/08 845.5% Extreme Value Ferris wstETH Wrapped Staked Ethereum 02/21/20 771.1% Stansberry Innovations Report Wade WRB W.R. Berkley 03/16/12 641.0% Stansberry's Investment Advisory Porter BRK.B Berkshire Hathaway 04/01/09 532.4% Retirement Millionaire Doc HSY Hershey 12/07/07 454.2% Stansberry's Investment Advisory Porter AFG American Financial 10/12/12 413.1% Stansberry's Investment Advisory Porter BTC/USD Bitcoin 01/16/20 383.6% Stansberry Innovations Report Wade PANW Palo Alto Networks 04/16/20 324.3% Stansberry Innovations Report Engel Please note: Securities appearing in the Top 10 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the model portfolio of any Stansberry Research publication. The buy date reflects when the editor recommended the investment in the listed publication, and the return shows its performance since that date. To learn if a security is still a recommended buy today, you must be a subscriber to that publication and refer to the most recent portfolio. --------------------------------------------------------------- Top 10 Totals 4 Stansberry's Investment Advisory Porter 3 Stansberry Innovations Report Engel/Wade 2 Retirement Millionaire Doc 1 Extreme Value Ferris --------------------------------------------------------------- Top 5 Crypto Capital Open Recommendations Top 5 highest-returning open positions in the Crypto Capital model portfolio Stock Buy Date Return Publication Analyst wstETH Wrapped Staked Ethereum 12/07/18 1,701.2% Crypto Capital Wade ONE/USD Harmony 12/16/19 1,170.2% Crypto Capital Wade BTC/USD Bitcoin 11/27/18 1,058.8% Crypto Capital Wade POLYX/USD Polymesh 05/19/20 1,058.6% Crypto Capital Wade MATIC/USD Polygon 02/25/21 894.8% Crypto Capital Wade Please note: Securities appearing in the Top 5 are not necessarily recommended buys at current prices. The list reflects the best-performing positions currently in the Crypto Capital model portfolio. The buy date reflects when the recommendation was made, and the return shows its performance since that date. To learn if it's still a recommended buy today, you must be a subscriber and refer to the most recent portfolio. --------------------------------------------------------------- Stansberry Research Hall of Fame Top 10 all-time, highest-returning closed positions across all Stansberry portfolios Investment Symbol Duration Gain Publication Analyst Nvidia^* NVDA 5.96 years 1,466% Venture Tech. Lashmet Microsoft^ MSFT 12.74 years 1,185% Retirement Millionaire Doc Band Protocol crypto 0.32 years 1,169% Crypto Capital Wade Terra crypto 0.41 years 1,164% Crypto Capital Wade Inovio Pharma.^ INO 1.01 years 1,139% Venture Tech. Lashmet Seabridge Gold^ SA 4.20 years 995% Sjug Conf. Sjuggerud Frontier crypto 0.08 years 978% Crypto Capital Wade Binance Coin crypto 1.78 years 963% Crypto Capital Wade Nvidia^* NVDA 4.12 years 777% Venture Tech. Lashmet Intellia Therapeutics NTLA 1.95 years 775% Amer. Moonshots Root ^ These gains occurred with a partial position in the respective stocks. * The two partial positions in Nvidia were part of a single recommendation. Editor Dave Lashmet closed the first leg of the position in November 2016 for a gain of about 108%. Then, he closed the second leg in July 2020 for a 777% return. And finally, in May 2022, he booked a 1,466% return on the final leg. Subscribers who followed his advice on Nvidia could've recorded a total weighted average gain of more than 600%. You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. 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