The Houthi rebels launched its biggest attack yet in the Red Sea yesterday. This has severe repercussions for peace in the Middle East, the economy, and trade.
The nearly doubling in the average shipping costs will have an impact on the global economy and trade. Consumers and companies will need to pay for the increase in 40-foot container shipping rates. Just as central banks looked like they contained inflation, the supply chain disruption disrupted the falling price trend.
Ships are diverting around $200 billion in cargo from the Red Sea. By sailing around it, they add thousands more kilometers, raising the total shipping costs.
Investors should watch shipping stocks like Maersk (AMKBY), Zim Shipping (ZIM), Star Bulk Carriers (SBLK), and Golden Ocean (GOGL).
Watch Defense and Aerospace stocks
The U.S. and its coalition of nations will need military equipment. They will need drones, planes, jets, and missiles. Watch Lockheed Martin (LMT), L3Harris (LHX), and RTX (RTX), formerly known as Raytheon.
Companies that try to pass the higher shipping costs to consumers only to hurt demand are the consumer stocks to beware of. Proctor and Gamble (PG) and Johnson and Johnson (JNJ) may face weaker sales of consumer goods should their production costs rise.
