Shipping companies took a hit yesterday. What do you think is the cause of the selloff?
Why Did Shipping Stocks Sell Off Yesterday?
This could be some simple profit taking since most shipping stocks have had a great start to 2024. If it is a simple profit take, then the rally will likely continue eventually if the Red Sea tensions escalate further or last longer than expected.
Seeking Alpha is blaming the selloff on a potential ceasefire. But I don't think the Huthis will stop if there is a cease fire between Hamas and Isreal.
The Huthis have already iterated that they would retaliate after any further U.S. attacks. And the U.S. has stated that they will continue to take out targets "when we want, and where we want."
The potential deescalation in Palestine could spread to other reagons in the Middle East, like the Red Sea. But I have my doubts.
Maybe these shipping delimas are naturally fixing themselves. Here is one such example.
If the Red Sea fiasco alleviates naturally, then this rally will get played out sooner than we think.
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Itsyaboy_ale : shipping companies .. maybe cuz of the Yemen situation
QianmengYu : Biden approved retaliation to Syria and Iran. So Huthis won’t stop simply because Hamas is spared.
SpyderCallOP QianmengYu: That is exactly what I was thinking.
QianmengYu SpyderCallOP: wow Biden just did, which blocks feasible land transportation from East Asia South Asia bypassing Suez. Kazakhstan, Caspian sea, Azerbaijan, Georgia, Turkey? Iraq/Saudi Arabia, Jordan, Israel? Or Kenya, Ethiopia, Sudan then Egypt? I’d rather stay with sea shipping.
SpyderCallOP QianmengYu: There is one thought in the back of my head that thinks the US could take over the Red Sea situation completely very soon and resolve all of the shipping problems. The market could possibly price this in early and start selling these shipping companies before any news about the Red Sea skirmishes subsiding.
I will be watching for any out of the ordinary selling to take place.
iamiam SpyderCallOP: it was a time in the cycle. they needed to cool off. think nothing of it. it a buying opportunity.
these companies are essentially profiteers running goods through dangerous areas for money.
the selloff was due to the ceasefire "news" and the fact China has a deal with the huthis allowing Chinese ships to sail through.
the US will not take over the Red Sea shipping route. that would be the start of ww3. the truth is the US is failing as a country, and we are losing our world leader status. Saudi, UAE, Egypt, and Somalia (Red Sea and suez Canal) are all BRICS countries now. that means they are against the dollar. wait for the canal to start taking payment outside the dollar, and watch all hell break loose. This is just a pause in the move. This is a new era of shipping
SpyderCallOP iamiam: It definitely is a complicated part of the world out there. But the West has ways of getting what they want most of the time. Whether that be through military power, coups, ecoterrorism, geopolitics, treaties, trade agreements, etc. The U.S. has had a constant presence in the Middle East for decades. I could be wrong, but I don't see things changing yet.
And keep in mind that most countries, whether they like the U.S. or not, still want to do business with the U.S. The U.S. always has something to offer. And if they don't, then they will force a capitulation in one shape or another to get what they want.
SpyderCallOP : The Huthis just aren't attacking Chinese ships? Or is this some new agreement?
SpyderCallOP iamiam: Options Flows are pointing towards upside in the long term. Definitely still looking bullish
iamiam SpyderCallOP: it's an agreement with China. as long as they don't supply Israel China ships can sail freely.
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