Markets moved higher as rate cut hopes persist

Dow climbed 212, advancers over decliners 5-1 & NAZ went up 80.  The MLP index added 2+ to the 253s & the REIT index rose 4 to the 394s.  Junk bond funds crawled higher & Treasuries had buying which reduced yields.  Oil was up 1+ to the 73s & gold gained 15 to 2055.

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Attacks by Iran-backed Houthi militants on ships in the Red Sea have already rocked global trade.  And there could be more disruptions & price increases to come for shipments of goods & fuel.  Several major shipping lines & oil transporters have suspended their services thru the Red Sea as more than a dozen vessels have come under attack since the start of the Israel-Hamas war in early Oct.  Help appears to be on the way.  Defense Secretary Lloyd Austin, who is visiting Bahrain, said American forces along with the UK, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles & Spain would create a new force to protect ships in the region.  MSC, Maersk, Hapag Lloyd, CMA CGM, Yang Ming Marine Transport & Evergreen have all said they will be diverting all scheduled journeys immediately to secure the safety of their seafarers & vessels.  Collectively, these ocean carriers represent around 60% of global trade.  Evergreen also said it would temporarily stop accepting any Israel-bound cargo, suspending its shipping service to Israel.  Orient Overseas Container Line (OOCL), which is a part of Chinese-owned COSCO Shipping Group, has also stopped accepting Israeli cargo, citing operational issues.  “About 30% of Israeli imports come through the Red Sea on container vessels that are booked two to three months in advance for consumer or other products, meaning that if the voyage will now be extended, products with a shelf life of two to three months will not be worthwhile importing from the Far East,” said Yoni Essakov, who sits on the exec committee of the Israeli Chamber of Shipping.  “Importers will need to increase stock due to the uncertainty and pay much more and others will lose out on their markets as time to market is not competitive,” Essakov added.  Yesterday oil giant BP (BP) said it would also pause shipping activity in the Red Sea as the Yemen-based Houthis continue their attacks.  “The safety and security of our people and those working on our behalf is BP’s priority. In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea,” the company said.  “We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region.”  Oil tanker group Frontline also said it is avoiding the Red Sea.

Global supply chain under threat after militant attacks in the Red Sea

US officials yesterday expanded a multinational maritime force in the Red Sea to defend against escalating attacks from the Iran-backed Houthi rebels, which have impeded intl shipping routes.  “The recent escalation in reckless Houthi attacks originating from Yemen threatens the free flow of commerce, endangers innocent mariners, and violates international law,” Defense Secretary Lloyd Austin said.  The new defense, named Operation Prosperity Guardian, builds on the power of the Combined Maritime Forces, a 39-member international coalition.  The CMF operates under the US Navy Fifth Fleet in Bahrain to protect maritime access & stability.  A subdivision of the forces, called Task Force 153 is dedicated to the Red Sea.  “What we’re trying to do is is strengthen and bolster it, and operationalize it, in ways that perhaps it hadn’t been operationalized prior to these Houthi attacks,” National Security Council spokesman John Kirby said of Task Force 153.  The expansion comes as a flood of companies pause their shipping activity along that popular Suez Canal route due to the elevated threat from the Houthis.  Oil giant BP announced yesterday it would temporarily suspend its shipping in the Red Sea, joining companies like shipping firms Maersk, MSC & others.  Operation Prosperity Guardian will aim to deter further Houthi attacks as the US eyes potential flare-ups of regional conflict amid the Israel-Hamas war.  The US has so far shot down dozens of Houthi drones heading towards commercial ships.  In recent weeks, Yemen's Houthi rebel group has launched a slew of drone attacks against commercial ships crossing the Red Sea.  The Iran-backed Houthis have previously warned that any ship connected to Israel is a “legitimate target” until the war in Gaza ends, and many commercial ships have been caught in the crossfire.

US launches Operation Prosperity Guardian to defend Red Sea shipping lanes from Houthi attacks

On Sep 26 Target (TGT), a Dividend Aristocrat, set off a national firestorm when it said it would close 9 stores in 4 states because theft & organized retail crime had made them too dangerous to run.  On its face, TGT's announcement was evidence that retail crime was preventing one of the country's most prominent retailers from operating stores profitably & safely.  It challenged skeptics who believed that retailers had exaggerated the impact of organized retail crime & used it as an excuse for poor financial performance.  There was just one problem with the explanation TGT gave for closing stores: The locations it shuttered generally saw fewer reported crimes than others it chose to keep open nearby, a monthslong investigation has found.  The findings cast doubt on TGT's explanation & raise questions about whether the company's announcement was designed to advance its legislative agenda — seeking a crackdown on organized retail crime — & to obscure poor financial performance at the stores as it grapples with sliding sales.  In some cases, TGT chose to keep operating stores in busier areas that had better foot traffic or higher median incomes, even though the locations saw more theft & violence, the probe revealed.  In those areas, police departments may be better funded due to higher tax bases & shoppers may have more to spend on discretionary goods.  Many of the locations TGT closed were “small-format” stores the company opened over the last 5 years as part of an experiment to expand its footprint in dense, urban areas.  The moves followed TGT's decision to shutter 4 similar stores in the spring that it said were underperforming.  At the time it announced the 9 store closures in Sep, TGT said, “We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance. We can only be successful if the working and shopping environment is safe for all.”  The news came just hours after the National Retail Federation (NRF) issued a key annual retail security survey — in which it said violence at stores had increased but losses from theft hadn't changed much — & exactly 1 month before the trade group was planning to lobby Congress for stiffer punishment for organized theft offenders.  TGT CEO Brian Cornell sits on the NRF's board of directors & is a member of its exec committee.  The stock rose 1.23.

Target blamed theft and violence for 9 closures. Crime is higher at stores it kept open nearby

Piracy in the Red Sea is getting more attention because it affects a large percentage of global trade.  Now the US & its allies have to show they are serious about enforcing this mission.  Meanwhile investors are mesmerized about thoughts of lower interest rates even though background economic is only so-so at best.

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