Insight and opinion from The National’s editorial leadership
January 02, 2024
In the past two months, the Houthi rebel group has seized a cargo ship, attacked several other commercial vessels and fired at least half a dozen missiles hundreds of kilometres from its base in western Yemen. In the past nine years since it emerged from northern Yemen and mounted a violent takeover of Sanaa, the Yemeni capital, the group has carried out more than 1,000 attacks against infrastructure important to the global economy – most of it oil facilities and airports in Saudi Arabia. The Houthis may control less than half of Yemen’s territory, but their aggression leaves an outsized footprint on the world stage.
The latest instance occurred in the Red Sea early on Sunday morning, when Houthi militants mounted an attack against a container vessel operated by Danish shipping giant Maersk. They were repelled by two US naval helicopters, which had responded to a distress call from the vessel’s security team. The resulting battle saw the choppers sink three Houthi ships, killing 10 militants.
Later that day, UK Defence Secretary Grant Shapps said his government would not hesitate to take “direct action” against the group – a phrase widely interpretedto mean London is considering air strikes on Yemeni soil.
By attacking ships and launching missiles, the Houthis claim to be helping to defend innocent Palestinians against Israel, which undertook a deadly ground campaign in the Palestinian enclave of Gaza in October. Given that the attacks have not only failed to move the dial in favour of Palestinians, but have in fact added to the number of innocent civilians in the region put at risk, the claim is at best dangerously naïve and at worst threatening a regional war without an end in sight. If the militants’ actions draw western powers into a new battlefront, ongoing peace talks in Yemen could unravel, injecting deep uncertainty into the country’s future – and risking even the Houthis’ own position.
The Houthis may control less than half of Yemen’s territory, but their aggression leaves an outsized footprint on the world stage
The failure of the international community to end the onslaught on Gaza, largely due to full American support of Israel’s tactics, has only emboldened the Houthis further. And while the Houthis' own tactics may often appear strategically senseless, these are not rebels without a cause. Seizing control of Yemen is only part of the picture; the group’s objectives are expansive and pernicious. As a core member of the Iran-led, so-called “axis of resistance” that aims to remake the Middle East in a more extremist image, the Houthis are part of a transnational agenda.
Diplomatic efforts over the past two years to bring an end to Yemen’s conflict and establish an inclusive government were aimed, in part, at containing the influence of that agenda on the Arabian Peninsula and, eventually, releasing Yemen from its grip entirely so that all Yemenis – including those living in the Houthi stronghold areas – could prosper in peace. These efforts were going relatively well; Hans Grundberg, the UN’s Yemen envoy, spent much of last year shuttling between warring parties to build out an agreement. On December 23, he announced that both the rebels and the Yemeni government had committed to steps towards a ceasefire.
A conflagration in the Red Sea that raises shipping costs to Yemeni ports, brings western sanctions or reignites an international conflict would pull Yemenis back into their most desperate days. By gambling with their fellow citizens’ lives, the Houthis are gravely miscalculating. The challenge for the rest of the world is to respond strongly enough to show them this while avoiding its own miscalculations, too.
Stars: Ajith Kumar, Arjun Sarja, Trisha Krishnan, Regina Cassandra
Rating: 4/5
What should do investors do now?
What does the S&P 500's new all-time high mean for the average investor?
Should I be euphoric?
No. It's fine to be pleased about hearty returns on your investments. But it's not a good idea to tie your emotions closely to the ups and downs of the stock market. You'll get tired fast. This market moment comes on the heels of last year's nosedive. And it's not the first or last time the stock market will make a dramatic move.
So what happened?
It's more about what happened last year. Many of the concerns that triggered that plunge towards the end of last have largely been quelled. The US and China are slowly moving toward a trade agreement. The Federal Reserve has indicated it likely will not raise rates at all in 2019 after seven recent increases. And those changes, along with some strong earnings reports and broader healthy economic indicators, have fueled some optimism in stock markets.
"The panic in the fourth quarter was based mostly on fears," says Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management Company. "The fundamentals have mostly held up, while the fears have gone away and the fears were based mostly on emotion."
Should I buy? Should I sell?
Maybe. It depends on what your long-term investment plan is. The best advice is usually the same no matter the day — determine your financial goals, make a plan to reach them and stick to it.
"I would encourage (investors) not to overreact to highs, just as I would encourage them not to overreact to the lows of December," Mr Schutte says.
All the same, there are some situations in which you should consider taking action. If you think you can't live through another low like last year, the time to get out is now. If the balance of assets in your portfolio is out of whack thanks to the rise of the stock market, make adjustments. And if you need your money in the next five to 10 years, it shouldn't be in stocks anyhow. But for most people, it's also a good time to just leave things be.
Resist the urge to abandon the diversification of your portfolio, Mr Schutte cautions. It may be tempting to shed other investments that aren't performing as well, such as some international stocks, but diversification is designed to help steady your performance over time.
Will the rally last?
No one knows for sure. But David Bailin, chief investment officer at Citi Private Bank, expects the US market could move up 5 per cent to 7 per cent more over the next nine to 12 months, provided the Fed doesn't raise rates and earnings growth exceeds current expectations. We are in a late cycle market, a period when US equities have historically done very well, but volatility also rises, he says.
"This phase can last six months to several years, but it's important clients remain invested and not try to prematurely position for a contraction of the market," Mr Bailin says. "Doing so would risk missing out on important portfolio returns."