US strikes Houthis, market instability, Q1 rate cuts in doubt, Carta's major mishap, DEI

After a brief joke about a clip of Friedberg's basketball shot, the hosts turn to the US-led strikes on Houthi targets in Yemen. Sacks says the US fired perhaps a hundred rockets and missiles to restore deterrence and stop attacks on commercial shipping in the Red Sea, and he points to a new Houthi attack on a merchant ship the next morning as evidence of failure.

that deterrence is not working

Sacks predicts escalation and a drift toward war with Iran, which he attributes to neoconservative pressure from figures such as Lindsey Graham. Another host replies that the opposing coalition is broad (the US, UK, Israel, Qatar, UAE and Saudi Arabia) and that Iran may hesitate to side openly with the Houthis. A further reply says Saudi Arabia and the UAE took no part in the strikes and called for restraint, and that the named participants, including Australia, Canada, the Netherlands and Bahrain, probably contributed no assets.

Asked why Chinese ships go unhit, Sacks says the Houthis claim to target Israeli-linked vessels but have attacked more widely. He adds that more Chinese containers than any other country's cross the Red Sea, so Chinese trade suffers whoever owns the ship. A counterpoint is that China could benefit if its own ships get through; the reply is that European vessels carrying Chinese containers cannot.

The economic case is disputed. One host says rerouting via the Pacific or around Africa adds only 5 to 10 percent for the US, making this chiefly a European inflation problem. Sacks says detours add two to three weeks and lift a China-origin container from about $1,500 to $3,000. He calls the strikes futile because the Houthis fought the Saudis on and off for a decade against Western-backed weapons, and he expects retaliation aimed at the US rather than Europe or China.

very determined, very tough fighters

Asked for an incentive, Sacks says the administration looked impotent while urging the Houthis to stop, who describe their campaign as solidarity with Palestinians in Gaza and demand an end to the Israeli invasion and entry of humanitarian aid. Chamath offers a variant: a struggling domestic position, citing polls and Dean Phillips, prompts a distraction abroad. He says he is not claiming this happened.