Oct 15, 2018

The unraveling of Saudi Arabia's "Davos in the Desert"

2017's FII. Photo: Fayez Nureldine/AFP/Getty Images

J.P. Morgan CEO Jamie Dimon last night became the first prominent Wall Streeter to say he won't attend next week's Future Investment Initiative conference in Riyadh, giving cover to folks like BlackRock's Larry Fink and Blackstone's Steve Schwarzman (both of whom officially pulled out this morning).

Be smart: It's much easier to bail on a conference than it is to unwind complex and lucrative business relationships.

  • Blackstone: Saudi Arabia committed up to $20 billion for a new global infrastructure fund that's targeting a total of $40 billion. Some other investors in the fund are beginning to murmur their disapproval, so we expect Blackstone to address the matter during its Thursday earnings call.
  • BlackRock: Last year BlackRock announced plans to open an office in Saudi Arabia (still a work in progress), and Fink expressed bullishness on "opportunity" in the kindgom after a summer visit.
  • J.P. Morgan: Picked to help manage the eventual Aramco IPO, J.P. Morgan has two operating licenses in Saudi Arabia, around 70 employees in Riyadh and has worked on sovereign bond offerings.

The bottom line: As of late Friday afternoon, all of these organizations (and others) were hoping that the Saudis would cancel or postpone the conference. It would have been a major embarrassment for the kingdom, but could have been a wise long-term play by maintaining good relations with Western business partners.

  • Now that ship has sailed, in part because of zero public pressure from the White House until a vague weekend threat via "60 Minutes" by President Trump (who also tweeted this morning that he's sending Secretary of State Mike Pompeo to Riyadh).
  • Treasury Secretary Mnuchin had reaffirmed on Friday that he'll attend the conference.

Also, and this cannot be overemphasized: No one knows the geopolitical or economic end game here, particularly if it results in Crown Prince Mohammed bin Salman losing his clear path to the throne.

Go deeper: Companies back away from Saudi business over missing journalist

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Coronavirus updates: WHO raises global threat level to "very high"

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

The World Health Organization raised its global risk assessment for the novel coronavirus to "very high" Friday, its highest risk level as countries struggle with containing spread of the virus. Meanwhile, National Economic Council director Larry Kudlow this morning tried to reassure the markets, which continued to correct bringing growing fears of a U.S. recession.

The big picture: COVID-19 has killed more than 2,860 people and infected about 83,800 others in almost 60 countries and territories outside the epicenter in mainland China. The number of new cases reported outside China now exceed those inside the country.

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Bernie's plan to hike taxes on some startup employees

Illustration: Sarah Grillo/Axios

Sens. Bernie Sanders (D-VT) and Chris Van Hollen (D-MD) introduced legislation that would tax nonqualified stock options at vesting, rather than at exercise, for employees making at least $130,000 per year.

The big picture: Select employees at private companies would be taxed on monies that they hadn't yet banked.

Judge rules against Trump policy limiting public comment on energy leasing

Photo: Joe Amon/The Denver Post via Getty Images

A federal judge on Thursday overturned a 2018 Trump administration directive that sought to speed up energy leases on public land by limiting the amount of time the public could comment.

Why it matters: U.S. Chief Magistrate Judge Ronald Bush's decision voids almost a million acres of leases in the West, according to The Washington Post. It's a victory for environmentalists, who tried to block the change as part of an effort to protect the habitat of the at-risk greater sage grouse.

  • The ruling invalidated five oil and gas leases in Nevada, Utah, and Wyoming, and affected 104,688 square miles of greater sage-grouse habitat, per The Associated Press.
  • Leases in greater sage-grouse habitat will return to allowing 30 days of public comment and administrative protest.

The big picture: From Axios' Amy Harder, this is the latest in a long and convoluted list of regulatory rollbacks the Trump administration is pursuing on environmental rules that courts are, more often than not, rebutting. With Congress gridlocked on these matters, expect the courts to be the default way Trump's agenda faces checks (unless, of course, a Democrat wins the White House this November).