WASHINGTON, November 9, 2017 – Given Saudi Arabia’s long religious journey back to the Dark Ages, recent events in the Saudi kingdom have been moving with breathtaking speed.
First, there was that controversial pair of Saudi government orders, shockingly permitting Saudi women to drive automobiles – by themselves! This was followed quickly by yet another order permitting women to attend sporting events, although under certain restrictions.
Then we witnessed the roundup of “corrupt” Saudi princes and their allegedly ill-gotten gains plus the sudden surprise resignation and (apparent) temporary exile of Lebanon’s prime minister.
Now this, according, oddly enough, to Iran’s English-language news service, PressTV:
“Saudi King Salman reportedly plans to relinquish power in favor of his son, Crown Prince Mohammed bin Salman, who has recently launched a self-promotion campaign under the cover of tackling high-level corruption.
“Rai al-Youm, an Arab world digital news and opinion website, reported on Wednesday that the king will announce the decision within ‘the next two nights.’
“Earlier on Wednesday, Saudi-owned television news channel Al-Arabiya had announced the news in a Twitter message, but it retracted the post hours later.”
This very likely not fake news, plus the ongoing media coverage of President Trump’s lengthy diplomatic and business-oriented trip to East and Southeast Asia, is roiling Wall Street today. Crude oil prices and gold catch a fresh bid even as most other stock sectors tumble, particularly tech, which has been leading the current melt-up rally to this point.
The celebratory anti-Trump media nonsense swarming about the Democrats’ off-year election pummeling of Republican candidates Tuesday in New Jersey and Virginia hasn’t helped market sentiment either. But political junkies couldn’t have expected anything less. (Follow this link to find out what I really think about this.)
Bottom line: The market’s massive autumn melt-up is running ahead of what are proving to be generally good corporate earnings. For that reason, we have to expect at least a sideways correction at this point, as many stocks, particularly in tech, are now overbought, at least in terms of current and projected 2018 earnings.
If that’s not scary enough, we simply have to imagine what will happen to fuel prices, international trade and shipping, and pretty much everything else if the current Saudi “Game of Thrones” heats to boiling the long-simmering animosity between the Saudi and Iranian regimes. Blowing up each country’s oil facilities might just be the start of the fun in this sector.
Ditto the turmoil in the Far East. President Trump has roiled the waters here when it comes to free trade. And let’s not forget to mention the President’s frankly welcome refusal to indulge any further North Korea’s fat, overindulged Little Rocket Man. This latest dictator in the detestable Kim Dynasty continues to oppress his own people mainly so he can threaten the United States and feel he’s actually someone important in the world.
In private, more Americans than one might think actually back Trump’s attempts to redress the U.S. trade balance with that part of the world. They’re also secretly glad he’s finally doing something to rein in North Korea, which, lest we forget, has remained in an actual state of war with America, as it has been since the early 1950s.
This fast-deteriorating situation has to be resolved before Kim and his associated certifiable nutcases get their hands on viable nuclear weapon delivery systems. Too bad every president since Eisenhower has kicked the can down the road on this one, leaving it, perhaps, to Trump to resolve once and for all.
But no one knows the end-game either to the current turmoil in the Middle East or the Bad Actor Sweepstakes in East Asia. Add this to Mr. Market’s likely desire to rein in Wall Street’s irrational exuberance just a bit, and investors find themselves rafting down treacherous waters today and perhaps for many days to come. Like insurance underwriters, investors hate uncertainty. But that’s mostly what we have right now.