MarketWatch – ‘Panic’ could set in after Saudi purge nabs ‘Warren Buffett of the Middle East’

Commentary, News

Critical information for the U.S. trading day

Saudi Crown Prince Mohammed bin Salman’s sweeping purge over the weekend has left investors to ponder — among all sorts of other things — what the tightening of his grip on the Kingdom ultimately means for global markets.

Specifically, should the arrest of Prince al-Waleed bin Talal, the familiar face of Saudi Arabia’s global investment scene, be a concern for those holding stakes in companies linked to his Kingdom Holding firm 4280, -5.26% which was smacked with a double-digit drop when the news broke.

In our call of the day, United Securities head of equity research Joice Mathew told Bloomberg there’s “a good chance” Twitter TWTR, -1.01%  and Citigroup C, -0.20% will get hammered in reaction to the news.

“In the absence of news or details on what kind of corruption this is, we’ll see some initial panic, that’s for sure,” Mathew said.

Al-Waleed, a Saudi royal with a vast fortune that puts him among the world’s richest men, is known as one of Citigroup’s biggest and most vocal shareholders. He also owns about 5% of Twitter’s outstanding shares, according to Bloomberg, and he’s a top investor in Apple.

Now, al-Waleed, who’s been called “the Warren Buffett of the Middle East,” faces laundering charges, a source told the Wall Street Journal.

President Donald Trump probably isn’t shedding a tear:

So far, markets don’t appear to be all that concerned with what’s happening over there, although the uncertainty has helped lift oil prices, which reached levels not seen since the summer of 2015.

See: How history suggests the Saudi ‘Game of Thrones’ may keep going — in one chart

Key market gauges

Oil CLZ7, +0.23%  is up, approaching $56 a barrel as investors gauge the Saudi news.

Futures on the Dow YMZ7, +0.11% Nasdaq NQZ7, -0.01%  and S&P ESZ7, +0.00% are struggling for any direction. Gold GCZ7, +0.22%  is catching a slight lift.

Asia markets ADOW, -0.21%  closed flat to lower, though the Shanghai CompositeSHCOMP, +0.49%  had a pretty good day. Europe SXXP, +0.06%  was mostly mixed .

Bitcoin BTCUSD, -0.99%  hit a new high way up near $7,600, but has since come down quite a bit.

Read the Market Snapshot column for the latest.

The buzz

A massive leak of data has revealed how the world’s super-rich move trillions of dollars in cash through offshore tax havens and has raised new questions about the finances of top members of Team Trump. Keep an eye out for what pops up next in the coming days. Check outmore about the Paradise Papers.

Amazon.com AMZN, +0.47%  is hammering away at the competition once again, lowering prices by as much as 9% in recent weeks on goods offered by third-party sellers. Just look for that “Discount provided by Amazon” tag.

Merger talk is in the air for Monday. Sprint S, -13.33%  is taking a hit after announcing with T-Mobile TMUS, -5.75%  over the weekend that merger talks had ended.

In the chip sector, Qualcomm QCOM, +5.13%  is up on a report that BroadcomAVGO, +1.90% could be planning an unsolicited takeover of its rival.

And Marvell MRVL, +11.35%  is popping after reports late last week that it could combine operations with Cavium CAVM, +10.49%  .

Rand Paul is still recovering from some pretty serious injuries after he got into a scrum with a neighbor in Bowling Green, Kentucky.

Earnings

Berkshire Hathaway  BRK.B, -0.75%  is under some pressure. It posted weaker-than-expected results late Friday that included a $1.4 billion loss in insurance underwriting.

Things won’t slow down too much this week on the earnings front, with DisneyDIS, +0.62%   , Snapchat parent Snap SNAP, -1.84%  , Nvidia NVDA, -0.33%  and some retailers headed our way.

Monday will bring CVS Health CVS, -2.48%  , Michael Kors KORS, +10.00%  , PricelinePCLN, -0.08%  , Etsy ETSY, -0.84%  and TripAdvisor TRIP, +0.54%  , all due after the close.

Check out a preview of this week’s earnings

The chart

Margin debt hit an all-time high in September, a sign that investors are feeling frisky about the current state of things in this market. Yet records in margin tend to pop up around major market tops.

Callum Thomas of the Topdown Charts blog says, however, there’s perhaps a “more useful” way to look at it — margin acceleration, as shown in this chart:

“There are two warning signs for this one; a. when it spikes to extreme levels of acceleration, and b. when it rolls over and goes negative,” Thomas explains. “At this point it has rolled over and so is on a watching brief.”

He adds that, as of now, it’s just a “mild warning sign,” but if the red line should turn negative, the bearish signal intensifies.

The stat

$7 billion — That’s how much Satoshi Nakamoto, the guy/girl/group who invented bitcoin, is worth now that the cryptocurrency just broke through yet another all-time high, according to estimates provided by Yahoo Finance.

What’s the aforementioned Saudi prince think of bitcoin as a possible investment? Let’s just say he’s not a huge fan.

The quote

“The reason our stock market is so successful is because of me. I’ve always been great with money, I’ve always been great with jobs, that’s what I do. And I’ve done it well, I’ve done it really well, much better than people understand and they understand I’ve done well. But we have a tremendous amount of strength because of what’s happened. You know, think of it — $5.5 trillion worth of value.” — Donald Trump, addressing reporters on Air Force One at the outset of his trip to Asia.

Also check out: Trump says Japan will easily shoot North Korean missiles ‘out of the sky’

The economy

Nothing too exciting going on Monday in terms of economic data — or for the rest of the week, really. Fed Chair Janet Yellen will be speaking on Tuesday, and we’ll get the preliminary reading on November consumer sentiment at the end of the week.

Read: Everything about the jobs market is hot except the paychecks.

Random reads

Why do women get prettied up if they don’t want to be harassed? Here’s the explainer you probably didn’t ask for … someone did, though.

Read the Milo Yiannopoulos column about Kevin Spacey that apparently led to the firing of the Daily Caller’s opinion editor.

The “fake news” engine was overheating after the latest shooting.

Building AI that … can build AI.

Rolling Stone takes a deep dive into “The Great College Loan Swindle.”

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