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Markets Mohammed bin Salman saudi arabia

Saudi Stocks Dive As Khashoggi Sanctions, CIA Conclusion Deep-Six Sentiment

It remains to be seen whether Trump will begrudgingly accept the intelligence assessment.

Late Friday, the Washington Post (followed by AP) reported that the CIA has come to the same conclusion as everybody else in the world when it comes to the assassination of dissident Saudi journalist Jamal Khashoggi.

That conclusion: The order to kill Khashoggi came from Crown Prince Mohammed bin Salman himself.

Of course the CIA knew that from the beginning. As soon as Khashoggi disappeared, the Post reported that the U.S. was in possession of intelligence intercepts that implicated the Crown Prince. But naturally, the U.S. gave the Saudis six weeks to try and craft a plausible cover story. Long story short, that effort failed miserably.

On Thursday, the Saudis announced the results of their farcical internal “investigation” and hours later, Steve Mnuchin sanctioned 17 Saudis, among them Maher Abdulaziz Mutreb (who has been photographed traveling with bin Salman on too many occasions to count) and Salah Tubaigy, the chief of forensic evidence and autopsy expert who dismembered Khashoggi with a bone saw.

The Crown Prince was not mentioned in the Saudi report or the Treasury sanctions, which means the CIA conclusion is going to present a real problem both for Riyadh and Donald Trump, who on Saturday suggested he isn’t likely to take action against bin Salman no matter what the CIA says.

Read more

Trump Indicates He Won’t Accept CIA Conclusion On Khashoggi Murder

CIA Concludes Crown Prince bin Salman Ordered Khashoggi Murder, Piling Pressure On Trump, Saudis

Fast forward to Sunday and Saudi stocks are down more than 2%, on pace for their worst day since the immediate aftermath of Khashoggi’s disappearance.

SaudiDailyChange

It remains to be seen whether Trump will begrudgingly accept the intelligence assessment and it certainly wouldn’t be out of character for him to ignore it. That said, don’t be surprised if you start seeing selling from qualified foreign institutional investors again like you did last month when the Khashoggi story started to spiral out of control (red arrow below).

SaudisSelling

(Bloomberg)

Meanwhile, 3M Saibor now looks like it wants to remain above Qubior and Saudi CDS doesn’t look like it wants to come back in.

Saudi2

(Bloomberg)

Oh, and the yield on the Kingdom’s 2028s is sitting near a record high around 4.6%.

Saudi3

(Bloomberg)


 

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