When in doubt

It started 5 days ago when I wrote ‘Bitches on parade‘ (at https://lawlordtobe.com/2019/08/26/bitches-on-parade/). The premise from my point of view is that you cannot heckle a country based on a lack of evidence (read: CEO Jamie Dimon), so whilst he pulled out of the Saudi Conference, he was eager and willing to take a chunk of a $2,000,000,000,000 pie at the drop of a hat (any hat). The man has no principles when it comes to money, which is fine. Yet now the entire event is exploding in several directions as the Guardian (at https://www.theguardian.com/business/2019/aug/29/political-uncertainty-puts-london-listing-in-doubt-for-saudi-aramco) informs us that “state oil company may rule out the London Stock Exchange amid Britain’s rising political uncertainty“, in one word brilliant! Two years of whining and lack of decision is not about to hit the British MP field in a massive way. It gets to be even better when we consider the impact for the EU as a larger field, the current favourite according to insiders will be the Japan’s Tokyo stock exchange. If that happens, I get to smile whilst a whole range of bonuses will not arrive with Wall Street, the ECB or London (I am least happy about London missing out). There is a price, there is a cost to doing business and it seems that this week Saudi Arabia is making the tally to that event.

And now we see that the field changes. With quote: “Saudi energy minister, Khalid al-Falih, reignited plans for the float earlier this summer after announcing that officials were working to list the company within the next two years. Aramco announced earlier this month, in its first investor call, that it is ready for the listing whenever its shareholders agreed market conditions were “optimal”” It is here that we need to see the profit, the sudden option for Tokyo, who was not in the race at all also implies the added risk that Tokyo says ‘yes’ (read: Hai!) too eager giving the Saudi Aramco executives a much larger bonus than they expected, making the wave on the market gives rise that there will be two waves and these executives get to enjoy the windfall of both waves. I reckon that Lürssen Yachts (optionally Damen Yachts and CRN) will get to look forward to at least 5 additional commissions for yachts over 90 meters before the end of the year.

There is a much larger issue; it is not merely who gets what, and where we buy in. Bloomberg gave us on Thursday: “It’s been a good week for those seeking to pare bets on a market that brokers including Morgan Stanley say has become too expensive, given weakening fundamentals. MSCI on Tuesday wrapped up the second phase of including Saudi shares in its developing nations index, prompting billions of dollars in inflows from passive funds. Some active managers took advantage of the increased liquidity to reduce their holdings“, there is no way for me to comment on the issue as stocks are not my trade EVER! Yet consider the quote ‘brokers including Morgan Stanley say has become too expensive‘, yet they too are rallying to get their fingers on Aramco. Business is hard and I am fine with the directness that the market needs to be. Yet Aramco is different, everyone wants in and as such Saudi Arabia gets to elect the offerings and as such some players are about to enter the new field, they are optionally becoming the next Ricky Fuld, who was the only person not offered a deal in 2008 whilst the others got one. I am not sure on how to see that, The Wall Street Journal gives us ‘Branded a Villain, Lehman’s Dick Fuld Chases Redemption‘, these people walked away with massive amounts whilst almost one in two households got foreclosed in the end, that is a massive amount of anger to deal with and I personally believe that the Saudi’s will do business with everyone, just a certain group of people will have to be willing to cut their margins by a fair bit. Certain actions have impact and will have a considerable impact of the option to do business, Saudi Arabia could afford to wait, of those people had only decided to wait factual evidence, that would have been nice, not?

I believe that their hypocrisy on Jamal Khashoggi now has a price (to some degree); in addition the economic turmoil gives Saudi Arabia the option to select the host, who will gain a lot. I never considered Japan before today on this, but the choice makes sense.

We could go with the option: ‘When in doubt select the ally that seems more sincere‘ or we can go with ‘Be careful who you wake up with presented and insincere morals‘ I reckon that Wall Street and Especially the ECB need to learn from the second option. No matter how things unfold, pretty much everyone will be keeping 100% attention on the Tokyo exchange, something that has not happened in a long time and Aramco made it happen. And all whilst this is going on, the UK is still in all kinds of childish banter, especially by opposition parties. So when we get the Jeremy Corbyn quote “avoiding a No Deal Brexit” my (absolutely less than diplomatic) response would be “If you weren’t such a stupid dick, you could have done something 2 years ago, but you all played the ‘it will blow over’ tactic ignoring the democracy when they majority decided to Brexit!“, and now the mess is becoming even larger as London lost the option for hosting the Aramco deal. We even see Dutch issues with: “Dutch Foreign Minister Stephen Blok said on Thursday that “serious talks” on Brexit had taken place in Brussels this week, but warned the two sides “are not there yet” on a deal“, there was never going to be a deal, all delays were set to try and overthrow Brexit, now you see that there will be a much larger impact and there will be trade deals in the end no company will walk away from the option to tap into a 69 million consumer base.

That was a clear setting from the very beginning, anyone ignoring that part is delusional. Let’s not forget that the need to exceed shareholder expectations also automatically imply that the EU customer base representing half a billion people also means that 13.5% of them will not ever be shunned, someone else will walk in and take over.

For some, the entire Aramco was icing on the cake and now that this falls away and falls away from Europe also means that the EU will have several grim numbers to report in January 2020, plenty of people are already scared whit less and ready to retire as soon as the October 2019 numbers are released.

When in doubt, never trust Status Quo to actually remain. It is the deadliest of traps and it just sprung.

 

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