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Wednesday, 21 November 2018

More what we’re tracking on 21 November 2018: Goldman’s 2019 EM outlook, The Donald stands with MbS, Carlos Ghosn arrested

Donald Trump is standing with Saudi Arabia, downplaying Crown Prince Mohammed bin Salman, “pledging to remain a ‘steadfast partner’ of the kingdom and dismissing U.S. intelligence conclusions that the Saudi crown prince had ordered the killing of a dissident journalist last month,” the Wall Street Journal reports.

Speaking of MbS: The crown prince will visit Egypt “soon” in a tour that will also take him to the UAE and Bahrain before heading to Argentina to attend the G20 summit, a diplomatic source revealed. MbS is due to hit the road this coming Friday.

Carlos Ghosn, the architect of the Nissan-Renault alliance, was arrested in Japan on Monday. The high-flying exec, who was said to be negotiating a full merger between the two companies in the days leading up to his arrest, faces charges he under-reported his compensation. That merger could be entirely off now: “Nissan’s investigation into alleged misconduct by Chairman Carlos Ghosn is expanding to include Renault-Nissan finances … in a further sign that Nissan may seek to loosen its French parent’s hold on their global carmaking alliance,” Reuters reports. The allegations are a warning to high-flying chief executives everywhere, the Financial Times editorial board writes.

A ray of sunshine? Goldman’s 2019 outlook for emerging markets: Goldman Sachs expects EM shares, currencies and bonds to see a “modest” rebound next year after a tumultuous 2018, according to its 2019 Outlook report (pdf). Returns on assets during the next six months may be better than the past period, analysts wrote, especially as concerns about the next US recession grow over time. Goldman sees EM growth sliding to 4.7% next year compared to 5.1% this year before accelerating to 5.3% in 2020. Thanks to a modestly weaker USD and economic improvements outside of China, EM equities will see the biggest rise at 12 percent in USD terms, while EM currencies should appreciate by an average of 2 percent, while local rates return round 10 percent and sovereign bonds return 5.5 percent, Bloomberg writes, picking up on the report.

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