| | In today’s newsletter, Liz checks in from Riyadh where she takes in Crown Prince Mohammed Bin Salman͏ ͏ ͏ ͏ ͏ ͏ |
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 | Liz Hoffman |
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Hi from Riyadh, where the juices are flowing. A missed turn in an Uber on Sunday brought me past the site of the Mukaab, a 1,300-foot-tall building going up in the desert just south of King Khalid International Airport. Think of the pyramids of Giza, but square, or an ornate tissue box big enough to hold 20 Empire State Buildings. Like most of Crown Prince Mohammed Bin Salman’s megaprojects, the Mukaab is grandiose, bizarre, and expensive. He has launched more than $1 trillion of projects under Vision 2030, his effort to tilt the Saudi economy away from fossil fuels and toward tech and finance. Even vast oil wealth can’t pay for it all, forcing the country to borrow. That’s why thousands of international investors and bankers are here this week. The annual Future Investment Initiative conference has been called “Davos in the Desert,” though its organizers hate that because they’re trying to kill Davos, not complement it. When FII launched in 2017, Saudi Arabia was a new global investor and used its checkbook to buy credibility. It invested abroad and asked for little in return. Today Saudi Arabia is meeting global investors on more equal footing. Even as its financial strain has grown, so has the draw for Western firms chasing the Gulf’s $4 trillion in sovereign wealth and growing billionaire class. That has allowed Saudi Arabia and other oil-rich regional monarchies to demand more for their money, including local investments and local headquarters. Thirty percent of Saudi Arabia’s Public Investment Fund’s $930 billion is in overseas investments, Governor Yasir Al-Rumayyan said here on Tuesday. He wants to bring it down to under 20%. The PIF and BlackRock teamed up this year for a $5 billion investment pool “for the Saudi market … managed by a Riyadh-based investment team,” and BlackRock is building a mortgage-bond market to help lower the cost of Saudi housing. Apollo is managing some money for Abu Dhabi for free. Lucid, the EV startup, received $2.5 billion from PIF in exchange for building the kingdom’s first car factory. “They are not stupid,” Lucid’s CEO, Peter Rawlinson, told me recently. “They are very savvy investors, and they are looking for multipliers that can help their transition.” I’ll be back Thursday with final thoughts from the week, and a look ahead to next week’s election. And if you want more, try our latest newsletter, Semafor Gulf. Sign up here!  Tasos Katopodis/Getty ImagesBUY: Vibes. The consensus among CEOs seems to be that Donald Trump has the edge. “How people are talking is completely different than three weeks ago,” UBS CEO Sergio P. Ermotti said at a Semafor event last week, a sentiment echoed by Ken Langone, a recent Trump convert, and today by Ken Griffin. SELL: Nerves. Treasury yields jumped Monday, after an auction of 2-year notes got a lukewarm response from investors. They’re nervous about the rising federal deficit (which they think will only get worse after the election) and potentially inflationary tariffs if Trump wins. |
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US investments in AI chips and other advanced technologies like quantum computing will be blocked on national security grounds under a new rule the Biden administration finalized Monday, Semafor’s Morgan Chalfant reported. The rules follow more than a year of deliberation, and are meant to keep US capital supporting American suppliers of key materials, not arming an adversary with cutting-edge technology. A Georgetown analysis last year found that US investors participated in 17% of fundraising rounds by Chinese AI startups. |
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 Courtesy of Future Investment Initiative (FII)Larry Fink said the classic inflation-fighting playbook of raising interest rates needs to be reexamined. Speaking at FII in Riyadh, the BlackRock CEO — and occasionally floated candidate for Treasury Secretary — said that rate hikes are less efficient than in the past because so many Americans have 30-year fixed mortgages: “Their major liability is their mortgage, and that did not move,” he said, echoing comments from Chicago Fed Chair Austan Goolsbee last month. They also exacerbate the wealth gap because “the people who don’t save, who are borrowers, are the ones being harmed.” |
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| Military + industrial = complex |
A division of the US military cited OpenAI’s “essential” technology in approving a cloud contract with Microsoft, The Intercept reported. The purchase comes a few months after OpenAI quietly removed the ban on military use of its products and pitched its image-generation tech as a way to visualize military operations. Backlash watch: Companies less overtly committed to “benefit[ting] humanity” than OpenAI have faced internal revolts over their military or law-enforcement contracts, including Google, Amazon, and Palantir. Counterpoint: Defense tech is newly trendy in Silicon Valley. “If you’re a roboticist, the fastest path to robots is in fact drone warfare, I’m sorry to say,” Eric Schmidt, the former Google CEO and proponent of AI-heavy fighting, said at FII today in Riyadh. And the pitch from tech companies is that if the US doesn’t build it, China will. In the archives: Dow’s CEO was chased off Berkeley’s campus in 1966 “as an instrument of the US government at war” because the company made napalm, one of his successors remembered in 2017. |
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 Boeing raised $21 billion to try to avoid a credit-rating downgrade and defray the costs of an ongoing machinists’ strike. Its $16.1 billion offering of common shares and $5 billion in depositary shares is one of the biggest ever, and close to the same size as the troubled banks that raised cash during the 2008 crisis and following recession. |
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  US Embassy TanzaniaThe Kamala Harris campaign has assembled a 25-strong team to devise a comprehensive US-Africa policy if she wins the White House next month, Semafor’s Yinka Adegoke scooped. People close to the Harris-Walz campaign say US-Africa policy, which is usually low down on US foreign policy priorities, “will get a lot more attention under Harris” if they win the White House and build on the Biden Administration’s attempts to upgrade the status of US-Africa policy. For more news on the African continent, subscribe to Semafor’s Africa newsletter. |
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