Saudi Arabia Postpones ‘Davos in the Desert’ After Houthi Attacks

After attacks on its airport at Capital City, Saudi Arabia is delaying its flagship investor conference until next year. Plus, why the luxury housing market is booming. They have access to huge, huge amounts of home equity. So they get huge amounts of cash that they can put big down payments or even buy their next home in cash. And the Elizabeth Holmes documentary just blew past box office expectations for its opening weekend. What's got audiences and some podcast hosts so excited? It's Monday, October 19th. I'm Alex Ocele for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Saudi Arabia has postponed its flagship investor conference that's known as Davos in the Desert. The future investment initiative was originally scheduled for next week. Now the conference will happen next year. WSJ foreign correspondent Stephen Kalin says Saudi Arabia's escalating conflict with the Houthis drove the decision. The airport in Riyadh was targeted multiple times this month. And there's just a sense that it's not safe enough for high-level executives to feel comfortable flying in. Jamie and Diamond from JP Morgan and Citi's Jane Frazier were some of the top guests that were expected. And they had been deliberating whether to come or not. Some other bankers from both of those banks. There was a lot of private back-channeling to the Saudis to explain that it was going to be really difficult for a lot of these senior people in finance and business from New York, London and elsewhere to make it to Saudi Arabia. Stephen says postponing the annual conference, which has been going on since 2017, is a big hit to the kingdom and its economy. This conference is really huge for Saudi Arabia. It is put on by the Public Investment Fund, which is the sovereign wealth fund of Saudi Arabia. It's chaired by Mohammed bin Salman. And the PIF is the vehicle through which he has been pushing his economic transformation plans. So this is sort of a hallmark annual event where they try to brag about what they're doing, what they're planning to do. They try to attract investors. And it came to be a trademark for him. So the fact that it has to be canceled now is honestly a huge frustration for the kingdom. And it's really a symbol. It's a symbol of how the geopolitical situation in the region, the war with Iran, now the war with the Houthis, is jeopardizing a lot of the economic and business plans that the kingdom has had. Separately, in a California courthouse, a new development in the case of the Saudi national who's been accused of bugging an OpenAI conference room. Federal prosecutors say that Abdulrahman Alfazan had been in touch with a member of the Saudi royal family about job opportunities in the kingdom before he was arrested. The prosecutors argue in a new filing today that Alfazan. Alfazan should be kept in custody because he's a flight risk. Alfazan's lawyer said he planned to address the new filing in court. Representatives from the Saudi embassy in Washington, D.C. didn't immediately have a comment. Elon Musk said that he would give every child in America one SpaceX share next year. He posted on X that this would be the, quote, first of many. There are about 73 million kids in the U.S. So based on that and Friday's SpaceX share price, that could mean Musk is giving away roughly $10 billion. The move follows similar pledges by anthropic and high-profile billionaires to give away some of the wealth they've accumulated during the artificial intelligence boom. And like some other wealthy donors, Musk seems to be planning to use the government's new Trump accounts program for kids to donate the shares. In other corporate news, the pharma industry is pouring billions of dollars into a new class of drugs. They're called protein degraders, and they're showing promise and going after a certain hard-to-target protein in disease cells. The U.S. Food and Drug Administration has already approved a few protein degraders for certain kinds of cancer. But drug makers are testing others to treat conditions including autoimmune diseases like asthma and neurological conditions like Parkinson's. Lizzie Lawrence covers the pharmaceutical industry for the journal, and she says this new type of drug works differently from existing treatments. Most of the drugs on the market currently work by finding a protein in a cell that's causing that disease, latching onto it, and stopping it. And so the drug really only works if it is latched onto that protein. You need to usually find some sort of nook or cranny for the drug to attach to, whereas these drugs don't need a nook or cranny so they could destroy a smooth protein or, you know, other proteins that we've not been able to drug before. Lizzie says virtually every major pharmaceutical company is working on developing a protein degrader. But she says there are still some pretty big unknowns about what these drugs can do. There are still questions about in what diseases. They might be most effective and, you know, whether they might work as a front line treatment or they might work for, you know, cancers, for example, where the cancer is mutated and other drugs don't work. The biggest safety issue to be aware of here is the drug makers need to make sure that the drugs are not accidentally killing healthy proteins. That is something that researchers and companies are well aware of and monitoring. But it's still, you know, a risk nonetheless that people should be aware of. In markets today, tech stocks are staging a recovery. The Nasdaq closed up more than 1 percent after last week's sell-off. And the S&P also rose while the Dow and oil prices were muted. Treasury yields were moderately higher. Earlier in Europe, major stock indexes were in the red. And French government bonds sold off after the cost of living protests that spiraled out of control over the weekend. With hundreds of millions of dollars. Hundreds of police and military were injured, as were demonstrators and bystanders. And in the latest development there, the government is ordering partial curfews in parts of Paris and other cities. And says it will deploy more police ahead of more protests planned for next weekend. Coming up, what the K-shaped housing market means for builders. More after the break. Across the U.S., the housing market is seemingly splitting in two. Mortgage rates above 7 percent have pushed many buyers to the sidelines, which is slowing down the market for lower-end and entry-level homes. Meanwhile, the luxury market is going strong. Nicholas Miller covers housing for The Journal and is here to discuss. Nicholas, I want to start with the camp that many would-be buyers would fall into, entry-level homebuyers. Higher mortgage rates are making it unaffordable for them to buy. What impact is this having on home prices and where in the country are we seeing this happen? If you look at the majority of the top 50 metros in the country, starter-level home prices are rising slower or falling faster than luxury prices. And that's because for a lot of these entry-level buyers, they're very sensitive to higher mortgage rates. And so a significant run in mortgage rates, that really increases your monthly payment. And so to offset that, you're going to look for lower home prices. A lot of sellers have actually started cutting the price. Even more common than that is offering very significant concessions in the form of closing costs, credits for mortgage rate buy-downs. Right. On the other hand, there's this luxury market, which is doing great. Why is it doing so well? So in the way that our most entry-level buyers are very sensitive to mortgage rates, these luxury buyers are a lot less sensitive. That is because they have significant cash reserves or they can tap stocks. And then also a lot of them are selling homes that they bought. So for the run-up in home prices after the pandemic, they have access to huge, huge amounts of home equity. So when they sell those homes, they get huge amounts of cash that they can put big down payments. And what that does is it decreases the size of the mortgage or even they can buy their next home in cash. And where in the country are we seeing the luxury market kind of pop off like this? There are places like San Francisco, for example, where the housing market has gotten a huge boost from the AI boom. And there, the rise in home prices is almost all in the luxury market, the top third of the market. There are places such as Cleveland, Pittsburgh, some of these Midwestern cities that are more affordable. And there, you're actually seeing the opposite effect where the affordability of these cities has drawn a lot of first-time buyers. And so there, you're actually seeing starter-level prices rise faster than the top third of the market. That's an interesting distinction. So for builders of these homes… I'm really curious what these sort of splitting forces mean for them. I mean, are they shifting away from building cheaper homes because they just can't get their money back on them? Most of the biggest builders in the country kind of focus on that entry-level segment. And right now, the problem they're facing is that because buyers are so hesitant, they have this built-up inventory of starter-level homes that they're having to offer very significant incentives to sell. And so that's really cutting into their profits. The builders that haven't seen that problem are builders that are focused on that luxury market. And they've continued to perform very well. And, yeah, some builders are trying to figure out ways to kind of shift toward that luxury market. There are some builders who are, you know, trying to build homes cheaper for the entry-level and that way kind of recover some of their profit. That was WSJ reporter Nicholas Miller. Thank you, Nicholas. Thanks so much. - And finally. - You really feel you did nothing wrong? I did not. So where did things get lost? Like, how are you where you are right now? I wish I knew. That's from the new documentary called You Can See Everything. It's about Elizabeth Holmes, the convicted fraudster behind blood testing startup Theranos. A lot has been said about her since the Wall Street Journal's 2015 investigative reporting on how Theranos' technology didn't work. But this documentary is raising new questions, and audiences are into it. It just had its opening weekend in 855 theaters across the country. And at $15 million, it was the strongest opening weekend for a documentary, besides those of concerts, since Fahrenheit 9-11 in 2004. I just checked tickets for my local theater, and every evening screening is pretty much sold out all week. Esther Zuckerman covers film and culture for the Journal, and she's seen it twice already. Now, Esther, we should say that we're going to avoid spoilers for this conversation, so those of us who haven't seen it yet don't need to worry. But why did this film do so well? I think it's mainly the pairing of Nathan Fielder, who has gained this sort of cult following through his shows like Nathan For You and The Rehearsal, which are comedy shows that take these documentary twists and turns and are sort of you-have-to-see-it-to-believe-it type of things. The fact that he is paired with Elizabeth Holmes, so it's this strange combination of these two people that makes it really fascinating. Plus the buzz since this film premiered last month at the Telluride Film Festival has just been through the roof, in part because they've been so adamant that a lot of the twists be kept a secret. So everyone just wants to know what happens because we've heard there's all this crazy stuff that happens. Okay, and speaking of the crazy stuff, what did you think of it? I think it was really cool. I think it was really completely captivating. This is a three hour long movie and you really don't feel the length at all. You know, they're the classic questions of when should I get up to use the bathroom if I'm in this three hour movie? And I really don't have a good answer for that because every interaction is really, really, really compelling. Well, sounds like I'm going to have to find a babysitter and go see this movie. That was journal reporter Esther Zuckerman. Thank you, Esther. And that's what's news for this Monday afternoon. Today's show was produced by Anthony Bansi with supervising producer Tali Arbel. I'm Alex Oseleff for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.