Panama Canal

  • Unprecedented drought in the Panama Canal is forcing some ships to offload 40% of their cargo.
  • It takes 200m liters of water per ship, that is pumped from Gatun lake.
  • Last year we had drought issues in the Rhine.
  • The coming El Niño weather pattern could lead to more issues for global transport supply chains.
  • Chart source: Tema ETFs.

Tesla and Service

  • Interesting analysis of Tesla’s purported business model compared to other automotive manufacturers – make cars that don’t break vs. the razor/razor blade (i.e. zero margin cars with high margin service and parts) typically adopted by others.
  • Tesla does not have an existing fleet and that the auto industry, the reason incumbents succeed and newcomers fail, the biggest reason is that the incumbents have a large fleet, and they’re able to sell new cars at close to 0 margin and then sell spare parts at a very high margin, sort of razors and blades type thing.
  • NB to access all the transcripts you can try Stream for free for two weeks.

Third Point Letter

  • In case you missed it – Loeb’s latest missive from Q1.
  • His purchase of UBS is interesting – though CS will undoubtedly have more skeletons (see here) and lose more AuM (as clients diversify), the uplift to UBS book value (74% accretive, putting UBS post deal on 0.74x P/TBV), state loss guarantees (CHF 9bn post first 5bn), and liquidity provision (CHF 100bn) are all positives.

Greece

  • The Greek economy is doing rather well, and starting to peel away in terms of growth.
  • Barclays, via FT Alphaville, argue it might be entering a third positive “megacycle”.
  • This analysis agrees – “Greece is growing, investment is booming, employment prospects are improving, the number of businesses is moving up, salaries are increasing, and the country is becoming less poor, not more“.
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