FT : Iran war boosts Panama Canal’s revenues by up to 15%

Iran war boosts Panama Canal’s revenues by up to 15%
CFO Victor Vial says world trading routes will be permanently reshaped after the conflict

The Panama Canal’s revenues have climbed as much as 15 per cent due to global trade disruption caused by the war with Iran, and the Central American waterway expects to keep some of the extra traffic even after the conflict ends.

Traders have sought out the canal after Tehran choked off traffic at the Strait of Hormuz, a vital shipping lane for global oil supplies.

Chief financial officer Victor Vial told the FT the Panama Canal had boosted daily transits by as much as 20 per cent since the conflict began in late February.

“Our sales are up, definitely,” Vial said. “We were moving 34 daily transits before the conflict. Now we’re moving an average of 38 and we have days of 40 and 41 transits.”

Asian traders, in particular, have scrambled to source oil, fuel and dry bulk commodities, such as coal, which are often transported through the waterway from the US Gulf Coast. The activity has driven the Panama Canal’s lane prices to record highs, with one gas tanker last month paying $4mn to cross, though Vial said the vast majority have been below $1mn.

The Panama Canal has seen some of its own costs — including overtime — rise but increased volumes and auction price premiums suggest revenue growth “is going to be somewhere between 10 and 15 per cent, but we’ll see how long that lasts”, Vial said.

He added: “When you have a disruption in the marketplace like this, things come and go real quick — so we’re not counting the money and changing projections for the year just yet.”

The Panama Canal posted a net profit of $4.1bn on revenues of $5.71bn for the fiscal year from October 1 2024 to September 30, 2025. The current revenue projection for the fiscal year ending in September 2026 stands at $5.8bn, reflecting stronger demand due to the conflict and a lower-than-expected impact of US tariffs.

In the first half of this fiscal year, net earnings rose 12 per cent compared with the same period the previous year, to $2.3bn on revenue of $3bn.

The month-long ceasefire in the Middle East was tested by fresh clashes this week, in which Washington said Tehran had launched cruise missiles at American warships and commercial vessels, while US forces struck several Iranian small boats. Iran said it still had control over the key route, and the US paused a plan to guide ships through the strait.

Trump has previously also said he wants to “take back control” of the Panama Canal, blasting what he sees as undue Chinese influence. Panama’s top court earlier this year annulled a contract for Hong Kong’s CK Hutchison to operate ports at either end of the waterway, sparking lawsuits from the Hong Kong conglomerate.

Vial said the number of oil cargoes from the US heading through the Panama Canal to China, Japan and South Korea had virtually doubled to “12 to 13, sometimes even 14 daily transits” versus seven before the conflict started.

Even after the war ends, “I would expect that there will be changes permanently — maybe some folks will say ‘I want to hedge my bets . . . because it’s just too risky to depend on the Middle East’. I would expect that we will see some of that,” he said.

While it is hard to predict how much volume might shift, he added: “Crude tankers using the Panama Canal maybe won’t go back to seven — maybe it’ll go back to eight, nine or 10.”

While some ships arrive without a booking and have to wait for one of the three daily auction slots, the Panama Canal’s reservation system means there has been no repeat of the lengthy queues of vessels waiting to cross during a severe drought in 2023, he said. Auction prices have risen to an average of about $385,000 compared with $135,000 before the conflict, Vial said.

But he said “of the 400 auctions we’ve had since February 28, less than 1 per cent — meaning just a couple — have been above $3mn. About 80 per cent have been below $1mn . . . there has been only one that paid $4mn”.

Even if the war “stops tomorrow”, Vial still expected the disruption means “we’re still going to have higher demand than usual . . . because we are a viable option to move product to Asia”.

Going round the Cape of Good Hope takes more than 14 extra days, he said, meaning the waterway is “very competitive” even at higher prices.

Water levels are the biggest long-term constraint but the Panama Canal has been helped by a very wet February and can maintain current volumes for a few months, Vial said.

FT : European carmakers take €8bn hit from Trump tariffs

European carmakers take €8bn hit from Trump tariffs
US president has threatened to raise levies to 25% if EU does not implement last year’s trade deal

European carmakers have been hit with more than €8bn in tariff costs in the year since Donald Trump increased import duties, with the industry bracing for a fresh escalation in the trade war with the US.

The figure, based on public statements by executives at Volkswagen, BMW, Mercedes-Benz, Stellantis and Volvo Cars, covered 2025 and the first three months of 2026 leading up to the anniversary of Trump’s auto tariffs.

The US raised duties on European cars to 27.5 per cent from 2.5 per cent on April 3 last year as part of President Trump’s blitz of tariff increases. The rate was subsequently reduced to 15 per cent after a US-EU trade deal in August but has still hit carmakers heavily.

“The operating environment has deteriorated significantly,” Volkswagen’s chief financial officer Arno Antlitz told investors last month, warning of US tariff costs of €4bn this year. “Against this backdrop, incremental cost measures will not be enough. We must fundamentally reshape our business model.”

The spectre of even higher tariffs looms after the US president threatened this month to increase levies on European car imports to 25 per cent, accusing the bloc of failing to abide by last year’s deal. He has given the EU until early July to implement its trade deal with the US.

Audi finance chief Jürgen Rittersberger told reporters this week that an increase in auto tariffs would place a “significant burden” on the manufacturer, which is one of 10 brands in the Volkswagen stable.

Tariffs have added to the challenges faced by European carmakers, already facing strong competition in China and contending with the costs of the transition to electric vehicles.

Volkswagen has reported €3.6bn in US tariff costs since the higher rates were implemented, the biggest hit among Europe’s car groups. BMW reported tariff costs of about €2.1bn, including duties on imports into the EU from the US and China, while Mercedes-Benz reported tariff costs of €1.3bn.

Stellantis reported €1.2bn in tariff costs but the US manufacturing presence of the maker of Chrysler, Dodge and RAM Trucks brands meant that a larger proportion of these costs related to trade between the US, Mexico and Canada.

Were Trump to swiftly follow through with his threat of 25 per cent tariffs on European autos, it could cost the three German carmakers — Volkswagen, BMW and Mercedes — an additional €2.6bn in 2026, according to analysts at Bernstein.

Carmakers would be examining measures to offset the cost of any increase in tariffs but further price rises could reduce sales volumes, said Bernstein analyst Stephen Reitman.

With European car groups’ profits already under pressure, “it’s very hard to expect that the manufacturers are going to absorb all of that themselves”, he said.

Audi said it hoped talks between the US and EU would “avoid any further increase in tariffs”.

The premium manufacturer is preparing the launch of its new Q9 three-row luxury SUV, which has been designed with US consumers’ preference for larger autos in mind.

But the new flagship model will be produced in Bratislava, meaning that all exports to the US will face tariffs. Audi has talked about the possibility of establishing a production site in the US to circumvent tariffs but a decision on the investment has not yet been made.

BMW chief executive Oliver Zipse said he was hopeful of a deal with the US administration, long sought after by European carmakers, that would offer a discount on tariffs to companies like his which produce cars in the country.

“We have a lot of support [in the administration] but, of course, only if the first part of the deal is also carried out by the European Union,” he said.

FT : Saudi Aramco profits rise as oil price surge and pipeline offset Iran war h

Saudi Aramco profits rise as oil price surge and pipeline offset Iran war hit
East-west pipeline allows world’s biggest oil company to circumvent the Strait of Hormuz and keep pumping

Saudi Aramco’s earnings rose in the first three months of the year as shipments via its east-west pipeline allowed it to mitigate the impact of conflict in the Middle East.

The Saudi oil company’s adjusted earnings in the first quarter stood at $33.6bn, 26 per cent higher than the same period last year, it said in a statement.

“Our east-west pipeline, which reached its maximum capacity of 7mn barrels of oil per day, has proven itself to be a critical supply artery,” said Aramco president and chief executive Amin Nasser.

Saudi Arabia depends heavily on revenues from the company. The results suggest higher oil prices and strong refining margins have offset some of the impact from attacks on its energy infrastructure and the halt to exports through its Gulf ports.

Aramco ordinarily exports most of its oil from the Gulf but Iran’s control of the Strait of Hormuz since the outbreak of war on February 28 has meant it can only ship from its west coast. It has been pumping as much oil as possible through the cross-country pipeline that supplies the Red Sea port of Yanbu.

While Aramco said the pipeline had reached maximum capacity during the quarter, it did not comment on its average utilisation or total shipments via that route.

Crude shipments averaged 3.3mn barrels a day in March, about half the volumes Saudi Arabia shipped the previous month, according to data compiled by oil research group Kpler.

Despite lower volumes in March, Saudi Aramco managed to sell more oil in the first three months of the year overall than in the same period last year, according to a Saudi stock exchange statement.

Aramco rushed to export as much as possible in the weeks leading up to the conflict amid fears of a US-Israeli strike on Iran.

The conflict also pushed international oil prices higher making the crude Aramco was able to export in March more valuable. The global oil benchmark Brent traded at about $100 a barrel in March, around 44 per cent higher than the previous month.

Aramco said its domestic and international storage capacity had also given it flexibility to handle disruption from the war. It did not comment in the results on damage to its infrastructure due to the war.

“Aramco’s first-quarter performance reflects strong resilience and operational flexibility in a complex geopolitical environment,” said Nasser.

“Recent events have clearly demonstrated the vital contribution of oil and gas to energy security and the global economy, and are a stark reminder that reliable energy supply is critical.”

Saudi Arabia is ordinarily the world’s biggest oil exporter but the US has overtaken the kingdom as its output is unaffected by the Gulf’s disruptions. US producers have moved to capitalise on higher global prices arising from the conflict.

Separately, ship tracking data appeared to show that Qatar had managed to send its first liquefied natural gas tanker through the Strait of Hormuz on Sunday.

The Al Kharaitiyat, which loaded in Qatar earlier this month, was displaying its location as in the Gulf of Oman and its destination as Port Qasim in Pakistan, according to data from Kpler’s commodity terminal.

The ship is at least the third LNG carrier to have run the gauntlet in recent days, raising hopes of a tentative restart to shipments from the Gulf.

FT : Tank maker KNDS pushes Berlin to decide on taking stake before IPO

Tank maker KNDS pushes Berlin to decide on taking stake before IPO
German family shareholders want to press ahead with listing of Paris-backed group at €15bn-€20bn valuation

Franco-German tank maker KNDS has urged the German government to decide on plans to purchase a stake in the business, warning it would press ahead with a planned stock market listing before the summer even if no agreement is struck.

Tom Enders, chair of KNDS, told Berlin in a letter last month that the group intended to begin an IPO process within the next two months irrespective of whether Berlin had reached a decision on taking a stake beforehand, according to two people with knowledge of the matter.

The listing plans have been delayed largely because Chancellor Friedrich Merz’s coalition has become embroiled in internal debate over the size of a potential holding, according to five people with knowledge of the situation.

The disagreement has hindered negotiations with the family shareholders from whom Berlin would buy a stake, including over price, they said.

After a year of talks, Enders’ warning reflects growing frustration among the German families who own half of the Amsterdam-based defence group and are seeking to exit.

An IPO without an agreement with Berlin would leave the French state, which owns the other half of KNDS, as the largest single shareholder in a key supplier to Germany’s armed forces, the Bundeswehr.

“The family doesn’t want to wait,” said one of the people. “If the German government misses the boat now, they really miss the boat.”

Advisers to the company and shareholders say KNDS is aiming to reach a market capitalisation €15bn-€20bn in an IPO by June or July, while demand for defence stocks is strong.

Valuations in the sector have surged in recent years but shares in Rheinmetall have declined almost a quarter in 2026 with sales missing analysts’ expectations. Shares in ammunition maker Czechoslovak Group, which listed in January, plummeted this month after a short seller report.

KNDS last month ordered an independent probe into bribery allegations related to a 2013 deal with Qatar’s armed forces. The company has said it expects to finalise its 2025 accounts this month. Auditor PwC will wait for the results of the investigation before signing off on the figures, the FT previously reported.

While the German government could still buy a stake after the IPO, it would then be constrained by takeover rules that require shareholders to bid for the entire company once they amass a 30 per cent holding.

At stake for Berlin is ensuring KNDS does not tilt towards Paris when deciding on programme priorities or the location of manufacturing sites.

Created in 2015 through the merger of Krauss-Maffei Wegmann and France’s Nexter, KNDS supplies Leopard 2 tanks to the German armed forces and Caesar howitzers to the French military.

The current plan is to float a minority stake — with the exact size still under discussion — with France and Germany to have equal holdings in the remainder.

However, divisions persist within the German government. The economy ministry favours a 30 per cent pre-IPO stake, while the defence ministry has pushed for a 40 per cent stake to account for possible future dilution.

Berlin is also seeking firmer commitment from Paris that France would reduce its own stake to match Germany’s holding, one of the people said.

The IPO is largely driven by the German families’ desire to sell down as much as possible and capitalise on investor interest as Germany pours hundreds of billions of euros into upgrading its military.

Within the German coalition, a decision over the stake is now at ministerial level with an intention to move quickly, according to two people with knowledge of the discussions.

One of them sought to downplay KNDS’s warning as partly tactical, saying it is in the company’s interest to strike a deal with Berlin because it would affect the size of its free float and share price.

The German and the French governments declined to comment. The families declined to comment.

KNDS said it could not comment on “internal German government discussions and [the company] shareholders’ matters”. It added that it remained focused on its strategy, including the IPO, with the full support of the board.

>>> Weekend Press Summary

FINANCIAL TIMES
-The US has sanctioned three Chinese satellite companies—The Earth Eye, MizarVision, and Chang Guang Satellite Technology—alleging they provided satellite imagery that assisted Iran in military actions against US forces in the Middle East. These sanctions coincide with President Trump's upcoming summit in Beijing with President Xi Jinping. Reports indicate that The Earth Eye's satellite helped Iran target US military installations. The US Secretary of State emphasized accountability for China-based entities supporting Iran’s military operations.
-Next week, Donald Trump will begin a two-day visit to Beijing amid escalating competition between the US and China in trade, technology, and global influence. Following a previous meeting in South Korea where both leaders agreed to a trade truce, the US is unwinding tariffs after China restricted essential mineral supplies. This shift reflects a significant moment in US-China relations, suggesting that the US no longer holds all the power, as noted by Victor Shih from UC San Diego. While some officials see the current phase as "strategic stability," others criticize it as "strategic deference," fearing a decline in US influence against growing authoritarianism from leaders like Xi and Putin.
-The MV Hondius cruise ship, affected by a hantavirus outbreak, will arrive in the Canary Islands early Sunday for the evacuation of nearly 150 people on board. The Spanish government is coordinating repatriation efforts and quarantine measures for passengers from various nations. Health officials have reported three deaths linked to the outbreak, with a total of six confirmed cases and two probable cases. The World Health Organization's director-general, Tedros Adhanom Ghebreyesus, is traveling to oversee operations. The situation is complicated by the disease's long incubation period and the cruise's multiple stops at remote locations with limited medical resources, requiring careful management of the disembarkation process by nationality, starting with Spaniards.
-Iran's "mosquito fleet," consisting of hundreds of fast-attack boats, is strategically positioned along its southern coast and ready to engage in the Strait of Hormuz. Despite many boats being lightly armed, the fleet plays a crucial role in harassing vessels and asserting Iran's control over this vital chokepoint. While lacking the firepower to significantly threaten US naval forces, the boats, in combination with the Islamic Revolutionary Guard Corps’ missile and drone capabilities, pose enough of a threat to deter commercial shipping. Analyst Joshua Tallis emphasizes that any approaching threat can create serious risks for mariners.
-Vessels transporting liquefied natural gas (LNG) are navigating the Strait of Hormuz, raising expectations for resumed deliveries from the Gulf. At least two LNG carriers from Abu Dhabi have successfully crossed the strait despite ongoing risks from Iran. In contrast, others en route from Qatar to Pakistan turned back. Pakistan canceled its plans to procure two spot market cargoes, believing shipments from Qatar would soon resume, following discussions between Prime Minister Shehbaz Sharif and Qatari leaders. Many vessels in the Gulf have disabled transponders, complicating tracking, with the Abu Dhabi carriers also not broadcasting their positions during their passage.
-President Donald Trump is reportedly planning to fire Marty Makary, head of the FDA, amid increasing pressure from anti-abortion advocates ahead of the midterm elections. The White House is seeking a replacement, and while Trump acknowledged awareness of the situation, he denied having concrete knowledge. Makary's expected dismissal is linked to the FDA's stance on abortion pills, particularly mifepristone, which the FDA maintains is safe despite claims of danger from anti-abortion groups. These groups had expressed their intention to meet with Trump officials on the matter.
-A Labour MP, Catherine West, has threatened to initiate a leadership challenge against Sir Keir Starmer following poor local election outcomes. She expressed dissatisfaction with Starmer's leadership and called for the Cabinet to select a potential successor by Monday. West, who is not a serious candidate, aims to prompt viable contenders to emerge. She indicated some MPs are interested in leadership but have yet to declare themselves. To activate a leadership contest, support from 81 MPs is required; West claims to have 10 backers and believes more will support her initiative. Over 20 Labour MPs have demanded Starmer resign or outline a timeline for his exit after the party's loss of over 1,000 councillors.
-Brazil has marked the end of a nearly five-year drought in public offerings with Compass, a gas and energy company, raising R$3.2B ($655M) through shares on the São Paulo stock exchange, the first listing since September 2021. This follows a 15% rise in Brazil's Bovespa index, fueled by foreign investor demand, attributed to high oil prices due to the Iran war. The index has gained nearly 30% this year in dollar terms, outperforming major indices like the S&P 500. As a significant exporter of commodities and distanced from geopolitical tensions, Brazil has benefited from increased global commodity prices.

NEW YORK TIMES
-In light of ongoing conflicts and stringent Western sanctions, the Caspian Sea is emerging as a vital trade route for Iran and Russia. U.S. officials report that Russia is supplying drone components to Iran through this waterway, enabling Iran to bolster its military capabilities despite prior losses. With the Strait of Hormuz blocked by the U.S. Navy, Iran is rapidly developing alternative trade routes, utilizing four Caspian ports to facilitate the import of essential supplies. Recent data indicates a significant rise in shipments, with Russian wheat now rerouted via the Caspian due to threats in the Black Sea, making this route increasingly favorable amidst regional instability.
-A grinding war in Iran has depleted American firepower, leading Chinese analysts to question Washington's ability to defend Taiwan. Since late February, the U.S. has used nearly half of its long-range stealth cruise missiles and fired significantly more Tomahawk missiles than its annual procurement. Analysts argue this depletion has damaged America's military dominance and revealed its inability to rapidly replenish munitions, undermining its global military hegemony, as noted by retired Chinese Colonel Yue Gang.
-President Trump's announcement for U.S. military escorts in the Strait of Hormuz provoked Crown Prince Mohammed bin Salman of Saudi Arabia, leading to restricted U.S. access to Saudi airspace and bases. This unexpected move forced Trump to abandon his plans. Although the Saudis eventually lifted these restrictions, they did not agree to support the “Project Freedom” naval operation. After a series of discussions, including a call between Trump and Prince Mohammed, the tanker escort operation was paused within 24 hours. Trump attributed this pause to perceived progress in peace talks with Tehran, despite a lack of substantial evidence. The situation highlights ongoing tensions affecting U.S.-Saudi relations, as previous Saudi pressure for U.S. military action against Iran contrasts with their current stance.
-Europe is experiencing a renewed energy crisis due to war, prompting a surge in the adoption of heat pumps, solar panels, and electric vehicles. In March, electric vehicle registrations rose by over 40% compared to the previous year, with 344,000 new vehicles added. Solar panel sales increased by 50% for Octopus Energy, and inquiries for residential solar systems in Germany doubled. Additionally, about 575,000 heat pumps were sold in 11 large European countries, marking a 17% increase from the prior year, particularly in France, Germany, and Poland.
-A panel of federal judges ruled that President Trump violated the law by imposing a 10 percent tariff on most U.S. imports, marking a significant legal setback for his administration. The Court of International Trade found the tariffs, applied in February, to be illegal, as Trump had improperly invoked a trade law. This ruling limits Trump's trade powers and complicates his upcoming trade discussions with China, particularly concerning tariffs. While the court blocked tariff collection from some states and businesses, it remains unclear how the Trump administration will respond, though an appeal is expected. Additionally, there are potential implications for refunding approximately $166 billion collected under previous tariffs. Trump criticized the ruling but indicated a determination to pursue alternative legal avenues for imposing tariffs.
-The U.S. government recently reached a significant milestone, as its debt exceeded the total economic output of the nation. This imbalance, experienced only during the pandemic and post-World War II, did not garner much attention in Washington. The debt surge stems from excessive federal spending versus tax revenue, compounded by an aging population increasing government costs. Economists warn that this trajectory could lead to a fiscal crisis where paying rising interest on the debt becomes unmanageable, yet policymakers have largely ignored these warnings, further straining the government's financial situation.
-A federal judge in Rhode Island appointed a special counsel to investigate Kevin Bolan, a lawyer from the Trump administration's civil division, due to allegations of misconduct. Bolan, under advice from the Homeland Security Department, withheld critical information regarding a detainee, Bryan Rafael Gomez, who was wanted for homicide in the Dominican Republic. Judge Melissa R. DuBose, unaware of this, ordered Gomez's release, leading to public criticism from the Department of Homeland Security. After expressing disappointment over Bolan's actions as a breach of legal ethics, Judge DuBose called for further inquiry. Chief Judge John J. McConnell Jr. selected Niki Kuckes, a law professor, to conduct the investigation. Her report will determine if formal disciplinary actions, potentially including fines or disbarment, are warranted against Bolan.
-Prime Minister Keir Starmer acknowledged significant Labour Party losses following local elections, attributing the results to voter dissatisfaction with his leadership. The right-wing Reform U.K. party, led by Nigel Farage, gained over 1,400 seats in municipal councils, impacting both Labour and the Conservatives. Labour's losses included ceding ground to the Green Party, Liberal Democrats, and Reform, resulting in over 1,300 lost council seats with more still to be counted. In Wales, where Labour has historically held power, the party fell to third place as Plaid Cymru appeared set to secure the most seats, reflecting a shifting political landscape across Britain.

NY POST
-In light of Spirit Airlines ceasing operations, former members can utilize their Spirit membership status for status matches with other airlines. Avelo Airlines, a low-cost alternative connecting many of Spirit's former routes, offers a free status match to Spirit Saver$ Club members who joined before May 1 and are not Avelo Plus members. Eligible members can submit proof of their status to receive Avelo Plus benefits, including low fares and priority boarding, valid for one year. The approval process takes 7 to 10 business days.
-ABC has accused the Trump administration of infringing upon its First Amendment rights in a dispute concerning "The View." The broadcaster criticized FCC Chairman Brendan Carr for his "unprecedented" actions against speech regulators disapprove of, arguing that such measures threaten political coverage ahead of the 2026 midterms. The filing from Houston's KTRK-TV could lead to a significant constitutional clash over federal regulation of broadcast television, marking a shift from ABC's previous position after settling a $15 million defamation suit with Trump post-2024 election. ABC has enlisted former Solicitor General Paul Clement to support its case.
-JPMorgan analysts warn that gasoline prices may soon reach $5 per gallon due to a jet fuel crisis stemming from the Iran war's impact on energy supply. Brent crude oil has averaged about $100 a barrel since the conflict began, with refiners prioritizing jet fuel over gasoline and diesel. This prioritization, along with the blockade of the Strait of Hormuz and damage to Middle Eastern facilities, is likely to keep prices elevated. As of Friday, the average gasoline price was $4.55 a gallon, a 52% increase from pre-war levels.

>>> Barron’s Weekend Summary

Cover:
-Domestic airfares have increased by 36% this year, impacting summer trips and the airline industry. While ultralow-cost carriers face challenges in the U.S., major airlines like Delta and United could benefit from the current situation, projecting close to $2 B in free cash this year. Spirit Airlines has struggled due to various factors, resulting in market share shifting to Frontier and JetBlue, both of which will also face financial challenges. Delta excels in premium seating and loyalty revenue, while American Airlines attempts to catch up with new initiatives. Southwest Airlines is also transitioning from a low-cost model, introducing additional fees in hopes of improving cash flow amid rising fuel prices.

Interview:
-Jane Fraser aims to demonstrate the sustainability of Citi's recent stock surge and business rebound. In a recent interview, the Citigroup CEO she emphasized her focus on future growth rather than past challenges. Fraser is preparing for the bank's investor day on May 7, highlighting an improving return on tangible common equity (13.1% in Q1). A key goal is to conclude federal consent orders related to past internal control issues, which she claims is nearly complete (90%). Despite progress, Fraser acknowledges upcoming challenges, including tough decisions about cost-cutting and talent acquisition. Over five years, she has evolved from a symbolic leader to a proactive figure in Wall Street, aiming to navigate Citi's path from turnaround to growth amidst intense competition.

Tech Trader:
-In recent years, central processing units (CPUs) have taken a backseat to graphics processing units (GPUs) in data centers due to the rise of generative artificial intelligence. However, interest in CPUs is resurging, with key players Intel, Advanced Micro Devices (AMD), and Arm Holdings reporting positive market outlooks. Intel's CEO noted that CPUs remain essential in the AI landscape, with Arm predicting the server CPU market could reach $100 B by 2030 and AMD estimating it at $120 B. Despite this growth, Nvidia is set to surpass these figures with projected data-center sales over $150 B in just two quarters. Historically, CPU servers dominated data centers, particularly before the advent of AI tools like ChatGPT.

The Trader:
-This may be an opportune time to buy Lowe’s (LOW), as its stock has decreased by 20% to $231 from a record close of $287 in February, influenced by rising long-term interest rates affecting housing goods demand. However, improving home-improvement trends and a strong first quarter are promising for the company. A UBS survey found that a greater percentage of contractors reported increased project activity, favoring Lowe's and Home Depot. Analyst data supports that these retailers are likely to benefit from sustained sales growth. Lowe’s, trading at 18 times forward earnings—lower than its peak of 22 times and below Home Depot's over 21 times—presents a compelling investment opportunity if market confidence in housing demand strengthens.
-The NASDAQ Composite has risen 22% from its low in late March, driven by increasing profit expectations for chip makers and AI data center builders, with strong demand from Amazon, Microsoft, and major AI service firms. Although its current valuation stands at 25.5 times expected earnings, making it expensive, the tech rally could continue. However, stocks remain susceptible to significant declines if there are indications of reduced capital investments from major AI companies. In response, Adam Parker of Trivariate Research has identified alternatives to AI chip stocks, focusing on those with low correlation to the AI sector that have gained at least 10% over the past six months, avoiding companies failing to meet earnings expectations.
Features:
-Markel Group, known as a mini Berkshire Hathaway, combines insurance, investments, and owned businesses. Its stock has risen 225-fold since its IPO, closing recently at $1,800. Currently trading at 1.2 times its book value, significantly lower than its intrinsic value of $2,900, Markel is appealing for investors. The company is improving its insurance operations and managing a $12B equity portfolio. An activist investor, Jana Partners, now holds under 1% of Markel and has urged the company to divest noninsurance units and initiate a $2 B stock buyback, as the stock's price-to-book ratio is at its lowest in 10 to 15 years. Investors anticipate increased shareholder-friendly actions due to this pressure.
-Raj Bhatia and his team at Merrill Private Wealth Management are highly regarded for their investment strategies, which utilize both their expertise and Bank of America’s research. Bhatia has been with the firm since 1981, and now works alongside his daughter Ariana, who has experience from Goldman Sachs and Vistria Group. Their team of 13 manages around $3.4B, primarily serving wealthy families, many of whom gained their wealth through business ownership or corporate executive roles. They focus on providing solutions for liquidity management and wealth preservation across generations, emphasizing the importance of capital management over time.

Europe:
-Shell reported substantial first-quarter earnings of $6.92B, up from $3.26B, driven by a $1.93B profit in its chemicals and products unit. The company raised its dividend by 5% and announced a $3B share buyback. However, production fell by 4% due to the Iran conflict, leading to a 2.1% decline in the stock, which mirrored losses in U.S. peers like Chevron and Exxon Mobil as oil prices dropped amid peace deal speculation.

Emerging Markets:
-Emerging market stocks are reaching new highs, primarily driven by AI leaders in Asia like Taiwan Semiconductor Manufacturing and South Korea’s Samsung Electronics and SK Hynix. Latin American commodities and energy exporters are also benefiting from heightened demand due to the blockage of the Strait of Hormuz. Thea Jamison from Change Global Investment describes emerging markets as entering "complete breakout territory," suggesting an influx of investment and momentum. While potential gains are on the horizon, investors should choose carefully amid mixed signals from AI enthusiasm and turmoil in some emerging markets due to the Iran conflict. The iShares MSCI Emerging Markets index has surged nearly 20% this year, outperforming the S&P 500's 6% recovery since the Iran war's onset, with significant bullish momentum indicated by technical analysts.

Commodities:
-Even with a potential peace agreement in the Middle East, the oil market will remain impacted for months, with elevated prices expected to last into 2027. Current oil prices are influenced by significant supply disruptions, causing analysts to raise their price forecasts for 2026 above $100 per barrel. Although Brent crude futures recently fell 7.8% to $101.27 amid peace talks, experts believe prices will not decrease substantially in the near term. Physical market impacts from the ongoing conflict will have long-lasting effects, regardless of the resolution timeline. Investment opportunities are seen in companies with less exposure to the Middle East, as the oil industry may remain in deficit for some time, particularly due to disruptions in critical supply routes like the Strait of Hormuz.

Streetwise:
-No update

The Informations : AI Finds Necessity in Frenemies

AI Finds Necessity in Frenemies

A very old proverb comes to mind when I think about this exact period in AI—because, really, it’s a moment when the enemy of your enemy can be your compute provider.

I’m referencing, of course, Elon Musk’s decision to strike a deal with Anthropic and sell it access to his data center campus in Memphis, Colossus 1. Until this week, Musk had seemed to view Anthropic strictly as a bitter rival to his xAI, which he recently folded into SpaceX; now the two companies are business partners. (Honestly, the AI industry treats labels and relationships much as a Fire Island share house does: It’s all very fluid.) Musk said he met with the team at Anthropic last week and decided to do the deal when “no one set off my evil detector.”

It’s a dramatic change in tone for Musk, who’d been merrily calling the startup “Misanthropic” as often as he could for several months. Perhaps he just misunderstood the word’s definition? No, it’s a matter of timing.

Anthropic’s Claude Code and Cowork products have become enormous hits, but the startup has faced a problem in securing the compute needed to keep up with demand. Having just really caught everyone’s attention after several years in the shadow of Google and OpenAI, Anthropic absolutely doesn’t want to slow down. It wants the compute as immediately as possible.

Meanwhile, Musk is incentivized to sell off Colossus access at this very moment in a way he wasn’t even a few months ago.

The Anthropic deal helps improve the financial situation for his SpaceX conglomerate as it prepares for an IPO next month. In addition, Musk got Anthropic to express interest in orbital data centers in its announcement of the Colossus deal; presumably, he’ll point to Anthropic’s interest when he talks up outer space data centers on his IPO road show, even if they remain a totally unproven concept, like Bigfoot.

I wonder what the Anthropic tie-up means for the deals Musk did just a few weeks ago—when he sold compute to Cursor, a top Anthropic rival, and said he’d acquired an option to buy the startup or fork over a $10 billion break-up fee. There’s a very good chance we’re a few months away from Musk suing to get out of paying that fee, especially if Anthropic continues on its recent pace and seems to dim Cursor’s prospects further, making the startup less attractive to Musk.

Another factor at play: Don’t underestimate how much motivation Musk may be drawing from the chance to screw over Sam Altman at an instant when their relationship has been put on full public display.

In the court case between the two over OpenAI, Musk’s lawyers have been trying their best to shove their fingers in Altman’s eye for the last two weeks. But they haven’t gotten close to securing a decisive victory, which must irritate Musk, who has publicly made Altman a total bête noire.

So with Anthropic, Musk gets another opportunity to kick the shins of one enemy by locking arms with another, which reminds me of another adage: With friends like these…

WSJ : China’s Cars Aren’t in the U.S., but Its Auto Parts Are Everywhere

China’s Cars Aren’t in the U.S., but Its Auto Parts Are Everywhere
Chinese companies have amassed ownership stakes in about 10,000 auto suppliers in America

  • Chinese-owned suppliers are deeply integrated into the U.S. auto parts supply chain.
  • Lawmakers revived the idea of eliminating Chinese parts in U.S. cars in a bill that would ban China-made cars and safety components.
  • Some carmakers including Tesla and GM are reducing reliance on China-made components for U.S. production.

Chinese cars aren’t on American roads, but Chinese auto parts are embedded in American cars.

More than 60 auto suppliers in the U.S. today are owned by companies located in China, according to data compiled by the consulting firm AlixPartners. Those include large manufacturers of air bags, automotive glass, and steering systems. Overall, Chinese companies have amassed ownership stakes in about 10,000 suppliers in America, according to the data, including stakes as small as 5%.

“They’re deeply integrated into the industry,” said Michael Dunne, chief executive officer of the automotive-consulting firm Dunne Insights, which focuses on China.

While American lawmakers, politicians and carmakers have emphasized the economic and national-security risks of Chinese companies that enter the U.S. market, some of those concerns have already manifested themselves in China’s grip on the supply chain. Last year a political dispute tied to a Chinese-owned chip maker threatened to disrupt production for global automakers.

Lawmakers recently revived the idea of eliminating Chinese parts in U.S. cars in a Senate bill that would ban China-made cars and safety components, such as air bags and seat belts.

In late April, more than 50 House Republicans, led by Rep. Mike Kelly (R., Pa.), wrote to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. They urged the Trump administration to block Chinese automotive and battery companies from manufacturing in the U.S. Their letter warned that Chinese investment in the American auto-supply chain poses risk to domestic industries.

Some car companies have been taking steps to bring some component production home. Tesla started requiring its suppliers to exclude China-made components in the manufacturing of its cars in the U.S., The Wall Street Journal reported last year. General Motors CEO Mary Barra has said the automaker has reduced its direct spending on materials in China for U.S.-made cars to less than 3% as part of a strategy to buy parts where it is building vehicles.

The U.S. has been looking at China’s presence in the domestic auto-supply chain for years. An International Trade Commission study in 2019 found that Chinese production of automotive parts had grown significantly over the preceding decade, with U.S. imports concentrated in smaller components such as brake rotors.

Several automakers have endorsed the recently proposed legislation to prohibit Chinese cars. But at least 40 vehicle models on sale today were assembled with a reportable amount of Chinese components, according to data that car companies submit to the National Highway Traffic Safety Administration.

Ford Motor’s latest Mustang GT uses six-speed manual transmissions from China. About 15% of parts in Toyota Motor’s latest Prius plug-in hybrid come from China, according to the data. GM reported that Chevrolet’s Trax sport-utility vehicle, along with the all-electric Blazer and Equinox SUVs, contain roughly 20% of parts from China, the data showed.

Ford said it looks forward to working with lawmakers on the proposed Chinese-car ban. GM, which said it endorsed the Senate bill, declined to comment further. A Toyota spokesman declined to comment.

Across the world, Chinese ownership of some of the biggest suppliers in the industry has steadily increased. In 2012, one Chinese company ranked among the top 100 global suppliers, according to data from AlixPartners-owned Berylls, which bases rankings on automotive revenue. In 2024, that number had jumped to 13 suppliers, and it is expected to reach 22 by the end of the decade.

“This shows the incredible speed in which the competitive environment has changed,” said Juergen Simon, a partner at AlixPartners.

In the U.S., carmakers have become closely tied to the work of Chinese-owned suppliers. Fuyao, a glass supplier, supplies Detroit’s three and other domestic auto manufacturers. Another company, CATL, is the world’s largest electric-vehicle battery manufacturer. Nexteer, a publicly traded global manufacturer of steering systems and drivelines, is controlled by a Chinese conglomerate and makes parts for top carmakers in the U.S. and China.

“Fuyao Glass America is a U.S.-based enterprise committed to localized manufacturing operations and the creation of local employment opportunities,” the company said, adding that it has strong relationships with major U.S. automakers. “Our localized supply and service network enables us to respond efficiently and promptly to our customers’ production needs.”

While Chinese suppliers used to be avoided because of concern about quality and performance, that is no longer the case, Simon said.

Simon has been advising a large supplier on business strategy for five years. When he started, he said the Chinese were only viewed as potential upstarts to competition, but things have changed.

“Now, they tell me whenever they lose, it is against a Chinese supplier,” he said.

WSJ : American Hondius Passengers to Head to Nebraska Quarantine Center

American Hondius Passengers to Head to Nebraska Quarantine Center
Global public-health officials race to contain the spread of hantavirus as over 100 passengers are set to return to home countries

  • The U.S. Centers for Disease Control and Prevention is sending staff to the Canary Islands to meet a cruise ship with a hantavirus outbreak.
  • The MV Hondius has a hantavirus outbreak that has killed three people and infected five others; the rare Andes variant is confirmed.
  • Seventeen American passengers from the ship will be quarantined at the University of Nebraska Medical Center’s National Quarantine Unit.

The U.S. Centers for Disease Control and Prevention sent staff to the Canary Islands to meet the cruise ship at the center of a hantavirus outbreak that global health authorities are racing to contain.

There, they are expected to help facilitate the next leg of the journey for 17 American passengers on board the vessel.

That destination: high-tech quarantine facilities in Omaha, Neb., that include a unit used in 2014 to monitor U.S. citizens with Ebola and again in 2020 for Americans returning from Wuhan, China, and from the Diamond Princess cruise ship stricken with Covid-19 at the start of the pandemic.

Public-health officials in states including Virginia, Texas and Georgia are now monitoring other Americans who got off the ship before authorities confirmed the outbreak. States like New Jersey are watching people who shared flights with cruise passengers who later were diagnosed with the virus.


As of Saturday, none of the passengers currently aboard the MV Hondius were showing signs of hantavirus, the rare infection carried by rodents that has so far killed three people and infected five others aboard the Hondius. But the contagion risk is still a mystery. There are confirmed cases among those who already left the boat and questions swirling over possible exposures on flights, pressuring U.S. health officials to escalate their strategy to halt its spread.

The Hondius is expected to dock early Sunday local time at Tenerife, the largest of the Canary Islands in Spain, according to the ship’s operator, Oceanwide Expeditions. The State Department is organizing a repatriation flight to bring the Americans still on board the ship back to the U.S. Another CDC team will go to a Nebraska Air Force base to meet the flight on its return.

The American cruise ship passengers will be brought to the University of Nebraska Medical Center’s National Quarantine Unit, the center said. The 20-room facility is the only quarantine facility funded by the federal government in the U.S., and its rooms are equipped with personal bathrooms, exercise equipment, Wi-Fi and special ventilation systems, according to the center. It was funded by a nearly $20 million federal grant.

The facility looks more like a hotel than a hospital. People quarantining at the center are asked not to leave their rooms and receive, essentially, room service brought to their door, said Dr. Michael Wadman, medical director of the National Quarantine Unit at University of Nebraska Medicine.

“We’re familiar with this virus,” Wadman said, contrasting it to Covid, which was a novel virus when it first emerged. “But in this situation we want to err on the side of caution.”

Nurses and physicians trained in infection control instruct those staying in the units on protocols, including how to manage their laundry, Wadman said. Nurses wearing personal protective equipment will check their symptoms daily. The quarantine unit staff also ensure people staying there can speak to friends and family and have access to counseling services if needed.

Staff undergo quarterly training that allows them to activate the quarantine unit quickly and mitigate a variety of situations, Wadman said. That could include determining what to do if someone vomits in their room or facilitating care if a healthcare provider gets sick.

“We’re really training to the range of possibilities,” Wadman said.

If any cruise ship passengers are quarantined and develop symptoms, they will be moved to the nearby Nebraska Biocontainment Unit—a facility isolated from the rest of Nebraska’s medical center, designed to treat patients infected with highly hazardous infectious diseases, according to Nebraska Medicine.

A CDC official said Saturday that ship passengers will be monitored for around six weeks, or 42 days, but not necessarily only in Nebraska. The official said authorities will coordinate with some passengers and local jurisdictions for at-home monitoring, though it wasn’t clear how many people were going home or when.

Scientists confirmed that the rare Andes variant of hantavirus is the source of the outbreak on the ship. It is the only form of the disease carried by rodents that can be transmitted between humans. Normally people can only transmit it through very close contact, like sharing food or living quarters, according to experts.

The World Health Organization said two passengers who later died from hantavirus boarded the vessel after traveling through Argentina, Chile and Uruguay on a bird-watching trip that included visits to areas where rats known to carry the Andes variant live.

Quarantines for returning travelers, depending on their level of exposure, could end up being lengthy as the incubation period for the virus is around six weeks. Argentina, which deals with this strain of hantavirus more than most countries, sets guidelines based on a person’s exposure. U.S. public health officials might take guidelines from Argentina into account when determining how to handle the ship’s passengers or any others who might have been exposed, said Dr. Gaby Frank, director for the Center for Special Pathogens at Johns Hopkins Hospital.

“The monitoring can be a little more intense or less intense,” she said. If a person was at high risk of exposure, she said, that person would likely be asked to have no contact with anyone else until the roughly six-week incubation period has passed.

That said, a person with a lower-risk exposure might only need to check in with public-health officials by phone once a day. In Texas, for example, the state’s health department said two residents who were aboard the ship are now checking their temperatures daily and agreed to contact public-health officials if they start to show any symptoms.