You vs Train: The Facts

As much as these Extinction Rebellion (XR) protestors think they’re so smart for jumping on the trains at Canary Wharf to rally against climate change, this is an interesting campaign by the train lobby in the UK showing just how stupid playing on trains can be. Could it be the extinction will turn out to be self inflicted by the very source of energy powered by fossil fuels?

1) 25,000 Volts

The power running through overhead railway lines is 100 times stronger than your supply at home. Electricity is easily the most dangerous factor in stepping on the track – it’s always switched on and nine out of ten people die when they’re struck by it.

Others are left with life-changing injuries, including burns and amputations; and that’s not to mention the emotional scars that will be left behind. Electricity is easily underestimated. People don’t realise it can jump – so you don’t even need to touch a cable to be seriously injured.

2) You vs Train traveling at 125mph

You can’t outrun a train. And even if you could, you wouldn’t hear it coming, as today’s trains almost silently reach speeds of 125mph. And they run 24 hours a day. So even if you think it’s a ‘quiet time’, you can be hit by thousand tonne freight trains that run all night.

Don’t think that keeping to one side of the track will keep you safe. Trains are all wider than the rails. You’re just as likely to trip over the train equipment and be dragged on to the track.

3) You vs the electrified 3rd rail

The third rail is probably the hardest danger to see. It looks just like an ordinary rail, but it carries 750 volts – easily enough to kill you.

It’s designed to send power to the train, but you are 70 per cent water and the perfect conductor for this electricity. If you touch the rail, you will “stick” to it. The DC current that flows through it will pull you in and not let go until the emergency services are able to switch the power off.

Nearly half of the UK rail network is now electrified – and more than 30 per cent uses a third rail to power the train. The only way to avoid stepping on this hidden danger is not to step on the track.

While they might argue there were no overhead power lines on this train their actions show a flagrant disregard for safety. The fine for rail trespass/disruption is £1,000. Let’s see how many actually get fined. Or do they get let off because of what they support?

Extinction Rebellion should be sent the bill for disruption

How about this? If these radical Extinction Rebellion protestors want to stop trains, perhaps they should foot the bill for the lost revenues to MTR Corporation? Perhaps companies should claim back lost productivity?

Moreover the danger they put others in by their actions. Without a doubt they’d be the first to complain and seek compensation if they were injured while being removed. Try not putting yourselves in that position in the first place! Absolutely unnecessary disruption and misuse of emergency services.

Normally protests require approval from the local government, insurance and coordinated police protection. It is unlikely that stopping trains in this fashion would have passed the application stage.

These people should be arrested, charged and heavily fined. Alas, they’ll be arrested, given a tap on the wrist and be released.

Shotgun Joe for 2020?

Joe Biden has officially thrown his hat into the ring for the 2020 presidential run. Despite the Creepy Joe video footage which will undoubtedly run on a loop during the campaign, he now has this video talking of why owners should just buy shotguns instead of high capacity rifles.

Nonetheless, if Biden wins the Democrat nomination, will his flock of voters care about those images any more than Trump voters dismissed audio of locker room talk? Probably not. Trump Derangement Syndrome is a pretty chronic condition.

The bigger question is why Obama never came out to support Biden during the creepy video release when he lauded him the best VP in American history? Talk about a conditional bromance.

So to the never ending list of Democrat nominees. The party looks so disjointed. Instead of narrowing the field down to a small clutch of realistic candidates with a consistent message, the policy platform has no sound base. It’s radical left all the way to traditional liberal. Perhaps the “shotgun” scatter policy mix is what the Democrats will end up with rather than targeted sniper fire.

The list of candidates so far is as follows –

Bernie Sanders,

Joe Biden,

Elizabeth Warren,

Kamala Harris,

Beto O’Rourke,

Pete Buttigieg,

Cory Booker,

Julian Castro,

John Delaney,

Tulsi Gabbard,

Kirsten Gillibrand,

John Hickenlooper,

Jay Inslee,

Amy Klobuchar,

Wayne Messam,

Seth Moultham,

Tim Ryan, Eric

Swalwell,

Marianne Williamson and

Andrew Yang

President Trump needn’t lose much sleep. Hating him is the only consistent policy message the Dems have. Why hasn’t Alec Baldwin or Oprah announced they’re running yet? Baldwin think s he’s a shoe in!

Greatest Corporate Showman on Earth

Tesla’s 1Q 2019 results were dreadful. CM has long held that Tesla is a basket case. The ever charismatic Elon Musk is trying to fan the flames of his company with dying embers. The question is where do we start on this diabolical 1Q report?

1. Musk started off with cash to speak to solvency. Tesla talks to $2.2bn in cash and equivalents. Down $1.5b, partly due to a $920m convertible repayment. Don’t forget Tesla has $6.5bn in recourse debt and $3.5bn in non-recourse debt. It has payables and accrued liabilities of another $5.5bn offset with receivables of just over $1bn.

2. Model S/X deliveries fell from 21,067 in 1Q 2018 to 12,091 in 1Q 2019. That’s -56% at the high margin premium car end. Musk claimed it was due to demand pull forward with a reduction in tax credits. Well he just proved that without credits, demand suffers appreciably.

Model 3 production was 3% higher on the quarter but deliveries were 20% lower. Note customer deposits total $768m, marginally down on the previous quarter. If Tesla starts to implode, customers have a right to get those credits back. Residual values aren’t holding as we discuss in pt.5.

3. Solar deployed -38% year on year

4. (Battery) Storage deployed -39%YoY

5. CM made it clear in point 11 of the 30 reasons why Tesla will be a bug on a windshield report,

The Tesla Residual Value Guarantee, while well intentioned carried risks that crucified the leasing arms of the Big 3. After the tech bubble collapsed at the turn of the century, do you remember the ‘Keep America Rolling’ programme, which was all about free financing for five years? While sales were helped along nicely, the reality was it stored up pain…Goldberg & Hegde’s Residual Value Risk and Insurance study in 2009 suggested on average 92% of cars returned to leasing companies recorded losses on return of up to 12%. Any company can guarantee the price of its used product in theory, the question is whether used car buyers will be willing to pay for it. Sadly Tesla does not get a say in what the consumer will be willing to pay.”

In the 1Q 2019 result, Musk admits that Tesla suffered $121m impairment on residual value guarantees (RVG). Is it any wonder they stopped this scheme. Now it’s payback time. There are $480mn worth of RVGs still on the balance sheet that are unlikely to have been marked to market values.

6. Level 5 autonomous driving is a pipe dream in the near term. 20+ years away. A fleet of Tesla taxis is an even bigger thought bubble. Regulation will put that on the back burner. The current level 2 systems have already shown significant short comings given the numerous beta testing deaths at the wheel of the Tesla auto pilot.

7. Musk is doing a stealth cash raise by putting a time limit on auto pilot upgrades. The question is when will the next cap raise come. His noise around Tesla taxis, Level 5 autonomous systems, Model Y all speak to the snake oil promises that he needs to distract investors from what is clearly going on.

8. His public spat with his biggest supplier, Panasonic, will not end well. Suppliers have to be on board with production expansion. Panasonic is cooling off its relationship. Musk publicly slapped the Japanese battery maker. It doesn’t augur well for the rest of the supply chain either to see these ructions

Peter DeLorenzo wrote the following with respect to Musk,

That this latest charade from Musk is yet another desperate act in an attempt at saving his floundering company is obvious. Where it differs from other Muskian braggadocio is the fact that he is insisting that his AV technology is safe for mass application and consumption. Sorry to disappoint all of the St. Elon acolytes out there, but this is the insane part…

…Unleashing a fleet of zombie Teslas on the streets of America curated by a notorious nanosecond-attention-span personality such as Musk is the quintessential definition of flat-out crazy. You can’t even squint hard enough to suggest that this is, in some way, shape, or form, rational thought. It’s a case of an intermittently brilliant mind that has wandered over the line into the Abyss of Darkness. A dangerous mind that is so obsessed with pushing his perpetually sinking car company into some sort of elevated stratosphere that he is willing to treat real people as so much collateral damage...

This country is 25 years away – at least – from widespread adoption of autonomous vehicles. Yes, there will be scaled deployment in limited, commercial applications primarily in urban centers over the next two decades, but driverless Teslas careening around less than two years from now? It is a recipe for disaster the likes of which simply defies calculation.”

All the reasons CM has disliked Tesla remain. It is so chronically overvalued. This stock will be lucky to be $100 by year end. Sadly the economy is slowing meaning it will be tougher to compete with more competition launching this year. China may give cause for some future hope but don’t bet on it.

The more Musk talks, the more desperate he is. Don’t forget he is not learning from SEC requests to lay off Twitter. His guidance in 1Q is lower than recent tweets suggesting appreciably higher targets. Tesla is a time bomb.

Vegan feminist cafe closes & Trip Advisor comments priceless

A vegan feminist cafe, Handsome Her, has closed its doors for good. It had imposed an 18% gender surcharge for men to account for the ‘wage gap’ and given women priority seating. Perhaps if the cafe focused on service in the normal fashion it might have flourished. Take these 1 star Trip Advisor reviews.

This from John P.

I was in Melbourne on business recently and a friend of mine recommended this cafe. What a shame I listened to her. It took 5 minutes to get the attention of a waitress who seemed to be more interested in chatting to her friends, rather than serving a customer who’d just walked through the door. I was eventually seated and chose the gnocchi paired with the suggested pinot noir. The gnocchi arrived and I was bitterly disappointed. The gnocchi was very undercooked and had a floury texture, the mushrooms were burnt and the dish lacked any real flavour. The only enjoyable part of the meal was the wine. I left most of my meal on the plate and finished my wine.

When I asked for the bill, the waitress asked if there was a problem with my meal, since I’d left most of it on my plate. When I told her of my dissatisfaction with the meal, she morphed into an aggressive and irate woman who then started dispatching some rather vile language. Not wanting to cause a scene, I subsequently left the requisite cash on the table, which included a 15% tip, and promptly walked out. As I was walking past the register on the way out, I could hear the same woman telling the other waitress working with her that I was a “vile beast” and that I “wasn’t welcome here again”.

I certainly won’t be coming back. One of the worst experiences I’ve had in quite some time.

Date of visit: August 2017

Cuban_American from Englewood, Colorado wrote

This place is a giant turd. Nobody in their right mind should eat at such a horrid place. Your sexism and gender attacks are cancer to society. Be gone forever.
Date of visit: April 2019
Jack from Adelaide wrote “Get Woke, Go Broke”
“Went there to see what the hype was all about. The conditions were dirty and unclean. The people working there looked like they hadn’t had a wash in days. The food was overpriced for what you got and the plate presentation was sloppy.”
Date of visit: January 2019
Fast Food Reviews wrote,

“A terrible cafe that has no respect for either equality or the law, with horrible staff that I swear the owner had to scour the scum of the earth to find. Spend half an hour trying to get a waitress to come over and when they finally showed up they told me I’d have to wait because I was a “cis gendered white man” and there were women who needed to be served first. According to the waitress I’d have to wait until ALL women in the shop were served before they’d take my order, even those who came in after me. I left at that moment and will never return.

Date of visit: February 2019

Good Tenks suggested,

“What a disgrace that in 2019 in Australia we allow a restaurant to discriminate against a group of people based on something they cannot change.
I went to handsome her with 3 girls who are close friends (I’m a male) and was spoken to like a second class citizen, the attitude and demeanour of the employees is abhorrent.
The food wasn’t bad, the coffee was terrible but the attitudes are disgusting, I was spoken down and made to feel like garbage.

Myself and the ladies all agreed this is promoting discrimination and against what we believe in which is equality.
What a joke, avoid at all costs there is much better around.”
Date of visit: November 2018
Do look up Handsome Her Cafe reviews on Trip Advisor. Sadly those that don’t pay attention to customer needs face the wrath of evil capitalism.

Harley delinquencies at 8 year high

Just noted from the conference call that Harley-Davidson (HOG) motorcycle loan delinquencies (30+ days in arrears) are at an 8 year high of 3.73%. While actually loss experiences have tracked sideways for the past few years, they are still higher than 8 years ago.

Interestingly, HOG loans outstanding were $7.53bn in 1Q 2015. In 1Q 2019 that figure was $7.63bn. So next to no loan growth against c.20% lower unit sales. In 1Q 2015 HDFS made $683.6m in new loans, 80% prime out of $1.5bn in 1Q motorcycle (incl parts/accessories) sales (43.6% financed). In 1Q 2019, $685.3m in new loans were made with a claimed 80-85% “prime” against $1.124bn (61.0%) of m/c and P&A sales. Essentially total sales would be worse without the finance arm. Why does CM smell Ford Credit all over?

So delinquencies up against a strategy to pump more bikes through financing. Is it the non-prime portion is faltering at greater rates? Or the prime?

Luxury motorcycles are generally considered discretionary spend items. Are aspirational consumers just tapped out?

HOG’s 2mn new riders in the US by 2027 seems an irrelevant target. 200,000 “new” riders per year by definition should not include existing customers. Management combine new and used sales using IHS Markit Motorcycles in Operation (MIO) data, not their own! That is fine if all are new Harley customers yet the brand has some of the highest loyalty rates of any maker period. Are we to believe that long term Harley owners didn’t upgrade?

Of the 138,000 new domestic US sales in 2018, the brand assumed 278,000 new riders to the family. It also cites that 50% of that were 18-34yo (implies poorer product mix), women (smaller capacity hence poorer product mix) or ethically diverse (irrelevant) riders. So by definition at least 140,000 sales were used bikes. Harley used bike sales in America are around 2.5x new, or 350,000 units. So assuming half were new customer sales for new bikes, 60% of used sales must have been to ‘never owned a Harley’ customers. Seems high.

It doesn’t much matter if HOG hit targets for new riders, the actual financial results point to further deterioration across the board at the top of the cycle. Most competitor luxury brands are ticking along just fine.

100 new high impact motorcycles has all the hallmarks of chucking spaghetti at the wall and hoping some of it sticks.

This stock should continue to flounder. CM thinks it will get back to the GFC $8 handle.

CM is not invested in HOG nor short the stock. This doesn’t constitute financial advice.

GetUp! smears 150,000 surf lifesavers

We understand that GetUp! hate Tony Abbott MP. The left-wing activist group is working hard to oust him in favour of independent candidate Zali Steggall for the seat of Warringah in the upcoming federal election. So not two days have passed since the tragic news that a father and son volunteer surf lifesaver team (SLS) drowned trying to save a stranded tourist, GetUp! thought this campaign was appropriate to take a pot shot. It has since withdrawn it.

Australia has a proud record of volunteer spirit. There are 150,000 people registered as surf lifesavers. Abbott happens to spend his spare time serving in both the SLS and the Rural Fire Service NSW. He isn’t there for photo shoots but actually puts his life on the line to help his community. Talk about cheap political point scoring.

For the record the Surf Lifesavers this season have rescued 5,353 people and performed first aid on 21,470 others. To put that in context, that is 30 people rescued and 451 preventative actions every hour. The SLS patrol 12,000km of beaches, 36,000km of coastline  and 100 million beach visits annually. This is SLS’s creed:

We are a can-do movement.
Optimistic at every turn.
Eternally vigilant.
Forever serving Australia.
For we believe in life.
In the sanctity of life.
And in our great Australian way of life.
We support it. We protect it. We celebrate it.
We are Surf Life Saving.

You can donate to the SLS here. CM just did.