90 seconds at 9 am: Flying taxis next?

Canada housing construction up; China's trade surplus with the US high; India tackles big corporate bad debt; CBA assigns $100 mln to fight AML cases; UST 10yr yield at 2.32%; oil and gold up; NZ$1 = 69.2 US¢, TWI-5 = 72.6

9th Nov 17, 7:29am by David Chaston

Here's my summary of the key events overnight that affect New Zealand with news ahead of today's Monetary Policy review by the RBNZ.

Firstly, in Canada, housing construction is trending higher. And the pace of new construction in the Vancouver region has hit a 12-month high.

China’s merchandise trade surplus rose to +US$38.2 bln in October from +US$28.6 bln the previous month. The politically sensitive surplus with the US, China’s largest export market and second-largest trading partner, stood at +US$26.6 bln, the second-highest on record, after September’s +$28.2 bln. With the rest of the world, the differences are quite small. New Zealand runs a small +US$300 mln merchandise trade surplus with China even though it is our largest trading partner for both exports and imports.

In India, their central bank is pressuring its banks to clean up a chronic bad-debt problem at their largest companies. This is an issue that they say is weighing on the country’s economic growth. It has circulated a list of 40 companies, ordering banks to either resolve bad debts owed to them by the companies or to refer them to the country’s bankruptcy courts - and that is to be done by the end of 2017. It is a major collision course.

In Australia, their largest bank CBA reported rising first quarter profits, up +6% and on track for a AU$10 bln result for the full year. They have also put aside about AU$100 mln into a fund to pay lawyers to fight more than 53,000 alleged breaches of Australia's anti-money laundering laws.

We reported important progress a few days ago for driverless cars. Now we can report that Uber and NASA have signed a deal to develop low-altitude flying taxis. They hope to start services in 2020 in Los Angeles and Dallas.

In New York, the UST 10yr yield is up +2 bp today, now at 2.32%.

The price of crude oil has firmed slightly today and is now just under US$57.50 / barrel, while the Brent benchmark is just under US$64.

The price of gold is +US$13 higher, now at US$1,285 oz. The bitcoin price is up more than US$700 on the day to a new record price of US$7,731 (NZ$11,200), a +10% burst higher. US$8,000 now beckons, a level predicted by Goldman Sachs.

The Kiwi dollar is little changed again today. We are now at just on 69.2 US¢. And on the cross rates we are at 90.2 AU¢, and against the euro at 59.7 euro cents. That puts the TWI-5 index at 72.6.

If you want to catch up with all the changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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33 Comments

by bw | 9th Nov 17, 7:32am 1510165966

“Development site values set to tumble. Chinese buyers have quit the market in droves. Metropolitan development sites values, which have surged in recent years on a wave of Chinese money, are showing the first signs of correcting after developer Nicholas Smedley secured two sites at discounts of 30 per cent or more after vendors rejected his original off-market offers, thinking they would get more through a public campaign.” (AFR)

Coming to a vacant property near ‘us’?

http://www.afr.com/real-estate/commercial/development/thirty-per-cent-d…

by sharetrader | 9th Nov 17, 7:47am 1510166866

People becoming more gloomy about property: ASB survey
dont they know its only the election, Chinese new year, bad weather, holiday season, people are to busy buying xmas presents etc etc.
looks like sentiment has changed and now and in the future with changes to laws over investment properties it will no longer be an easy fool free way to make money
https://www.stuff.co.nz/life-style/homed/houses/98628647/proposed-chang…

by bw | 9th Nov 17, 7:57am 1510167430

"the reality is that even though inflation is now very low, the CPI figures have most likely been overstating inflation. This is because of the way the consumer price index is calculated."
Again from Australia, but are we any different?
https://www.theguardian.com/commentisfree/2017/nov/09/low-inflation-and…

by Retired-Poppy | 9th Nov 17, 8:07am 1510168030

....and then comes one "dead cat bounce" after another just to tease the Spruikers. Trend heading south, tide going out. FHB, be very patient and save, time is on your side.

by Hardly | 9th Nov 17, 8:17am 1510168669

Trademe up to 11359 in Auckland. Let’s see how high it goes.

I’d say now is the time to get out but that was March 2017. We are on the downhill slope now.

by Cowpat | 9th Nov 17, 8:37am 1510169870

David has tabled the graph of listings . Its all ok. Its not 2008

by bw | 9th Nov 17, 8:51am 1510170674

2008? What happened in 2008? Oh, that's right! The GFC hit. Let's hope you're right and it isn't 2008 all over again because if it is, there isn't any ammunition in the arsenal to defend us with this time....

by Cowpat | 9th Nov 17, 9:28am 1510172939

Bw, there was a degree of sarcasm in my post. The question everyone should answer is what drives the increase in listings, could it be the flow of sales . As we know in 2017 unlike 2008 , interest rates are already at historic lows, prices have basically doubled, FHB are almost extinct in Auckland. David needs to invert and overlay the sales data. As an aside its Thursday morning, 860 new Auckland listings since Monday morning, last month only 1591 sales. What will drive an increase in sales.

by Lapun | 9th Nov 17, 11:24am 1510179874

Compared to the typical contributor I'm a layman about property but it does anecdotally seem to me that the underlying cause of the drop of prices in Auckland is a small but consistent flow of wealthy older Kiwis leaving and they are being replaced by a far larger number of immigrants who are younger and on average poorer. The money is leaving town.
The original concept behind immigration was to bring in families that earned well above average and although that still happens (new senior doctors, etc) the majority of our current immigration is low wage. The underlying flow of wealth out of Auckland has been happening for several years but was obscured by foreign investors until recently.

by Didge | 9th Nov 17, 1:30pm 1510187421

That is a fascinating thought.

by David Chaston | 9th Nov 17, 4:10pm 1510197011

I would be interested to know of the evidence here. It seems to me if a boomer sells, they get the funds from the sale, paid by the buyer's financing (bank deposit, bank loan, or in the case of an immigrant, imported funds). Unless the boomer leaves New Zealand (and there is little evidence of that), the net is zero, even if the boomer buys a down-szed unit. The balance of the housing funds released will go back into the banking system. These will be spent as living costs, or transferred on death to others. Only in the case that those 'others' are overseas would there be any outflow of wealth.

As to whether there is regional flow, that seems unlikely too, although there may be anecdotes. Would love to hear of hard evidence however.

by Zachary Smith | 9th Nov 17, 8:11am 1510168305

I mentioned a wee while back that autonomous quadcopters (or similar) would be the transport of the future. They could be charged using solar power.

by Didge | 9th Nov 17, 8:34am 1510169648

Airborne taxis. Perhaps another good reason to get out of a future Auckland? Will they fly from pads on high rise buildings? Will this innovation promote more high rises? Science tells us that too much noise pollution can kill.

by Zachary Smith | 9th Nov 17, 8:51am 1510170695

Do you live in Auckland Didge?
Also the airborne taxis are likely to be electric powered. They will fly from pads although not necessarily from high rises.

by Didge | 9th Nov 17, 9:14am 1510172069

Hell no. I made my money there decades ago. I now live in the country, yet within 5 to 10 minutes of all essentials and not too far away for occasional visits to the Opera or whatever in Auckland. Auckland traffic has become a joke.

by NorthernLights | 9th Nov 17, 10:13am 1510175584

by Yankiwi | 9th Nov 17, 10:09am 1510175383

The flying taxi thing... this is similar to the promises made for nuclear fusion. For a third of a century (or more) fusion has been promised as a wonderful and clean power generation method that is just a single development away from prime-time usage. Note that the contract to NASA is for control software for these as yet undeveloped flying taxis. I will be very surprised if we get unmanned flying taxis in 15 years, much less 3 years. The stated desire in the article is electric jet powered unmanned flying taxis. Until there is a breakthrough in battery technology, this is a very unlikely design concept... The odds of any unmanned flying taxi operating in the next decade is quite low, despite the possibility that my prediction becomes an example of one of Arthur C. Clarkes rules about technology predictions. The laws of physics are rather difficult to cheat, and the required safety protocols will result in said electric flying taxi not being a viable concept. Even with assuming a breakthrough in battery technology, there are many other pitfalls in making an unmanned electric powered flying taxi a reality.

I think that finding a battery chemistry that does a half order magnitude better than Lithium is rather unlikely with Lithiums extremely high bonding capability as well as its very light molecular weight that results in the very high energy density Lithium batteries. I do look forward to being proved wrong on this in the future. I expect this to happen at some point when some genius finds a new paradigm and exploits it. Until that unknown invention happens, the electric unmanned taxi development programs are a nice way to bleed some of the profit from idealistic and naive companies.

by Foyle | 9th Nov 17, 10:52am 1510177972

Flying taxis are already flying and about to enter commercial service (in Dubai). At least 20 different companies developing them, many in 'stealth' mode with good funding, most with prototypes either flying or to be flying in 2018/19.

The tech is relatively cheap and easy to develop (compared to eg cars) for autonomy as hobbiest drones have illustrated (check out DJI mavic). So they are going to be a reality soon. Noise and safety are issues that will impact their ultimate success, but already range is good enough (about 300km with batteries), and batteries are likely to improve greatly over next 5 years. Makes the lifestyle block much more attractive, and cities much less attractive.

by dtcarter | 9th Nov 17, 3:42pm 1510195343

what is your reference for a battery powered flying taxi with 300km range?

by dtcarter | 9th Nov 17, 7:50pm 1510210234

dubai 'flying taxi' "maximum flight time of 30 minutes, at a cruising speed of 50 km/h (31 mph)" so that's a range of 25km.

" nine independent battery systems. Each battery takes two hours to fully charge,"

You say it's about to enter commercial service, but sounds like that is five years away.
" The Government of Dubai says over the next five years, Dubai’s Road and Transport Authority (RTA) will work with the country and city’s aviation authorities to develop policy and laws for the AAT and its services. Trial operations will take place during this time"
https://www.theverge.com/2017/9/26/16365614/dubai-testing-uncrewed-two-…

Apparently it was originally planed to be in service "from July" which is now 4 months ago, seems they hit a few snags and have pushed that out by 5 years eh? http://www.bbc.com/news/av/technology-39003397/sky-taxi-to-fly-in-dubai…

by NorthernLights | 9th Nov 17, 10:08am 1510175328

Well Zach you’re an interesting case study
You name yourself after a Lost in Space TV show character
You consistently see pigs flying in RE
You now tell us we will be flying around in something akin to a helicopter
Nice to dream it but the energy required to lift a person and then travel requires a lot more energy than a daytime solar panel can provide
By the way you need the ability to store energy and lithium isn’t a lightweight either

by Zachary Smith | 9th Nov 17, 12:02pm 1510182149

It all fits into my Elysium project. Robots and flying things seem to be in the news a lot these days Science fiction becoming reality.
Apparently it only takes 8x250w solar panels to provide enough energy to charge the batteries on an electric car. I'm confident technology will continue to improve.

by NorthernLights | 9th Nov 17, 12:51pm 1510185113

I agree Zach the speed of tech change is evident
I’ll add ElZyum to your file

by kiwimm | 9th Nov 17, 3:14pm 1510193695

Depends on your daily distance covered. An electric car needs about 0.2kWh/km. And solar charging only really effective between 10-3 in winter, 9-5 in summer.

by Oskar | 9th Nov 17, 12:08pm 1510182531

Clearly not many helicopter pilots on this forum, has anyone seen a drone autorotate successfully yet?
Until someone comes up with a way of packaging nuclear power in a backpack all there is to say is "Tell 'im 'e's dreamin' ...."

by murray86 | 9th Nov 17, 12:25pm 1510183517

i am a pilot (fixed wing, not frantic palm tree) and have you ever heard of a ballistic parachute? I agree that flying taxies will become a reality, the only question is time frame.

by Oskar | 9th Nov 17, 2:48pm 1510192107

Ballistic parachutes work fine from about 200ft upwards which leaves a "dead man's zone" from about 30 ft up to 200ft. People say helicopters are dangerous, but they can always be flown outside the dead man's zone, even without a ballistic parachute.

by Zachary Smith | 9th Nov 17, 3:03pm 1510193029

How about ejector rockets on the passenger pod to launch it beyond the dead man's zone before deploying the ballistic parachute? Should make for an exciting trip.

by Foyle | 9th Nov 17, 3:33pm 1510194813

Some are proposing elevated launch and landing platforms for this very reason. Also gets the noise slightly further away from houses.

by NorthernLights | 9th Nov 17, 1:05pm 1510185904

Murray86 I
What’s it cost to run fly touch & go & cost per hr in a Cessna 152 these days ?
Do you fly out of Ardmore or Dairy Flat ?

by murray86 | 9th Nov 17, 2:46pm 1510192014

Whangavegas actually. Aeroclubs generally charge out around $200 + per hour. C150s are getting a little old now so maintenance costs are fairly high.

by bw | 9th Nov 17, 1:23pm 1510187012

"Xero shocked its long-time New Zealand investors with the move ( to de-list from the NZX)"
Getting out before the local market sours?

by dtcarter | 9th Nov 17, 7:42pm 1510209736

somehow they claim de-listing will improve their access to capital and analyst coverage on the Aussie markets? How does that work, investors/analysts in Oz have an aversion to dual listings?