Sunday, May 14, 2017

Be worried about commodity slip ups; Toyota 'backs flying car project'; Can millennials own homes?

1 Be worried about commodity slip ups (Shelley Goldberg in Gulf News) The world has become more efficient both in commodity production and consumption over the last few decades. As a result of better technology, it costs less today to produce many commodities than it did even a few years ago.

In energy, horizontal fracking provides much greater output then ever imagined when we were drilling straight down into the earth’s surface. Today, workers will venture 2.5 miles deep to extract from a 30-inch wide vein of gold-rich ore.

The world’s deepest oil well, known as Z-44 Chayvo in Russia’s Far East, extends over 40,000 feet into the ground — equal to 15 of the world’s tallest skyscraper, the Burj Khalifa, stacked on top of each other. Industrialised farming is yielding crops faster and larger than ever while utilising less land.

On the consumption side, energy usage has dropped as office buildings, homes and appliances become more efficient. We utilise energy from sunlight, wind, ocean waves and biomass without having to drill for it. And our ability to recycle has increased substantially as we aim to close the loop in what’s referred to as the “circular economy.”

Thus, even in a world where the population increases daily, it still makes sense that commodity prices are falling. Consider an industry that isn’t a heavy consumer of commodities, such as financial services. Why should it care? Because they most likely have a solid client base that is negatively affected by lower commodity prices.

Lower commodity prices are indicative of an economy that is slowing, and portend a domino effect that negatively impacts the broader capital markets. Now is the time to question the assumptions behind the rosier economic forecasts — are they real and where are they coming from and can they be sustained under the current landscape of too much supply and insufficient demand?

2 Toyota ‘backs flying car project’ (BBC) Japanese carmaker Toyota has announced its backing for a group of engineers who are developing a flying car. It will give 40 million yen (£274, 000) to the Cartivator group that operates outside Toyota city in central Japan.

The Nikkei Asian Review reports Toyota and its group companies have agreed in principle to support the project. So far crowdfunding has paid for development of the so-called Skydrive car, which uses drone technology and has three wheels and four rotors.

Measuring 9.5ft (2.9m) by 4.3ft (1.3m), Skydrive claims to be the world's smallest flying car. It has a projected top flight speed of 100km/h (62mph), while travelling up to 10m above the ground. The team of 30 volunteers developing the Skydrive car hopes its prototype could be used to light the Olympic flame when Tokyo hosts the summer games in 2020.

3 Can millennials own homes? (Anurag Mathur in Straits Times) A recent survey by CBRE found that almost two-thirds of Asia-Pacific millennials are still living with their parents and 18 per cent have no plans to move out, with unaffordable real estate cited as the common factor.

So is home ownership simply beyond reach for millennials or do they just have no desire to take on the responsibility and commitment to finance a property?  According to HSBC's recent global survey - Beyond the Bricks - 83 per cent of millennials (those aged between 18 and 35) who do not own a home intend to buy one in the next five years. In other words, young people strongly value home ownership.

But buying a home is never easy. The HSBC report showed that globally 69 per cent of young people said that saving enough for a deposit was their biggest barrier to home ownership and 64 per cent cited the need for a higher salary.

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