TBL Thinks: Flying Cars, Bleak Housing, and Canada Railways Lockdown

Aug 23, 2024

Dear Readers,

It’s Thinking Time! This week we cover flying cars and an emerging air-taxi market, a slight upturn in housing sales and changes to how we buy and sell houses, and the lockdown in Canada that has the potential to massively disrupt North American supply chains.

TBL Thinks is our way to summarize the most important paywalled, longer reads relevant to global macroeconomics, helping you cut through the noise. With that in mind, please enjoy.

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It’s a Bird, It’s a Plane, It’s a CAR?

Dream or Disaster, Flying Cars Face Multibillion Dollar Moment (BBG) As I write this article I think of The Jetsons, or more recently Harry Potter and Ron Weasley flying Mr. Weasley’s car to Hogwarts. But then I’m reminded that’s make believe world, and those cars all needed pilots; the real world is different, and it’s working on UN-PILOTED flying cars.
EHang is vying to be the world’s first un-crewed commercial flying taxi this year. It flew a test flight in China last month, with a Bloomberg reporter as the only person inside it. Closer to home, Boeing-owned Wisk is aiming to operate air taxis that can shuttle four people and no pilot before the end of this decade, while New York companies Joby Aviation and Archer Aviation are looking to fly people from downtown Manhattan to the city’s airports in mere minutes.
According to a Morgan Stanley report, the piloted and un-piloted air taxi market has the potential to be $1 trillion by 2040, which if accurate, will be more than what people currently spend on conventional air travel. This emerging market is attracting startups and established names with little aviation experience with companies such as Hyundai, Toyota, Stellantis, and Chinese tech giant Tencent Holdings having thrown their hat into the ring.

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Ray of Hope for Bleak Housing Market

US Home Sales Edged Up in July, Prices Still Near Record Highs (WSJ) A slight ray of hope shines through an otherwise gloomy housing market, with home sales rising slightly in July, ending a four month streak of declines. A fall in mortgage rates in recent weeks is helping the cause, but volume of existing-home sales stays low and prices remains at near record highs.
The housing market has also been in the news because the process of how we buy and sell houses has changed. Sweeping changes in how real estate agents get paid were recently rolled out in the US. For the past several decades, it is the seller that decided how much compensation to pay agents for both sides, and the listing says how much the buyer’s agent can expect to be paid. In a landmark legal settlement, the listing databases called multiple-listing services (MLS) will no longer show whether a seller is offering to pay the buyer’s agent or how much; and buyers will be required to negotiate with and pay their agents before they start touring homes. It might take time for these changes to make their way through to the housing market, but we are fascinated by what’s around the corner.

a couple of red doors sitting on the side of a building

Canada Railways in Turmoil

Canada’s Railways Lock Out Unionized Workers, Snarling Trade (BBG) Canada’s two biggest railways, Canadian Pacific Kansas City and Canada National Railway, shut down on Thursday after talks with union leaders failed. The two railways are the arteries of North American supply chains and if the lockout lasts for days will cause major disruptions and economic fallout.
Commodities such as wheat, fertilizer, chemicals have no good shipping alternatives and will feel the impact of the lockout immediately. In a note to investors, Bank of Nova Scotia economist Derek Holt wrote “the shutdown will have ‘ripple effects’ across the continent, especially given uncertainty toward potential strikes at US ports and given soaring global shipping costs driven by avoidance of the Red Sea and Suez Canal.”
The lockdown applies only to Canadian workers and not to the railways’ large operations in the US and for Canadian Pacific - Mexico; and is another blow to Canada’s reputation for reliability as it deals with disruptions to its transportation networks. Is this an inflationary impulse nobody was expecting? We’re curious how material the impact will be.

Until next time,

TBL Thinks