1. BEIJING PROHIBITS FINANCIAL NEWS GATHERING OPERATIONS, ITS OFFICIAL PMI RISES SLIGHTLY (PUTATIVELY INDICATING A SECOND MONTH OF SLIGHT EXPANSION), AND IT CONSIDERS A CARBON EMISSIONS TAX
Kathrin Hille at the Financial Times reports that in regulations posted yesterday in the cabinet's website on Thursday, Beijing said that foreign media outlets would be allowed to operate out of China, but "foreign financial information providers set up in China ... must not undertake news gathering activities."
"China has required foreign news agencies to distribute to media clients only through Xinhua for more than 50 years. This will not change, and the foreign players do not challenge this arrangement for their news agency business which helps the Chinese government ensure news does not reach the public uncensored.In the meantime, the AFP reports that China's official purchasing managers' index, or PMI, rose to 53.5 in April, up from 52.4 in March, per a statement on the the China Federation of Logistics and Purchasing's website. A reading above 50 indicates expansion; below 50 indicates contraction. Manufacturing accounts for more than 40% of Chinese GDP. Meanwhile, Keith Johnson at Real Time Economics reports that Beijing has asked state researchers to draw up proposals on a carbon tax. News of the action has caused some surprise given the recent call by China, India, and South Africa--see Daily Sources 4/29 #1--for $200 billion in contributions from the developed world to help their effort to curb greenhouse emissions and their insistence that the bulk of carbon reductions come from the developed world.
The companies’ financial information services business had been relatively unrestricted until 2006, when China took the controversial step of ordering distribution through an agent wholly-owned by Xinhua."
"[T]he idea of a carbon tax is the favored approach of most mainstream economists; cap-and-trade systems, like that under (tortuous) debate in Washington, are seen as more cumbersome systems that require a huge regulatory apparatus.2. CHÁVEZ SAYS VENEZUELA WILL NOT TOLERATE FARC INCURSIONS INTO ITS TERRITORY
So what to make of the carbon tax proposal? Maybe the environmental balance of power between the old guard and the new guard in Bejing ... is more equal than many observers think.
Or perhaps China is just polishing its image ahead of the big Copenhagen conference in December that will aim to craft a successor to the Kyoto Protocol. Most Republicans—-and plenty of moderate Democrats—-are loath to take any action to curb US greenhouse-gas emissions unless China and other developing countries play ball, too."
Christopher Toothaker at the Associated Press reports that President Hugo Chávez said that Venezuela would not tolerate incursions of FARC guerrillas into its territory.
"Chavez said he was responding to concerns relayed this week by Colombia's government over the killing of eight Colombian soldiers by a rebel ambush in the Sierra de Perija, a mountain range on the 1,400-mile (2,300-kilometer) border separating the two countries"Bogota has accused Venezuela of providing safe havens for FARC guerrillas for some time now--see Daily Sources 11/25 #12.
3. UK PURSUES ARRANGEMENT BY WHICH TO PROVIDE SECURITY FOR IRAQI OIL FACILITIES, FIRST OIL CONCESSIONS SINCE SADDAM WILL REQUIRE COMPANIES TO OFFER CASH LOANS TO BAGHDAD ... THE STATUS OF THE IRAQI DRAFT OIL AND GAS LAW REMAINS MUCH AS IT WAS ONE YEAR AGO
Eric Watkins at the Oil & Gas Journal reports that following the news of the UK's decision to withdraw its troops from military action in Iraq, London wants to set up an arrangement with Baghdad to protect oil supplies.
"'We hope to sign an agreement with the Iraqi government about the future role that we can play in training and in protecting the oil supplies of Iraq,' said [British Prime Minister Gordon] Brown, adding that the agreement would be 'between our two governments rather than any new United Nations resolution.'"The statement came after Brown met with the Iraqi Prime Minister and other key officials in London. Spencer Swartz at Environmental Capital reports that Iraqi oil minister Hussein al-Shahristani briefed journalists in London after the meeting on the first licensing round since Saddam's ouster:
"He basically said that to get contracts, oil companies had to be willing to cough up a total of $2.6 billion in cash 'loans' to the government. This caught foreign oil firms off guard. In recent days, Iraq’s government has jacked up the amount of upfront cash oil companies have to pay when contracts are awarded.The Iraq Oil Report links to a study done last year by Susan L. Sakmar, adjunct professor of International Trade Law at the University of San Francisco Law School entitled The Status of the Draft Iraq Oil and Gas Law which is still a fairly accurate description of the the proposed legislation, given that the political disputes surrounding it in Iraq remain unresolved.
In return, Mr. Shahristani said it would pay foreign energy companies with crude oil production in exchange for these giant cash 'soft' loans. Oh yeah, and Baghdad hasn’t said just how much oil that will be—and won’t let companies lay down the drill bit just because of suicide bombings or attacks from militants."
4. RIYADH DEMANDS USDOS RETRACT STATEMENT THAT KING ABDULLAH MET WITH SHIMON PEREZ IN NOVEMBER
Andrew Hammond at Reuters reports that Riyadh demanded that the US State Department retract the claim that King Abdullah met with the President of Israel at the time, Shimon Perez, in November at the UN interfaith meeting. The Saudi state news agency SPA referred to an "official source:"
"The official source demanded that the State Department retract the news and offer an explanation and clarification of the reasons behind this falsehood that does not serve relations between the two friendly countries."There are no official ties between Israel and Riyadh.
5. RBC CAPITAL MARKETS PREDICTS 3-4 YR BULL RUN IN URANIUM MARKETS
William MacNamara at FT Energy Source reports that RBC Capital Markets has released a new study which argues that uranium is about to enter a "bull market rally" which could last as long as three to four years.
"Factors cited by the report: A looming supply/demand shortfall, as a new generation of nuclear power plants--largely in Asia, but also in Western Europe--requires more uranium in a world that has not invested properly in new sources of supply. Another factor: Japanese and Korean utility companies’ direct buying of uranium companies, which signals 'the start of utilities looking to secure long-term supplies where they see potential shortfalls.'"6. MEXICAN ECONOMY SHRINKS BY 7% IN Q1
Valerie Rota at Bloomberg reports that the Mexican economy likely shrank by as much as 7% in the first quarter.
"The country’s gross domestic product fell for a second straight quarter 'due to the deterioration of global economic conditions,' according to an e-mailed statement released late April 30 in Mexico. The official GDP number is scheduled to be released May 20."7. THE GLOBAL CREDIT CRUNCH IS SHOWING SIGNS OF EASING, BUT QE DOES NOT APPEAR TO HAVE THE DESIRED EFFECT ON 10 YR TREASURIES
Rebecca Wilder at News N Economics reports that the credit crunch is easing according to data from three key central banks--the ECB, the Bank of England, the Bank of Japan, and the Bank of Canada. The ECB reported that the tightening of standards for credit lines was still ongoing, 21% less banks reported doing so in April than had in the fourth quarter of 2008. The Bank of Canada also reported a slight decrease in the percentage of banks that were tightening credit, Ms. Wilder's graph:
The Bank of England reported a small net increase in lending in the three months to mid-March.
"The BoJ's survey report indicates that in the first quarter of 2009 net, lending standards to large firms tightened somewhat, while those to medium-sized firms eased somewhat. Small firm and household lending standards eased somewhat. However, the outlook for small firm and household loans suggests that less easing is on the horizon."Ms. Wilder concludes that the worst of the global credit crunch is now behind us. Her post is well worth reading in its entirety. Meanwhile, Karl Denninger at The Market Ticker points out that though Fed chief Ben Bernake has pursued a policy of "quantitative easing" putatively in order to suppress yields and push up prices on 10 year Treasuries, precisely the opposite has happened. His chart:
8. INDONESIA TO OFFER GUARANTEES TO SPUR REFINERY CONSTRUCTION
Platts reports that the Indonesian government is considering offering a set of guarantees to encourage the construction of new refineries.
"'Apart from a zero tax incentive for import duties and crude oil imports, we may also give our guarantee to new refinery projects,' oil and gas director general at energy and mines ministry Evita Legowo said. 'Our guarantee will allow investors access to lower interest from lenders.'"There are three potential refinery projects in the works, a 200 kb/d greenfield refinery in Tuban, the expansion of its 125 kb/d refinery in Balongan, West Java, and a 300 kb/d refinery in Bantan in conjunction with the National Iranian Oil Company and the Malaysian Petrofield Refining Co. (The talk about this last with NIOC has been going on for quite some time now. As it stands, however, even with these guarantees, it seems especially risky to build refineries into the Asia Pacific market, which is facing a glut of refining capacity over the next several years--see Daily Sources 1/12 #6.
9. APRIL CAR SALES DATA CONTINUES TO BE GRIM, CHRYSLER FILES FOR CHP 11
Nick Bunkley at the New York Times reports that sales of new vehicles experienced another sharp drop in April, per preliminary results released today.
Chrysler's sales dropped 48% year-over-year, 24% month-over-month. Ford's sales dropped 35% year over year, and at an annual rate of 35%. GM's sales were down 34% on the year, but up 11% from March. Toyota, Nissan, and Honda reported annual rates of sales declines of 42%, 38%, and 25%, respectively. Chrysler filed for Chapter 11 bankruptcy yesterday and is slated to shutter 13 factories for up to 11 weeks starting as early as next week.
10. US FEB OIL CONSUMPTION REVISED DOWN TO BELOW 19 MB/D
Linda Rafield at Platts reports that total US petroleum demand in February was revised down to 780 kb/d to 18.706 million b/d according to the EIA. The new total is 5.44% below consumption in February 2008. Further:
"US commercial crude inventories ended February at 354.923 million barrels, an upward revision of 4.119 million barrels from preliminary estimates."