United Press International reports that Japan's Cabinet Office released preliminary data today showing that GDP contracted by 4% in the first quarter from the fourth.
"Based on the latest numbers, the GDP contracted at an annual rate of 15.2%, Kyodo news service reported.2. AMOUNT OF NATURAL GAS TRANSITING UKRAINIAN PIPELINE SYSTEM IN FIRST FOUR MONTHS DOWN 50% YEAR OVER YEAR--LIKELY CULPRIT REDUCED INDUSTRIAL PRODUCTION
That beat the previous annual worst performance record of 13.1% in the January-March quarter of 1974, which was blamed on the global oil crisis."
Upstream online reports that the volume of natural gas transiting the Ukrainian pipeline system to Europe has fallen by 50% in the first four months of 2009 from the first four of 2008, per a statement on the Ukrainian energy ministry's website.
"Russia transported 23.2 billion cubic metres of gas through Ukraine to Europe against 46.3 Bcm last year in January-April, according to the ministry's statement, wrote Reuters."3. CHINA INTRODUCES NEW RURAL STIMULUS FOR LENDING, TAKES MEASURES TO REDUCE STIMULUS-BASED CORRUPTION, AND REPORTS THAT REGIONAL STIMULUS OBLIGATIONS NOT BEING MET
Jason Subler at Reuters reports that China's Ministry of Finance today announced that it would provide qualified rural financial institutions with subsidies equal to 2% of their loan books. In the meantime, the Associated Press reports that Tuesday the China Banking Regulatory Commission announced new rules governing loans of more than 5 million yuan (~ $732,000) or which account for more than 5% of the project financed. The new rules are in effect anti-corruption legislation.
"[T]he National Audit Office [NAO] said in a report released earlier this week that it found that local governments were failing to disburse funds allocated for projects, causing delays and other problems.JR WU at the Wall Street Journal also reports on the NAO's audit, writing:
Less than half of the funding due from local governments had been invested, it said."
"The report 'has some substantial findings,' said Xianfang Ren, an analyst with IHS Global Insight. She said the issues it raised--funding delays and not enough stimulus for small- and medium-size enterprises--are big problems that have long been suspected. The report also raised the matter of speculative bill financing, which occurs when borrowers use loans not for working capital but to buy stocks or speculate in other assets.4. BRAZIL AND CHINA 'FINALIZE' $10 BILLION LOAN PACKAGE, PETROBRAS AGREES TO PROVIDE 4%+ OF CHINESE CRUDE OIL IMPORT REQUIREMENT, BOTH STUDY OPTION TO SETTLE BILATERAL TRADE IN THEIR OWN CURRENCIES
The auditor called for a review of how some financial institutions are carrying out their work to expand domestic demand and promote economic growth. The review would include some state-controlled commercial banks; Agricultural Bank of China; policy lenders Agricultural Development Bank of China and Export-Import Bank of China; and China Credit & Export Insurance Corp., or Sinosure, a policy-oriented export credit-insurance firm.
A China Ex-Im Bank spokesman said he didn't know when the review would take place. Reviews of state-owned institutions are regularly conducted by the audit office, he said."
Yesterday Brazil and China appeared to finalize a $10 billion loan package first announced in February in da Silva's visit to Beijing. Winnie Lee at Platts reports that part of the agreement, per a statement on Sinopec's website posted today, is for Petrobras to export 150 kb/d of crude oil to China in 2009 and for volumes to rise to 200 kb/d between 2010-2019.
"The 150 kb/d of crude supply which Petrobras has promised Sinopec for 2009 is equivalent to about 4.2% of China's overall crude imports last year, and would catapult Brazil to the ranks of top foreign crude suppliers of China."In January, Brazil was the 10th largest supplier of crude to Beijing, exporting 88 kb/d, up 50.6% from exports to China of 58.5 kb/d in December. In January 2008, Brazil exported zero crude to China. Dune Lawrence and Paul Panckhurst at Bloomberg report that Brazil's foreign minister, Celso Amorim, said in a press briefing in Beijing yesterday that the two countries are researching a plan to conduct bilateral trade in local currencies--effectively eschewing the dollar. Even if priced in dollars, or if contracts for oil were linked to futures prices listed in dollars, there is no reason actual transactions for oil would have to be conducted in dollars. Why not in reais, if the renminbi remains restricted?
5. UAE DROPS OUT OF GCC MONETARY UNION, UAE NUCLEAR ENERGY MAY BE DOOMED BY VIDEO OF ROYAL BEATING MERCHANT
Maher Chmaytelli and Camilla Hall at Bloomberg reports that a UAE foreign ministry spokesman told the media that the confederation will withdraw from the Gulf Cooperation Council's planned monetary union. UAE Central bank Governor Sultan bin Nasser al-Suwaidi told journalists "the UAE will continue to maintain its expansionary monetary policy and will keep the exchange rate of the dirham pegged to the dollar."
"'This decision seems to be linked to the decision to locate the GCC Monetary Council in Riyadh,' Tristan Cooper, chief regional economist at Moody’s Investors Service, said by e-mail. 'It remains to be seen what the ramifications of this decision will be for the UAE’s bilateral relations with Saudi Arabia, but clearly it is not positive.'"Meanwhile, Mary Beth Sheridan at the Washington Post reports that the UAE nuclear energy accord with the US has been put in jeopardy by the emergence of a tape of a half brother of a UAE crown prince beating a merchant.
"Screened for a stunned congressional audience last week, it shows a robed sheik heaping sand into the mouth of a writhing Afghan merchant pinned to the ground by uniformed police.6. US AND ISREAL FORM WORKING GROUP ON IRAN, IRAN TEST-FIRES MISSILE WITH 1,200 MILE RANGE
The sheik later slams a board with a protruding nail into the Afghan's naked backside. In a gruesome conclusion, a black SUV is driven over the victim's bruised and bleeding body."
Eli Lake at the Washington Times reports that Israel and the US have formed a high-level joint working group to share intelligence on Iran.
"The agreement, reached during Monday's meeting between Israeli Prime Minister Benjamin Netanyahu and Mr. Obama, gives the US a clear channel for communicating with the new Israeli government and a vehicle for keeping tabs on any military contingency plans Israel might make if diplomacy fails and Iran develops nuclear weapons capability."A day after a joint Russian-US analysis determined that a US missile shield based in Europe would likely be ineffective against an ICBM launched from Iran, Nazila Fathi and Alan Cowell at the New York Times report that President Mahmoud Ahmadinejad told the media today that the country had test-fired a missile with a range of 1,200 miles today. The Federation of American Scientists plotted a map illustrating the relative reach of Iranian missiles.
As I have noted in the past, Tehran does not appear to be especially keen on rapprochement with the US.
7. TALIBAN FORCING MARRIAGE AND MILITARY SERVICE IN SWAT, AFGHAN TALIBAN FOUND WITH US MUNITIONS, US PLEDGES $110 MILLION IN AID FOR THOSE DISPLACED BY SWAT OFFENSIVE
As Pakistan pursues its military offensive in Taliban held areas, the Afghanistan News Network reports that Taliban is forcing the daughters of locals in Swat to marry its operatives at gunpoint, evidently in order to force allegiance in the oldest way on record. (h/t Juan Cole at Informed Comment.) Cole also notes that the Taliban is allegedly forcing the sons of locals into military service. Meanwhile, CJ Chivers at the New York Times reports that arms and ordnance collected from Taliban dead from firefights with NATO forces appear to be identical to those given by the US to the Afghan Army.
"The scope of that diversion remains unknown, and the 30 magazines represented a single sampling of fewer than 1,000 cartridges. But military officials, arms analysts and dealers say it points to a worrisome possibility: With only spotty American and Afghan controls on the vast inventory of weapons and ammunition sent into Afghanistan during an eight-year conflict, poor discipline and outright corruption among Afghan forces may have helped insurgents stay supplied."Some are beginning to wonder what conceivable point our military occupation in Afghanistan might have. Fabius Maximus, for example, thinks the reason we cannot get our NATO allies to commit more troops to the conflict are--an issue which Defense Secretary Gates recently found "puzzling":
"How might the leaders of our NATO allies answer, after we injected them with truth serum?I'm not sure I entirely agree--clearly Islamabad regards the government of Karzai as potentially problematic. But, therein lies the rub, there are many governments more directly affected by the events in Afghanistan than the US and to which their national interest is quite closely tied. Three major powers--Russia, China, and India--are all more directly affected by instability in Afghanistan than the US. Furthermore, a regional power historically constantly in conflict with Russia is also directly affected by such instability. I doubt that their respective analysts believe our current efforts are particularly stabilizing for the region, but, I imagine that some of NATO allies calculate that it may make more sense, in terms of blood and treasure, to leave the question of stabilizing Afghanistan, a country with few raw resources and little industry, to those nations which are more likely to regard a rapid US withdrawal from the country with real concern. In the meantime, Arshad Mohammed at Reuters reports that the US announced yesterday that it would provide $110 million to Pakistan to help attend to the needs of the two million people that have reportedly fled the Swat Valley to get out of the way of the Pakistan armed forces' operation there.
(1) There is no point to this occupation of Afghanistan. They will find their own destiny, and our armies can do little to influence this. Neither can your flocks of airborne killers, nor your legions of special ops assassins.
(2) Afghanistan poses no conceivable threat to us--nor to you, and probably none to Pakistan. The Taliban’s support for al Qaeda’s attack on the US (to the extent that they did support or facilitate it) was a one-off event, for which they paid dearly. There is no evidence or logic to suggest they found the experience so enjoyable that they will repeat it."
"The White House said that the United States would provide $100 million in humanitarian aid such as food, tents, radios, generators and other items and that the US Defense Department would give a further $10 million in unspecified assistance."Unfortunately, the President of Pakistan just now is known to his own people as Mr 5%.
8. ETHIOPIA DENIES THAT TROOPS HAVE CROSSED INTO SOMALIA
Mohamed Olad Hassan at the Associated Press reports that Ethiopia has officially denied allegations that its troops had re-entered Somalia yesterday.
"'Our troops have not returned to Somalia,' Ethiopian Foreign Ministry spokesman Wahde Belay said. 'Our troops are on our side of the border.'"9. CHAD ANNOUNCES NEW CROSS-BORDER OFFENSIVE VS REBELS IN SUDAN
Reuters reports that Chad has announced that it will send troops into Sudan again today in order to intercept a rebel assault being prepared there, two days after calling a halt to cross-border bombing raids into the country.
"Sudan called last week's bombing raids on its territory an 'act of war' and issued another warning on Tuesday.10. CALIFORNIA AND FRENCH PORT DATA STILL SHOWING LARGE ANNUAL DECLINES IN VOLUME
'We would urge Chad to refrain from violating the sovereignty of the country and stop its aggression,' Ali Youssef Ahmed, an official in Sudan's foreign ministry, told Reuters.
'Chad needs to come to its senses and respect the agreement which was signed in Doha. We hold them responsible for any repercussions that may arise from such actions.'
Chad and Sudan held reconciliation talks in Doha earlier this month and agreed to refrain from using force to resolve their conflicts. But N'Djamena accused Khartoum of sending armed groups over its border just hours after the deal was signed."
The Port of Long Beach has released its April TEU data, showing a 26.6% year over year decline in volume for the month:
The Port of Los Angeles has also released its April TEU data, showing a 12.11% decline year over year in volume:
And the Port of Marseilles has released its April TEU data, showing a 12% decline year over year in volumes handled:
It does look from the Marseilles data the the worst declines may be over, though the contraction is still pretty steep.
11. UN NEGOTIATING TEXT ON CLIMATE TREATY WANTS NEAR ELIMINATION OF DEVELOPED WORLD EMISSIONS, 25% REDUCTION IN DEVELOPING WORLD EMISSIONS
Alex Morales and Jeremy Van Loon at Bloomberg report that the UN's negotiating draft for a new treaty to put a stop to global warming was published today.
"The United Nations’ first draft of a new treaty to stem global warming suggests goals such as the near elimination of greenhouse-gas emissions by mid-century in developed countries including the US and Japan.The 50 odd page negotiating text can be found here.
China, India and other emerging economies would have to aim for a 25% reduction of heat-trapping gases, under a separate option that would mark the first-ever target for developing nations."
12. IEA PUTS NUMBER ON OIL DEFERRED BY PRICE DECLINE
The Paris-based IEA put a number on the delayed investments in new oil supply, per Kate McKenzie at FT Energy Source:
"In a new report, the agency reportedly warned that oil companies and investors have postponed about $170 billion of projects, equivalent to about 2 mb/d, and a further 4.2 [mb/d] in future oil supply capacity has been delayed by at least 18 months."13. THE CENTER FOR NAVAL ANALYSES SAYS FOSSIL FUEL USE IS AN URGENT NATIONAL SECURITY THREAT
The Military Advisory Board of the Center for Naval Analyses has concluded that fossil fuel use is an urgent national security threat. (h/t reader Dee Illuminati.)
14. WET WEATHER DELAYING PLANTING OF US WHEAT CROP
Tony C. Dreibus at Bloomberg reports that wheat prices have risen to the highest levels seen since January as wet weather in the US has hindered the planting of the crop.
"About 50% of the spring crop was planted as of May 17, down from the five-year average of 90%, the Department of Agriculture said this week. Parts of central Kansas have received as much as three times the normal rainfall in the past month, National Weather Service data show."The US is the world's largest exporter of wheat.
15. EIA DATA SHOWS CRUDE STOCKS STILL AT HIGHS, BUT BIG DRAWDOWNS IN BOTH CRUDE AND GASOLINE--NATIONAL GAS AND DIESEL PRICES CLIMBING BACK UP ... NOT FAR FROM DEMAND DESTRUCTION TERRITORY
The EIA announced today that commercial stocks of crude oil fell by 2.1 million barrels in the week ended May 15 to 368.5 million barrels, a big drop, but still the most seen since September 1990. The median expectation of analysts was, according to a Bloomberg survey, for a 400,000 stock draw. Gasoline stocks fell by a whopping 4.3 million barrels to 204 million barrels, moving in the course of a month from holdings in excess of the five year historical range for the time of year to below the five year historical range for the time of year.
The decline in gasoline stocks was "more than three times what was forecast." Distillate stocks, by which the EIA primarily means diesel and heating oil, built by 600,000 barrels to 148.1 million barrels, 40.8 million barrels or 27% more distillates are in storage than this time last year. They also produce a chart of retail gasoline and diesel prices in the US over the last six years or so:
I've previously remarked that at about $2.50-$3.00/gallon you start seeing Americans reducing their driving ... we are beginning to enter that price range now.
16. SF FED'S REPORT ON HOUSEHOLD DELEVERAGING AND FUTURE CONSUMPTION GROWTH SEEMS TO SUGGEST THAT CONSUMPTION GROWTH IS UNLIKELY
Mike Shedlock at Mish's Global Economic Trend Analysis notes the recent release of the Federal Reserve Bank of San Francisco's report on Household Deleveraging and Future Consumption Growth. Mish republishes a graph from the report:
"Notice the enormous gap between debt and income. This gap will be filled by deleveraging (increased savings), by default, or a combination of both. Either way, given consumer spending is close to 70% of the economy, it is irrational to expect the stock market to come roaring back anytime soon."and points to another revealing graph from the bank:
Well worth reading in full.
17. COULD SPENDING ON RAIL CREATE AS MANY JOBS AS SPENDING ON THE CAR INDUSTRY?
Yonah Freemark at The Infrastructurist argues that investing in rail will employ more people than commensurate investments in the auto industry would.
"France’s TGV high-speed trains, which criss-cross that country, carried 100 million people in 2008, and the national rail company employs about 200,000 people (that number includes people working on commuter trains). France is 1/5th the size of the US in population.(h/t Kate McKenzie at FT Energy Source.)
One can extrapolate: an equivalent American rail network could transport 500 million passengers a year on fast rail and provide jobs for one million people operating trains, maintaining track, and serving customers. There are about as many people working in motor vehicle and part manufacturing in the US today. A vibrant rail industry would mostly be a service-oriented one, rather than a manufacturing one.
The US isn’t close to providing anything of the sort today: Amtrak’s 18,000 employees served only 29 million passengers in 2008. It’s hard to imagine an $8 billion dollar investment from Washington being enough to stimulate the 20-fold expansion of a transportation sector, but it’s a start."