Daily Sources 7/29

1. EUROPEAN ECONOMIC SENTIMENT HITS 28 MONTH HIGH

Marcin Grajewski at Reuters reports that consumer sentiment in Europe has hit a 28 month high.

"The European Commission said its economic sentiment indicator for the 16-nation currency area rose to 101.3 in July, a 28-month high, from an upwardly revised 99.0 in June."

2. GERMAN UNEMPLOYMENT FALLS FOR 13TH STRAIGHT MONTH

Rainer Buergin and Christian Vits at Bloomberg report that unemployment in Germany fell for the 13th straight month by a seasonally adjusted 20,000 to 3.21 million.

3. BANKS TO PREPARE FOR EUROZONE EXIT SCENARIOS

Eurointelligence reports that banks in Europe are preparing scenarios for eurozone states exiting the euro.

"The International Swaps and Derivative Association asked some of its members to form a group to consider what they may need to do if a eurozone state is ejected."

4. CZECH GOVERNMENT REFUSES TO SET DATE FOR EURO ADOPTION

Peter Laca and Ladka Bauerova at Bloomberg report that the Czech government has said that it refuses to commit to a date for euro adoption.

"[Prime Minister] Necas, 45, said the country will benefit from a flexible exchange rate as consumer prices converge with those in richer European Union-member states, and rapid euro adoption would risk fueling inflation. The koruna has gained 3.7 percent against the euro this month, the most among more than 170 currencies tracked by Bloomberg, making Czech exports more expensive.

'The government program will not include any target date or a promise to join the euro area,' Necas said today in an interview at his office in Prague. 'Exports are important, but this country is not only a country of exporters.'"

5. UK PRODUCTION OF GAS DOWN 14.3%

Platts reports that the UK's production of gas was down 14.3% in 2009 from 2008. "Gross natural gas production has fallen by 45% since its peak in 2000."

6. REGIONAL GROUPING TO DISCUSS COLOMBIA-VENEZUELA RIFT

BBC reports that Unasur, a regional grouping of foreign ministers, is set to discuss the rift between Venezuela and Colombia at its meeting in Quito today.

7. CONOCO WILL SELL ENTIRE STAKE IN LUKOIL

Sheila McNulty at the Financial Times reports that Conoco announced yesterday that it would sell its entire stake in Lukoil.

"Jim Mulva, Conoco chief executive, said the Lukoil investment had been aimed at doing joint deals and these had not happened."

8. IMF TO LEND UKRAINE $15.2 BILLION

Kateryna Choursina and Sandrine Rastello at Bloomberg report that Ukraine has secured a $15.2 billion, 2 1/2-year loan from the IMF.

"The Washington-based institution’s board of directors agreed to disburse $1.9 billion immediately, with subsequent payments subject to quarterly reviews.

“Ukraine is emerging from a difficult period during which the economy was severely hit by external shocks and exacerbated by domestic vulnerabilities,” John Lipsky, the fund’s first deputy managing director, said in a statement. “Authorities are committed to addressing existing imbalances and putting the economy on a path of durable growth, through important fiscal, energy, and financial sector reforms.” "

9. INITIAL UNEMPLOYMENT CLAIMS DOWN 11,000

Calculated Risk reports that

"In the week ending July 24, the advance figure for seasonally adjusted initial claims was 457,000, a decrease of 11,000 from the previous week's revised figure of 468,000. The 4-week moving average was 452,500, a decrease of 4,500 from the previous week's revised average of 457,000."

Daily Sources 7/28

CHINA HOUSING BUBBLE TO UNDERMINE ECONOMY

Yongheng Deng, Joseph Gyourko and Jing Wu at Vox EU argue that the Chinese housing bubble is likely to undermine the entire economy. Richard Smith at naked capitalism argues that the Chinese banking system is likely to go bust.

NO NEW UK COAL FIRED POWER PLANTS WITHOUT CARBON CAPTURE AND STORAGE TECHNOLOGY

Fiona Harvey at the Financial Times reports that the UK government indicated Tuesday that no new coal-fired power plants can be built without carbon capture and storage technology.

"[Energy Secretary] Mr [Chris] Huhne predicted: 'We will see the first new nuclear power station on track for 2018.'"

JAPAN TO BUILD UP SUBMARINE FLEET

Greg Scoblete at the Compass reports that Japan is to increase its submarine fleet for the first time in 36 years. The plan is apparently to counter the Chinese build-up.

JAPAN'S REFINING UTILIZATION HITS A 10 WEEK HIGH

Yuji Okada at Bloomberg reports that refining utilization hit a 10 week high as Japanese companies restarted idled plants. Capacity utilization hit 75%. A hotter than usual Summer may soften the dent in margins.

JORDAN'S KING ABDULLAH II AND ISRAEL'S NETANYAHU MEET

CNN reports that Jordan's King Abdullah II and Israel's Netanyahu are meeting to discuss the Israeli Palestinian peace process in a regional context.

SAUDI ARABIA'S HOUSING MARKET READY TO TAKE OFF?

Frontier Markets reports that it is.

IS EGYPT TOO BIG TO FAIL?

Michael Collins Dunn at the MEI Editor's Blog considers whether Egypt is too big to fail and if so how that has affected the political culture there.

BANGLADESH TO IMPORT 250 MW FROM INDIA STARTING 2012

UPI reports that India and Bangladesh have concluded a deal for Bangladesh to import 250 megawatts of electricity from India starting 2012.

"Under the deal, state-owned Power Grid Corporation of India Ltd. will invest and construct 50 miles of transmission line, which it will own, operate and maintain. PGCIL will recover the construction costs under a fixed rate over 35 years."

NIGERIAN OIL RESERVES DOWN 4.8%

Platts reports that Nigeria's oil reserves are down 4.8% on the year due to decreased exploration efforts by oil companies in the region. The oil companies are leery of continuing exploration efforts due to legislation the Nigerian government is considering which would leave little room for companies to profit from investments.

INVESTMENT IN DURABLE GOODS UP

Timothy R. Homan at Bloomberg reports that investment in non-military capital equipment climbed 0.6% last month after a revised upwards jump of 4.6% in May.

"'Business investment remains the bright spot in an otherwise dull economic outlook,' said Jay Feldman, an economist at Credit Suisse in New York. 'Corporations have actually underinvested quite dramatically in recent years and, to some extent, we are catching up.'"

CRUDE OIL STOCKS JUMP 7.2 MILLION BARRELS

The EIA reported that crude oil stocks jumped by 7.2 million barrels the week ended July 23rd to 360.8 million barrels. Gasoline stocks climbed by 0.1 million barrels and distillate stocks grew by 0.9 million barrels. Refinery utilization was at 90.6%. The price of gasoline climbed 2.7 cents to 274.9 cents for the week ended July 26th.

Daily Sources 7/27

LATEST ECB LENDING DATA MIXED

Brian Blackstone at Real Time Economics reports

"Total loans to the private sector grew 0.3% last month from one year ago. Though hardly signaling a resurgence in economic activity, that’s still the best pace in almost one year and well above the trough of -0.8% last October.

What ECB economists will notice is the breakdown. Loans to households grew 2.8% on the year, led by a 3.4% rise in lending for home purchases (consumer credit fell). Home loans have been rising steadily since early last year, when they were contracting on an annual basis. The rise in lending to households last month offset a 1.9% drop in loans to nonfinancial corporations.

According to an ECB paper last year, loans to households tend to be a leading indicator for GDP by one or two quarters, while loans to businesses lag the economic cycle."

CHINA INVESTS HEAVILY IN BRAZIL

John Pomfret at the Washington Post reports that China is investing heavily into Brazil. Now some in Brazil, and elsewhere in South America, are beginning to see the Chinese as the new colonialists. Worth reading in full.

ENGLISH SPREADING IN INDONESIA DRIVING FEARS FOR THE FATE OF INDONESIAN

Norimitsu Onishi at the New York Times reports that English is spreading in Indonesia as the language of the upper classes; some fear for the fate of the native Indonesian language as a result.

LEBANON CLAIMS ISRAELI OFFSHORE GAS FIELDS CROSS INTO LEBANESE TERRITORY

Bassem Mroue at the Associated Press reports that Hezbollah is claiming that Israel's offshore gas fields found last year cross into Lebanese territory and that force needs to be used to stop them from being stolen from.

KYRGYZSTAN'S ENERGY CRISIS WORSENS

Asyl Osmonaliyeva at Central Asia Online reports that Kyrgyzstan's energy crisis is deepening.

CONSUMER CONFIDENCE FELL TO A FIVE MONTH LOW OF 50.4

Shobhana Chandra at Bloomberg reports that

"The Conference Board’s sentiment index fell to 50.4, below the median forecast of economists surveyed by Bloomberg News and the lowest level in five months, figures from the New York-based private research group showed today."

CASE SHILLER INDEX UP

Invictus at the Big Picture hosts a graph of the Case Shiller Index, which showed a small rise in its most recent reading:



Free Exchange wonders why the readings are up in places where the bubble was worst, such as Las Vegas.

Daily Sources 7/26

US SENATORS PEN LETTER RE: REPORT ON CHINA'S MILITARY BUILD-UP

Several US Senators have penned a letter to the Defense Department asking for assurances that the report on China's military build-up hasn't been toned down. The report is five months late in the making.

PLAN TO BROADCAST MORE IN MANDARIN IN GUANGDONG LEADS TO PROTEST

Brian Spegele at China Real Time reports that a plan to broadcast more shows in Mandarin in Cantonese-speaking Guangdong Province led to a decent-sized protest.

CHINA FACING DIFFICULTIES MANAGING WATER RESOURCES

Christina Larson at Environment 360 reports that China is facing increasing difficulty managing its water resources. China has 20% of the world's population, but just 7% of the world's fresh water resources.

"World Bank estimates show that China possesses only one-fourth the global average amount of water per capita. As more and more of its people move to cities, household demands will grow. Professor Wang estimates that Beijing’s water use has grown 150 percent in just the last decade. China’s power sector is extremely water-intensive, and steeply rising energy use is also driving water demand."

UKRAINE MAY ISSUE RUBLE-DENOMINATED DEBT

Daryna Krasnolutska and Denis Maternovsky at Bloomberg report that Ukraine is considering issuing ruble-denominated bonds after abandoning a US-dollar bond issue in the middle of July.


ISRAEL RAISES BENCHMARK INTEREST RATE

Alisa Odenheimer at Bloomberg reports that the Bank of Israel has raised its benchmark interest rate a quarter point to 1.75%.

AFRICAN UNION HEAD CONDEMNS ICC'S INDICTMENT OF SUDANESE PRESIDENT

Agence France Press reports that the head of the African Union, the President of Malawi, has said that the International Criminal Court's indictment of the President of Sudan undermines peace and security in Africa:

"To subject a sovereign head of state to a warrant of arrest is undermining African solidarity and African peace and security that we fought for for so many years."

ANADARKO DISCOVERS OIL OFFSHORE GHANA

Sharon Hong at Newswatch: Energy reports that Anadarko has made a significant oil discovery off-shore Ghana.

"The discovery well found about 174 net feet of "high-quality" oil pay in two zones, the company said. The oil appears to be light crude between 33 and 36 degrees API."

MONEY FOR MEXICAN DRUG WAR NOT SENT

Jackson Diehl reports that only a small percentage of money budgeted to help Mexico in its drug war is actually reaching Mexico City.

JUNE HOME SALES WORST EVER RECORDED (SINCE 1963)

Calculated Risk reports that

"Sales of new single-family houses in June 2010 were at a seasonally adjusted annual rate of 330,000 ... This is 23.6 percent (±15.3%) above the revised May rate of 267,000, but is 16.7 percent (±10.9%) below the June 2009 estimate of 396,000."

HOUSEHOLD NET WORTH AS A PERCENTAGE OF DISPOSABLE INCOME BACK TO LATE 80S EARLY 90S LEVELS

Barry Ritholtz at the Big Picture hosts a graph of household net worth as a percentage of disposable income:



IS AMERICA FACING INCREASED STRUCTURAL UNEMPLOYMENT?

FreeExchange hosts a debate.

Daily Sources 7/22

1. EUROPEAN DATA OPTIMISTIC

Quentin Peel at the Financial Times reports that both manufacturing and services purchasing manager indices showed unexpected strength in the Eurozone.

"Taken in isolation, the indices suggest a real growth rate of gross domestic product in the eurozone of 0.7 per cent in the third quarter – above the 0.5 per cent for the second quarter – but analysts warned against extrapolating the figures for the full quarter."

Worth reading in full.


2. US CHIEF OF THE JOINT CHIEFS OF STAFF SAYS HE HAS MOVED FROM BEING CURIOUS TO CONCERNED AT CHINESE NAVAL BUILD UP

Brian Spegele at China Real Time reports that the chairman of the Joint Chiefs of Staff, Adm. Mike Mullen, told troops at a town hall meeting in South Korea Wednesday that

“I have moved from being curious about what [the Chinese] are doing to being concerned about what they are doing.”

This has apparently been the position of the chairman for some time now.

3. IS JAPAN IN DANGER OF FAILING?

Barry Ritholtz at the Big Picture reports on Vitaliy Katsenelson's argument that Japan will be the next big economy to crash.



4. ICJ RULES KOSOVO SECESSION LEGAL

Douglas Muir at A Fistful of Euros reports that the International Court of Justice today ruled that the Kosovo unilateral declaration of independence was legal. What does that mean for Catalonia, Scotland, Abkhazia, etc.?

5. VENEZUELA SEVERS DIPLOMATIC RELATIONS WITH COLOMBIA AGAIN

Christopher Toothaker at the Associated Press reports.

6. ONGC AND PETROVIETNAM TO PURCHASE BP STAKE IN OFFSHORE GAS FIELD

Nidhi Verma at Reuters reports that India's state owned ONGC has reached an agreement in principle with PetroVietnam for a joint purchase of BP's stake in a Vietnamese offshore gas field.

7. SOUTH AFRICA KEEPS BENCHMARK INTEREST RATE AT 6.5%

Nasreen Seria and Franz Wild at Bloomberg report that South Africa's central bank has decided to keep interest rates steady at 6.5%.

"Seven interest rate cuts since December 2008 and inflation at its slowest pace in four years have helped to spur consumer spending and growth in Africa’s biggest economy. [Central Bank Governor Gill] Marcus resisted calls from labor unions and exporters to cut interest rates again today as the World Cup, which ended on July 11, fueled wage demands and pushed up prices of hotel rooms, flights and restaurant bills."

8. FORMER SINGAPORE PRIME MINISTER SAYS ENERGY INDEPENDENCE UNATAINABLE

Peter Maloney at Platts reports that the former Prime Minister of Singapore answered the question of whether the city state could become energy independent firmly in the negative.

"He was also refreshingly direct about the prospect of renewable energy making a significant dent in Singapore's energy mix. Wind power is out, he said. The island does not have winds that are strong or consistent enough. And solar power is too expensive.

Lee noted that China has a huge share of the market for photovoltaic equipment, but the Chinese charge too much. If they want to lower prices, then Singapore might be interested, he said. Until then the island nation is looking to diversify its energy sources in other ways.

Right now, about 80% of the country's electricity is generated by natural gas, most of it from Indonesia. So Singapore is building an LNG regasification terminal to import LNG from Qatar."

9. PERU TO PURCHASE RECORD NUMBER OF DOLLARS TO STAVE OFF SOL'S APPRECIATION

John Quigley at Bloomberg reports that Peru may purchase a record number of dollars to prevent the sol from appreciating on investment in the country.

"Foreign investors are moving capital into the country as policy makers lift borrowing costs to prevent the $129 billion economy from overheating. The central bank will probably raise reserve requirements again, following an increase on July 18, Segura said. The Finance Ministry said this week it will coordinate dollar purchases with the central bank to slow gains in the currency."

10. INITIAL JOBLESS CLAIMS RISE TO 464K

Peter Boockvar at the Big Picture reports that initial jobless claims totaled 464k, 19k above expectations and up from a revised 427k last week.

11. RAILFAX WEEKLY DATA--LOOKS LIKE GROWTH IS MODERATING

Atlantic Systems Inc.'s weekly railfax showed that year to date rail carriage of coal was down 1.4%. That should mean for no recovery in industrial production in the US.



Their graph of total North American carloads of waste and scrap material in four week rolling averages:

Daily Sources 7/21

1. BANK OF CANADA RAISES INTEREST RATE TO 0.75%

Greg Quinn at Bloomberg reports that Canada yesterday raised its benchmark interest rate by a quarter percent to 0.75%. The central bank indicated that it would consider international developments before raising the rate further.

2. MEXICAN RETAIL SALES UP 5% IN MAY

Jonathan J. Levin at Bloomberg reports that Mexico's retail sales were up 5% from last year in May. The increase took place outside of Mexico's border regions with the US where drug cartel-inspired violence has become endemic. Americans are "thinking twice" before crossing the border to shop.

3. JF-17 MAKES A SPLASH AT FARNBOROUGH

Brian Spegele at China Real Time reports that the Chinese and Pakistani new fighter jet--the JF-17--made a splash at this year's Farnborough International Air Show in England.

"Aircraft sales are the most lucrative part of Beijing’s weapons exports, totaling some $815 million, China Daily reported."

The plane relies on Russian made jet engines, but the fact that China is willing to export its latest technology makes for a different arms theory than that practiced by the US.

4. INTERNET USAGE IN CHINA IS SURGING

Kevin Sullivan at the Compass reports that Chinese internet usage is surging.



23% of a billion is a lot of people.

5. CHINA FACING HOUSING BUBBLE?

James Hamilton at Econbrowser asks whether China is facing a housing bubble.



6. NEW SANCTIONS ON NORTH KOREA

Craig Whitlock and Karen DeYoung at the Washington Post report that the US has announced that it will impose further sanctions on North Korea.

7. INSURANCE COMPANIES ABANDONING IRANIAN SHIPPING

Thomas Erdbrink and Colum Lynch at the Washington Post report that insurance companies have abandoned their relationship with Iranian shipping in order to comply with new US sanctions. Ports will refuse to allow Iranian ships entry if they are not covered for potential damages. Worth reading in full.

8. KURDS BLOW UP TURKO-IRANIAN GAS PIPELINE

Ivan Watson and Yesim Comert at CNN report that Kurdish rebels today took credit for the bombing of a Turkish-Iranian gas pipeline.

"An official from BOTAS, Turkey's state oil and gas company, speaking on condition of anonymity, told CNN that the fire had been extinguished. However, the official said, it will take at least six days to resume pumping fuel through the pipeline. In the meantime, BOTAS has increased the flow of gas from Azerbaijan to compensate for the gas cut."

9. INDIA AND PAKISTAN DISPUTE KASHMIR DAM

Lydia Polgreen and Sabrina Tavernise at the New York Times report that tensions are rising over the construction of a dam in Jammu-Kashmir. Pakistan is worried that India will be able to control water flow to its farmers during planting season. Worth reading in full.

10. COLOMBIA LOOKING UP

Frontier Markets optimistically notes that Colombia is emerging from its drug war. Investors will be more likely to place their money in Colombia than, say, Venezuela.

12. HOUSING HEADED FOR A DOUBLE DIP?

Barbara Kiviat at the Curious Capitalist argues that a double dip in housing is likely.

13. CRUDE AND PRODUCTS STORAGE INCREASES

The EIA reports that crude oil stocks grew by .4 million barrels in the week ended July 16th. Gasoline stocks grew by 1.1 million and distillate stocks grew by 3.9 million barrels. The national price of gasoline rose by 0.4 cents to 272.2 cents per gallon for the week ended July 19th. (Prices between $2.50 and $3.00 per gallon is where you start to see modification of use.) For the week ended 7/16 refinery utilization crept up to 91.5%.

Daily Sources 7/20

1. BUNDESBANK SAYS CURRENT-ACCOUNT DEFICITS OF IRELAND, SPAIN, GREECE AND PORTUGAL THREATEN EUROZONE

Thomas Molloy at the Independent reports that the economic policies of Ireland, Spain, Greece, and Portugal represent a threat to the Eurozone as a whole and the entire Euro project.

"'These macro-economically erroneous trends' are 'a source of danger for other member countries and the currency region as a whole,' the Bundesbank wrote in its monthly bulletin. Deficit countries damage the eurozone's stability and 'it is urgently necessary to correct maldevelopments and avoid a repetition in the future'."

2. EUROPEAN COMMISSION TO BAN COAL SUBSIDIES BY 2014

James Kanter at Green reports that the European Commission has tentatively banned subsidies for coal mining starting 2014.

3. PEW SAYS THE DEVELOPED WORLD UNHAPPY WITH CHINA'S RISE

Free Exchange notes that concerns about China's economic might are high in the developed world. Much of the developing world ain't so keen on its rising military prowess either.



4. CHINA NOW THE WORLD'S LARGEST ENERGY USER

Grant Smith at Bloomberg reports that according to the IEA China is now the largest user of energy consuming 2,252 million metric tons of oil equivalent in 2009 versus the 2,170 million tons used by the US. Somewhat oddly, Shai Oster at China Real Time reports that the Chinese leadership has rushed to deny that it is now the largest energy user, saying that by their calculations the US remains top dog in that department.

5. JAPAN AND CHINA TO NEGOTIATE HOW TO DEVELOP UP EAST CHINA SEA GAS

Takeo Kumagai at Platts reports that Japan and China are seeking to schedule negotiations on how best to jointly develop the East China Sea gas fields which have been the source of some friction between the two governments.

6. US AND SOUTH KOREA TO CONDUCT NAVAL DRILLS NEXT WEEK

After a delay which caused some to speculate that the US was worried about upsetting China, Elisabeth Bumiller and Edward Wong at the New York Times report that the US and South Korea have agreed to hold naval exercises in the Sea of Japan and Yellow Sea next week. The exercises are in part a response to the sinking of a South Korean ship by a North Korean submarine four months ago. Beijing has strongly objected to the US holding naval drills in the Yellow Sea.

7. JAPAN TO CONSIDER ENERGY HUB AMBITIONS

Takeo Kumagai at Platts reports that Japan is considering using its spare storage capacity to act as an energy hub in the region. Japanese oil consumption is on a downward trend leaving considerable spare capacity. Some are considering using that spare capacity to export out into regional markets extra petroleum products, becoming the third trading hub in the region after Singapore and South Korea.

8. RUSSIA SENDS MISSION TO CLARIFY BORDER ON ARCTIC SHELF

Elena Kovachich at the Voice of Russia reports that

"The flagship of Russia’s polar fleet “Academician Fyodorov” has left for the Arctic on an expedition to clarify the outer border of the country’s continental shelf."

9. NABUCCO COMPLETES PUBLIC HEARINGS IN TURKEY

Alex Froley at Platts reports that the Nabucco pipeline project has completed the first round of public hearings in Turkey.

"Erdal Tuzunoglu, managing director for Nabucco Turkey, said: 'The completion of the public hearings is an important step towards the realization of the Nabucco project. The communities are very interested in the project and we feel that their concerns were addressed and discussed.'"

10. JUNE UNEMPLOYMENT BY STATE SHOWS IMPROVEMENT

Phil Izzo at Real Time Economics reports that the Bureau of Labor Statistics announced that most states--37--saw unemployment fall in June, while five saw an increase and in six there was no change. 27 saw a decrease in payroll employment while 21 saw an increase. Click on the link for neat interactive map and chart.

11. THE WHITE HOUSE ANNOUNCES FORMATION OF NATIONAL OCEAN COUNCIL

John M. Broder at Green reports that the White House yesterday announced the creation of a National Ocean Council. The new body will not have the power to create new regulations, but will attempt to coordinate the policy of overlapping institutions regulating ocean policy. Worth reading in full.

Daily Sources 7/19

GOLDMAN SACHS BEING FROZEN OUT OF EUROPEAN SOVEREIGN DEBT OFFERINGS

Elena Moya at the Guardian UK reports that European governments are freezing Goldman Sachs out of debt offerings. An observer in France says that there would be rioting in the streets if Paris chose Goldman to lead a bond sale. Worth reading in full.

PRIVATE EQUITY INVESTMENT IN INDIA GROWING RAPIDLY

James Lamont at beyondbrics reports that India's private equity market is predicted to reach $17 billion this year.

"New investments will originate from the US where investors seek to participate in India and China’s high growth profiles. Average deal size among private equity investments this year is already between $50m and $200m, up from an average of $21m last year."

CLINTON ANNOUNCES NEW AID PROJECTS FOR PAKISTAN

BBC News reports that US Secretary of State Hillary Clinton announced a number of new aid projects for Pakistan worth $500 million. The projects include the building of two new hydroelectric dams. The aid money comes from a five year $7.5 billion aid package agreed to by Congress last year.

HUNGARY SUSPENDS BUDGETARY REVIEW BY IMF AND EU

Judy Dempsey at the New York Times reports that Hungary's government has stated that it will not pursue further austerity measures despite pressure from international creditors. The IMF and EU suspended a budgetary review of Hungary over the weekend.

MOODY'S DOWNGRADES IRISH DEBT

Matthew Saltmarsh at the New York Times reports that Ireland's debt has been downgraded by Moody's to Aa2 from Aa1. It's outlook has been changed from stable to negative. Not sure why anyone would pay any attention to the ratings agencies after this last bugaboo, but there you have it. The rating is still well above junk.

IRANIAN REVOLUTIONARY GUARD PULLS OUT OF PHASES 15 AND 16 OF SOUTH PARS

Aresu Eqbali at Platts reports that due to sanctions, the Iranian Revolutionary Guard has pulled out of phases 15 and 16 of the South Pars project.

"The IRGC and its affiliates have grown into an economic power in Iran, largely as a result of a succession of UN sanctions imposed by the international community over suspicions that Tehran is secretly developing nuclear weapons, a charge the Iranians deny.

The involvement of IRGC or its subsidiaries would make it difficult to source parts and equipment from foreign companies, which run the risk of being in breach of the sanctions should they have to deal with Khatam al-Anbiya or any other banned entity."

BOEING SELLS 30 777S TO DUBAI

Christopher Drew at the New York Times reports that the Dubai-based Emirates Airlines has put in a purchase order to Boeing for 30 777s. Airbus has sold 131 commercial airplanes this year; Boeing has sold 177.

WATER START UP SEEKS MARKETS IN INDIA, SAUDI ARABIA, CYPRUS AND IRAQ

John Collins Rudolf reports that a start up company in Texas plans to ship fresh water from Sitka, Alaska, to markets in India, Saudi Arabia, Iraq, and Cyprus. The company has no contracts yet, but has signed a deal with Sitka.

MOZAMBIQUE SOURCE OF COKING COAL FOR CHINA, INDIA, AND SOUTH AFRICA

Frontier Markets reports that interest is growing in Mozambique from China, India, and South Africa due to its reserves of coking coal for use in their steel plants.

BUILDER CONFIDENCE IN NEWLY BUILT, SINGLE FAMILY HOMES DECLINES ACCORDING TO HMI

Free exchange opines that the outlook for housing will be grim for the foreseeable future.



TWO AND HALF MILLION UNEMPLOYED LOSE ACCESS TO UNEMPLOYMENT BENEFITS

Phil Izzo at Real Time Economics reports that 2,502,000 jobless Americans have lost access to unemployment benefits since June 2.

"The Senate is expected next week to vote to extend unemployment benefits, but the delay has caused a lapse in benefits for some 2.5 million of the nation’s jobless."

Meanwhile, Tom Barkley at Real Time Economics reports that the National Association for Business Economics survey of 84 companies found that they were back in hiring mode. Meanwhile, Free Exchange reproduces a Brookings graph which plots the length of time it will take for jobs to reach the height seen prior to the recession with how many jobs need to be created.


Invictus at the Big Picture reproduces a graph from the University of Michigan's Consumer Sentiment Survey and notes that the reading looks a lot like the last time we had a double dip recession.



THE CLEVELAND FED REPORTS THAT THE PUBLIC EXPECTS INFLATION TO STAY BELOW 2% OVER THE NEXT DECADE

"The Cleveland Fed’s estimate of inflation expectations is based on a model that combines information from a number of sources to address the shortcomings of other, commonly used measures, such as the "break-even" rate derived from Treasury inflation protected securities (TIPS) or survey-based estimates."

Daily Sources 7/15

1. FRANCE, GERMANY AND THE UK WORKING TO CONVINCE EU TO ADOPT 30% CARBON REDUCTIONS BY 2020

Paul Whitehead at Platts reports that France, Germany and the UK have launched an effort to convince the EU as a whole to adopt a measure calling for 30% carbon reductions by 2020. The current goal for the EU is a 20% reduction by 2020.

2. TURKISH CENTRAL BANK LEAVES BENCHMARK RATE UNCHANGED

Steve Bryant at Bloomberg reports that the Turkish central bank left its key benchmark rate unchanged at 7%.

3. CHINESE GDP GROWTH UP BY 10.3% IN THE SECOND QUARTER

BBC reports that GDP in China grew by 10.3% in the second quarter, down from the 11.9% seen in the first quarter.

"Other official Chinese figures show retail sales are growing at around 18% a year, which suggests that consumption is still rising."

Meanwhile, Frontier Markets reports that manufacturing is already switching from China to other, cheaper, locales. Michael Schuman at the Curious Capitalist notes that some economists expect China to relax lending quotas again in a second stimulus.

4. MICHAEL PETTIS ARGUES THAT A FLOOD OF MONEY TO THE US IS MORE LIKELY THAN CHINA DUMPING US TREASURIES

Michael Pettis at Chinese Financial Markets argues that the US is more likely to see a "tsunami" of foreign capital entering the country than China exercising the "nuclear option" and selling its US treasuries holdings. He says the latter cannot and will not happen. Worth reading in full.

5. JAPANESE CARBON EMISSIONS CUTS GOALS INCOMPATIBLE WITH PROJECTED INDUSTRIAL DEMAND GROWTH

Hong Chou Hui at Platts writes that a new report by a consultancy predicts that Japanese manufacturing may be forced overseas if its goal for carbon emissions reductions--25% by 2020--are to be met. Forecasts of growth in industrial power demand are incompatible with the carbon emissions goals.

6. UAE AMBASSADOR SAYS AN ATTACK ON IRAN PREFERABLE TO IRANIAN NUCLEAR WEAPONS

Alexander Smoltczyk and Bernhard Zand at Der Spiegel report that the UAE ambassador to the US said

"A military attack on Iran by whomever would be a disaster, but Iran with a nuclear weapon would be a bigger disaster."

Spiegel concludes that an axis is forming against Iran in the Middle East.

7. TWO HOUSES BEING KEPT OFF MARKET FOR EVERY HOUSE ON SALE

Yves Smith at naked capitalism reports that for every house on sale there are two houses being kept off the market, or shadow housing.

"James Saccacio, CEO of RealtyTrac, said at the current pace, more than 3m properties will receive a foreclosure filing by the end of the year, and lenders will repossess more than 1m of them. According to a report from the Toronto-based Capital Economics, the weight of the shadow inventory may contribute to a double dip in the housing market. The report found that for every home currently on the market, two homes are waiting to be sold."

8. 429,000 NEW JOBLESS CLAIMS LAST WEEK

Kelly Evans at Real Time Economics reports that there were 429,000 initial jobless claims last week.

9. INDUSTRIAL PRODUCTION UP 0.1%

Courtney Schlisserman at Bloomberg reports that industrial production rose 0.1% in June.

Daily Sources 7/14 (Bastille Day)

THE EU IS HALFWAY TO MEETING THEIR GOAL OF 20% RENEWABLE FUELS CONSUMPTION BY 2020

Reuters reports.

THE EURO'S INTERNATIONAL ROLE

The European Central Bank has released a 84 page paper on the international role of the Euro.

RUSSIAN SPENDING MORE THAN THE PRICE OF OIL WOULD ALLOW

Toni Vorobyova at Reuters reports that Russian spending is well above what the price of oil would allow without running a deficit.

GERMANS WORRIED THEIR RELATIONSHIP WITH RUSSIA IS COOLING

Matthias Schepp at Der Spiegel worries that the Merkel administration has not continued a strong tradition of courting Moscow, allowing other nations to attempt to get pride of place. In the meantime, John Roberts at Platts reports that RWE has decided to consider an offer from Moscow to join the South Stream pipeline plan, but loudly asserted its commitment to Nabucco.

BERLIN CONSIDERS AUCTIONING OFF EXTRA TIME FOR NUKE PLANTS

David Crossland at Der Spiegel reports that the Merkel Administration, which wants to bypass the plan to shutter all nuclear power plants by 2020, is considering auctioning off more time for the plants to operate. That is, the power companies could bid for additional time past 2020 in which they could operate. A key reason for the idea is that nuclear power makes it easier to meet carbon reduction goals.

SPANISH SOLAR POWER NOW BIGGER THAN US

Sharon Hong at News Watch Energy reports that with the commissioning of a new solar plant Spain now leads the US in solar power energy production.

SOUTH KOREAN PLAN FOR PRIVATE COS TO SPEND $18 BILLION ON GREEN TECH SMOKE AND MIRRORS

Christian Oliver at FT Energy Source warns us that the news yesterday that the plan for South Korean companies to spend $18.6 billion on green technologies is not quite what it seems.

NIGERIAN CRUDE EXPORTS TO US ON THE RISE

Jacinta Moran at Platts writes that NIgerian exports to the US are averaging 945 kb/d in the first quarter of 2010, up from 606 kb/d in the same quarter last year. A key reason is that efforts to mollify Niger Delta rebels have had some success. Meanwhile, Sharon Hong at News Watch Energy reports that the Nigerian state oil company is insolvent as it waits for the government to pay it its subsidies.

MORE THAN 4 PEOPLE ARE LOOKING FOR JOBS FOR EACH AVAILABLE JOB

Per Mark Thoma at Economist's View:



OIL PRICES MODERATING SOMEWHAT IN US

James Hamilton at Econobrowser updates some charts he uses to monitor energy costs in the US, including a chart of US retail gasoline prices.



Note that prices are in the range where they begin to affect driving behavior in the US, or $2.50/g. They are just short of $3.00/g where prices will have a strong effect on driving behavior.

CRUDE OIL STOCKS DOWN 5.1 MILLION BARRELS

The EIA reports that crude oil stocks fell by 5.1 million barrels in the week ended July 9th, though they are still well above the 5 year historical average. Gasoline stocks built by 1.6 million barrels and distillates grew 2.9 million barrels. The average price of gasoline for the week ended July 12th fell by 0.8 cents to 271.8 cents/gallon. For the week ended July 9th, refinery utilization grew to 90.5%.

Daily Sources 7/13

WILL CHINA'S DEBT EXPLOSION BITE IT IN THE BUTT?

Asks Michael Schuman at the Curious Capitalist.

THE NOTION OF A EUROPEAN-NORTH AFRICAN SUPER-GRID GAINING GROUND

FT Energy Source reproduces an interview with Gregor Czisch of Germany’s Kassel University, who argues that such a supergrid would not be more geopolitically compromising than the current dependence on natural gas.



SOUTH KOREAN INDUSTRIES TO SPEND $18.5 BILLION ON GREEN TECHS TO 2013

Shinhye Kang at Bloomberg reports that South Korean companies plan to spend $18.5 billion in clean energy technologies to capture government spending on green technology and jobs. In the meantime, Choe Sang-Hun at the New York Times reports that there may be some friction between Seoul and DC when they begin renegotiating their nuclear fuel treaty later this year. Nuclear energy provides about 40% of South Korea's electricity. Seoul wants to reprocess the nuclear fuel; the US is opposed because reprocessing makes making nuclear weapons a simpler prospect.

PUTIN EXTENDS FUEL SUBSIDIES FOR FARMERS FACING DROUGHT

Maria Kolesnikova at Bloomberg reports that Prime Minister Putin has agreed to continue fuel discounts to farmers in Russia, who are facing the worst drought in a decade.

OPEC PREDICTS 2.1% INCREASE IN GLOBAL OIL DEMAND IN 2010

Robert Perkins at Platts reports that the IEA predicts a 2.1% increase in global oil demand in 2010, or an additional 1.8 million b/d rise from 2009. For 2011, the IEA predicts a 1.3 million b/d year-on-year growth in global oil demand to 87.8 million b/d. The slowing demand growth comes on top of predictions of growing global GDP.

BASHIR CHARGED WITH GENOCIDE BY INTERNATIONAL CRIMINAL COURT

Colum Lynch and Rebecca Hamilton at the Washington Post report that the International Criminal Court has charged the sitting Sudanese President, Omar Hassan al-Bashir, with genocide. David Eggers and John Pendergrast opine in the New York Times that the US should threaten Sudan to try and ensure that the North-South peace referendum takes place in January. Right now it looks to them that war is inevitable between them. Although they make room for the ICC's recent holding, it is not clear to me how it would be likely to produce a peaceful solution to the emerging problem.

PEMEX TO SELL DOLLAR BONDS

Gabrielle Coppola and Andres R. Martinez at Bloomberg report that Pemex, Mexico's national oil company, will sell at least $500 million in dollar bonds, yielding 250 basis points over US Treasuries today.

BOSTON FED PRESIDENT WORRIED MORE ABOUT DEFLATION THAN INFLATION

Jon Hilsenrath at Real Time Economics reports that Federal Reserve Bank of Boston President Eric Rosengren is more concerned about the possibility of deflation than of inflation.

“The core inflation rate is right around 1%,” he said. “Given the amount of substantial excess capacity that we have in the economy, there is some risk of further disinflation. And I would say the risk of deflation has gone up and is more of a risk than I would like to see at this point.”

Rebecca Wilder at News N Economics reports that inflation expectations for all the developed countries appear to be going down.



Edward Hugh at Fistful of Euros argues that there is a global slowdown in the works.

Daily Sources 7/12

SOUTH KOREA RAISES BENCHMARK INTEREST RATE BY .25%

William Sim and Shinhye Kang at Bloomberg report that South Korea's central bank on Friday raised its benchmark interest rate by .25% to 2.25%. GDP is expected to grow by 5.9%, up from previous estimates of 5.2%. Exports are expected to rise by 26.4%. Consumer price inflation is expected to hit 2.8% this year and 3.4% in 2011. Guess they're not worried about a double dip in the recession.

INDIA ENDS FUEL SUBSIDIES, PROTESTS IMMEDIATELY ERUPT

Chris Stanton at the National reports that India has ended its subsidies on gasoline and substantially reducing them for diesel. Large protests immediately erupt.

IS YEMEN THE NEXT AFGHANISTAN?

Robert F. Worth at the New York Times Magazine asks whether Yemen is the next Afghanistan.

UGANDA HIT BY TERRORIST BOMBINGS

Josh Kron at the New York Times writes that at least 64 people were killed in three bombings in Uganda. The main suspect is Al-Shabaab. Uganda has ties with the transitional government in Somalia.

Because It's Awesome

Egypt unveils discovery of 4,300-year-old tombs

Maggie Michael reports. For pictures, click on the link.

Daily Sources 7/8

THE IMF REVISES ITS WORLD GROWTH MEASURE UPWARDS

S.D. at Free Exchange reports that the IMF has revised its world economic growth indicator upwards by 0.4% to 4.6%. The IMF indicated that it believed world growth was 5% for the first quarter of 2010. Meanwhile, Alex Frangos at Real Time Economics reports that the IMF's chief economist, Olivier Blanchard, has said that developing countries still need to worry about big inflows of money.

BALTIC DRY INDEX AT LOWEST POINT IN YEAR



BANK NEGARA MALAYSIA RAISES OVERNIGHT POLICY RATE TO 2.75% FROM 2.5%

Shamim Adam at Bloomberg reports.

BRAZILIAN SENATE APPROVES NEW STATE OIL COMPANY

Upstream Online reports that the Brazilian Senate has OK'd a new oil company to handle the offshore pre-salt fields, tentatively to be called Pre-Sal Petroleos. The bill remains stuck in the lower house of the Congress, however.

US AND MEXICO TO FORM BILATERAL COUNCIL ON COLORADO RIVER

David Steffen at the Imperial Valley Press reports that the US and Mexico have agreed to set up a bilateral council on the Colorado River.

"The U.S. and Mexican governments, Colorado River basin states and {International Boundry and Water Commission] representatives would make up the council. Its mission would be to facilitate administrative and legal aspects associated with the binational agreement, according to the minute."

COMMERCIAL VACANCIES CONTINUE TO CLIMB

Mark Thoma at Economist's View posted the following graph:



INFLATION NOWHERE TO BE FOUND

Menzie Chinn at Econbrowser checks a variety of data looking for US inflation, but finds none. Here is his graph of the annualized 3 month change in price indices.



TEMP JOBS UP 19.6% YEAR OVER YEAR BUT FULL TIME DOWN 0.7% YEAR OVER YEAR

Invictus at the Big Picture reports that temp jobs are up 19.6% year over year, the most since the data series began to be recorded in 1990. Private sector full time jobs less temp jobs is down 0.7% year over year, unusually low given the temp jobs number.

Daily Sources 7/7

1. CHINA'S US TREASURY HOLDINGS UP $5 BILLION IN APRIL

Bloomberg reports that China's State Administration of Foreign Exchange urged markets to not consider changes in US treasuries political statements. It further indicated that gold is not likely to become a major part of its reserves holdings because of its volatility and lack of interest payments. Some think this is just Beijing talking its book so it can buy further gold at depressed prices. Last year Beijing doubled its gold holdings.

2. FREE EXCHANGE HOSTS A NEAT INTERACTIVE MAP OF THE EU



3. NEW POLISH PRESIDENT AN EUROPEANIST

Greg Scoblete at Real Clear World reports that the new Polish President is a committed Europeanist as opposed to his predecessor, who was a committed Atlanticist.

4. US RHETORIC IN GEORGIA DESIGNED TO CALM FEARS IN T'BLISI

Mary Beth Sheridan at the Washington Post reports that in her visit to Georgia, Secretary Clinton indicated the US's opposition to Russia's "invasion and occupation" of Georgia. Prime Minister Putin took issue with the characterization of the Secretary of State, calling the Russian troop presence an effort to liberate the Abkhazians and South Ossetians.

5. DRILLING IN GREENLAND'S ARCTIC WATERS BEGAN LAST WEEK

Kate MacKenzie at FT Energy Source reports that deep water drilling in Greenland's Arctic waters began last week. And so the race for Arctic natural resources begins.



6. AUSTRALIA KEEPS BENCHMARK RATE AT 4.5%

Jacob Greber at Bloomberg reports that Central bank Governor Glenn Stevens yesterday left the benchmark cash rate at 4.5% for a second month. Australia's central bank had raised interest rates six times since October when it stood at a low of 3%. Inflation is expected to increase to more than 3% in the coming months.

7. INDIA DEPLOYS TROOPS IN KASHMIR IN EFFORT TO SUPPRESS UNREST

Lydia Polgreen at the New York Times reports that the Indian Army has deployed troops in Kashmir in an effort to calm the region after large street protests resulted in paramilitary units firing into the crowds.

8. RUMORS THAT MUBARAK'S HEALTH IS IN SERIOUS DECLINE

Michael Collins Dunn at the MEI Editor's Blog reports that Ha'aretz has picked up a rumor from a London-based daily that Mubarak's trip to France was for medical reasons. The story is that Mubarak's health is in serious decline and that his son is in line for succession.

9. OBAMA EXPECTS NETANYAHU TO BEGIN TALKS WITH PALESTINIANS BEFORE MORATORIUM ON NEW SETTLEMENT BUILDING EXPIRES IN SEPTEMBER

Sheryl Gay Stolberg and Mark Landler at the New York Times report.

10. BANK CARD DELINQUENCIES FALL BELOW 4%; SERVICE SECTOR NOT ADDING JOBS QUICKLY ENOUGH

In a good sign for the economy, Darrell A. Hughes at Real Time Economics reports that bank credit-card delinquencies dropped below 4% for the first time in eight years.

[ABA Chief Economist James] Chessen said the anticipated slow growth is unlikely to cause delinquencies to rise significantly, but there could be some impact. 'Until we get a sustained level of new jobs in this economy, we’re not going to see delinquencies fall to very low levels,' he said.

In the meantime, Phil Izzo at Real Time Economics reports that the Institute for Supply Management subindex for employment fell below 50, indicating a fall in employment.


11. THE EIA REPORTS THAT CRUDE STORAGE IS DOWN 2 MILLION BARRELS, STILL 12.9 MILLION MORE IN STORAGE THAN LAST YEAR

The EIA reports that crude stocks fell to 363.1 million barrels, down 2 million from last week, up 12.9 million from last year. Gasoline stocks rose by half a million while diesel stocks rose 2.5 million. Average US gasoline prices rose by 1.4 cents to 275.7 cents the week ended June 28. In the week ended June 25, refinery capacity utilization stood at 88.4%, down 1% from the week previous.

Daily Sources 7/6/10

1. Susan Li and Jacob Greber at Reuters report that Kenneth Rogoff, Harvard University professor and former chief economist of the International Monetary Fund, said that the China property market is beginning a collapse that will hit its banking system. Meanwhile, Michael Shuman at the Curious Capitalist reports that China's June Purchasing Managers Index dropped more than expected, meaning that industrial output is likely to slow in the coming months. He notes that Beijing's efforts to rein in lending is also expected to have a slowing effect on the economy. He also reports that PMIs fell across the board in Asia, leading him to ask how meager the US's economic recovery is going to look. Also, Willem Thorbecke at VOX argues that China's decision to abandon the dollar peg could facilitate considerable appreciation which would help the region redirect production away from the US and EU and towards themselves. Brian Spegele at the China Real Time Report writes that Chinese journals have seized upon the suggestion in a niche arms journal that the US Administration is considering canceling purchases of the F-35 due to unanticipated military advances made by China.

2. Nikki Tait and Mark Mulligan at the FT report that Spain's plan to retain jobs by doubling its subsidies to its coal sector is running into heavy flak in both Spain and now Brussels.

3. Nassir Karimi at the AP writes that Iran has sent letter to the EU establishing its conditions for further talks on the nuclear issue.

"[President Mahmoud Ahmadinejad]also set three conditions for an eventual resumption of talks, saying countries who want to participate should make clear whether they oppose Israel's purported atomic arsenal, whether they support the Nonproliferation Treaty and whether they want to be friends or enemies with Iran. However, he said, participation in the talks was not contingent on the answers."

Meanwhile, the AFP reports that Iran will cease subsidizing gasoline sales in late September.

Iranians are currently allocated 60 litres (13 gallons) of petrol a month at a subsidized rate of 1,000 rials (10 US cents). These sales would be stopped, according to [Mohammad] Royanian, [the head of Iran's fuel transportation organization], who did not reveal the new price.

Any other purchase of petrol over and above the rationed quota is at a price of 4,000 rials (40 US cents).

4. Upstream Online reports that OPEC's annual statistical bulletin released today purported to show a 4% rise in proven reserves, led by an increase in Venezuela.

5. Reuters reports that Thailand extended its state of emergency.

6. Dave Ernsberger at Platt's The Barrel reports that in a recent conference in Thailand it was estimated that the world water market will grow twice as fast as the oil market by 2030. There are some doubts that water will be commercialized in the same way as other commodities. Water is much more critical than energy politically speaking. Either way, the prediction that the water market will grow that quickly is an indication of geopolitical stressors to come.

7. Emmeline Zhao at Real Time Economics reports that the Federal Reserve Bank of Dallas authored a report that showed that the developed countries in the world have responded to increased unemployment by erecting new barriers to immigrant labor. Meanwhile, Meraiah Foley reports that the new Australian Prime Minister, Julia Gillard, has proposed a regional processing center in East Timor for refugees seeking to settle in Australia.

8. Anton Troianovski at Real Time Economics reports that vacant office space continued to accumulate in the second quarter, an indication that companies aren't planning to do any hiring in the near future. Tim Duy at Economist's View asks what's wrong with the American jobs machine. He quotes from a piece by Andy Grove which stipulates that an economy which continues to export jobs while innovating will eventually lose both its manufacturing base and its capacity for innovation. Well worth reading in full.