Daily Sources 8/2

The China Car Times reports that"China now has 65,000km of highways across the nation, making it the second largest highway network in the world after the United States." According to the state's 2020 plan, China should have 100,000km of highways by then, about the same as what we have in the US. This should provide a tremendous economic boost over time as well as security dividends in China where it will be easier to deploy troops from one place to another.

CHINESE PMI FALLS TO 51.2

Peter Boockvar at the Big Picture reports that China's state Purchasing Managers' Index fell to 51.2. (Numbers above 50 indicate expansion; below 50 indicates contraction.)

GUANGZHOU AND HONG KONG ANTI-MANDARIN PROTESTS

Carmen Ng at China Real Time reports that there has been a second protest in Guangzhou and Hong Kong regarding the plan to change some prime time TV programming from Cantonese to Mandarin speaking. The first took place July 25th.

JAPANESE JULY PMI FELL SLIGHTLY TO 52.8

Prieur du Plessis at Investment Postcards from Cape Town reports that Japanese Purchasing Managers' Index fell slightly to 52.8. (Numbers above 50 indicate expansion; below 50 indicates contraction.)



GERMAN ELECTRICITY AND NATURAL GAS DEMAND UP 8% IN 1H

Andreas Franke at Platts reports that natural gas and electric power demand in Germany grew by 8% in the first half of the year over the same period one year ago.

"Based on its latest estimates, electricity consumption was up by 4.6% at 274 billion KWh, while the use of natural gas was 14% higher than in the first half of 2009, the BDEW said in the statement.

According to the BDEW, the main reason for the demand increase is the positive development of industrial production in Germany, which accounts for 40-45% of energy demand, while the demand for gas was also boosted by the long winter."

Demand has still not recovered to pre-crisis levels, however.

SPAIN TO CUT SUBSIDIES TO PHOTOVOLTAIC POWER PLANTS BY 45%

Victor Mallet at the Financial Times reports that Spain's industry ministry has announced the subsidized electricity prices paid to photovoltaic power plants by up to 45%. Worth reading in full.

AFTER NUCLEAR DEALS, SOUTH KOREA AND UAE AGREE TO COOPERATE IN OIL AND GAS EXPLORATION AS WELL AS STOCKPILING OIL IN SOUTH KOREA


Shinhye Kang and Ayesha Daya at Bloomberg report that after having secured a deal to build the UAE nuclear power plants South Korea and the Emirates have agreed to cooperate on oil and gas exploration and for the stockpiling of oil in South Korea. Part of Seoul's energy security program has to do with oil stockpiling by various producers in South Korea to take advantage of quick changes in the Asian oil market. South Korea gets to draw down on those stockpiles in case of an emergency disruption in oil supply. The UAE is a major entrepot for stockpiling oil in the Middle East.

DELINQUENCIES GROW IN COMMERCIAL REAL ESTATE MARKET

Yves Smith at naked capitalism reports that the commercial real estate sector is feeling pain:

"• All deals seasoned at least a year have a total unpaid balance of $767.76 billion, with $60.45 billion delinquent – a 7.87% rate (up from only 5.28% six months prior).
• When agency CMBS deals are removed from the equation, deals seasoned at least a year have a total unpaid balance of $736.75 billion, with $60.39 billion delinquent – a 8.2% rate (up from only 5.46% six months prior).
• Conduit and fusion deals seasoned at least a year have a total unpaid balance of $655.41 billion, with $54.69 billion delinquent – a 8.35% rate (up from only 5.33% six months prior)."

JULY PMI DOWN TO 55.5

Shobhana Chandra at Bloomberg reports that US manufacturing grew at a slightly slower rate in July than June. The Institute for Supply Management's Purchasing Managers' Index fell to 55.5 from 56.2 in June. (Readings above 50 indicate growth; readings below 50 indicate contraction.)

BEN BERNANKE SAYS CONSUMER SPENDING TO PICK UP IN COMING MONTHS

Scott Lanman and Steve Matthews at Bloomberg report that Fed chief Ben Bernanke said in a speech today that consumer spending was likely to pick up in coming months.

HARLESS ARGUES THAT STRUCTURAL UNEMPLOYMENT NOT A PROBLEM

Andy Harless at Employement, Interest and Money argues that we are not seeing new structural unemployment, but rather cyclical unemployment. Worth reading in full.

MAXINE UDALL REPORTS THAT ROADS ARE BEING ALLOWED TO REVERT TO GRAVEL

Maxine Udall reports that in the US highways are being allowed to turn back to gravel. This should have significant detriments going forward, including that the amount of gas to travel from one place to another on gravel roads is higher than on paved roads. A must read.