Daily Sources 8/4

August is surely a slow news month.

EUROPEAN HOME PRICES HAVE MUCH ROOM TO CORRECT

Barry Ritholtz at the Big Picture hosts a graph of developed nations' home prices.



As you can see there is plenty of room left for correction in the European housing markets.

CHINA TO HAVE 500 MILLION BARRELS OF PETROLEUM PRODUCTS STORAGE BY 2015

David Winning at the Wall Street Journal reports that Chinese petroleum product storage tanks are set to grow by 500 million barrels by 2015. In addition, China is adding 338 million barrels to the existing 102 million barrel strategic petroleum reserve. Filling these tanks will put upward pressure on the price of oil. Building the tanks will also dampen the dreams of other countries with spare storage capacity, South Korea and Singapore, to sell into the Chinese market.

CHINA'S CAR SALES NOW FAR SURPASS US'S

Alex Taylor III at Fortune Magazine reports that China is expected to sell 15.6 automobiles in 2010, a 20% rise from the year before. Auto sales in the US are expected to reach 11.6 million units this year.

CHINESE BANKING REGULATOR ASKS BANKS TO PERFORM STRESS TESTS TO SEE WHAT WOULD HAPPEN WITH 60% REDUCTION IN HOUSING PRICES; NEW STUDY SHOWS THAT SMALLER CITIES NOT FACING SIMILAR HOUSING PRICING PROBLEMS IN CHINA

Bloomberg reports that China's banking regulator last month asked its banks to perform stress tests to see what would happen if housing prices declined.

"Banks were instructed to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively."

Meanwhile, Aaron Back at China Real Time reports that Standard Chartered has conducted a survey of "Tier 2 and 3" cities and found that they are not suffering from deep corrections.

"'The Tier 2 and Tier 3 cities have not seen much of a correction in land or apartment prices. Moreover, developers’ sentiment about sales volumes seems pretty good, and they do not appear to be postponing construction,' Standard Chartered said in a report on Tuesday. 'This is important, since if sales and construction activity holds up in most Tier 2 and Tier 3 cities, then the economy will not tank, and the State Council will not be forced to loosen real-estate or monetary policy.'"

PALESTINIAN PRESIDENTIAL ADVISER SAYS PEACE MAY CREATE 20% ECONOMIC GROWTH IN PALESTINE

Jonathan Ferziger at Bloomberg reports that a key adviser to the Palestinian president said that the Palestinian economy may grow by as much as 20% if there is peace with Israel.

EIA REPORTS 2.8 MILLION BARREL CRUDE DRAW DOWN IN STOCKS

The EIA reported today that for the week ended July 30 crude oil stocks drew down by 2.8 million barrels to 358 million barrels. Crude oil stocks are well above the five year historical average. Gasoline stocks grew by 0.7 million barrels and distillate stocks grew by 2.2 million barrels. Refining capacity utilization grew to 91.2%. For the week ended August 2nd, national gasoline prices fell by 1.4 cents to 273.5 cents.