Daily Digest

Daily Digest 12/10 - U.S. Trade Gap Drops, Renewable Energy Funding, Violent Student Protests in the UK

Friday, December 10, 2010, 11:00 AM
  • Dead Cat Bounce
  • U.K. Vote on Student Fees Sparks Violent Protests
  • German 2 Year Auction Fails By 20% Of Notional As Rush From Government Paper Intensifies
  • U.S. Trade Gap Drops as Exports Rise to Two-Year High
  • China Raises Banks' Reserve Requirement Ratio
  • On Christmas Shopping Lists, No Credit Slips
  • Tax Package Changes – Renewable Energy Programs are Back in Business
  • China November Crude Imports Jump by 26% as Refiners Boost Fuel Production
  • IEA Raises 2011 Global Oil Demand Forecast for a Third Month, Citing China

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Dead Cat Bounce (adam)

Back in early 2008, in his #1 best selling book - Guide to Investing in Gold and Silver - Mike Maloney wrote a few different possible scenarios he believed may play out, including a most likely scenario. So where are we on his most likely prediction? It's playing out before our very eyes! Mike wrote that U.S. Federal Reserve Chair Ben Bernanke would be spooked by the specter of deflation and would over-react by inflating the currency supply—which Bernanke has surely done.

U.K. Vote on Student Fees Sparks Violent Protests (cmartenson)

The U.K.'s coalition government narrowly won a vote to raise the cap on tuition fees, a key political victory that came against a backdrop of large-scale and sometimes tense student protests outside Parliament. Outside Parliament, as police helicopters buzzed overhead, tens of thousands of students gathered to protest the cap increase in a demonstration that turned violent. Pushing and shoving between police and protesters intensified after the vote concluded. Protesters fanned out in to London. On Regent Street, protesters kicked and splashed paint on a car containing Prince Charles, the heir to the British throne, and his wife Camilla, Duchess of Cornwall, according to the Associated Press. The couple were unhurt.

German 2 Year Auction Fails By 20% Of Notional As Rush From Government Paper Intensifies (steve w)

There is only so long that the Bundesbank can keep ignoring the fact that it has recently started piling on failed auction after failed auction. Today, Germany tried to sell €5 billion in 2 Year 1% Schatz notes. And while the official tally on the auction was a 1.1 Bid To Cover at a 0.92% average yield, just above our own 3 Year auction yesterday, (and a drop from the 1.4 previously) this was yet another failed auction, as the bank managed to get only €4.33 billion in competitive and non-competitive bids. The kicker: the Bundesbank retained €995 million of the issue, a whopping 20% of the proposed issue size - this is the amount it could not find any buyers for, and the deficit to what have been a non-failed auction. In other words, after the entire world was rushing to buy German paper, suddenly there is nobody willing to get in.

U.S. Trade Gap Drops as Exports Rise to Two-Year High

The gap narrowed 13 percent to $38.7 billion, less than the lowest estimate of 78 economists surveyed by Bloomberg News and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products. 3M Co. and General Dynamics Corp. are among companies that will probably benefit from growing demand in markets like China, Brazil and South Korea, which this year are among the top-10 buyers of American-made goods. Imports stagnated in October as U.S. demand for crude oil plunged, an outcome that may prove to be temporary as the world’s largest economy picks up.

China Raises Banks' Reserve Requirement Ratio

China's central bank said Friday it will raise banks' reserve requirement ratio by 0.50 percentage points, the sixth such hike this year, as inflationary pressures strengthen. The increase, which takes effect Dec. 20, is the latest move by China to curb inflation after the consumer price index rose 4.4% in October from a year earlier, a two-year high. Markets, which had widely anticipated a tightening move this weekend by Chinese authorities, reacted calmly to the news. Prices rose for commodities that are highly sensitive to news on the Chinese economy.

On Christmas Shopping Lists, No Credit Slips

The lowest percentage of shoppers in the 27-year-history of a national survey said they used credit cards over the Thanksgiving weekend, while the use of general credit cards like Visa and MasterCard fell 11 percent in the third quarter from a year earlier, according to the credit bureau TransUnion. “Cash is the route I’m taking this year, from past experiences with credit cards and being in debt and trying to pay it off for so many years,” said Liz Gonzalez, a community-college employee in Signal Hill, Calif. Her debt problems started two Christmases ago, when she charged the gifts that turned into the bills that sent her life into disarray.


Tax Package Changes – Renewable Energy Programs are Back in Business

Clean and renewable energy provisions that were set to expire have been added into the tax package. This is good news for progressives and friends of clean energy, depending on how you look at it – we get a pittance out of the near-trillion dollar deal, but if the monster was going to go through anyway, this way at least we get a few crumbs to move renewable energy forward. Led by California’s Senator Dianne Feinstein, 17 Democratic Senators had been pushing to get these items added in. It’s still unclear just what is going into the package, set to be voted on Monday – nobody has seen an actual text of the bill yet. “I believe they are [in],” Feinstein  told reporters in the Capitol. ” ‘Believe’ is the operative word because I haven’t seen it.”

China November Crude Imports Jump by 26% as Refiners Boost Fuel Production (cmartenson)

China, the world’s biggest energy user, increased net imports of crude oil by 26 percent in November from a month earlier as refineries ramped up processing rates to ease a diesel shortage. Net purchases were 20.3 million metric tons, or 5 million barrels a day, the highest since September’s record of 22.9 million tons, data from the Beijing-based General Administration of Customs showed today.

IEA Raises 2011 Global Oil Demand Forecast for a Third Month, Citing China (cmartenson)

The International Energy Agency raised its 2011 global crude oil demand forecast for a third month on consumption gains in North America and China. Crude use worldwide will average 88.8 million barrels a day next year, about 260,000 barrels more than its previous forecast, the Paris-based adviser said today in its monthly Oil Market Report. Increasing demand could put pressure on OPEC to boost supply early next year, the IEA said.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."


saxplayer00o1's picture
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4282
Re: Daily Digest 12/10 - U.S. Trade Gap Drops, Renewable ...

"At the end of the third quarter of 2010, the level of domestic nonfinancial debt outstanding was $35.9 trillion; household debt was $13.4 trillion, nonfinancial business debt was $11.0 trillion, and total government debt was $11.5 trillion. "

..........................1A) L.1 Credit Market Debt Outstanding

"There's now a better estimate of how wide the gap between expected revenues and expenses could be in North Carolina state government in 2011.

Fiscal experts at the Legislature announced this week the preliminary gap for the year starting July 1 is $3.7 billion. That's $500 million more than the minimum budget gap discussed after the current year's $19 billion budget was approved last summer.

Most of the gap is caused by the loss of federal stimulus dollars and temporary taxes set to expire. The increase can be attributed to high-priority spending items the General Assembly usually agrees to such as increasing school enrollment, state pension funds and the employee health insurance plan."

  • Other news, headlines and opinion:

Spanish Bonds Fall for a Fifth Straight Day Amid Auction, Bank Speculation 

Fed Assets Reach Record $2.39 Trillion on Purchases of Bonds

New Jersey's Bonded Debt Said to Grow by $1.4 Billion in Past Fiscal Year

Senate Tax Bill May Add $801.3 Billion to Deficit Over 10 Years, JCT Says

Fitch Says More ECB Buying, EU Aid Needed to Stem Contagion

Governor says Arizona wants Medicaid waver

Nevada Medicaid Program Continues To Grow, Adding To State Budget Challenges

Bond yields edge above 8% (Ireland)

Santa Rosa faces sharp jump in pension costs

Moody's may cut some Portuguese banks' ratings

State's unfunded pension liability hits 22-year high (Connecticut)

California Pensions May Face $200B Hole

ICN 11/28/2010 100 Years Since Jekyll Island Meeting and Birth Of The Fed, Hot Watch Orders

Tommygun's picture
Status: Bronze Member (Offline)
Joined: Apr 21 2009
Posts: 65
Re: Daily Digest DEAD CAT BOUNCE..

Good Post.  In the video, Mike Maloney makes a good case for being out of stocks and into gold and silver. I wonder if hanging on to a few junior gold and silver mining companies is still a good idea. I would think that those stocks would hold up in a bear market fall. Perhaps they would sell off like the rest of the index. Any ideas or thoughts ?


ao's picture
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
Re: Daily Digest DEAD CAT BOUNCE..
Tommygun wrote:

I would think that those stocks would hold up in a bear market fall.

They didn't in the past and most likely won't in the future.

saxplayer00o1's picture
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4282
November federal budget deficit highest on record


"WASHINGTON (AP) — The federal budget deficit rose to $150.4 billion last month, the largest November gap on record. And the government's deficits are set to climb higher if Congress passes a tax-cut plan that's estimated to cost $855 billion over two years.

The Treasury Department says November's budget gap was 25 percent more than the deficit in November 2009. Much of last month's jump, though, was due to a quirk of the calendar determining when benefit checks are mailed.

For the first two months of the current budget year, which began Oct. 1, the deficit totals $290.8 billion. That's 2 percent less than for the same period a year ago. And economists had been estimating that the full-year deficit would decline after two years of record highs.

But analysts say the tax deal President Barack Obama reached with Republicans this week will give the 2011 budget year the largest deficit in history — $1.5 trillion, according to economists at JPMorgan Chase. It would mark the third straight year of trillion-dollar-plus deficits."

"Italy was forced Friday to pay a higher interest on 12-month treasury bills than a month ago, reflecting the tensions in European debt markets, but the auction attracted strong demand.

"For now at least, Italy remains on the sidelines of the euro-zone sovereign crisis," said Ben May, European economist at Capital Economics. "But as we have previously argued, huge levels of public debt and a weak growth outlook mean that it could yet get dragged in."

The Italian treasury sold all EUR4 billion on offer at an average yield of 2.014%, up about 13% from 1.778% at the previous 12-month T-bill auction Nov. 10. "

"The Spanish Economy Minister Elena Salgado acknowledged on

Friday that the country's cost of borrowing would probably rise

at Thursday's auctions of 10- and 15-year bonds, Madrid's last

this year. "We are paying an average interest rate of 3.6 percent and

it is possible that ... we might have to pay 5 percent."

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