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

    by DailyDigest

    Friday, December 10, 2010, 4:00 PM

  • 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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Economy

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.

Energy

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.”

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