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Eurozone Inflation Drops To Fresh 5 Year Low, EURUSD Tumbles
Anyone confused why futures are doing their best to surge in the overnight session, the answer is simple: first it was Japan reporting the latest batch of atrocious economic data, which an hour ago was followed by Europe own abysmal econofreakshow, where Eurostat just reported that in September Eurozone inflation rose a meager 0.3% from a year ago, the lowest annual increase since October 2009.This marks the 12th straight month that Euro inflation has been below 1%, and far below the ECB's goal of 2% inflation.
More importantly, it also shows that some 3 months of a sliding Euro have not only had zero impact on European export competitiveness, as the entire continent is careening into a triple dip recession, but that the ECB is completely powerless to create an inflationary spark, as not only is the bulk of the Eurozone flirting with disinflation but more and more European countries are in outright deflation.
Also of note, while headline inflation was in line with expectations, it was core CPI that missed expectations of a 0.9% increase, and rose by only 0.7%, confirming that the most recent bout of deflation in Europe is about far more than just sliding energy prices. In fact for the culprit, perhaps look at Japan which is now exporting deflation hand over fist.
Then again, there is always hope. From the WSJ:
There are reasons to expect the rate of inflation will begin to pick up from next month. With food and energy prices very low in Europe last fall, annual comparisons for these sectors should start rising in October. Analysts refer to these statistical forces as base effects.
However, inflationary pressures are likely to remain very weak. Surveys of businesses have pointed to a weakening of activity as the third quarter has progressed, making it unlikely that the eurozone economy has picked up significantly after stagnating in the second quarter.
To be sure, the already weak and sliding EUR welcomed the news with open arms, weakening and sliding even more.
As for the great news, here is Bloomberg:
European stocks rebounded from a five-week low, as investors speculated on the possibility of further European Central Bank stimulus, after data showed euro-area inflation slowed this month. U.S. stock futures gained, while Asian shares fell.
The Stoxx 600 Europe Index climbed 0.6 percent to 342.87 at 10:17 a.m. in London, extending earlier gains. The equity benchmark fell 0.4 percent yesterday, as banks slid and data showed economic confidence in the region dropped to the lowest since November.
“The ECB has done a lot already to stimulate economic activity in Europe,” Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit, said by phone from Hellerup, Denmark. “This week we’ll look for more details regarding the asset-backed securities program and covered bond program. We’re still waiting for the big bazooka, which would be the ECB really expanding their balance sheet.”
In other words, the European economic collapse is bullish because it means more failed monetarist experiments to make rich richer. QE and D.
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It's all Putins fault, LOL.
Until Europe rids itself of the oppressive, parasitic EU superstructure, they will remain in an endless depression. Government does not create wealth, it destroys it.
I sure hope Putin has the resources available to him to deal with the coming tribulation. Its only a matter of time before the EU starts blaming other people, other than the Germans for all their problems.
My 0,02€ is that they will somehow plame Putin, maybe after he turns off the gas, to deflect public outrage to someone else other than the EU in Brussels?
The only thing I can hope for is Russia immediately recognize Catalonia as independent after their referendum/new local elections, and thus bankrupting Spain, in turn bankrupting the EMZ (and thus wiping out the EU) before the French Polish and British try their hand at Operation Barbarosa.
Back to 2009 macro and markets are up 300%....how'd that happen....oh wait....
Its because our benovolant overlords are trying to make everyone the top 1%. It's easy. Just really isn't a party until everyone has this;
http://static01.mediaite.com/med/wp-content/uploads/2011/10/shrink-wrapp...
In their basement/trunk of their car/front lawn, AMIRITE!?
How do you export deflation ?
Latina Lover, you should perhaps once explain what you mean by "oppressive, parasitic EU superstructure"
as often, I have the impression that mainly it's a case of projection. a "US=EU thing"
what ails you about the EU? is it the EU army? the EU navy? the EU militarized police? the EU military budget? the EU intelligence services?
none of those really exist in any tangible way. the EU, for all it's faults - and they are many - is not a federal superstate. yes, there is some tendency or dangers that it will become one, in the future
until then, it's still a kind of package of deals among sovereign nation states. each with a government, and there your criticism about creating or destroying wealth might or might not apply
meanwhile, "This marks the 12th straight month that Euro inflation has been below 1%", as ZH reports very laconically. now please would someone explain to me what is so terrible about that? except it's feeding of neo-keynesians requests for the ECB to QE?
whatever the ECB is doing, one year of prices between 0% and 2% is still fulfilling it's only mandate of price stability. we'll see what the future bears
Ghordius we hear people on here all day long talk about deflation and say "no one has ever suffered from a strong currency". It looks like Europe is seeing deflation and yet the euro keeps dropping vs the usd. What's up with that? If the fed actually has the ballsack to go for even a token 25 basis point hike the Euro would probably head towards parity. So, deflation and a depreciating currency at the same time...?
hey fonz, nice to read from you. note that there is no deflation, here. there is a scare of a possible, future deflation
look, there is not much to say about the EURUSD. in theory, it should be the most liquid and deep market on the whole world
but yes, imho it is possible to have two contradicting realities at the same time, if your trade zone is sufficiently big. in fact, the US has always been a showcase for that
the EURUSD is actually the eurUSD. The Mighty Dollar is still the sun in the monetary system. And it's strenghtening, imho maily in expectation of the end of the "tapering" and of rate rises. Perhaps the high dividends that were paid out by euro-companies were also a reason to disingage for many investors, and the market actions of the ECB in the last two months gave the last needed impulse. It's very difficult to have a complete picture of the thing, imho
big thing, expectations
Yeah, right. There is no inflation.
Does anyone actually believe this bullshit?
No.....anything else?
Yeah, why does ZH even publish this nonsense if they know it is patently false?
TBF - ZH publishes what is published. They didn't come to these conclusions themselves, but instead just repeat the lines the MSM feeds the sheeple to keep them occupied.
We good a good lol at their expense.
so you are experiencing price rises? seriously? where? rent? food? gas? insurance?
No. I actually just got my bonus, and a 6k raise, so I am plenty happy. I am moving out of the city and chopping rent down 400€ a month. My new place is super close to the SBahn so I will go from spending 5k€ per year in gas to 1400€ for a Jahreskarte and probably another G or two in gas.
The rest goes into AG and AU which is deflating at the moment.
I am not complaining about the "inflation" as there is none, or next to it where I live, and there is relative price stability, which I find good as the German population is shrinking.
Maybe you're having a hard time reading today. I never said there was inflation.
then it was definitely my mistake. I understood that if someone writes something attached to a thread, it's in the context of the thread
which was Bay of Pigs writing: "Yeah, right. There is no inflation. Does anyone actually believe this bullshit?"
which again was in the context of the article, i.e. "Eurozone Inflation Drops to Fresh 5 Year Low, EURUSD Tumbles"
nope, I really can't say that I really understand how this blog comment thing works, even after a few years here
LOL
https://www.youtube.com/watch?v=Odj67g0yH7c
Well, I'm going along with Ghordius on this one. Don't know exactly about the rest of Europe, but here in Belgium there's no inflation problem for the moment.
Where I don't follow you, Ghordius, is that this isn't necessarily a problematic situation, because in the current environment of currency turmoil (the socalled race to the bottom) deflation is a real threat to any major economic bloc, for it rapidly weakens its competitiveness on the international market.
Therefore, deflation has the EU very worried, so much so that I dread the financial measures they're going to take to fight it.
well, competitivenes on the international markets is also a function of the EURUSD, isn't it?
Agree. Something is missing.
Of course showing a low inflation reading is the best thing that can happen for M. Draghi. Ever.
He can shut up Weidmann, Merkel and any other potential critics by just saying: "See, guys. Even after expanding balance sheets for a PROTRACTED period of time, we do not see any sort of inflation! It works! We need to cautiously avoid deflation by potentially discussing the purchase of asset backed securities or other securities with our friends at Blackrock! And also, soon, we might want to think about doing whatever it takes. For example bring out THE BIG BAZOOOKA!!!! For my friends at GS, and for Janet, because the FED wants to taper!"
This whole thing is so sick. Especially young people just live their lives, don't complain and don't seem to even understand or care about what is going on. "Oh oh, Iphone 6 is out! I'm gonna be cool and sleep in front of an Apple store!" "I want to buy a camera on a stick and do something really cool!" "I want to be social (on social media) to show everybody how much fun I am having!" "Selfieee!!!!!"
WTF
The young people are completely right. They cannot stop their elders from messing up the entire world, and they aren't(?) interested in worshipping at the altar of _money_, probably realising the futility of such an exercise, and neatly preempting hyperinflation by just not caring. So instead of spending their lives "gathering capital" that is worthless as soon as it is theirs, in preparation for... Well, what really? A grand funeral at the end? Instead of all that they choose to simply enjoy their lives.
I say "good for them". At some point they will get to collect the pieces and rebuild society. That's soon enough to start worrying about "gathering capital".
Yesterday I had a presentation for about 60 managers from different sectors.
Everybody believed in deflation.
Everybody believed in delayed purchasing behavior from consumers.
I don't bother anymore to try to explain to them where deflation and inflation comes from.
People don't like to read much. And if the headlines in the newspapers say so, it's the truth.
Just play along.
I did say: Yes, I also happened in the 90's and was followed by a hughe inflation spike of 30% over the weekend...
But their "knowledge" ends there so let's just act all surprised when it happens and prepare without anybody knowing.
In my street, a house just went for sale:
1. 1850 square meters. 720 euro's per square meter for the land, and another 450k for the the house.
I don't think anybody will pay that much but I'm following up because my house and land are bigger.
But just 3 years ago, land sold for 300 euro's per square meters and back than also everybody was saying nobody would pay that much and it was sold within 2 weeks.
Inflation?
Yes, if you've got money.
Deflation? Yes if you're a wageslave and they're talking about your paycheck and not the cost of living.
Still waiting for you guys to succeed from Belgium and get annexed by the Dutch. Why is it taking you guys so long?
By the dutch :)
Those are inferior creatures who just dream to tripple their national average IQ's by doing that.
That would be a bit to far off :)
Nop, if we're ever split, we might allow dutch creatures to move in as house slaves and the few nice woman, after having their ability of speech being removed, as sex slaves. Besides that they serve no real purpose besides feeding the fish when their piece of land goes under the waves when global warming really kicks in.
I would venture to say they are better than the French in Wallonia -- correct?
Not really
I just drive my car in circles to speed up global warming so they'll all drown in my lifetime.
Be careful amigo....those lil commie bastards will stick your head on a pike.
Stay away from nailguns too.
"Not really
I just drive my car in circles to speed up global warming so they'll all drown in my lifetime."
ROTFLMAO !! Sudden Debt, I'm going to use that with my Dutch office mate the next time he pisses me off.
Yes we are, I have no idea why SD hates us so much. I am very upset.
Because of the 100 days war in 1815... you know what I mean...
I love "Europeans."
well, your idea of Flanders wanting to go back to a United Kingdom of The Netherlands is a bit... outlandish
If you never want to see another ship dock in Antwerp, by all means keep this up, manneke!
More seriously: why would we want the Belgiums to join us? Just because they speak the same language? Then why not argue for having all English-speaking countries join together, or all Spanish-speaking ones... Let them be independent if that's what they want. Hell, split all of the Netherlands up while you are at it: our brightest period in history was when the area was known as the "Republic of the Seven United Netherlands".
"Yes, I also happened in the 90's and was followed by a huge inflation spike of 30% over the weekend..."
I remember. Though wasn't it a devaluation by the Belgian national bank? When Belgium hit a fresh record of sovereign debt? It sent a ripple through all currencies that are now in the EUR
awesome book on the subject, the tragedy of the euro by phillip bagus.
watch germany. the euro was created to control the bundesbank and force it to inflate. once the german people really start feeling the inflation, the euro experiment will end.
So true. This is why the only number that needs to be manipulated is the inflation number. Everything else doesn't matter, because it is just a "logical consequence" of the low inflation reading. A necessity ("we had to print an insane amount of money to save the world from deflation. sorry guys, we didn't want to, but we had to.").
And then when the truth finally comes to light (hyperinflation?), then it will be too late.
everything is fine, move along
Is that hope or change?
I think it's both actually.
Stats are necessary to justify QEuro.
What happens when their made up inflation number always equals 0
Euro inflation drops off. . . It always seems to do that when buying goes down the shitter because of hidden inflation costs from central bank intervention. The article is a sham, wrapped in a secret, covered by an enigma. total bs
ECB President Mario Draghi's last move towards more QE is no more than stupidity on steroids, even words like misdirected and boneheaded do it a disservice. This is more proof that the Euro-zone is in big trouble, both the union and the flawed currency is again begging to crumble.
One is forced to wonder if Japan and the Yen will crash first considering how each day Japan slides closer to the economic abyss or whether the Euro will lead the way into the wastebasket. Draghi has helped the countries of Europe kick the can down the road but this only delays the failure on the Euro. More on how the Euro-zone has failed to make any real reforms in the article below.
http://brucewilds.blogspot.com/2014/09/euro-zone-and-draghi-both-mired-i...
I know everyone shits on you all the time -- but some of your comments are spot on. This is one of them.
Upvote.
I bet the EUR goes first and drags down the Yen and USD with it. Poor Swiss will be left holding the bag.
4/2/2017 - 1 CHF = 923874 EUR and 2874598324789320984032892345 YEN.
So you think the collapse of the EUR will be so fast that the Swiss wont be able to keep up the printing and the Swiss Franc will go through the roof?
I'm wondering. Or it will all go a bit slower then the damage will be done also for the SNB balance sheet.
Maybe the gold referendum will trigger a collapse of the 1.20 threshold?
http://goldinitiative-ja.ch/wp-content/uploads/2014/09/goldinitiative-english.pdf
Looking forward to 30th of November 2014.
In any case, I'll make sure to stack some more gold before that day... 1200 fiatDollars/ounce is INSANELY cheap!!!
Hey Bruce, you're advertising so hard, you are starting to repeat yourself, again.
http://www.zerohedge.com/news/2014-10-01/germany-throws-over-draghi-plan...
Europe. It's all fine and dandy until you piss off your source of energy....Oh wait, you've done that.
The US has our old friend stagflation.
1. Inflation high. Everything cost more, check.
2. Economic growth slow. Check. Economy sucks.
3. High unemployment rate. Very high. Worst ever.
The crazy thing about this is that the ECB (together with the rather infamous European Banking Authority EBA) has brought this development on itself with its crazy banking stress test which combines the need to deleverage balance sheets with a huge administrative and cost burden for the European banking sector. Its no surprise that the Eurozone went into double-dip recession in 2011 based on the then EBA stress test and those lunatics have done it again!
First distort the markets and then stir in more confusion. ECB President Mario Draghi's last move towards more QE is no more than stupidity on steroids, even words like misdirected and boneheaded do it a disservice. This is more proof that the Euro-zone is in big trouble, both the union and the flawed currency is again begging to crumble.
One is forced to wonder if Japan and the Yen will crash first considering how each day Japan slides closer to the economic abyss or whether the Euro will lead the way into the wastebasket. Draghi has helped the countries of Europe kick the can down the road but this only delays the failure on the Euro. More on how the Euro-zone has failed to make any real reforms in the article below.
http://brucewilds.blogspot.com/2014/09/euro-zone-and-draghi-both-mired-i...
translation: fx desks are due for moar bonuses as there will certainly be MOAR
Only by reading the published BS on zero hedge can we understand the real world,because the BS points us in the wrong direction and many of us see that.
The banking system continues to create vast quantities of money, and loan it all to governments and central banks. No surprises here. Daddy and mommy are fat slobs that think baby grows when they eat all the baby food themselves.
<-- WTF
<-- WTF
For months the major world currencies have traded in a narrow range as if held in limbo by some great force. This has allowed people to think we were on sound footing as central banks across the world continued to print and pump out money chasing the "ever elusive growth" that always appears to be just around the corner. Recently some currencies have made multi-year highs or lows depending on the match-up .
Weak demand for goods and most of this money flowing into intangible investments inflation has not been a major problem, but the seeds for its future growth have been planted everywhere. John Maynard Keynes said By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.
While there are not many Bond Vigilantes there are a slew of Currency Vigilantes and they are ready to make their presence known. Weakness in the value of the Yen, Pound, and Euro must not go unnoticed. More on why this may be a signal that currency trading is about to get very wild in the article below. Please note, this may also be sending a signal that the whole system is unstable and the stock market is about to drop like a stone.
http://brucewilds.blogspot.com/2014/09/caution-alert-currencies-may-get-wild.html
If I read inflation goal. I'm finished with reading. Hell do I hate central banks, I can not phrase it in any non offensive words....
If the Euro keeps cratering, then there's no need for Draghi to do QE, right?
Bartender!
Another round of bailouts for the Euro banks!
absolutely
Every european I know is very happy to see cheaper energy prices right now. Fuck the banks.