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Jim Sinclair’s Commentary

The latest from John Williams at www.ShadowStats.com.

– The Great Downturn Deepens as Household Incomes Collapse
– September Retail Sales Gain Exaggerated by Poor-Quality Seasonal Adjustments
– Trade Deficit Still Suggests A Positive Contribution to Third-Quarter GDP
www.ShadowStats.com

 

Jim Sinclair’s Commentary

You think this is limited to Euroland?

Eurozone inflation hits three-year high
By Ralph Atkins in Frankfurt

Eurozone inflation has surged unexpectedly to a three-year high of 3 per cent, adding to the dilemma facing the European Central Bank as an escalating debt crisis pushes the region towards recession.

The acceleration weakened the case for an ECB interest rate reduction at its meeting next week, although the euro’s monetary guardian is expected to press ahead with measures to provide extra liquidity to eurozone banks. Eurozone unemployment, meanwhile, saw a surprise fall in August.

With next Thursday’s interest rate-setting meeting the last to be chaired by Jean-Claude Trichet, whose eight-year term as president ends on October 31, it will be harder for him “to bow out with a cut”, said Julian Callow, European economist at Barclays Capital. Eurozone inflation could rise further in October, he warned, before falling later. The ECB aims to keep inflation “below but close” to 2 per cent over the medium term.

September’s inflation rate – the highest since October 2008 – was driven up by clothing prices and energy costs. August’s inflation rate was 2.5 per cent.

However, the latest data did not close the door on an early interest rate cut. The ECB expects inflation to decelerate rapidly next year – the more relevant time horizon for its interest rate decisions.

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