Deflation Risk in U.S. Seen Rivaling Euro Area: Chart of the Day
(Bloomberg) -- Deflation would be as much of an issue for the U.S. as it is for the euro region if consumer prices were tracked the same way, according to Albert Edwards, a global strategist at Societe Generale SA.
The CHART OF THE DAY helps illustrate how Edwards drew his conclusion, presented in a report yesterday. He tracked changes in the core U.S. consumer-price index, which excludes food and energy, and the CPI for shelter.
Core inflation in December was 1.6 percent, according to the Labor Department. That's 0.9 percentage point more than the euro region's comparable figure, as compiled by Eurostat. This gap disappears after bringing the U.S. figure into line with Eurostat's definition of housing, Edwards wrote.
"The deflationary fault line on which the U.S. sits is every bit as precarious as that of the euro zone, but is being disguised," the London-based strategist wrote. "The scales will soon lift from the market's eyes."
In oil price war, Gulf producers grab market share in Asia
(Reuters) - Saudi Arabia's move to slash the price it charges in Asia for its oil this week to the lowest in more than a decade is the latest aggressive action by Gulf states to defend market share in the world's top oil consuming region.
A price war between producers has raged since Saudi Arabia and its Gulf OPEC allies last November chose to keep their taps open in a bid for market share over price, sending oil prices down more than a third to under $50 a barrel in just two months.
Since then, Gulf producers - including Saudi Arabia and the United Arab Emirates - have steadily increased shipments to Asia, helped by low production costs that allow aggressive discounts, at the expense of West African and Latin American supplies.
With currency war threatening, speculators focus on Swedish crown
Feb 5 (Reuters) - Speculators are turning their attention to the Swedish crown, expecting it to weaken as Sweden reacts to the threat of a widening currency war in Europe.
Sweden's Riksbank might open fire as early as next week by cutting interest rates to less than zero and setting the stage for quantitative easing. But if those efforts fall short, analysts say, the central bank may need to intervene directly to weaken the crown.
The European Central Bank's 1.1 trillion-euro quantitative easing programme, announced last month, pushed the euro lower against a host of European currencies. In response, the Swiss National Bank abandoned its cap on the value of the franc and Denmark's central bank intervened in record amounts.