Germany & The Big D; Futures & The Big Swing

Today it's Germany.

Germany's latest CPI figures show that deflation is now biting into the world's fourth largest economy.

Though the source is uncertain, Zero Hedge just reported:

"Germany, the country that is supposedly Europe's growth dynamo is now in outright deflation."

October regional inflation data for Germany shows:

Brandenburg CPI -0.3%, Previous 0.0%
Hesse CPI -0.2%, Previous 0.1%
Saxony CPI -0.2%, Previous 0.1%
Bavaria CPI -0.3%, Previous 0.1%

Also, when asked why the recent stress tests on European banks did not use any negative inflation assumptions, ZH also noted a telling quote by ECB governor Vítor Manuel Ribeiro Constâncio who said "the scenario of deflation is not there because indeed we don't consider that deflation is going to happen."

This is classic head in the sand stuff that causes big trouble for bureaucrats and politicians everywhere who think they live in a world of their own.

But the results were immediate in the financial markets. E-mini futures reversed a solid 6 point gain to head as much as 15 points lower, a swing of 21.5 points. This morning oil is lower, gold is lower, the euro is lower, the dollar is higher, and the major bourses across Europe are down hard.

Exactly the type of scenario that makes life difficult for central bankers and the Peter Schiffs of the world.

I see room for slightly higher near-term highs as long as 1961.95 holds. If it breaks, 1904.01 and 1910 (200dma) remain levels of interest.