From Bloomberg:

“Euro-area unemployment rose to a record and inflation quickened more than economists forecast as rising energy costs threaten to deepen the economic slump.

The jobless rate in the economy of the 17 nations using the euro was 11.3 percent in July, the same as in June after that month’s figure was revised higher, the European Union’s statistics office in Luxembourg said today. That’s the highest since the data series started in 1995. Inflation accelerated to 2.6 percent in August from 2.4 percent in the prior month, an initial estimate showed in a separate report. That’s faster than the 2.5 percent median forecast of 31 economists in a Bloomberg survey.”

This latest report out of Europe shows that Europe may have entered a period “stagflation.” That is, both increasing unemployment and increasing inflation. This is a particularly difficult situation for governments and central banks to handle because solving one problem generally makes the other worse.

Today is finally the day the market has been looking forward to for weeks: Ben Bernake’s Jackson Hole speech. At 10 Am EST Bernanke will take the podium to deliver a speech titled “Monetary Policy Since the Crisis.” Ahead of the market open the dollar is weak across the board, with the Euro up nearly 1% against it. Metals are also strong, with Gold +0.50% and silver +1.4%. Traders appear to be positing themselves to profit from further hints of QE3 from Bernanke, which increases downside risk in the market should the speech disappoint.