Okay, so the market volatility continues, in a big way. Perhaps it is the ECB actions that are driving the market. Actually, the ECB is driving the market. This is big news out of Europe. The expectation is that the QE there will do for Europe what it did for the US.
- As we all know by now, the central bank announced a Quantitative Easing program to the tune of €60b per month, beating the whisper expectations of 50B/month, and most importantly, committed to buying assets for at least 18 months.
So, aside from the fact that the Euro-QE will revive the European economy in the long term, what is it traders and investors have to look forward to in the short term? Opportunity is the answer.
- However, unlike last week’s Swiss National Bank policy shift, investors had anticipated Thursday’s move and have, as such, been positioning for ongoing euro weakness.
If you trade Forex, there is much to think about in the ECB’s action. We are certainly looking at a weaker euro, perhaps getting down to 1.10, or perhaps lower still. If you like stocks or mutual- funds, get involved in Europe that way because a weaker euro means exactly what it meant for a weaker US dollar way back in 2009.
- A weaker euro has great potential benefits to manufacturers and exporting nations in general–just as long as there is fundamental demand for goods and services.
Yes, when the nonsense with Russia ends, i.e. the economic war over the Ukraine, then the demand for European goods will pick up (sanctions will end). As China continues its drive to decrease its exports and increase its imports, the demand for European goods will pick up, as well.
It will probably take two years for the new QE to bring about substantial change, but, in the near term, we should see incremental change, and that will drive investors into the market. You know, that notion about getting in early.
In the meantime, global consumers will have more money to spend as the new QE takes hold because oil is still maintaining its low levels. Today, right where live on the Central Coast of California, gasoline is now $2.53 per gallon.
Mind you, that is a whopping $2.36 cheaper than it was six months ago. Those kinds of drops in fuel prices mean trillions in extra dollars for consumers. Believe you me, those dollars will show up in both discretionary and non-discretionary spending.
Get your money into Europe somehow some way and keep your money in the US, no matter what, as the market is going up, despite the chatter from the talking heads.
Trade in the day; invest in your life …
