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Market Preview: Look Out Above!

Stocks in this article: NAV WCRX SPY ^GSPC ^IXIC ^DJI

NEW YORK ( TheStreet) -- The time for the world's central banks to live up to the assumptions of additional stimulus that have fueled the rally in stocks this summer is fast approaching.

First up, of course, is the European Central Bank, which reportedly could outline plans for an unlimited bond-buying program on Thursday. On the surface, this proposal resembles the panacea eurozone watchers have been waiting for but the details may tell another story.

The analysts over at Capital Economics were taking a very skeptical view ahead of the announcement. Among the firm's criticisms was the "sterilized" nature of the asset purchases, referring to expectations that the ECB plans to make sure the bond buys have a neutral impact on money supply, thus falling short of "full-blown" quantitative easing, and the fact that the bank is likely to concentrate on bonds with short maturities of less than three years.

Even the "unlimited" nature of the anticipated proposal from ECB President Mario Draghi fails to impress.

"For a start, the lack of a limit on bond buying could simply reflect unwillingness on behalf of the ECB to commit to a specific amount of purchases rather than anything bolder," the firm wrote in commentary on Wednesday, adding later: "Meanwhile, Draghi is likely to restate that the ECB will not act until the EFSF European Financial Stability Facility or ESM European Stability Mechanism have bought bonds, which could be months away. And it seems the Bank's purchases may be conditional on the governments in question meeting economic and fiscal targets -- the Bank could even threaten to stop bond purchases or even sell its existing holdings if governments fail to comply with demands."

And while it seems to be a foregone conclusion that the Federal Reserve will come through with an announcement of QE3 at the central bank's next policy meeting on Sept. 12-13, Deutsche Bank was leaving some room for Ben Bernanke to throw the markets a curve ball.

"We believe there is scope for additional QE, but not necessarily next week," the firm wrote. "The Chairman's comments evaluated the effectiveness of both traditional and non-traditional monetary policy actions over the past five years. Importantly, he noted that both traditional (interest rate cuts) and nontraditional (QE/Twist/language guidance) tools were effective."

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