This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Watch European Central Bank for Opportunities to Make Money on Policy Moves

For economists, this is a recipe for the value of the euro to fall relative to the value of the dollar.

Since the ECB telegraphed this move, the hedge funds positioned themselves accordingly.

The early results: the euro plunged to a four-month low against the dollar after the ECB announced the package, falling 0.7% to $1.3503 from above $1.36 before the central bank's rate cuts.

People are making money off of this change in central bank policy, in short.

I believe that Mr. Draghi could make the same argument that Mr. Geithner made in the earlier instance. The ECB does not have the goal of helping hedge funds to make billions of dollars. The ECB is just trying to prevent the eurozone from falling into deflation.

If some benefit from such a move, then so be it!

Investors, keep your eyes open for such opportunities. They are more frequent than you might guess.

Two final comments on the ECB's actions.

First: psychologically, I believe that the ECB had to act in order to keep European financial markets relatively stable. Stock prices rose after the rate changes were announced.

This is not unlike how Geithner saw his responsibility during the Great Recession.

My second point is this. I don't believe that these actions or even moving to a policy of quantitative easing will get the eurozone economy growing more rapidly in the near term. I see the dilemma being faced by officials in the eurozone as one of a major economic transition, a transition that will take time and concerted effort.

Many members of the eurozone need to reform their governments, substantially reduce corruption, adjust labor union power, and restructure industries. This is going to take much effort, much time and much pain. It is not altogether sure that the European Union can pull it off.

But, for now, the monetary policy of the ECB is the only stabilizing influence in the European markets. It must act, even if it is only keeping the flood from spilling over the dyke.

How Apple iPhone's Ad Hints at Its Next Big Thing

The Expected Rise and Inevitable Fall of MannKind

GM Unveils Ignition Switch Internal Probe Details

Clorox Insider Trading or More Golf Course Chatter Among the Big Dogs?

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
FB $117.44 -0.95%
GOOG $692.33 -0.84%
TSLA $232.32 -3.92%
YHOO $36.02 -1.40%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs