This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Lew Has to Admit Europe's Latest Banking Moves Eased U.S. Concerns

Stocks in this article: M SPY

NEW YORK (TheStreet) -- Treasury Secretary Jack Lew breathed a sigh of relief last week when the European Central Bank issued unprecedented policy to combat growing deflation concerns in the European region.

Lew, answering questions at the Economic Club of New York from Macy's (M) CEO Terry Lundgren and Stern School of Business Dean Peter Blair Henry, said the features of the ECB's changes highlighted some of the Obama administration's concerns about the European recovery.

WATCH: More market update videos on TheStreet TV | More videos from Joe Deaux

The Treasury Secretary said he was pleased with the ECB's recent decision to encourage banks to lend to small- and medium-sized private enterprises, a sector he says has lagged the United States since the end of the Great Recession.

The ECB on June 5 announced its intention to cut its key refinancing rate to 0.15% from 0.25% and set negative deposit rates, which would require private banks to pay the central bank to hold reserves. They also started a lending program targeted at banks that would lend to the private sector, and began preparing for future asset-backed security purchases, which would be similar to the Federal Reserve's actions since the 2008 financial crisis.

"What Europe is doing, economically, has a big effect on U.S. stocks," Wells Fargo Advisors chief equity strategist Scott Wren, said in an interview. "So the better the European economy is doing, the more money our companies are going to make."

These policy changes come as disinflation has continued across many European nations -- a signal that the eurozone economy could be headed for deflation without extraordinary action.

Economists argue that the main function of central banks is to control inflation -- keeping it from going too high or turning into deflation. The Fed's and ECB's key tool to control inflation is setting interest rates, but as the global economic registered its worst pullback since the Great Recession, near-zero interest rates weren't enough to soften the impact. The Fed acted with a quantitative easing program, which included purchases agency-held asset-backed securities to help stimulate the financial sector.

Europe, though, opted for a tighter monetary policy as a handful of country members -- notably Greece, Italy, Portugal, Spain and Ireland -- would need more significant accommodation than others. Simply, a nation like Germany wasn't willing to help pay down the debts of a nation like Greece without meeting demands that would force them to reducing spending.

The result was an economic recovery in the United States with a near 3% annual growth rate, but stagnant to negative growth in the eurozone.

Lew said he doesn't know how effective the ECB's move will be, but said he will continue to encourage their decisions in the recovery.

So while it seems like the Treasury Secretary is happy to see new ECB action, it comes years after the Obama administration and the Fed wanted the eurozone to take a more accomdative approach in an effort to bolster a stronger global recovery.


Here Are the Stock Sectors to Buy on the ECB's Latest Moves

The S&P 500 Is Reaching a Top, Here's the Case for Why

-- Written by Joe Deaux in New York.

>Contact by Email.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs