Will European Central Bank Ease Policy in Wake of Weak GDP Figures?
I get the feeling that Draghi is not impressed with the results the Americans have achieved with their various versions of quantitative easing. There is no information available at this time to indicate that these efforts at quantitative easing have helped the U.S. economy grow more rapidly or produced less unemployment.
But the efforts at quantitative easing have produced substantial distortions within the economy that will have to be dealt with at a later time. Many of these efforts have gone to help those that can invest in assets, physical as well as financial, and have not done much to produce investment in physical capital or other spending that can increase output.
Additionally, Draghi seems to believe that to get real economic growth in the eurozone, countries like Italy and France are going to have to deal with the structural problems that exist within their own economies before "real" growth can actually come about.
Read More: Tesla's Model X: Everything We KnowIn my mind, the pressure is going to build for the ECB to ease further, even if this is not in the long-run interest of the eurozone. And, once there is any sign that Draghi or the ECB is moving to a policy of greater ease, there will be a quick drop in the euro's value. Right now, I believe that there is more chance that the value of the euro will go down than go up. The will be substantial political pressure to ease policy. There is little expectation that the economy will rebound strongly enough on its own to result in a rise in the value of the euro. At the time of publication, the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV