This Day On The Street
Continue to site
ADVERTISEMENT
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

What Thursday's European Central Bank Meeting Means for Investors

NEW YORK (TheStreet) -- Three months ago, Mario Draghi, president of the European Central Bank, set the bank on a path to lower the value of the euro. At the time, the market value of the euro was about $1.36.

The concern at that time was about the continuing disinflation of the eurozone and the possibility that the European continent was heading for a recession.

The value of the euro has dropped since then, just breaking $1.32 around Aug. 20.

Read More: Chipotle's Monty Moran Unwraps the Restaurant's Success Story

The reason for this decline: Italy was declared in a recession after the 2014 second quarter GDP numbers were announced. German growth for the first half of the year was flat. And the French economy was doing so badly that French president Francois Hollande had to re-structure his government to try to reform his country's economy.

Now, the spotlight is back on Draghi and the ECB, which has a policy meeting this Thursday.

The question is -- given all the bad news that has been reported over the past month -- what will Draghi and the ECB do to combat the looming eurozone recession and a possible Japan-like stagnation?

The first thing to come into anyone's mind these days is for Draghi to emulate the Federal Reserve system in the U.S. and move to a policy of quantitative easing.

Draghi has seemed reluctant to make such a move.

Although Draghi has stated in the past that he would do whatever was necessary to spur on the economies of Europe and keep the currency union together, he has dragged his feet concerning the move to quantitative easing.

Read More: Dollar General Offers Major Antitrust Concessions as It Lifts Bid for Family Dollar

For one thing, as Draghi looks toward America, he sees that in terms of boosting on economic growth, quantitative easing has done practically nothing.

If anything, quantitative easing has provided support for the banking system and helped the regulators to eliminate troubled banks and reduce the size of the banking system in an orderly fashion. This effort has gone amazingly well.

But quantitative easing has also helped to propel the American stock market upwards and keep the lid on longer-term interest rates. The Standard & Poor's 500 (SPY) stock index has penetrated the 2,000 ceiling for an all-time high, and the yield on the 10-year U.S. Treasury note, which was expected to run up above 3.00% this year, now rests around 2.35%.

1 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
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!
SYM TRADE IT LAST %CHG
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%
TSLA $206.79 0.00%
YHOO $44.45 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs