• 96 days Could Crypto Overtake Traditional Investment?
  • 101 days Americans Still Quitting Jobs At Record Pace
  • 103 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 106 days Is The Dollar Too Strong?
  • 106 days Big Tech Disappoints Investors on Earnings Calls
  • 107 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 109 days China Is Quietly Trying To Distance Itself From Russia
  • 109 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 113 days Crypto Investors Won Big In 2021
  • 113 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 114 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 116 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 117 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 120 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 121 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 121 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 123 days Are NFTs About To Take Over Gaming?
  • 124 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 127 days What’s Causing Inflation In The United States?
  • 128 days Intel Joins Russian Exodus as Chip Shortage Digs In
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

QE Ending Or Just Getting Started?

Marco Bellucci Flickr


ECB To Step Up As Fed Steps Back?

While the Federal Reserve has laid out specific plans to end their quantitative easing (QE) program, a new season of QE may be getting ready to kick-off across the pond. From Reuters:

The euro fell broadly on Wednesday, hitting a 19-month low against the Swiss franc, as speculation that the European Central Bank (ECB) will resort to quantitative easing was fueled by yet more bad news from the euro zone...ECB chief Mario Draghi fueled speculation that monetary policy would be further loosened in the euro zone over the weekend by saying the central bank would use "all the available instruments" to deal with the threat of deflation at the U.S. Federal Reserve's annual conference in Jackson Hole. Developments on Wednesday only worsened the picture for the euro zone: data showed German consumer morale fell for the first time in 1-1/2 years, while Italy's economy minister said the country must cut its growth forecast.


Time To Jump On European Equities?

Investors in the United States have seen QE's impact on asset prices. With the ECB/quantitative-easing story beginning to gain more traction, European stocks (FEZ) have beaten the S&P 500 by over 2.0% this week (see upper right corner of chart below). However, European stocks have some work to do to reverse what has been a bearish trend relative to the S&P 500 in 2014.

FEZ:SPY Chart: SPDR Euro STOXX 50 ETF/S&P 500 SPDRs NYSE + BATS


This Is The Look We Want

If the 2014 chart above could morph into a look similar to the period shown below, our interest in European stocks would increase. For our time frame and approach to the markets, some patience remains in order to see the impact of any chess move by the ECB.

FEZ:SPY Chart: SPDR Euro STOXX 50 ETF/S&P 500 SPDRs NYSE + BATS


Investment Implications - The Weight Of The Evidence

If you are new to the concept of using observable evidence to manage risk, Anatomy Of A Stock Market Turn illustrates the approach by examining the S&P 500 between August 7 and August 26, 2014. Before we went to press, the S&P 500 was still drifting around 2,000, but with the weekly gain still above 10 points. Until the evidence changes in a meaningful way, we will continue to hold U.S. stocks (SPY), and leading sectors, such as healthcare (XLV), complimented by a small stake in bonds (TLT).

 

Back to homepage

Leave a comment

Leave a comment