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Thursday, August 2, 2012

ECB Making Plans for Bond Acquisitions

In the short term the announcement by ECB President Mario Draghi that the European Central Bank drew a yawn from the markets after his aggressive posturing recently on how he'll do anything to support the euro.

"The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective," said Draghi.

"The Governing Council will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission. In the coming weeks we will design the appropriate modalities for such policy measures," he added.

The Federal Reserve is also expected to make a move at its next meeting in September, as Chairman Ben Bernanke noted in the recent meeting that the U.S. economy was faltering and the central bank stands ready to take action when needed.

What this means is come the latter part of August and early September we should see a big upward move in stocks and commodities in response to the two probable initiatives by the ECB and the Federal Reserve.

The move by the ECB will probably be very close to the same move by the Fed.

With little reason for Bernanke waiting, it appears he's caved to pressure to wait until it could make the economy look better as the election approaches, giving a potential boost to Obama, who is in danger of losing the election in the midst of the disastrous economy and his atrocious economic policies.

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