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Profiting From The Major Shift Inside The ECB



November 03, 2011 – Comments (0) | RELATED TICKERS: SPY , MFGLQ.DL , JEF.DL

No sooner had the new president of the ECB Mario Draghi said goodbye to the old president Jean-Claude Trichet, he put his stamp on Europe. In a major shift in policy that sent ripples throughout the world, Draghi lowered interest rates by .25%. This may not sound like a big move, but it shows a fundamental shift on how the ECB will be handling Europe going forward. Trichet was a hard line player, always focused on inflation rather than growth. Today, clearly, global governments and the U.S. Federal Reserve hand picked Trichet's replacement and will be a clone of Federal Reserve Chairman Ben Bernanke in terms of policy.

This news sent the markets spiking. The SPDR S&P 500 ETF (NYSEARCA:SPY) is trading at $125.17, +1.18 (+0.95%). Just last night the futures were taking a brutal hit on continued worries out of Greece. This move by Draghi was a golden goblet, sent out to investors saying, "the ECB is now going to handle this problem like the Federal Reserve."  In other words, print money, bailout and place more band-aids on the problems for the short run.

Most stocks are higher today. The one area of weakness is coming from the banks. After MF Global Holdings Ltd (NYSE:MF) collapse, Wall Street has been wondering if there are more players that will go bust. Today, Jefferies Group, Inc. (NYSE:JEF) saw massive declines in their stock. The stock closed at $12.27 yesterday, and fell to $9.79 today, before recovering. The company had to come and and defend themselves. There is a lingering worry surrounding all financial stocks. While the rest of the market inches higher, stocks like JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group, Inc. (NYSE:GS)  are flat to lower.

Gareth Soloway

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