Posted: March 03, 2016
In the last installment of my Market Update, I predicted that the January 2016 correction was a temporary one and that with announcements soon to be made by several countries that the markets would stabilize. The Dow Jones has climbed back above 17,000, the Shanghai composite index is back to its mid-January levels and other markets have stabilized as well. Looking forward to the next three quarters investors in Oil, real estate, currency and the stock markets can expect more of the same.
EU Finds a Stimulus
The European Union has finally, after seven years decided that a large stimulus for its economy is what is needed to finally help the region climb out of the persistent recessionary tendencies it has had since the 2008 financial crisis. The U.S. was almost immediate with its stimulus package and now is in a healthy financial position and is raising interest rates.
The EU is reducing its interest rate to zero with certain countries such as Sweden even going into negative interest rate territory in order to spur the economy of the region. Although it is several years overdue, it is the right move for the economic region. The European Central Bank’s stimulus package includes expanding its asset-buying program and increasing its monthly bond purchasing from 60 billion euros to 80 billion. Much bolder than expected it will finally provide the needed boost to the region within the next two quarters and will help spur further global growth.