Mario Draghi sought to restore the faith of investors in the European Central Bank’s ability to revive its ailing economy.

Under pressure to show he can spur inflation, and to narrow divisions among policy makers over how to do so, the ECB president said officials will buy assets for at least two years to boost their balance sheet by as much as 1 trillion euros ($1.2 trillion), and will study further stimulus. He stressed that the ECB is on a different path from the Bank of England and U.S. Federal Reserve, which have stopped purchases.

The euro and Treasuries dropped as traders concluded that with the economic outlook deteriorating, Draghi may be preparing to expand its measures as soon as next month. Corporate and government-agency bonds may be the next target before officials contemplate more-controversial sovereign debt.

“Draghi indeed impressed by his ability to unite his ranks behind his agenda,” saidChristoph Rieger, head of fixed-rate strategy at Commerzbank AG in Frankfurt. “The cascade of events that will eventually lead to larger-scale asset purchases in order to meet the balance-sheet goal and inflation target keeps unfolding.”

The euro area’s central bankers met today in Frankfurt amid claims that Draghi often acts without the backing of them all, and just days after the Bank of Japan ramped up its own stimulus campaign. The question for investors is how much more he can do to boost an economy that risks sliding into its third recession in six years and where inflation is close to becoming deflation.

And from the conclusion:

It would test the limits of Draghi’s ability to push through radical measures. Reuters reported on Nov. 4 that Governing Council members planned to challenge him on his management style at dinner yesterday, citing a lack of collegiality and erratic communication.

Draghi said he isn’t operating a “kitchen cabinet” and and that no “coalitions” are forming within the 24-member Governing Council. He said his opening statement yesterday was signed by all the members of the decision-making body.

“It’s fairly normal to disagree about things,” he said. “Read recent statements about when to raise interest rates in the U.S. It happens in the U.K., it happens in Japan. This is part of normal diversity.”

David Fuller's view

I maintain that Mario Draghi has by far the toughest job of any central banker in the present environment.  He needs to remain razor sharp intellectually and analytically, and to be a superb diplomat.  It is the equivalent of herding 24 angry cats within his Governing Council, and he does it superbly. 

Draghi has been incorrectly blamed by some commentators for ineffective policies.  I think they have misunderstood the political challenges Draghi faces and I credit him with holding the Eurozone together during the last few years.  Moreover, he appears to have gained the upper hand once again and will now lift the ECB’s balance sheet of total assets back to the levels seen in 2012. 

That may hold off deflation and it will be a powerful monetary tailwind behind Eurozone stock markets, but will it be enough?  It will lift some of them in shrinking euros but the EU has far too much wasteful spending on the part of unelected bureaucrats, too many unproductive socialist policies and too few efforts to spur GDP growth. 

Nevertheless, there are some stock market comparative bargains for patient investors among Euroland’s Autonomies.  For instance, BMW which sells at an estimated p/e of 9.32 and yields 3.08% according to Bloomberg.  Similarly, Daimler has an est. p/e of 9.79 and yields 3.57%.  Their chart patterns are a little ropy but Mario Draghi’s monetary tailwind should help.  More importantly, these world class automobile manufacturers continue to expand their number of plants outside of Europe.