With the program now announced, the debate between bulls and bears turns to whether it will lead to increased share prices and help Europe break out of its current economic slump.  ECB President Mario Draghi remarked last Thursday: “What monetary policy can do is create the basis for growth.  But for growth to pick up, you need investment; for investment, you need confidence; and for confidence, you need structural reform.”  We agree.  With all QE programs thus far, the initial beneficiaries have been investors (through higher prices) and borrowers both corporate and individual (through lower borrowing costs).  When QE is combined with the cyclical benefits of a weaker currency and lower oil prices, we expect corporate earnings growth to accelerate, especially for multinational companies.  Regarding ‘investment and confidence,’ we are encouraged to see the growing demand for lending and the increasingly willingness of the banks to lend (see our Weekly Chart on page 2).

David Fuller's view

Here is The Weekly View.

I agree, and I would not be surprised to see Europe’s SX5E outperform the S&P 500 this year, despite the Greece risk.