In our view the ECB is about to play as important a role in the fortunes of global markets as the Fed did in the fall of 2008. European governments have concocted their equivalent of the US' TARP, but we think the ECB will need to be assertive in using their balance sheet to restore confidence. ECB president Jean Claude Trichet has 16 months of his eight year term remaining. He is one of the prime architects of the euro, and will not want to see it disintegrate on his watch. We believe the ECB's recent endorsement of, and role in, the Eurozone bailout plan signaled its willingness to expand its balance sheet and engage in Fed-like quantitative easing. Now, the balance sheet actually needs to expand.

David Fuller's view We are already seeing more quantitative easing by the ECB and I expect it to continue, in an effort to counter some of the deflationary crunch that Euroland will experience if credible deficit reduction plans are implemented and maintained until targets are met. Ultimately, Euroland's potential will be determined by its ability to generate GDP growth.

While the adage that countries or currency unions have never devalued their way to prosperity is correct, a problem with the euro has been overvaluation due to its previous status as an alternative reserve currency for countries with surpluses to invest and who did not want more US dollars. A euro (monthly & weekly) closer to $1.20 rather than $1.60 has largely corrected this problem.

Who are the winners and losers following this currency realignment?

Euroland's exporters will certainly benefit and Germany most of all. As this stock market correction runs its course, investors may wish to take a fresh look at Europe's leading export companies, particularly those leveraged to Asia's growth. One obvious candidate is Siemens AG which also has an ADR. Siemens, which I held temporarily my personal trading account a few months ago in anticipation of its breakout from the €60 to €68 range, is a good play on the global infrastructure theme which Fullermoney continues to favour. Daimler and BMW will also be major beneficiaries of the cheaper euro.

I think the euro is fair value today but if it overshoots to the downside in the next few weeks or months, as so often happens with trends, Euroland's leading exporters will be even better value. This same argument applies to the UK's leading exporters who are already benefiting from sterling's devaluation.

In contrast, the USA's leading exporters, which Fullermoney has favoured when the dollar has been soft, now face a headwind from the increasing stronger greenback.

Do not miss the graphic in this issue of The Weekly View. An Extreme Pessimism / Optimism indicator based on the CBOE three-day equity put / call ratio, note how quickly and significantly it has reversed, and it has only been updated through 21st May. I suspect we are close in time to a short-term bottom for stock markets. What I do not know and no one can know at this stage, is whether that will be THE bottom.

While I am concerned by the speed and extent of this correction in response to the triple waterfall of events plus China's tightening of liquidity, I wonder if prices have also been driven lower faster because some people are doing in this downturn what they wish they had done two years ago. Meanwhile, the only certainty is that the further stock markets fall the closer they are to the next important bottom. This is not 2008 all over again but some people will fear a repeat of that depression-discounting slump. (See also yesterday's stock market comments.)