It’s important to correctly identify economic cycles in order to forecast economic U-turn points and to take position accordingly to realise the maximum profit.
The ECB just revealed that it will cease its Quantitative easing program : the 2% inflation rate target has been globally reached in the eurozone. I remind you that the 2% inflation rate target is the only indicator shaping ECB monetary policy compared to the FED in the USA for instance.
A book about monetary policy which I read is talking about what we call in French « point d’ancrage nominal » to qualify this indicator and target to guarantee the stability of the euro currency and to insure the equilibrium between money creation (when the central bank is buying derivatives, public debt or equities in exchange of created cash) and money destruction (when the ECB is selling back previously purchased assets to the market to get back its money). I am here talking about ECB and central bank balance sheets which are composed of equities, assets and liabilities. Or in French, « Fonds propres, passif et actifs du bilan ». I won’t go into any further details about these specific details because I already published a lot about it. Please browse archives of my website in the finance subcategory.
The USA are always a way ahead of the EU and the ECB in the economic cycles. The USA Quantitiave easing started earlier than its European equivalent, and, while the ECB is thinking about stopping its quantitative easing, the American fed has already raised its director rate a lot and stopped its QE program a while ago.
Source (in French ), weekly finance magazine’s “la tribune”. Please find the link on the French version of the publication.
