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Wednesday, January 21, 2015

How will the markets react to the EU QE announcement tomorrow?

Tomorrow is the due date that it is widely expected that the EU Central Bank Chairman, Mr. Draghi, will announce an QE program for the Eurozone. That is, the money-printing bond buying program will start as well in EU. So how will the markets react to this announcement? It is anyone's guess but I bet the markets will likely react negatively to the announcement and will go down potentially hard tomorrow. You see, if Draghi meets the expectation to start the QE with the reasonable size, the markets will take profit by selling, i.e. buying the rumors and selling the news. If Draghi cannot meet the expectation for whatever reasons, the market will be disappointed and sell. So I think the odds is much in favor of a declining market. Buying SDS today is a good bet for tomorrow.

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