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Scott Minerd
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As Chairman of Guggenheim Investments and Global Chief Investment Officer, Mr. Minerd guides the Firm’s investment strategies and leads its research on global macroeconomics. Prior to joining Guggenheim Partners, Mr. Minerd was a managing director at Morgan Stanley and Credit Suisse. He is... More
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  • Europe And Japan Add To Good News For Investors 0 comments
    Sep 4, 2014 6:07 PM

    The European Central Bank on Thursday went further than expected in its attempts to counter the threat of euro zone stagnation. ECB President Mario Draghi cut interest rates and signaled his intent to launch a program to purchase asset-backed securities and covered bonds. More negative deposit rates, which fell to -0.2 percent from -0.1 percent, should encourage commercial banks to take reserves out of the ECB and put them into the economy rather than pay to park bank deposits at the ECB.

    With euro zone inflation less than one quarter of its target, the ECB has been under pressure to act. Dr. Draghi deserves credit for clearing the path toward quantitative easing in Europe-no mean feat considering the skepticism that has been emanating from some quarters. While some commentators may argue that the ECB's program does not look quite like the QE we saw here in the United States, the reality is if it walks like a duck and quacks like a duck, it's a duck.

    Meanwhile in Japan, Prime Minister Shinzo Abe appointed Yuko Obuchi as the country's first female minister of trade and industry. Obuchi's appointment to a ministerial position of such importance is highly symbolic and underscores Dr. Abe's intention to expand the Japanese workforce by increasing the participation rate of women, a critical component of his three-arrow approach to reinvigorate the Japanese economy. This may well signal a major cultural shift in Japanese society, in which women tend to be underrepresented in leadership roles, and it certainly has broken the glass ceiling. In the words of Bob Dylan, "The Times They Are a-Changin.'"

    The third piece of the puzzle is that in the United States the voting members of the Federal Open Market Committee in 2015 will be even more dovish than the current committee. If there is a risk, it is that the Fed will keep monetary policy at a high level of accommodation for longer than previously anticipated.

    For investors, the aggressive accommodation in Europe, Abenomics pushing ahead in Japan, and a dovish U.S. Federal Reserve at home all bode well for equities and bond prices.

    This material is distributed for informational purposes only and should not be considered as investing advice or a recommendation of any particular security, strategy or investment product. This article contains opinions of the author but not necessarily those of Guggenheim Partners or its subsidiaries. The author's opinions are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. No part of this article may be reproduced in any form, or referred to in any other publication, without express written permission of Guggenheim Partners, LLC. ©2014, Guggenheim Partners. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.

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