The European Central Bank (ECB) is getting out their caps and fire hoses in order to play firefighter once again. Similar to what it did in December, the organization will provide liquidity for 36 months for European banks that need it in hopes of rebuilding confidence in the banking sector and, therefore, in the equities markets. The Spanish and French stock markets will be, for their heavy investments in banks, the markets that benefit most from the ECB's latest effort to put out the flames in Europe at a time when the Ibex 35 and Cac 40 are likely to offer most opportunities to capitalize on stocks with attractive PE ratios.
In the previous "open bar" of liquidity on December 21, 523 firms appealed to the ECB for around 490 billion euros, and now the stream of liquidity could reach a trillion euros. Although the figure could be less if we take into account the opinion of 42% of Barclays Capital clients who were surveyed recently. They put the figure between 450 and 600 billion euros, while another 29% anticipate between 300 and 450 billion, which is a very similar forecast to the one from Merrill Lynch, who predicts there will be 500 million euros in safeguard funds.
Expecting to see the results of the ECB's efforts, some are already claiming that it is still possible to see a similar deal in the future if stock market pressure in bailed-out or questionable European nations continues to be a pronounced issue.
