This article originally appeared on RealMoney.com on Sept. 5, 2014 at 9:30 a.m. To read more content like this AND see inside Jim Cramer's multi-million dollar portfolio for FREE... Click Here NOW.
Jim Cramer had a good piece the other day pondering the low-yield world we occupy, rock bottom rates for government debt in the Western world and the difference between the landscape for our major banks and Europe's.
He also mused that yesterday's action by European Central Bank (ECB), which some are dubbing "QE Lite," is likely to bring the euro to below $1.25 in short order. I have a few comments about his observations, which I largely agree with.
First, I think anyone willing to lend Spain or Italy funds for 10 years at a yield under 3% should have their head examined, especially with non-euro funds, as the currency is going to see significant downward pressure from these latest moves from the ECB. In addition, little has been done in either country or in Europe in general to foster the structural labor reforms to make the countries more competitive on the world stage.
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I do expect "QE Lite," or whatever this strategy will ultimately be called, to be a tailwind for European stocks and bourses. I raised my stake in Netherlands-based insurer AEGON (AEG) yesterday as soon as the ECB outlined its new policy. European financials in general should see improving sentiment on the back of the ECB's new liquidity support. Even better, the company gets around two thirds of its revenue from North America, and a lower euro will mean these income streams will translate into higher earnings. The company just reported strong quarterly results, is holding excess capital, sells for around 60% of book value and yields just under 4%.