- The rebound of the Euro, fueled mainly by Spanish bonds auction confirms my previous theory that the European are full of opportunities as their problems have been largely overstated. Even Greek banks are becoming interesting given the possible mergers in their highly fragmented market and the interest of some Sovereign Wealth Funds in acquiring largely undervalued Greek banks.

Overall I think European companies present better opportunities than U.S. ones. As an example of U.S. related issues we should note that some US States like California and Illinois are struggling to replay their bonds (cutting wages and deferring payments to suppliers) so in a way they are in a worse situation than many European Governments;

- Given the substantial penalization of European banks and the new financial regulations in the U.S. European and Swiss banks are still a good buying opportunity. Many European banks do not rely on credit card loans (that are not largely diffused in Europe) but in a more traditional and profitable approach to banking.

- Commodities (through a broad Index Linked ETF) are in negative this year and this is a very good entry point. Despite the volatility China, India and other emerging countries will fuel demand and supply remains limited. My advice, given the cycle in commodities, is to rely on broadly diversified exposure perhaps equally weighted among the 4 main commodities sectors (Agriculture, Precious Metals, Industrial Metals and Energy). This strategy will also serve as a good hedge against inflation.
This inflation hedging strategy has been recently adopted by several pension funds like the California State Teachers Retirement System and Calpers.

- Earnings will continue to surprise positively in this quarter - for this reason exposure to equities is still highly recommended. Rebound till end year to be expected.

In Short: Positive on the Euro, European Banks and overall on European Equities. Recommend exposure to commodities directly through a well diversified ETF as a hedge against inflation and as a bet on continuing growth. Earnings to surprise positively as the year is most likely to end in positive territory as Economic growth will, even if at a lower pace, continue.