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IMF: Uneven Recovery in Europe
As Today we will have the presentation of the "IMF Regional Economic Outlook for Europe" in Frankfurt we can look at what the IMF recently said in their World Economic Outlook report published last month. Essentially Europe is experiencing an uneven recovery with negative growth in some countries (Greece, Portugal) and moderate growth throughout Europe with only positive exceptions being Germany, Nordic Countries and Switzerland (albeit not part of the EU). The IMF stressed some of the problems in the European banking sectors like:
-lack of transparency on exposures
-asset quality
-significant" capital shortfalls in some banks

I expect the new report to be again a mixed picture of uneven recovery.

European Uncertainties
A lot of uncertainties are surrounding Europe. It is not clear if Greece will get another round of EU/IMF support or not. In my view uncertainties will continue to penalize the Euro and strengthen the Dollar. If any sort of restructuring will surface this would be very negative for Europe and the Euro. An alternative solution has to be found not only for Greece but also for the other peripherals economies. A fragmented and undecided Europe is making the US Dollar more attractive.

Commodities: Too Hot !
In my previous appearance I did warn viewers about a) A Rebound of the US Dollar (that occurred a few days later) b) High speculation in some commodities like Silver.

At the end of March investors had over 412 billion in commodities: a 50% increase since last year. While some of the demand and supply fundamentals remains positive the level of speculation in the market is creating very high volatility and uncertainties.

My view is that a strengthening of the Dollar and other factors will open for more corrections in the commodity markets.
It might be time to take some profits and buy when the levels become more rational. The big question is how much of the speculation is driving prices up vs the fundamentals? this is relevant as it becomes difficult to right value commodities.

As the Federal Reserve viewed some of the increase in fuel as temporary I think that, for example, Crude Oil might drop further till the end of the summer.

I recommend to re-enter after the correction (perhaps after the summer) with a modest allocation to a broad index of 17-20 commodities.

Web bubbles 2.0
With the Nasdaq at a 3 years high and web 2.0 companies being valued in billions - and not millions - I think that another bubble might be forming. Much of the 2.0 Web assets (like Twitter, Facebook etc.) is in my opinion unreasonably over priced.

Strategy: Cautious on Commodities, Positive on Consumer Staples
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- With commodities "too hot" and some of the Tech companies following course I remain highly conservative but relatively positive on European based food & beverage companies, consumer staples and personal & household goods;

- I maintain a positive outlook to more stable markets, like the Swiss market, as we have less volatility thanks to the index being dominated by Food (Nestle) and Healthcare (Novartis Roche);

- Several markets (at an unjustified 3 years high?) might experience corrections in tandem with commodities.