While we believe risks in global markets are not trivial, when we review international markets for contrarian opportunities, Europe is a place where value may be available.

Equities in Italy, Spain, and Portugal — countries that were at the epicenter of the European fiscal crisis a year ago — are beginning to look more interesting to us on a relative basis [For commentary on credit conditions in peripheral European bond markets, read Fixed-Income Outlook or Capital Markets Outlook]. On balance, the level of fear attached to these countries has come down significantly.

Euro area GDP

Some of the biggest risks that beset Europe with varying degrees of urgency in 2012 — such as a potential breakup of the European Union and a failure of the euro currency — appear to have been curtailed by the efforts of eurozone policymakers.

As we evaluate opportunities in this region, a number of infrastructure companies domiciled in Italy, Spain, and Portugal, for example, are beginning to exhibit attractive characteristics.