The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK (ETF Expert) -- Last year, world equity markets obsessed over the movement of sovereign debt yields in Portugal and Greece. Here in 2012, Spanish and Italian bond yields have risen enough to scare investors back into the perceived safety of U.S. Treasuries. In fact, iShares Barclays 7-10 Year Treasury Bond Fund (IEF) - Get Report is near 52-week highs.

IEF 200

Unfortunately, concerns about the third- and fourth-largest European economies aren’t the only issues weighing on sentiment. Now there are geopolitical battles, from the upcoming French election to a breakdown in party talks in the Netherlands. Predictably, both

iShares MSCI France

(EWQ) - Get Report


iShares MSCI Netherlands

(EWN) - Get Report

have surrendered all of their double-digit, year-to-date price gains.





and become a fan on


EWQ 2012

How worried should you be? Well, if you haven’t been bottom fishing in the European stock ETF tank, you’re probably fine; that is, you’re probably fine for now. Yet Europe’s quagmire is still an

enormous drag on emerging stock assets as well as U.S. stock assets


Most commentators in the mainstream media have been cheerleading the notion that the European debt crisis was fairly well contained. What’s more, armed with this knowledge, investors could be more confident in wading back into the stock pool. Yet a tenuous alliance between Germany’s Merkel and France’s Sarkozy (”Merkozy”) is likely to fall by the wayside, creating more drama in Europe’s ongoing saga.

Keep in mind, the likely winner in France, Hollande, is pushing for a 75% income tax on the top marginal bracket. Indeed, it’s difficult to see how capitalistic financial markets could embrace the demands of the Socialist Party's candidate. For that matter, it’s difficult to imagine an economy thriving on the backs of fewer and fewer high-income producers, as many would have very little incentive to increase their earning power.

In March, I suggested that aggressive investors consider

shorting iShares MSCI Spain (EWP) - Get Report

. Aggressive investors may even wish to take a look at adding iShares MSCI France to the list as well.

Of course, most of my clients and readers are more moderate and/or conservative in their pursuits. It makes more sense for most folks to avoid exposure to the region, increase cash as an asset class, employ hedges or

stop-limit loss orders

, as well as embrace your high-income yielding ETFs like

Guggenheim Multi-Asset Income

(CVY) - Get Report


PowerShares High Yield Corporate Bond

(PHB) - Get Report

. After all, it could be yet another bumpy ride into the summer.

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Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

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