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1. Gold and Silver stabilize after massive drops.

Below: Massive drops are relative on a year-to-date chart.

2. CAC 40 Index hits record high amid strong earnings season.

The CAC 40 is catching up with other regional benchmarks such as the STOXX 600 and Germany's DAX, both of which have reached new highs multiple times this year. The CAC 40 has gained 12% so far this year. French companies have reported strong earnings, with LVMH's stock surging last week after unexpected sales growth. EssilorLuxottica also hit a record high as its sales exceeded analyst expectations. Kering's stock rose this week following its agreement to sell its beauty division.

Political headlines are buying opportunities.

3. Pharma is cheap and defensive.

Investors are slowly returning to European health-care stocks, as easing concerns over drug pricing and tariff risks complement tempting valuations. The Stoxx 600 Health Care Index has bounced about 10% off last month’s low, as Pfizer’s drug-pricing agreement with the Trump administration fueled optimism that other pharmaceutical companies can strike similar deals.

The sector is among the best performers this quarter, joining a swing toward defensives that has has taken in consumer staples, utilities and telecoms.

Barclays strategists led by Emmanuel Cau upgraded the sector to overweight this month. They noted “very cheap” valuations and positioning that’s still “depressed,” with some early signs of that changing. The team expects earnings momentum to broaden, while a stabilization in the euro and a rebound in US imports should fuel a recovery.

4. BNP Paribas shares now price worst-case outcome of “Sudan litigation”.

The drop in BNP Paribas's shares after a U.S. court verdict related to the French bank's alleged role in Sudan already seems price in a worst-case scenario, Citi says. The French bank says it will appeal the judgment and that the verdict on the three plaintiffs--who were awarded $20 million--shouldn't have broader application, so any speculation regarding a potential settlement is wrong. Analysts calculate a $9.7 billion worst-case scenario, extrapolating the $20 million verdict to all 20,000 potential plaintiffs, based on historic average settlement rates. "In reality...any potential settlement would likely be materially lower than this, given the potential size of the claim, in our view," they write in a note to clients.

Below: BNP is very oversold. The next couple of days/weeks it will form a base and a good opportunity to buy.

5. The Swiss franc nears a decade high versus the euro.

The Swiss franc is emerging as the standout risk hedge in FX given Europe, US and Japan face concerns ranging from growth to fiscal expansion and debt sustainability. One factor that seems to be supporting the franc is investors' perception that it is safe, and growing demand for it may stem from the rising risk of holding gold that had been previously used to hedge risks against equity downside.

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