Suddenly there's optimism about Europe. Things aren't great, but they aren't so dreadful. But keep an eye on Slovenia, says Andreas Hoefert, UBS AG's chief economist and the regional chief investment officer for Europe.
The small country has the potential to be this year's Cyprus, throwing the dislocations in the continent's economy back onto the world stage.
"Markets are not so much focused on what is going on in Europe, but it really could come up again," said Mr. Hoefert. Slovenia "has to be on the radar screen," he said.
Slovenia's story is familiar. Its banks are in trouble, and required a government bailout. The economy has shrunk massively, more than any other nation in Europe save Greece. The International Monetary Fund is demanding tougher government spending cuts.
But for the moment, Slovenia is largely an afterthought. The general view on Europe is the worst is over. Bonds from crisis-stricken countries like Ireland and Spain are trading at much stronger levels, and there are nascent signs of growth in even some of the hardest hit euro zone members.
Mr. Hoefert is not convinced. "The euro crisis is not over," the economist said. "If I were a politician I would say it is – but it is not."
The other thing to watch in Europe is this spring's election cycle, Mr. Hoefert said. Gains by anti-Europe parties, fueled by anger over austerity measures, could highlight again the seemingly fragile state of the currency union.
"Social tensions are continuing to build up," Mr. Hoefert said, adding that his fear is that "France will take the lead."
Canada is not without issues, either, Mr. Hoefert asserted.
He is of the belief that Canada is suffering from the so-called "Dutch disease." (The name comes from the situation that arose in the Netherlands in the 1970s, when energy discoveries fueled gains in the country's currency and hurt the manufacturing sector.)
There has been plenty of debate about whether Canada has a case of the disease. Ottawa officials, from the Bank of Canada to the government, have tried to refute the notion.
Mr. Hoefert said he is convinced, saying Canada's trade balance, excluding energy, is proof. The energy sector is pushing up labor costs, and other areas of the Canadian economy are forced to compete with the energy sector.
"If it's not the Dutch disease, it's a Canadian disease," he said.