Michael Chiu, senior investment manager at ING Investment Management, has China Mobile as its biggest holding, and is overweight the banks as it plays down the potential impact of NPLs.

Those who tend to avoid posh restaurants in Geneva’s expensive Rue du Rhone district and famed private banks because they believe they are not rich enough may be given a second chance at century-old wealth manager Julius Baer.

The Swiss private bank, which has made its name thanks to the services it offers to the ultra-rich, believe its powerful high-end brand may be keeping potential clients away.

“It’s a bit like the nice chic restaurant on Rue du Rhone you walk by 10 times and think: “I am not so sure I can go in there, it might be a bit sophisticated,” Boris Collardi, Chief Executive of Bank Julius Baer, told the Reuters Wealth Management Summit in Geneva.

“And then you end up going in there and you have a wonderful meal.”

Private banking services at Julius Baer start at around 1 million Swiss francs.

Worth trying?

In a bull market, buying on the dips works like a charm. Pullbacks in the market are quickly cannibalized by hungry investors looking for anything that smells like a bargain.

In a bear market, dip-buying does not work so well, as supposed bargains turn out to be value traps. This brings us to Ken Lewis, retiring as CEO of Bank of America. If dip-buying is a disaster in bear markets, Lewis engineered the M&A version of "dip buying" at the worst time not once, but twice.

He struck first with a $2 billion investment in Countrywide Financial in August of 2007, just before stock markets peaked - and after real estate was already teetering. In a good environment, it's a potentially solid investment. Not so much this one, when Countrywide was at $18 a share, and Lewis doubled down with a $4 billion buy (well, rescue) of Countrywide in January of 2008. That's hit the bank hard due to rising defaults in the housing market, which some analysts believe have not peaked.

But the real blow came on that fateful mid-September weekend when Lewis spurned Richard Fuld of Lehman Brothers and instead agreed to purchase Merrill Lynch for $ 29 a share, a 70 percent premium to where it was trading at the time. This has been more than problematic; the brokerage accelerated $3 billion in bonus payments in advance of a shareholder vote on the deal, in the midst of a quarter in which it lost billions. Lewis said he had second thoughts about the deal, testifying before Congress that then-Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke pushed him to go through with the purchase.

The damage had been done, particularly to the stock price. Eventually, the company may recover, though the housing market's drag will weigh for a long time, as consumer behavior has been altered dramatically. Whatever happens, it wasn't enough to save Lewis.

It used to be that Citigroup was one of the market's most important stocks, if not the most important. At the nexus of the banking, securities and lending industries that benefited most from the easy-credit boom of the middle of the decade, its success as a stock mirrored the market and the economy.Somewhere around 2006, when people started to call for a breakup of the company, it was supplanted by a company even more tied to the derivative-fueled mess that masked the holes in the economic landscape - Goldman Sachs.

But Goldman continued to earn massive profits while Citigroup nearly died a painful death. Shares eventually fell to less than $1 a share, it was kicked out of the Dow and investors started to view other consumer banks as better indicators of the market's health.

Still, there's a chance that Citigroup may become more important once again, provided it survives (with substantial help from the government). Kevin Depew, recently writing on Minyanville.com, noted that most of Citigroup's short-term debt has returned to spreads present before the blowup of Lehman Brothers, suggesting that bond investors believe the debt crisis has receded. He notes (using a bit of technical analysis) that "Citigroup right now might again be The Most Important Stock in the Universe."

But one could argue it never stopped being important . It's clearer now that those in search of a proxy for the economy, investors should have stuck with Citigroup all along. (Not that they should have stuck with owning the shares.) Its plunge came at a time when many thought a second Great Depression - or something close to it - was on the way, and its status as a ward of the state mirrors the economic situation as well: second-quarter GDP would have been worse had it not been for government spending.

Shares of the stock continue to struggle. It trades at less than $4, but the company recently saw a boost in trading volume as a result of an increase in its influence in the S&P 500. This may increase again if certain preferred shares held by the government are converted to common stock and then end up in the public's hands.

The market can't be blamed for ignoring Citigroup, washing their hands of it as it slumped.

But Citigroup never stopped being a bellwether for the economy. Its likely path in the next several years: slower growth, forced reduction of leverage, and government help, is the one the broad economy is likely to follow.

Eventually, when the banking system is smaller, and has delevered, and consumers and businesses have pulled out of the mountain of debt piled on over the years, Citigroup will be just another company. Until then, the health of the economy is the health of Citigroup.

Five things to think about this week:

GOOD RUN 
-  Stocks have managed to extend their rally but potential hurdles, such as this week’s U.S. non-farm payrolls, could prove increasingly hard to leap given valuations — European stocks are trading at their highest multiples of earnings since May 2008 while the multiple for the S&P is the highest since mid-September 2008. If investors are to boost equity holdings — which Reuters polls show already back to pre-Lehman levels — it may require more concrete evidence of economic expansion, rather than just economic stabilisation, and signs that profit margins will be supported by revenue growth, rather than cost cutting. 

BOE - HANGING IN THE BALANCE
- The Bank of England will have to decide this week whether to end its asset-buying programme or extend it. Concern about potential longer-term inflation implications will have to be weighed against the signs of economic weakness still manifest in recent Q2 GDP data. With economists split on the outcome, markets look set for volatility, not least as the MPC’s decision is likely to be viewed as a indication of when other central banks could start to halt/unwind their credit easing strategy. 

SQUARING CIRCLES
- The dexterity with which China can manage surging lending and potential price pressures without unsettling markets with any rapid reversal of stimulative policy is increasingly in focus and will have financial market and macroeconomic repercussions well beyond its borders and Asia, as last week showed. Australia, which felt the spillover effect of the China jitters, has its own policy dilemma as the RBA is trying to push back against its currency’s appreciation while giving markets another reason to buy A$ by its more upbeat view on the domestic economic outlook. The RBA policy meeting this week will give the central bank a chance to show how it squares this circle. 

INVENTORIES AND EXPORTS 
- Detailed PMI data and UK, Italy industrial output reports will be scanned for signs of whether the inventory decline that accompanied a rise in Japanese industrial output is being seen elsewhere, with the inventory-shipments, inventory-orders ratios remaining firmly in focus as key signals for the outlook for production. The extent to which Asian economic activity is helping trade flows will also be flagged by German and French June trade data (all the more interesting given May exports rose in both countries, despite their differing export specialisations.

LOAN PROVISIONS 
- European banks reporting this week will be closely watched for the extent to which they follow in Deutsche Bank’s footsteps by making higher loan loss provisions. The ECB’s latest lending survey shows euro zone banks’ expect to continue to tighten credit conditions in the coming months, albeit at a slower pace; heftier loan provisions will make this all but guaranteed.

Investors have been cock-a-hoop about the latest earnings season — and probably with some reason. There has been positive surprise after positive surprise, particularly in America. Thomson Reuters latest research shows that of the 337 companies in the S&P 500 that had reported through Friday, 74 percent came in above analysts expectations.

A wag might suggest that this only means that analysts are not very good. Chances are, however, that it reflects that they overshot in their pessimism, a not unusual factor. Are they now being overly optimistic?

Investors are now buying away and putting bad news to one side. Consider as one example how the ballooning of bad debts in European banks have not stopped the sector from rallying sharply.

Rupert Robinson, chief executive at Schroders Private Bank, is one of those who have injected a note of caution into the earnings euphoria. Speaking primarily of  FTSE 100 index, which is up 35 percent since a March low, he says:

“One should not lose sight of the fact that the reason profits have come in ahead of expectations is cost-cutting –- not top-line revenue growth. Cost-cutting means higher unemployment and less consumption. Less consumption means less final demand, and therefore top-line growth is likely to remain very sluggish.”

Robinson says that investors need to see real evidence of stronger economic activity feeding through into corporate earnings for signficant progress to be made from here. He is looking more closely at defensives than he was and excpects a market consolidation or correction is likely.

But he too is relatively bullish. He says the FTSE could well hit 5,000 – about 7 percent above todays levels – in the first quarter of next year.

Five things to think about this week: 

RESULTS RUSH 
- The early wave of Q2 earnings last week prevented any major risk shakeout but there are plenty more results this week, including from banking, technology (Apple, Microsoft), and other sectors (Lockheed Martin, Coke, McDonalds). Investors with bullish inclinations will be looking for the VIX to stay subdued after it fell last week to lows last seen in September 2008, especially if more pent up cash is to be released from money market funds. Bears will be thinking that what might be the S&P’s best weekly performance since mid-March could be setting the market up to be more sensitive to bad news.

BANKS - IS THE BEST PAST? 
-  It is hard to see how bank results this week can top the boost which Goldman and JPM gave stocks last week. More of a mixed bag is likely with the U.S. slate including Bank of New York Mellon, Morgan Stanley, Wells Fargo, Capital One, and American Express while Credit Suisse will be the first major European bank to report. Defaults and delinquencies will be in focus for banks more exposed to the retail sector — both for what it means for their outlook and for what it bodes for household solvency and spending. 

DRILLING DOWN 
-  The breakdown of company results this week (ABB, Texas Instruments, Caterpillar, DuPont, Boeing, 3M) will show the extent to which the inventory rebuilding story, which has helped lift world equities almost 40 percent from their March lows, can offer more sustainable support to stocks in the weeks and months ahead. Earnings this week will be closely scanned to see how inventories are stacking up verus orders. How deeply firms are cutting into costs to defend profit margins, as well as their business investment plans, will be key for unemployment and other macroeconomic data.

FLASH IN THE PAN? 
- Flash PMIs will show whether the positive surprise of the German orders and output data was a flash in the pan for the euro zone, and whether Chinese growth is generating orders in key euro zone countries. British Q2 GDP — the first out of any G7 country — will show the relative strengths and weaknesses of domestic demand, exports and inventory components and it will be particularly interesting in the UK’s case to see just how supportive sterling’s past slide has proved for net trade. 

QE STEER 
-  Minutes from the Bank of England’s last policy meeting and congressional testimony from Federal Reserve Chairman Ben Bernanke should give a clearer steer on where quantitative easing programmes are heading. Key questions investors want answered are why the BoE deferred making a firm decision on whether to extend QE beyond August, and whether the Fed will increase its bond purchases. Government bond markets will be particularly sensitive and signs that central bank appetite for buying government debt is cooling — perhaps because of concern over long-term inflation — could trigger heavy selling, particularly in an climate of strong U.S. bank earnings and rebounding equities.

Five things to think about this week

TUSSLE FOR DIRECTION
- The tussle between bullish and bearish inclinations — with bears gaining a bit of ground so far this month — is being played out over both earnings and economic data. Alcoa got the U.S. earnings season off to a good start but a heavier results week lies ahead and could toss some banana skins into the market’s path. Key financials, technology bellwethers (IBM, Google, Intel), as well as big names like GE, Nokia, Johnson and Johnson will offer more food for thought for those looking past the simple defensive versus cyclical split to choices between early cylicals, such as consumer discretionaries, and late cyclicals, such as industrials, based on the short-term earnings momentum. Macroeconomic data will need to confirm the picture painted by last week’s unexpectedly German strong orders and production figures to give bulls the upper hand.

FINANCIAL FOCUS
- The heavy financial results slate (Goldman, JP Morgan, Bank of America, Citi) will show the extent to which balance sheets are being cleansed of toxic assets and the health of, and outlook for margins, trading revenues, etc. The relative performance of the firms reporting could put the spotlight on the split between investment banking and retail exposure. In Europe, Swedbank’s results will be watched for Baltic exposure while clarity is still being sought on what banks plan to do with the large chunk of ECB one-year money which they continue to park back at the ECB in the form of overnight deposits.

JAPANESE DILEMMA
- The BOJ’s policy meeting poses thorny questions on quantitative easing (QE), with the policy debate complicated by sharp gains in the yen. The yen has risen as much as 10.5 percent in three months against the dollar and is nearing the 90 threshold which is viewed by the foreign exchanges as the point at which the Japanese authorities start ratcheting up the rhetoric. Further sustained yen gains will fuel market debate about the fallout for carry trades and for exporters — and by extension economic activity.

HOOKED ON QE
- The sharp jump in yields in gilts, euro zone debt, and Treasuries seen after the Bank of England deferred any decision on expanding its QE programme gave a good indication of how bond markets could react when central banks flag that the QE taps will finally be turned off for good. Implementation of exit strategies may be some way off and producer and consumer price data from both sides of the Atlantic this week are likely to be subdued. However, base effects from the oil price peaks of 2008 are expected to fade in the coming months, leaving a less supportive inflation backdrop.

CHINA
- The FX reserve debate was aired by the highest-ranking Chinese politician to date at L’Aquila summit and U.S. TICs data this week should keep the reserve holdings issue on the boil. Attention is also on Chinese domestic/trade policy following violence in Xinjiang and strains in relations with Australia over Rio Tinto staff detention. Any escalation in either could prompt investors to review the potential for regional outperformance.

Ministers and bankers meeting at the European Bank for Reconstruction and Development’s annual gathering in London tomorrow and Saturday have a sorry mess to scrutinise.

By the bank’s own (revised) forecasts, its region of central and eastern Europe will contract by over 5 percent this year. Many countries in eastern Europe took too much advantage of western banks’ lending spree, and businesses and households are struggling to pay back foreign currency loans.

Falling commodity prices have hit countries like Russia and Kazakhstan, and a burst consumer credit bubble is risking double-digit contraction in the Baltic states and Ukraine.

The bank’s 61 country members together with the European Union and its development bank the European Investment Bank will be discussing how to cope with the crisis and manage any recovery.

They will be looking at whether to continue giving help to several EU member countries which were due to stop receiving EBRD funds next year. Some countries may also be asking for an increase in the EBRD’s capital from its current 20 billion euros, to cope with the crisis.

The EBRD operates in 30 countries, mainly in the former communist bloc, and most recently Turkey. Those countries may be wondering if the bank could have done more to help them through the crisis, and seek more help now.

It seemed only a bit odd that media star Arianna Huffington was the guest host on CNBC the day the all-important stress test results were due. Not to play down her credentials in media or commentary circles, but where were the celebrated bank analysts, the corporate chieftains and the investment gurus who so routinely enjoy a dose of the limelight on America's Business Channel?

Wasn't this the perfect day for a newsmaker rather than a news talker? The Huffington Post founder has been a good reality check on market cheerleaders who live on CNBC, but on Stress-Test Thursday, the less-than-casual viewer expects insiders with insight. It tasted like something strange and exotic had made its way into the DealZone coffee machine.

Then disgraced former New York Governor and Attorney General Eliot Spitzer joined the fray, and the slightly odd became surreal. Spitzer, who casually noted he was invited to the show (hint, hint), gave a spirited view from the nosebleed seats, far back from the federal policymakers' bench.

Forget all this stress test stuff -- what about Spitzer's attempt at resurrection? Anchor Joe Kernen asked whether Spitzer the AG would have prosecuted Spitzer the governor and Spitzer the guest legal expert answered no, arguing that issues of judgment are more important than issues of law.

This should be equally true for the banks, Spitzer said. But the banks' transgressions were far more damaging to many more people than Spitzer's own. It's hard to believe moral suasion and limiting access to cheap funds would have been enough to persuade greedy bankers to act more responsibly. Certainly, shareholders would not have rewarded them for behaving better while others were making a killing selling toxic investments.

DealZone commends CNBC's producers and guest bookers for creative thinking. While the stress test results are not due until late this afternoon, so much has been leaked already that the minutiae still to come will probably numb the minds of even the hardiest financial news junkies. With no news to break, the Huffington/Spitzer show turned out to be refreshingly watchable. Indeed, who understands a stress test better than Eliot Spitzer?

Deals of the Day:

* Anheuser-Busch InBev said it agreed to sell its South Korean Oriental Brewery to private equity firm Kohlberg Kravis Roberts & Co for $1.8 billion, allowing the world's largest brewer to repay debt.

* Global miner Rio Tinto Ltd/Plc has not talked to Chinese state-owned metals firm Chinalco about revising a planned $19.5 billion tie-up, and still believes the deal makes sense.

* Australian blood-products and vaccines maker CSL said U.S. competition regulators had yet to make a decision on its proposed $3.1 billion takeover of smaller rival Talecris Biotherapeutics Holdings Corp.

* Australian brewer Lion Nathan, which has agreed to a $2.5 billion takeover by Japanese brewer Kirin, halted trade in its shares on Thursday on concerns the confidentiality of its talks with Kirin may have been breached.

* U.S. coal miner Peabody Energy and Anglo-Swiss miner Xstrata plan to bid for a majority stake in Indonesian coal miner PT Berau Coal in a deal that may be valued at around $1 billion, two sources with direct knowledge of the deal said.

* Porsche Automobil Holding SE stock fell as much as 17 percent after the sports car maker scrapped attempts to take over Volkswagen and agreed to explore a merger with Europe's biggest carmaker.

* Magna International has so far presented a more concrete proposal on General Motors unit Opel to the German carmaker than Fiat, Opel's supervisory board member Armin Schild told Reuters.

(PHOTO: New York Governor Eliot Spitzer stands next to his wife Silda Wall Spitzer as he announces his resignation at his office in New York March 12, 2008. REUTERS/Brendan McDermid)