Out of Barclays’ latest 120-page Global Outlook report, entitled “A Stressful Muddling Through,” you’d be hard pressed to find a page that did not mention the European economic crisis or the declining euro.

Europe was front and center, and analysts at Barclays agreed that it would likely remain there for the remainder of the year. At a press conference, Larry Kantor, the head of research at Barclays, cautioned investors to seek out a “risk neutral” approach for the time being and searched for more promising opportunities.

“The tempting thing is to tell investors to just run for cover to avoid risky assets. The problem with that kind of advice is that everybody’s done that already,” Kantor said.

Likewise, Kantor cautioned that he does not recommend turning to Europe yet either even though its underperformance may make it attractive if investors sense a turnaround.

“Even though it’s very tempting because it’s been battered so much already, we’re still not ready given the higher tail risk and the volatility,” Kantor explained.

Instead, the report says, investors should look to other markets, including the U.S. Despite the potential for volatility during elections, the report was confident in the country’s deep liquid markets, strong corporate profits with dividends above US Treasuries, a dollar that has strengthened in the shadow of problems with the euro, and turnarounds in previously distressed markets.

The silver lining of the report, according to Ajar Rajadhyaksha, head of rates and securitized products research, is that housing prices and housing formation are up. Residential investment spending has grown for four consecutive quarters, home inventories are at a record low and some of the states with the worst performing housing market, such as Arizona and Florida, were now top performers according to year over year home price appreciation.

“These numbers all seem to paint the same picture that in the absence of another big financial asset price crisis, the U.S. Housing market should continue to grow,” Rajadhyaksha said at the press conference. “It’s been a long time coming.”

Other major economies, including China and Japan, showed promise based on data from the report. The Global Outlook predicted that because of reconstruction from the earthquake and government investment Japanese real GDP growth was “likely to be faster in 2012 than any other major developed economy.”

Additionally, all the research analysts from Barclays agreed that the Chinese slowdown would make a soft landing before improving in the second half of the year. Analysts at Barclays predicted China would end up with 8.1% GDP growth for this year.

Kantor pointed to some smaller emerging markets that could deliver promising returns on investment as well, including India, China, Turkey and Brazil.

“They have not rallied as much,” Kantor said. “They’re still scoped for more monetary ease. Most of the economies are pretty weak so we like Government bonds there.”

Commodities also got a favorable nod in the report, which noted that inventory trends in major commodity markets were not indicative of a collapse and that supply and demand should remain firmly balanced. Crude oil and refined product materials, the report stated, were back on track despite an unusually warm winter that decreased demand thanks to an increase in China.

Regardless of some of the opportunities, the consensus among analysts was to remain defensive or neutral in investments, particularly for the near term.

That attitude played into their stock strategies, which the report labeled as “playing offense with defensive strategies.” Staples, Health Care and Utilities sectors came recommended.

The report signs off with a final caution that investors looking into these new options still cannot forget about Europe and must stay defensive on any countries with high exposure to the euro area such as Czech Republic, Hungary and Poland.

“We expect the euro area to remain a source of anxiety for markets. Volatility is likely to remain elevated given the next few weeks of event risks,” the report said.

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