Australia

Markets taking any negative news as additional must-have accelerators of a bail-out.

Time being of the essence.

But what if things just drag on? 

Legal precedent means nothing. Rule of law means nothing. Free speech means nothing. Their own treaties mean nothing. It’s unbelievable. Anyone in the west who honestly thinks he’s still living in a free society is either a fool or completely out of touch. If that seems too radical an idea, consider that ECUADOR is now the only nation which stands to defend freedom and human rights against an assault from the United States, the United Kingdom, and their spineless allies. The west has just become a giant banana republic. Have you hit your breaking point yet? If not now… when?

Organic growth is slow and painful (Boo!), central bank money fast, cheap and with few strings attached (Yes!)…And anyway, QE and other supports have already been priced in… Can’t change the programme.

• Gu Kailai Trial Has Ended, verdict imminent (WSJ)
• Greek unemployment rises to 23.1 pct in May, new record (Reuters)
• Greece’s Power Generator Tests Euro Fitness Amid Blackout Threat (Bloomberg)
• Fannie Mae, Freddie Mac Results May Ease Wind-Down Push (Bloomberg)
• Monti takes off gloves in euro zone fight (Reuters)
• U.S. Fed extends comment period for Basel III (Reuters)
• HP in $8bn writedown on services arm (FT) - must be good for +10% in the stock
• News Corp in $2.8bn writedown (FT) - must be good for +10% in the stock
• Japan to Pass Sales Tax Bill After Noda Avoids Election Push (Bloomberg)
• China May Set New Property Controls This Month, Securities Says (Bloomberg)

European equities are seen in decent positive territory heading into the Wall Street bell, though a clear lack of direction has been observed as well a thin summer volumes . The FTSE-100 is the day's underperformer following last night's allegations made by the State of New York against UK bank Standard Chartered that the company violated US sanctions by making secret transactions to the tune of USD 250bln with Iran. The Spanish 10-year yield has held below the key 7.00% level, though higher than yesterday's close at 6.76 with the spread over the benchmark Bund is slightly wider by 1.2bps. Steepening seen in the Spanish 2-year over the last couple of days as ECB's Draghi commented that any periphery bond-buying programme would be in the short end has halted and is now wider by 13bps. The Italian 10-year yield briefly traded above the 6.00% level though has since pulled back to lows printed earlier, currently standing at 5.91%, its spread tighter by 10.4bps on the session.

After last week's event-a-palooza, where the headlines, the spin, the erroneous HFT trading, and the propaganda (Draghi is too cold; Draghi is too hot; Draghi is just right) just refused to stop, we finally enter the summer proper where all of Europe is on vacation, as is congress. Add on top of this a very light macro event week and an earnings season which has seen the bulk of companies already report, and we expect the volume in the coming 5 days to be among the lowest recorded in 2012, and thus in the past decade. Which of course means that the cannibalization among the market makers will continue as more and more firms succumb to "trading anomalies."

The 2012 Olympics was shaping up as Ryan Lochte's breakout year, and in many respects it was. But more than anything, the London Olympics turned out to be the swan song of Michael Phelps, who hours ago completed his final Olympic event and retired from the sport of swimming where is now inducted in perpetuity into the swimming hall of fame with not only a record 18 Olympic gold medals, twice as many more as any other Olympian, in a career that stretches from Athens through Beijing and concludes with London, but a record 22 medals of all colors. What was Phelps final tally in the 2012 Olympics, how does that compare to Lochte's total, and how did the London Olympic swim times compare to Bejing? The infographic below will answer all questions.

 Every summer, my colleagues and I invite young people from all over the world for an intensive 4-day workshop about freedom and entrepreneurship. This year’s workshop just concluded yesterday afternoon, and it was, without doubt, the best one ever. For the past several years, we have been conducting this event at a lovely resort in the Lithuanian countryside. It’s a pretty place– a nice, comfortable, relaxing environment away from all the noise and distraction of daily life.  Now, I pay for the whole thing myself. I rent out the entire resort and pick up the total cost of food, lodging, entertainment, etc. For this year’s event, my staff was able to negotiate the same price as last year, and I was happy about this. But after the first two days, we began to notice something different: the resort was actually skimping out on our food portions! In other words, they kept the price the same as last year… but they were delivering less value than before. In this case, it was in the form of food portions that were at least 10% smaller!

As markets continue to yo-yo and commentators deliver mixed forecasts, investors are faced with some tough decisions and have a number of important questions that need answering. On a daily basis we are asked what’s happening with oil prices alongside questions on China’s slowdown, why global trade will collapse if Romney wins, why investors should get out of stocks, why the Eurozone is doomed, and why we need to get rid of fractional reserve lending. Answering these and more, Mike Shedlock's in-depth interview concludes: "The gold standard did one thing for sure. It limited trade imbalances. Once Nixon took the United States off the gold standard, the U.S. trade deficit soared (along with the exportation of manufacturing jobs). To fix the problems of the U.S. losing jobs to China, to South Korea, to India, and other places, we need to put a gold standard back in place, not enact tariffs."

The week ahead brings a batch of Q2 GDP prints, which will provide guidance on the strength of activity in that quarter, as well as a bunch of business survey data which will offer insights into the strength of momentum at the start of Q3. Starting with the GDP data, the main attraction is likely to be the print from the US. Goldman expects a below trend print of 1.1%qoq, vs the consensus at 1.5%qoq. The Q2 print from the UK is expected to be negative. While only a few Q2 prints have been published so far, only China has recorded a recovery on Q1. The consensus expects soft prints for the business surveys out this week. The Euroland flash PMIs are expected to be unchanged, leaving them at levels consistent with a continued contraction in activity. The German IFO is expected to fall slightly, as is the Swiss KoF. There are no consensus expectations for the China flash PMI, however if it does not pick up from current levels around 48, questions over the extent/effectiveness of stimulus in China will remain.

At least superficially, they appear to be coming more and more often.

Via Goldman, here are the key economic events to look forward to in the coming relatively quiet week. And out of DB, we get a list of the key PIIGS bond auctions and bailout events in the immediate and near-term future.

In the US and Europe we have slowly come to the realization that traditional accommodative economic policies leave, and have left, the real economy limp.  Wildly divided governments don't help, but beyond the fact that western decision making bodies are polarized, it is abundantly clear that the panacea for the global economy is not even on the table right now.  The western world has been thrown into a bout of sovereign game theory, and by the constructs of game theory itself, one country will "win," while everyone else will lose to varying degrees.  But that we are such a highly integrated global economy--the reason the whole world is heading towards recession right now--means that a solution must incorporate every economy around the world.  The current game Europe is playing is bound to fail because if one country gets their way, others lose by definition.

In the second part of our five-part series on The Olympics (Part 1 here) we ponder the impossible to predict - the medal count. As Goldman notes: Economists like to think that the toolkit of their profession helps them explain many things or, as some would claim, everything that is interesting about human behavior. In the context of the forthcoming Olympic Games in London, therefore, the key question is whether economic variables can help explain and predict success at the Olympics itself. At one level, this seems like a daft question even to consider. It is hard to imagine that economic variables could even begin to capture the kind of individual skill, mental determination and hunger that drive athletes to perform feats of unimaginable virtuosity that is the stuff of Olympic legends. But at the level of a country, it may be possible to identify the ingredients that unlock success at the Games. As British Paralympian Tim Hollingsworth explains: "...when you create a world class environment you are far more likely to create world class athletes." What is a 'world class environment' and how do we measure it across countries? Luckily, we have an answer in the GS Growth Environment Scores (GES), a broad measure of growth conditions across countries - and, indeed, this is what we find: gold does go where the growth environment is superior. The forecast leaves USA, China, and Great Britain battling it out for 'Most Golds' and USA leading China overall - but remember "the most important thing in the Olympic Games is not winning but taking part."

Peak oil is a phenomenon many will be aware of – peak gold remains a foreign concept to most. Peak gold is the date at which the maximum rate of global gold extraction is reached, after which the rate of production enters terminal decline. The term derives from the Hubbert peak of a resource. Unlike oil and silver, which is destroyed in use, gold can be reused and recycled. However, unlike oil gold is money, a store of value and a foreign exchange reserve and gold is slowly being remonetised in the global financial system and indeed may soon play a role in a new international monetary system. Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970. Peak gold may not have happened in 2000. Nor may it have happened in 2011. However, the geological evidence suggests that it may happen in the near term due to the increasing difficulty large and small gold mining companies are having increasing their production. The fact that peak gold may take place at a time when the world is engaged in peak fiat paper and electronic money creation bodes very well for gold’s long term outlook.