Switzerland

Sovereign debt is the bonds that are issued by national governments in foreign currencies with the intent to finance a country’s growth. The risk involved is determined by whether that country is a developed or a developing country, whether that country has a stable government or not and the sovereign-credit ratings that are attributed by agencies to that country’s economy.

The recent decline in gold prices and the drain from physical ETFs have been interpreted by the media as signaling the end of the gold bull market. However, our analysis of the supply and demand dynamics underlying the gold market does not support this thesis. In our view, the bullion banks’ fractional gold deposit system is testing its limits. Too much paper gold exists for the amount of physical gold available. Demand from emerging markets, who do not settle for paper gold, has perturbed the status quo. Thus, our recommendation to investors is the following: empty unallocated gold accounts and redeem your gold in physical form (while you still can).

Lets face it, shysters exist....it's our job to ensure we stay well clear of them. Here are some RED FLAGS to look out for!

Risk assets are not quite (yet) back to the ‘melt-up' of May but equity markets are trading in a confident mood after Bernanke caused sentiment to flip from glass ‘half empty' to ‘half full'. China Q2 GDP data did not derail price action as equity futures anticipate a positive start of the week. The semi-annual testimony of the Fed Chairman is typically a seminal event on the market calendar but do we dare say that the one coming up this week is a non-event following last week's message on policy accommodation? The VIX index dropped 7 points over the last three weeks of which 2 points alone came last Thursday and Friday as stocks roared to new highs and shrugged off the candid observation on the Chinese economy by finance minister Lou Jiwei. If a 6.5% growth rate is tolerable in the future, there is little doubt that commodities and the AUD have further to fall. Chinese GDP slowed from 7.7% to 7.5% according to data released overnight and prospects for the second half don't look much brighter after evidence of slowing credit growth. Data on Friday showed declines of narrow money from 11.3% yoy to 9.1% in May, with broad money growth slowing to 14% yoy. Non-bank credit and new foreign currency bank lending also weakened.

Tired of tapering talk? We couldn't resist. Then, on to more pressing matters. Seems an investment in China might just not be what it seems to be.  Think Three Paddy Hat Monty.

The DRC has comparisons with Mongolia but offers far better risk/reward potential for investors.

The central bank "reason" goal-seeked for today's US overnight ramp - because it sure wasn't fundamentals with both German exports (-2.4%, Exp. +0.1%) and Industrial Production (-1.0%, Exp. -0.5%) missing - was the weekend Spiegel story that despite the unanimous decision by the ECB last week to keep rates unchanged, ECB chief economist Peter Praet and Mario Draghi himself had insisted on a 25 bps rate cut. They were, however, stopped by seven council members from the northern euro states, including Weidmann, Knot and Asmussen. As a result, Draghi was steamrolled in the final vote. Yet somehow this is bullish for risk, pushing equity futures higher and peripheral debt spreads lower, even as the EURUSD has drifted higher. Of course, one can't have an even more dovish ECB as a risk on catalyst alongside a rising Euro, but who cares about news, fundamentals, or logic at this point. All that matters is that US futures are higher, which was especially needed following yet another rout in the Shanghai Composite which dropped 2.44% back under 2,000 following news that China's Finance Ministry has told central government agencies to cut expenditures by 5% this year, and a 1.4% drop in the PenNikkeiStock225 on a weaker USDJPY. Remember: all is well in the global economy (whose forecast is about to be cut by the IMF) if the US is generating a record number of part-time jobs.

Things are turning from bad to worse for the real-life version of The Terminal's Edward Snowden, who a day after applying to 21 countries for political asylum has been flooded with rejection letters near and far, even as he was forced to cancel his application to his current host nation, Russia, after being told he would have to stop leaking secrets as a condition to stay. More from the FT: "The 30-year-old fugitive’s options narrowed further on Tuesday when China reacted coolly to the idea of him moving there, Poland rejected an application and other European nations said asylum requests had to be made in the country."

• Pretty much as expected from George W. Bush: Edward Snowden ‘damaged’ security (Politico)
• Gotta love the Keynesian-Monetarist religion: True 'Bullievers' Are Still Sweet on Japan (WSJ)
• Canadian Takes Reins at Bank of England (WSJ)
• Egypt streets quiet, political standoff goes on (Reuters)
• Private Banks Leave Switzerland as End of Secrecy Hurts (BBG)
• How Next Debt-Ceiling Fight Could Play Out (WSJ)
• Easy Money Is Still Central (WSJ)
• Lew Says China Needs Market Policies and Stop Spying (BBG) - China replies with the same
• Ireland Preparing Plan to Tap Euro-Area Rescue Fund, Noonan Says (BBG)
• Poll shows strong shift to Australian PM Rudd, new ministry named (Reuters)

A busy week, with a bevy of significant data releases, starting with the already reported PMIs out of China and Europe (as well as unemployment and inflation numbers from the Old World), the US Manufacturing and Services PMI, another Bill Dudley speech on Tuesday, US factory orders, statements by the ECB and BOE, where Goldman's new head Mark Carney will preside over his first meeting, and much more in a holiday shortened US week.

A priest, a banker and a spook… not the start of a joke or a John LeCarre spy novel, but merely the latest addition to a long list of financial scandals involving the Vatican Bank. Yet despite its quasi comedian if convoluted plotline, the latest attempt to defraud the Catholic church will likely pale in comparison to the most infamous incident involving the Institute of Religious Works (or IOR) as the Vatican Bank is also known. That one involves one Roberto Calvi, the chairman of Banco Ambrosiano, who in 1982 was found hanging from London’s Blackfriars bridge, a short distance away from JPMorgan’s gold vault, his pockets stuffed will cash and bricks in what at the time was a presumed hit by the mafia taking revenge for funds lost through the collapse of Calvi’s bank – a bank in which the Vatican was a significant shareholder. This time, however, with plenty of living loose ends, we may finally get a glimpse into how deep the rabbit hole involving the legal, and more importantly illegal, (ab)use of Catholic funds really goes.

“That’s the whole dilemma!” As the G-20 is already getting cold feet....

• Hilsenrising interest rates Business Feels Pinch of Swift Rate Rise (WSJ)
• Yellen Betting Defies 100-Year Jinx of Fed No. 2 Never Elevated (BBG)
• No sign of cyber leaker Snowden on flight to Cuba (Reuters)
• Back to the Future 2 is finally coming: Honda Sees ‘Flying Sports Car’ Making Profit by Decade’s End (BBG)
• Europe’s Richest Person Kamprad to Move Back to Sweden (BBG)
• Li’s Shock Treatment to China Lenders Evokes Ex-Reformer (BBG)
• In India, Gold-Related Shares Melt Down (WSJ)
• Citigroup Opens in Iraq to Tap $1 Trillion of Oil Spending (BBG)
• France warned on budget deficit  (FT)

It’s not mere anecdotal evidence: Visibly melting sea ice is the best evidence that the planet is warming. So prospecting for oil in the Arctic is a tricky endeavor that must be undertaken slowly and with extreme caution. So just how hot is it going to get? Hotter than we can handle if we fail to reduce greenhouse gas emissions significantly...

The Federal Reserve has had $1.2 million swiped from a flight somewhere between Switzerland, the land of secret banking, and New York City. Now, in the ranking of thefts that have taken place in history, this one seems like it is rather untimely! Has anybody seen Ben Bernanke lately?