Sequentially, the monetary lever may be pulled before the fiscal lever may be engaged. The BOJ meets at the end the month. If it fails to impress the market, it may strengthen the yen.

The most recent drama has been in the UK. The immediate uncertainty has been reduced. A new Tory government is in place, and the Bank of England has signaled that is will most likely ease policy (and probably more than simply cutting the base rate). It is also clear that despite the fact that Cameron's successor is in office 2-3 months before initially anticipated, Prime Minister May is in no hurry to trigger Article 50.

The Labour leadership challenge is getting underway, but it is simply a mess.  Previously rules required that one became an official candidate (name on the ballot) if some Labour MPs endorsed them. However, the rules were apparently changed last week to allow the current party leader Corbyn to be on the ballot. It was also decided that the some 130k people who joined the party since the start of the year, including since the referendum, would not be allowed to participate in the election of a new leader (must be a member for six months). On top of these changes, Labour raised the price of voting (for party leader) from GBP3 in 2015 to GBP25.

May indicated she has no intention of calling a snap election. Given the disarray of Labour Party, the Prime Minister may reconsider at some point. However, the Fixed Term Act of 2011 complicates matters. It effectively transfers the decision to call a snap election from the Chancellor to the House of Commons. Such an important decision requires 2/3 parliament support, and not the simple majority on which the referendum was decided. An early election can also be called if the government loses a vote of confidence. Imagine the confusion that can be caused by May turning the triggering of Article 50 into a vote of confidence, and then losing it (as a majority of MPs favored remaining within the EU).

The UK reports on prices, labor market developments, and retail sales. The data do not matter much. It is too backward looking for policymakers and investors. BOE easing is not about how the economy did in Q2 but its trajectory going forward.

Having explored some of the other dramas, we turn to center stage. We think that most important thing is not going to be found on many economic calendars. The European Court of Justice is to hand down its ruling on July 19 on case brought in 2013 by Slovenia that challenges EC's authority in requires the bailing in of creditors as a precondition for access to government funds.

The ruling is likely to go against the EC. This assessment is not about the merits of the case, what this analyst may think about the issue. The outlook is based on the fact that the Advocate General issued a preliminary opinion in February against the EC. And the ECJ follows the Advocate General more than three-quarters of the time.

A decision which finds that the EC overreached would raise questions about the validity of at least parts of the Bank Recovery and Resolution Directive (BRRD). It would likely strengthen Italy's Renzi who is looking to recapitalize Italian banks. Portugal may also benefit insofar as its largest bank may need to be recapitalized.

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