It’s as if Italy’s sublime and mercurial striker singlehandedly yesterday ripped the heart out of Germany’s side, all of it, including the XI who suited up for the second semifinal match of the Euro 2012 soccer tournament as well as Chancellor Angela Merkel and those with her sticking doggedly to the country’s longstanding defense of the hardline against bailouts and inflation.

The answer to the headline question is, of course, “no,” but there is no doubt Jun. 28 marked a shift in German thinking and it’s public approach to the European problem. And the sequence of events is titillating if not entirely substantive (or the specific nature of some of these events not completely relevant).

At 9:05 pm Brussels time, about 20 minutes into the match, Mario Balotelli netted Italy’s first goal versus Die Mannschaft–the nickname for Germany’s national soccer team, which to this point in the second-most important international football tournament was thought to be if not the best side at least the most plausible candidate to topple 2010 World Cup champion Spain–with a lovely header off a perfectly placed soft cross to just in front of the penalty box from teammate Antonio Cassano.

By 9:21 it was 2-0, as Balotelli drove home a vicious strike from 18 yards out to settle the matter of who would face the Spanish on Sunday in the Euro 2012 final. Mezut Ozil converted a penalty kick in the 92nd minute (two minutes into the four-minute injury time period) for a cosmetic tally that made the score look a little better for Germany. But on this day 2-1 was just as good as 2-0 for the Italians.

As the first day of the European Council summit stretched into Jun. 29 in Brussels, negotiations on more flexible terms for rescues of Italian and Spanish banks had progressed substantially; at around 4:30 am news came that agreements had been reached to relax conditions for potential help for Italy and to ease repayment rules for loans made to Spain’s banks.

New French President Francois Hollande assured the demise of the term “Merkozy,” as he led other European Union leaders in a charge against Germany’s “austerity first” approach to solving the Continent’s financial and economic problems. Rather than focus on a long-term reform-and-growth program championed by German Chancellor Angela Merkel, the summit turned instead to crafting immediate solutions to the panic gripping the periphery, threatening to engulf and consume the EU and gnawing at global prospects.

Prime Minister Mario Monti of Italy and Prime Minister Mariano Rajoy of Spain insisted that the gathering take up the issue of their respective distressed bond markets first, and Mr. Hollande joined their call.

And though Chancellor Merkel can explain to her people today that certain concessions–such as the issue of joint bonds, or Eurobonds, and a cap on yields suggested by Prime Minister Monti–weren’t made and that Germany’s parliament will have two opportunities to effectively veto the new package, the road toward true fiscal and monetary union is now clearer and more fully marked.

These are good things, immediately for Italian and Spanish bond yields, which are easing substantially as I write, as well as global equities, which are rallying everywhere. And the long-term reality is that this gets us closer to a day when the eurozone will have in place a structure built to last, not just whack the latest peripheral mole.

Mr. Hollande questioned a deficit-reduction treaty so central to Ms. Merkel’s domestic credibility, thus shattering her defense in a way similar to what Super Mario accomplished with Die Mannschaft’s backline in Warsaw.

The deal reached in Brussels will allow euozone banks to be recapitalized directly by existing bailout funds rather than through the subject country’s government. This depends on the establishment of a single eurozone banking supervisor, a new office also agreed at the summit that’s hoped to come online by 2013.

Creditor countries also surrendered on their demand that bailout funds lent to Spain would be first in line for repayment in the case of a Spanish default.

Leaders in Europe, in a statement released at the conclusion of the marathon first-day talks, also noted that the European Financial Stability Fund (EFSF), in place since 2010, and the European Stability Mechanism (ESM), which will be implemented this year, will be used “in a flexible and efficient manner in order to stabilize markets for Member States.” This suggests bailout funds could be used for direct purchases of bonds from troubled peripheral states in order to suppress yields.

There are other problems in addition to Germany’s effective veto power, including the fact that important details for the new easing steps, including timing and conditions for any support to the Italian and Spanish bond markets. This is redolent of the previous 18 summits since the present crisis began to unfold three years ago.

The EFSF and the ESM still lack sufficient firepower to deal with the massive amounts of debt in question, and the legal mandate for the ESM, including the granting of a banking license–a process also subject to negotiation among EU members, is still to be worked out. And there was no movement on Eurobonds, a plan to guarantee bank deposits or a fund to redeem bonds.

On the whole, however, the meaningful steps hammered out suggest movement is toward a true financial, monetary and economic union. Expectations for this summit, set against the 18 failures that came before, were low. Bond and equity market reactions reflect these near-zero hopes.

But participants in these markets are rightfully suspicious. We’ve seen such bounces before, and they’ve turned negative within days, hours sometimes, in the recent past.

The European Central Bank (ECB) gets together Jul. 5 for its next monetary policy meeting. ECB President Mario Draghi has indicated his pleasure with these developments in Brussels, but to this point his institution has been a spectator. A prior ECB attempt at bond buying in the periphery was thwarted by German representation on the bank’s board. We’ll know more about the commitment to immediate-term triage in the interest of long-term health next week, but there is room for a 25 basis point cut to the ECB’s overnight lending rate.

That’s not to say a cut or not-a-cut is a litmus test. There are still a lot of moving parts, but there seems to more coordination today than at any other time since late 2009.

The Picture from Australia

The graphic below illustrates the reaction by the S&P/Australian Securities Exchange 200 Index to the news from Brussels, which hit Sydney around 12:30 pm local time.

Source: Bloomberg

The ASX 200 rose 49.8 points, or 1.23 percent, to close at 4094.6 after trading in negative territory in the morning. Seventeen of 20 Australian Edge Portfolio Holdings posted gains on the day, led by global energy and commodity engineering firm WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY), which surged 3.89 percent. Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY), the largest gold miner Down Under, was up 3.01 percent, while eight other Holdings posted market-beating gains on the day.

Our group of 20 Holdings posted an average gain of 1.37 percent. The 10 Aggressive Holdings posted an average gain of 1.74 percent, the Conservative Holdings 1.01 percent.

The Australian dollar jumped on Europe’s progress, too, and is trading at USD1.0238 as of this writing, up 1.92 percent from its Thursday close of USD1.0045 and well off its closing low for the year of USD0.9701 plumbed Jun. 1, 2012. The aussie ticked as low as USD1.0019 before the EU statement was released in Brussels. It traded higher against all 16 of its major counterparts.

The aussie is likely to see further upside versus the US dollar so long as the US Federal Reserve’s commitment to maintaining its historically low target interest rate near the zero bound remains in place. As of its most recent meeting the Fed is sticking to a pledge to keep interest rates low until late 2014.

It will also be supported by European efforts to boost its ailing constituent economies, which begins first with repairing banks. This, in turn, will boost demand for products from China. And as we well know the Middle Kingdom looms large–literally, if you look at a map; figuratively, from the perspective of what makes the economy go Down Under–over Australia.

The Reserve Bank of Australia (RBA) will meet Tuesday, Jul. 3, amid rising expectations that it will hold the line on its benchmark overnight rate. The RBA’s cash rate now stands at 3.5 percent, the highest in the developed world.

Fifteen of 20 AE Holdings currently trade below recommended buy-under targets. The Conservative Holdings currently yield an average of 5.82 percent, the Aggressive Holdings 3.27 percent. Overall the group represents solid value and one of the best growth-plus-income stories on the planet.

The Roundup

Conservative Holding and original AE Portfolio member AGL Energy Ltd (ASX: AGK, OTC: AGLNF, ADR: AGLNY) has completed its previously announced purchase of the remaining shares of the Loy Yang A power station that it didn’t already own from a consortium of investors.

The company also announced that Standard & Poor’s has restored its long-term credit rating to BBB with a “stable” outlook. This follows the successful completion of a AUD650 million subordinated note issue and AUD900 million equity raising to fund the acquisition of the 67.5 percent of Great Energy Alliance Corp Ltd (GEAC) not currently owned by AGL, to allow partial repayment of existing GEAC bank loans and for general corporate purposes. GEAC is the owner of the Loy Yang A power station and adjacent coal mine.

S&P noted that AGL has “prudently financed” the acquisition of GEAC. AGL, subject of a June Sector Spotlight in AE, paid AUD448 million to complete its ownership of Loy Yang A.

AGL Energy is a buy under USD16 on the Australian Securities Exchange (ASX) using the symbol AGK, on the US over-the-counter (OTC) market using the symbol AGLNF or via its US American Depositary Receipt (ADR) which is worth one ordinary ASX-listed share and is traded on the US OTC market.

Management of Conservative Holding Cardno Ltd (ASX: CDD, OTC: COLDF) has guided toward full fiscal-year 2012 (ending Jun. 30, 2012) net profit after tax (NPAT) growth of 21 percent to 26 percent over fiscal 2011’s AUD58.8 million.

Cardno expects to report NPAT of between AUD71 million and AUD74 million for the year ending Jun. 30, 2012, based on unaudited management results and current forecasts.

Managing Director Andrew Buckley noted the continuing growth of Cardno’s business in variable market conditions. These results also confirm the soundness and actual success of Cardno’s growth strategy, which has positioned the company to take advantage solid sectors including environmental consulting services.

Cardno’s fiscal 2012 results will rise due to the acquisition of Cardno TEC in October 2011, Cardno HRP in November 2011 and Cardno ATC in March 2012.

The company’s low debt level and strong balance sheet position it for more acquisition-led expansion and dividend growth. Cardno, which is trading above our buy-under target of USD7, will report full-year results on Aug. 14, 2012.

Transurban Group (ASX: TCL, OTC: TRAUF) announced that New South Wales and its 50 percent owned Interlink Roads Ltd unit have reached agreement on the AUD400 million widening of the M5 toll road in Melbourne.

The project, of which the NSW government will fund approximately AUD50 million directly, will add an extra lane in each direction over the 21 kilometers of the M5 South West Motorway. All project documents have been executed with the NSW government, financiers and the principal contractor, Abigroup Ltd. Preliminary work will begin in July 2012, with construction expected to be completed in late 2014.

All project financing has been raised with new non-recourse debt of AUD210 million raised for the construction in addition to the refinancing of AUD525 million of existing debt facilities. According to a statement released by Transurban, “This debt package has been closed on market competitive rates.”

Interlink shareholders, including Transurban, have provided AUD140 million via a shareholder subordinated loan facility. Transurban has funded its AUD70 million contribution from existing corporate facilities, provided for by prior capital raisings.

Transurban probably won’t begin to realize the benefits of the M5 widening until fiscal 2014, due to traffic disruptions brought on by construction activity. But the company has already absorbed its share of costs, and there’s considerable likelihood of additional cash flow sufficient to fund a substantial dividend increase in the next couple years. Transurban Group, currently yielding 5.3 percent, is a strong buy up to USD6.

Aggressive Holding Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY), featured prominently in the June AE In Focus, announced that Australia Pacific LNG has reached a “sale and purchase” agreement with The Kansai Electric Power Company for the supply of approximately 1 million metric tons of LNG per year for 20 years.

Origin owns 37.5 percent of AP LNG, as does ConocoPhillips (NYSE: COP), while China Petroleum & Chemical Corp Ltd, better known as Sinopec (Hong Kong: 386, NYSE: SNP), owns the remaining 25 percent.

According to terms of the agreement Australia Pacific LNG will supply Kansai Electric with LNG from facility on Curtis Island, with deliveries anticipated to commence in 2016.

The binding agreement is further indication of the strong demand for LNG from Asia, Japan in particular, and is another significant milestone for the AP LNG project specifically. The agreement is conditional on AP LNG making a final investment decision on the second phase of the project, which remains on track for mid-2012. The first LNG train of the project was sanctioned in July 2011 and is currently under construction, with first LNG production on target for 2015.

Origin will report fiscal 2012 final results on Aug. 23, 2012.

Origin Energy, which is yielding 4.1 percent at current levels, is a buy under USD15 on the Australian Securities Exchange (ASX) using the symbol ORG and on the US over-the-counter (OTC) market using the symbol OGFGF. Origin also trades on the US OTC market as an American Depositary Receipt (ADR), which represents one ordinary, ASX-listed share and is also a buy under USD15.

Following are dates (confirmed, tentative or estimate) for each AE Portfolio Holding’s next earnings announcement. Where companies have reported recently we’ve included a link to our discussion and analysis of results.

Conservative Holdings

• AGL Energy Ltd (ASX: AGK, OTC: AGLNF, ADR: AGLNY)–Aug. 22, 2012 (estimate, FY 2012, end Jun. 30, 2012)
• APA Group (ASX: APA, OTC: APAJF)–Aug. 22, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• Australand Property Group Ltd (ASX: ALZ, OTC: AUAOF)–Jul. 26, 2012 (confirmed, CY/FY 2012 1H, end Jun. 30, 2012)
• Australia & New Zealand Banking Group Ltd (ASX: ANZ, OTC: ANEWF, ADR: ANZBY)–May 2 Down Under Digest (FY 2012 first half, ended Mar. 30, 2012), Nov. 5, 2012 (estimate, FY 2012, end Sept. 30, 2012)
• Cardno Ltd (ASX: CDD, OTC: COLDF)–Aug. 14, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• CSL Ltd (ASX: CSL, OTC: CMXHF, ADR: CMXHY)–Aug. 21, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• Envestra Ltd (ASX: ENV, OTC: EVSRF)–Aug. 23, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• M2 Telecommunications Group Ltd (ASX: MTU, OTC: MTCZF)–Aug. 29, 2012 (estimate, FY 2012, end Jun. 30, 2012)
• Telstra Corp Ltd (ASX: TLS, OTC: TTRAF, ADR: TLSYY)–Aug. 9, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• Transurban Group (ASX: TCL, OTC: TRAUF)–Aug. 7, 2012 (confirmed, FY 2012, end Jun. 30, 2012)

Aggressive Holdings

• BHP Billiton Ltd (ASX: BHP, NYSE: BHP)–Aug. 22, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• GrainCorp Ltd (ASX: GNC, OTC: GRCLF)–May 23 Down Under Digest (FY 2012 first half, ended Mar. 30, 2012), Nov. 14, 2012 (estimated, FY 2012, end Sept. 30, 2012)
• Iluka Resources Ltd (ASX: ILU, OTC: ILKAF, ADR: ILKAY)–Aug. 23, 2012 (confirmed, FY 2012 1H, end Jun. 30, 2012)
• Mineral Resources Ltd (ASX: MIN, OTC: MALRF)–Aug. 20, 2012 (estimate, FY 2012, end Jun. 30, 2012)
• Newcrest Mining Ltd (ASX: NCM, OTC: NCMGF, ADR: NCMGY)–Aug. 13, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• New Hope Corp Ltd (ASX: NHC, OTC: NHPEF)–Sept. 20, 2012 (estimate, FY 2012, end Jul. 31, 2012)
• Oil Search Ltd (ASX: OSH, OTC: OISHF, ADR: OISHY)–Jul. 24, 2012 (confirmed, FY 2012 1H, end Jun. 30, 2012)
• Origin Energy Ltd (ASX: ORG, OTC: OGFGF, ADR: OGFGY)–Aug. 23, 2012 (confirmed, FY 2012, end Jun. 30, 2012)
• Rio Tinto Ltd (ASX: RIO, NYSE: RIO)–Aug. 8, 2012 (confirmed, FY 2012 1H, end Jun. 30, 2012)
• WorleyParsons Ltd (ASX: WOR, OTC: WYGPF, ADR: WYGPY)–Aug. 29, 2012 (estimate, FY 2012, end Jun. 30, 2012)