Greece

The German Council of Economic Experts is out with a new report on euro area crisis management which backs state bankruptcies and euro exits for governments deemed "uncooperative." "A permanently uncooperative member state should not be able to threaten the existence of the euro. In view of this, the Council of Economic Experts recommends that the withdrawal of a member state from the currency union must be possible as an utterly last resort," the council says.

For the first half an hour after China opened, things looked bleak: after opening down 5%, the Shanghai Composite staged a quick relief rally, then tumbled again. And then, just around 10pm Eastern, we saw a coordinated central bank intervention stepping in to give the flailing PBOC a helping hand, driven by the BOJ but also involving NY Fed members, that sent the USDJPY soaring which in turn dragged ES and most risk assets up with it. And while Shanghai did end up closing down -1.7%, with Shenzhen 2.2% lower at the close, the final outcome was far better than what could have been, with the result being that S&P futures have gone back to doing their thing, and have wiped out all of yesterday's losses in the levitating, zero volume, overnight session which has long become a favorite setting for central banks buying E-Minis.

Greece has no future, so long as it clings to the euro. The dollar won't servce you much better. A drachma will only harm the Greek people. That leaves one other option.

The U.S. economy is growing at a painfully slow pace. Greece still threatens the euro. Chinese stocks have just pulled out of a frightening free-fall. Big companies in the U.S. are struggling to boost profits. You might think it's been a rough year for investors, but it's mostly been a smooth ride - and a profitable one. "Things have worked out," scoffs one analyst "and that has emboldened investors." Maybe too much...

China crashing, commodities plunging, emerging currencies imploding to levels last seen when LTCM blew up, Greece on the verge of deposit confiscations, the Apple Sachs Industrial average well in the red for the year, the US economy on the verge of an industrial recession, junk bonds bloodbathing, Donald Trump pulling ahead of Hillary... Meanwhile the president is in China's African slave colony of Ethiopia... prioritizing.

As The Greek government presses The ECB for 'permission' to reopen its stock market, it may want to reconsider. GREK, the Greek Stock Index ETF trading in US markets, is down over 3% today and has plunged to its lowest since the peak of the crisis in 2012 (near its lowest since 1989). Just as in China, The ECB (who is now very much in charge) seems to believe that if markets are not open for locals, then they have no 'real' idea just how bad things are.. and with National Bank of Greece stock trading at record lows (below $1), and the expectations of bail-ins looming, that is not what The ECB wants the people to see...

"You shouldn’t rush when there is still smoke coming from a house that was burning. It is simply not safe to do so."

Over the last five-plus years in regard to today’s financial markets, the most revered memes that are recited in unison whether it’s in the form of a silent prayer or, it’s done in a near backwoods revival fashion from the televised financial shows “pulpit” in a “Can I get an …. !!!” stylized homily are: “It’s different this time!” followed with “The Fed’s got you’re back.” However, what they mean today may find those that put all their “faith” into such dogma finding that faith severely tested. For as of today July, 26, 2015 It truly is – different this time. And what else is different is: the Fed. may indeed have one’s back. Only problem this time is – that back may no longer be “yours.”

Overnight, the Telegraph's Ambrose-Pritchard reported that "Mr Varoufakis told the Telegraph that the quotes were accurate but some reports in the Greek press had been twisted, making it look as if he had been plotting a return to the drachma from the start.  "The context of all this is that they want to present me as a rogue finance minister, and have me indicted for treason. It is all part of an attempt to annul the first five months of this government and put it in the dustbin of history," he said. It remains to be seen if treason charges are forthcoming but Varoufakis isn't wasting time, and after giving unofficial on the record comments to the Telegraph, moments ago he issued the following public statement on his blog.

The S&P 500 and Russell 2000 are very close to joining the Dow Industrials and Transports in negative territory for the year. The S&P 500, which has fallen 5 straight days for the first time since January, is now back below its 200DMA, having swung from euphoric "Greece is fixed" exuberant record highs in just a week of rising volume. The Dow is the furthest below its 200DMA since October's Jim Bullard-rescued dump. Treasury yields are plunging.

There is now a new symbol for Greece's perpetual debt servitude...

• Chinese shares tumble 8.5 percent in biggest one-day drop since 2007 (Reuters)
• Japan’s Economy Shrank Last Quarter, Top Forecaster Says (BBG)
• Creditor teams in Athens to work on third bailout (AFP)
• Tsipras’s Paradox Is Six Months of Pain and Enduring Popularity (BBG)
• Goldman-Backed Instant Messaging Company Seeks New Investment (WSJ)
• Best Buy will sell the Apple Watch on August 7th (Engadget) - when is it coming to Dollar General?
• Senate votes to revive Ex-Im (Hill)
• U.S.-Turkey Deal Paves Way to Set Up Buffer Zone in Northern Syria (WSJ)

It all started in China, where as we noted previously, the Shanghai Composite plunged by 8.5% in closing hour, suffering its biggest one day drop since February 2007 and the second biggest in history. The Hang Seng, while spared the worst of the drubbing, was also down 3.1%. There were numerous theories about the risk off catalyst, including fears the PPT was gradually being withdrawn, a decline in industrial profits, as well as an influx in IPOs which drained liquidity from the market. At the same time, Nikkei 225 (-0.95%) and ASX 200 (-0.16%) traded in negative territory underpinned by softness in commodity prices.