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In the face of Latvia's outgoing President's comments, that debt writedowns for Greece will only come after the bankruptcy of the state, German finance minister Schaeuble has once again gone on the offensive this morning saying that "we know from the Treaties that debt relief is not possible," yet noting that "the need for help for Greece is obvious." However, his concluding, seemingly ad hominem, remarks are the most troubling for those expecting smooth passage of Greek proposals and a renewed rally to record stock market highs... "Greeks won't pay their bills... everyone knows they can't be believed." Just what exactly is Greece so enamored by that keeps them in this union - especially when friends are likely waiting to help post-Grexit.

"Where ignorance is bliss, it's folly to be wise..."

Spontaneous combustion. Alien invasion. Zombie apocalypse. What do these have in common? Their likelihood is next to impossible. So why worry? This is how people tend to think about the financial system. Mentioning even the possibility, for example, that the US could default on its debt is met with so much scorn and contempt it would be safer to stand on the street corner warning about an alien invasion. The same goes for the imposition of capital controls. Or a collapse in the banking system. Or a currency crisis. And yet the most casual glance at the headlines proves that these events not only can happen, they do happen... and for one underlying reason...

Yes, it’s still entirely possible that Tsipras submitted this last set of proposals knowing full well they won’t be accepted. But he’s already gone way too far in his concessions. This is an exercise in futility. It’s time to acknowledge this is a road to nowhere.

Follows the full text of a letter Greek PM Tsipras send to the Troika: Commission President Juncker, ECB's Draghi, and the IMF's Lagarde regarding the latest Greek deal proposal. What is left unsaid: any debt haircut requests (recall just on Sunday night Tsipras requested a 30% debt haircut in line with the IMF's debt sustainability proposal), and any mention of the Greek referendum which Tsipras personally called two weeks ago to the day to reject precisely the proposal he is now presenting.

It's officially Groundhog day... and month... and year... and so on.

There is nothing incrementally new or different to what we revealed earlier in the leaked Greek proposal (i.e., no actionable pension cuts, no debt "reprofiling") and as Bloomberg makes it all too clear in flashing red headlines:

GREEK GOVT PROPOSAL SIMILAR TO EU COMMISSION'S JUNE 26 PROPOSAL

... or the one which 61% of the Greek people said no to.

While yesterday's suspension of trading on the New York Stock Exchange drew attention to the plunge in equity prices, the reality is that stocks have been in a correction since the all-time highs posted back in May. Of course, until yesterday's headlines, you may not have realized that the correction was in process as it has been "as slow as a turtle running in peanut butter."

Janet Yellen’s reputed favorite jobs measure, the JOLTS (Job Openings and Labor Turnover Survey) reported blockbuster record job openings in May. But look beneath the headlines and you will see just how distorted and maladjusted the US job market is.

The Shanghai Composite Index had dropped as much as 3.8% to a 4 month low before the news that the cops were going to arrest anyone who was caught "maliciously shorting stocks", when everything suddenly took off, and the SHCOMP closed  a "Dramamine required" 5.8% higher, the biggest daily increase since March 2009! Stocks around the globe followed, with US equity futures wiping out much of yesterday's losses and up 1% at last check.

Since The FOMC's supposedly dovish June meeting, bonds have outperformed stocks rather notably and crude has crashed. The crucial aspect for the Minutes is the balance they struck between market turmoil overseas (dovish) and the domestic economic and housing recovery (hawkish) as to how that fits with an expectation for a 'gradual' post-September lift-off...

• *FOMC SAW CONDITIONS STILL APPROACHING THOSE WARRANTING LIFTOFF (dovish)
  
• *ONE MEMBER READY TO RAISE RATES IN JUNE BUT WILLING TO WAIT (dovish)
• *MANY FED OFFICIALS EXPRESSED CONCERN ABOUT GREECE AT JUNE FOMC (hawkish)
  
• *SEVERAL OFFICIALS VOICED UNCERTAINTY ABOUT CHINESE GROWTH PACE (hawkish)

With macro data having beaten expectations since then, the last best hope for stocks is that global turmoil picks up (as it has in Greece) to keep The Fed on hold (as they remain cornered to regain some ammo before the next 'event' happens). As SF Fed's Williams notes today the "safer course" for raising rates would be to start sooner and proceed gradually.

EURO AREA, ECB SAID TO DISCUSS GUARANTEE AS HUMANITARIAN ACTION

Greece formally requested a three-year bailout from the eurozone’s rescue fund Wednesday and pledged to start implementing some of the overhauls demanded by creditors by early next week. Crucially for Greece’s creditors, the letter says the government would start implementing some measures, including on taxation and pensions, by the beginning of next week, though it doesn’t go into details. The letter is a first step toward fulfilling a demand by international creditors, who have given Athens until Sunday to come up with tougher measures they would impose in return for desperately needed financing that could keep the country from bankruptcy and even worse economic turmoil. 

Today's market battle will be between those (central banks) "hoping" that a Greek deal over the weekend is finally imminent (which on one hand looks possible after a major backpeddling by Tsipras - who may never have wanted to win the Greferendum in the first place - yesterday in Brussels and today during his speech in the Euro Parliament, but on the other will be a nearly impossible sell to Greece as any deal terms will be far harsher than the deal offered by the Troika 2 weeks ago and will have no debt reduction), and those who finally noticed that the Chinese central planners have effectively lost control.

GREEK PROPOSALS HAVE TO GO BEYOND WHAT BAILOUT INSTITUTIONS DEMANDED BEFORE REFERENDUM
MERKEL RULES OUT DEBT 'HAIRCUT'
JUNCKER: LAST MOMENT FOR GREEK GOVT WILL BE MONDAY MORNING