Markets Left to Wait for Greek Referendum --- Recap

European markets staged a sharp rally Wednesday and trading volumes surged after Greece’s Prime Minister Alexis Tsipras sent a two-page letter to the country’s creditors saying he would accept their reforms with some changes in exchange for a third bailout, a move that sparked renewed hope for a deal.

Three officials told The Wall Street Journal that the new proposal still falls short of creditors’ demands. On Wednesday afternoon, Mr. Tsipras said on television that his country’s referendum would go ahead, and he would still campaign for a ‘No’ vote, taking the heat out of the rally. A meeting of eurozone finance ministers after markets closed in Europe was united in its decision: There would be no further talks until the outcome of the referendum was in.

We followed all the latest twists and turns with our markets team in London and our reporters on the ground in Athens, Brussels and Berlin. Catch up here.

-- Phillipa Leighton-Jones

1:02 pm | EU let's the side down on the digital front | by Phillipa Leighton-Jones

There should be a video up now on the EU website, but sadly, it's not working.

12:58 pm | Flashes from our wire | by Phillipa Leighton-Jones

12:46 pm | Nothing to see here. | by Gabriele Steinhauser

#Eurogroup united in decision to wait for the outcome of the #Greece referendum before any further talks

— Peter Kažimír (@KazimirPeter) July 1, 2015

12:45 pm | Three scenarios for Greece | by Phillipa Leighton-Jones

Here’s colleague Ian Talley with three scenarios for Greece and the eurozone.

A ‘Yes’ Vote on Referendum and Slow Path Back to Normalcy

B: Greece Approves the Referendum, but Eventually Exits the Eurozone

C; Greece Rejects the Referendum and Is Forced to Exit the Eurozone

Read his full blog post here.

12:39 pm | The conference is done, let's wait for the remarks | by Gabriele Steinhauser

#Eurogroup conference call on #Greece just ended; video with my remarks will be online shortly on http://t.co/9b0ZXi2aT4

— Jeroen Dijsselbloem (@J_Dijsselbloem) July 1, 2015

12:34 pm

Tough crowd: When #Greece says no, it's being intransigent. When it says yes, it's doing an about-face.

— Pedro da Costa (@pdacosta) July 1, 2015

12:30 pm | Lost in translation, it's all Greek to me etc. | by Viktoria Dendrinou

We already know that Greeks will be asked a complicated question in their referendum. It's this:

The Greek people are asked to decide with their vote whether to accept the outline of the agreement submitted by the European Union, the European Central Bank and the International Monetary Fund at the Eurogroup of 25/06/15 and is made up of two parts which constitute their unified proposal:

The first document is entitled: Reforms for the completion of the current program and beyond and the second is Preliminary Debt Sustainability Analysis.

Whichever citizens reject the proposal by the three institutions vote: Not Approved / NO

Whichever citizens agree with the proposal by the three institutions vote: Approved /YES

But there's a problem in the translation with one of the documents, with the English document suggesting one trajectory for Greece's debtload, and the Greek document suggesting the opposite.

12:07 pm

Markets once again unfazed by Tsipras: stocks still up, S European govt bond spreads still tighter, Bund yields still higher.

— Richard Barley (@RichardBarley1) July 1, 2015

12:05 pm | U.S. banks foresaw the dangers | by Peter Rudegeair

The Greece situations looks manageable at large U.S. banks for now.

Partly that’s from years of expectations that this type of event might happen. Worries over the Greek government and Greek companies’ ability to repay what they owed led big U.S. and European lenders in recent years to reduce the amount of Greek debt they held on their books.

Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co. and Morgan Stanley dropped their collective exposure to less than $2 billion from about $3.75 billion three years ago, according to the Office of the Comptroller of the Currency.

“[What they have] on [their] balance sheet is very manageable at this point,” said Pri de Silva, a bank analyst at CreditSights Inc. “Banks have had five years to reduce their direct exposure to Greece.”

11:59 am | Here's European Council President Donald Tusk | by Gabriele Steinhauser

Europe wants to help #Greece. But cannot help anyone against their own will. Let’s wait for the results of the Greek referendum

— Donald Tusk (@eucopresident) July 1, 2015

11:52 am | Stocks still tinted green, but off highs | by Paul Vigna

European indexes have finally settled, and while they've closed higher, they closed off their highs.

The Dax gained 1.9%, the CAC-40 rose 1.9%, and the FTSE MIB rose 2.2%. The FTSE 100, though, fell 1.5%.

Greek exchanges, recall, remain closed.

In the U.S., the major indexes are all in the green, but off their early highs. The Dow is up 123 points at 17742, and the S&P 500 is up 13 at 2076. Remember we wrote earlier that 2074 is a key level for the index. So far, it's holding.

11:43 am | Tsipras renews pledge for referendum | by Paul Vigna

Interesting hour. Mr. Tsipras sounded, to us at least, somewhat defiant in a speech he just delivered, vowing to go ahead with the referendum, and reiterating his call on Greeks to vote against the creditors.

That seemed a contrast to the tone he took earlier, in his letter to creditors in which he essentially acceded to all their demands.

Meanwhile, the Council of Europe is calling into question the validity of the referendum. "The referendum has been called on such a short notice that this in itself is a major problem," Thorbjorn Jagland, the council's secretary general, said. While the warning itself does not present the basis for a legal challenge, it does cast more doubt on the vote, still set for Sunday.

European and U.S. stocks are higher, though off their highs. Frankly, it doesn't seem like even fast moving equities traders can keep up with the twists and turns of this miasma.

11:16 am

How do you vote if you disagree with the reform proposals but agree with the debt sustainability analysis? https://t.co/HIXfQBYhPD

— Stephen Fidler (@StephenFidler1) June 28, 2015

11:14 am | Is it time for a trader time-out? | by Paul Vigna

With so much chaos in the Greek crisis right now, the best course for investors may simply be to get out of the fray. Indeed, Dennis Gartman, who edits and publishes the eponymous Gartman Letter, says he's thinking about doing that very thing:

"Things can and will change many times between now and the referendum, and they will change many times after the referendum. Perhaps ‘tis best to have no positions at all in place and we are very seriously considering doing precisely that: going flat ahead of the referendum and going flat ahead of the US Employment Situation Report."

We don't know Mr. Gartman well, but we do know he is a trader through and through - his daily newsletter comments on just about every conceivable market - and we have a hard time believing such a pro would really get out of the market at a time like this. But it's telling that he's even thinking about it.

Dow up 120, seems stuck right around 17737.

11:11 am | Now, about that referendum | by Gabriele Steinhauser

A planned referendum in Greece on the terms for an international bailout isn’t in line with European standards, Europe’s rights watchdog said on Wednesday.

“The referendum has been called on such a short notice that this in itself is a major problem,” Thorbjørn Jagland, the secretary-general of the Council of Europe, said in an interview with the Associated Press. The comments were confirmed by Mr. Jagland’s spokesman, Daniel Höltgen.

The warning doesn’t have any legal consequences and doesn’t provide a basis for a legal challenge in the Council’s court, the European Court of Human Rights. But it raises further doubts over the vote, which was already been questioned by European politicians and Greek opposition leaders. (Photo: Reuters)

10:51 am | Flashes from our wire | by DJ

10:47 am | Cynicism leading, but fear's not out of it yet | by Paul Vigna

We've been talking about the markets being in a pendulum swinging between fear and cynicism. Fear that the Greek crisis will start a chain reaction and meltdown, and cynicism that this is all just for show, and the end result will be another deal that pushes the ultimate reckoning off to some distant point in the future.

Cynicism is winning, right now at least. The Dow was up 170 points, now up 120 points. Is a little fear creeping in? Kit Juckes, a forex strategist at Societe Generale, had this to say this morning:

"The impression I get is still that the consensus view expects Greece to reach a deal with creditors and remain in the Euro, either before Sunday or after a ‘yes' vote. This may be right but seems complacent to me. The only thing we can be sure of is that there are many more twists and turns in this crisis and plenty of uncertainty ahead. For now, we'll follow news headlines and possibly go on drifting back towards EUR/USD 1.10."

The euro is down about 0.4% at 1.108.

10:46 am

Might as well cancel that eurogroup call then. Nothing to discuss. #tsipras

— Simon Nixon (@Simon_Nixon) July 1, 2015

10:43 am | Merkel plays favorites

Meanwhile; 14:39 GMT *DJ Germany's Merkel: Impressed by Italy Renzi's Implementation of Reforms

— Richard Barley (@RichardBarley1) July 1, 2015

10:42 am

Come Monday, the Greek government will be at the negotiating table after the #referendum, w/better terms for the Greek people. #dimopsifisma

— Alexis Tsipras (@tsipras_eu) July 1, 2015

10:36 am

*TSIPRAS SAYS DIFFICULTIES FOR GREEK PEOPLE WILL BE TEMPORARY

— Nick Kounis (@nickkounis) July 1, 2015

10:34 am | Flashes from our wire | by DJ

10:34 am | by Nektaria Stamouli

#No is a decisive move for a better deal says @atsipras #Greece #Greferendum

— Nektaria Stamouli (@nstamouli) July 1, 2015

10:23 am

Greeks may not understand what they are being asked to vote on, says European rights watchdog. http://t.co/RahIVKrtwn via @WSJ

— Stephen Fidler (@StephenFidler1) July 1, 2015

10:19 am | Here's where those crowdfunding pledges are coming from | by Giles Turner

So where are Mr. Feeny’s contributions coming from? Well, the top contributor might surprise you.

10:18 am | Greece praised for meeting targets | by Naftali Bendavid

There is still one corner of Brussels where Greek government policies are praised and held up as an example for others: North Atlantic Treaty Organization headquarters.

That's because Greece is of only five NATO countries that meet the alliance's target of spending at least 2% of gross domestic product on defense. The other four are the U.S., the U.K., Estonia and Poland.

While Greece spends 2.4% of GDP on the military, Germany--an economic powerhouse and sharp critic of Greece--spends 1.2%, despite calls from Washington and others to spend more on defense given the Russian threat.

10:14 am | So, this is going to help | by Giles Turner

Only €1,599,131,972 to go

Apparently, it’s not who you know, it’s how you crowd-fund. Far removed from European finance minsters and Greek officials, Thom Feeny, a 29-year-old marketing manager from London, is trying crowd-fund €1.6 billion ($1.77 billion) for “the Greek people.” So far, his effects have been picked up by a vast array of media outlets, and more importantly he has received pledges for €868,028 via 50,828 people – an average of €17.08 per person.

On his website, Mr. Feeny states that: “I’ve never been involved in Greek politics. I see the campaign as more of a helping the Greek people than getting involved with politics.” The International Monetary Fund needed a payment of €1.54 billion ($1.69 billion) on Tuesday night. It is unclear why Mr. Feeny is raising an extra €60 million.

10:10 am | Risk appetite returns | by Kristen Scholer

Riskier assets are leading Wednesday amid optimism Greece will reach a deal with its creditors, in addition to a batch of better-than-expected U.S. economic reports: June ADP employment, May construction spending and June ISM manufacturing.

Growth-sensitive sectors -- financials, techs and industrials -- are outperforming. U.S. bond prices are down, pushing yields higher. At 2.4%, the U.S. 10-year Treasury yield is near its highest level this year. Gold, which is consider a safe haven bet, is fractionally lower.

10:04 am | The mistake Tsipras made | by Paul Vigna

Has Alexis Tsipras ever bought a house?

This whole mess over the Greek negotiations reminds me of nothing more than buying a house. When you go into negotiations, you have to have a number in your head, a price you are willing to pay. If you don’t get that number, you have to be prepared to walk away. That last part is the key, because if you’re not going to walk away, you are going to overpay.

Tsipras clearly wasn’t prepared to walk away, indeed it’s arguable about whether that would have been smart or disastrous, but he bluffed like he was. When the creditors called that bluff, he crumbled. He’s been scrambling ever since.

"It seems Greek PM Tsipras' and Greek FM Varoufakis' plan all along was to bring the euro zone to the edge," Christopher Vecchio, a currency strategist at DailyFX, wrote, "only to get creditors to back down at the last minute, afraid of Greece. However, the German-led Eurogroup contingent has stayed firm in their expectations from Athens, and not wanting to face the July 5 referendum - merely a negotiating tactic - the Greek government is now ready to change its tune."

How do you recover from a historically blown bluff? That’s where Tsipras is right now.

10:03 am | And we’ve broken the 2% mark… | by Josie Cox

The Stoxx Europe 600 has surged to a day’s high of just under 390 points, representing a more than 2% rise on the day, on fresh confidence that Greece and its creditors might soon be clinching a deal. The index is now on track to record its biggest daily gain since June 22, when it rose just under 2.3% in one day.

10:01 am | Slovak finance minister warns on a no vote | by Viktoria Dendrinou

Here’s Slovak Finance Minister Peter Kazimir

I’m afraid that #Greece banks might not reopen with the euro as the currency in case the referendum on Sunday ends with a NO

— Peter Kažimír (@KazimirPeter) July 1, 2015

Mr. Kazimir has also played down hopes of any major progress on Greece at the finance ministers’ call later – in line with earlier comments by European officials who dismissed a new proposal for budget cuts and policy overhauls by Greece as insufficient to revive negotiations over a new bailout for Athens.

9:54 am | Greek stocks up in U.S. | by Kristen Scholer

Several Greece-based stocks listed in the U.S. are up Wednesday morning…

-Seanergy Maritime Holdings Corp., a shipper, is up 61% to $0.90.

-National Bank of Greece S.A. is up 11% to $1.17.

-DryShips Inc., a shipper, is up 3.1% to $0.62.

-Diana Shipping Inc., a shipper, is up 2% to $7.19.

-Tsakos Energy Navigation Limited, an oil and gas transportation company, is up 0.9% to $9.62.

9:54 am | Goldman eyes euro dollar parity, deflationary shock | by Chiara Albanese

As the Greek crisis intensifies, the direction for the euro is lower, says Goldman Sachs.

“Building uncertainty around Greece is as a catalyst for euro to go near parity against the dollar,” says Robin Brooks at Goldman Sachs.

Even if in the last weeks dollar bulls have been “on the defensive”, he adds, and the euro has shown a surprising resilience to the crisis, the case for the dollar to go higher is steadily building.

Mounting tensions in Greece are also reinforcing the U.S. outperformance over the euro zone, and “the odds of a deflationary shock to the euro-zone are rising,” says Goldman. The bank sees the euro trading at 0.95 against the dollar in one year. (Photo: EPA)

9:42 am | U.S. stocks off to strong start | by Paul Vigna

U.S. stocks burst out of the gate, with the Dow up 170 points, and the S&P 500 up 18 points at 2081.

Few things to keep in mind here. One, it's the first day of a new quarter and month. That means the proverbial new money is in. Also, we've seen these early feints before, as recently as yesterday. What matters isn't necessarily where the market opens (unless you plan on selling before lunch), but where it closes.

Remember these two numbers: 2074 and 2090. If the bulls can hold those two levels on the S&P 500, they will essentially wipe out Monday's selloff.

9:35 am

Stressed abt #GreeceCrisis ? Worried about eur? Relax says HSBC. Upcoming results season will bring relief. Expects significant positives...

— Andrea Tryphonides (@ATryphonides) July 1, 2015

9:34 am | Barclays clients vote in the Greek referendum? Well, kinda | by Giles Turner

Taking its lead from Greek officials, Barclays’s investment bank has asked its clients to vote in its own poll.

"What do you think will be the most likely outcome of the 5 July referendum in Greece?" So far over 1,000 have voted, and lines are open until 5pm EST. The outcome so far is resoundingly ‘Yes’ – Greece should accept its creditors’ proposals. Barclays added a sub question – ‘If the result is “Yes,” which asset class offers the most attractive risk-reward in the next three months?’ Just under half the respondents said European equities.

9:31 am | First-half assessment | by Josie Cox

Amid all the latest Greek excitement, let’s not forget that Wednesday marks the first day of the second half of 2015 and also the first day of July.

A good opportunity to look back: After five “quantitatively-stimulated” months of consecutive gains, the S&P Europe 350 fell by 4.6% in June. “The culprit, undoubtedly, Greece,” says Tim Edwards, Senior Director, Index Investment Strategy at S&P Dow Jones Indices.

9:23 am | Greece ETF up premarket | by Kristen Scholer

Amid hopes of a Greek deal, the Global X FTSE Greece 20 ETF is up 7.9% premarket after witnessing its worst day on record Monday, declining 19%, following the eurozone's decision Saturday not to extend Greece's bailout package without concessions from the country on austerity measures.

Greece's stock market is closed this week, but investors can get exposure to the country via the Greece ETF that trades on NYSE Arca under the ticker “GREK.” It tracks the Athens Stock Exchange’s 20 biggest companies by market cap, with the largest holdings being Coca-Cola Hellenic Bottling Co. SA and Hellenic Telecommunications Organization SA.

9:23 am | U.S. traders trying to climb back up the hill | by Paul Vigna

U.S. stocks look like they will open sharply higher. But they did the same thing on Tuesday as well, losing most of those gains before the closing bell rang out.

It's a sign that what investors are watching more than the latest pronouncement of this or that eurocrat is what their fellow traders are doing. What matters in a state like this - extreme uncertainty with no clear end point in a market that counts eternity in nanoseconds - isn't necessarily the fundamentals of whatever is driving the market, Greece in this case, so much as the opinion of the trader next to you about whatever is driving the market. It's like Keynes's famous beauty contest, where participants aren't trying to pick the actual winner, but trying to gauge how their fellow participants will vote.

Technically speaking, the number towatch for in Wednesday's trading is Tuesday's high on the S&P 500 - 2074 - according to Instinet's Frank Cappelleri. "Should the SPX get through (and hold above) yesterday’s high, it would yield an upside target just above 2,090," he wrote.

That level, 2090, is near the high from Monday's trading, so you can see the kind of bootstrapping the market's trying to do here to retrace Monday's selloff. Of course, it all depends upon what the guy next to you is doing - or at least what you think he is doing.

9:20 am | Pope Francis weighs into the Grexit debate | by Liam Moloney

Pope Francis on Wednesday steps into the Grexit debate – he was probably one of the few world leaders that hadn’t had something to say on the matter.

In a Vatican statement, the head of some 1.2 billion Roman Catholics asked for those involved in finding a solution to the Greek crisis to take responsible decisions and that the dignity of the human person must remain at the center of any political and technical debate.

Pope Francis said the economic and social situation in Greece is worrying and he sends a special thought to the many families “gravely beset by such a complex and keenly felt human and social crisis.”

The Holy Father, who is keen to promote greater cooperation with the Christian Orthodox with whom Catholics split from about 1,000 years ago, ends his message by inviting the faithful to pray for the “good of the beloved Greek people.” (Photo: AP)

9:14 am | BATS has done the math on today's trading volumes | by Phillipa Leighton-Jones

Volumes traded in the European markets today have been much higher than usual.

Here are some stats from BATS-Chi-X Europe, the stock exchange:

9:06 am | It seems like everyone wants a deal, but time's just running out | by Josie Cox

“We’ve said for some time that the odds of a Greek exit from the eurozone were around 30%. We would now put that up to 40%,” says Eric Lascelles, chief economist at RBC Global Asset Management. “It would be strange for Greece to exit given that the majority of Greeks prefer to stay, and given that European leaders would prefer the country to stay, even if their own citizens are no longer sure. The negotiating positions between the two parties are no longer very large. However, there simply isn’t much time left to sort things out.”

9:04 am | Hope spreads to U.S. futures | by Saumya Vaishampayan

U.S. stock futures have advanced Wednesday.

S&P 500 futures gained 17 points, or 0.8%, to 2071. E-mini Dow futures rose 164 points, or 0.9%, to 17687, and e-mini Nasdaq-100 futures rallied 37 points, or 0.8%, to 4427.

Changes in stock futures don’t always accurately predict moves in the stock market after the opening bell.

Stocks ended higher Tuesday, with the Dow and S&P 500 rebounding from their biggest losses of the year. The uncertainty about Greece’s future in the eurozone has propelled the CBOE Volatility Index, which reflects S&P 500 options prices, to nearly five-month highs. Investors tend to rush to S&P options when they’re fearful of a selloff, driving the options prices and the VIX higher.

8:57 am | A little more on how Brevan plans to play the market | by Phillipa Leighton-Jones

Brevan Howard's appointment of Greek poker player might of course have nothing to do with Greece. Still, it's a move worth watching. Here's MoneyBeat's Giles Turner:

Brevan Howard, one of the U.K.’s largest hedge funds, has hired Alexios Zervos, a former professional poker player, to join its London office. That he hails from Greece,given the current macro-environment, will surely be an added bonus.

Mr. Zervos confirmed to Moneybeat that he was a professional poker player, but declined to comment further. A spokesman from Brevan Howard declined to comment on what Mr. Zervos will focus on.

Mr. Zervos is currently 18 in Greece All Time Money list, and in 3,234 in the Global Poker Index Ranking. He came 55 in the 2014 World Series, collecting $124,447.

Hedge funds and poker players are common bed-fellows. Perhaps most well-known is David Einhorn, founder of Greenlight Capital, who is a keen player and past competitorat the World Series of Poker. Others include Pine River Investments’ Steve Kuhn, Ariel Investments’ John Rogers, and Jim Chanos of Kynikos Associates.

8:53 am

8:49 am | Grexit won't hold the Fed from raising rates | by Paul Vigna

Of course, much is in motion, but as things stand right now the Greece crisis isn't likely to stop the Federal Reserve from raising interest rates.

This from Julian Jessop at Capital Economics:

"The Fed would, of course, be reluctant to hike rates for the first time since 2006 in the midst of another global financial crisis triggered by Greek exit from the euro. However, we do not expect contagion from developments in Europe to be severe enough to prevent the U.S. central bank from pressing ahead with a September lift-off, provided domestic fundamentals continue to strengthen."

For one thing, Mr. Jessop said, any effects on the U.S. economy from the Greek crisis would be indirect rather than direct, and some ramifications might even be positive. Interest rates on U.S. Treasury bonds, for instance, could rise as safe-haven money flows into them.

But the bottom line, he said, is that the U.S. labor market is strengthening and the Greek crisis isn't likely to change that. So the firm is still thinking that September will see the Fed enact its first rate increase since 2006.

8:48 am | With volatile markets, you need a poker face | by Giles Turner

Greece has been sending markets haywire over recent months, so an ability to keep cool when placing your bets will be a much desired quality among investors right now. Which may explain why U.K. hedge fund Brevan Howard has hired a former professional poker player to join its London office. That he hails from Greece, given the current macro-environment, will surely be a plus.

8:44 am | What's the timetable to a Grexit? | by Phillipa Leighton-Jones

With major doubts still hanging over any kind of deal, it's worth having a look at the painfully tight schedule Greece is on before it's forced out of the euro. With no deal, a Grexit is probably closer than you imagine. The next three weeks are crucial. This explainer from the WSJ's Charles Forelle is unmissable if you want to see how the endgame could play out. (Photo: Bloomberg)

8:33 am

A very intense speech by Schäuble in the Bundestag - giving in to Syriza would mean "we destroy the credibility of the European project."

— Anton Troianovski (@AntonWSJ) July 1, 2015

8:32 am

Clear Syriza badly miscalculated over referendum and default. Meanwhile capital controls not working properly, may have to be tightened.

— Simon Nixon (@Simon_Nixon) July 1, 2015

8:32 am

Berlin wants GR referendum to go ahead; Commission wants Tsipras to campaign for yes. Cancelling might preserve Tsipras political skin.

— Simon Nixon (@Simon_Nixon) July 1, 2015

8:31 am

"Whoever has money supports the euro. I have none," says Greek pensioner in portrait of a torn land by @MatinaStevis http://t.co/40o1lQQ54y

— Todd Buell (@ToddBuell) July 1, 2015

8:30 am | One reason to call off the referendum | by Josie Cox

We’ve come to a point where Tsipras is “ battling for his own political survival”, says Brian Jacobsen, chief portfolio Strategist at Wells Fargo Funds Management. Speaking about the weekend’s planned referendum, Mr. Jacobsen says a “yes” vote “would only be acceptable to the creditors if Tsipras isn’t the one implementing the reforms. A “No” vote would lead to pain for Tsipras’s political base as Greece will have a hard time raising enough euros to make payroll and pension payments,” he says. “His only real hope is to call off the referendum.”

8:26 am | 'The situation has changed' -- Schäuble | by Andrea Thomas

Mr. Schäuble said he is willing to talk about new aid, but the situation has changed since Tuesday because a new program would have to be agreed to on the tougher bailout rules laid out in the eurozone’s European Stability Mechanism.

“Under very much more difficult conditions will we have to talk about” Greece’s request for new aid, he said, stressing that it’s not possible to simply pick up the previous bailout package that expired at Tuesday midnight.

He also said he “wouldn’t make any predictions” whether a deal could be agreed before Greece is due to repay €3.5 billion in bonds to the European Central Bank on July 20.

8:23 am | Schäuble needs clarity from Greece | by Andrea Thomas

German Finance Minister Wolfgang Schäuble on Wednesday said cash-strapped Greece has to provide more clarity on what it wants before negotiations about possible financial aid can begin.

He said that a second letter sent by the left-wing Greek government "hasn't created much clarity."

"This is no basis for serious" negotiations, said Mr. Schäuble during a news conference on the government's 2016 budget. "First of all, Greece has to declare what it wants."

8:21 am | In the U.S., stock investors looking inward | by Paul Vigna

With Europe going through its convulsions, and China going through its convulsions, Americans might just want to sit out the whole global economy thing these days.

"The 'stay home' investment strategy is looking more appealing than the 'go global' investment strategy," Ed Yardeni of Yardeni Research wrote, "given that Greece is a real pain in the peripheral for the Eurozone. China’s stock market has started to compete with Hong Kong’s Dragon Roller Coaster for exhilarating thrills and scary chills."

The damage from Greece possibly leaving the euro isn't likely to have a direct effect in the U.S., he said, so there's chance U.S. stocks could outperform their counterparts across the pond.

Of course, U.S. stocks have been a dog this year. The DJIA was down for the first half of the year, for the first time since 2010. The S&P 500 was up just 0.2%. Dow transports are down 17% from their highs, and the Fed hasn't even started raising interest rates yet.

8:21 am | Keep an eye on Portugal | by Josie Cox

If the Greek situation does deteriorate and there is contagion, the first place to feel it would be Portuguese government bonds, says Demetrios Efstathiou a strategist at Standard Bank. "The yield of 10-year Portuguese bonds closed last Friday at 2.70%, in expectation of a deal between Greece and the eurozone. Following the shock announcement of the referendum, the yield spiked to 3.18% on Monday open, and has been fluctuating ever since," he says. After yesterday's selloff that took the yield back up to 3.12%, there has been a steady decline to 2.84%. Portugal's PSI 20 stock index is up 2.2%. (Photo: Getty Images)

8:17 am | Crispin Odey lashes out at Greece | by Giles Turner

Hedge fund Odey Asset Management lashes out at Athens.

“What a mess,” said hedge fund manager Crispin Odey in his latest letter to investors, published this week. The well-known, and vocal, founder of Odey Asset Management added: “In Greece, part of the reason that the IMF have given up listening to the government’s promises is that, whilst income tax is assessed and payable in September, here we are, some nine months later, and only 12% of Greek income tax has been collected.”

8:16 am

Eurogroup source: no deal poss today since negotiating new program could take weeks. But talks can't start until referendum won/cancelled.

— Simon Nixon (@Simon_Nixon) July 1, 2015

8:14 am | The euro's all about the good-news-is-bad-news trade | by Tommy Stubbington

The euro briefly surged along with stock markets after Greek Prime Minister Alexis Tsipras sent a new proposal for budget cuts and policy overhauls as part of a request for a new bailout. But after the knee-jerk reaction it quickly gave up its gains against the dollar to trade 0.2% lower at $1.1104. We've been here before.

Over recent weeks, the common currency has generally tended to rise when the Greek situation deteriorates, and fall when it shows signs of progress. That's partly because investors by and large aren't speculating over the Greek outcome.

What they are doing is cutting positions when risks rise, and building them up again when risks fall. Given the enduring popularity of bets on a lower euro--usually for reasons unrelated to Greece--that means a thawing of tensions in Greek talks is sometimes an opportunity to sell the euro. (Photo: Bloomberg News)

8:10 am | What does the euro make of all of this? | by Josie Cox

So far today it’s been oscillating between losses and gains against the U.S. dollar. It’s currently trading at $1.1103. That’s 0.3% lower against the buck.

8:08 am | The eurozone can't even start talking again yet | by Gabriele Steinhauser

The EU’s vice president for the euro, Valdis Dombrovskis, said a deal on a new bailout is possible before big new debt repayments are due but stressed it would take some time. The next big payment is July 20, when €3.5 billion in Greek government bond held by the European Central Bank come due.

He stressed that capital controls and the uncertainty created by the expiration of the old rescue deal will make it harder for Athens to get its economy growing again. “Now much more damage is done and much more effort will be needed to restore the situation,” Mr. Dombrovskis said.

He also said that the European Commission and other institutions involved in eurozone bailouts can’t start negotiations on the terms, size and duration of a new aid deal before a decision from eurozone finance ministers to allow such talks. Some ministers, including Germany’s Wolfgang Schaeuble, need a positive vote in their parliaments before they can even agree to start talks on a new bailout.

8:06 am | Grexit could weaken the upturn, says S&P | by Emese Bartha

In a worst-case scenario of a Greek exit from the eurozone, the risks of contagion to other countries in the single currency area are less elevated than in 2010-2011 but it could “easily” weaken the upturn, said Standard & Poor’s Ratings Services Wednesday.

“Yet, such a shock could lead to increased risk aversion among investors, lenders and consumers,” said Jean-Michel Six, S&P’s chief economist for Europe, Middle East and Africa. “Because business and consumer confidence is a key factor in our baseline forecast for the next two years and a half, a Grexit could easily weaken the upturn we are currently contemplating.”

8:05 am | Don't forget the default | by Phillipa Leighton-Jones

Let's not forget that Greece missed its $1.73 billion payment to the IMF last night. Here's Charles Forelle from Athens on that.

8:03 am | Lehman Brothers or Radioshack | by Juliet Samuel

Greece has until July 20 to stay in or leave the eurozone, according to Andrew Pease, head of investment strategy at Russell Investments, and it is more likely to stay than go.

“There is no good outcome for Greece,” he said, but added that, with the population “being asked to choose between misery and disaster” in Sunday’s referendum on a package of austerity measures demanded by creditors, the country is likely to choose “misery.”

Even if Greece does reject the measures, it could still stay in the eurozone and work out a deal, up until July 20, when €1.4 billion is owed to the European Central Bank. That payment is the “drop dead cannot-be-broken deadline.”

And if the country does leave, Mr Pease does not believe that devaluing its currency will revitalize its economy. “The Bank of Greece would be more like the Reserve Bank of Zimbabwe,” he said, because it would have to print so much money. For markets as a whole, however, Greece is less important than when and how the U.S. Federal Reserve decides to raise rates. “Is Greece Lehman Brothers or Radioshack? I think it’s more likely to be Radioshack,” Mr Pease said.

8:01 am | Scared of missing the upside | by Josie Cox

Was everyone just scared of missing the upside this morning? The market rally was sharp and immediate as soon as news of the letter broke, without even a thought as to what creditors would think of it.

Nick Lawson, a managing director within Deutsche Bank’s equities team is cautious though. “The market is reading the latest headlines as signs that Tspiras is backing down but we have to remember that he is only doing so on some points,” he says. “There seems to be a sense in the market that people are a bit scared of missing the upside, especially considering the fall we have had already this week.”

8:00 am | U.S. stocks looking to join in the fun | by Paul Vigna

Over in the U.S., bulls are looking to take that Tsipras fig leaf and turn it into something. S&P futures are up more than 15 points, and Dow futures are up 137 points.

Markets both here and overseas were clearly responding to the latest overture from Tsipras, and they seem to be ignoring the response from the eurocrats, who said the offer still isn’t enough. As the day drags on, though, it will be interesting to see which bit of news carries the market. Yesterday’s early attempt to rally off Monday’s selloff turned into a dud. Will today provide the same?

The U.S. 10-year Treasury note’s yield is up a few basis points at 2.39%. While it’s flirted with the 2.50% level a few times lately, that round-ish number has been a collar on the bond bears.

7:58 am | Looks like something will have to give… | by Josie Cox

Philip Lawlor, a partner at London-based Smith & Williamson Investment, says stocks are rising Wednesday because "markets don't like uncertainty and some of that uncertainty is now starting to lift" on a pick-up in news flow on the situation in Greece.

"The pressure is on and it's inevitable that something will have to give soon," he adds. On Wednesday, Greek Prime Minister Alexis Tsipras sent a new proposal for budget cuts and policy overhauls as part of a request for a new bailout. Stoxx Europe 600 index is up 1.6% at 387.33. Germany's DAX is up 1.9%, France's CAC 40 is 2.3% higher and the U.K.'s FTSE 100 is 1.3% higher.

7:55 am | Tsipras getting "cold feet"? | by Josie Cox

Gary Jenkins, chief credit strategist at asset manager LNG Capital, says it's still tricky to understand exactly what the prime minister of Greece's strategy is. He says a letter to Greece's bailout creditors, in which Mr. Alexis Tsipras says he is willing to accept most of the conditions that were on the table last weekend, might be a ploy "to prevent the European Central Bank from cutting off the emergency lending to Greek banks." Mr. Jenkins says Mr. Tsipras also might be getting "cold feet" about the referendum. "He may be realizing that if he loses the referendum, he loses everything."

7:53 am | Mind the gap, says RBS | by Josie Cox

Greek Prime Minister Alexis Tsipras has sent a new proposal for budget cuts and policy overhauls as part of a request for a new bailout, but Alberto Gallo, head of macro credit research at RBS, says it's still not enough.

“The proposals are closer, but not enough to bridge the gap, in our view,” he says. “Unless the deal is signed Greece will still go ahead with a referendum this weekend,” he notes. He says that a 'Yes' vote in the referendum is his base-case scenario.

“With a Yes, the creditors’ deal is likely to be back on the table. PM Tsipras or the government could resign, or SYRIZA could seek an alliance/new coalition, or a unity government. This would make it easier to negotiate a deal and to keep Greece within the Eurozone.”

7:52 am | Markets rallied | by Tommy Stubbington

Wednesday’s rally extends a rollercoaster ride for European stocks over the last month. As hopes for a Greek deal have ebbed and flowed, markets have been hit by dramatic daily swings.

June 22's 2.3% surge for the Stoxx Europe 600, the largest since May, was wiped out by the biggest one-day fall since October on Monday. Swings in other indexes, like Germany’s DAX and Italy’s FTSE MIB, have been even larger.

The moves come in the context of a strong year for European equities. The Stoxx Europe 600 remains more than 13% higher in 2015, despite a 3.2% loss over the last month.

7:52 am | Welcome! | by Phillipa Leighton-Jones

Thanks for joining us.

Never let it be said that Mr. Tsipras isn't full of surprises. In case you're catching up, he sent a letter to creditors last night saying that he would in fact accept many of the their demands, though he wanted his own conditions too.

Eurozone officials have told the WSJ it's still not enough; the two sides still remain at odds on key points. And there's also the small issue of that referendum. Let's see what changes through the day.