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News out of Greece and Spain really freaked people out this morning.First the scoreboard:

Dow: 12,721, -101.1, -0.7%
S&P 500: 1,350, -12.1, -0.8%
NASDAQ: 2,890, -35.1, -1.2%

And now the top stories:

  • According to Germany’s Der Spiegel newspaper, the IMF does not expect to extend bailout funds to Greece, which could reportedly send the debt-laden country into bankruptcy by September.  In other news, Germany’s vice chancellor Philipp Roesler said that the prospect of a Greek exit from the euro had “lost its horror.” All of this came out on Sunday, which set up the global markets for an ugly start.
  • The IMF published an extremely brief statement today saying that it would soon start discussions with Greece on how to bring it “back on track.”  However, there was no explicit confirmation or denial of the communication mentioned in the Der Spiegel article.
  • Spain announced that its economy shrank 0.4 per cent in the second quarter, which represents acceleration from the 0.3 per cent decline it experienced in the first quarter.  This morning on Bloomberg, Sean Egan told Tom Keene that Spain was entering a “black hole.”
  • European stock markets got slammed and borrowing costs surged for the most debt-laden countries.  Meanwhile, US Treasury rates sank to all-time lows as investors sought safe-havens.
  • The bears were growling today.  In his weekly commentary, fund manager John Hussman wrote that a rare “exhaustion syndrome” had emerged, which could be precursor to a major stock market sell-off.  David Rosenberg, the top strategist at Gluskin Sheff, pointed to Sunday’s New York Times article on prospect for Dow 20,000.  “Well, this is perfect,” said Rosenberg noting the contrarian nature of such headlines.  Here’s An Awesome Breakdown Of The State Of The Markets And The Economy >
  • Corn prices retreated a bit today.  But they remain near record highs.  However, a number of analysts came out today and noted that inflation wasn’t on their radars.  Morgan Stanley analysts argued that high corn costs were unlikely to cause a major move in food prices.  Economist Mark Perry listed a bunch of goods that have seen price plummet from a year ago.  SocGen’s Patrick Legland went as far as to say that deflation is now a “major risk for the financial markets.”
  • McDonald’s announced Q2 earnings that fell short of expectations.  Comparable store sales grew 3.7 per cent and 3.6 per cent in Europe and the U.S., respectively.  Sales in the Asia Pacific region climbed be just 0.9 per cent.  “”As we begin the third quarter, global comparable sales for July are expected to be positive, but less than second quarter,” Thompson said.  SEE ALSO: The World’s Biggest Companies Reveal What’s Happening In The Global Economy >
  • Don’t Miss: 20 Mathematicians Who Changed The World >

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