Economy
Euro zone inflation continued to fall in August, with consumer prices rising just 0.3% Y/Y, well below the ECB's target of just below 2%. The new figures released by Eurostat boost expectations that the central bank will announce further stimulus measures, and will likely result in lively discussion at the ECB's Sept. 4 policy meeting next week.

The U.S. and EU are considering another round of sanctions on Russia, following heavy firefights in new regions along Ukraine's eastern border, and a NATO warning that stated Russia had moved "well over 1,000 troops" into the country. Despite the severe escalation, President Obama ruled out military intervention in the region, but outlined the necessity to consider additional economic sanctions.

Pakistan's army chief has stepped into the political struggle between the country's embattled Prime Minister Nawaz Sharif and the opposition which demands his resignation. The coup-prone nation has been gripped by mass rallies for more than two weeks and the new intervention suggests a likely transfer of power from politicians to the army. In the past, Pakistan has repeatedly swung between military rule and democracy. Sharif himself was toppled in a coup in 1999 during his previous tenure.

Stocks
It has been revealed that Google X is developing delivery drones, and has even been testing the aircraft for the last two years. The Atlantic reports Google (GOOG, GOOGL) has carried out over 30 test flights for its drone initiative, known as Project Wing, and hopes its drones can eventually be used to deliver products within minutes. Rival Amazon (NASDAQ:AMZN) announced its development of "Prime Air" delivery drones last year.

Morgan Stanley is filing plans to build, own and operate one of the first U.S. compressed natural gas export facilities and submitted its application to the Department of Energy in May. Morgan Stanley (NYSE:MS), along with Goldman (NYSE:GS), are the only two Wall Street banks that are allowed to own and operate infrastructure of raw materials due to their "grandfather" status for any commodities activities they engaged in before 1997.

Bank of America has asked Judge Jed Rakoff to dismiss the jury verdict which found its Countrywide unit guilty of past mortgage fraud which resulted in a $1.3B penalty. Known as the "hustle" case, the lawsuit accuses BofA (NYSE:BAC) of selling toxic mortgages to Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC), although the bank argues that the evidence at the trial does not support the claims. The motion comes just one week after BofA agreed to a record $16.7B settlement with the U.S. government to settle charges over its role in mortgages leading up to the financial crisis.

Tyson Foods has completed its $7.7B acquisition of Hillshire Brands (NYSE:HSH). Hillshire's common stock will be de-listed and cease trading on the NYSE and Chicago Stock Exchange before the market open this morning. Tyson (NYSE:TSN) says the combined company's new leadership will include a mix of senior leaders from both companies, although Hillshire's CEO Sean Connolly has chosen to pursue other interests.

Three more McDonald's restaurants have been closed in Russia, now bringing the total amount of shut branches up to eight. Russia's food safety regulator, Rospotrebnadzor, still maintains that the closings are due to sanitary violations, although they coincide with heightened tensions over the Ukraine crisis. Earlier this week, McDonald's (NYSE:MCD) said that it will appeal the closures by a court in Moscow.

Telefonica has announced that it expects to acquire Vivendi's (OTCPK:VIVHY) Brazilian wireline carrier GVT by mid-2015. The news comes after Vivendi chose to enter exclusive talks with Telefonica (NYSE:TEF), snubbing a rival bid from Telecom Italia (NYSE:TI). Telefonica's €7.45B bid will merge GVT with its Brazilian subsidiary Vivo (NYSE:VIV) to create the country's largest telecom group.

Deutsche Telekom is open to holding talks to sell T-Mobile USA (NYSE:TMUS) at $35/share or more. Previously, French carrier Iliad (OTC:ILIAF) offered $33/share for a 56.6% stake in T-Mobile, although T-Mobile dismissed the bid as "very inadequate." Earlier this month, Sprint (NYSE:S) was rumored to be prepping a $40/share bid but abandoned its plans due to regulatory hurdles. Deutsche Telekom (OTCQX:DTEGY) owns 67% of T-Mobile USA.

Johnson & Johnson is beginning the process of seeking a buyer for its Cordis unit that makes medical devices including stents and catheters. Cordis could fetch $1.5B-$2B and is expected to attract interest from P-E firms and other health care companies. A sale would mark the latest divestiture for Johnson & Johnson (NYSE:JNJ), which is looking to shed slower-growth businesses and reduce annual costs by $1B.

Repsol has dropped its plan to buy all of Talisman Energy (NYSE:TLM) but is still interested in purchasing some of TLM’s shale assets. Repsol (OTCPK:REPYF, OTCQX:REPYY) is said to have abandoned its original plan for a full takeover after failing to find buyers for the deal's assets it wasn’t interested in, including TLM's North Sea and Southeast Asia assets.

Malaysia Airlines is cutting 30% of its workforce, slashing 6,000 jobs of its current 20,000 staff, following the company's long-running losses and its two recent aircraft disasters. The restructuring will cost $1.9B and de-list Malaysia Airlines (OTCPK:MLYAF) from the Kuala Lumpur exchange by the end of 2014. Earlier this month, wealth fund Khazanah Nasional offered to take the airline private by buying out the remaining stock of the company it did not already own.

Fiat says it has cleared a road block for its planned reorganization, as the pay off of dissenting shareholders who were allowed to tender their Fiat (OTCPK:FIATY) shares will likely not exceed the €500M ($658.3M) set aside for the merger. The reorganization will create Fiat Chrysler Automobiles, a new company with headquarters in Amsterdam, domiciled in the U.K. for tax purposes and a primary stock market listing in New York.

Today's economic calendar:

8:30 Personal Income and Outlays
9:45 Chicago PMI
9:55 Reuters/UofM Consumer Sentiment

Notable earnings before today's open: BIG