Stocks are mostly lower and government bond prices higher as U.S. equity futures ease from record levels. "We're now on to the next shiny new object and that's earnings season," said Paul Nolte, portfolio manager at Kingsview Asset Management. "As long as companies beat earnings estimates, investors will feel comfortable buying stocks." But with grim Q2 results predicted by analysts, will traders continue the equity buying?

Economy

As Turkey picks up the pieces after Friday's failed coup, new details are emerging of how it unfolded, and just how close the military intervention came to succeeding. In the meantime, the government has detained or suspended nearly 20K members of the police, judiciary and army, and demanded the extradition of Fethullah Gulen, the alleged mastermind of the overthrow attempt. "The U.S. should not harbor a terrorist," declared President Erdogan, threatening to go to war with "any country" that supports the exiled cleric.

Financial implications? Moody's has put Turkey's Baa3 credit rating, the lowest level of investment grade, on review for a downgrade to "assess the medium-term impact" of the unsuccessful coup. It's also likely Turkish citizens won't be granted visa-free travel this year, according to European Commissioner Gunther Oettinger, despite the nation's migration deal with the EU. U.S. Secretary of State John Kerry has further stressed that NATO countries had a requirement when it came to democracy and "will measure very carefully what is happening."

Annual inflation in the U.K. accelerated in June, fueled by a rise in airfares as soccer fans traveled to France for the 2016 European Championships. The Office for National Statistics said consumer prices climbed 0.5% from a year earlier, up from a 0.3% rise in May. Data was collected before the Brexit, so the recent drop in sterling wasn't captured in the numbers.

German investor confidence deteriorated in July on concern that Britain's decision to leave the EU could weaken the region's fragile economic recovery. The ZEW Indicator of Economic Sentiment for Germany, which aims to predict economic developments six months ahead, fell to -6.8 from 19.2 in June. That's the lowest level since November 2012.

North Korea has launched three powerful ballistic missiles from its east coast, with the U.S. and Japan labeling the tests a clear violation of U.N. resolutions, and South Korea vowing to push for tighter sanctions on Pyongyang. "The ballistic missiles flight went from 500 to 600 kilometers, which is a distance far enough to strike all of South Korea including Busan," the South's military said in a statement.

Stocks

The Republican convention has left Wall Street banks on edge by embracing a proposal to reinstate Glass-Steagall, the banking separation rule which was dropped during the Clinton administration after a bipartisan effort to overturn it. The repeal is often cited as a cause of the financial crisis in 2008, even though two of the institutions at the core of the crisis, Lehman and Bear Stearns, were unaffected by the act's prohibitions. Related tickers: C, JPM, BAC, WFC, GS

Wells Fargo has struck a £300M deal to buy a new European headquarters in the heart of London's financial district in a much-needed boost for the city post-Brexit. The world's biggest bank by capitalization will move into the 11-story building, known as 33 Central, in the autumn of 2017. WFC -0.4% premarket.

Big movement in Japan: SoftBank (OTCPK:SFTBY) fell 10% as investors reacted to the company's announcement to acquire ARM Holdings (NASDAQ:ARMH) for $32B. Shares of messaging app Line (Pending:LN) also dropped 10% following a successful dual listing last week in New York and Tokyo. Nintendo (OTCPK:NTDOY) continued to climb on "Pokemon GO" fever, trading up 14%. Its market cap, now over $42B, has just topped Sony (NYSE:SNE).

On the radar in Europe: Novartis (NYSE:NVS) -1.4% premarket after lowering its full year earnings guidance on plans to increase spending on its drug Entresto. Ericsson (NASDAQ:ERIC) reversed earlier losses as investors digested the firm's plans to cut costs by twice as much as previously thought. Rio Tinto (NYSE:RIO) -5% premarket after reporting that Q2 iron-ore production rose a weaker-than-expected 8%.

French music-streaming service Deezer is launching to the masses in the U.S., stiffening the competition in an already-crowded market. Deezer, which had about 6M subscribers worldwide, already has some American users, but was only available to AT&T's (NYSE:T) Cricket Wireless customers or on Sonos and Bose speaker systems. Starting today, the 9-year-old service will be available for $10/month to all U.S. consumers.

Looking to protect their severance pay, Viacom (VIA, VIAB) CEO Philippe Dauman and COO Thomas Dooley have reserved their legal right to resign "with good reason," if a judge finalizes Sumner Redstone's recent management actions. Under their employment agreements, Dauman could receive more than $90M in compensation and Dooley could receive more than $30M if they depart with that status, but not if they are removed.

21st Century Fox plans to remove Fox News Chairman and CEO Roger Ailes, who has been accused of sexual harassment by former anchor Gretchen Carlson, according to New York magazine. Fox (FOX, FOXA) Co-Chairman Rupert Murdoch and his sons James and Lachlan reportedly agree that Ailes needs to go, but have not reached a consensus on the timing and nature of his exit.

Volkswagen is seeking a settlement with Canadian diesel vehicle owners similar to the one reached in the United States, Germany's Handelsblatt reports. Last month, VW (OTCPK:VLKAY) agreed to pay as much as $15.3B after admitting it cheated on American diesel emissions tests, buying back vehicles from consumers and providing funding that could benefit makers of cleaner technologies.

Federal authorities are investigating whether Fiat Chrysler (NYSE:FCAU) inflated sales reports, adding to mounting pressure on the firm and sharpening scrutiny of the way that car companies report their monthly volumes. The SEC as well as the DOJ are conducting the investigation and the Italian-American automaker based in London is cooperating, according to a company statement.

China's auto industry regulator is working with police to formulate rules governing self-driving cars, warning automakers that they shouldn't test the vehicles on highways before the regulations are released. The field has come under increased scrutiny after the U.S. began investigating a fatal accident in May involving a Model S sedan driver that used Tesla's (NASDAQ:TSLA) Autopilot system.

Other auto woes... Takata (OTCPK:TKTDY) routinely manipulated results of air bag inflator tests reported to Honda (NYSE:HMC), according to an ongoing audit commissioned by the parts maker and its biggest customer. "We have found examples of what I would call 'selective editing,' where they have left out results... because the results that remained were better," said Brian O’Neill, a former Insurance Institute for Highway Safety president.

Teva Pharmaceutical has successfully priced a debt offering for $15M worth of senior notes, maturing between 2018 and 2046, to help fund its acquisition of Allergan's (NYSE:AGN) generic drug business. "The strength of the demand, which was multiple times the size of the offering, and the attractive prices, are a testament to TEVA's financial strength and strong reputation with investors," declared CFO Eyal Desheh.

Monsanto is negotiating the terms of a confidentiality agreement with Bayer (OTCPK:BAYRY) that would allow extensive due diligence, after the latter raised its offer to $125 per share, or more than $64B. While there is no certainty Monsanto's (NYSE:MON) discussions will result in the pact, let alone in any deal, the move indicates that Bayer's latest offer may at least help the negotiations make progress.

Monday's Key Earnings

Bank of America (NYSE:BAC) +3.3% after topping expectations.
Charles Schwab (NYSE:SCHW) +0.3% on rising rates.
EMC Corp. (NYSE:EMC) +1.9% AH following positive Q2 results.
Hasbro (NASDAQ:HAS) -6.6% with concerns over boy sector sales.
IBM (NYSE:IBM) +2.4% AH as the shift to cloud paid off.
Netflix (NASDAQ:NFLX) -11.6% AH on slowing customer growth.
VMware (NYSE:VMW) +9.9% AH beating profit estimates.
Yahoo (NASDAQ:YHOO) flat AH awaiting the firm's next moves.

Today's Markets

In Asia, Japan +1.4% to 16723. Hong Kong -0.6% to 21673. China -0.2% to 3037. India +0.2% to 27788.
In Europe, at midday, London -0.4%. Paris -1.2%. Frankfurt -1.2%.
Futures at 6:20, Dow -0.2%. S&P -0.3%. Nasdaq -0.3%. Crude -0.5% to $45.72. Gold +0.3% to $1333.20.
Ten-year Treasury Yield -4 bps to 1.54%

Today's Economic Calendar

8:30 Housing Starts
8:55 Redbook Chain Store Sales