U.K. inflation accelerated in July and there were signs of further price pressures with the weak pound leading to the biggest jump in import costs since 2011. Consumer-price growth picked up to 0.6% from 0.5% in June, and a 0.6% rise compared to the same period last year. This week will also give some further signs of how the U.K.'s economy is faring post-Brexit: Unemployment data for July is due tomorrow, followed by retail sales on Thursday and public finance data on Friday. Sterling +0.7% to $1.2970.

Economy

Australia's central bank saw room for faster economic growth when it cut interest rates to record lows earlier this month, predicting inflation would remain below target for another two years or more. "While prospects were positive, there was room for stronger growth, which could be assisted by lower interest rates," the RBA said in minutes of its Aug. 2 meeting, when it reduced the benchmark rate to 1.5%.

Central bankers and governments must come up with new policies to buffer their economies against persistently low interest rates that threaten to make future recessions more difficult to avoid, according to San Francisco Fed President John Williams. Possible suggestions? Setting higher inflation targets, tying monetary policy directly to economic output, instituting government spending programs that automatically kick in during economic downturns and boosting investment in education and research.

China's State Council has approved the launch of the Shenzhen-Hong Kong Stock Connect, nearly two years after the country opened a similar link between Shanghai and Hong Kong's stock markets. "The basic preparation work is ready. The State Council has already approved the necessary documentation," said Premier Li Keqiang, which brokers read as meaning the long-awaited scheme will be launched soon.

Oil prices are edging closer to $46 a barrel, fueled by talk of producers taking action to prop up the market, although some investors cashed in during Asian hours on the 16% rally since early August. Led by top exporter Saudi Arabia, OPEC has re-launched a debate about potentially capping soaring output in an effort to reduce a global overhang in crude production, inventories and refined fuel products.

Stocks

BHP Billiton swung to its worst-ever annual loss of $6.4B and cut its final dividend by 77% as the world's largest miner by market value got hammered by a bad bet on shale, a dam disaster in Brazil and a commodities slump. "While commodity prices are expected to remain low and volatile in the short to medium term, we are confident in the long-term outlook, particularly oil and copper," CEO Andrew Mackenzie said in a statement. BHP +4.1% premarket.

George Soros has become more bearish on equity markets, nearly doubling his short bet against the S&P 500, following similar moves by Jeffrey Gundlach, Carl Icahn and David Tepper. According to his 13F filing, Soros now holds put options on roughly 4M shares in SPY. He also lowered his gold holdings in Q2, slashing his stake in GLD by a quarter and almost liquidating his position in Barrick Gold (NYSE:ABX).

Another big name, another big bet. Warren Buffett's regulatory filings show he has taken a large bite out of Apple (NASDAQ:AAPL), raising his stake in the stock by 55%. Berkshire Hathaway's (BRK.A, BRK.B) holding in the tech giant was first revealed in May and shares have since risen more than 20%. The move contrasts with Carl Icahn and George Soros, who both sold Apple entirely. Buffett also took a dimmer view on Walmart (NYSE:WMT), cutting his stake in the retailer by 27%.

Morgan Stanley climbed 1.2% in extended trading on Monday after ValueAct Capital disclosed a $1.1B stake, representing about 2% of the shares outstanding in the bank. The MS holdings could represent a catalyst for investors who have shunned bank stocks for years, due mainly to low interest rates that sap lending profits and tough post-crisis rules that have taken much out of once-lucrative trading businesses.

Previously readying an IPO of its United Guaranty mortgage insurance unit, AIG is instead nearing a deal to sell it for $3.4B, sources told WSJ. The insurer could announce an agreement with Arch Capital Group as soon as this week. An IPO would have left AIG with a majority stake in United Guaranty, but selling it outright would help the insurer speed up returning cash to shareholders.

Due to persistent financial losses on Obamacare plans, Aetna (NYSE:AET) is withdrawing from 11 of the 15 states where it currently offers plans through the Affordable Care Act exchanges. Aetna's decision follows similar moves from UnitedHealth (NYSE:UNH) and Humana (NYSE:HUM), and it puts at least one county, Pinal in Arizona, at risk of having no insurers offering exchange plans in 2017 (a circumstance that would present a major challenge to the basic mechanics of ACA).

Google is trying again with a new video chat application called Duo, which works with both Android and iOS devices. The app runs on Wi-Fi and cellular networks, automatically switching between different speeds of connection to adjust video quality. Duo also uses phone numbers, rather than Google (GOOG, GOOGL) accounts or Gmail addresses, and has a "knock knock" feature that displays a live video preview of who is calling.

Chemical reaction? Praxair (NYSE:PX) rose 3.3% AH following a Dow Jones report stating it has held merger talks with Germany's Linde (OTCPK:LNAGF), in a deal that would create the world's largest industrial gas supplier with more than $30B in annual revenue. The news comes less than three months after Air Liquide (OTCPK:AIQUY) bought Airgas for approximately $10B, perhaps setting off a wave of consolidation in an industry hit by declining energy prices and sluggish economic growth.

Billionaire investor Carl Icahn is calling on the EPA to make changes to the market for renewable fuel credits or else risk "the mother of all short squeezes" that could bankrupt refiners. "The RIN market is the quintessential example of a 'rigged' market where large gas station chains, big oil companies and large speculators are assured to make windfall profits at the expense of small and midsized independent refineries which have been designated the 'obligated parties' to deliver RINs."

The Obama administration is expected to issue final rules today reducing greenhouse gas emissions from trucks over the next decade, likely one of the last major climate-related rules President Obama will issue before he leaves office. The final regulations, which aim to cut 1B metric tons of emissions, will be a game-changer for tractor-trailers, buses and other large vehicles with model years 2021 through 2027. Related tickers: CMI, ETN, NAV, PCAR, OTCPK:DDAIF, OTCPK:VOLVY

U.S. prosecutors and Volkswagen are negotiating a settlement that could result in significant fines after Justice Department officials found evidence of criminal wrongdoing in the car company's diesel-emissions cheating, WSJ reports. The amount of any DOJ financial penalty against VW (OTCPK:VLKAY) is still being negotiated, but it could exceed the $1.2B Toyota (NYSE:TM) suffered in 2014 for concealing unintended acceleration problems, a record for an automaker.

A Texas judge has thrown out a lawsuit against General Motors (NYSE:GM) from a woman who blamed a 2012 car crash on a faulty ignition switch that later prompted the company to recall 2.6M vehicles. The order came in a case that GM had selected as the second test trial amid 20 similar cases in that state court over the ignition switch. The first bellwether trial, picked by plaintiffs' lawyers, began last week.

In what's being called an industry first, Audi (OTCPK:AUDVF) has launched a feature that will allow its cars to communicate with traffic signals, notifying drivers when lights are about to change. The information will be routed via an on-board LTE connection, representing another vehicle-to-infrastructure advancement for the self-driving car industry. The plan is that eventually city grids will not just send data, but will be able to receive it to adjust traffic light times accordingly.

More car-related news... While Didi's (Private:DIDI) decision to buy UBER's Chinese operation creates a $35B ride-sharing juggernaut ruling almost 90% of the market, the odds are slim that regulatory agencies will nix the deal. "It requires a very complicated process to determine monopoly status. Revenue and market share figures usually do not show the full picture," said Huang Yong, a senior member of an anti-monopoly board advising China's State Council.

Monday's Key Earnings
Sysco (NYSE:SYY) unchanged after mixed results.

Today's Markets

In Asia, Japan -1.6% to 16596. Hong Kong -0.1% to 22910. China -0.5% to 3110. India -0.3% to 28064.
In Europe, at midday, London -0.3%. Paris -0.5%. Frankfurt -0.7%.
Futures at 6:20, Dow -0.1%. S&P -0.1%. Nasdaq -0.1%. Crude +0.4% to $45.90. Gold +0.7% to $1356.70.
Ten-year Treasury Yield -2 bps to 1.52%

Today's Economic Calendar

8:30 Consumer Price Index
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 E-Commerce Retail Sales
12:30 PM Fed's Lockhart speech