Traders will fixate on a wave of U.S. economic data this week, crested by payrolls data on Friday that could sway expectations about the timing of a future interest rate hike and spark volatility in record-high stock prices. On Friday, Fed Chair Janet Yellen said the case for a rate hike was strengthening, but left open the timing of what would be the first increase since December 2015. Other upcoming data will detail personal consumption, consumer confidence, car sales and factory activity.

Economy

Although global equities are under pressure, Japan's Nikkei climbed 2.3% overnight as the yen weakened against the resurgent dollar following Yellen's comments. Adding to pressure on the currency, BOJ Governor Haruhiko Kuroda said at Jackson Hole on Saturday that there was ample space for further easing of monetary policy via QE or by cutting interest rates deeper into negative territory.

Free trade talks between the EU and the U.S. have failed "even though nobody is really admitting it," Germany's economy minister said Sunday, citing a lack of progress on any of the major sections of the long-running negotiations over TTIP. Sigmar Gabriel also added that Turkey was unlikely to join the EU during his political career, saying the bloc was not in the position to take in Ankara even if it met all the entry requirements tomorrow.

Donald Trump will be making a speech on illegal immigration in Arizona on Wednesday, following a week of speculation that he might be softening his hard-line promise to deport 11M people living in the U.S. illegally. The rally will be closely watched in light of his recent rhetoric on an issue that helped propel him to the Republican presidential nomination.

Brazil's impeachment trial on Saturday advanced toward its final stage, after three days of witness testimony deepened divisions among senators debating whether to permanently remove President Dilma Rousseff from office. Lawmakers are expected to hold a final vote on Tuesday or Wednesday, which will result in her ouster if they muster at least a two-thirds majority, as is widely expected.

Political shock waves roiling South Africa are continuing to reverberate, with news that a controversial business family linked to President Zuma would sell all its assets in the country and Finance Minister Pravin Gordhan would be charged for graft. The latest developments could add to pressure on South African assets and aggravate the perilous state of the economy, which is hovering close to recession. The country's sovereign debt is just one notch above junk status.

Turkish forces are intensifying their military campaign in Syria, seizing territory held by ISIS and Kurdish militants. The clashes underscore the complexity of the U.S.-led coalition against Islamic State. American special operations forces are embedded with Kurdish rebels, but also have close contact with their Turkish counterparts and rely on the country for their rear supply lines.

"We continue to build common ground and a new consensus on stabilizing oil markets, strengthening industries, strengthening OPEC," Venezuelan President Nicolas Maduro declared Saturday, following a meeting with Iranian Foreign Minister Mohammad Javad Zarif. He also said his country would make more announcements in the coming weeks, but didn't provide details on concrete actions. Despite the comments, oil futures are trading lower after Iraq's oil minister pledged to continue to ramp up output.

Net foreign assets at Saudi Arabia's central bank fell to $555B in July, down $6B from the previous month, as the government drew on reserves to cover a budget deficit caused by low oil prices. Assets shrank by 16% from a year earlier to their lowest level since February 2012. They reached a record high of $737B in August 2014 before starting to fall.

Stocks

GCL-Poly Energy Holdings, the world's biggest maker of polysilicon for solar cells, has agreed to purchase the solar-material business of SunEdison (OTCPK:SUNEQ) for $150M. GCL's (OTC:GCPEY) acquisition includes subsidiaries SunEdison Products Singapore, MEMC Psadena, Solaicx, and its shares in SMP, a Korean joint venture. SunEdison filed for Chapter 11 bankruptcy protection in April with $16.1B in liabilities.

Separately, D.E. Shaw & Co is weighing a bid for SunEdison's (OTCPK:SUNEQ) controlling stake in TerraForm Power (NASDAQ:TERP), the bankrupt renewable energy producer's most valuable asset. The hedge fund and its affiliates already own some TERP common shares after receiving them in an agreement announced last year upon forgiving debt owed by SunEdison. Appaloosa Management and Brookfield Asset Management (NYSE:BAM) have also announced plans to jointly bid on the so-called "Class B" shares of TerraForm Power.

New rules by the FAA go into effect today, clarifying what is acceptable commercial usage of small unmanned aerial vehicles. Drones must weigh less than 55 pounds, fly up to a maximum of 400 feet in altitude, at a speed of no more than 100 miles per hour and can only be operated during the day. According to industry estimates, the rules could generate more than $82B for the U.S. economy and create more than 100K new jobs over the next decade. Related stocks: AMBA, AMZN, AVAV, BA, DJI, DPZ, HON, INVN, IXYS, GPRO, TRMB

The significantly faster pace of asset growth for Chinese banks other than the nation's big four, suggests that much of the current asset growth in the country's banking system is supported by wholesale funds and not deposits. This constitutes a "systemic risk" because it raises interconnectedness in the system, and makes transmission of unexpected shocks more pronounced, warned Moody's Investors Service.

Santander UK has been spending nearly £1B a year to cover the cost of its flagship current account despite the monthly fees charged by the lender, sources told FT. The controversial move is another example of how record low interest rates - and in the case of Europe and Japan, negative rates - are eroding banks' margins. Santander's (NYSE:SAN) 123 product has been the bank's principal driver of new business since it launched in 2012.

The saga over the control of the Viacom (VIA, VIAB) media empire may finally be completely done. Keryn Redstone, granddaughter of Sumner Redstone, has agreed not to oppose her grandfather's decision to resolve lawsuits over the removal of Viacom CEO Philippe Dauman, removing a key obstacle to a settlement. In return, Redstone said he will meet with his granddaughter, who has challenged his competency in a Massachusetts court fight.

Sharp is hoping to team up with its domestic rival Japan Display (OTC:JPDYY) in OLED displays to catch up with South Korean manufacturers. "Let's gather all Japanese talents in liquid crystal displays, develop (the OLED technology) and jointly manage," Sharp's (OTCPK:SHCAY) new CEO, Tai Jeng-wu, told the Nikkei in an interview.

A Southwest Airlines flight landed safely Saturday morning after being diverted to northern Florida following a major malfunction of one of its two engines during a flight from New Orleans to Orlando. Photos showed the Boeing 737's (NYSE:BA) engine inlet completely torn away, revealing extensive structural damage to the engine nacelle that hangs underneath the wing. CFM International, a joint venture between General Electric (NYSE:GE) and Safran (OTCPK:SAFRY), is the sole supplier of engines for the single-aisle 737. LUV unchanged premarket.

China is launching its first aircraft-engine manufacturer in an attempt to wean itself off Western suppliers, like GE and United Technologies' (NYSE:UTX) Pratt & Whitney. The state-owned Aero Engine Corp. of China was created by combining a group of existing aircraft-engine companies, according to local media reports. It has about 50B yuan ($7.5B) in registered capital and will develop both military and commercial engines.

A truck transporting Takata air bag inflators and propellants exploded in Texas earlier this month, resulting in one death and four injuries. More than 100M vehicles worldwide have been slated for recall to replace Takata (OTCPK:TKTDY) inflators, while the company looks for a financial sponsor to help overhaul its business and reduce its ballooning costs.

Amid a wave of criticism over the rapid escalation in EpiPen costs, Mylan (NASDAQ:MYL) said it would launch the first generic to its allergy auto-injector at a discount of more than 50% to the branded product's list price. The device will be identical to the branded product, including functionality and drug formulation. Mylan expects to release the $300 two-pack carton in several weeks, pending completion of labeling revisions. MYL +1.2% premarket.

According to an analysis by the Kaiser Family Foundation, nearly a third of U.S. counties will likely be served by only one insurer that participates in an Affordable Care Act marketplace in 2017, representing an increase from 7% this year. The data underscores the degree to which industry retrenchment from low enrollment and high service costs is curtailing options within the marketplaces. Insurer departures will likely lead to higher prices, analysts have warned. Related tickers: UNH, AET, ANTM, CI, HUM, WCG, CNC, MOH, GTS, HQY

Singapore authorities have identified 41 Zika cases that were transmitted locally, and warned that they expect to find more. The cases appear to be the largest single beachhead the virus has made in Asia in the current epidemic, which has also been detected in countries like Bangladesh, Malaysia and the Philippines. On Thursday, China added the U.S. to a list of Zika-infected countries, worrying U.S. exporters, who fear they will be required to fumigate containers destined for Chinese ports.

Meanwhile, the FDA has issued an Emergency Use Authorization for Roche's (OTCQX:RHHBY) "Lightmix Zika" test, a quick diagnostic check that allows healthcare professionals to quickly detect the virus. Zika has been associated with microcephaly, a birth defect characterized by an unusually small head and potential developmental problems.

A flood of share debuts is expected to invigorate the listless IPO market after the coming Labor Day holiday. On the radar: Valvoline (Pending:VVV), Nutanix (Private:NTNX), Bank of N.T. Butterfield & Son, J.A. Cosmetics US and Yeti Holdings (Pending:YETI). As of late August, 2016 was on track to be the worst year for IPOs since the financial crisis, with 63 companies listing on U.S. exchanges and raising just $12.9B.

Today's Markets

In Asia, Japan +2.3% to 16737. Hong Kong -0.4% to 22821. China flat at 3070. India +0.4% to 27902.
In Europe, at midday, London closed. Paris -1%. Frankfurt -0.8%.
Futures at 6:20, Dow flat. S&P flat. Nasdaq flat. Crude -1.5% to $46.95. Gold -0.2% to $1323.30.
Ten-year Treasury Yield -1 bps to 1.61%

Today's Economic Calendar

8:30 Personal Income and Outlays
10:30 Dallas Fed Manufacturing Survey