Deutsche Bank -4% in Frankfurt, as worrying headlines continue to surface and traders fear contagion due to its position at the heart of world finance. A report yesterday suggested a number of hedge funds were cutting back their exposure to the lender, coming on top of a $14B fine the DOJ wants Deutsche (NYSE:DB) to pay and suggestions the German government won't be helping the ailing bank. In June, the IMF described the institution as "the most important net contributor to systemic risks in the global banking system."

Economy

The Bank of Japan may have shaken up its strategy to jump start inflation, but on the ground, there's little sign change is coming. Headline consumer inflation remained negative in August, down 0.5% from the year earlier, making Japan the only major economy still so deep in negative territory. More dispiriting, the central bank's preferred gauge of core inflation likely dropped to 0.4%, the lowest level in 18 months.

Activity at China's small and mid-sized firms expanded this month, but the improvement was marginal and manufacturers continued to shed jobs. The Markit/Caixin manufacturing PMI came in at 50.1 for September, marking the second time the index reached positive territory since February 2015. The reading has bounced around the neutral 50 level for the best part of five years, pointing to stubbornly sluggish demand.

Preliminary figures from Eurostat showed the inflation rate across the eurozone doubling in September as the impact of weaker energy prices faded. The annual rate of inflation rose to 0.4%, in line with market expectations, from 0.2% the month before. Elsewhere, Eurostat said unemployment remained high across the region, remaining at 10.1% in August.

The U.K. economy grew by 0.7% in the three months to the end of June, according to the Office for National Statistics, revising up its previous estimate of 0.6%. The stats body also reiterated its view that data since the Brexit vote showed "no sign of an immediate shock to the economy" and suggests it may even perform better than expected in the second half of the year.

Speaking by video to a Kansas City Fed conference, Janet Yellen said the Fed - as has happened with some overseas central banks - might find itself hitting a ceiling on the amount of U.S. government paper it could purchase. In that case, the Fed would have to move on to other assets such as corporate bonds and stocks. There would, she cautioned, be both costs and benefits to such an exercise.

Puerto Rico's federal control board is scheduled to have its first meeting in New York today, where it's expected to choose a president and outline the first steps it will take to restructure a portion of the island's $70B in public debt. "Like many of you, I didn't agree either with the excessive power granted to the board... but the truth is we had no alternative," Puerto Rico Gov. Alejandro Garcia Padilla said ahead of the gathering.

The IMF is calling on Brazil's new government to step up efforts to close a yawning fiscal gap, recommending tough policy changes for it to pull out of a bruising recession. "If key reforms are watered down or get stalled in Congress, the boost to confidence will be short lived, and the recession may continue," the IMF wrote in a preliminary findings report.

Tensions between India and Pakistan are escalating, with investors responding by selling assets in both countries. Following Indian "surgical strikes" on suspected militants preparing to infiltrate from Kashmir, Pakistani Defense Minister Mohammad Khwaja threatened to use "tactical" nuclear weapons to "destroy" India. While the disputed Himalayan territory has seen border skirmishes in recent years, a ceasefire between the two countries was agreed to in 2003.

Stocks

Shares of Wells Fargo fell about half a percent after the bell yesterday amid a rumor that Warren Buffett had spoken with the board of directors, asking for "radical transformation." He denied the report to CNBC, saying he's spoken to no one, besides CEO John Stumpf. As for whether he's buying or selling, Buffett said regulatory limits currently prevent Berkshire (BRK.A, BRK.B) from adding to its WFC position, and confirmed that he hasn't ever committed to any of his positions.

The plan put together by JPMorgan (NYSE:JPM) and MedioBanca (OTCPK:MDIBY) to save Italy's Banca Monte dei Paschi di Siena (OTCPK:BMDPY) is well designed and will be a success, the country's economy minister told La Stampa daily. "I am absolutely confident it will work," Pier Carlo Padoan declared, adding that the Sept. 30 deadline to sell four small banks the government rescued in November last year would be extended.

Nearly three years after merging with US Airways, American Airlines (NASDAQ:AAL) faces a major information-technology challenge this weekend, when it transitions all pilots and planes to one "flight operating system." The shift will allow the nation's largest airline by traffic to schedule all 15,000 pilots and 1,500 planes in its system, instead of keeping pre-merger planes and aviators separate.

Stripping out bureaucracy and simplifying its brand, Airbus Group (OTCPK:EADSY) is merging with its planemaking unit and confirmed the promotion of Fabrice Bregier to a new role as the company's chief operating officer. Europe's largest aerospace firm will be renamed "Airbus," after its core planemaking brand, the latest piece of corporate tinkering since it emerged from a cluster of French, German and Spanish aerospace interests in 2000.

A New Jersey commuter train crashed into Hoboken Terminal yesterday morning, killing one person and injuring over a hundred, renewing a focus on a mandatory anti-collision system that has been plagued by delays. By law, NJ Transit is required to have a positive train control system in place by the end of 2018. Amtrak has already rolled out PTC on its network, while freight railroads have mostly been rolling out the technology a section of track at a time. Related tickers: UNP, CSX, NSC, CNI, CP, KSU, WAB

"We have spoken to our customer, who confirmed that Autopilot was functioning properly and that his use of Autopilot was unrelated to the accident," Tesla (NASDAQ:TSLA) announced, after it fell under the spotlight again following a collision in Germany. Tesla's Autopilot, introduced last October, has been the focus of intense scrutiny since it was revealed in July that a Model S driver was killed while using the technology in Florida.

Investors piled billions of orders into a $1.3B bond from media giant Viacom (VIA, VIAB) on Thursday, betting that a possible merger with CBS would help turn around the struggling business. The deal was one of the most heavily oversubscribed investment-grade bonds of late, notching up an $11B order book even as pricing was tightened sharply during bookbuild.

Two consortia have been formed to make offers to buy Cabela's (NYSE:CAB) this week, sources told Reuters, making the sale of the U.S. outdoor gear retailer more likely. Bass Pro Shops, which has partnered with Goldman Sachs' (NYSE:GS) private equity arm, is now working on a bid with Capital One (NYSE:COF), which is interested in Cabela's credit card business. Meanwhile, Sycamore Partners has formed its own consortium with Synchrony Financial (NYSE:SYF) to make an offer.

Less than three months after being acquired by Hollywood talent agency WME-IMG, the UFC is going A-list. Twenty-three celebrities, including Ben Affleck, Adam Levine and Serena and Venus Williams, are investing in the rapidly expanding sports league. Backers of the $4B transaction in July included private equity firms Silver Lake, Kohlberg Kravis Roberts (NYSE:KKR) and Michael S. Dell.

Nutanix is set to go public in a long-delayed test of investor attitudes about the technology sector. The company, which sells "hyperconverged infrastructure" that offers computing power and storage to businesses, priced its initial batch of shares above range at $16, implying an initial market cap of about $2.2B. Nutanix will begin trading today on Nasdaq under the ticker symbol "NTNX."

Salesforce is pressing U.S. and European regulators to block Microsoft's (NASDAQ:MSFT) $26.2B acquisition of LinkedIn (NYSE:LNKD), arguing the deal would hurt competition by giving it too much control over the company's vast pool of data. Salesforce's (NYSE:CRM) public broadside against the deal comes three months after it lost a bidding war for the social-network.

Thursday's Key Earnings

Accenture (NYSE:ACN) +4.3% after topping estimates.
ConAgra Foods (NYSE:CAG) +7.2% beating earnings expectations.
Costco (NASDAQ:COST) +1.7% AH on lower fees to Visa (NYSE:V).
PepsiCo (NYSE:PEP) +0.4% buoyed by organic growth.

Today's Markets

In Asia, Japan -1.5% to 16449. Hong Kong -1.9% to 23297. China +0.2% to 3004. India +0.1% to 27865.
In Europe, at midday, London -0.9%. Paris -1.4%. Frankfurt -1.1%.
Futures at 6:20, Dow -0.2%. S&P -0.2%. Nasdaq -0.3%. Crude -1.1% to $47.30. Gold +0.3% to $1329.90.
Ten-year Treasury Yield -1 bps to 1.54%

Today's Economic Calendar

8:30 Personal income and outlays
8:30 Chicago PMI
10:00 Consumer sentiment
1:00 PM Baker-Hughes Rig Count
1:00 PM Fed's Kaplan speech