The pound took a dive overnight, tanking as much as 9%, as traders scrambled to assess the cause of the heavy selling. Possible reasons? A fat finger, an error, a low liquidity sell-off, algorithmic trading, fears of a "hard Brexit," etc. Sterling fell as far as $1.1491, striking its lowest level since 1985 - a year when it hit $1.0520 amid an acrimonious mining industry strike - but later recovered to hover at the $1.24 handle.

Economy

Echoing comments by Germany's Angela Merkel, French President Francois Hollande said Britain would have to pay the price for leaving the EU, calling on member countries to respond with "firmness" to avoid jeopardizing principles of the bloc. A "hard Brexit" option would essentially involve Britain giving up full access to the EU single market and customs union in favor of making new trade deals.

"Our economy is fundamentally strong, but we are now going into a period of uncertainty because of the Brexit vote," British finance minister Philip Hammond told CNBC. "Our growth figures, our employment figures for the first half of this year have been revised upwards. We're probably going to be the highest growing G7 economy this year, but next year will be a slightly more turbulent period."

The U.S. employment report for September comes at a crucial time for both politics and policy, with the presidential election and Fed's next meeting just weeks away. Economists are looking for an increase of 170K jobs, with the unemployment rate remaining unchanged at 4.9%, while traders will keep a close eye on clues that may point to the timing of the next rate hike. The data will be released at 8:30 a.m. ET.

The offshore yuan is at its lowest level against the dollar since January, weakening 0.15% to 6.7166 in Hong Kong, after data showed a sharper-than-expected decline in Chinese foreign exchange reserves. Figures from the PBOC showed the currency reserves falling by $18.79B in September to $3.17T, marking their largest monthly drop since May.

Manila should "reassess" its relationship with the U.S., according to Philippines Defense Minister Delfin Lorenzana, who stated the country's military would survive if Washington were to withdraw aid. He also informed the U.S. Army that joint patrols in the South China Sea have been put on hold, while President Duterte wants to halt the Philippine military exercises carried out with U.S. forces each year.

Finance officials and central bankers from around the world are gathering in Washington for the annual fall meetings of the IMF and World Bank. The talks will take up issues including weak global growth trends, the increase of anti-trade measures and concerns that many have expressed about the financial health of European banks.

Crude prices have topped $50 a barrel once again, as OPEC and non-OPEC oil producers head to Istanbul for an informal meeting to discuss how to implement the production deal reached in Algiers last week. The gathering will take place between Oct. 8-13. OPEC members committed to lowering production to between 32.5M-33M barrels a day, marking a drop of around 750K barrels from September.

Stocks

Hurricane Matthew lashed Florida with heavy rains and winds overnight after killing at least 339 people in Haiti on its destructive march north through the Caribbean. While the storm has been downgraded to a Category 3, the National Weather Service has issued some of its strongest language since Hurricane Katrina. The forecast sent shares of roof and building suppliers higher yesterday and insurance stocks lower: PGTI +9%, BECN +4%, OC +3%, HD +2%, HCI -13%, UVE -12%, HRTG -10%, UIHC -8%, FNHC -8%.

Samsung's exploding Galaxy Note 7 doesn't appear to have hurt the company's earnings - yet. The tech giant expects operating profit during Q3 to come in at 7.7T won ($6.9B), a modest increase of about 5% Y/Y, on record revenue of nearly 51T won ($45B). Ironically, the Note 7 problems could boost Samsung's (OTC:SSNLF) chip business. Industry execs say the sudden need for chips in 2.5M replacement phones is exacerbating already tight memory market conditions, which could push prices higher.

Following a host of bad news for Yahoo (NASDAQ:YHOO), Verizon (NYSE:VZ) will be seeking a $1B discount on its $4.83B deal to acquire the company's core business, sources told the NY Post. Yahoo recently revealed a 2014 data breach that affected 500M user accounts, and Reuters reported that the company built a secret program to allow government intelligence to scan all incoming e-mail.

Deutsche Bank is working on a public listing of its asset management division to rebuild its capital buffers, FT reports, amid pressure to shore up its balance sheet. The German lender may also be looking at external financing. A report in Handelsblatt yesterday suggested that several German blue-chip companies may be prepared to offer capital, should Deutsche Bank (NYSE:DB) be crippled by a U.S. mortgage fine.

Nearly five years after Jon Corzine presided over the collapse of MF Global and became a target of federal investigations, his legal ordeal might be drawing to a close. Corzine may pay $5M out of his own pocket to settle claims from the Commodity Futures Trading Commission and submit to a lifetime ban from trading client money in commodities and other assets regulated by the commission.

Avolon Holdings, part of China's acquisitive HNA Group, has agreed to buy the aircraft leasing business of CIT Group (NYSE:CIT) for $10B to create the world's third-largest aircraft leasing company. The deal, which is expected to close in the first quarter of 2017, will result in a combined entity that will have a fleet of 910 aircraft valued at over $43B. CIT +7.8% premarket.

"The Volkswagen group is financially solid and has many options for financing," VW (OTCPK:VLKAY) supervisory board chairman Hans Dieter Poetsch told German daily Boersen-Zeitung. "And that is without extraordinary measures such as a capital increase. That is not being considered at this time. We are also not thinking of selling parts of our brands."

With current VR headsets mostly ranging starkly between higher-end, externally-powered (Oculus Rift, HoloLens, PlayStation VR, Vive) and more lower-end, smartphone-powered offerings (Samsung Gear VR, Cardboard, Daydream), Oculus is looking to broaden the technology's reach through a standalone, but powerful, device. Facebook (NASDAQ:FB) CEO Mark Zuckerberg warned that the headset isn't coming anytime soon, but still showed a short video at yesterday's Oculus Connect event that included footage of the prototype.

The venture capital arms of both GE and Caterpillar (NYSE:CAT) have recently invested in Clearpath Robotics, a startup focused on developing autonomous robots for factories, according to Fortune. The investment was a part of larger $30M Series B investment that was led by iNovia Capital. Clearpath will use the new capital to improve its robots and hire more employees.

Total is selling its specialty chemicals unit, Atotech, to Carlyle (NASDAQ:CG) for $3.2B, as the French oil major disposes of non-core assets to weather a slump in crude and preserve payouts to shareholders. Total (NYSE:TOT) is also working on the sale of some "mature" offshore oil fields in the North Sea and Africa this year, and plans to sell businesses in its Italian marketing and services division in 2017.

Brazil's top court has approved a request by prosecutors to split the investigation of dozens of politicians implicated in the sprawling Petrobras (NYSE:PBR) corruption scandal by grouping them by the main parties that prosecutors allege received kickbacks. The separation may be bad news for President Temer because it will focus the investigation directly on politicians of his Brazilian Democratic Movement Party.

Though not the first time IPO speculation has surfaced, the WSJ suggests a potential late-March 2017 target for a Snap (Private:CHAT) listing. Readying of related paperwork is claimed to be underway, but no banks are presently considered to be hired. The virtual messaging company may be valued at $25B or more, making it one of the highest-profile share debuts in years and possibly signaling a turnaround in the new issue market.

Mars Inc. has finally taken full control of Wrigley, formally putting M&Ms and Skittles in the same division to create the Mars Wrigley Confectionery. In so doing, Mars is buying out the minority stake that Berkshire Hathaway (BRK.A, BRK.B) has owned in Wrigley since Warren Buffett helped engineer the $23B takeover in 2008. Financial terms of the deal weren't disclosed, though previous preferred stock investments by Berkshire charged a premium if they were cashed out ahead of schedule.

Today's Markets

In Asia, Japan -0.2% to 16860. Hong Kong -0.4% to 23851. China closed. India -0.2% to 28061.
In Europe, at midday, London +0.8%. Paris -0.5%. Frankfurt -0.6%.
Futures at 6:20, Dow -0.3%. S&P -0.4%. Nasdaq -0.3%. Crude +0.5% to $50.67. Gold +0.5% to $1259.10.
Ten-year Treasury Yield flat at 1.75%

Today's Economic Calendar

8:30 Non-farm payrolls
10:30 Stanley Fischer
12:45 PM Fed's Mester speech
1:00 PM Baker-Hughes Rig Count
3:00 PM Fed's George speech
3:00 PM Consumer Credit
4:00 PM Fed's Reserve Gov. Lael Brainard speech