Almost a year to the day after Britons voted to leave the European Union, Brexit talks are finally underway in Brussels. EU chief negotiator Michel Barnier is sitting down with U.K. Brexit Secretary David Davis, who struck a conciliatory tone overnight, emphasizing Britain and the EU's "shared European values" and promising Brexit will deliver "a deal like no other in history." The two-year divorce process is due to end by March 2019.

Economy

"Because we're leaving the EU, we will be leaving the single market. And, by the way, we'll be leaving the customs union," U.K. Treasury chief Philip Hammond declared, despite the Conservative Party's recent election setback. What about a possible €55B-€60B divorce bill? "I don't recognize these sums at all," he said. "I think this is the most egregious pre-negotiation posturing that I've seen for a very long while."

One person has been killed and 10 injured after a man drove a van into worshippers leaving a London mosque early Monday. Investigation of the incident is being carried out by the British police's counter-terrorism command, while Theresa May said it's being treated as a potential terrorist attack. The news isn't moving sterling, which continues to trade around the $1.27 handle seen through the last week.

President Emmanuel Macron won a commanding majority in France's parliamentary elections on Sunday, securing a powerful mandate to push through his pro-business reforms. According to exit polls, year-old En Marche! was on track to take around 361 seats in the 577-seat national assembly, marginalizing the long-dominant Republican and Socialist parties.

New American sanctions under consideration would damage U.S.-Russian relations, Vladimir Putin told news agency RIA, but he said it was too early to talk about retaliation. Meanwhile, the European Union in the coming days is set to extend sanctions again on Russian companies and others who gained from the Kremlin's annexation of Crimea in 2014.

Deepening involvement? An American warplane shot down a Syrian army jet on Sunday, marking the first such occurrence in the country's years-long civil war. Meanwhile, Iran launched missiles over the weekend at ISIS targets in Syria in response to the recent attacks in Tehran. The Syrian pound has lost four-fifths of its value since 2010, while the IMF said Syria's GDP today is less than half of what it was before the war.

Efforts to end a two-week-old crisis in the Persian Gulf have shifted to the U.S., with Rex Tillerson canceling a trip to Mexico to try to end a Saudi-led coalition's isolation of Qatar. "The Secretary of State will continue his efforts to de-escalate tensions in the Middle East region through in-person meetings and phone conversations with Gulf and regional leaders," according to the State Department.

Australia's economy is capable of stronger growth, according to central bank governor Philip Lowe, but he said lawmakers must first overcome political gridlock over needed economic reforms. Separately, Moody's downgraded the long-term credit rating of Australia's "Big Four" banks, saying surging home prices, rising household debt and sluggish wage growth pose a threat to the lenders.

U.S. index provider MSCI is likely to promote Argentina to its $1.5T Emerging Markets Index (ETF: EEM) this week, prompting investment funds from all over the world to buy Argentine equities. The Merval stock index has risen 24% YTD, while the country recently commenced several sovereign bond sales, ending a decade of isolation from international credit.

Taking a big step towards loosening the shackles on Wall Street, President Trump has nominated James Clinger as chairman of the FDIC, one of the U.S.'s most powerful bank regulators. If confirmed by the Senate, he would begin his term in November. Clinger currently serves as chief counsel for the House Financial Services Committee and has been involved in efforts to rip up Dodd-Frank.

Just days after the U.S. central bank hiked interest rates, several Fed Presidents will make appearances across the country. New York's William Dudley will kick off the full week of Fedspeak today, taking part in a roundtable with local business leaders in Plattsburgh, NY. Later tonight, Chicago Fed President Charles Evans will speak about current economic conditions and monetary policy in NYC.

Stocks

The aircraft industry is descending on Paris for the biennial aviation and defense industry gathering that alternates with Farnborough, England. More than 350K people visited the Paris Air Show in 2015 and 91 countries were represented. It will go some way in determining whether the recent orders slowdown will reverse, or is simply a cooling-off period after years of supercharged growth.

First news... Airbus (OTCPK:EADSY) has unveiled the A380plus, the world's new largest passenger jet, while Boeing (NYSE:BA) is expected to launch the 737 MAX 10. Raytheon (NYSE:RTN) plans to announce it will restart its Standard Missile 2 production line after a $650M order from four U.S. allies, and Lockheed Martin's (NYSE:LMT) F-35 is set to score a load of customers.

Brexit boost? Jaguar Land Rover (NYSE:TTM) will hire 5,000 staff as it boosts skills in autonomous and electric vehicle technology. It's a business endorsement for Theresa May as she starts Brexit negotiations following a botched election. The additional personnel will include 1,000 electronic and software engineers, as well as 4,000 employees for manufacturing.

Fiat Chrysler is not pulling the plug on its Chrysler brand in Japan, shooting down rumors stating it would stop selling the cars due to poor sales. "Although FCA Japan has already announced its intention to concentrate its resources on the Jeep brand ahead, no decisions have been made regarding (the) Chrysler brand," Fiat (NYSE:FCAU) said in a statement.

General Electric is looking at opportunities to invest in transportation in the Middle East and Africa after signing a $575M railway deal in Egypt. "Demand for infrastructure continues unabated, the region is shifting to renewables, which is becoming more and more important," said GE Vice Chairman John Rice. "We don't expect that to change."

Bitcoin traded higher on Saturday near $2,680, according to CoinDesk, up more than 20% from a June low of $2,185.96 hit Thursday that had erased gains for the month. The cryptocurrency still remains more than 150% higher since Jan. 1, while rival ethereum has skyrocketed over 4,000% YTD and came closer this week to topping bitcoin in market value.

"Some thought we shouldn't broadcast this interview because his baseless allegations aren't just offensive, they're dangerous. But here's the thing: Alex Jones isn't going away," Megyn Kelly told viewers Sunday night. Kelly, who gained prominence as an anchor at Fox News (NASDAQ:FOX), joined NBC (NASDAQ:CMCSA) this year. The network is banking on her as its next flagship star, who is drawing a salary reported to be about $15M.

"While we and others have worked for years to identify and remove content that violates our policies, the uncomfortable truth is that we, as an industry, must acknowledge that more needs to be done. Now," Google (GOOG, GOOGL) wrote in a weekend blog post. The tech giant will implement more measures to identify extremist videos and up the number of experts that flag them, while taking a tougher stance and expanding its counter-radicalization efforts.

Investors are still talking about Amazon's (NASDAQ:AMZN) deal to acquire Whole Foods Market (NASDAQ:WFM) for $13.7B, a move that catapults the e-commerce giant into hundreds of physical stores and fulfills a long-held goal of selling more groceries. The deal sent shockwaves across both the online and brick-and-mortar industries on Friday. Wal-Mart (NYSE:WMT) fell as much as 7.1%, while Kroger (NYSE:KR) tumbled 17% on fears of an increasingly cutthroat industry.

Today's Markets

In Asia, Japan +0.6%. Hong Kong +1.2%. China +0.7%. India +0.8%.
In Europe, at midday, London +0.6%. Paris +0.9%. Frankfurt +0.8%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.6%. Crude +0.2% to $45.08. Gold -0.3% to $1252.90.
Ten-year Treasury Yield flat at 2.15%

Today's Economic Calendar

7:00 PM Fed's Evans: Monetary Policy