President Trump has revealed a reversal of strategy in Afghanistan, warning against creating a vacuum for terrorists, but declined to give details on troop levels. Defense stocks have nearly doubled the S&P 500's performance since Trump's election, with the SPDR S&P Aerospace & Defense ETF (NYSEARCA:XAR) rising 26% since Nov. 8 vs. a 13.5% gain for the index. Shares are also inching up premarket, including RTN, NOC, LMT, OA, GD, BA.

Economy

"There is zero chance, no chance we won't raise the debt ceiling," Senate Majority Leader Mitch McConnell said at a town hall meeting in Kentucky with Treasury Secretary Steven Mnuchin. The Treasury Department has been employing cash-conservation measures since March, when the previous suspension of the debt limit expired and the new ceiling was set at nearly $20T.

Revisions to their free trade agreement? South Korean and U.S. officials have kicked off talks on their five-year-old deal, which President Trump has called a "jobs killer." "The outcome of the first round of the talks is hard to predict," South Korean Trade Minister Kim Hyun-chong told reporters before meeting his American counterpart, U.S. Trade Representative Robert Lighthizer.

Spanish police have shot and killed the Barcelona attacker, Younes Abouyaaqoub, who killed 14 people and injured dozens after he drove his van last Thursday through crowds on Las Ramblas. Prior to the attack, Spain had been experiencing a tourism boom, thanks in part to visitors scared away from countries in North Africa and the Middle East with a higher perceived threat from terrorism.

Morale among German investors deteriorated for a third consecutive month in August, according to ZEW survey data, which showed its economic sentiment index falling to 10.0 from 17.5 points in the previous month. "Both weaker than expected German exports as well as the widening scandal in the German automobile sector in particular have helped contribute to this situation," said ZEW President Achim Wambach.

OPEC will debate whether to "extend or terminate" the OPEC and non-OPEC production cut at a meeting in late November, according to Kuwait Oil Minister Essam al-Marzouq, who is "optimistic" about finding an agreement. According to Dow Jones, compliance with production cuts fell to 94% in July from 98%, due to higher production by Iraq and the United Arab Emirates.

Stocks

The U.S. Air Force has awarded Boeing (NYSE:BA) and Northrop Grumman (NYSE:NOC) separate contracts to continue work on the Ground-Based Strategic Deterrent program, which is planned to replace aging Minuteman missiles. It's the first step in a three-pronged $500B refresh of the U.S. nuclear arsenal, which includes a long-range bomber being built by Northrop (NOC) and new nuclear submarines now under construction by General Dynamics (NYSE:GD).

A shadow was cast over solar energy stocks yesterday as throngs of Americans came out to see a rare total solar eclipse that was visible nationwide. However, analysts said the drop was likely a case of correlation, not causation. If anything, Monday's solar power outages showed that utilities have become adept at managing the power fluctuations. JKS, CSIQ -10%; FSLR, SPWR -4%.

BHP Billiton +2.4% premarket after announcing plans to sell off its U.S. shale oil unit, stating it is "actively pursuing" options to exit the "non-core" business. BHP bought the U.S. oil and gas business at the height of the oil boom and has since come under pressure from investors including Elliott Management to spin out the division.

Signing an MoU with Anhui Zotye Automobile, a major manufacturer of zero-emission all-electric vehicles in China, Ford (NYSE:F) will explore establishing a joint venture to build electric passenger cars in China. The vehicles produced will be sold under a brand owned by the new joint venture in which both companies would hold a 50-50 stake. F +1.1% premarket.

There's finally a name for Google's (GOOG, GOOGL) latest mobile operating system: Android Oreo. It will include updates to what the tech giant calls "vitals," like extended battery life and security improvements. App badging is also coming to the new OS, so users can see pending notifications, as well as a screen setting that shows two apps at once.

The board battle at ADP is heating up. The company just rejected three members proposed by Bill Ackman, but the activist investor was quick to fire back. "The fact that the board believes that the company's largest owner with an 8.3% stake does not deserve even one board seat speaks to their insularity and lack of shareholder perspective," he declared, adding that the 10-person board currently owns only 0.09% of the firm's shares.

Publicly traded bitcoin miner OTCQB:BTCS is moving toward a new merger after its tie-up with Spondoolies-Tech fell through in 2015. New filings with the SEC show that the company has signed a non-binding letter of intent with Blockchain Global, which operates a bitcoin mine out of China and runs an Australian bitcoin exchange called AXC.io.

Janssen Pharmaceuticals, a unit of Johnson & Johnson (NYSE:JNJ), opposes plans by Florida authorities to use its drug Etomidate in a coming execution, after the state exhausted its supply of sedative midazolam. In recent years, companies including Pfizer (NYSE:PFE), McKesson (NYSE:MCK), Roche (OTCQX:RHHBY) and Baxter International (NYSE:BAX) have also publicly opposed the use of their drugs in executions.

Johnson & Johnson has also been ordered by a California jury to pay $417M to a woman who claimed she developed ovarian cancer after using the company's talc-based products for feminine hygiene. The verdict was the largest to date in lawsuits alleging J&J failed to adequately warn consumers about cancer risks. "We will appeal," the company said in a statement.

Bulking up its online efforts? Macy's (NYSE:M) has selected eBay (NASDAQ:EBAY) senior VP Hal Lawton as its new president, as it shakes up management and cuts 100 jobs in an effort to reignite slumping sales. The restructuring will result in one-time costs of about $20M-$25M and save the department store chain about $30M per year.

Today's Markets

In Asia, Japan -0.1%. Hong Kong +0.9%. China +0.1%. India +0.1%.
In Europe, at midday, London +0.7%. Paris +0.5%. Frankfurt +0.7%.
Futures at 6:20, Dow +0.1%. S&P +0.1%. Nasdaq +0.3%. Crude +0.2% to $47.63. Gold -0.4% to $1291.
Ten-year Treasury Yield +2 bps to 2.2%

Today's Economic Calendar

8:55 Redbook Chain Store Sales
9:00 FHFA House Price Index
10:00 Richmond Fed Mfg.