Sears has filed for bankruptcy after years of staying afloat through financial maneuvering, a merger with Kmart and relying on billions of CEO Eddie Lampert's own money. It's set to shutter 142 stores towards the end of the year and begin liquidation sales shortly. While Lampert will step down as CEO, he'll remain Sears (NASDAQ:SHLD) chairman, as his ESL Investments negotiates a debtor in possession loan and other funding to support what was once the country's biggest retailer through the bankruptcy process. SHLD -16% premarket.

Economy

U.S. stock index futures are following Asia and Europe into the red as risk-off sentiment pervades amid increasing tensions between Riyadh and Washington. The Kingdom has vowed an economic response "with greater action," should the U.S. impose sanctions against Saudi Arabia over the Khashoggi case. Crude warning? "If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure," Al Arabiya's Turki Aldakhil wrote in an op-ed.

China's central bank governor Yi Gang on Saturday promised to keep the yuan currency’s value "broadly stable" at IMF and World Bank annual meetings in Bali. But U.S. Treasury Secretary Steven Mnuchin reiterated concerns that a major drop in the yuan's value this year against the dollar could be part of an effort to gain a trade advantage for Chinese exports or to offset the impact of U.S. tariffs.

In response, Washington wants to include a provision to deter currency manipulation in future trade deals, including with Japan, based on the currency chapter in its new deal to revamp NAFTA. The decision drew concerns in Japan over whether the U.S. would have the right to label any future forex market interventions by Tokyo as manipulation. The yen is often regarded as a "safe-haven" currency in Asia.

Negotiations over Britain's departure from the EU suffered a setback Sunday as the two sides failed to resolve differences, chiefly over how to avoid the re-emergence of a physical border in Ireland. Arlene Foster, the head of the Northern Irish party that props up Prime Minister Theresa May's government, added she would prefer a no Brexit deal to a bad deal, describing current backstop plans - whereby Northern Ireland would effectively remain subject to EU regulations - as amounting to an "annexation."

Lawmakers start discussions today over a constitutional amendment renaming the country to "the Republic of North Macedonia," a move that will open the way to NATO and EU membership. Complicating the discussion is the result of a Sept. 30 referendum in which a majority of voters backed the name change following a decades-long dispute with Greece, however, very low turnout prompted the opposition to declare the government plan a failure.

Stocks

Aerospace and defense M&A is on the rise amid increased military spending and a boom in jetliner sales. Harris (NYSE:HRS) and L3 (NYSE:LLL) have agreed to an all stock merger of equals, creating the sixth largest U.S. defense contractor to be called L3 Harris Technologies. The companies say the transaction will add to combined EPS in the first year after the close of the deal, and generate $500M in annual pretax cost savings and $3B in free cash flow by the third year.

There will be "severe punishment" for Saudi Arabia if it turns out that missing journalist Jamal Khashoggi was killed in the Saudi consulate in Istanbul, President Trump said in a 60 Minutes interview. However, he doesn't want to block military sales to the kingdom. "I don't want to hurt jobs... I don't want to lose an order like that,” he said, singling out Boeing (NYSE:BA), Lockheed (NYSE:LMT) and Raytheon (NYSE:RTN).

More business executives are pulling out of Saudia Arabia's three-day conference known as "Davos in the Desert," set to begin on Oct. 23. The latest include JPMorgan (NYSE:JPM) CEO Jamie Dimon and Ford (NYSE:F) Chairman Bill Ford. The cancellations could add pressure on other U.S. firms like Goldman Sachs (NYSE:GS), Mastercard (NYSE:MA) and Bank of America (NYSE:BAC) to reconsider their plans to attend the investment summit.

SoftBank shares tumbled as much as 8% in Tokyo overnight as fallout from the disappearance of a Saudi journalist spread to the Japanese conglomerate, whose nearly $100B Vision Fund is almost half financed by Saudi Arabia. In other news, a headline from the WSJ suggested that "SoftBank (OTCPK:SFTBY) is giving startups billions of reasons to hold off IPOs," as a bid to own a majority of WeWork (VWORK) signals a deeper push to let companies stay private.

Apple has scooped up Asaii, a startup that built a music analytics engine for music labels and artist managers. The purchase was worth less than $100M, sources told Axios, and comes just weeks after the tech giant purchased music discovery app Shazam. Both acquisitions will help Apple (NASDAQ:AAPL) better compete with music streaming service Spotify (NYSE:SPOT).

Walt Disney is offering concessions in an attempt to allay EU antitrust concerns over its $71.3B bid for Twenty-First Century Fox (NASDAQ:FOXA) entertainment assets, according to the European Commission. The regulator, which extended its deadline for reviewing the deal to Nov. 11 from Oct. 19, is now expected to seek feedback from customers and rivals before deciding whether to accept Disney's (NYSE:DIS) concessions.

Verizon's network suffered "an unprecedented amount of fiber damage" during Hurricane Michael, according to spokeswoman Karen Schulz, as efforts continue to restore service in parts of the Florida Panhandle. Verizon (NYSE:VZ) has some mobile cell towers in place in lieu of direct fiber connections and on Sunday secured permission from the FAA to launch a manned aircraft to provide LTE service from the air.

Called the Praetor, Embraer (NYSE:ERJ) is adding two longer-range business jet variants to its mid-sized Legacy line, featuring revamped cabins and technology that reduces turbulence to create smoother flights. The corporate jet push is important because Embraer will no longer be able to count on its best-performing commercial division if its deal to merge that business with Boeing (BA) goes forward.

New Jersey's sports betting market brought in $184M in wagers during September after the U.S. Supreme Court paved the way for legal sports betting. That's almost double the $96M it took in during August and easily quadruple the $41M raked in during July. The huge month for New Jersey could add some pressure in nearby states for lawmakers to accelerate their own sports betting legislation. Related stocks: MGM, CZR, SGMS, NYNY, WYNN, PENN, BYD, DRAFT, DUEL

Today's Markets

In Asia, Japan -1.9%. Hong Kong -1.4%. China -1.5%. India +0.4%.
In Europe, at midday, London flat. Paris -0.3%. Frankfurt +0.2%.
Futures at 6:20, Dow -0.4%. S&P -0.4%. Nasdaq -0.8%. Crude +0.7% to $71.81. Gold +1% to $1234.30. Bitcoin +5.3% to $6553.
Ten-year Treasury Yield flat at 3.15%

Today's Economic Calendar

8:30 Empire State Mfg Survey
8:30 Retail Sales
10:00 Business Inventories