Taliban fighters have taken over the presidential palace in Kabul after a stunning blitz across Afghanistan that saw them seize most of the country in just over a week. Afghan President Ashraf Ghani has also fled abroad, leaving the government in collapse, while demoralized Afghan security forces offered no resistance. The lightning sweep comes after the U.S. spent nearly 2,500 American lives (and some 150,000 Afghan lives) trying to ensure the territory would not become a terrorist haven, while attempting to refashion the nation into a pro-Western democracy.

Backdrop: Towards the end of his presidency, former President Donald Trump announced that U.S. troops would leave Afghanistan by 2021 provided the Taliban met the terms of a peace accord signed the previous year. President Biden went along with the plan, announcing in April that all U.S. forces would leave Afghanistan by Sept. 11, but the news prompted the Taliban to launch an offensive to regain much of the country. That month, the group took control of 73 districts of 421 nationwide, and by August, insurgents controlled 222, and conquered the largest cities and strongholds over the past week.

Quote: "We've seen that force [Afghan military] has been unable to defend the country, and that has happened more quickly than we anticipated," Secretary of State Antony Blinken told CNN's State of the Union. "This is manifestly not Saigon," he added. "We went to Afghanistan 20 years ago with one mission, and that mission was to deal with the folks who attacked us on 9/11. And we succeeded in that mission."

What the markets are feeling: Military conflict or attacks generally don't have much impact on stocks, and even if they do, the sentiment is usually short-lived. That's especially the case here, where the war lasted two decades and the pullout was highly publicized. If anything, some are looking at the economic impacts of the long-running conflict, which has cost the U.S. taxpayer an estimated $2.26T.

What to watch: The U.S. has begun moving personnel from its embassy compound in Afghanistan to the airport in Kabul, where the American "core diplomatic presence" will now be headquartered. Ahead of the departure, the State Department instructed staff at the embassy to eliminate sensitive material, with officials racing to destroy military equipment and hard drives containing classified information. United Airlines (NASDAQ:UAL) has also started rerouting its India flights to avoid Afghanistan airspace, while Emirates has suspended Kabul flights. While many are weighing in over whether America's longest war was worth it - as well as the pace of the withdrawal or future threats - that debate will continue for some time and may be one for the history books.

Stocks - Next stop?

Equities have continued to churn higher through thin summer trading, supported by bumper results from the second-quarter earnings season. The major averages notched further record highs last week, before taking a day off this morning. At the time of writing, stock index futures are down 0.3%, though some were quick to point to a bit of nervousness being felt in the air.

COVID conditions: The highly infectious Delta variant is taking a toll on the economic recovery in China, where fresh data on industrial, consumer and investment activity all missed forecasts. That likely means the world's second-largest economy continued to lose steam in August and the trend is only likely to worsen given the recent tightening in coronavirus restrictions there.

"Asia's low vaccination rates and low tolerance for community spread suggest it is the region most at risk economically from Delta," pointed out JPMorgan economist Bruce Kasman, but others are more concerned about the impacts or fallout that could be felt on business activity elsewhere.

On the economic calendar: While no major releases are due out today, investors are preparing for some big data points later in the week. Monthly retail sales data for June will be announced tomorrow, Fed minutes will be released on Wednesday and Philly Fed on Thursday. It's also a big week for retail earnings, with Q2 reports set to be published by Walmart (WMT), Target (TGT), Lowe's (LOW) and Macy's (M).

Covid - No vax, no service

Starting today, New York City will impose a vaccination requirement on dining, fitness clubs and performances held indoors, making it the first major U.S. city to implement such restrictions. Employees of those venues will also be required to be vaccinated, and following a grace period of a few weeks, enforcement will begin on Sept. 13. The policy is gaining traction, with San Francisco instituting its own vaccination requirement for indoor activities that will go into effect on Aug. 20 (Los Angeles is mulling a similar plan).

Bigger picture: The developments could spell trouble for an industry that has been one of the hardest hit by a national labor shortage. The U.S. unemployment rate for restaurants was 8.4% in July, according to the Bureau of Labor Statistics, and many eateries have been turning to pay hikes and retention bonuses to attract new workers. However, some feel that restaurant operators could see some benefits from the vaccine mandate, like less workers that call out sick or stemming the rise in new COVID cases.

"I just don't think that we're gonna be the vaccination police," said Mary Josephine Generoso, manager at Pasticceria Rocco's of Bay Ridge. "That should be up to the mayor's office, it's up to the health department to figure out, but it certainly shouldn't be the burden of store owners, bars and gyms to be regulating that." Medical or religious exemptions could also present difficulties in implementing the mandate, as well as tourists, whose foreign vaccine barcodes or documents aren't recognized in the U.S.

On the corporate side: As safety restrictions and vaccine mandates evolve, Booking Holdings' (NASDAQ:BKNG) OpenTable has rolled out a feature that allows restaurants to display COVID-19 vaccine requirements to diners. The reservation service additionally plans to launch a national list, updated in real-time, of restaurants that are currently requiring proof of vaccination.

Cryptocurrency - Market cap milestone

Bitcoin (BTC-USD) continues to build on its recent momentum as crypto bulls return to the driver's seat. In fact, the total market value of cryptocurrencies rose above $2T over the weekend following a heavy selloff in June and July. At one point, Bitcoin even dropped below $30K - following a record high of over $64K in April - and on Sunday it once again topped the $48K level.

Snapshot: Bitcoin could "definitely look to go back to all-time highs," said Vijay Ayyar, head of business development at cryptocurrency exchange Luno, though he doesn't expect it to "run through in one shot." As Bitcoin climbs higher, other cryptos are advancing as well. Cardano (ADA-USD), the third-ranked cryptocurrency after Bitcoin and Ether (ETH-USD) climbed 47% over the past week, while Ripple (XRP-USD) and Dogecoin (DOGE-USD) are up 61% and 18% over the same period, respectively.

Crypto headwinds were seen over the summer due to headlines about Bitcoin's energy usage and a mining crackdown by regulators in China. The U.S. Senate also passed a massive infrastructure bill last week without any of the proposed amendments on crypto tax reporting that had delayed its passage. While the extensive supervision could be seen as a blow to the crypto community, others said it meant the government is getting serious about the burgeoning industry.

Research note: "The price of Bitcoin was surprisingly resilient in the wake of the news," wrote NYDIG Global Head of Research Greg Cipolaro "We interpreted this price action as extremely bullish," and "we think the recognition of the crypto industry by lawmakers was ultimately a legitimizing event, one that should give investors comfort that this industry is here to stay."