All eyes are again on China, where a key manufacturing index signaled contraction. That caused global markets to swoon – although in Shanghai, the government-led rescue effort kicked in after lunch. The Chinese are trying to orchestrate a flawless military parade later this week to celebrate the “Victory of the Chinese People’s Resistance Against Japanese Aggression and the World Anti-Fascist War.” Says one China watcher: “the sky must be blue, people must look happy, the stock market figures must be on the rise.”

For those who soil this pretty picture, the consequences can be severe. A Chinese reporter was detained last week for writing a story that contributed to the market’s fall. And a hedge fund manager has been taken into custody.

More news below

Top News

• Fiat Chrysler pushes for GM merger

Fiat Chrysler CEO Sergio Marchionne continues to make public pleas for General Motors to consider a merger, despite GM CEO Mary Barra rejecting such pleas. Marchionne believes that the firms could make $30 billion a year if they merged, adding his board has "no choice but to put pressure on GM to begin discussions now." But so far, Barra has refused to meet with Marchionne, and some GM executives believe he wants to use GM to get out of a rough patch.  Fortune

• U.S. stocks post bad loss in August

The Standard & Poor's 500 index posted its largest monthly loss since May 2012, as shares were hurt by uncertainty about the timing of Federal Reserve rate hikes and worries about a China slowdown. The S&P 500 fell by 6.3% for the month, while the Dow Jones Industrial Average posted its worth month since 2010. Nine out of the 10 S&P sectors fell in August, with energy stocks as the sole gainers as oil prices surged in the final days of the month after the Organization of Petroleum Exporting Countries indicated they are prepared to discuss production levels.  USA Today

• Valeant, AstraZeneca reach drug pact

Valeant has reached an agreement with AstraZeneca for the rights to sell a psoriasis treatment after Amgen dropped its own collaboration with AstraZeneca over concerns about the drug's side effects. Valeant is paying AstraZeneca $100 million upfront with millions more due if certain milestones are reached. The companies will also share profits on sales of the drug. Valeant plans to submit regulatory approval for brodalumab in the U.S. and EU later this year.  WSJ (subscription required)

• Samsung smartwatch aims at Apple

Samsung is trying to crack the smartwatch market for the second time with the launch of the Gear S2, which is the company's highest-profile launch yet to run on the in-house operating system Tizen. That move comes with some risks, as Samsung has struggled to attract app developers to Tizen, which could limit the smartwatch's functionality until the ecosystem can match the size of Google's Android or Apple's iOS.  Fortune

Around the Water Cooler

• Yahoo's Marissa Mayer is pregnant

Marissa Mayer and her husband, investor Zachary Bogue, announced they are expecting identical twin girls. The tech executive generated headlines back in 2012 for two reasons: she was named CEO of Yahoo and it was quickly revealed that she was pregnant when she took the job. Mayer was criticized for setting "unrealistic expectations" for only taking two weeks off following the birth of her first child, though just a few months later, she extended Yahoo's paternal leave and added other family perks. Fortune

• LinkedIn revamps inbox messaging

Business-oriented social network LinkedIn has outlined plans to debut a new inbox design for mobile and desktop users that will be more similar to chat and messaging apps. The move is one of a series of new apps, services and redesigns planned by CEO Jeff Weiner, as LinkedIn has faced some criticism that the site hasn't changed much to keep up with the times. The goal of these changes is to encourage users to log in more frequently and for longer periods of time.  Fortune

• Frozen food aisle battle heats up

As frozen food sales have slowed to a growth rate of less than 1% on average over the last four years, disruption is taking place. Smaller rivals like Luvo, Amy's Kitchen and Simple Truth are picking up shelf space and market share as top producers like Nestlé, ConAgra and General Mills no longer find themselves dominating the aisle as they once did. The competition is inspiring the big players to invest more in the business. Nestlé, for example, has spend $50 million on a research and development center as part of an effort to give its frozen foods business a jolt.  New York Times (subscription required)