Have a look at where the european equities are trading right now. 30 minutes away from the end of the tuesday session, stocks are heavily down today after that north Korea Missile Launch over japan. We are seeing a real flight to save havens. Currencies arising against the dollar. It is the yen and the swiss franc are preferred haven currencies today. You have bond yields declining and gold rising today. We had some data on the u. K. Housing today. They are cooling in august after the economy slowed in the first half with a 2. 1 annual rate matching maze reading, which was the smallest since june 2013. 1 he month, prices fell and the economy posted the weakest expansion among g7 nations in the second quarter. Faster inflation and uncertainty about the future of the eu weighing on consumption and investment. It, see overall growth at 1. 5 this year compared with 1. 8 last year. Nationwide expect house price growth to average about 2 this year. Look at where annual house price growth was in june 2014. It was in double digits. Gold rising to its highest level since september last year after north korea fired the Ballistic Missile over japan. Amiding demand for havens escalating tensions between pyongyang and the United States. The bloomberg dollar spot index is the blue line with the gold futures about 1300. Gold surging, rising everything a month apart from june. It has climbed as the fed is expected to go slower on its rate hikes this year. It is weakening the dollar as you can see from that chart. A Hedge Fund Billionaire ion thisg bully in th month, urging investors to place their assets in the commodity. This is a wonderful chart. In major currencies, its exceeding that of emerging markets. The spread between threemonth implied volatility in developing nations and g7 countries is the widest since february according to j. P. Morgan chase. The subdued volatility has been a boon for emergingmarket carry trades, which have returned 12 this year. Have reduceddes and that depends on the direction of the greenback, which this year is down by 9 . Keep an eye on that chart at g btv 4451. Abigail, hows it looking over their . Abigail we are looking at very small declines for the major averages. What makes that interesting is that earlier we had much bigger declines. At one point, the dow and s p 500 down more than 6 10 of 1 on the north korea tensions. The nasdaq now down just 1 10 of 1 . Earlier it had been down 9 10 of 1 . Investors appear to be buying the debt. Katie stockton over at bt ig saying that she expects the pullback that we were seeing more so earlier to deepen as the week goes on. Right now, that sense of risk off relative to stocks here in the u. S. Fading a little bit. We do have the vix spiking higher. Spiking more than 13 earlier. Lets hop into the bloomberg and see what is happening on across cross asset space. On blue, we have the vix seeming to gyrate everywhere between 10 and 16. Whitery elevated, but in and purple, we have a bond volatility index along with the currency volatility index and we see that more recently when the vix spiked higher to about 16 and then has been gyrating. Both bonds in currencies have been staying relatively not very volatile, more stable and more complacent. Some investors are not worried about the macro uncertainties that we are seeing out there. We do have one sector giving a nice bit off the north korean tensions. Lets take a look at some of the defense stocks. You have lock in berkeley Lockheed Martin trading sharply higher as you do have money have geopolitical tensions. Lockheed martin said to be close to an International Deal on the f16s select to be one help as well. Lets take a look at two earnings losers as finish line is plunging after they preannounced to the downside. Deutsche bank has cut those shares to a sell. Best buy down around 11 . Shares have been higher earlier, but now investors taking less heart after that beat with the ceo warning on the future, saying the good times may not last. The shares seem to be reflecting that, down 10 . Vonnie that is quite the reversal. Abigail doolittle, thank you for that. Lets check in the bloomberg first word news with courtney donohoe. Courtney Tropical Storm harvey is not letting up on houston. The fourth largest in the u. S. Has been inundated by floodwaters and up to 20 inches of rain is in the forecast. Harvey has drifted out into the gulf of mexico and is set to crash ashore want to get tomorrow on the texaslouisiana border. President trump is on his way to the region right now. Refiners in south texas starting to recover from the storm. Valero and citgo said to be on the verge of restarting refineries in Corpus Christi. The secondmakes landfall as expected, the nations Largest Oil Refinery could be hit. The loss of refineries in that region would leave only facilities in louisiana supplying fuel to new york and other demand centers. President trump is promising that taxes will get emergency disaster aid quickly. He said there will be very Rapid Reaction from congress. Still there are signs that there may be a political fight over the money. A top texas conservative, Financial Services committee chairman, says he wants to cut spending to pay for the response to harvey. Global news powered by more than 27 or journalists and analysts in more than 120 countries, i am courtney donohoe. This is bloomberg. Big lets get to another story moving markets north korea firing a missile over japan. President donald trump says all options are on the table. Stephen engle files this report from tokyo. Stephen shinzo abe twice converging meetings of his Security Council following what he called the unprecedented, grade, and serious threat from north korea come which fired what is believed to be an intermediate range Ballistic Missile over the northern island. Speakingister abe with President Trump for about 40 minutes and also calling on china and russia to take action. Alsoouth korean president ordering a show of force against north korea with four f15 fighter jets conducting drills. China saying it does oppose north koreas missile and nuclear programs. However, it also went on to say that it called on the relevant countries taking part here to stop provoking each other. Threats and sanctions, beijing says, wont solve the issue. It has to be resolved through dialogue says china. U. K. Premise or theresa may is on her way to japan on a previously scheduled trip. She says the missile test on north korea was a reckless provocation. Stephen engle, bloomberg news, tokyo. Vonnie the firing of that missile by north korea has been rattling equity markets from london to sydney today. Gold surging to a ties levels this year and bonds gaming and classic rust off risk off moves. Joining us now from boston is is goodvice chairman of sales to see you. Give us a readout of this market. We have the 10 year yield below to 10 right now. Very few people short. What is going on here . Othern the first place, than treasuries, volume is very light. There are some price moves. I should be more accurate and say moves particularly on the mid side, but they are not very much. This is a really quiet week in the markets. Its a vacation week. Its the last week of the two weeks that the traders have and no new issues to speak of. Its just very quiet. The news is turbulent, but the actual market activity on the fixed income side is quite light. Equities are whole different story. Said and given japans 10 year yield want to zero today as well in the latest session, we still have those levels to contend with even if more liquidity and more volume comes second to the market. We gosee a recovery or do back to Something Like a one handle so the 10 year for example . Doubt if we will go to a one handle for the 10 year u. S. But i thinknence, it is fair to say that the geopolitical and domestic anitical environment is such its going to be more difficult for our central bank as well as the others, but for our central bank to go forward and both reduce its Balance Sheet and bring rates up as much as. Arlier i thought they would they might boost once at the end of the year if everything quiets down. But that does not look very likely right now. The Balance Sheet how willoject that affect the treasury market, how will it affect the mortgage debt market . Will you be adjusting your portfolios or are you adjusting your portfolios and of that . Now we have been adjusting for about the past nearly two years. We have made a further adjustment in recent months. We now have the average maturity of about 40 of where we used to run. We are actually under five years now on average maturity. I know, wow, is right. We are in singlea territory. Yield is still all right, but we could obviously add more yield if we get more aggressive right now. Its the geopolitics and the than fear of the fed. The fed will do its darndest to bring the bound shootdown of it, but its an uncertain environment. The three major Central Banks are trapped on it. And the, europe, European Central bank and japan. This is been the normal playbook that you read about for some childrens. Banks. Ral theyre supposed to be focused on economics and employment and so forth. Now is the geopolitical and the political that is starting to dominate. Mark the geopolitical is weighing on the dollar. The yen is in favor today. The dollar continues its dissent. Its at the lowest level since january 2015. How low could the dollar go . When does the descent of the dollar end . Dan thats the 64 question. You might say that today the dollar should of been stronger. There is a strong flight to quality. What is is is a flight to the major reserve currencies. Recall that half of asian currency trading has already stopped and the others difficult now so youll have to watch the mexican peso to see what the emerging currencies are doing. Nonetheless its a flight to safety, but not a wild one. The dollar has adjusted down somewhat. On a longerterm basis, you look back a year and a half or so and say the dollar has been very, very strong. We have been giving sort of part of that back this calendar year here. So on that, i would not make a forecast on the dollar. Vonnie whatever you have been doing, you have been doing it very well because youre ranked in the 97th percentile in your Fund Universe and according to the benchmark, your outperforming as you can see from the chart on the bloomberg. Outperforming by a long shot relative to the barclays benchmark. Dan, i what point do you start moving out maturities against . At what point do you start moving out maturities again . When i like to give you a firm answer. You that i have trustees and clients asking the same question. Out that when the world is a little more safer and quite frankly when yields may be a bit higher in the difference in yields, the spreads widen out. Spreads a very narrow. Are very narrow. When things are quiet, the fed would like to raise. Whether or not they will be able to his yet to be seen. Discussed islittle the credit cycle when you look at it is clearly over in the third quadrant. Dependent on the Central Banks keeping rates low, which so far the half. Ey have. Thats the time for more caution. We are still able to get some decent returns in this market, just here and there. This market is thinner. When the market is this the in, you can add value with patients without major trades, just the small every single day, you do one small thing and it adds up. It has been doing that. Vonnie dan is sticking with us. Dan fuss will be with us again. Up next, we we speaking about brexit negotiations and how they will be impacting european n deals. This is bloomberg. Vonnie live from bloomberg World Headquarters in new york, i am vonnie quinn. Mark i am mark Barton County it down to the european close in roughly 10 minutes. Negotiations turned tense. U. K. Failed to prepare adequately for the talks. Ive read all the position papers produced by the your majestys government and none of them is satisfactory. There are still in enormous amount of issues that remain to be settled. Mark back with us from boston is dan fuss. Thanks for sticking with us. Im looking at the u. K. 10year and you have not been below 1 since the middle to end of june a few months ago. Round three of brexit talks are underway. What does the u. K. Fixed income space look like given the uncertainty around the outcome of brexit . Dan well, it looks much too pricey just to be blunt. The currency has been up against the u. S. Dollar, just under 5 year to date, but recall that it got really clobbered after the brexit vote. It is still well below that level by say approximately 10 11 . The point is here that we worry about our political situation. My goodness, in the u. K. , they really worry about theirs. How do you deal with the uncertainty that is here . Markets you know, the other situation over there, whether its a lot of as you might expect reexamination, a lot of ideas being put forth, the most recent one just yesterday from labor saying wait a minute, lets love this whole process down. Give us four years, spread it out. Lets go easy here. That one copy off guard. I was not ready for that. They said it was more like what tony blair was talking about here just a week or two back, where he was saying lets get rid of the brexit. Let stand pat. That might not be workable, but bour that switched over. Andeported in the press certainly my inference on this, it does look like the u. K. Government is not really well prepared for this. Head as i seeg my that here you have the prime japaner headed over to after abe has made it really clear that no, no, he wants to negotiate with the European Union first. There may be a strategy behind it. I dont see it. I dont feel it. So i am hopeful that things will quiet down. , i hopeful that, in my case will like to see tony blairs idea come all the way through. Intermediaten step, it would cause me to change my thinking a little bit. If you said we are going to string it out over four years. We dont want disruption that takes longer than that. Strong a threat once it is out of the european is in the European Union. So i take that into account. Mark dan, thanks for your time today. Great to have you on is always. Ahead, we are going to get more insight on the soaring euro and what it means for the Global Economy from the strategist for europe, the middle east, and out africa. This is bloomberg. Vonnie breaking news United Technology is essentially nearing a deal to buy Rockwell Collins. The price is 140 per share or less. This is according to the wall street journal. Both companies are higher by more than 1 . United technologies and Rockwell Collins potentially doing a deal. Youre looking at United Technologies shares higher by 1. 5 . Investors piled into Rockwell Collins today after the supplier canceled the row showed a roadshow and it spread speculation that the company would be closer to deal. Mark check and what is happening to european equities. The Industry Group falling after north korea fired that missile over japan. Is boosting the yen, gold, Government Bond markets around the world. I will leave you with the stock market, which is down for a third consecutive day. The close is next. This is bloomberg. Live from london and new york, this is the european close. I am mark artan, along with vonnie quinn every single Industry Group is down today. We are at the lowest level since february, down for a third day after north korea fired back a Ballistic Missile over japan, prompting a massive move into haven assets, which is not helped equity space. Volume up 26 over the 30 day average. The have come back from a bank holiday in the u. K. Esterday, we were down we will finish 1 lower today. What a day for the euro, climbing above 20. Since january 2015. We are up 14 this year against the dollar, the best start for a year ever, the best year as a whole since 2003. Traders say it is the key level that marks the 50 trade and so until the euro drops in 2014. Do not forget the minutes from last meeting, when individuals expressed concern about the currency spread. Will they do so again . Lets look at tech stocks. Trackingstocks at United States economic data. The white line is the stoxx 600 technology index. Citigroup engaged the drop on macroeconomics and has not recovered from tumbling into negative territory since that march high. The stoxx 600 tech index has risen about 2 . Last week, trading on the google sector, saying it is among the group that makes most of the revenue outside the region and has yet to respond to weaker u. S. Economic data or the lower dollar. Japans job market sets a more positive signal to the bojs reflation efforts. It rose in july to the highest 1974. Thece february unemployment level remained below the boj estimates and real income picked up. Strong word upward pressure on wages, which could support consumption. Jobjobless race versus the race. Vonnie we are talking about the below market. I want to point out models could go to 126 before we are done with the search. Lets keep watching the dollar index, now below 92. 91. 91 right now. Some of those currencies you mentioned, including the yen, beneficiaries of the weakness. We also have gold futures above 1300. Last week, we were wondering if we could make 1300 and say about it. Well, north korea and jackson hole happened, and that is what happened to gold futures. 12 year yield the 10 year yield is back to 2. 12. Be 2. 02. Level will lets go to macro movers and see what else is moving. If the dollar is moving so much today, you wonder what other currencies are moving. Naturally, the indian rupee, the ruble and the korean won being affected by political events in all these stock indexes are lower. It seems like only u. S. Stocks are higher today. Mark lets talk about more currencies, particularly to the euro, hitting levels we have not since january 2015 and sterling falling to an eight year low. Bloomberg reported the u. K. Is seeking more frequent brexit negotiations. Peter proctor is petr krpata. First time since january 2015, has been overshot the euro or not . Petr we think it did. We estimated at this point or the shortterm fundamentals, but at this point, we see this i would say the skies the limit for the euro because if you look at the grand scheme of rings, geopolitical of things, geopolitical, it is on the third winning stage in terms of ranking. Also, there was a continuation of the upward trend. Importantly, with the ecb incoming, or any trader, it is important and hard to put on a short euro position. Mark still, you are suggesting the euro will stabilize at these around 120 and then we begin the grind higher at the beginning of next year . Petr we think two factors will limited, one, the fact that the there is anng means upside, and two elections in the First Quarter of the next year. Ahead of the french election, we learned that bund yields are likely to rise. Once we move above this point, we say the sky is the limit for the euro and to the euro to break about 1. 25 in the next year and above that after. Vonnie something similar to what john taylor, the fx guru was saying today. How do you make money in this environment . Do you wait to see which way it breaks or put on some traits just in case trades just in case . Think now are great opportunities to put on long, structural trade. 1. 18,ample, if it goes to we think it is a great opportunity to put on a fresh one position again or brighter, we probably think this higher eurodollar will spill into european currencies, so we think that currencys like this reduce currency against the dollar offer great value over the oneyear to twoyear horizon. From that perspective and given what we have seen now, nearterm, yes, we wait until it goes higher to 1. 22, but structurally, when year to two years ahead, we think any is a great opportunity to put on fresh loans. Theie any currencies in emerging markets looking attractive to you . Gasoline not in the past few days. Petr yes, we have a long healthy view we are in deep lust in central and Eastern European currencies. Against the dollar offers a great value over the mediumterm. Why . Because this is the only emergingmarket region which can benefit neatly and directly from the structural change in the eurodollar and higher euro. Historically, when the eurodollar goes up against the dollar, but importantly, at the same time, european currencies benefits, hence, loan eurodollar on steroids. Mark one currency you could call on steroids is the euro pound, at 92. 98. Your thirdquarter forecast is 19 pence. Clearly, we have gone through it in the third quarter. The euro is incredible. Is it out of the question . Petr rethink for now it is out of the question. I would say i agree that this fall in sterling in august was stunning. It, theook at eurodollar is up 1. 5 and euro sterling is up 3. 5 . We estimate there are around 4 risk premium built into sterling against the euro on a shortterm basis. That means too much is priced into sterling and for sterling to fall, you would need to have more talks with brexit. Mark which is looking like we . Petr at this point, we think so. There is this massive over devaluation limit over devaluation limit. It is hard for them to push forward. The eurodollar was the case in point over the last years. It was too cheap. At this point, we think sterling is too cheap against the euro. On petr had krpata, to you are. Vonnie lets check on first word news. President trump is warning all options on the table when it comes to north korea. The white house issued the Statement Today after north korea fired a Ballistic Missile that flew over japan before landing in the pacific. President trump has said north korea has signaled its contempt for all united nations. President trump is on his way to texas to get a look at disaster. Houston inundated by flood water caused by harvey and the area may get another 20 inches. Some estimates say damages may reach 100 billion. The oil industry is reeling from the shutdown of production. Meanwhile, harvey may make second landfall tomorrow among the texaslouisiana border. President trump promising to get quick funding to texas quick way. After previous storms, lawmakers have asked her detailed spending plans. Conservatives are likely to ask that it be offset cuts in domestic ending. The u. K. Once to step up the intensity of brexit negotiations and the with the eu more often, according to a person familiar with discussions in brussels. Negotiatorief brexit told reporters he had concerns of the pace of talks. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Vonnie t y for that. Coming up they keep for that. Coming up, a warning from the ceo of best buy. It is our mover of the hour, next. Take a look at apple. Shares trading at a new record before the iphone event next month. This is bloomberg. Live from london and new york, i am mark barton. Vonnie i am vonnie quinn. This is the european close on bloomberg markets. Time for our stock of the hour, shares in best buy down as much as 11 , facing a big reversal, the biggest intraday decline since january 2016. Thatis despite earnings show the best sales in more than seven years. What exactly happened . Earnings for best buy this morning were very good. You mentioned a posted the best sales growth in seven years. 2976, itok at g btv shows that and what we saw was a 5. 4 sales growth, double the analyst forecasts and they also increased their forecast before for revenue and profit. What we sow it shares rising this morning, it was earnings when the ceo got onto the call and sounded cautious. What he said was that todays good results cannot be seen as the new normal in the level of growth may not be sustainable, particularly into the fourth quarter, around the holiday season, when we see emotional activity and very competitive. It is the ceos comments on the Earnings Call that sent the shares shattering. Vonnie a 10 move is a lot. It is difficult to know whether he intended to go that far, but i think you heard that caution and that reminded investors about the big threat we always talk about when it comes to retail and that is ecommerce and people stop buying things in bricks and Mortar Stores and move online, and we talk about whether it is apparel, groceries, and now whether electronics. One thing i saw from the ansumer survey done by analyst, he estimates more than half of online sales now goes to amazon. Vonnie that is a fantastic report on challenges facing best buy. Much appreciated. Back to Tropical Storm harvey, the situation remains dire in houston and surrounding areas due to flooding and now it is back in the gulf of mexico, expected it is expected to recharge. Joining us on the phone is a representative of parts of the southwestern areas of houston and surrounding areas. What is the latest in terms of search and rescue . Thanks for joining us area to you thanks for joining us. I just received the reports out that houston and they rescued 400 people with water crafts recently. They have opened up another shelter at kiplinger high school. Itt night, the opened when Marshall High School and it was filled to capacity within hours. At the city center in missouri, 120 people are there and other shelters are opening in churches and schools around the area. We would like to thank those who are volunteering, first responders, good samaritans, and i said my prayers and sympathies to those in harms way because were not out of the woods. This is still an emergency situation and we have a lot of work to do. Vonnie of course. What more and can be done . Every National Guard has been sent out and lots of resources from fema and the department of homeland security. What else that you want in texas and bordering areas now . Representative green yesterday indicated that too much will not be enough. This is one of the circumstances that you have to cope with maybe once in a lifetime, and in this circumstance, you have to put everything you have into it. All the resources you can. I am glad government has added additional National Guard persons, helicopters, more water crafts. These are the kinds of things we need. We have to put them to good use. I think if there are others who can help us, we want that help. Volunteers are coming from louisiana and other places. We need as many people on this as possible. Too much is not enough but we have to get it done. Vonnie the president will be addressing people in Corpus Christi in austin today in the next two hours. What do you want to hear from him . Representative green i want to hear him make it clear that he will do all that he can to make sure that we get all of the resources necessary, available an immediate recovery in terms of the temporary need, and a longterm need. This is not something that will in a few months. It is going to take years, and we need the resources necessary to recover. Not only for my district but the entire state of texas. And the president needs to let people know that when we see these moments in time, we are going to do what we would do for all americans right here in houston, texas, and when we develop this bill for the resources, i do not want to see us get a bill that will hurt someone else so that we can help the people in houston. We do not have to hurt people nowneed food stamps or snap , or other services so we can help people in houston, texas. This government is big enough to take all of its people. Vonnie do you anticipate being able to go back to work in washington, d. C. , next week is to mark represented the green i plan to be here as long as the need is going to be here, but i assure you i will be in washington, d. C. , for that critical vote. I will have to be there for that vote. As long as there is a need in houston, i have got to be on the ground in houston. I may be in washington, but i will not be there long. I will have my heart in houston with my constituents. All this has been a difficult month in so, so many ways. Will congress be able to get together and come to some kind of agreement on anything in september . Rep is in the green i talked to mike representative green i talked to my colleagues and i have not had one person say we will not reach a consensus on emergency supplemental legislation. It ought to be done with the specific needs of people in mind. This is an opportunity for us to try to accomplish things. This is a major catastrophe and it takes a major effort on our part to make sure people are taking care of. Vonnie t y to representative thank you to representative green. And the American Red Cross is asking for your help in texas. They already have dozens of shelters running but it does expect the crisis to grow expansion look, and thousands of texans will end up relying on the red cross for food, water in a place to stay. Your donations will help. Go online for further details. This is bloomberg. For our global battle of the charts, where we look at the telling charts and what they mean for investors. You can access them on the bloomberg irony the function featured at the bottom of your screen. Kicking things off is christine. Hi, mark. Today, north korean tensions but the dollar has been locked out of that rally today and in 2017, hasreasuries and gold etfs delivered positive returns, as you can see year to date. That contrasts with a negative return, decline of almost 10 for the bloomberg index. That decline actually coincides with a negative turn on the surprise u. S. Economic index, which means u. S. Data of late has been disappointing analysts. That means the dollar is a bit more of a play on the u. S. Economy rather than safety and anything that hurts risk aversion, such as the events today would only be bad news for the dollar. If you want to keep track, check out this chart that g btv 996. Mark vonnie . Vonnie i am rubbing my hands because i have a great chart on jobless claims. We have been looking for those on thursday before jobs data on friday. I wanted to point out that typically after a major event catastrophe, like we see now in texas, you do see jobless claims spike. This is katrina in 2005. Course, this was sandy. Becausesee the spike all the people could not get to work those weeks but it doesnt last. This is what you see in the proper trend of rising claims. We are likely to see distorted inbers of the overall trend job creation and it should continue. You can see that on the bloomberg that g btv 9474. Mark which sets us up nicely for the job report later this week. Vonnie, christine has not gone the family mafia, but i did love christines haven chart, but vonnie, you brought me history of initial jobless claims. So by the slimmest of margins, the winner today is vonnie quinn. Vonnie i can never read your mind anymore, mark. There is distance created. I used to be able to read the able to. Mark i like to surprising. Brilliant job by christine. Coming up, a big interview you will not want to miss. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Vonnie it is in new york, 5 00 p. M. In london and midnight in hong kong. I am vonnie quinn. Welcome to bloomberg markets. From bloomberg World Headquarters in new york, here at the top stories. The staggering totals keep climbing as texas braces for even more flooding from Tropical Storm harvey. Some estimate damages could run as high as 100 billion plus. We had the latest. North korea sending another sign of defiance, firing a missile directly over japan. Japanese Prime Minister calls it a grave and serious threat to resident donald trump says all options are on the table threats. President donald trump says all options are on the table. And we hear a take on the current m a environment with uncertainty out of washington. Lets start with a check on first word news