North korea tested a nuclear bomb on sunday. Two Industry Groups are rising and the rest are lower. By twon gauge was down thirds of 1 are in now it is. 5 . 5 area the vix raised by 12 , the most since midaugust. That was the day that north korea fired a missile over japan. To trumps fire and pure he comments had the gauge rise to 19. 3 , the highest since april. Levelsnowhere near the we were before the French Election in may. That is the german tenyear. It is down a basis point, 36 basis points as well. China sent that missile over japan. The yield on the 10 year falls to its lowest level in the yields have changed little over the week. 60july 13, the high was basis points. That was the highest since january 2016. It has come down 17 basis points eyes are on mario draghi the ecb thursday. The last time i checked, the function was up against swiss francs, the swedish currency rising against the yen. Cleanospect for a resolution of the north korean tensions looks slim. There is a risk the yen could push back. Produce ave could short squeeze her in north koreas missile test did spur a move in the end. It did little to dissuade players betting against the currency, going against the third most popular that across major currency. Ugly if thereurn is a shakeup. The currency is on the back of that geopolitical tension. The mostne year after powerful detonation. North korea was preparing for an intercontinental blissful missile launched from seoul. Speed on the growing tensions between north and south korea. Up theh korea is ramping pressure on north korea. Hoping for a is peaceful negotiation. Over the last 24 hours since the nuclear test, we have seen increasingly south korea swaying toward military measures. The u. S. And south korea are considering deploying a Carrier Group and strategic bombers to the region, as many as four antiballistic Missile Systems could we launched soon. That is according to the news agency. An impacta approved survey on that. It has been a contentious issue among locals here in south korea as well as the president himself who has been against such a program in fear that china could he angered by this from the u. S. And south korea and japan. Mark look at how korea is affecting the markets, its good to see you. They are showing remarkable resilience. Tuesday,ested last things have calm down likely after. About were talking volatility indices picking up. Point,ess levels at this there has been a pick up and save havens. This is just over the last month or six weeks. Investors are running for cover. This is not a headlong flight or something significant. U. N. Have a year in Security Council meeting right now. China back to last sanctions. Seems they are resisting countermeasures to cut off oil flows. Trumps rhetoric is ratcheting up this military action. It wont be taking place imminently. Areall keep an eye on that lets move to the big event of the week, the ecb meeting. Two words in the you bf notes, stay put. John if you went back several months ago, we thought this given what happened to the euro, it is stronger than it was then. That is like me is difficult that draghi will be striking a balance tone for the moment and hope that upside strength doesnt follow. It did after the last meeting. We think tapering. Mark how does he ensure the euro does not continue its upward trend after the meeting . He hasnt been majorly successful. John if you look back at the july meeting, the impression was he was like dovish. His take was quite dovish. He did not explicitly address the euro at that point. Have been followed by a slightly softer euro. Around, he does say further strength would be unwelcome and warned investors who are pushing the ecb not wanting to toe that much longer. Nontaperhis a tantrum . John qe might be scaled tackle the next six months. Buying this place, theyre going to run into problems sooner rather than later. Robust. As been the indicators suggestible state robust. Inflation is edging toward the target. From a policy point of view, it is appropriate they take the foot off the accelerator. They are very keen to avoid anything like what we saw in the when theyears ago markets were taken by surprise. Balance,to strike a the euro does not go on strengthening and they slow down the case soon. Mark we will be back in just a couple of minutes. Lets check in. The president may end the program that prevents young undocumented immigrants from being deported. According to the new york times, he would give congress ticks months to come up with a program. Said thenor of texas state me need more than 120 billion dollars. That is more than the u. S. Spent on Hurricane Katrina in 2005. The president made it clear clear that this is just a down payment. Has a report there is an agreement to pay a 65 billion exit fee to the eu. There is an attempt to get trade talks started. Merkel was on the defensive about the debate. The candidate suggested that the government has not cracked down hard enough on auto executive. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Mark thank you so much. We have a look at sterling. That is next. This is bloomberg. U. K. Lets see how the economy is holding up. This is before we talk exit and other matters. Lets go back to the ecb. Could entry points to strategic shorts by real yields . John we have seen a big drop in developed markets. Goods, there are a lot of reasons for that from a geopolitical point of view. From a macro point of view, we dont there is justification. Qe is starting to taper off. The economic seven holding up well in the eurozone. Bondsnk yields on 10 year are trending significantly higher rid higher. We have a forecast that is about 40 basis points at the moment. Next year as the tapering runs its course and the supply and demand dynamics change with the is ourng things it forecast. Did at the on expect moment. Things are deteriorating with geopolitics. Fundamentally, we think yields represent an opportunity and they should be going higher. Mark anything with the long case . John they have been compressed by the market. U. K. Lets talk about the greece. In the u. K. To liesme goes on, the power within. John there are differences. We think that is one of the realities of the negotiation. There are several reasons why the deal will, relate in the process. One of the reasons is the close you get to that without resolution, the more the leverage and the negotiations want award the eu, who cliff edge exit. Think its not going to come anytime soon. That is a worry for that u. K. Economy the longer we go without any , thety on what goes on bigger the danger of a slowdown in private sector demand and investment and sentiment and confidence. Mark it allows the boe to have some defenses. John we think they should. Growth has slowed significantly this year. Ofis a school it thought that says it is only temporary. Seriest happen without a of interim arrangements on the post brexit arrangement. Think we will, but only late in the day. Year,eans for the next our growth will be around. 2. That is likely to continue. Mark Capital Growth . Markethat weakens the and brings inflation back down. Mark the basis comes down as well for the end of the year. It starts to look. John we think we are at the peak right now. We have seen recently that the big move in sterling ended about a year ago. We dont think so. From here, we think this is a much more gradual decline the one than the one we saw. By the end of next year, we think it will be down at 123. We think we have seen most of it. Eurosterling doesnt quite get past that. Mark yields . John we think they will end where they are right now. We think yields will keep rising in treasury yields will dissipate. For the u. K. , there will be very specific reasons. Mark thanks a lot. Were going to go to the u. N. Ambassador who is speaking. Haley this is not a situation in which we have allowed divisions to stop any action. Here we are. Despite our efforts over the past 24 years, the north Korean Nuclear program is more advanced and more dangerous than ever. They fire missiles over japanese airspace. They have a icbm and capabilities. They claim to have tested a hydrogen bomb. This morning it, the regime is preparing for yet another icbm launch. To the members of the security loud so council, enough is enough. We have taken an incremental approach and it has not worked. Members of this council will no doubt urge negotiation and a return to talks. As i have just outlined, we have engaged in numerous talks with the north korean regime. Time after time, they have not worked. The time for half measures is over. The time has come to exhaust all of our diplomatic means before it is too late. We must adopt the strongest possible measures. Kim jonguns actions cannot be seen as defensive. He wants to be a knowledge as a nuclear power. Using thoseabout terrible weapons to threaten others. Nuclear powers understand the responsibility. Kim jongun shows no such understanding. His use of missiles and his Nuclear Threats show he is taking for war. War is never something the United States wants. If we dont want it now. Our patience is not unlimited. We will defend our territory and our allies. A socalled brees or freeze is insulting. When a rogue regime has a Nuclear Weapon and an icbm appointed at you, you do not take steps to lower your guard. No one would do that. The time has come to exhaust all diplomatic means to end this crisis. That means quickly and in the strongest possible measures. Strongest sanctions will enable us to resolve this problem through diplomacy. We have kicked it can down the road it long enough. There is no more road left. This crisis goes well beyond the u. N. The United States will look at every country that does business with north korea. We will look at every country that does business with north korea as a country that is giving aid to a Dangerous Nuclear power. A real impact on how other Outlaw Nation to seek Nuclear Weapons choose to conduct them selves in the future. The stakes could not be higher. The urgency is now. 24 years of half measures and failed talks is enough. Thank you. I think the representative of the United States is gordoning us chang. He is the author of nuclear showdown. Thank you for joining us. I dont know if you get here nikki haley there. We need to have the strongest sible sanctions hearing sanctions. Policy of stronger sanctions going to work against korea . That itnk we consider hasnt then tried. The sanctions we have had on north korea have not then severe enough. If we were to have a total embargo, that could change the calculus. An embargo on the countries that do business with north korea could change the calculus for their support. These are things we need to do. I know they sound drastic. Thats better than going to war. War with north korea could be histories greatest conflict. Threatsnt that a veiled against china . Absolutely. It should be less veiled that it is. The problem with diplomacy as we assume china wants to cooperate to denuclearize north korea. Thats not clear to me. China has been supplying north materials. Perhaps the technology or the most of danced missiles. We know china has been Money Laundering for the north koreans. Withis deep involvement beijing. We need to recognize that china is part of the problem and we are never going to make any progress unless we impose big cost on china. Mark if you push ahead with penalties on chinese banks, does that have a knock on effect . Effect nothave an only in the region around the world. States ink the united can permit chinese banks to engage in criminal act 70 using their dollar accounts. Activities using their dollar accounts. Startesident needs to declaring chinese tanks primary Money Laundering concerns. He did that on june 29. He needs to do that against the bank of china. They were cited in a u. N. Report advising a Money Laundering scheme for north korea. We cannot ignore that more. We have to go after the largest chinese banks. We dont have a choice. Trump get south korea to change its position against north korea . There talk of appeasement with north korea will not work. They only understand one thing. Isn it comes to south korea, diplomacy failing . South korea has tried a number of outrages outreaches. They have rebuffed all of them. South korea has had a problem. They have tried to ease the north koreans. They dont want to be appeased i sold. By south korea. I thought it was wrong for President Trump to send that tweet. You dont treat your ally like that in public. Its important for the United States to keep south korea on board. Has an antisouth korean attitude. Evident in the free trade agreement. They will withdraw from the pact. He should not be doing it. Mark thank you for joining us. Thank you. You can catch the meeting in its entirety on the bloomberg. Nikki haley spoke a few minutes ago. 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. Mark this is bloomberg markets. We are one hour until the close. After they tested the currency board choice is haven of the swiss franc. Sterling is little changed against the dollar. Theeuro is lower against yen. It is up against the meeting with the ecb. Haven assets today. Theee yields decline across space. 10 year yields are all lower today. The un Security Council meeting is underway. Hasi haley said the u. S. Kicked the can down the road it long enough or it south korea says they are planning an International Missile loss. This comes after the regime carried out its sixth the most powerful Nuclear Detonation so far. South korea has suspended flights. The test site is at the virtual target. Says the threats cut off the is unacceptable. China is north koreas biggest trade partner. An aidnuchin wants package with an increase in the debt limit. Congress they need to raise the debt ceiling i the end of the month. The duchess is suffering from morning sick this and has canceled her engagements today. They have two other children. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Mark thank you. This is two days after donald trump asked for eight ilion dollars in aid. Greg abbott said the hurricane could cost up to 180 billion. The governor said the president and congress made it clear this is just a down payment. Compare it to katrina. Much greater than katrina in sandy combined. Joining us is the Bloomberg News reporter. Aregulf coast refineries planning to resume operations after they were shut down force by flooding. Thank you for having me. Some have resumed normal operations. We have a severe Refining Capacity cut. Some of them coming back online has helped futures dropped to the lowest point in a week. Has the what extent Energy Industry in houston and the surrounding area been affected . Major damage to assets and infrastructure . Still feeling that out at this time. As i said it, fifth of Refining Capacity has then cut. Gas, there hasal been some production upset and that is coming back online. When a hurricane comes in, offshore platforms have to evacuate. Some of those are coming back online now. There has been a hit to the u. S. Energy sector. At the same time it, we are just enable to get in and look at what assets are being effect. Mark to what extent has the hurricane revealed how dependent mexico has become on natural gas to its northern neighbor . Ryan we send natural gas tonight to go the pipeline. They are the biggest buyer. Hit,ay after harvey exports were cut 18 . As far as the omg side is concerned, the only asked orting facility in the United States this point said production was not halted it. The problem occurred that note vessels good get into the dock to offload the gas. Presents the problem of where they put the gas . They only have so much storage. The high ad from week ago. Hit. E seeing these of fact mexico felt the force of it. Mark will their appetite for natural gas grow more and more over the next 15 years . Ryan yes. Definitely. Mexico deregulated their industry. Made are pipelines being right now on the mexico side of the border. As they come online it, more power plants will be switched to natural gas. They will be more dependent on u. S. Gas. Mark thank you for joining us. That was ryan collins from houston. That is the latest on the refinery closures. Lets look at how the industry is helping the victims. Joining us is the chief executive. The company is based in houston. Thank you very much for letting us. To what extent have you seen a pick up in business and inquiry cents Hurricane Harvey arrived . Hurricane its way through the area, phones were ringing off the hook. A lot of different people, especially corporate entities when it to utilize thrown service to utilize the damage. Has the airspace been restricted at all . Ryan it was. There was a temporary flight restrictions that goes through september 5. That affected flight operations. You had to go to the faa and ask for emergency authorization. That made the process cumbersome. They are trying to eliminate that the amount of traffic is in communicating with the rescue efforts. This given the extent of the damage the hurricane has caused, i have read this could the the seminal moment for the drone industry. Ryan without a doubt. There are two phases in a natural disaster. The first is the emergency response. Thats what our First Responders in houston were doing. They have been doing that in the past week. Floodwaterslp when and access to areas you need to visit to see whether there are people or pieces of equipment that are critical or might affect the safety of people around the area. There is the recovery effort afterwards. Storm, itsith the going to be huge. Its going to last for years most likely. Drones are a great tool for understanding and assisting the process. There are a lot of different ways and help out there it there are services that drones can provide. Its going to be an integral part of the process. Byk have you been shocked the data youve collected in the wake of the hurricane western mark hurricane . Ryan its interesting to see. Some of the footage we cap your of the flooding, especially in areas where the storm was unprecedented, seen floodwaters where we ever seen floodwaters before, even in really bad storms, was shocking. I think the city has come together in a rate way. I do the floodwaters are starting to recede. Some areas are still affected by the reservoirs and they are still draining. Some shocking footage was captured. Mark the faa is trying to make standards to track flying drones and to what extent are tensions between regulators and drone manufacturers, to what extent are those tensions going to be influenced by the rulemakingorts and by the faa . Interesting give and take. The industry has developed so quickly. Ishink what everybody wants safe operators to be able to do their jobs and assist. Right now, the faa is trying to figure out how to quickly authorize drone operations, especially in an area like this with the heavy demand aircraft traffic. They typically set up a support center when they have this amount of workload. That relationship between the faa and the joan industry, that has great munication. Companies like us are going to be given feed back. May make arma landfall. Learning from harvey could benefit everybody. Mark thanks a lot for joining us today. Markets, on bloomberg a record 2. 9 billion. The search giant is taking actions. To the un Security Council median on north korea is underway right now. The u. S. Ambassador to the u. N. Set patience isnt unlimited. President trump will be speaking to the south korean president today. We will continue to follow this coming up on bloomberg markets. This is bloomberg. Mark its time for the Bloomberg Business flash. The use top courts will rule on whether the sale of the fine against intel. Its a big antitrust case. If intel wins, it might encourage other companies to be more aggressive in appealing fines. Haveivate equity firms given into the demand from a hedge fund management. Part sharehare owners will get a higher price for their stock. He is been holding out for premiums. Flights toveiling north america. 48 from then save standard fare. Pay toll have to checkin luggage. The antitrust regulators have approved germanys plan to loan money to a struggling carrier. Shareholder with through its financial support. Latest Bloomberg Business flash. Lets get to the eu. They are hoping to get more revenue from alpha that. They were find for breaking antitrust rules. At theke to bloomberg forum. Would satisfy her concerns in the google case . We will have to see the change in the market. Customers get a chance to choose other comparisons. If you have to go to page for in your search results to find a competitor, you are not to be found. Thats not going to happen. We are looking for chases in the marketplace. That thereif we find is no equal treatment, we will start investigating in depth. Might lookssible you into google behaviors . They might make changes concerning the way they show travel or mass results . It is possible. Point when weing are looking into new areas. The fact that we have found dominant, you have a special responsibility. You are welcome to row and be successful. You cannot misuse your government position. Having found that and demonstrated that, you have a starting point with local search or travel. It is not as demanding as before. Mark this is part of the other conversation. What we are looking for is choice, a port affordable products to buy. This is what we are looking into. We have at a couple of months to go into depth. It is very important people not be locked in. They can have choice to do what they do. Could they offer you some kind of payment . That happens. If we have serious concerns, they have to be addressed. The companys will have to offer things. This is the way we work. The companies have to come forward to make this concern. Mark still ahead, Angela Merkel is on the defensive over dieselgate. Has that move the needle in germany with less than three weeks to the election. The un Security Council emergency meeting on north korea is still on the way. It is still ongoing. We will follow the headlines here on bloomberg television. Anna live from london, i am mark barton. Angela merkel has been on the defensive in the only televised she was accused of taking her foot off the pedal on dieselgate. The government could have done more about the scandal. Did this debate move the needle . Joining us is patrick. How did the debate go . Who wanted . Have in a number of flash polls after the debate. Its the only debate in the season. Merkel had a better debate. We will have to see if this has any affect on the polling now. Mark did merkel at any juncture during the debate look alterable at all . Theick you mentioned diesel scandal. Its not the first time shes been pressed on the issue. The question came from the moderator. The question was why have you gone so easy on carmakers . Why is there no heavier hand from the government on the diesel scandal. She said she was livid and outraged. She held a meeting today in berlin with them. She did seem a bit defensive. Mark is there a problem with debate . The social democrats have governed with her, with their own party. Mean there is little to separate the two sides . There is an element of that area that is more problem for the social democratic challenger. He tried to attack her on the refugee crisis, her failure to bring other countries on board. Agreement ons a in how to respond. He wanted a stronger voice on that. It is difficult or the social democrats. Like onat does it look the Coalition Options . Who is she likely to government . Freest eyes are on the democrats. They could form a majority government. Polls show its going to be a tight squeeze for that. Is there any threat to her lead . Patrick so far, not much. Merkel has had a strong lead from the spring. Year, beginning of the things looked fairly even. That has gone away. Globalas been some turmoil and that his plate in her favor. There could be some narrowing in the weeks to come. Far, she looks like she is in a strong position. Mark thank you for joining us in berlin. Its the close next. We are 35 minutes away from the end of the session. U. S. Markets are closed. In london,eclines frankfurt, and paris. I will leave you with the currency war today. It is the yen and the swiss franc. The closes next. This is bloomberg. Mark it is 4 00 p. M. In london, 5 00 p. M. In frankfurt, and 11 00 p. M. In hong kong. From london, i am mark barton, and this is european close on bloomberg. Here are the top stories we covering from bloomberg and around the world. Yen is higher as north korea tests a hydrogen bomb. Maybe preparing to bm. Nch an ic the ecb holds its policy meeting this week. Then you can politics, brexit talks, the eu and brexit trading words about how much money will be required for the divorce. More here from the economic commissioner. How about european