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 m