Homeless oil refinery is hobbled in the oil refinery the German Media Company says a weak advertising will hurt Third Quarter profits, prosiesen good morning, everyone it is tuesday. If you take a look at the heap map, the stock 600 in europe, you are seeing a sea of red, a picture of risk aversion as we see that north korea has fired a missile over japan it is down by 1. 34 . We are trading at the lowest level in six months. This has to do with risk aversion in the face of the latest aggression from north korea and also the euro strength it has climbed above the 120 mark for the First Time Since january, 2015. Thats not helping many of the exporters in europe. Lets have a look at european markets. What you will see is we are seeing lots of red on the screens. There you go lets swap over, the ftse 100 off by 1. 3 . Similar for the other markets. When it comes to the sectors, media is one of the biggest declineers y it was downgraded by goldman sachs. It is looking for investors as the advertising environment is difficult. As far as the fx markets, a flight to safety we are seeing investors flocking into the yen, up 0. 6 against the dollar, 108. 58 the euro is gaining, 12040 is the level. The dollar has fallen to the lowest level since january, 2015 safe haven is doing pretty well. That is also gold, the yen, the swiss and we are seeing some of the risky assets declining today. Investors moving out of equities and Everything Else deemed risky. Chinas Foreign Ministry has called for restraint after north korea launched a missile over japan. The latest provocation from north korea has prompted investors to pile into safe haven assets, the japanese yen yields on german and japanese government bonds have touched multimon multimonth lows lets bring in tom smith thank you for joining us do you jump on the bandwagon or pile into safe haven or stay on the sidelines . We dont jump on the safe i have been haven bandwagon. North korea is what investors wish wasnt happening. We try and use a game theoretical framework to understand whats going on north korea is an agitator within a larger game theater across asia where the dominant players are the United States and china who are competing for influence in trade and Security Issues north koreas primary objective is to preserve its regime by being an agitator and not go so far as to make them gang up and say we have to stop this and we agree on how to do it. We think this is the kind of thing that should not tip into full scale risk aversion thats not preelreally warranted there are effects you should shy away from, korea, japan. It is not the thing we think justifies a fullblown, riskoff move it happens for a couple of days and it does tend to die down markets are a little decency advertised to that you are applying game theory. I am wondering how you are factoring higher volatility into your portfolios. We are seeing a number of flareups and the response from washington, which isnt always measured that is set to increase volatility we saw a big jump in the vix two weeks ago. It is higher volatility coming off a low base. There are relatively few influences that serve to raise shortterm risk. A couple of years ago, there were a lot of things happening at once that upped the risk level in markets it certainly does have that effect it is kind of standing on its own. Some of the elements have gone away, the rise of populism, the sharp swings in commodities, notwithstanding whats happened in the last couple of days they arent there anymore. It is volatility that is moderately higher but not the kind of thing that warrants a huge amount of protection. We are going to pick up this conversation in a little bit we want to get more on the latest coming out of japan we have more on the latest escalations between north korea and japan. Nokiko the missile was launched just before 6 00 a. M. Tuesday morning and flew around 1,700 miles and broke into three pieces and fell into the waters off japans northern coast japans Prime Minister abe strongly condemned the launch. Translator this missile poses great threat and we strongly protest they said it was likely a new midrange Ballistic Missile capable of reaching the u. S. Territory of guam. Japanese forces didnt attempt to shoot it down because they had determined it would not fall within the japanese territory. They issued an alert while sirens blaired out in the northern regions as the u. S. And south korea conducted regular joint military exercises set to include scenarios of preempty strikes against north korea missile bases and its leadership they have irritated pyongyang and prompted them to launch the missiles the japan and the u. S. Have requested a United Nations meeting to discuss the missile test and call for heavier sanctions on the country north korea is accelerating its efforts to develop a missile that can reach the u. S. Mainland north koreas National Foundation anniversary is coming up and japan as well as neighboring countries are staying on alert thats all from the nikkei, back to you thank you so much shares in gold mine are wrangled they are trading slightly higher as bullion prices soar they are flocking to the safe haven. Randgold up by 3. 7 . Let us know whether you are jumping on the safe haven bandwagon at cnbc. Com or do you think this is something that will move on pretty quickly and you want to get back to the bigger macro issues . P tweet me at carolyn cnbc. We will be back after this short break in two your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Welcome back to the show uvs was hosting economic laureates as part of its nobel perspectives to acknowledge its role in the economy and society. O nancy hummingford has been speaking to the laureates. For the first time, the u. S. Is bringing together four Nobel Laureates to take questions on the big economic issues. Front and center is the future of employment, what the jobs picture will look like when you take into consideration the acceleration in technology and a. I. There are many questions being asked by investors and central bankers alike about wages. Why in some places wages havent kept pace with strong Economic Growth that is the question i put to peter diamond, a Nobel Laureate, who has spent a great deal of his career looking at labor economics and particular frictions when it comes to labor searches take a listen to what he had to say about the question around wages specifically a big driver of wages is people moving up to higher paying jobs. Thats not happening the total number of quits in the u. S. Economy is about the same place it was before the crisis i have be given how much employment has grown, you can see the quick rate is way below what it was before if a lot of wage increases come when you shift jobs, thats not happening. Thats an important part of whats going on. Peter diamond, Nobel Laureate weighing in on the fact that the quit factor is just one component of sluggish growth he weighed in on the fiscal policy saying it should be doing more to hold up their side of the bargain and help increase aggregate demand that, of course, continues to be a big question mark as we await physical policy momentum in washington, question over whether or not infrastructure and tax cuts will get through. That is just one uncertainty weighing on the feds tax line back to you. Creditors overlooking air berlin are likely to pick the buyers by midseptember, according to reuters the decision could come as soon as september the 15th. Some sources say the schedule is ambitious. Air berlin declined to comment on that story. German Media Company proseiben is trading at the bottom of the stock market this morning. This as the firm struggles to encourage viewers to spend money and view ads on its online sites. It has upheld its full year profit guide and warned them the revenues and german language markets would decline. They have also been trading lower today. German finance minister says greek debt relief is currently not on the agenda. In an interview with a german newspaper, they urged them to push on for their reforms and strength in economic competitiveness. Germany says it will not discuss debt relief before its election next month go figure, i guess Angela Merkel met p with African Leaders to discuss the migrant crisis and agreed to provide protection for those at the country of origins instead of destination. She said she had no regrets over her decision to admit over 1 million refugees in 2015 she is set for her annual press conference coming up in a few minutes time at 10 30 cet. We have spoken to the president and asked them what the biggest risk was our membership and all other Business Partners im talking to dont see a risk in the elections. They rather see a hope that reforms that are Still Necessary will take place. We will have the investments in infrastructure, not only in streets and rivers and whatever but also in Digital Infrastructure for the future. They have a strong hope in tax reforms for the future to make the economy to make the economy stronger here in germany and germany more attractive. I hear more hope than risks and anything else. In your view, is there remote risk that Angela Merkel might not win this election . The risk might be that we have instability in politics in germany. We didnt have radical changes in the past and will not have that in the future they say, yes, it will be safer for the future lets see what the election day will be. Reporter perhaps with the advent of the liberals, we get more Economic Policy reforms for the next four years. Whats the wish list, as you were saying. The wish list is clear advocacy for free and fair trade, open borders, nothing that has unilateral elements but really a worldwide free trade. Secondly, the tech reform, Digital Infrastructure these are the three things that are very, very important for the future reporter do you think the new government, whatever it will be, will be a more pro european and that we see more european integration the next four years . Yes, i any so germany is one of the powerhouses in europe. All the politician parties are all saying yes, strong europe is what we need we need it for germany, for growth in germany but also in europe therefore, yes, i think we will have support for a strong europe in the future as well. Lets get back to tom clarke, partner and coport foe yoel managat william blair. We are trading back above the 1. 20 for the First Time Since january, 2014. How far does it have to go before the ecb comes back in probably some way if your chart went back further, you would see the euro has traded just about 1 and 1. 40 the euro versus the u. S. Dollar is not that far out of line much the euros valuation is emerging thats a different story against the u. S. Dollar at 1. 20 might be the first time in a couple years if you look at euro trade, a fraction of the euro zone economy, it is not that large a fraction the economy is fairly close. What that means is a level of dollar euro doesnt matter a great deal we shouldnt get carried away with the impact on the export s exporters . The cyclicals are falling. Those are overdone, you say. I think your chart with the red zone a few minutes ago where we saw most european markets down by a similar market a lot of that is bringing in the influence. It is not easy to separate the elements as far as the euro down, mark the questions are always looking for more than the Central Banks are willing to put out they talk about the ecb soupdndn the alarm and being silent at jackson hole they didnt say anything at the july press conference they just mention it Central Banks dont really sound alarms they shouldnt at this level the market looking for that tends to indicate to me that long euro is really not a crowded trade right now. There is reluctants that it will go higher. That sounds like a pretty contrarian view. Most people tell me the dollar is oversold and the euro is overbought but you say it could go up a little bit further what does it mean for european equities it is a margin nal negative influence. If we look at fairly good growth in the last few quarters and the decline of Popular Support for populist parties in germany, spain, italy, france, if you look at the polling levels for these parties, they have been falling steadily since the start of the year. A number of clouds have disappeared off the horizon. This is a negative influence at the margin i dont think it gets in the way of what is fundamentally attractive euro and equity markets. What are some big themes you are looking at for investors at this point apart from euro dollar, both of the countries are highly overvalued against many currencies in the emerging world. The currency opportunity we see is really to be long of several emerging countries, not all of them but quite a lot it is the developed currency space where they are all unattractive to us other than that, u. S. Equities are looking somewhat extended right now. There is opportunity in several markets in the euro zone, italy, spain, to some extent france, not particularly germany, the u. K. As well, despite the brexit negotiations it doesnt amount to a huge gap between price and fundamental cost the main thing we responded to last year is some of the not particularly fundamental but macro influence such as populism, such as china have receded in importance and they are no longer clouding those opportunities and allowing a slightly more fertile environment to take risk. Before i let you go, one big fop topic we cant ignore is brexit. You have another contrarian view you actually like the pound . There arent very many market currencies that we like. The pound is one of them the reason why we like it, it has gone down so much already. More than a year ago, it depreciated quite sharply. Because it stands alone, we are more inclined to want to express a positive pound view despite brexit that is a slowmoving train. The clock is ticking the u. K. Does not have very much influence much the eu has the most power things are going to favor the uri European Union as the clock ticks. The pound having gone down as much as it did in 2016 means it is fundamentally quite attractive and we are rather happy to have a positive exposure there in the portfolio. Currently at 129. 66 when looking at the sterling dollar here whats the up side here . Probably about 5 10 thats not necessarily going to happen very quickly. The euro is something very smaller than that. In the scheme of things, it is relatively rare in our world right now to find an attractive market right now tom, thank you so much for your views really appreciate it tom clarke partner and comanager at william blair. And expedia chief month Dara Khosrowshahi is poised to accept the new offer at uber. We have more details Dara Khosrowshahi was selected to be ubers next ceo at the end of a dramatic weekend that saw jeff immelt drop out via a tweet and meg whitman reenter despite publicly deny she was interested in the role khosrowshahi is the current expedia ceo. His name was leaked before they had a chance to tell his employees or his own chairman, barry dillard, wrote that nothing has been finalized but having extensively discussed this with dara,ible it is his intention to accept. He was the dark horse candidate that managed to stacey credit throughout the turbulent search process and has prosided over expedias expansion to more than 60 countries, quite the deal maker bringing travelosity into the hold while fending off air b b. If and how much he will work with the former ceo and founder, trav Travis Kalanik is a big question plenty of executive positions to still be filled and not least boosting morale and fixing culture in a company that has just gone through the ringer still coming up, we cross live to houston, texas for the latest on Tropical Storm harvey. Dont want to miss it. Well be back in two do i use a toothpaste that whitens my teeth or. One thats good for my teeth . Now i dont have to choose from crest 3d white comes new whitening therapy. Its our best whitening technology. Plus, it has a fortifying formula to protect your enamel. Crest. Healthy, beautiful smiles for life. Welcome back asia on edge north korea fires a test missile over northern japan alarming residents and triggering a sharp response from regional leaders the flight to safety helps send the euro to a 2 1 2 year high grens tagainst the dollar danger zone. Flooding from harvey punishes the coast and leaves tens of thousands homeless prosieben shares plummet to the bottom after the German Media Company says weak Advertising Sales will hurt Third Quarter profits. Good morning, everyone if you are just tuning in, you are watching live pictures of german chancellor, Angela Merkel, as she gets set to deliver her annual Summer Press Conference well keep you updated of any developments out of that she hasnt started speaking yet. She will do that imminently. Lets take you back to the markets and u. S. Futures are looking quite negative the dow jones seen falling triple digits. 125. The s p 500 seen up by 21 points and the nasdaq off by 56 points. The major average treaded water for much of the regular session ending with the dow falling 5. 5 points this is now the response to the latest aggression coming out of north korea firing that test missile over japan we are still very much feeling that r