The standoff with North Korea escalated this morning, as the rogue nation fired a ballistic missile from Pyongyang that flew over the northern Japanese island of Hokkaido before plunging into the Pacific. It was the first North Korean missile to cross over Japan since 2009 but the fourth that North Korea has launched since President Trump’s warning of “fire and fury”a couple of weeks ago. Japanese Prime Minister Abe said “this reckless act of launching a missile over our country is an unprecedented, serious and important threat.”

Global stock markets took the news badly. Asian markets tumbled, and U.S. futures pointed to a lower open in the U.S. this morning (more below).

Meanwhile, as many as half of the buildings in the Houston that are at high or moderate risk of flooding are in areas not covered by federal flood insurance. That sets the stage for some nasty battles between property owners and private insurance companies over billions of dollars of damage.

All in all, not a very good start to the day. More news below.

Top News

• Harvey Havoc Continues

The death toll from Hurricane Harvey reached 10 as rain continued to lash Houston and the surrounding area. Some 30,000 people are seeking emergency shelter while around 450,000 are likely to seek federal aid, according to the New York Times. Among the direct economic impacts, gas prices have surged to a two-year high due to disruptions at Gulf coast refineries, and thousands of flights into and out of Houston have been cancelled. The city’s airports are expected to stay closed until at least Wednesday. President Donald Trump is expected to visit Texas later Tuesday.  Fortune

• North Korea Not The Only Worry for Markets

Financial markets have reacted badly, but not extremely, to North Korea’s latest missile test, which sent a medium-range missile over northern Japan. The Nikkei lost 0.5%, while South Korea’s Kospi lost only 0.2%. European stock indices have opened down by much more. That’s because the markets’ bigger concerns revolve around the dollar, which has hit its lowest level since early 2015. Concerns about Korea, the debt ceiling and Harvey have driven the euro above $1.20 for the first time in nearly three years, while gold prices have hit a new 11-month high over $1,330 an ounce, amid a general preference for haven assets. Fortune

• Gilead’s Megabet on Cancer Immunotherapy

Gilead Sciences finally put to work the cash pile generated by its hepatitis C wonder drug Sovaldi. The company paid just under $12 billion for Kite Pharma a company focused on a groundbreaking new class of treatments that turns the body's own immune cells into targeted blood cancer killers. The company might have hoped for a more enthusiastic reaction from the market. Its shares, which had lost nearly 50% from their 2014 peak, notched a modest 1.2% gain. Fortune

• Begging Favors in Moscow

Michael Cohen, a senior lawyer with the Trump Organization, told The Wall Street Journal he discussed a prospective Trump Tower project in Moscow with the future president on three separate occasions before the project was shelved in January 2016. The Washington Post had earlier reported that Cohen had e-mailed Vladimir Putin’s press spokesman Dmitry Peskov (via a publicly-available e-mail address) with an appeal to help get the project moving. The manner of the approach suggests no privileged access to the Kremlin, quite the opposite in fact. However, the willingness to beg favors from a man in Putin’s position, and to be indebted to him, may raise eyebrows on special counsel Robert Mueller’s team.  Fortune

Around the Water Cooler

• A Real Price War in Virtual Reality

The battle for dominance in the virtual reality market heated up as Microsoft announced Lenovo, Dell and Acer would all use its Windows operating system in their VR headsets, scheduled to hit stores in time for this year’s holiday season. Sony, meanwhile, whose headset offering was already at the cheaper end of the spectrum, cut the price for its PlayStation VR bundle to $400 from $460. The increasingly intense competition will make it harder for Facebook to revert to the sticker price of $600 for its Oculus Rift headsets. They’re currently priced at $400 due to a ‘summer sale’. Fortune

• Renault-Nissan Goes Electric in China

The Renault-Nissan alliance, which sells more cars than any other single automaker worldwide, announced its latest tie-up: a joint venture to make electric vehicles together with China’s Dongfeng. The JV will build on the technology used in Nissan’s Leaf and Renault’s Zoe. The news follows similar deals by GM, Tesla and Daimler. China currently accounts for more EVs than the rest of the world put together, and wants battery-powered EVs and plug-in hybrids to account for 8% of sales next year, rising to 20% by 2025. Bloomberg

• Pay Ratio Disclosure Arrives in Europe

U.K.-based companies will be forced to disclose the gap between CEO pay and average worker pay from 2018, as part of a broader range of policies intended to crack down on perceived corporate excess. However, the package has been watered down significantly from Theresa May’s initial vision: there will be no mandatory, binding shareholder votes on executive pay, and the promised degree of worker representation on company boards has also been diluted. The end result will satisfy both business and the many Tory MPs who felt that May was abandoning the pro-business legacy of Margaret Thatcher. Fortune

• Zuck’s a Pop Again

Facebook CEO Mark Zuckerberg announced the arrival of his second child, a daughter named August. Bloomberg reported that he’ll be heading off on paternity leave but didn’t say whether he intended to make full use of the four months parental leave Facebook offers to both mothers and fathers. Bloomberg

Summaries by Geoffrey Smith; geoffrey.smith@fortune.com

@geoffreytsmith