Trump and Germany's 30-Year Bond

choi

Today's news first. When several incidents happen on the same day (as in (2)), the earliest is in the bottom.

(1)
(a)
(i) Revecca Ballhaus and Alex Leary, Trump Blasts Denmark's Leader for Spurning Sale of Greenland. Wall Street Journal, Aug 22, 2019
("A person close to the White House said the president felt Denmark was trying to embarrass him in its response")
(ii) Paul J Davies and Patricia Kowsmann, German Long Bond's Yield Turns Negative. Wall Street Journal, Aug 22, 2019
https://www.wsj.com/articles/ger ... -yields-11566385847

Quote:

"Investors buying debt at a negative yield get back less than they paid if they hold on until maturity. In Wednesday's sale, Germany borrowed €824 million ($914 million) through bonds that pay no interest [0% coupon]. The bonds were sold slightly above face value, so when they mature in 2050, Germany will pay back €795 million  [which is the face value of principal].

"The European Central Bank is a big buyer of German government bonds, while other demands for negative-yielding debt comes from asset managers and investors * * *

"One way investors can make money is if rates continue to drop. Bond prices rise as yields fall.  'Why are people buying at negative yields? It is mainly in expectation that you're going to be able to sell to someone at a higher price later on,' said Andrea Iannelli, Investment director, fixed income at Fidelity International [based in Boston]. 'Whatever the yield you have to assume[,] you're going to make more on the capital gain than lose on the yield.'  The German sale adds to the roughly $16 trillion of negative-yielding bonds outstanding world-wide, many of which are from European governments or state-sponsored agency bonds [AND Japan, but all until yesterday are short-term bonds, not 30-year ones]

"As much as 2 billion of Germany's new 30-year bonds were offered for sale Wednesday [Aug 21], but the auction drew €869 [I can not explain the discrepancy with €824m] million of bids. The remaining bonds were retained by Bundesbank, the country's central bank, and will be sold into the market over time.

Note:
(A) bond (finance)
https://en.wikipedia.org/wiki/Bond_(finance)
(section 3 Features: principal (needs to be paid back when bond becomes mature, coupon, yield, market price)

section 2 Issuance: "The most common process for issuing bonds is through underwriting. When a bond issue is underwritten [the same in initial public offering (IPO) of a stock], one or more securities firms or banks, forming a syndicate, buy the entire issue of bonds from the issuer and re-sell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors. * * * In contrast, government bonds are usually issued in an auction. * * * In the case of an underwritten bond, the underwriters will charge a fee for underwriting.

section 3.6 Market price: "The issue price at which investors buy the bonds when they are first issued will typically be approximately equal to the nominal amount. The net proceeds that the issuer receives are thus the issue price, less issuance fees [which government bonds does not charge]. The market price of the bond will vary over its life: it may trade at a premium (above par, usually because market interest rates have fallen since issue), or at a discount (price below par, if market rates have risen or there is a high probability of default on the bond).

(B) James Chen, Bond Yield, Investopedia, updated on July 22, 2019.
https://www.investopedia.com/terms/b/bond-yield.asp
("Bond yield is the return an investor realizes on a bond. The bond yield can be defined in different ways. Setting the bond yield equal to its coupon rate is the simplest definition [but inaccurate, not taking inflation into consideration]. * * * [sectional heading"] Bond Yield Vs Price[:] As bond prices increase [which only happens if interest rates later (after issuance) FALL], bond yields fall")

Please read the section (with sectional heading "Bond Yield Vs Price."
(C) In (1)(b) below,  德国之声 and a few English-language news reports cites yield of "-0.11%" but none of them specifies what kind of yield (current yield or yield to maturity). But current yield (according to its formula) should be zero for bonds with 0% coupon. So the yield of -0.11% must be yield to maturity.

(ii) John Ainger, Germany Regrets Size of Bond That Pays Nothing as Auction Flops. Bloomberg, Aug 21, 2019
(paragraph 1: "The world’s first 30-year bond featuring zero income struggled to find buyers, prompting Germany's debt agency to admit the sale may have been 'too large' ")

There is no need to read the rest of this Bloomberg report.
(b) 凝炼/李鱼（based on 德新社、路透社）, 德国国债负利息 特朗普：凭什么！  德国之声, Aug 22, 2019
https://www.dw.com/zh/德国国债负利息-特朗普凭什么/a-50127053
(i) subtitle: "美国现总统有这样一句口头禅：美国到处都受到 '不公平' 对待。即使是在货币市场上，德国人也比更强大的美国得到更好的条件，这可不公平！
(ii) text: "德国人支付零利息，借别人 [foreigners] 钱还有收益！ 特朗普这样推文道 [the report has a snapshot of Trump's tweet of Aug 21, at 9:56 AM (2 hours before his South Lawn remarks)]。 * * * 的确，德国第一次成功拍卖30年期国债挣了些钱。拍卖行动带来了平均0.11%的负收益率，使联邦政府得到小幅盈利，尽管它是借贷方。负收益率的出现，是因为对较为保险的有价证券存在极大需求的结果。德国联邦债券便是有价证券 [简称: 證券; English: securities; definition varies in jurisdictions but at least includes stocks and bonds] 之一。

choi

(2)
(a) Hakeem Jeffries (a US House representative and Chairman of the House Democratic Caucus). Twitter, Aug 21, 2019, at 10:30 pm
https://twitter.com/RepJeffries
(full text: "WOW.
This guy [Trump] is having a complete and total meltdown.
The sycophants in the cabinet lack the guts to deploy the 25th Amendment.
Will his family have the good sense to engineer a clinical intervention?
We can only hope")
(b) 特朗普指不会视香港为贸谈筹码 期望能以人道方式解决. RFA, Aug 22, 2019
https://www.rfa.org/cantonese/news/us-trump-08222019074730.html
("特朗普周三（21日）在白宫回应记者提问时再谈到香港问题，否认在美中贸易谈判中打「香港牌」。他希望香港问题能以最人道方式解决，并不是甚么「筹码」，相信中国国家主席习近平有能力做到。 特朗普形容自己是「上天选择」去对付中国的人，指假如没有对中国发动贸易战，他的生活会过得更加轻松。特朗普早前指贸易战即使会对美国经济构成短期影响，亦必须在贸易问题上与中国对抗，因为在过去几十年来中国一直从美国得益")
(c) Remarks by President Trump Before Marine One Departure. White House, Aug 21, 2019.
https://www.whitehouse.gov/brief ... e-one-departure-60/

Quote:

(i) "South Lawn
11:41 AM EDT

(ii) "Q Are you demanding that Jay Powell[, chair of Federal Reserve, who is independent] lower interest rates? [lower is a verb; the clause following 'demand' has subjunctive mood]

"THE PRESIDENT: No, I don't demand it. But if he used his head, he would lower them. * * * We're much stronger than Germany [economically; in the preceding reply, Trump said 'our economy is the strongest in the world, by far. Nothing even close'] , but we do compete with Germany [to serve national debts, by borrowing internationally]. * * * They [Germans or Germany the nation] borrow money, and they actually get paid to borrow money. And we have to compete with that. * * * Jay Powell and the Federal Reserve have totally missed the call. I was right, and just about everybody admits that. I was right. He did quantitative tightening [opposite of quantitative easing, which essentially releases money into economy -- not by printing money but by buying treasuries from US Department of Treasury] . He shouldn't have done that. He raised interest rates too fast, too furious. * * *

(iii) "Q Mr President, can you explain your decision not to go to Denmark? Is it really because they wouldn't talk about selling Greenland?

"THE PRESIDENT: No — Denmark, I looked forward to going, but I thought that the Prime Minister's statement — that it was absurd; that it was an absurd idea — it was nasty. I thought it was an inappropriate statement. All she had to do is say, 'No, we wouldn't be interested.'

"But we can't treat the United States of America the way they treated us under President Obama. I thought it was a very not nice way of saying something. They could've told me 'no.' This is something that's been discussed for many years. Harry Truman had the idea of Greenland. I had the idea. Other people have had the idea. It goes back into the early 1900s. But Harry Truman, very strongly, thought it was a good idea.

"I think it's a good idea because Denmark is losing $700 million a year with it [Greenland, through funds]. It doesn't do them any good. But all they had to do is say, 'No, we'd rather not do that,' or 'We'd rather not talk about it.' Don't say, 'What an absurd idea that is.'

"Q Sir —

"THE PRESIDENT: Because she's [Denmark prime minister is a woman] not talking to me —

"Q Mr President —

"THE PRESIDENT: Excuse me. She's not talking to me. She's talking to the United States of America. You don't talk to the United States that way, at least under me.

"Now, President Obama, when they wouldn't land — let him land in the Philippines, when they treated him so badly in so many places — the Philippines is one that comes to mind — that's different. That's different. They can treat him any way they want to; that’s up to him. But they can’t treat the United States with a statement, 'How absurd.'

(iv) "Q Mr President, so taking America into a recession: Is it worth it? And do Americans need to back that up?

"THE PRESIDENT: So, the fake news, of which many of you are members, is trying to convince the public to have a recession. 'Let's have a recession.' The United States is doing phenomenally well.

"But one thing I have to do is economically take on China because China has been ripping us off for many years. President Clinton, President Bush, and President Obama, and others should have done this long before me. My life would be much easier — although I enjoy doing it — but my life would be much easier if I just said, 'Let China continue to rip off the United States.' All right? It would be much easier, but I can't do that.

"We are winning against China. They've lost two and a half million jobs in a very short period of time. They want to make a deal. It's got to be a deal that’s good for the United States, where they want to make a deal — probably, we will make a deal.

"But if I didn't do that — and I'm not doing this — somebody said it's Trump's trade war. This isn't my trade war. This is a trade war that should have taken place a long time ago by a lot of other Presidents.

"Over the last five or six years, China has made $500 billion. $500 billion. Ripped it out of the United States. And not only that — if you take a look, intellectual property theft. Add that to it. And add a lot of other things to it. So somebody —

"Q (Inaudible.)

"THE PRESIDENT: Excuse me. Somebody had to do it. I am the chosen one. Somebody had to do it. So I’m taking on China. I’m taking on China on trade. And you know what? We’re winning. Because we’re the piggybank. We’re the one that all these countries — including the European Union — wants to rob and takes advantage of. European Union — $200 billion [US and EU goods and services trade deficit in 2018 was $109b, composed of goods trade deficit $169b and services trade surplus $60b: per office of US Trade Representative]. China — more than $500 billion. Sorry.

"Q So it sounds like a recession is worth it —

"THE PRESIDENT: I was put here —

"Q — is that what you're saying?

"THE PRESIDENT: I was put here by people — I was put here by people to do a great job. And that’s what I’m doing. And nobody has done a job like I’ve done.

"Now, would China rather wait for a little more than a year and try and get Sleepy Joe Biden to negotiate with, instead of President Trump? Maybe. But I don't think so. You know why? They're losing too many jobs too fast. They had the worst year in 27 years, but I think it was actually 52 or 54 years. It's the worst year they've had in a half a century. And that's because of me. And I'm not proud of that. But you know what? They want to negotiate.

"And Sleepy Joe doesn't have a clue. Sleepy Joe said, 'Oh, China is wonderful.' Well, China is wonderful for China. But I'm wonderful for the USA.

(v) "Q Did Hong Kong give you leverage in the China talks? Does Hong Kong give you leverage in the China talks — in the negotiation?

"THE PRESIDENT: I don’t view it as leverage, no. I hope Hong Kong works out in a very humane way. I don’t view it as leverage or non-leverage. I hope it works out in a humane way. And I think that President Xi has the ability to make sure that happens.

(d) President Trump tweeted -- in three (3) tweets -- shortly after 7:30 am, Aug 21, quotingWayne Allyn Root (WITHIN internal quotation marks -- ' -- below):

"Thank you to Wayne Allyn Root for the very nice words. 'President Trump is the greatest President for Jews and for Israel in the history of the world, not just America, he is the best President for Israel in the history of the world...and the Jewish people in Israel love him....

....like he's the King of Israel. They love him like he is the second coming of God...But American Jews don't know him or like him. They don't even know what they're doing or saying anymore. It makes no sense! But that's OK, if he keeps doing what he's doing, he's good for.....

....all Jews, Blacks, Gays, everyone. And importantly, he's good for everyone in America who wants a job.' Wow!  @newsmax  @foxandfriends @OANN"

Note:
(i) For Obama's landing or not in the Philippines, see Glenn Kessler, Trump's Bizarre Claim That Obama 'Never Got to Land' in the Philippines. Washington Post, Nov 15, 2017.
https://www.washingtonpost.com/n ... ines/?noredirect=on
(ii) Luke 9:35 (pronounced Book of Luke, chapter 9, verse 35).

King James Version (published in 1611): And there came a voice out of the cloud, saying, This is my beloved Son: hear him.
New International Version (NIV; published in 1978): A voice came from the cloud, saying, "This is my Son, whom I have chosen; listen to him."
English Standard Version (ESV; published in 2001): And a voice came out of the cloud, saying, "This is my Son, my Chosen One; listen to him!"
(A) 1 Peter 2:4 has similar message, where "1 Peter" is First Epistle of Peter or First Peter.
(B) epistle (n; from Ancient Greek; First Known Use 13th century): "letter"
https://www.merriam-webster.com/dictionary/epistle

choi

(3) The Wayne Allyn Root Show in Newsmax TV Tuesday evening (starting at 8 and 10 pm for an hour each), Aug 20, 2019, where Mr Root started by saying he was Jewish, followed by the comment quoted by Trump the next morning.

Note: Newsmax.com is a conservative website with commercials since 1998 whose CEO and founder is Christopher RUDDY.