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DealBook Briefing: Bond Investors Are Making a Killing

Cheer up: Bonds are doing great this year.Credit...Richard Drew/Associated Press

Good Thursday morning. (Was this email forwarded to you? Sign up here.)

The U.S.-China trade war and the gloom of the global economy have driven investors toward bonds, the traditional place to park cash in uncertain times. They’re doing great, Matt Phillips of the NYT writes.

Bonds are a better bet than stocks in some parts of the market, Mr. Phillips writes.

• One of the broadest gauges of the American bond market, the Bloomberg Barclays Aggregate index, “ is sitting on gains of more than 9 percent,” he explains. “If it were to finish the year at that level, it would be the index’s biggest increase since 2002.”

• Longer-term bonds have done even better. “If you simply bought the 10-year Treasury note at the end of last year, you’d be up almost 13 percent,” Mr. Phillips writes.

• “In other words, an investment that is seen as virtually risk free (because repayment is considered guaranteed by the United States government) has done as nearly as well as the much riskier stock market.”

• The other side of that coin is that bond yields, which move in the opposite direction of prices, have fallen. “The yield on 30-year Treasuries has this week fallen decisively below the 1.98 percent dividend yield from U.S. stocks,” the FT notes. “On Wednesday, the 30-year yielded 1.94 percent.”

Bonds “do carry risks for investors who are buying now,” Mr. Phillips adds. “If the concerns that have lured investors into the bond market dissipate — because Washington and Beijing reach a trade deal, for example — then bond prices could start to fall.”

More: Treasury Secretary Steven Mnuchin said that ultralong U.S. bonds are “under very serious consideration.”

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Today’s DealBook Briefing was written by Andrew Ross Sorkin, Michael J. de la Merced and Jamie Condliffe.

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Credit...Justin Lane/EPA-EFE, via Rex, via Shutterstock

The German lender disclosed in court on Tuesday that it has some of President Trump’s personal or business tax returns. But it also has other documents that could prove more revelatory, David Enrich of the NYT writes.

Deutsche Bank probably has information about his corporate balance sheet, his income from various assets and documents that describe how his businesses are set up, according to Mr. Enrich.

The bank’s files could describe dealings with Russia — although not necessarily involving Mr. Trump himself. (Currently there is no evidence that Deutsche Bank’s lending to Mr. Trump was connected to Russia.)

Together with Mr. Trump’s tax returns, these documents could “fill in some of the gaps about the true extent of Mr. Trump’s fortune, which he has described as being in the billions of dollars,” Mr. Enrich writes.

Congressional investigators want these files, though the Trump administration has sued to block the bank from turning them over.

More: The MSNBC host Lawrence O’Donnell has retracted a claim that he made on air on Tuesday about Mr. Trump having made a financial arrangement with Russian oligarchs.

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Prime Minister Boris Johnson of BritainCredit...Neil Hall/EPA, via Shutterstock

Prime Minister Boris Johnson turned to Britain’s queen yesterday to limit Parliament’s ability to challenge his plan to take the country out of the E.U. in nine weeks, with or without a deal, Stephen Castle of the NYT writes.

“Mr. Johnson asked Queen Elizabeth II to suspend Parliament in September, a move that will cut the already dwindling number of days lawmakers have to find an alternative path ahead of the looming Brexit deadline on Oct. 31,” Mr. Castle writes.

• “Any legislation developed in the first two weeks in September when Parliament will still meet does not carry over to the new parliamentary session if not passed, meaning lawmakers will have to start from scratch.”

• It also “forecloses any attempt by the opposition to shorten the three-week break to allow for more time to address Brexit — something lawmakers were considering.”

Many analysts believe Mr. Johnson is inviting an early general election. In that case, Mr. Johnson’s adamantly pro-Brexit stance would “enable him to present himself as the champion of the people against a Parliament that has betrayed voters’ desire to leave the bloc,” Mr. Castle writes.

The normally fractious opposition swiftly united in outrage. The move was denounced by the opposition and members of Mr. Johnson’s own Conservative Party as undemocratic and possibly unconstitutional. The Conservative leader in Scotland, Ruth Davidson, resigned over the maneuver, and the former Conservative prime minister John Major said he was seeking “advice on the legality” of the move.

Whatever happens, the move reveals Mr. Johnson as a “ruthless tactician,” Ben Mueller of the NYT writes. “Mr. Johnson showed that he would be as pugnacious in Downing Street as critics said his predecessor, Theresa May, was timid.”

The co-working giant is preparing to go public next month, in one of the most highly anticipated I.P.O.s of the year. But Peter Eavis of the NYT notes that the company’s offering prospectus doesn’t disclose some potentially crucial information.

• WeWork doesn’t give information about how specific office spaces are performing, especially older ones. (A publicly traded rival, International Workplace Group, does break down that data.)

• The company doesn’t disclose average occupancy per square foot or any similar measure of how well-used its locations are.

• And it doesn’t give any data about the discounts it offers some customers.

WeWork’s prospectus “doesn’t quite have the requisite information for a reader to understand how the business is actually doing on the ground,” the C.E.O. of a competitor told Mr. Eavis.

The company is also dealing with other concerns, including the amount of control that its C.E.O., Adam Neumann, holds and whether it can weather a recession.

This matters given WeWork’s ambitions for its I.P.O. It hopes to raise up to $4 billion from the offering, and will most likely aim for a valuation that surpasses the $47 billion it reached in its last fund-raising round. Investor uncertainty could ruin that plan.

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Little St. James, one of Jeffrey Epstein’s private islands.Credit...Marco Bello/Reuters

The financier used two Caribbean islands, Little St. James and Greater St. James, to host high-profile guests — and, his accusers say, to abuse underage girls. But they were useful for his business, too, Steve Eder of the NYT reports.

• Mr. Epstein “cultivated close ties” to the “political and financial elite” in the U.S. Virgin Islands, where his islands were situated. “He employed a governor’s wife. He hired an architecture firm owned by that governor’s uncle.”

• Mr. Epstein’s companies were allowed to participate in a tax-cut program that allows certain people and businesses that invest at least $100,000 in the U.S. Virgin Islands to “have their income and other tax rates cut substantially or eliminated.”

• “It was kind of accepted,” Sasha Bouis, who used to run a floating restaurant anchored near Great St. James, told Mr. Eder. “There was just this creepy old billionaire living out there.”

• The U.S. authorities are now scouring the island as part of their investigations into Mr. Epstein’s associates and finances, Mr. Eder writes.

More: Mr. Epstein used Wall Street to help build his fortune, but frequently clashed with his bankers. And here’s an argument for why Harvard should divest the $6.5 million in donations it received from the financier.

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Sarah SandersCredit...Evan Vucci/Associated Press

The former White House press secretary is said to be in talks to work with Teneo, a consulting firm founded by former aides to President Bill Clinton, Daniel Lippman of Politico reports, citing unnamed sources.

Ms. Sanders would advise on working with the Trump administration, Politico reports. The firm has worked with the likes of UBS, Coca-Cola, G.E. and Delta.

She would be an independent contractor, not a full-time employee. It may be a short-term arrangement while she considers running for governor of her home state, Arkansas.

It’s a rare corporate gig for a former Trump official. Few have landed such high-profile jobs after leaving Washington, unlike Obama administration officials who moved to companies like McDonald’s and Amazon. (Ms. Sanders’s predecessor, Sean Spicer, will appear on “Dancing With the Stars.”)

Senator Johnny Isakson, Republican of Georgia, plans to retire this year for health reasons. His departure would mean both U.S. Senate seats will be on the ballot in 2020.

Ravi Gupta will step down as C.F.O. of Instacart to join Sequoia Capital as a partner.

UBS has hired Iqbal Khan, a former Credit Suisse executive, as co-head of its wealth management unit.

Anthony DiClemente, CBS’s head of investor relations, will keep that role when the company completes its merger with Viacom.

Kirkbi, the investment fund that manages the wealth of Lego’s founding family, has named Malou Aamund, a Google executive, as a director.

Deals

• The owner of Lord & Taylor agreed to sell the struggling department store chain to Le Tote, a clothing start-up, for $100 million. (NYT)

• The fast-fashion retailer Forever 21 is reportedly preparing to file for bankruptcy protection. (Bloomberg)

• How bad a deal has Bayer’s takeover of Monsanto been? Consult these 12 charts. (WSJ)

• Amazon is reportedly in talks to invest in GoJek, the Indonesian ride-hailing start-up. (WSJ)

• TeamViewer, a German videoconferencing software company, plans to go public on the Frankfurt stock exchange. It reportedly hopes to be valued at up to $5.5 billion. (FT)

Politics and policy

• Senator Kirsten Gillibrand dropped out of the 2020 Democratic presidential race after failing to qualify for the third round of debates. (NYT)

• Two parties have formed a coalition government in Italy that excludes Matteo Salvini, the hard-right politician who forced the collapse of the previous government. (NYT)

• The Trump administration plans to ease Obama-era regulations on methane emissions for the oil and gas industry. (NYT)

• Joe Biden pledged to put up an “absolute wall” to separate himself from his relatives’ business dealings in China, Ukraine and elsewhere. (Politico)

• President Trump criticized Fox News yesterday, saying on Twitter that the outlet “isn’t working for us anymore!” (WaPo)

• Democratic presidential candidates are pushing up Facebook advertising prices. (WSJ)

Trade

• American establishment figures like Hank Paulson worry that the U.S. backlash against China has gone too far. And analysts have slashed profit expectations for American companies as the trade war drags on. (WSJ, FT)

• Australia’s strong economy has been battered by the U.S.-China trade war. (NYT)

• Japan and South Korea have escalated their trade fight, but their tightly intertwined economies will be hard to separate. Still, the Pentagon is worried about the spat. (NYT, FT)

• Google reportedly plans to start producing Pixel smartphones in Vietnam, rather than China, to avoid rising labor costs and U.S. tariffs. (Nikkei)

Tech

• The Amazon-owned smart doorbell company Ring has partnerships with 400 police forces to help them access footage from the devices. (WaPo)

• Samsung’s de facto leader, Lee Jae-yong, could face more jail time after South Korea’s top court ruled that a lower court had underestimated the bribes he paid to the country’s former president. (NYT)

• A U.S. cyberattack hurt Iran’s ability to target oil tankers in the Persian Gulf. (NYT)

• YouTube plans to build a separate version of its website for children. (Bloomberg)

• Apple says it is improving its privacy policies after news reports about its contractors listening to Siri audio recordings. (FT)

Best of the rest

• Oil giants like Chevron are betting tens of billions on new fields in Kazakhstan. (NYT)

• The needs of older relatives remove women from the U.S. work force far more than in other wealthy nations. (NYT)

• It’s still impossible to quantify how badly Puerto Rico’s economy has been damaged by hurricanes. (Axios)

• “Why the periodic table of elements is more important than ever.” (Bloomberg Businessweek)

Thanks for reading! We’ll see you tomorrow.

You can find live updates throughout the day at nytimes.com/dealbook.

We’d love your feedback. Please email thoughts and suggestions to business@nytimes.com.

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