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What’s
News
Business & Finance
H edge funds are betting
billions against the
yuan, wagering China will
let its currency weaken fur-
ther to halt outflows. A1
 No IPOs were launched
in the U.S. in January, a
drought blamed on the
global stock-market rout. A1
 Credit Suisse and Bar-
clays agreed to pay $154.3
million combined to settle
investigations by regulators
into their “dark pools.” C1
 Barclays replaced its
risk manager, the first ma-
jor management change un-
der the bank’s new CEO. C1
 U.S. tech companies
have been hard hit by the
strong dollar because of Sil-
icon Valley’s high propor-
tion of overseas sales. B1
 Activists investors Ack-
man and Icahn have seen
their portfolios decline due
to bad investment decisions
and market upheaval. C1
 A Depository Trust unit
said it would stop facilitat-
ing certain interbank repos,
affecting an estimated $45
billion in daily loans. C1
 The U.S. and EU are
scrambling to reach a data-
privacy accord in advance
of a Tuesday deadline. B1
 The E. coli outbreak that
sickened more than 50 Chi-
potle customers is expected
to be declared over. B3
World-Wide
 Sanders attacked Clinton
over alleged ties to Wall
Street and her use of a pri-
vate email server on the eve
of the Iowa caucuses. A1
 A potential Trump win in
Iowa could hinge on the
turnout among first-time
Republican caucus-goers. A1
 GOP candidates made
sharply different cases for
why each should win the
first election contest. A4, A6
 Wall Street is emerging
as a particularly dominant
funding source for both
parties, early campaign-fi-
nance reports show. A7
 Syria’s opposition threat-
ened to boycott peace talks
until Assad ends bombings.
Islamic State claimed deadly
blasts near Damascus. A8
 Fallujah residents said at
least 10 people have starved
to death in the Islamic State-
occupied city since a block-
ade by Iraqi forces began. A8
 Suspected Boko Haram
militants stormed a refugee
camp in northeast Nigeria,
killing at least 60 people. A8
 Saudi Arabia said it is
forming a group to probe
claims of airstrikes in Yemen
that led to civilian deaths. A8
 The EU is trying to block
the flow of refugees through
Macedonia as other plans to
stem migration flounder. A10
 South Korea’s exports fell
18.5% in January, in a warn-
ing sign on global trade. A10
CONTENTS
Business News.. B2-3,5,7
Crossword................. B7
Global Finance........ C3
Heard on Street.... C6
Journal Report.. R1-8
Media & Mkt........... B6
s Copyright 2016 Dow Jones &
Company. All Rights Reserved
Moving the Mkt.... C2
Opinion............... A11-13
Sports.......................... B8
Technology............... B4
U.S. News............. A2-3
Weather..................... B7
World News..... A8-10
> has nothing to do
* * * *
NASDAQ 4613.95 À 0.5%
Candidates Make Final Push in Iowa
Donald Trump
POLLING AVERAGES IN IOWA
Ben Carson
Oct. Nov.
IOWA CAMPAIGN VISITS SINCE START OF 2014
54
Sources: Real Clear Politics (moving average of several major polls); Des Moines Register candidate tracker (campaign stops); Photos (L-R): Scott Morgan/Reuters; Paul Sancya/AP;
Charlie Neibergall/AP; Jim Lo Scalzo/EPA; Mark Kauzlarich/Reuters
GOP Vote Hinges on Turnout
Getting out first-time
caucus-goers is seen as
key to Trump’s chances
of winning Iowa
BY PATRICK O’CONNOR
DES MOINES, Iowa—To pull
off a momentum-building win
here Monday night, Donald
Trump is banking on turnout
from people who would be
caucusing for the first time,
U.S. Hedge Funds Dozens Killed in Syria Bombings
Bet Against China
BY JULIET CHUNG
AND CAROLYN CUI
Some of the biggest names in
the hedge-fund industry are pil-
ing up bets against China’s cur-
rency, setting up a showdown
between Wall Street and the
leaders of the world’s second-
largest economy.
Kyle Bass’s Hayman Capital
Management has sold off the
bulk of its investments in stocks,
commodities and bonds so it can
focus on shorting Asian curren-
cies, including the yuan and the
Hong Kong dollar.
It is the biggest concentrated
wager that the Dallas-based firm
has made since its profitable bet
years ago against the U.S. hous-
ing market. About 85% of Hay-
man Capital’s portfolio is now
These German Vacationers Don’t
Take Kindly to the Kinder
i i
Youngsters are verboten as hotels seek
tranquility for guests; no cannonballs in pool
BY NATASCHA DIVAC
Germans are giv-
ing adult entertain-
ment a new meaning.
To truly decom-
press, vacationers
from the country are
increasingly looking
for a specific, relaxing
hotel type—one that
with traditional ame- Franz Kandlbinder towel and decided
nities.
Rather, they are seeking out under the age of 16.
properties that ban children, The result: His hotel, which
along with their crying, tan- overlooks a bucolic lake near the
trums and other distractions Please see HOTELS page A10
MONDAY, FEBRUARY 1, 2016 ~ VOL. CCLXVII NO. 25
STOXX 600 342.27 À 1.2%
Ted Cruz Marco Rubio
Sunday
30.4%
24.2
15.2
Dec. Jan.
144 98
such as Maddie Hiatt.
The 20-year-old Drake Uni-
versity student waited in the
cold last Thursday to catch a
glimpse of the Republican
presidential front-runner. She
said she definitely plans to
caucus for him on Monday.
“He’s running on his own
terms, and he’s not backed by
big corporations,” said the
sophomore graphic-design ma-
jor.
The most important vari-
able heading into caucus day is
invested in trades that are ex-
pected to pay off if the yuan and
Hong Kong dollar depreciate
over the next three years—a bet
with billions of dollars on the
line, including borrowed money.
“When you talk about orders
of magnitude, this is much larger
than the subprime crisis,” said
Mr. Bass, who believes the yuan
could fall as much as 40% in that
period.
Billionaire trader Stan-
ley Druckenmiller and hedge-
fund manager David Tep-
per have staked out positions of
their own against the cur-
rency, also known as the ren-
minbi, according to people famil-
iar with the matter. David
Einhorn’s Greenlight Capital Inc.
holds options on the yuan depre-
Please see YUAN page A9
i
synonymous with
the terrible twos.
Tom Cudok, di-
rector of Hotel Es-
planade in Bad
Saarow, spent years
smoothing conflicts
between couples
seeking repose and
families with chil-
dren. But late last
year, he threw in the
to ban youngsters
WSJ.com
10-YR. TREASURY À 1 4/32 , yield 1.928% OIL $33.62 À $1.43
Hillary Clinton Bernie Sanders
Saturday
47.3%
50%
40
44.0
30
20
10
Martin O'Malley
0 email server as secretary of
Oct. Nov. Dec. Jan.
105 154
THE WALL STREET JOURNAL.
disappointing finish by Mr.
Trump.
 Republican candidates’ last Some 39% of likely GOP cau-
appeal before caucuses... A4 cus-goers who haven’t turned
 Iowa GOP fears state’s out in past contests prefer Mr.
loss of influence................. A6 Trump over his rivals, accord-
 Wall Street dominates ing to a recent Wall Street
fund raising........................... A7 Journal/NBC News/Marist poll,
10 percentage points higher
than the portion of past par-
how many people will make ticipants who favor the front-
the trip to their local precinct runner. That poll found Mr.
to vote. That number could Trump leading the GOP field.
prove the difference between a Sen. Ted Cruz performs just
once-improbable win and a Please see VOTE page A4
WRECKAGE: A series of bomb blasts near Damascus, for which Islamic State claimed responsibility, left
at least 50 people dead on Sunday, further clouding the prospects for peace negotiations in Geneva. A8
Inside Turmoil Puts Brakes
On Market for IPOs
BY CORRIE DRIEBUSCH
A frigid January for initial
public offerings is pointing to
a hard winter for fledgling
firms seeking to go public.
There were no U.S. IPOs in
January, the first monthlong
drought since September 2011,
GETTY IMAGES
when the eurozone crisis was
in full swing and the debt rat-
ing of the U.S. had just been
downgraded, according to data
provider Dealogic. Investors
JOURNAL REPORT | R1
and analysts attribute the
dearth to the global stock-
The Top Schools market rout of the first two
For Earnings weeks of the year, which sig-
naled a broad retreat from risk
by investors.
Elite schools help business If sustained, the reversal
majors make more money. But in threatens to send ripples
science and tech, where you get through global financial mar-
your degree may hardly matter. kets. Many analysts and trad-
ADVERTISEMENT
HHHH $3.00
EURO $1.0833 YEN 121.13
Sanders
Steps Up
Clinton
Attacks
BY PETER NICHOLAS
AND LAURA MECKLER
COUNCIL BLUFFS, Iowa.—
Sen. Bernie Sanders, closing
out his campaign in Iowa, took
a strategic gamble in hopes of
notching a victory over Hillary
Clinton in the state’s Demo-
cratic caucuses Monday night:
He went negative.
The Sanders campaign ran a
new TV spot that implies Mrs.
Clinton is in the pocket of Wall
Street. And after refusing to
talk about the Democratic
front-runner’s use of a private
state, Mr. Sanders on Sunday
called her email practices a
“very serious issue” that could
render her unelectable.
Similarly, a Clinton cam-
paign that had once ignored
the 74-year-old democratic so-
cialist is now casting him as a
pie-in-the-sky dreamer whose
ideas are utterly impractical.
“I don’t want to over-prom-
ise and under-deliver. I’d
rather under-promise and
over-deliver,” she said at a
rally here. She added: “I know
what it’s going to take.”
This wasn’t the way many
thought the Democratic pri-
mary would conclude before
the balloting began.
When he jumped in the race
in May, Mr. Sanders looked to
many Democratic officials like
a candidate who wanted a fo-
rum to talk about income in-
equality in America and who
Please see RACE page A6
LOUAI BESHARA/AGENCE FRANCE-PRESSE/GETTY IMAGES
ers view a healthy IPO market
as a necessary precondition
for a sustainable advance in
the broad stock indexes.
In recent years, markets
were “wide open and compa-
nies that wanted to raise capi-
tal could,” said Eddie Yoon,
portfolio manager of the Fidel-
ity Select Health Care Portfo-
lio, with $9 billion in assets.
But now some companies,
both public and private, could
face being shut out for an ex-
tended period, as many inves-
tors seek to reduce risk by fo-
cusing on firms with histories
of steady profitability and rev-
enue growth.
The number of U.S.-listed
IPOs in 2015, as well as the to-
tal money they raised, de-
clined sharply from 2014.
Please see IPO page A2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

U.S. NEWS
The U.K. Economy’s Hidden Achilles’ Heel
A
t a time of jittery mar- ing savings that other sectors ing as fast as usual, have still companies to save.
kets and uncertain Saving Divergence of the economy can use to in- held up better than Britain’s. In the U.K., the imbalance
prospects world-wide, Difference between households’ financial inflows and outflows vest, they either run down Also, fast increases in U.K. is expected to remain. The
the U.S. and Britain have still as a percentage of gross domestic product their financial assets or ramp house prices have persuaded British government’s inde-
managed to end the year up borrowing. many Britons to spend on pendent fiscal watchdog, the
posting the strongest eco- 10% The U.K. picture contrasts real estate. Office for Budget Responsi-
nomic growth among major with sounder family finances bility, forecasts it will con-

D
advanced countries, helped 8 in most other advanced coun- espite a slowdown in tinue until at least 2021, add-
by consumer spending. tries, including the U.S., the second half of ing that “this persistent and
But a warn- 6 where household financial in- 2015, growth in the relatively large house-
THE ing sign has 3Q flows exceeded outflows U.K. and the U.S. has by far hold deficit would be unprec-
OUTLOOK emerged in the 4 2015 by roughly 2.8% of gross do- outstripped that of their Eu- edented.”
JON U.K, whose mestic product in ropean peers and is expected Bank of England governor
SINDREU growth now U.S. the third quarter, according by the International Mone- Mark Carney last year called
2 +2.8%
stands on a far to the Federal Reserve. tary Fund to be above 2% in real estate “the greatest risk
flimsier foot- Families in the U.K. have a both countries in 2016. But to the domestic economy” in
0
ing: Households are once Spending
pending more
mo stronger tendency than their some economists believe a speech that served to an-
again spending more than han
ha
thann earning
earning
earn ing U.K. Western neighbors to feel wobbly household finances nounce the enactment of
–2 –2.0%
they earn. Among developed overly optimistic about their and ever-rising house prices tighter standards on mort-
countries, only Canada is in a personal finances when mean the U.K.’s brisk expan- gage borrowers. Although the
similar place. Both summon –4 house prices go up, leaving sion is unlikely to be sus- new rules cooled the prop-
memories of an imbalance 1987 ’90 ’95 ’00 ’05 ’10 ’15 them vulnerable if the econ- tained. In Canada, the econ- erty market, an endemic
that brought the global econ- Sources: U.K. Office for National Statistics; U.S. Federal Reserve omy stops, said Kallum Pick- omy has already slowed. shortage of housing supply
omy real pain in the latest fi- THE WALL STREET JOURNAL. ering, a London-based econo- Most other Group of has led prices to start climb-
nancial crisis. mist at Berenberg Bank. Seven countries have seen ing once again.
And again, high home val- about their cash needs. lows, while credit to consum- “British households are now their household balances re- For now, BOE officials say
ues are mainly to blame. Since reaching a postcrisis ers is growing at the fastest very, very susceptible to a main in the black, according they are watching credit
Rapidly rising property low in 2012, British house pace since the crisis. U.K. real-estate shock,” he said. to the Organization for Eco- closely for signs of overheat-
prices are fueling a belief prices have risen by 21% and households ran a deficit in The last time U.S. and U.K. nomic Cooperation and De- ing, but aren’t too worried
among homeowners that they are back at 2006 levels after the third quarter that households were in this situ- velopment. yet, as the cost of servicing
can bulk up on debt. This is a discounting inflation, accord- amounts to 2% of the British ation was between 2004 and In France, strong wages debt remains low. At the
risky move because money in ing to the Bank for Interna- economy, measured by the 2007, as a massive housing have enabled families to keep same time, more borrowers
real estate can’t be quickly tional Settlements. difference between financial bubble developed. Both coun- saving even after the storm have taken up fixed-rate
drawn upon in times of need, British household debt, inflows and outflows, accord- tries saw a sharp correction, passed. Germany has bet on mortgages, meaning costs for
which means small economic which was reduced signifi- ing to the Office for National but their paths have diverged export-led growth, which has households won’t suddenly
slumps are more prone to be cantly after the 2008 crash, Statistics. over the past five years. driven the country to accu- increase when the U.K. cen-
transformed into larger de- is now rising again as a share Household deficits mean The U.S. is in a healthier mulate more financial assets tral bank decides to nudge up
clines in consumption if peo- of disposable income. Savings families are net borrowers of position now because wages, in the rest of the world—al- interest rates from 0.5%, a
ple become overly worried rates in the U.K. are at record money: Instead of accumulat- though they haven’t been ris- lowing both households and record low.

Millions Who Are Eligible for Medicaid Go Without It

BY LOUISE RADNOFSKY spring for outreach and enroll- They also don’t pay a penalty
ment work, adding to about for going uninsured.
Dejah Collier is a waitress, $126 million given out in the That is a contrast to how
a theme-park ride operator, past six years. private insurance works, with
mother of two, uninsured— But it is uphill work—and limited enrollment periods and
and a sign of the continuing government forecasters don’t no retroactive coverage.
challenge in widening cover- see the number of people who “On the one hand, they are
age under the federal health are eligible for Medicaid but insured under certain circum-
law. unenrolled budging signifi- stances,” said Mike O’Grady, a
Ms. Collier, a 24-year-old in cantly. top official with the Depart-
the Denver area, had enrolled To be sure, the health law ment of Health and Human
in the Medicaid federal-state also has added to the ranks of Services during the Bush ad-
insurance program to cover a Medicaid recipients by re- ministration. “On the other, in
ROSS TAYLOR FOR THE WALL STREET JOURNAL

hospital delivery for her sec-
ond son but let her enrollment
lapse later. Under the Afford-
able Care Act, her family’s in-
come is low enough that they
would all likely still qualify for
the program, but they haven’t
gone through the process to
sign up again.
“It just became less impor-
tant,” she said, adding that the
family is healthy, and happy to
pay cash for occasional ser-
vices.
Among the 30 million peo-
ple still without health insur-
ance despite gains made under
the 2010 health law, there is
one surprising and poorly un-
derstood group: as many as six
million people, like Ms. Collier,
who are eligible to get nearly
free care but don’t sign up.
The Obama administration
was closing out the latest
sign-up period for coverage
under the health law on Sun-
Dejah Collier and Brett Harrison with children Zane, left, and Tobias in Westminster, Colo., in January.
day, already heralding a late
rush of applicants for private
coverage. They put the admin-
istration well on track to ex-
ceed targets of having 10 mil-
lion people enrolled in plans
bought through Health-
Care.gov and state equivalents
at year-end, up from nine mil-
lion at the end of 2015.
From here, making a bigger
dent in the uninsured rate will
likely hinge on Medicaid sign-
ups. Federal officials have fo-
cused on continuing to expand
eligibility for Medicaid and
will soon ask Congress for
fresh incentives for the 20
states that hadn’t agreed to do
so at the start of 2016.
There are about three mil-
lion people who now can’t get
government-funded insurance
because their states haven’t
extended Medicaid eligibility,
and they don’t make enough
vamping enrollment proce-
dures to make it easier to sign
up everywhere
“Increasing how many
Americans have health insur-
ance is one of the central
goals of the Affordable Care
Act,” said Lori Lodes, director
of the office of communica-
tions at the Centers for Medi-
care and Medicaid Services.
There are at least 13 million
more people in Medicaid now
than before the law’s rollout,
money to qualify for private and some 71 million people
coverage. Still, they are signif- were in Medicaid in Septem-
icantly outnumbered by those, ber 2015, making it far and
like Ms. Collier, who have cho- away the single biggest source
sen not to enroll. of health coverage in the U.S.
To get at these holdouts, But enrolling the Medicaid-
the administration is enlarging eligible can seem less urgent.
a national campaign that had That is because people who do
been aimed at enrolling low- meet the qualification criteria
income children to include can sign up on any day, and
their parents, too. Federal offi- even get coverage retroac-
cials also say they will offer tively for treatment incurred
$32 million in grants in the in the previous three months.
their behavior, they are really
not” because they probably
aren’t accessing regular pre-
ventive care. That could mean
greater expense in the long
run if some people incur big
hospital bills for conditions
that could have been treated
more easily sooner.
Mike Perry, a pollster who
has studied people’s experi-
ences with Medicaid, has
found one reason some don’t
enroll is that they see their
hardships to be temporary.
That presents experts an
additional conundrum. To
avoid having people like Ms.
Collier drop out of Medicaid,
some states have experi-
mented with making them eli-
gible for long stretches of
time. Others worry that the
programs will be undermined
in the eyes of taxpayers—and
enrollees—if they don’t con-
tinually re-evaluate eligibility.

IPO than $2.8 billion in its IPO,

Continued from Page One
Cracks appeared in the market
during the second half of last
year as volatility in stocks es-
calated and decreased investor
appetite for risk led to some
companies, including retailer
Neiman Marcus Group, to de-
lay going public.
Stock performance for re-
cent IPOs has also faltered.
Some of the biggest offerings
of last year trade below their
offer price, including First
Data Corp., which raised more
THE WALL STREET JOURNAL
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livechat
and Fitbit Inc., which raised
about $841 million.
While some technology and
Internet startup companies
were able to raise money in
the private market last year
and steer clear of a choppy
IPO environment, there is
some concern that may not be
possible in 2016.
The faltering IPO market
also is likely to weigh on the
valuations of private compa-
nies, many of which received
lofty valuations during the
process of getting private fi-
nancing from Silicon Valley in-
vestors. Fissures already be-
gan to appear in that market
last year as the IPO market
showed signs of strain.
The fate of biotechnology
companies is most in focus.
While an IPO slowdown is
problematic for all sorts of
companies, including the tech-
nology sector in which dozens
of companies have raised
money privately at billion-dol-
lar implied valuations, biotech
is getting special scrutiny
from investors because the
sector is widely viewed as the
most vulnerable to diminish-
ing access to public funding. It
can take many years and mil-
lions of dollars to bring early-
CORRECTIONS 
AMPLIFICATIONS
Readers can alert The Wall Street
Journal to any errors in news
articles by emailing
wsjcontact@wsj.com or by calling
888-410-2667.
stage drugs through clinical
trials and approval by the
Food and Drug Administra-
tion.
Several new share offerings
by already-public biotech com-
panies have floundered this
year, not only pricing at steep
discounts, but also falling even
further the session after pric-
ing. So far this year, new-
share offerings by biotech
companies have dropped 15%
from the time of the an-
nouncement of the deal to the
end of trading after the sale,
according to data from Dea-
logic.
“If the market does reopen,
it will be for higher quality
companies,” Mr. Yoon said.
At least three IPOs were
withdrawn or postponed in
January due to market condi-
tions, according to Dealogic,
including that of online lender
Elevate Credit Inc.
This week, the IPO market
will face another test, as at
least two biotech companies
are expected to attempt offer-
ings raising roughly $225 mil-
lion in total, according to reg-
ulatory filings and people
familiar with the deals.
Among the companies plan-
ning stock-market debuts the
first week of February are
BeiGene Ltd. and Editas Medi-
cine Inc., according to people
familiar with the deals.
Immuno-oncology drug de-
veloper BeiGene is seeking to
raise roughly $127 million, if it
prices at the midpoint of its
expected range, according to a
regulatory filing, with the pro-
ceeds going to clinical trials as
January Freeze
U.S. share offerings are off to a slow start this year as
market turbulence damps investors' appetite for risk.
Total number of January
IPOs and follow-on offerings
80
Follow-ons
IPOs
60
40
20
0 0
2005 ’08 ’11 ’14
Source: Dealogic
well as research and develop-
ment.
Genome-editing company
Editas Medicine is in the early
stage of development of a
treatment to correct disease-
causing genes in patients and
is aiming to raise about $100
million at the midpoint of its
expected range. The company
plans to use the money raised
for preclinical studies and
clinical trials, among other
things. Editas plans to price
its IPO Tuesday, according to
people familiar with the deal.
To be sure, biotech shares
have periodically sold off
sharply only to bounce back.
While biotech stocks are near
their lowest levels in more
than a year, their values have
more than quadrupled since
Total deal value in January
$20 billion
$11B
15
10
32
0 5
0
’16 2005 ’08 ’11 ’14 ’16
THE WALL STREET JOURNAL.
lows hit in 2008.
And many firms won’t nec-
essarily founder even if the
market remains closed. A
merger boom in the health-
care industry has helped lift
biotech valuations, as many
large pharmaceutical firms are
perceived to be open to acqui-
sitions and partnerships in a
bid to boost soft revenue
growth.
Such arrangements aren’t
the favored option of many
biotech executives, however.
They tend to prefer raising
funds in initial offerings be-
cause they “want to remain in
control of the drug and reap
all the benefits,” said David
Chalupnik, head of equities for
Nuveen Asset Management,
which manages $142 billion.
Shares of early-stage bio-
tech companies, those that
don’t have any products that
have been approved for sale,
performed well in past years,
as a broad stock-market ad-
vance buoyed by expansive
central-bank policy helped
push up the prices of the riski-
est securities. Some investors
were further encouraged by
some experimental drugs be-
coming blockbuster sellers.
But a broad market pull-
back is now eroding those
gains, thanks to dimming
global-growth expectations,
high valuations and concerns
about the impact of the Fed-
eral Reserve interest-rate-in-
crease cycle that began in De-
cember.
The Nasdaq Biotechnology
Index is down 21% this year.
Shares of biotech companies
that made their stock-market
debuts last year are down an
average 27% from their IPO
prices.
The declines have “quickly
shut the window for the vast
majority of companies that
want to go public,” said John
Schroer, portfolio manager of
the health-sciences fund run
by Allianz Global Investors,
which oversees $477 billion.
Exacerbating the retreat:
outflows from biotechnology
funds that once poured bil-
lions of dollars into the mar-
ket annually.
From August to December,
investors pulled about $1.5 bil-
lion from stock mutual funds
and exchange-traded funds
with biotech in their name, ac-
cording to Morningstar Inc.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 1, 2016 | A3

U.S. NEWS

Baltimore Gets Flak for Fees to Law Firm

City plans to pay up to such as federal civil-rights in-
vestigations, “I think you need
$2.2 million to outside some pretty good brains on
counsel amid Justice it,” he said.
The Justice Department
Department probe opened its Baltimore probe in
May, after Freddie Gray, a
BY SCOTT CALVERT black 25-year-old, died of inju-
ries sustained in police cus-
BALTIMORE—The mayor tody. His death sparked riots
and city attorneys are drawing and added to a national debate
heat for planning to pay out- about policing and race.
side lawyers up to $2.2 million Baltimore hired lawyers at
as the Justice Department in- Wilmer Cutler Pickering Hale
vestigates the city’s police & Dorr LLP, including Jamie
could be better spent on recre- ter a white officer fatally shot
ational opportunities for at- Michael Brown, an unarmed
risk youth, and paralegals black 18-year-old. Ferguson
could fulfill many of the Jus- spokesman Jeff Small said Mr.
tice Department’s documenta- Webb’s roughly $1,300-an-
tion requests at lower fees. hour rate gave some residents
Still, Mr. Young said Balti- “sticker shock” but officials
more shouldn’t worry about wanted someone “top tier.”
the cost of transforming the Mr. Webb said he billed
police department, noting that only a portion of his time,
reducing police-brutality law- knowing Ferguson faces finan-
suits would save the city cial challenges.
money in the long run. In Baltimore, Wilmer Hale so
Ms. Gorelick said she and far has billed more than $1 mil-
other Wilmer Hale lawyers are lion under a contract that caps

SUE OGROCKI/ASSOCIATED PRESS

practices. Gorelick, a partner and former working constructively with payments at $2.2 million
Some City Council members deputy attorney general under the Justice Department. “You through June. Mayor Stephanie
have questioned the decision President Bill Clinton. The wouldn’t hire us if you wanted Rawlings-Blake has said she has
to hire private Washington, firm is giving Baltimore a 10% us to be in fisticuffs” with the a duty to taxpayers to limit the
D.C., lawyers who are bill- discount, something it is also Justice Department, she cost of police overhauls.
ing the cash-strapped city doing for Chicago. said, adding, “There’s no ques- Mr. Nilson concluded last
$600 an hour on average. “Wilmer Hale has lawyers tion if you do this right, the year that the city would bene-
In the face of similar who have more experience and city will come out ahead both fit from an outside firm, in
probes, Miami, Cleveland, Los are better suited to do this in terms of the safety and se- Jamie Gorelick of law firm Wilmer Hale, hired by Baltimore and part because of the need to
Angeles County, Seattle and than any firm in America that curity and liberty of its citi- Chicago, is billing $1,200 an hour in the Chicago case. turn over reams of documents.
Portland, Ore., relied on in- I was aware of,” said George zens, and just pure dollars.” He and Wilmer Hale found a
house attorneys. Baltimore, Nilson, who oversees Balti- Justice Department spokes- vestigation into the city’s po- second firm will handle the “creative” way under federal
Chicago, New Orleans and Al- more’s legal department. woman Dena Iverson said in lice. The probe began after the bulk of the work subject to the law to give Justice Depart-
buquerque, N.M., among other Many in Baltimore support an emailed statement: “The release of a police dashboard city’s usual cap, $295 an hour. ment officials the internal po-
cities, felt their staff attorneys a drastic change in the city’s Civil Rights Division will work camera video showing an offi- Ferguson, Mo., said it has lice disciplinary files they
lacked the expertise and time police practices. But some, in- with whomever a jurisdiction cer fatally shooting 17-year-old paid Chicago lawyer Dan K. sought, Mr. Nilson said, get-
to deal with the probes and cluding City Council Presi- designates as the point of con- Laquan McDonald in 2014. Webb, co-chairman of Winston ting around a state law that
went with outside counsel. dent Bernard “Jack” Young, tact and legal representation The city will pay hourly & Strawn LLP, more than barred such disclosures.
That appears to be a grow- worry that hiring private law- for a pattern or practice inves- rates ranging from $290 for $100,000 since March to help The City Council and mayor
ing trend among municipali- yers to represent the police tigation.” more junior lawyers to $1,200 it negotiate with the Justice are locked in a budget fight
ties, said Chuck Chandler, a might result in fewer re- Chicago hired Wilmer Hale for Ms. Gorelick’s work, said Department. Federal lawyers over the payments. Officials
partner at consultancy Valeo forms. Mr. Young said the in December, after the Justice Stephen Patton, who heads began investigating the city’s say the dispute won’t keep the
Partners. In complex cases funds going to Wilmer Hale Department launched an in- Chicago’s law department. A police in September 2014, af- city from paying the law firm.

©T&CO. 2016
Ruling Buoys Kentucky Ark Builder
BY ARIAN CAMPO-FLORES

A creationist group building

what it calls a full-scale rep-
lica of Noah’s ark in Kentucky
scored an important legal vic-
tory last week, providing a
boost to a theme-park project
that has stirred tension be-
tween secular and religious
groups.
The $91 million Ark En-
MICHAEL CLEVENGER/THE COURIER-JOURNAL/ASSOCIATED PRESS

counter, which is scheduled to

open in Williamstown in July,
will feature a massive 510-
foot-long, four-story-high
wooden vessel, an animatronic
Noah and 120 sculptured ani-
mals, including giraffes and di-
nosaurs. The organization cre-
ating it, Answers in Genesis, is
a Christian ministry that seeks
“to proclaim the absolute
truth and authority of Scrip-
ture,” according to its website.
But the project became tan-
gled in litigation over whether
it should qualify for a state
tax-incentive program worth Construction continues on the Ark Encounter Park in Williamstown, Ky., seen this past November.
an estimated $18 million.
Though the Kentucky tourism group’s application because of plans to appeal it. in Petersburg, Ky., which pro-
cabinet initially gave approval, its spiritual profile was dis- The court’s decision “is a motes the belief that the Earth
it later reversed itself, arguing criminatory and an unconsti- victory for the free exercise of was created by God and has
that the ark had evolved from tutional violation of freedom religion in this country, in- exhibits including Adam and
a tourist attraction to an ex- of religion. cluding in hiring,” said Ken Eve in the Garden of Eden. TIFFANY 1837®
tension of the group’s minis- U.S. District Judge Gregory Ham, president of Answers in With the latest endeavor,
try. Officials said the group’s Van Tatenhove sided with the Genesis. Mr. Ham said he sought to cre-
plans to use religious criteria ministry in a ruling last week. But Gregory Lipper, senior ate as accurate a version as
in hiring was discriminatory Kentucky’s “exclusion of AiG litigation counsel at Ameri- possible of the ark that, ac-
and that granting it incentives from participating in the pro- cans United for Separation of cording to the Bible, saved
would be an unlawful advance- gram…is a violation of AiG’s Church and State, an advocacy Noah, his family and the
ment of religion by the state. rights” under the Constitution, group that filed a brief in the world’s animals from a flood. 800 843 3269 | TIFFANY.COM
Last year, Answers in Gene- he wrote. case opposing the tax incen- “What we want to show
sis sued the state. The minis- Kentucky’s newly elected tives, said “the judge made a people is the feasibility that
try said federal law permits it governor, Republican Matt serious legal error.” this could be built and that it
to consider religious criteria Bevin, said he was pleased Answers in Genesis in 2007 was big enough to handle all
in hiring and that denying the with the ruling and had no opened the Creation Museum the animals,” Mr. Ham said.

Terror Trial to Test Marriage Secrecy VALUE PROPOSITION

BY NICOLE HONG the same language and were
living over a thousand miles Best value in a large-cabin aircraft:
NEW YORK—The coming apart—the wife in Egypt,
trial of a suspected Islamic where she is believed to re- three flexible living areas, unmatched payload,
State supporter is reviving the main, and the husband in Ku- choice of a forward or aft galley.
age-old question of when a wait. Mr. Pugh, a U.S. citizen,
couple’s secrets can be aired in was arrested in January 2015 www.gulfstream.com
ELIZABETH WILLIAMS/ASSOCIATED PRESS

court. in Asbury Park, N.J.

Tairod Pugh, a 48-year-old Prosecutors also said in
U.S. Air Force veteran, heads court filings that Mr. Pugh
to Brooklyn federal court in didn’t fully divorce his second
February in what is expected wife, making his current mar-
to be the first trial in the U.S. riage potentially invalid under
of an accused Islamic State U.S. law.
sympathizer. Mr. Pugh, who Mr. Creizman, however, said
prosecutors said was turned his client’s marriage is very
away at the Turkish border be- much alive. He added that he
fore he could allegedly cross Tairod Pugh, right, shown in an artist’s sketch in court last March. is working to locate the official
into Syria and join the terror- record of Mr. Pugh’s divorce
ist group, has pleaded not spouses shouldn’t be forced to ruled that spousal privilege from his second wife.
guilty. reveal their secrets in court applies only to couples that The couple was coping with
Federal prosecutors want to because that would damage are “still cohabiting” and not a long-distance relationship,
present jurors with a draft let- the trust within a marriage. to ones whose marriages “are but still cared for each other,
ter that Mr. Pugh had saved on It is unclear when the judge over or damaged beyond re- Mr. Creizman said in a filing.
his computer and addressed to will decide on the issue, which pair.” The filing contains other Face-
“My Misha,” referring to his could potentially come up in Mr. Pugh’s lawyer and a book messages between them,
wife. In the five-paragraph let- the trials of other Islamic spokeswoman for the U.S. at- including ones where Mr.
ter written before his flight to State defendants around the torney’s office in Brooklyn de- Pugh’s wife allegedly said,
Turkey, he said he wanted to country. Of the 78 individuals clined to comment on the is- “Baby, you’re the best man I’ve
“establish and defend the Is- who have been arrested in the sue. seen in my life” and “I love
lamic States” and suggested U.S. on charges related to the In court papers, the govern- you, I love you, I love you.”
his desire to become a martyr. terrorist group, at least 18 ment says Mr. Pugh and his “They fight, as married cou-
Mr. Pugh’s lawyer, Eric were married at the time of wife were effectively separated ples do, and then they make
Creizman, said the letter is in- arrest, according to data from when he flew to Turkey, citing up,” Mr. Creizman wrote.
admissible in court because it Fordham Law School’s Center Facebook messages where she Experts say spousal privi- SCOTT NEAL +1 912 965 6023
is protected by the so-called on National Security. allegedly told him things like, lege has been rooted in English scott.neal@gulfstream.com
marital communications privi- Ahead of Mr. Pugh’s trial, “You make me hate marital common law since at least
lege, a centuries-old doctrine the two sides have been spar- life” and “please divorce me.” 1628, when an English lord es-
that shields private communi- ring over the strength of his According to prosecutors, tablished the idea that spouses
cations between married cou- marriage. This matters be- the couple married before they shouldn’t be forced to testify
ples. The basic principle is that cause federal judges have knew each other, didn’t speak against each other.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Monday, February 1, 2016 P W L C 10 11 12 H T G K B F A M 1 2 3 4 5 6 7 8 9 O I X X ** THE WALL STREET JOURNAL.

GOP Candidates Make Their Final Appeals

Trump, Cruz exchange tics as usual. said to a laughing crowd. old financial planner. “Now...I
Saturday night in Sioux “Please, pick a winner,” he want to get the guy who can
barbs while Rubio says City, Mr. Cruz went after both added, pointing to himself. beat Trump.”
he will be a uniter as of his rivals for their supposed Messrs. Cruz and Trump are Mr. Cruz’s success in Iowa
conservative apostasies. each heavily invested in win- will hinge on winning over vot-
Iowa caucuses near “A vote for Rubio is a vote ning Iowa. Mr. Cruz declared ers like Scott Hardwick, a
for amnesty” for illegal immi- himself the front-runner here landscaper from North Liberty
CEDAR FALLS, Iowa—The grants, Mr. Cruz said. “A vote in January, before Mr. Trump who had been turned from Mr.
crowded Republican presiden- for Trump is a vote for Obama- launched attacks on his Cana- Trump by his attacks on Mr.
tial race spilled into its final care.” dian birth and Iowa Gov. Terry Cruz. “I wasn’t anti-Trump un-

PAUL SANCYA/ASSOCIATED PRESS

day here with the top-tier can-
didates making sharply differ-
ent cases for why each should
win the nation’s first election
contest.
By Reid J. Epstein,
Janet Hook
and Ben Kesling
Florida Sen. Marco Rubio,
returning to a theme he used
to launch his campaign, prom-
ised to expand the party’s elec-
torate. Texas Sen. Ted Cruz ac-
cused his rivals of being
insufficiently conservative.
And Donald Trump, the un-
imaginable GOP front-runner
when the campaign began a
year ago, promised rallies
across the state to “make
America great again” without
offering many specifics.
The closing arguments re-
flected bets on who will decide
Audience members at a rally Sunday for Ted Cruz in Iowa City.
Iowa’s Monday night cau-
cuses—and what placing first,
second or third would mean
for each camp.
Mr. Rubio, in a town-hall
style meeting Sunday after-
noon at the University of
Northern Iowa, argued he is
best equipped to unite the
GOP’s disparate elements as
the party has been split by the
anti-establishment campaigns
of Messrs. Cruz and Trump.
“No one running for presi-
dent can bring the conserva-
tive movement and the Repub-
Mr. Trump fired repeated Branstad, the state’s most pop- til he came down like he did on
barbs at Mr. Cruz while essen- ular Republican, said Iowans Ted Cruz,” said Mr. Hardwick.
tially ignoring Mr. Rubio. He shouldn’t vote for Mr. Cruz be- “It caused me to eliminate any
campaigned alongside Liberty cause of his opposition to fed- doubt about who Donald
University President Jerry Fal- eral ethanol mandates. Trump was.”
well Jr., who vouched for the If Mr. Rubio finishes in sec- Lower-polling candidates
New Yorker’s appeal for evan- ond place ahead of either rival, aimed to peel away support
gelical voters. In a Sunday TV it would be a damaging blow from the front-runners.
interview on Fox, Mr. Trump to the candidate coming in Mike Huckabee and Rand
said he would “strongly con- third. Rubio aides have pub- Paul are airing ads attacking
lican Party back together sider” appointing Supreme licly played down their own Mr. Cruz. And Mr. Christie,
faster than I can,” Mr. Rubio Court justices who would seek expectations, providing an with 3% support in the latest
said. “We won’t just unite this to overturn last year’s ruling opening for a surprise finish. Des Moines Register poll, ar-
party, we will grow it.” legalizing same-sex marriage. One Rubio target, Mike gued Messrs. Rubio and Cruz
Mr. Cruz closed his Iowa To his crowds, Mr. Trump Hammer of Clive, said at Mr. lack sufficient executive expe-
campaign yo-yoing between crowed over the latest polling Rubio’s Saturday night rally in rience to be president and
attacking his two top rivals numbers. In Council Bluffs, he Urbandale that he remains slammed Mr. Trump for being
and offering a strictly positive reminded Iowa voters that torn between the Florida sena- unserious.
message about himself. In the Monday is their opportunity to tor and New Jersey Gov. Chris And former Florida Gov. Jeb
campaign’s final weeks, the “pick a winner”—in a state Christie, after previously flirt- Bush, who when the race be-
first-term senator diverged that hasn’t picked the GOP ing with Govs. John Kasich of gan was considered a favorite
from his once-disciplined com- nominee since George W. Bush Ohio and Scott Walker of Wis- because of his lineage and ro-
mitment to avoid attacking in 2000. consin; Mr. Walker ended his bust fundraising but is now
other candidates, which en- “You have a lousy record, campaign in September. polling at 2% support, found
deared him to voters who see you’ve gone 16 years without “Early on I liked governors,” himself lamenting his inability
in him an alternative to poli- picking a winner,” Mr. Trump said Mr. Hammer, a 56-year- to attract voters.

On the Stump Kasich’s ‘Traveling

Jeb Bush Goes for
Hugs in Final Days
Jeb Bush, once considered
the front-runner for the GOP
presidential nomination, spent
his final weekend in Iowa la-
menting his inability to convince
voters of his political arguments.
In Cedar Falls, a sign of Mr.
Bush’s place in the current politi-
cal order came when he called
on Harrison Cass Jr., a 67-year-
old retiree from Waterloo. Mr.
Cass told Mr. Bush he was “the
most reasonable, responsible, re-
spectful and resilient candidate.”
“Are you caucusing?” Mr.
Bush asked him.
“Yes,” Mr. Cass replied.
“For me?” Mr. Bush asked.
“Monday night, for you,” Mr.
Cass said, offering a firm com-
mitment of support that’s been
tough for the Bush campaign to
acquire here.
“Whooo!” Mr. Bush yelled, jog-
ging across the room to give Mr.
Cass a hug. “I give out hugs. I’m
from Miami, that’s what we do.”
—Reid J. Epstein
‘I have a heart. If
people have no
money, we have
to help people.’
DONALD TRUMP saying
on ABC that the
government should help
poor people who can’t
afford health care.
Fall
in love.
Troubadour’ Returns
Ohio Gov. John Kasich has
picked up a musical groupie.
A guitarist who struck up a
rendition of David Bowie’s
“Space Oddity” at a Kasich event
in New Hampshire last week de-
cided to attend the governor’s
town hall in Salem, N.H., Sunday
afternoon.
“I know what’s going to hap-
pen here, I’ve had a traveling
troubadour following me
throughout New Hampshire,”
said Mr. Kasich.
The man, local activist Rod
Webber, struck up “Here Comes
the Sun” by the Beatles, to ap-
plause.
Mr. Kasich had Mr. Webber
stand next to him during a press
gaggle outside his campaign bus
parked in the rear of a local Elks
Lodge. This time he played Mr.
Bowie’s “Moonage Daydream.”
Mr. Kasich, a music lover,
eventually had enough.
“I think you’re losing the
crowd,” he said, cutting the gui-
tarist off before stepping inside
his bus.
—Heather Haddon
VOTE The Three Faces of Iowa’s Republican Voters
Iowa's voters are far from a monolith. Data from The Wall Street Journal/NBC News polls suggest a GOP
Continued from Page One
primary electorate that can be divided into three broad sectors: the state's conservative northwest
counties, the populist southern tier and the more politically moderate voters in population centers.
as well among first-time cau-
cus-goers as among Republi-
cans who have turned out in
the past, the WSJ/NBC/Marist
poll found. Other surveys show
him outperforming Mr. Trump
among regular participants. 35
“The bigger the turnout, the
better it is for Trump,” said
Iowa Gov. Terry Branstad, a
Republican.
The Democratic race in
Iowa features a similar dy-
namic, with many strategists
saying a high turnout would
favor Mr. Sanders in his race
against Hillary Clinton. Mr. 80
Sanders has made that argu-
ment himself. “My prediction
is that if tomorrow night there
is a large voter turnout we
win,” he said Sunday in Mar-
shalltown, Iowa.
Like Mr. Trump in the Re-
publican race, Vermont Sen. One dot ( ) = 100 people
Bernie Sanders leads among
first-time Democratic caucus- THE NORTHWEST THE SOUTHERN TIER URBAN IOWA
goers and lags behind his top Rural conservatives A more populist profile The population centers
rival among those who have
Counties to watch: Lyon, Sioux Counties to watch: Pottawattamie, Counties to watch: Dubuque,
previously attended. and Black Hawk Marshall, Jasper, Mahaska Linn, Polk, Johnson
In the Republican race, in-
ternal projections by GOP op- Ted Cruz, the social Donald Trump supporters share Marco Rubio, the leading
eratives involved in the race conservative who has mobilized several traits with voters in this establishment candidate in
show the prospects of a Trump his ground game here in recent part of Iowa. Iowa, should do best in these
win improving as the elector- weeks, should find fertile more moderate counties.
ate expands above the ground in this region.
120,000-vote range of the past Iowans here typically: Iowans here typically Iowans here typically
two presidential cycles. But Are more religious (% adherents*) Are less religious: Are less religious:
some of those same projec- 67.2% 46.3% 49.0%
tions suggest turnout may Iowa 53.9% 53.9% 53.9%
need to exceed 140,000 voters
for Mr. Trump to defeat a Cruz Are less likely to be college grads Are less likely to be college grads Are less likely to be college grads
campaign that has focused on (% bachelor’s/higher)
caucus-goers who regularly 19.9% 18.5% 32.4%
participate in the event. Iowa 26.4% 26.4% 26.4%
Just under 119,000 Republi-
cans turned out for Iowa’s cau- Are older Are older Are younger
cuses in 2008, and a record Age 18–34 Age 50+ Age 18–34 Age 50+ Age 18–34 Age 50+
121,500 caucused in 2012. 20.9% 38.7% 19.9% 39.0% 24.8% 32.3%
Iowa GOP Chairman Jeff Iowa 22.8% 35.3% 22.8% 35.3% 22.8% 35.3%
Kaufmann has suggested as Have lower incomes
many as 150,000 people could (county median income distribution) Have lower incomes Have higher incomes
participate, thanks to the ex-
ceptionally large field, higher-
Iowa

than-normal interest in the

race and, of course, the pres- $40K $50K $60K $70K $40K $50K $60K $70K $40K $50K $60K $70K
ence of Mr. Trump.
The Iowa profile map was produced by filtering county data to reflect the demographics of supporters for each candidate type, based on an analysis
The size of the turnout isn’t
of WSJ/NBC News polls. Counties were classified based on whether they were above or below the state level for each demographic characteristic.
the only factor that could tip Counties where the demographic trends overlapped were reclassified based on further reporting and expert consultation with Timothy Hagle,
the scales; the makeup of the University of Iowa, and David Redlawsk, Drake University Harkin Institute for Public Policy and Citizen Engagement and Rutgers University.
electorate is also critical.
Roughly half of all caucus-go- *Includes church members and nonmembers who participate, such as members’ children and others.
Sources: U.S. Census Bureau American Community Survey 2014 5-year estimate (demographics); Association of Religion Data Archives (adherence)
ers in 2012 described them-
Randy Yeip and Max Rust/THE WALL STREET JOURNAL.
selves as “very conservative,”
and 57% said they were evan-
gelical Christians. But public is that people who haven’t nal weekend before balloting closing days, with many not-
polls, including the WSJ/NBC/ voted before will be put off by doing everything they could to ing his decision to skip the fi-
Marist survey, predict a much the caucus process, which can juice turnout. The Cruz cam- nal candidates’ debate last
smaller share of both groups involve spending hours Mon- paign has assembled 12,000 Thursday.
Waterfall Pendant with Genuine Hawaiian will appear this time around. day night listening to political volunteers, making more than “The people of Iowa deserve
Koa Wood Inlay in Sterling Silver If that trend holds, Mr. speeches before casting a bal- 20,000 calls a day to likely to hear his closing argument,”
$199 Trump could be in for a big lot. One voter attending Mr. caucus-goers and knocking on said Bryan Moon, 54, a Repub-
night. He does best among Trump’s Davenport rally Satur- more than 1,000 doors. lican from West Des Moines
Chain included less-conservative voters, while day wasn’t sure whether she “At this point, it is all turn- who had planned to vote for
Mr. Cruz, of Texas, outpaces could vote that night. out,” Mr. Cruz told reporters Mr. Trump.
Matching Earrings available the New York businessman “Is this the caucus?” asked in Sioux City on Saturday. Love him or not, Mr. Trump
among evangelicals. According Ellen Kine of Davenport, be- While the Cruz camp priori- remains the biggest attraction
HAWAII: Oahu, Maui, Kauai, Big Island of Hawaii to public polls and internal fore being reminded that it tizes traditional caucus-goers, in the race. Thousands of stu-
BOSTON: Natick Mall, Northshore Mall campaign models, the race was just a rally for Mr. Trump. the Trump campaign is partic- dents and supporters stood
CHICAGO: Woodfield Mall gets a lot tighter if evangeli- There is little evidence of a ularly focused on voters who outside an auditorium on the
DALLAS: NorthPark Center • DENVER: Cherry Creek Shopping Center cals represent a similar share big surge in new, Republican attended his rallies or visited Drake campus Thursday night
LAS VEGAS: Grand Canal Shoppes at The Venetian
LOS ANGELES: Glendale Galleria • NEW YORK: Roosevelt Field
of the caucus-night electorate voters. A Des Moines Register/ his campaign website or Face- to get a seat for his im-
PHILADELPHIA: The Plaza at King of Prussia as they did in 2012. Bloomberg Politics poll found book page, Iowa Republicans promptu fundraiser for veter-
PLEASANTON: Stoneridge Mall • PORTLAND: Washington Square “The Cruz coalition largely that first-timers accounted for said. On Saturday night, Mr. ans after he backed out of the
SAN DIEGO: Fashion Valley, Horton Plaza • SAN FRANCISCO: PIER 39 consists of Iowans who caucus 40% of the expected GOP elec- Trump’s daughter Ivanka took Fox News debate.
SAN JOSE: Valley Fair • SEATTLE: Bellevue Square every four years like it’s their torate Monday, in line with the to a Facebook video to explain “I’m not sure I could be this
WASHINGTON, D.C.: Tysons Corner Center job,” said Matt Strawn, who 38% of newcomers in 2012. in minute detail how to caucus excited about another candi-
chaired the Iowa GOP during The Register poll in 2008 for her father. date,” said Alec Bognor, 18, a
the 2012 presidential election. successfully predicted the Despite his lead in most Drake student who spoke on
“The power of Iowa’s Chris- surge of new caucus-goers who polls, Mr. Trump remains a Mr. Trump’s behalf at the
tian-conservative voting bloc boosted Barack Obama to vic- polarizing figure among Re- school’s mock caucus event. “I
would be diluted if a surge of tory in the Democratic contest. publicans here. Some regular wouldn’t sit in line for three
NaHoku.com • 1-866-296-9374 first-time caucus attendees Nearly 240,000 Democrats caucus-goers who had planned hours for Marco Rubio.”
FREE FEDEX SHIPPING ON ALL ORDERS OF $200 OR MORE turn out to support Trump.” showed up that year. to back the billionaire said —Janet Hook
But the risk for Mr. Trump The campaigns spent the fi- they were jumping ship in the contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 1, 2016 | A5
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Monday, February 1, 2016
Clinton’s Second Chance
Eight years ago, Hillary Clinton’s lead in Iowa
polls evaporated in the final month before her
eventual third-place finish. The closing weeks
this year point to another tightening race.
Clinton share of the vote in 2008
25% 30% 35%
Sources: U.S. Census Bureau American Community Survey 2014 5-year estimate (demographics); Associated Press (election results)
RACE
Continued from Page One
didn’t really believe he could
win. But the Vermont senator’s
success at raising money and
attracting young voters has
upended the race. The Sanders
campaign announced Sunday it
had raised $20 million in Jan-
uary alone.
On the eve of the caucuses,
Iowa was up for grabs. Given
the stakes, both the Clinton
and Sanders campaigns are of-
fering some sharp assessments
of the opposition.
Assessing the new tone,
Matthew Dowd, a former strat-
egist to President George W.
Bush, said: “It’s been ratcheted
up. Hillary understands that if
she wins Iowa, she basically
begins to end the race. Bernie
realizes that the whole prem-
ise of his race is contingent on
winning Iowa, and he’s trying
to do whatever he possibly can
at this point to get over the
hump.”
Spotlighting a vulnerability,
Mr. Sanders is making the case
that Mrs. Clinton is beholden
to Wall Street. Speaking to re-
porters at a Bloomberg Politics
breakfast last week, he men-
tioned that Mrs. Clinton had
just attended a fundraising
event at a Philadelphia invest-
ment firm.
“That’s how she has raised
money throughout her politi-
cal career,” he said. “Millions
of dollars from Wall Street and
from other very powerful spe-
cial interests.”
The combative posture
poses risks for Mr. Sanders—
something his team acknowl-
edges. He has pledged to usher
in a more uplifting style of
politics. He has said he would
inspire voters and thus expand
turnout on Election Day much
as Barack Obama did eight
years earlier.
Recognizing the potential
damage to the Sanders brand,
his aides say there are lines he
won’t cross: He won’t air the
classic political attack ad com-
plete with ominous music and
unflattering pictures of Mrs.
Clinton.
“He’s not going to go there;
it’s not in the cards,” said Tad
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Population age 18–34
17%
Obama victory margin in ’08:
Clinton
win
Bernie Sanders’s chances rest
largely on turning out the counties
with large college-age populations
that boosted Barack Obama.
ADREES LATIF/REUTERS
Hillary Clinton posed for photos with supporters after a rally in Council Bluffs, Iowa, on Sunday.
Devine, a senior Sanders cam-
paign strategist.
So, instead, some of Mr.
Sanders’s ads leave it to voters
to connect the dots. The latest
spot features Goldman Sachs
Group Inc. and its role in the
2008 financial collapse. No
pictures of Mrs. Clinton’s face
appear in the ad; her name is
never mentioned. Yet she is
the star.
Mrs. Clinton and her hus-
band have a long history of
dealings with Goldman. To-
gether, they have collected
nearly $3 million in speaking
fees from the company since
2005.
In the spot, a narrator says
that “millions in campaign
contributions and speaking
fees” enabled Wall Street firms
to engage in reckless practices.
In an interview with NBC
News over the weekend, Mrs.
Clinton said her opponent’s
method is to discredit her
through “insinuation and im-
plication.”
“That’s disappointing,” she
added, “because he’s always
prided himself on being a can-
didate, a politician—he’s been
in politics a really long time—
not to go negative.”
As the campaign unfolds
Mr. Sanders has flashed in-
creasing irritation at some of
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Nonwhite population
20% 23%
4,000
1,000
Mr. Obama won 62% of the Iowa
minority vote in 2008; Mrs. Clinton
drew 69% of that vote in the latest
WSJ/NBC News national poll.
the criticism lodged by Team
Clinton. Clinton allies have
said that Mr. Sanders’s social-
ist views would be exploited
by Republicans in a general
election.
On Sunday, Mr. Sanders
tried to turn the tables. Asked
by ABC News if he would get
“slapped” with the socialist la-
bel should he win the party’s
nomination, he pointed to re-
cent disclosures that top se-
cret information passed
through Mrs. Clinton’s private
email server.
Having memorably told
Mrs. Clinton in a debate in Oc-
tober that Americans were
“sick and tired of hearing
about your damn emails,” he
said Sunday: “Look at the front
pages in terms of what Secre-
tary Clinton is getting slapped
with.”
Mrs. Clinton dismissed the
latest controversy over her
email as an “interagency dis-
pute” that pales next to the
larger issues on voters’ minds.
For all the sparring, both
campaigns are also taking
pains to put out a positive
message. But their core argu-
ments are very different.
Mrs. Clinton says that her
strength is persevering in the
face of setbacks. A biographi-
cal video that plays for crowds
Trump Campaign Makes Last Push
BY BEN KESLING
DAVENPORT, Iowa—Furni-
ture sales manager Lee Kerr
laughed when the bartender
said the crowds coming for a
drink after the Donald Trump
rally here Saturday were wear-
ing him out.
“We got too many Trump
people down here who just
want to spend money, people
who want to put money into
the economy!” bellowed Mr.
Kerr, a stout fellow holding a
bottle of Bud Light, who said
he’s a Trump man through-
and-through. “Everything he
touches turns to gold!”
Mr. Kerr headed to the Me
& Billy bar and restaurant
rather than the rally in part
because he’s already made his
mind up on who he’s going to
caucus for Monday, when vot-
ing finally begins in the 2016
presidential primary races.
He knows where the candi-
date stands because of the
GOP front-runner’s personal
appearances in the state—and
the controversy and the free
media exposure that comes
with it. Mr. Kerr has gotten
calls from the Trump machine
to make sure he turns out for
his first-ever caucus.
In short, Mr. Kerr is an ex-
ample of just how unusual the
Trump campaign has been.
The first-time candidate has
broken almost all the political
rules, by insulting women, mi-
norities and even Fox News,
the media darling for most
5% 10% 15%
Counties Clinton won
THE WALL STREET JOURNAL.
ahead of her appearances ends
with Mrs. Clinton saying, “I
don’t quit”—a theme of her
campaign since it launched
last April. She says she has the
experience and stamina to
both accomplish her goals and
beat the Republican nominee
this fall.
Mr. Sanders is laying out a
broader vision of a country
that seeks to overturn a politi-
cal system that favors the rich-
est Americans.
He is calling for a bottom-
up “revolution” that will com-
pel Washington officials to act
in the interests of a struggling
middle class.
A huge rally he held Satur-
day in the college town of Iowa
City captured the campaign’s
mood.
As he finished his remarks,
the rock band Vampire Week-
end took the stage and invoked
an optimistic spirit of America
at its best.
The band played Woody
Guthrie’s “This Land is Your
Land,” and were joined by Mr.
Sanders and his wife, Jane,
who, together with the crowd
sang along: “From the red-
wood forests to the Gulf
Stream waters, this land was
made for you and me.”
—Colleen McCain Nelson
contributed to this article.
Donald Trump held a rally Sunday at Dubuque Regional Airport.
conservative Republicans.
It’s another surprising ele-
ment in the candidacy of Mr.
Trump, a reality television
star and billionaire business-
man-turned-politician. His un-
orthodox campaign, once dis-
missed by party insiders as a
political folly, has dominated
one of the longest and most
unpredictable beginnings to a
presidential race in modern
history. If he wins the GOP
nomination, his campaign
could fundamentally change
both the Republican Party and
the way business is conducted
on the campaign trail.
Mr. Trump’s campaign has
been calling voters, but those
interviewed said they weren’t
cajoled by campaign represen-
tatives to do any volunteering
and weren’t even helped to
find their caucus locations.
* * THE WALL STREET JOURNAL.
Iowa GOP
Fears Loss
Of Influence
BY REID J. EPSTEIN But his failure to get closer
to the nomination, won by Mr.
DES MOINES, Iowa—An Romney, showed a flaw of run-
Iowa caucus exhibit at the ning an Iowa-centric campaign
State Historical Museum here strategy: The state’s social
documents how Democrats conservative GOP electorate is
Jimmy Carter and Barack older, whiter, more religious
Obama used Iowa caucus vic- and far more rural than the
tories to propel their presiden- rest of the country. Reince
tial campaigns all the way to
the White House.
It hasn’t worked that way
for Iowa Republicans, who ha-
Priebus, the Republican Na-
tional Committee chairman,
has said Iowa and New Hamp-
shire shouldn’t assume they
ven’t picked the eventual GOP will always lead the party’s
nominee since 2000. Mike nominating calendar.
Huckabee and Rick Santorum, The leading 2016 Republi-
low-budget social conserva- can candidates each pose their
tives powered by the state’s own unique threat to the ac-
large and well-organized evan- cepted political wisdom that
gelical voters, won the past the way to win Iowa’s contest
two contests only to flame out is to embrace local issues and
in primaries later on the nomi- spend months trekking across
nating calendar. the state greeting voters in
The propensity of Republi- small groups.
cans here for picking losing Mr. Cruz, a Texas senator, is
candidates, combined with opposed to ethanol mandates,
particulars of the party’s lead- an industry dear to Iowa’s GOP
ing 2016 campaigns, has GOP Gov. Terry Branstad. Business-
officials in the state worried, man Donald Trump has mostly
like no time before, about eschewed the retail campaign-
whether Iowa can hold its ing Iowa officials claim vets
place as the nation’s first pres- candidates for the rest of the
idential nominating contest. country. And Florida’s Sen.
“Iowa has become sort of a Marco Rubio has done far less
primary for the Christian-right campaigning in Iowa than can-
portion of the party,” said didates like Messrs. Huckabee
Doug Gross, a Des Moines law-
yer who held senior Iowa cam-
paign positions for both
‘Iowa has become
George W. Bush and Mitt Rom- sort of a primary for
ney. “If we give the nation Ted
Cruz after giving the nation
the Christian-right
Mike Huckabee and Rick San- portion of the party’
torum, party elders have to
think, ‘Is Iowa serving its
role?’ ” and Santorum.
The record is different for Three candidates who em-
Iowa Democrats, who have ployed an Iowa-first strategy—
chosen the eventual party Bobby Jindal, Rick Perry and
nominee for the past five pres- Wisconsin Gov. Scott Walker—
idential elections since Iowa’s already have dropped out of
own Sen. Tom Harkin won in the GOP race.
1992. In that time, only Bob The death of Iowa’s straw
Dole in 1996 and George W. poll in 2015, an event that his-
Bush in 2000 won both Iowa torically winnowed the field as
and the GOP nomination. a test of organizational
Fretting about the state los- strength, doesn’t help the state
ing its place at the front of the GOP’s case for maintaining its
presidential nominating calen- first-state status. The state
dar is a quadrennial sport in GOP was forced to cancel it
Des Moines and across Iowa, when the vast majority of can-
with the 2012 GOP results pro- didates elected to skip the
viding much reason for Io- fundraiser that is associated
wans’ bitten fingernails. with the event.
Mr. Romney, who barely Even backers of Mr. Cruz,
competed in the state until the who is running the closest
contest’s final two weeks, was thing to a traditional Iowa
declared the victor on caucus campaign among leading can-
night. But two weeks later, didates, say the old model of
there was a correction: Mr. success is broken. “I have al-
Santorum had in fact won by ways believed from the get-go
34 ballots. this will be the final Iowa cau-
For the rest of the cycle, the cus as we’ve known it,” said
former Pennsylvania senator’s Des Moines radio host Steve
team believed it was robbed of Deace, a prominent Cruz sup-
the momentum an Iowa vic- porter. “I think Iowans recog-
tory would have provided. nize this, too.”
around, landing and pulling
right up next to the throng so
he had to walk just a few steps
to address them.
The most recent Des
Moines Register/Bloomberg
Politics Iowa Poll released Sat-
urday shows Mr. Trump, with
28% support of likely voters,
ANDREW HARRER/BLOOMBERG NEWS
pulling even further ahead of
his closest rival, Texas Sen.
Ted Cruz, who slid to 23%.
His message has remained
consistent even in the closing
days of the Iowa campaign.
Build a wall on the Mexican
border, freeze immigration,
support gun owners, mock the
Iran deal and tout indepen-
dence from the establishment.
Campaign workers sometimes His recent courting of evangel-
work the crowd to get contact icals has also taken more
information and pass out liter- prominence, with Jerry Falwell
ature, but not always. Jr., Liberty University presi-
In response to a request for dent, joining him Saturday and
the size of Mr. Trump’s opera- Sunday.
tion in Iowa, his campaign Mr. Trump added some fi-
said, “Seventeen paid staffers, nal flourishes to the usual
thousands of volunteers!” script to ensure supporters get
Mr. Trump closed his Iowa out to vote. “It all doesn’t
campaign by covering the matter if you don’t caucus on
state in recent days, using his Monday,” he said at the Dav-
signature Boeing 757 to make enport rally Saturday. "The
appearances in front of huge polls don’t matter, nothing
crowds in places like Daven- matters. The only thing that
port rather than the tradi- matters is the poll that’s going
tional close-up meetings with to be taken on Monday.”
voters. He also made whistle At a Sunday rally in Council
stops in places like Dubuque, Bluffs he praised Iowans’ intel-
where he held a rally in a han- lect, telling them, “People are
gar at the regional airport. very smart, they just get it,”
The plane did a low flyby of and adding, “You are going to
the crowd as soaring music make a decision soon and
played on a public address we’re going to do a hell of a
system before circling back job.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
H H H H H
CAMPAIGN
WIRE
H H H H H
IOWA CAUCUSES
Trump Dominates
Facebook Discussions
Donald Trump is dominating
the conversation among Iowans
on Facebook ahead of Monday’s
presidential caucuses.
The social network reports
181,300 Iowans talked about Mr.
Trump on Facebook in the past
week. The next most-discussed
Republican candidate was Sen.
Ted Cruz, with 48,000 people
mentioning his name.
Facebook doesn’t track senti-
ment, so there is no way of
knowing whether the mentions
were favorable or unfavorable.
On the Democratic side, the
Facebook data from Iowa reflect
the tight race between former
Secretary of State Hillary Clinton
and Sen. Bernie Sanders. In the
past week, 99,500 people gener-
ated 366,400 posts, likes or
shares about Mrs. Clinton, while
86,900 people created 334,600
interactions on Facebook men-
tioning Mr. Sanders.
—Natalie Andrews
DEMOCRATIC PRIMARY
Party Agrees to
Back More Debates
The Democratic National
Committee gave its blessing
Sunday to additional presidential
debates, paving the way for a
Thursday debate in New Hamp-
shire to be hosted by MSNBC.
Over the weekend, the Demo-
cratic Party and its three candi-
dates agreed to add four de-
bates to the previously
scheduled six. But a spat be-
tween the campaigns of Hillary
Clinton and Bernie Sanders over
where the debates should be
staged delayed the announce-
ment of a full agreement.
The DNC said it was putting
off a decision on the details of
the last three debates but said
one proposed for Thursday in
New Hampshire would go ahead.
—Byron Tau
and Laura Meckler
Introducing Our
New Managing Directors
These outstanding individuals are talented, committed professionals
who exemplify what it means to be a leader at Morgan Stanley.
Alex Abagian
Juan A. Abril
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Dave Atheis
Vanessa Barboni
Frederick Barnfield
Scott A. Beicke
James Belsey
Kwasi Benneh
Hemant Bhangale
Arnaud Blanchard
Javier Bocos
Lauren Boyman
Robert John
Frederick Brass
Selma Bueno
Eduardo Cabal
Sherrese A. Clarke-Soares
Nathan Coelen
Michael Cohen
Matthew R. Collins
Kim W. Cross
Constantine
Nicholas Darras
Jake Dennison
Alberto Donzelli
Carl Dooley
James Doyle
Kempton Dunn III
David M. Dwek
Jeffrey Eckelman
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Keren Ehrenfeld
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Gregg Erspamer
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Desmond Foong
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CRC 1369687 02/16 CS8427533 01/16
* * * * *
Wall Street’s Donor Role Expands
BY REBECCA BALLHAUS
AND BRODY MULLINS
Wall Street is emerging as a
particularly dominant funding
source for Republicans and
Democrats in the presidential
election, early campaign-fi-
nance reports filed with the
Federal Election Commission
show. The trend comes even as
candidates seek to cast them-
selves as uniquely able to take
on the bankers and investors
who contributed to the econ-
omy’s collapse almost a decade
ago.
So far, super PACs have re-
ceived more than one-third of
their donations from financial-
services executives, according
to data from the nonpartisan
Center for Responsive Politics.
In the 2012 election, dona-
tions from the financial-ser-
vices sector made up roughly
20% of the $845 million raised
by super PACs, or political-ac-
tion committees, and other in-
dependent campaign groups. In
the 2004 election, Wall Street
and other financial groups
were responsible for just $2.4
million of the money collected
by super PACs or other inde-
pendent groups spending
money on the election.
The super PAC backing Re-
publican Sen. Marco Rubio of
Florida drew more than half its
funds in the second half of 2015
from financial-industry donors,
a Wall Street Journal analysis
found. Its two largest donors
were hedge-fund billionaires
Paul Singer and Ken Griffin,
who gave the group $2.5 mil-
lion apiece in the final two
months of the year. Hedge-fund
manager Cliff Asness and Flor-
ida-based investor Mary Spen-
cer each gave $1 million.
Wall Street also provided
more than half of the $5 mil-
lion raised by the super PAC
backing New Jersey Gov. Chris
Christie in the second half of
2015. The group’s fundraising
was largely fueled by a $2 mil-
lion donation in December
from hedge-fund billionaire
Steven Cohen and his wife, who
Gerald Forey
Daryl Francis
Casey D. Galligan
Rahul Gautam
Amy Gelfand
Christina Gili
Massimiliano Gino
Rohit Goenka
James Grafton
Anthony Greco
Bart Gysens
Eric Hahne
Michael James Harris
Maged Hassan
Amay Hattangadi
David Haydon
Jeffrey W. Hibbard
Julie Hobbs
Kelly Holliday
Tommy Hsu
Adriano Ieva
Scott Ince
Phillip Hugh Ingle
Michael Jabara
Daniel Jacobson
Raj Jain
Vikrant Jain
Nigel James
Grant Jonas
Matthew Jones
Adam Josephart
Kara Julian
Karn Karuhadej
Dov B. Katz
Jeffrey M. Kaufman
Ingrid M. Keag
Kelly Hyeeun Kim
Timothy Knierim
Michelle Kong
Alex Kornfeld
Monday, February 1, 2016 | A7
RONDA CHURCHILL/BLOOMBERG NEWS
ANDREW HARRER/BLOOMBERG NEWS
JASON ALDEN/BLOOMBERG NEWS
George Soros, left, gave $6 million in December to a group supporting Hillary Clinton. Steven Cohen, center, in December made a $2
million donation to an entity backing Chris Christie. Ken Griffin, right, gave $2.5 million last year to a group backing Marco Rubio.
also collectively gave $2 mil- their prospects in an election evening. do that if they thought I was
lion to the group in the first where voters appear to be The rise of spending by Wall going to go easy on them?”
half of 2015. overwhelmingly favoring such Street comes as labor unions American Crossroads, a su-
The super PACs backing outsider candidates as real-es- are trending downward. While per PAC founded in 2010 at the
Texas Sen. Ted Cruz raised at tate billionaire Donald Trump. unions will be important politi- direction of Mr. Rove, has aired
least $11 million from billion- Mr. Trump has noted his lack cal backers of the Democratic an ad portraying Mrs. Clinton
aire hedge-fund founder Robert of reliance on a super PAC as Party this election, they have as the tool of wealthy Wall
Mercer and $10 million from proof he isn’t beholden to do- so far contributed just $7.7 mil- Street interests.
Toby Neugebauer, founder of a nors. Still, his campaign has lion of the roughly $290 mil- The early fundraising data
private-equity firm. raised at least $4 million from lion raised by super PACs this provides the most recent evi-
Meanwhile, the super PAC outside sources. election. dence that Wall Street is the
backing Democratic front-run- Republican Jeb Bush has On the campaign trail, can- single biggest driver behind the
ner Hillary Clinton drew $15 also been a hefty beneficiary of didates have talked tough surge in spending by super
million of the $25 million it Wall Street cash this cycle. The about the financial sector. PACs and other outside groups
raised in the second half of the super PAC supporting the for- Messrs. Rubio and Cruz have on U.S. elections.
year from Wall Street sources, mer Florida governor raised pledged to “take on the Wash- According to the Center for
nearly half of which came from $10 million of its total $15 mil- ington establishment” in Responsive Politics, money
billionaire investor George So- lion haul for the second half of speeches. Mrs. Clinton, facing from big banks, investment
ros. Mr. Soros gave the group, 2015 from Maurice “Hank” criticism from her chief rival, firms, real-estate companies
Priorities USA Action, $6 mil- Greenberg, who built American Vermont Sen. Bernie Sanders, and insurers makes up more
lion in December, bringing his International Group into a over her perceived coziness than $115 million of the roughly
total donations to the group to world-wide financial power- with Wall Street, has promised $290 million raised by super
$7 million. Priorities also re- house before its government to rein in the financial sector PACs and other independent
ceived $3 million from billion- bailout. and has talked up conservative campaign entities.
aire entertainment-industry in- A further $540,000 came groups’ spending against her as Donors from Wall Street
vestor Haim Saban and his from Stephen Lessing, a man- proof that she wouldn’t go easy also appear to be favoring Re-
wife, Cheryl, who also gave $2 aging director at Barclays, on the industry. publican candidates more heav-
million earlier in the year. where Mr. Bush previously “This is perversely flattering ily. Thus far in the 2016 elec-
Most candidates and their worked as a consultant making to have Karl Rove go collect tion, Wall Street donors have
allied super PACs hadn’t filed about $2 million a year. Inves- money from the financial in- given to pro-Republican enti-
with the FEC as of early Sun- tor Julian Robertson, who gave dustry to start running ads ties by a 12-to-1 margin. In the
day evening. The deadline to do the super PAC $1 million in against me—to try to convince 2012 presidential election, Wall
so was midnight on Sunday. June, gave $185,000 more later Democrats not to support me,” Street favored Republicans by a
The influx of Wall Street in the year. she said at a recent campaign 3-to-1 margin, according to
cash, while giving candidates a Mr. Bush’s campaign hadn’t stop in Iowa. “It kind of raises data from the Center for Re-
financial boost, may complicate yet filed its report as of Sunday the question: Why would they sponsive Politics.
Katherine Koutsantonis Nicola Savoini
Arek S. Kurkciyan Bob Schulz
Calvin Lam Junaid Shah
Robert Richard Lee Brenda Sirena
Young C. Lee Richard V. Slater
Satnam S. Lehal Matthew A. Slaughter
Daniel Leiter David Solganik
Jan P. Lennertz Darren Spencer
Che King Leo Patrick Standaert
Chris Lipscomb Frank Keith Stepan, Jr.
Barra Ross Little Maxime Stévignon
Ivan Mallardi Matthew Philip Stillwell
Neha Champaneria Markle Claire Anita Storey
Javier Martinez Jeffrey Sun
de Olcoz Cerdan Susan Xun Sun
Gautier Martin-Regnier Yuichiro Suzuki
Rajat Kishore Mathur Joyce Tavoulareas
Daniel McCormick Kalpana Telikepali
Gregory McMullen Radha Thillainatesan
Catherine McNulty Yan Tordoff
Neil H. Mehta Thomas P. Torrisi
Gillian Meth Jeffrey A. Turner
Andrew J. Millest Lisa Vaillencourt
Sunil Mody Jerry Valletta
Rany Moubarak Bryan VanDyke
Kristen Murphy Keith Weiss
Josh Myerberg Tom Wills
Rani Nazim Isabelle Halphen
Robert Newton Winkles
Pawan Kumar Passi Jessica Wright
Aden R. Pavkov Tao Wu
Stuart Perilstein Gangqiang Xia
Tom Perry Shinya Yamamoto
Murat Pinhas Jack Yeung
Tim Pubins Christopher M. Yonan
Roopak Radia Rina Yoshikawa
Harish Rajaram May Yu
Adam Richmond Olga Zeltser
Nikki Rush Michael Zezas
Yacine Saidji Dennis Zhang
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A8 | Monday, February 1, 2016
Deadly Bombings Cloud Syria Peace Bid
Strikes near capital
highlight obstacles to
war’s end; regime’s
opponents set terms
BY SAM DAGHER
GENEVA—Opponents of
Syria’s President Bashar al-
Assad who traveled to Geneva
for peace talks threatened
Sunday to stay out of the ne-
gotiations until the regime
ends its campaign of bombings
and sieges in rebel-held areas.
The move came as a series
of bomb blasts claimed by Is-
lamic State outside the capital
Damascus left at least 50 peo-
ple dead. Regime representa-
tives responded by accusing
the government’s opponents of
being terrorists and foreign
agents, underlining the im-
mense difficulties facing any
effort to end nearly five years
of war.
“This confirms what the
Syrian government has been
saying over and over again
about a link between terrorism
and the backers and patrons
of terrorism and the political
groups that claim to be
against terrorism,” said
Bashar al-Jaafari, the regime’s
representative to the United
Nations, which is hosting the
talks in Geneva.
The Syrian regime has long
claimed that all of its armed
opponents, from moderate
groups to Islamic extremists,
are terrorists backed by West-
ern and Arab powers.
Several representatives of
the 24-member delegation of
Syria’s opposition met Sunday
with U.N. special envoy Staffan
de Mistura to tell him they are
ready to engage in the peace
talks but that Mr. Assad’s re-
gime first needed to meet
Iraqi Blockade Leaves City Residents Starving Saudis
BY MATT BRADLEY
BAGHDAD—At least 10 peo-
ple have died of starvation in
the Islamic State-occupied city
of Fallujah after Iraqi forces
blockaded the city about three
months ago, residents said,
underlining the costs of trying
to weaken extremist strong-
holds.
Iraqi government troops
and Shiite-dominated militia
groups blocked most food,
medicine and fuel from enter-
ing the city, nearly 40 miles
west of Baghdad, in an effort
to strangle Islamic State and
pressure several thousand re-
maining civilians to leave the
city or resist their occupiers,
the Iraqi military and resi-
dents said.
Residents said Islamic State
fighters and their families
were hoarding the few goods
that made it past the block-
ade. The fighters were also
preventing civilians from leav-
ing to use them as human
shields against coalition air-
strikes, they said.
A spokesman for Iraq’s Min-
istry of Defense said the gov-
ernment wasn’t targeting civil-
Militants Kill Dozens at Nigerian Refugee Camp
BY GBENGA AKINGBULE
AND DREW HINSHAW
Suspected Boko Haram
members stormed a refugee
encampment in northeast Ni-
geria, killing at least 60 peo-
ple, many of them children
burned to death in makeshift
homes.
The attack spotlighted the
Islamist insurgency’s brutal
punishment of those fleeing
its violence.
The assault began on Sat-
urday night in the small town
of Dalori, which houses a
camp for Nigerians and other
West Africans made homeless
by the group’s violence, said a
military spokesman, Col. Mus-
tapha Anka. Several suicide
bombers ran toward the
camp’s gates while gunmen on
motorcycles traversed the area
firing assault rifles, he said.
The terrorists dressed in
military fatigues, as Boko
Haram fighters often do, said
a survivor, Maina Bukar. Sev-
eral of them set fire to mud-
brick homes with families
trapped inside. “I had to run
and hide,” he said.
Syrian pro-government forces inspected damage following suicide bombings on Sunday in Seyda Zeinab, on the outskirts of Damascus.
their demands. One member of
the opposition delegation,
Mounzer Makhous, said after-
ward that they would leave
Geneva within days if no prog-
ress is made.
Mr. de Mistura’s office said
he would meet separately with
the opposition and regime del-
egations on Monday.
The opposition delegation,
which arrived late Saturday
from the Saudi capital Riyadh
after deliberations and delays,
said it had received assurances
from its Arab and Western al-
lies that they would help end
the regime’s siege and bom-
ians. He called on civilians in
the Sunni-majority city to ei-
ther leave or oust the mili-
tants themselves.
“For those who prefer to
stay in the city and are calling
Islamic State a state, their
state should provide them
with security, food and medi-
cine,” said the spokesman, Ye-
hya Rasool.
U.S. authorities are aware
the Iraqi military is beginning
to isolate Fallujah, said Col.
Steve Warren, a spokesman
for the U.S.-led coalition
against Islamic State.
“We’re encouraged by the
Iraqis’ reports that they are
trying to get humanitarian aid
into the city,” he said.
The United Nations on Sun-
day launched an appeal for
$861 million to plug a funding
gap in its 2016 humanitarian
emergency-response budget
for Iraq.
People in Fallujah said
prices have climbed and many
people have resorted to eating
grass and plants—mirroring
the hunger crisis in some
rebel-controlled parts of Syria.
“Shops are closed most of
the time because there’s noth-
A man walked past a burned house Sunday in Dalori, Nigeria, a day after a deadly militant attack.
Many of the dead were chil-
dren, Mr. Bukar said, adding
that he helped recover 60 bod-
ies. His account matches that
of another survivor, cited by
the Associated Press, who de-
scribed hiding in a tree as
Boko Haram militants fire-
bombed homes below him.
WORLD NEWS
bardment campaigns and se-
cure the release of prisoners.
“We are counting on the
goodwill of our friends to stop
the suffering of the Syrian
people,” said delegation
spokesman Salem al-Mislet in
an interview before his meet-
ing with Mr. de Mistura.
“That’s what facilitated our
mission and travel to Geneva,”
added Mr. Mislet.
U.S. and Western officials
said the opposition and their
main Arab backers Saudi Arabia
and Turkey were assured that if
the opposition came to Geneva
all efforts would be made to
TURKEY
Mosul
100 miles
100 km
T ig r i s
SYRIA
Euph
R.
ra
te
R.
s
Baghdad
Fallujah
IRAQ
SAUDI
ARABIA
THE WALL STREET JOURNAL.
ing in them. We go to what’s
called a market but we find
nothing there at all,” said
Ibrahim al-Jumaili, a 37-year-
old resident. “We beg govern-
ment or coalition forces or
whoever is capable to do
something quick because the
people cannot handle this situ-
ation any longer.”
Mr. Jumaili reported seeing
a mob of hungry residents at-
tack a truck carrying sacks of
potatoes several weeks ago. In
another incident, he saw a
crowd of people break into a
store before fighting over its
remaining inventory: two
Three suicide bombers, all
women, then ran into a group
of people fleeing to a nearby
village, the AP reported.
The attack fits a pattern for
Boko Haram. For six years, the
group has shot up villages,
burned down schools, kid-
napped children and made the
THE WALL STREET JOURNAL.
aim to pave the way for a
more permanent cease-fire
and a transitional government
that, within six months, would
combine elements of the re-
gime and opposition.
Backed by Iranian forces
and Russian military power,
Mr. Assad has conducted a
blistering campaign of air-
strikes against opposition ar-
eas in Syria since the end of
September.
Humanitarian organizations
have warned of dire conditions
in several pro opposition
towns besieged by the regime,
most notably Madaya near Da-
mascus.
Opponents of Mr. Assad ha-
ven’t stopped fighting either.
LOUAI BESHARA/AGENCE FRANCE-PRESSE/GETTY IMAGES
The attack Sunday occurred in
Seyda Zeinab, a town on the
outskirts of Damascus con-
trolled by the regime and its
ally, the Iran-backed militia
Hezbollah.
A car bomb exploded at a
bus station, followed by two
suicide bombers who detonated
their explosive belts among a
crowd of people aiding the
wounded, Syrian state news
agency SANA reported, citing
an interior ministry official.
Mr. Assad’s government, as
well as Iran and Russia, have
implement their demands. ties to the conflict have a duty urged that the talks in Geneva
Saudi Foreign Minister Adel to facilitate humanitarian ac- be focused on how to combine
al-Jubeir confirmed this at a cess to populations in desper- efforts to defeat terrorism in
news conference with his ate need, not in a week, not Syria.
Turkish counterpart in Riyadh after further discussions, but The regime’s Minister of In-
on Sunday. “Our Syrian broth- right now today,” he said in formation, Omran al-Zoubi,
ers and sisters and us are in the video. said Saturday that all states
the same team,” he told re- The U.N. Security Council must agree to designate as ter-
porters. “So the assurances passed a resolution in Decem- rorists the majority of armed
are provided to them and us at ber that calls on all parties to groups opposed to the regime.
the same time.” the conflict in Syria, not just “There will be no progress on
The U.S. State Department the regime and its backers, to the political front unless there
released a video statement by end the shelling and bombard- is an agreement among states
Secretary of State John Kerry ment of civilians and medical over naming the terrorist or-
on Sunday addressing these facilities, allow humanitarian ganizations,” he said.
demands. “Let me be clear, the agencies access to besieged ar- —Asa Fitch in Geneva
Syrian regime has a funda- eas, and release detainees. and Dana Ballout in Beirut
mental responsibility, all par- The peace talks in Geneva contributed to this article.
sacks of flour and some bot-
tles of cooking oil. The death
the Iraqi Sunni minority that
many Iraqi Shiites suspect are
To Probe
toll includes five babies who
died of diarrhea in the city’s
sympathetic to the Sunni in-
surgent group. Deaths
main hospital because milk Many Iraqi politicians dis-
formula was unavailable. miss talk of retaking Fallujah
In Yemen
IRAN
Iraqi security forces said because of its perceived sym-
they have secured passage for pathy to Sunni militants. Iraqi
food to enter the city and for officials have focused instead BY AHMED AL OMRAN
civilians to leave, but spokes- on liberating larger cities, AND ASA FITCH
men for the military and mili- such as Islamic State’s de facto
tias leading the offensive ac- Iraqi capital, Mosul. RIYADH—Saudi Arabia said
knowledged that the city had While Fallujah residents it would set up an indepen-
been effectively besieged since said Islamic State enjoys some dent group to investigate
the fall. local support, they said most claims of airstrikes that have
“It’s difficult to us to let the people despise the group. led to civilian deaths in Ye-
goods trucks get into the city Many see their city—the first men, where the kingdom has
because this means dealing to be occupied by Islamic led a military coalition fight-
with Daesh,” said Karim al- State more than two years ing Houthi rebels.
Nouri, a spokesman for the ago—as a largely forgotten The coalition said it “deeply
government-sanctioned mili- corner of the regionwide war. regrets the death of civilian
tias, using a pejorative term Without government help, victims in Yemen” and that it
for the group. Islamic State “is people in Fallujah warned that takes all precautions to pro-
the one who will receive the food in the city could run out tect them.
goods and the one who will within a month. The group will comprise
use them.” “We want Fallujah to be be- “senior officers, military ad-
Islamic State released pho- sieged, securitywise, to pre- visers and experts in the field
tos in December of what it de- vent Daesh from committing of weapons and international
scribed as its fighters distrib- crimes, but we also want safe humanitarian law to assess ac-
uting food to civilians in passages for people to get cidents and verification proce-
Fallujah. out,” said Sheikh Hameed Ah- dures, and the mechanism of
The food shortage in Fallu- med al-Alwani, a former head targeting and how it can be
jah highlights the toll that the of the Falluja city council and developed,” the Saudi-led co-
fight against Islamic State has a member of the Anbar Pro- alition said.
taken on civilians, particularly vincial Council. Coalition spokesman Brig.
Gen. Ahmed Asiri said that
some reports by the media
and rights groups on civilian
deaths are “categorically base-
less,” but he acknowledged the
coalition made mistakes.
launching guerrilla raids on That included an airstrike
those people as the Nigerian in October that caused severe
army has pushed the group damage to a hospital operated
into a smaller territory. by aid group Doctors Without
The militants have sent sui- Borders, known by its French
cide bombers to strike the acronym MSF, in the northern
camps where homeless war area of Haydan.
survivors line up for free Gen. Asiri attributed the
meals. It has set up roadblocks mistake to miscommunication
and positioned lookouts in tall between advanced observers
grass to stop villagers from and the fighter pilot who was
walking to safety, said people aiming to hit a target near the
who have made the journey. In hospital for which the coordi-
some towns, the group has nates were previously provided
banned backpacks, residents to the coalition command.
JOSSY OLA/ASSOCIATED PRESS
of those communities said. The coalition has been criti-
It is an increasingly popular cized by rights groups and aid
tactic for jihadist groups. In agencies for what they allege
Syria and Iraq, Islamic State, is a pattern of civilian damage.
to which Boko Haram has The U.N. estimates that
pledged allegiance, has made around 2,800 civilians have
it difficult or deadly for civil- been killed in Yemen since the
ians to leave territory it con- coalition strikes started last
trols. Men departing the jihad- March, out of an overall death
ists’ Syrian stronghold of toll of above 6,000. A U.N. re-
border areas between Nigeria, Raqqa or Mosul in neighboring port last year found that as of
Chad, Niger and Cameroon Iraq must leave family behind the end of June, most civilian
largely uninhabitable. Some as insurance that they will re- deaths were the result of co-
2.5 million people have fled turn. alition strikes.
their homes in that region, ac- The upshot is that Boko Gen. Asiri said Sunday that
cording to the United Nations Haram and Islamic State have the coalition is working to im-
Office for the Coordination of been able to surround them- prove its targeting mecha-
Humanitarian Affairs. selves with a human shield of nisms with the help of experts
Boko Haram has begun civilians too scared to leave. from the U.S. and U.K.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 1, 2016 | A9

WORLD NEWS

India Takes Steps to Halt It’s a Boy

Access to prenatal gender
testing has contributed to

Sex-Selective Abortions greater male-female ratios in

BY SURYATAPA BHATTACHARYA Public-health and law-en-
forcement authorities say Mr.
countries such as China and India
with a cultural bias against girls.
Males born for every female
happen in hotel rooms or the
back of delivery vans. Those 1.20

SURYATAPA BHATTACHARYA/THE WALL STREET JOURNAL

BAHADURGARH, India—Be-
hind the door of a tiny store-
front on a trash-strewn street
in New Delhi, investigators
trailing two women from this
city found a hospital bed, a
rusted metal gurney and a
small ultrasound machine.
Police arrested the shop’s
proprietor, an unlicensed
druggist named Jitendra
Kaushik, on suspicion of run-
ning a lucrative—and, in India,
illegal—side business identify-
ing the sex of unborn babies
so expectant mothers can
abort female fetuses.
Mr. Kaushik, who is await-
ing trial on charges of illegal
sex determination and practic-
ing without a license, couldn’t
be reached to comment. His
lawyer said: “He is totally in-
nocent.”
Kaushik’s ramshackle clinic
and others like it are part of a
vast underground industry
aimed at preventing the birth
of female children, which has
helped give India one of the
most-skewed sex ratios in the
world.
In Bahadurgarh, just 30
miles outside the Indian capi-
tal in the northern state of
Haryana, police and doctors
are mounting an aggressive
new campaign to tackle the
widespread practices, casting
a light on a business that has
largely operated out of sight.
Pregnant women can get
scans from an extensive net-
work of operators—some with
no formal qualifications—who
use portable and relatively in-
expensive ultrasound ma-
chines. Examinations at times
with girls are then referred on
to unlicensed practitioners of
sex-selective abortions. 1.15 China
As India has become
wealthier, the demographic
trends have worsened. In 1991, 1.10 India
945 girls were born for every
1,000 boys in India. By 2011,
the female number had 1.05
U.S.
dropped to 918. Every year,
400,000 Indian girls go “miss-
ing,” according to the United 1.00
Nations Population Fund, the ’85 ’90 ’95 ’00 ’05 ’10 ’15
result of selective abortion, in- Note: For five-year periods Source: U.N.
fanticide and neglect. A store suspected of being used in identifying unborn babies’ sex. THE WALL STREET JOURNAL.
Those numbers reflect a
deep cultural bias against normalities. Abortion is also ing ultrasound scans for that said, was taken for an exami-
girls, especially in the north. legal for cases of rape and if a purpose, inadvertently creat- nation at his clinic by a female
Abortion in India is legal up woman claims contraceptive ing a thriving black market. go-between from Haryana. The
to 20 weeks if the fetus is failure. Otherwise it is illegal. Mr. Kaushik, the drugstore go-between was also arrested.
shown to pose a risk to the Prenatal sex determination owner, was apprehended after Both were released on bail in
mother’s life or if there is sub- has been banned in India since a sting operation involving a December and await trial on
stantial risk that the child will 1994. A 2003 change to the then-pregnant undercover po- charges of illegal sex determi-
be born with debilitating ab- law specifically prohibited us- lice officer who, authorities nation.

YUAN omy gives the government a

Continued from Page One
ciating.
The funds’ bets come at a
time of enormous sensitivity for
China’s leaders. The government
is struggling on multiple fronts
to manage a soft landing for the
economy, deal with a heavily in-
debted banking system and navi-
gate the transition to consumer-
led growth.
Expectations for a weaker
yuan have led to an exodus of
capital by Chinese residents and
foreign investors. Though it still
boasts the largest holding of for-
eign reserves at $3.3 trillion,
China has experienced huge out-
flows in recent months. Hedge
funds are gambling that China
will let its currency weaken fur-
ther in a bid to halt a flood of
money leaving the country and
jump-start economic growth.
The wager is a lot riskier,
though, than taking on a cur-
rency whose value is set by the
market. China’s state-run econ-
number of levers to pull and tre-
mendous resources at its dis-
posal. Earlier this year, state in-
stitutions bought up so much
yuan in the Hong Kong market
where foreigners place most of
their bets that overnight bor-
rowing costs shot up to 66%,
making it difficult to finance
short positions and sending the
yuan up sharply.
The situation grew more
tense after billionaire investor
George Soros predicted at the
World Economic Forum gather-
ing in Davos, Switzerland, re-
cently that “a hard landing is
practically unavoidable” for
China’s economy. He said he is
betting against commodity-pro-
ducing countries and Asian cur-
rencies as a result.
Days later, a commentary ap-
peared in China’s state-run Xin-
hua News Agency warning that
“radical speculators” trying to
short sell, or bet against, the
Chinese currency would “suffer
huge losses” as the Chinese
monetary authority takes “effec-
tive measures to stabilize the
value of the yuan.”
A spokesman for Soros Fund
Management, Mr. Soros’s family
office, declined to comment on
during the Asian financial crisis.
Mr. Druckenmiller, then chief in-
vestment officer for Soros Fund
Management, said at the
the firm’s currency positions. time that while the main Soros
The show of force has scared hedge fund had earlier shorted
off some fund managers from the ringgit, it bought the cur-
adding to their wagers. Some rency during the crisis, cushion-
traders have scaled back or even ing its fall.
exited from their short bets, say- Hayman Capital began bet-
ing they have little appetite to go ting against the yuan last
up against the Chinese govern- year after studying
China’s banking system and its
rapid debt expansion. The firm’s
Bets against the yuan analysis suggested that past-
come at a time of due loans, which currently stand
at about 2% of the total, would
enormous sensitivity rise sharply and eventually re-
for China’s leaders. quire an injection by the central
government of trillions of dol-
lars of yuan to recapitalize the
ment. Some say they are looking banks. An expansion of the Chi-
with new interest at shorting the nese central bank’s balance
currencies of other Asian coun- sheet would lead its currency to
tries that they expect would fall weaken, just as the dollar depre-
if the yuan keeps depreciating. ciated when the Federal Reserve
The standoff harks back to bailed out U.S. banks during the
big battles such as Soros’s bet financial crisis.
against the British pound a quar- Broader market bets against
ter-century ago. In 1997, Malay- the yuan began growing last Au-
sia’s prime minister blamed Mr. gust, when the People’s Bank of
Soros for a run on the ringgit China unexpectedly devalued the
currency by 2% against the U.S.
dollar. The move fueled specula-
tion that Beijing eventually
would have to decouple the yuan
from the strengthening dollar
and follow other countries to
weaken its currency as a way to
buoy growth.
Mr. Druckenmiller, who now
invests his own wealth, and one
of his former protégés, Zach
Schreiber, who runs the roughly
$10 billion hedge-fund firm
PointState Capital LP, also have
had sizable shorts against the
renminbi since last year, people
familiar with the matter said.
The wager helped PointState
gain about 15% last year, one of
the people said, and contributed
to gains of more than 5%
through mid-January.
Traders who remain bearish
now are shorting China’s cur-
rency in several ways, say people
familiar with the trades. Some
are betting that the gap between
the currency’s onshore exchange
rate and more market-sensitive
offshore rate will diverge fur-
ther. Early in January, the spread
hit a record of 0.1367 before
government intervention nar-
rowed it sharply.
Other firms that have prof-
ited from shorting China’s cur-
rency include the $2 billion
Scoggin Capital Management
and Carlyle Group LP’s Emerging
Sovereign Group, according to
people familiar with the matter.
It was unclear how much ex-
posure Greenlight and Mr. Tep-
per’s Appaloosa Management
LP have, though Mr. Tepper was
outspoken last year in calling the
yuan overvalued.
Since August, China has been
imposing various rules to stabi-
lize the exchange rate and stem
the outflows, including a 20%
reserve requirement applied to
onshore yuan-derivative
trades. That move makes it
more expensive for funds to
keep shorting the currency
through swaps.
Chinese officials have indi-
cated they aren’t seeking to de-
value the yuan to gain advan-
tage over their trading partners,
citing the need to avoid a dam-
aging spiral of competitive de-
valuations as others follow suit.

DO PRESTIGIOUS COLLEGES PAY OFF?

IT DEPENDS ON THE MAJOR.
Graduating from more selective schools can help students with certain majors earn more
money. But in science and tech fields, a mortgage-sized tuition might not be worth it.

READ MORE IN THE JOURNAL REPORT SECTION TODAY.

© 2016 Dow Jones & Co., Inc. All rights reserved. 6DJ3159
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Monday, February 1, 2016
EU Slows Flow of Migrants to Buy Time
Germany, others seek
to limit tide coming in
through Macedonia to
ease political pressure
Europe is bottling up mi-
grants at the foot of the Bal-
kans as its other plans for
stemming the migration crisis
flounder.
By Valentina Pop
in Skopje, Macedonia,
and Anton Troianovski
in Berlin
European Union member
states have sent border
guards, police vehicles and fin-
gerprinting machines to Mace-
donia, which isn’t a member of
the bloc. The goal: to squeeze
the river of people still
streaming north from Greece
toward Germany into a trickle,
turning away all but those
from war-torn countries such
as Syria and Iraq.
The mounting restrictions
are buying German Chancellor
Angela Merkel time as she
asks voters for patience and
lobbies fellow EU leaders to
implement what she promises
will be a comprehensive solu-
tion to the migration crisis.
Ms. Merkel wants Turkey to
dismantle smuggling networks
that bring migrants across the
Aegean Sea to Greece, and she
wants Greece to set up large
U.K.’s Demands Create a Dilemma for Europe
EUROPE FILE
SIMON NIXON
At some point this week,
European Council President
Donald Tusk is expected to
send a letter to European
Union leaders containing the
outline of a possible deal
with the U.K. over its de-
mand for changes to its
terms of EU membership. Al-
though the reforms outlined
are likely to be fairly small-
scale and technocratic, the
political significance of this
moment is
immense:
What is de-
cided in the
coming
weeks and
days will
have profound implications
for the future of the EU.
In crunch talks in London
on Sunday, Mr. Tusk and
Prime Minister David Cam-
eron said they failed to reach
a draft agreement but would
continue talks over the next
24 hours. From the British
perspective, the main objec-
tive of any deal is clear: It
HOTELS
Continued from Page One
Polish border and markets itself
as an oasis for harried Berliners,
has become “quieter” and “ti-
dier,” he says.
He is far from alone. Two
years ago, Franz Kandlbinder
closed his upscale Bavarian ho-
tel, Hotel Parkschloessl, to the
14-and-under-crowd. After
weathering some negative local
press about the restriction, and
drip in business from families,
he now attracts Germans who
travel up to 500 km for its tran-
quility.
“One single vivacious child
can completely ruin your holi-
day,” says René Weiss, a child-
less 48-old German who has fre-
quented such establishments
with his wife in recent years. Al-
though the hotels can’t guaran-
tee a pin-drop noise level, post-
pubescent guests can dine and
sunbathe without children
splashing and yelling.
Germans overall are particu-
lar about noise, obediently fol-
lowing rules on when it is per-
mitted to toss bottles in curbside
recycling bins (never on Sun-
days) or do laundry (not at
night). Also prohibited on Sun-
days are loud music, electric
tools and hammering or sawing.
Many Germans also show im-
patience with childhood. They
send youngsters to school unac-
companied at an early age and
New arrivals lined up for security checks in Serbia on Friday.
registration camps that would
allow recognized refugees to
be settled across the EU.
But with the chancellor’s
approach making little head-
way, many European policy
makers say they have only un-
til March to reduce the num-
bers from the Middle East,
South Asia and Africa who are
arriving in the Continent’s
core, mainly Germany.
Soon, spring weather is ex-
pected to accelerate the arriv-
als, just as Ms. Merkel’s con-
servatives face state elections
in which an anti-immigration
party is poised for unprece-
dented gains.
Within Ms. Merkel’s ruling
coalition, demands to shut
Germany’s own border are
needs to provide a ladder for
Mr. Cameron and many of
his colleagues to climb down
after years of deriding Brit-
ain’s membership in the EU.
Mr. Cameron has made it
clear he will campaign to
keep the U.K. in the EU
ahead of a referendum that
he must hold by the end of
2017, and the debate in his
party and the country ap-
pears to be swinging deci-
sively in his favor. Two opin-
ion polls published last week
gave the “remain” campaign
an 18- and 19-point lead.
Y
et despite the stars
apparently aligning
for Mr. Cameron, he
believes he still needs to be
seen to have scored a politi-
cal win in his negotiations
before he can launch his
campaign. He staked his po-
litical credibility on a prom-
ise that he could restrict the
payment of certain welfare
benefits to EU migrants until
they had been working in the
U.K. for four years. This was
a clear breach of the bloc’s
principle of nondiscrimina-
tion against EU citizens
since it amounts to imposing
a higher rate of taxation on
workers dependent on their
nationality. But unless Mr.
Cameron can secure some-
thing close to what he has
proposed, he fears the do-
mestic backlash could tip the
sometimes pack kindergartners
off on wilderness sleepovers.
Until recently, even the sound
of child’s play was regulated.
German environmental law clas-
sified youthful screams from
playgrounds and child-care cen-
ters as “environmentally harm-
ful.” The designation compli-
cated opening facilities for
children in residential neighbor-
hoods. The government in 2011
changed the law and urged toler-
ance.
Leonhard Kuckart, the chair-
man of the North Rhine West-
phalia Pensioners Union, was
outspoken in his opposition.
“Permanent exposure to 90
decibels is intolerable noise pol-
lution, whether it comes from
children’s friendly yelling or the
hammering of a pneumatic
drill,” he said.
Unsurprisingly, Germany has
one of the world’s lowest birth-
rates.
“Children have become very
rare in Germany and because of
that adults can show a particu-
larly allergic reaction to them
when they present a distur-
bance,” says Hans-Peter Müller,
professor of General Sociology
at Humboldt University in Ber-
lin. “Germans can be incredibly
German about this.”
Jule Denz, a 33-year old civil
servant, says she is annoyed by
children’s high-pitch screams
from two kindergartens opposite
her apartment on Dusseldorf’s
periphery. On vacation, she
wants tranquility.
WORLD NEWS
GERMANY
AUSTRIA
ARMEND NIMANI/AGENCE FRANCE-PRESSE/GETTY IMAGES
SLOVENIA
Belgrade
CROATIA
SERBIA
ITALY
MACEDONIA
ALBANIA
Alternative route GREECE
May be used if the
Greece-Macedonia
border is sealed off
Sources: IOM; EU internal document; staff reporting
multiplying. Support for her away, but weeks” from cutting
open-door policy is waning off Greece, Macedonian For-
abroad, too. Even her ally Aus- eign Minister Nikola Poposki
tria has announced an annual said in an interview. “Actually,
cap on asylum places. this is the second-worst op-
Mounting political pressure tion, because the worst option
around Europe to cut the num- isn’t doing anything, and then
bers arriving, coupled with se- each of the [EU] member
curity fears about potential states would be sealing off its
terrorists using the migrant own borders,” he said.
trail, is leading to measures EU governments are draft-
that could effectively redraw ing contingency plans to deal
Europe’s border at the Bal- with the humanitarian impact
kans. of a buildup of migrants in
In Macedonia, a small, im- Greece if its northern border
poverished ex-Yugoslav repub- is sealed off, according to min-
lic, officials warn that Euro- utes of a meeting in Brussels
pean governments are last week seen by The Wall
discussing a Plan B that would Street Journal.
have the Macedonian-Greek Some countries, notably It-
border sealed off entirely. aly, are worried that shutting
“We aren’t three months the Greek-Macedonian border
David Cameron, right, and Donald Tusk met in London on Sunday.
referendum toward a “Br- scarcely less destabilizing:
exit.” Other countries might be
Therein lies the problem tempted to try to carve out
for the rest of the EU. No their own exemptions to
one in Europe wants the U.K. common rules by similarly
to leave. Every government threatening to bring chaos to
agrees a Brexit would have the rest of the continent.
disastrous consequences for
T
the stability and security of here is no guarantee
the rest of the EU: It would this impasse can be
fuel nationalist and populist broken. The broad out-
parties across the continent lines of a possible deal have
and raise doubts about the been cobbled together in dis-
continued membership of cussions involving Brussels,
other non-eurozone states. It Paris and Rome. One option
would also rob the EU of one is to allow Mr. Cameron to
of its most powerful propo- restrict welfare for EU mi-
nents of free markets and a grants, but only on an emer-
counterbalance to the power gency basis and as a stopgap
of Germany and France. measure, leaving ambiguous
On the other hand, allow- whether the permanent solu-
ing Mr. Cameron to claim his tion will be found in reforms
major political victory is to EU rules or the benefits
Rival Thomas Cook Group
PLC almost doubled its offerings
between 2013 and 2015, to 198
adult-only hotels world-wide.
Mr. Weiss went so far as to
create a German-language web-
site, whose name translates to
NATASCHA DIVAC/WALL STREET JOURNAL
“vacation without children.” It
aims to list every child-free hotel
world-wide—670 and counting.
Majorca leads in popularity, fol-
lowed by Mexico and Greece.
The Spanish island is so popular
among German revelers that
some people call it the republic’s
17th state.
One of the biggest problems
The pool at Hotel Parkschloessl, with young hotel guests, say
which doesn’t allow children. child shunners, is parents. Many
German mothers and fathers
“I feel annoyed by the mere take a hands-off approach that
presence of children,” she fumes. scandalizes calm-seekers.
“Their running around, their Hans-Joachim Spröde, a 54-
loudness, their parents—it cre- year-old detective and father of
ates a tense atmosphere.” one daughter, says he is shocked
Mr. Weiss has traveled to the by how younger German parents
Caribbean for the calm company let their children “run wild” in
of his coevals. hotels, restaurants and other
“I can relax and read without public places.
a horde of children running “Children are a disturbance in
through the hotel lobby... or spa and bathing areas, which are
some child doing a cannonball particularly sensitive to noise, or
into the hotel pool,” he says. in restaurants where children
Germans’ demand for more are squawking.” says Mr. Spröde,
child-free hotels has been seen who with his partner Ms. Denz,
and heard. recently enjoyed a stay in a
“Adult-only is definitely a ris- child-free hotel in Bavaria.
ing trend,” says Kathrin Ms. Denz recalls a breakfast
Spichala, spokeswoman for TUI in a four-star hotel in Italy ru-
AG, Germany’s biggest travel ined by a six-year-old German
company. TUI’s global network boy running around while his
of around 250 adults-only hotels, parents enjoyed their salmon.
including its Sensimar brand “It was unbearable,” she re-
“created for adults,” is growing. calls. “The boy’s parents weren’t
* *** THE WALL STREET JOURNAL.
EU countries Bottleneck
The EU has sent border guards, police
vehicles and fingerprinting machines
to Macedonia to reduce the number
of people heading north to a trickle.
Idomeni-Gevgelija
border crossing
Could be closed
Black Sea
within weeks
TURKEY
Athens
might only open up new mi-
gration routes. The most likely
is a sea crossing from Greece
or Albania to Italy. However,
overall numbers would likely
fall, diplomats believe.
The European Commission,
the bloc’s executive, said
Wednesday that Greece isn’t
properly fingerprinting incom-
ing migrants and began pro-
ceedings to potentially sus-
pend Greece from the EU’s
open-border Schengen zone.
Greek officials say the EU is
pressuring Greece to build
huge detention camps for mi-
grants, with no viable plan for
what to do with the inmates.
Meanwhile, Greece—which
last year let migrants leave its
territory as fast as they en-
system. Mr. Cameron’s office
said late Sunday that he and
Mr. Tusk had made some
progress on the issue. But
the details will have to be
agreed on by all 28 EU lead-
ers, and no one knows for
sure how those who have yet
to see the whole package
will react.
That is why some Euro-
pean governments insist that
TOBY MELVILLE/REUTERS
any deal with the British
needs to be accompanied by
a wider overhaul of how the
EU works to head off the
risk that other countries de-
mand unilateral concessions.
The EU is an association of
sovereign states whose sur-
vival depends on respect for
common rules. But recent
crises have laid bare the ex-
tent to which the bloc’s inte-
gration has left national gov-
ernments exposed to
spillover risks from other
member states over which
they have no control,
whether it be the mishan-
dling of the refugee crisis or
of an economy.
The British debate high-
lights the challenge in find-
ing long-term answers to
these structural problems.
Unless the EU finds ways to
address legitimate concerns
about risks emanating from
other member states, Mr.
Cameron won’t be the last to
demand the right to impose
national solutions.
even looking.”
Child-free vacations aren’t
new in Mexico or the Caribbean,
where they have long lured
Americans. Hotel chain Sandals,
which got started in the 1980s
catering to couples and offers a
variety of adults-only packages,
is one of the concept’s big pio-
neers. Club Med got its start tar-
geting singles in the 1960s.
Those chains mostly mar-
keted to young adults just start-
ing down the path to parent-
hood.
To some Germans, though,
excluding children smacks of
discrimination.
“If a hotel closed its doors to
senior citizens, there would be
an outcry,” says Heinz Hilgers,
president of Germany’s child
protection association DKSB.
“There would probably be more
of an outcry about (banning)
dogs than about children.”
Mr. Cudok doesn’t under-
stand the fuss and argues that
the guiding principle is simple.
“When the focus is on tran-
quility, a playing child is a nui-
sance,” he says.
As the trend spreads, more
Germans are venturing beyond
Majorca in search of child-free
bliss, though other problems can
arise.
Petra and Gunter Bonn, a cou-
ple from Frankfurt, loved their
stay at a luxurious adults-only
resort in Punta Cana, Dominican
Republic. The resort’s empty
beaches, she says, were only
marred by “loud Americans.”
Main route
Many migrants from Syria and
Iraq eventually travel through
Macedonia to reach Europe
IRAQ
SYRIA
THE WALL STREET JOURNAL.
tered—has been forced to slow
down the transport of people
to its northern border. Last
week, more than a thousand
migrants were camping at
three gas stations along the
road from Athens to the bor-
der town of Idomeni.
Ms. Merkel remains skepti-
cal about cutting off Greece,
said people familiar with her
thinking: She shares Athens’s
concerns that swelling num-
bers of trapped, frustrated mi-
grants could destabilize a
country still struggling with a
long-running debt crisis. But
her government is desperate
to avoid a repeat of 2015,
when a million asylum seekers
and irregular migrants entered
the country.
World
Watch
CHINA
Manufacturing Data
Show Sluggishness
Gauges of China’s manufac-
turing registered mixed results
in January, with an official mea-
sure weakening while a private
one strengthened, though overall
the world’s second-largest econ-
omy appeared sluggish.
China’s statistics bureau re-
ported that the official manufac-
turing purchasing managers in-
dex fell to 49.4 in January from
49.7 in December—the sixth con-
secutive month of contraction.
The private Caixin manufacturing
PMI edged up, to 48.4 from 48.2
in December, still in contraction.
Asian markets were down
early Monday after the release.
Official subindexes measuring
new orders, production and ex-
ports also weakened, the statis-
tics bureau said. Meanwhile, the
service industry, which has been
a bright spot, also slackened.
—Mark Magnier
SOUTH KOREA
Declining Exports
Reflect Trade Woes
South Korea’s exports fell at
their fastest pace since the
global financial crisis, the latest
warning sign about international
trade.
Exports, the first shipments
data released each month in
Asia, slid 18.5% to $36.74 billion
in January, the steepest fall
since August 2009 and the 13th
straight monthly decline. Imports
plunged 20.1% from a year ear-
lier to $31.42 billion in January.
South Korean data are
viewed as a proxy for the global
trade picture because of the na-
tion’s heavy dependence on im-
ports of raw materials and ex-
ports of goods such as cars and
phones. The data also give a
reading of the health of the Chi-
nese economy because around a
quarter of South Korea’s exports
are sent to China.
—Kwanwoo Jun
CENTRAL AFRICAN
REPUBLIC
France Aims to End
Military Presence
France aims to end its mili-
tary intervention in the Central
African Republic this year, De-
fense Minister Jean-Yves Le
Drian said on Sunday.
France initially deployed some
1,600 troops in the country in
December 2013. The intervention
was aimed at preventing fight-
ing between predominantly Mus-
lim militants and bands of Chris-
tian vigilantes.
The planned withdrawal of
the troops indicates France ex-
pects a gradual return to peace
in the country after more than
two years of civil war and inter-
religious violence.
—William Horobin
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
‘Economics-Free’ Obamanet
A Tech-
nology
Policy In-
stitute
confer-
ence last
INFORMATION m o n t h
AGE turned
i n t o
By L. Gordon
some-
Crovitz
thing of a
roast.
Economist Tom Hazlett pro-
posed a mischievous toast to
“our friend, former FCC chief
economist Tim Brennan, who
wrote every word” of the
Federal Communications Com-
mission’s new regulations over
the Internet. Mr. Brennan
denied any involvement with
the heavy-handed rules: “Noth-
ing the FCC says necessarily
represents the views of Tim
Brennan or his staff.” He called
the rules “an economics-free
zone.”
That admission should inter-
est the federal appeals judges
now considering the legality of
the regulations, which subject
the Internet to regulations
written for 19th-century rail-
roads and the 1930s phone
monopoly. Mr. Brennan has
confirmed that the agency
failed to conduct the cost-bene-
fit analysis the Supreme Court
requires for regulatory agen-
cies to justify their rules. Mr.
Hazlett, who served as the
FCC’s chief economist during
the George H.W. Bush adminis-
tration, told me he was “not at
all surprised that Tim Brennan,
a thoughtful and honest econo-
mist, would distance himself”
from the new regulations.
Who Says Puerto Rico Needs Bankruptcy?
Senate Demo-
crats wrote to
Majority
Leader Mitch
McConnell on
Wednesday
AMERICAS urging him to
pass legisla-
By Mary
tion that
Anastasia
would allow
O’Grady
Puerto Rico to
write down “a
meaningful portion” of its $72
billion of debt. “This is the
only way Puerto Rico can re-
spond effectively and responsi-
bly to this growing financial
and social catastrophe,” the
senators argued.
The letter echoed recent
calls from other mainland
Democrats for a bankruptcy
provision—not currently per-
mitted under U.S. law—for
Puerto Rico’s debt as a way to
end the island’s fiscal crisis.
On Jan. 15 Treasury Secre-
tary Jack Lew wrote to House
Speaker Paul Ryan warning of
“real suffering for the people
of Puerto Rico” if Congress
doesn’t act soon. And in Octo-
ber Sen. Elizabeth Warren,
who refers to those who lent
money to Puerto Rico as
“vulture funds,” criticized the
Obama administration for
failing to find a way to cir-
cumvent Congress and act on
its own.
Translation: This is an elec-
tion year, and we are the party
that cares about Hispanics.
Yet is Democrats’ insistence
on bankruptcy for Puerto Rico
compassion? Or is it the soft
bigotry of no expectations by
mainland overseers? Lots of
U.S. Economic Freedom Continues to Fade
By Terry Miller
T
he 2016 Index of Eco-
nomic Freedom, re-
leased Monday by the
Heritage Foundation and The
Wall Street Journal, highlights
the urgent need for the U.S. to
change course. For the eighth
time in the past 10 years,
America has lost ground—its
score of 75.4 points out of a
possible 100 ties the country’s
previous low in 1998. Today,
the U.S. ranks 11th out of 178
rated economies, behind devel-
oped countries including Swit-
zerland (fourth), Australia
(fifth) and Canada (sixth).
Countries in the Index are
graded on 10 factors of eco-
nomic freedom, including the
size of government, regulations,
corruption, taxes, and the open-
ness of markets. The factor
scores are averaged together
and countries are ranked re-
gionally and world-wide.
The U.S. score declined re-
peatedly during the Obama
years thanks to dramatically
It’s no mystery why the FCC
skipped the economic analysis.
The commission had planned
less-extreme regulations, but
President Obama intervened at
the last minute, driven by “net
neutrality” poll numbers, to
demand the Internet be regu-
lated as a utility—an approach
the FCC had rejected since the
launch of the commercial In-
ternet in the 1990s.
Congress rejected it, too. The
bipartisan Telecommunications
The White House and
FCC acted on pure
ideology. Cost-benefit
analysis? What’s that?
Act of 1996 was designed to
“preserve the vibrant and com-
petitive free market” for the
Internet, “unfettered by federal
or state regulation.” The Obam-
anet regulations are contrary at
least to the spirit of the law.
Economic analysis would
have predicted these regula-
tions would suppress invest-
ment in broadband. That expec-
tation has been borne out in the
work of Hal Singer of the Pro-
gressive Policy Institute, who is
tracking the dramatic decline in
capital spending due to the
uncertainty caused by the need
for government approval.
The FCC also ignores eco-
nomics by going after innova-
tive pricing plans for broadband
and wireless. The target is “zero
rating” programs, which ex-
empt selected data usage from
Puerto Ricans believe it’s the
latter, and they want no part
of it.
In a Jan. 27 news release,
Alfonso Aguilar, president of
the Latino Partnership for Con-
servative Principles, argued
that the “primary responsibil-
ity” for addressing the fiscal
crisis belongs to Puerto Rico,
not Congress. Moreover, bank-
ruptcy, Mr. Aguilar wrote,
would do nothing to “address
the cause of the problem which
is the [government’s] addiction
to borrowing and spending.”
Mr. Aguilar also expressed
concern that politicians favor-
ing a debt write-down have
created a perception on the
mainland that there is a Puerto
Rican consensus favoring bank-
ruptcy powers. In fact, debate
on the island is raging.
Ricardo Rosselló—a mem-
ber of the pro-statehood New
Progressive Party (PNP) and a
Democrat—is an outspoken
opponent of default. He’s run-
ning in his party’s June pri-
mary to be its nominee in the
November gubernatorial elec-
tion. In an interview at the
Journal’s New York office on
Jan. 20, Mr. Rosselló told me
that Puerto Rico should make
explicit its intention to pay its
debts. And it should use the
fiscal crisis, he said, as an op-
portunity to remake govern-
ment for the better.
Mr. Rosselló identifies “a
lack of credibility,” driven by
Gov. Alejandro García-Padilla’s
proposal to give creditors a
haircut, as a key problem. By
signaling a default, the gover-
nor has damaged the island’s
increased government spending
and regulations, a failed stimu-
lus program that enriched the
well-connected but left average
Americans behind, and laws
such as the Affordable Care Act,
which denied the right of indi-
viduals to keep the health plans
they already had, and as the
president had promised.
Meanwhile, 32 countries—as
diverse as Germany, Vietnam,
Angola and Israel—now enjoy
higher levels of economic free-
dom than ever. Of the 186 coun-
tries in the index, 97 improved
their position relative to 2015.
Increasing economic freedom
in countries such as India and
the Philippines has brought
increased prosperity, better
health and education, and a
cleaner environment to hun-
dreds of millions of people. The
globalized economy also pro-
vides tremendous growth op-
portunities in countries open to
international competition. It is
no longer a fantasy to foresee an
end to poverty in the world.
Given the gains elsewhere,
OPINION
monthly usage caps, giving con-
sumers lower-price options.
Net-neutrality absolutists
object to price and service dif-
ferentiation. T-Mobile’s Binge
On includes unlimited video
from two dozen providers,
including Netflix and ESPN,
but not full Internet access.
AT&T’s Sponsored Data lets
companies pay the data bill for
consumers to gain access to
content such as online games
and health records. Sponsors
use Verizon’s FreeBee Data to
subsidize access to movie trail-
ers and magazine articles.
In November, FCC Chairman
Tom Wheeler praised the Binge
On offering as “highly innova-
tive and highly competitive.” He
chided his critics for predicting
that the new regulations would
force innovators to ask the FCC
“Mother, may I?” before launch-
ing new pricing initiatives.
Then in December, Mr.
Wheeler reversed himself. He
ordered executives from T-
Mobile and others offering
zero-rating services to submit
to FCC approval after all. In
January, agency bureaucrats re-
ported “productive” talks. The
Republican FCC commissioners
objected. Michael O’Rielly
called commission bureaucrats
“inquisitors,” while Ajit Pai
said they are “micromanaging
all kinds of business plans and
hauling in companies to fly-
speck whatever innovative ser-
vice offerings they might
choose to put out into the
marketplace.”
Eight million customers
switched to T-Mobile last year,
many lured by the low-price
access to capital markets.
Moreover, the root of the
problem is that Puerto Rico
runs “continuous deficits” of
about $6 billion a year. Even if
this year’s debt-service were
eliminated, he said, there
would still be a hole in the
consolidated budget of some
$3 billion.
There is no consensus
on the island, despite
the drumbeats
in Washington.
This overspending needs to
be funded, and there is a pre-
dictable “lack of restraint
when it comes to issuing
bonds,” according to Mr. Ros-
selló. Meanwhile there is no
economic growth plan. “We
can make use of financial engi-
neering for only so long. We’ll
be back in Washington asking
for more if our behavior
doesn’t change.”
To restore credibility, and
thus access to financing, Mr.
Rosselló proposes to put
Puerto Rico’s debt under a new
debt management authority
established by federal law—a
control board, if you will, but
“for the managing, issuance
and payment of the debt.”
Board members could be a mix
of local and federal partici-
pants. Some government-reve-
nue streams would be dedi-
cated to flow directly to the
board so that it can prioritize
and pay the debt.
and the continued regression
in the U.S., it is no wonder that
so many Americans are angry
this election year. As the Index
notes, they have endured a full
decade in which “government
favoritism toward entrenched
interests has hurt innovation
and contributed to a lackluster
recovery and stagnant income
growth.”
About five million fewer
Americans have jobs now than
one would expect if historical
trends had prevailed. Assis-
tance programs like disability
insurance and food stamps,
necessary for some but relied
on by rapidly growing numbers
of Americans, cannot provide
the same level of dignity, self-
worth and independence that
come from successfully holding
down a job.
After its own string of de-
clines in economic freedom that
had pushed it to 16th place by
the 2010 Index rankings, the
United Kingdom has bounced
back into the top 10. It did this
by cutting its corporate tax,
offerings the FCC could now
revoke. If these consumers like
their new low-cost plans, will
they be allowed to keep their
plans? Mr. Wheeler’s bureau-
crats get to decide.
Economists understand that
when government mandates
business practices, this limits
consumer choice. “Zero rating
is not price discrimination,”
explained Roslyn Layton on
the American Enterprise Insti-
tute’s Tech Policy Daily blog
last week. “It is price differen-
tiation, a practice that is the
essence of competition.” Con-
sumer-friendly pricing should
be cheered, not banned. Even
when the FCC micromanaged
Ma Bell, regulators allowed
zero rating through toll-free
phone calls paid for by busi-
nesses.
The net-neutrality activists
who got the White House to
end 20 years of the unregulated
Internet are now pushing their
agenda globally. The govern-
ment of India recently banned a
zero-rating service from Face-
book that gave millions of
Indians their first access to the
Internet. Net-neutrality abso-
lutists demand that poor peo-
ple get no access if they can’t
afford unlimited access.
The FCC’s former chief
economist Mr. Brennan did a
public service by admitting
that Obamanet has no eco-
nomic justification. Consumers
around the world were better
off with the open, permission-
less Internet when no one had
to beg government bureaucrats
to let them offer new products,
services or lower prices.
To ensure solvency he pro-
poses improvements in tax col-
lection and spending disci-
pline. On the revenue side, he
notes that the island has a 60%
income-tax evasion rate. The
federal government could help
by sending the IRS, which
already collects payroll taxes
on the island, to provide tech-
nical assistance to increase tax
compliance.
Once Puerto Rico lives up to
its obligations to creditors, Mr.
Rosselló says, Washington
needs to butt out. “We Puerto
Ricans would be in charge of
the budget locally.”
Mr. Rosselló notes that be-
cause “some revenue would
be dedicated to the debt man-
agement authority” to meet
payments “and the govern-
ment would no longer have
the power to authorize new
debt, we would have to re-
structure in order to live
within the means of Puerto
Rico.” But that restructuring
“will be the responsibility of
Puerto Ricans.”
He doesn’t envision draco-
nian across the board cuts.
Rather, he favors “a deep dive”
analysis to uncover the ineffi-
ciencies of a state government
that has 118 different agencies
executing 340 services with
147,000 employees.
It won’t be painless, but
with the easy-out of bank-
ruptcy off the table, Puerto
Ricans will own the question
of how to make the pie bigger
and how to divvy it up. Clearly
some Puerto Ricans welcome
the challenge.
Write to O’Grady@wsj.com.
controlling spending and reduc-
ing deficits. Estonia and Lithua-
nia, which languished for de-
cades under the Soviet Union,
have become the ninth and 13th
freest economies in the world
by opening their borders to
trade and investment. Despite
increasing pressure from main-
land China, Hong Kong has
maintained its commitment to
economic freedom and remains
in first place.
In the decades after World
War II, American leadership in-
troduced the principles of eco-
nomic freedom—the rule of
law, limited government, regu-
latory efficiency and open mar-
kets—to people all over the
world. The 2016 Index of Eco-
nomic Freedom, and the exam-
ples set by newly thriving
nations, highlights the need for
Americans to rededicate them-
selves to those principles.
Mr. Miller is co-editor, with
Anthony B. Kim, of the Heri-
tage Foundation’s 2016 Index
of Economic Freedom.
Monday, February 1, 2016 | A11
BOOKSHELF | By Gabriel Schoenfeld
Haunted
By the Bomb
My Journey at the Nuclear Brink
By William J. Perry
(Stanford, 234 pages, $24.95)
N
ot long after the end of World War II, William J.
Perry, age 18 and already on his second enlistment,
was shipped off to Japan as part of America’s occu-
pation army. Arriving in Tokyo, he saw that the “once great
city was decimated—virtually every building made of wood
was destroyed by firebomb attacks. Survivors were living in
vast wastes of fused rubble, existing on meager rations.”
For the young Mr. Perry, witnessing such horror was a
“transformational experience”; and he understood that the
destruction wreaked by dropping thousands of conventional
bombs on Tokyo, as awful as it was, had been exceeded at
Hiroshima and Nagasaki. His encounter with the effects of
modern war was to lead to a lifetime devoted to protecting
America from the fearsome
weapons of the nuclear
age, recounted now in “My
Journey at the Nuclear
Brink,” an engrossing
memoir and, along the way, a
concise guide to some of the
most intractable national-
security perils confronting our
country.
In 1954, while finishing a
Ph.D. in mathematics at Penn
State, Mr. Perry assumed the
title of senior scientist at
Sylvania’s Electronic Defense
Laboratories in California, a firm
established by the Army to devise defenses
against Soviet nuclear-armed missiles. The expertise he
acquired there was to make him a participant in some of
the Cold War’s most terrifying moments. Thus when Nikita
Khrushchev installed nuclear weapons in Cuba in October
1962, Mr. Perry was summoned to Washington, where for
eight harrowing days he prepared reports for the president
on the technical aspects of the weapons themselves.
The Cuban Missile Crisis was defused, but in its
aftermath the Kremlin embarked on a nuclear buildup so
intense that, by the mid-1970s, America’s deterrent power
had come into question. Mr. Perry had spent the 1960s and
1970s running a startup, exploring how then-novel digital
technology could be applied to military problems. In 1977,
Harold Brown, Jimmy Carter’s secretary of defense, asked
him to take a top slot in the Pentagon, with the assignment
of introducing silicon chips and other engineering wonders
into our fighting machines. Soviet superiority in quantity
was to be offset by American superiority in quality.
Mr. Carter’s presidency was in many ways a fiasco in
international affairs, but it can be counted as a success in
Mr. Perry’s domain. Stealth technology, which could make
ships and aircraft nearly invisible to enemy radar, was one of
the innovations that Mr. Perry pushed into the field, in this
case from Lockheed’s laboratory. Another development on
the drawing board was a satellite network that would give
precise location coordinates in real time. The Global
Positioning System, as it was christened, was deemed “inter-
esting but not essential” by the Carter White House. They cut
it from the budget. Mr. Perry fought hard to restore funding,
rescuing what would become our now ubiquitous GPS.
Perry helped introduce GPS and stealth
innovations to the U.S. military. But not all
military problems have a technological fix.
These breakthroughs, followed by Ronald Reagan’s
massive investment in defense over the following decade,
improved America’s military position dramatically. When,
in 1991, a rain of smart, stealthy weapons fell on Baghdad
in the first Gulf war, it was plain that a revolution in
military affairs, long promised, had indeed come about.
Not that the revolution eased all of America’s problems
abroad. On being appointed secretary of defense by Bill
Clinton in 1994, Mr. Perry inherited a range of crises, not
one of them amenable to a technological fix: a coup d’état in
Haiti, bloodshed in Bosnia, potential loose nukes in the
former Soviet Union, and—most challenging of all—nuclear
ambitions in North Korea. Within weeks of Mr. Perry’s
swearing in, Pyongyang announced that it was withdrawing
from the Nuclear Non-Proliferation Treaty and ejected
inspectors from its reactor at Yongbyon. The rogue state was
now poised to reprocess Yongbyon’s spent fuel and forge it
into plutonium cores for up to a dozen nuclear bombs.
Mr. Perry recounts how he “ordered preparation of a plan
for a ‘surgical’ strike by cruise missiles” on the Yongbyon
facility, telling President Clinton grimly that he might have
to choose “between a disaster and a catastrophe.” Just as
the crisis was reaching its apogee, former President Jimmy
Carter, on his own initiative, flew to Pyongyang and brokered
an accord, and the need to choose between disaster and
catastrophe was averted. Mr. Carter’s diplomacy, which led to
the 1994 Agreed Framework, was a triumph. North Korea
would not go nuclear—or so it was claimed at the time.
Unfortunately, as Mr. Perry is forced to concede, this
“good deal” for the United States took “a bad turn” when
North Korea broke out and sprinted to a nuclear weapon,
testing its first device in 2006. Perhaps because he was
snookered (along with Mr. Carter and the rest of the Clinton
team), Mr. Perry goes to surprising lengths to pin the blame
for this dangerous outcome on the policies of George W.
Bush. He suggests that North Korea wanted to end “decades
of insecurity” through “normalization,” a desire that the
Bush administration heedlessly ignored, he says.
Such an interpretation rests on a startlingly naïve
reading of North Korean motives. It also involves explaining
away, among other things, the fact that Pyongyang began
cheating on the nuclear accord sometime in the mid- to late
1990s, while Mr. Clinton was still in the White House. To
comply with its pledge not to go nuclear, North Korea had
duly shuttered its plutonium-generating facilities, but soon
after it was secretly enriching uranium instead.
Mr. Perry’s skewed version of the North Korean fiasco
serves as a template for his defense of another flawed
agreement: Barack Obama’s nuclear deal with the rogue state
that is Iran. Although “naïve” is not a word that one puts
easily next to Mr. Perry’s name, his devotion to the cause of
arms control, a major theme of his memoir, seems on these
two occasions to have gotten the better of his judgment.
Mr. Schoenfeld, a senior fellow at the Hudson Institute, is
the author of “Necessary Secrets: National Security, the
Media, and the Rule of Law.”
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A12 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK LETTERS TO THE EDITOR

Syria’s Phony Peace Talks Journal Is Wrong on the Criminal Intent Bill

R
egarding the Syrian peace talks that be- they offer international legitimacy as well as Regarding your editorial “Chuck facts, not “scare tactics.” As the Jour-
gan over the weekend in Geneva, allow new opportunities to extract political conces- Grassley’s Guilty Politics” (Jan. 26): nal reports, federal prosecutions for
The House and Senate bills that you food contamination cases that don’t
us to raise two questions: What peace— sions from its opponents. Russia sees the talks support would radically change fun- require intent have resulted in food
and what talks? as a vehicle for its own diplo- damental principles of law. A person companies stepping up efforts to pre-
The regime of Bashar Assad bombs with matic rehabilitation amid normally must intend to commit the vent such contamination. That’s the
Assad is intensifying its long- impunity while Islamic Western sanctions, even as it acts that constitute a crime. But as whole point of such prosecutions,
standing “starve or kneel” defends its clients in Damas- the Supreme Court reaffirmed last which bills like these would stop.
policy against besieged en- State gains ground. cus and extends its influence June, this “is not to say that a defen- Instead, the sentencing bill I au-
claves containing an esti- in the Middle East. dant must know that his conduct is il- thored takes a more responsible step
mated half a million people. Less clear is how this helps legal before he may be found guilty.” by directing all agencies to inventory
The regime has also scored recent battlefield the Syrian people. “As usual, the regime imposes Your editorial wrongly argues other- crimes in the statutes and regulations
victories against moderate opposition forces, the siege on the city before each conference or wise when referencing a nonexistent they administer, identify the required
“Western legal tradition that a party intent and report the number of pros-
aided by a combination of Russian air power, an important event,” a councilman in one starved
must have wanted to break the law to ecutions. It isn’t even clear what
Hezbollah ground fighters and Iran’s elite and encircled town recently told the Journal. be found guilty.” The pending bills problem supporters of these bills are
Quds Force. Creating catastrophes it can then “solve” in ex- would allow defendants to claim igno- addressing, as court records under-
Meantime, the Institute for the Study of War change for Western concessions is an Assad fam- rance of the law as an excuse. And be- mine the few anecdotal cases cited for
reports that Islamic State (ISIS) has responded ily specialty. It has already parleyed this into U.S. cause a defendant need not know the supposed justification. I’ve offered to
to its recent losses in Iraq by launching a fresh acquiescence in Mr. Assad’s participation in a law or intend to violate it, your refer- work on changing particular statutes
offensive in eastern Syria to consolidate control “transitional” future government with no fixed ence to the number of new crimes on that should be clearer, and am trying
of the Euphrates River valley, while the al timetable for his departure. the books is irrelevant to criminal in- to find a middle ground, but support-
Qaeda-linked Nusra Front is gaining strength The tragedy for Syria is that, even as talks tent as it has always been under- ers of the bills have refused so far to
in Aleppo, once Syria’s commercial capital. Nei- enhance Mr. Assad’s legitimacy and strengthen stood. talk and are taking the bipartisan sen-
ther ISIS nor Nusra are at the talks, and they his hand, they will further discredit the moder- Imposing a default standard for tencing bill hostage unless their far-
mens rea to thousands of existing reaching bill is accepted as is.
will continue to fight regardless of what comes ate opposition, which is being pressured to par-
crimes and elements of crimes would In light of our hearing, and given
out of Geneva. ticipate in a transitional government with the cause serious unintended conse- that no Senate Democrat supports un-
Also not represented are Kurdish forces, same regime most Syrians are desperate to quences. It would create numerous dermining fundamental principles of
which have been the most effective ground overthrow. The dragooning may further embit- new issues to litigate, and make ob- criminal intent, don’t be surprised if
fighters against ISIS but were excluded due to ter moderates toward the U.S., while strength- taining pleas and convictions much the House Democrats similarly refuse
Turkish sensitivities. ening claims by Islamic State and the Nusra harder in important cases. For in- to support this bill as the process
Instead, the opposition is represented by an Front that they are the only serious Sunni oppo- stance, it would jeopardize prosecu- continues.
umbrella group backed by the U.S. and Saudi sition to the Shiite regime. tions for terrorism, child pornography SEN. CHUCK GRASSLEY (R., IOWA)
Arabia called the High Negotiations Committee, That point is worth underscoring as Republi- production and food safety. These are Washington
which is demanding that the regime lift its star- cans like Ted Cruz and Rand Paul argue that in-
vation sieges and end air strikes as a precondi- tervening against Mr. Assad would strengthen
tion to “proximity negotiations”—so named be- the jihadists. In reality, the regime and Islamic No Single Formula for Good Company Boards
cause the two sides won’t agree to sit in the State are symbiotic enemies, each drawing po- Board independence is a hot topic and improved corporate performance.
same room. But the opposition’s diplomatic litical strength from the other’s brutality even indeed, especially when activist inves- As with too many current boardroom
leverage has fallen with its battlefield fortunes, as they both target more moderate forces. tors enter the picture. I would paint “best practices,” the drive for stron-
so any deal it might strike in Geneva would There’s a reason Russian warplanes have rarely another point, however, into the ob- ger board independence measures
have little effect inside Syria. targeted Islamic State and the Assad regime servations in “Close Ties in the Board- seems driven less by reality and more
None of this augurs well for the talks called buys Islamic State oil. room”(page one, Jan. 20): the interde- by appearances.
Geneva III after the collapse of Geneva I and II. Next month marks the fifth anniversary of pendency between director and RALPH WARD
Why hold them at all? For President Obama, the the Syrian war. Nobody can claim there’s an activist. Just as good investors know Editor, Boardroom Insider
effort fulfills his pledge after the San Bernar- easy solution to what has become the greatest the companies they invest in, good di- Riverdale, Mich.
rectors need to visit their sharehold-
dino terrorist attack to renew U.S. diplomatic geopolitical disaster of the decade. But a plausi-
ers regularly. When I was head of Regarding “Inside America’s Board-
efforts over Syria, regardless of the prospects ble solution isn’t possible as long as Islamic board governance for General Motors, rooms: How Many Board Seats Make
for success. It also gives Hillary Clinton an State controls much of the country and the I made annual trips to all of our top Sense?” (Business & Tech., Jan. 21),
opening to say on the campaign trail that Mr. Assad regime feels free with Russian help to investors. It certainly helped. In to- some years ago, I was tasked with cre-
Obama is “finally” on the right course in Syria, force Syrians into exile with barrel bombs and day’s governance environment, if an ating a PC-based application to main-
after her previous disagreements with Mr. hunger sieges. The only peace likely to come out activist approaches a board, and there tain and report attendance and com-
Obama while Secretary of State. of Geneva is if the U.S. bludgeons the moderate is no prior relationship, it makes the pensation and produce Form 1099 for
The Assad regime welcomes talks because Sunni opposition into surrender. situation that much more difficult. In- board members of a large corporation.
dependence is certainly important; en- I was surprised to learn that in addi-
gagement, even more so. tion to meeting-attendance payments,
Medals for U.S. Humiliation GREG LAU
Head, Board Advisory Practice
per diem and miscellaneous expense
reimbursements, members had de-
RSR Partners fined-benefit retirement payments for
Greenwich, Conn. 180 months after leaving the board. I
assume that other corporations have a
Years of research have failed to similar benefit. Multiple board mem-
find any notable links between tighter berships are basically sinecures.
standards of board independence (or TOM MCDONOUGH
usage of an independent board chair) North Wales, Pa.

The American Slave Coast Relied on Cotton

ASSOCIATED PRESS

Regarding Fergus M. Bordewich’s The observation that “miscegena-

review of Ned and Constance Sub- tion” was “extremely rare” in the
lette’s “The American Slave Coast” North but “ubiquitous in the South”
(Books, Jan. 23): It is extraordinary ignores the fact that free blacks were

I
to read a book review about 19th-cen- rare in the North—under 2% of the
n other news from the receding tide of der armed Iranian guard. tury slavery that doesn’t mention cot- population. The North was inhospita-
war, the Ayatollah Ali Khamenei has given Secretary of State John Kerry initially hailed ton. Slavery would have withered ble to blacks after the Civil War. The
medals to the Iranian Revolutionary the return of the sailors as a sign of the great without cotton. Slavery spread only black population of the North re-
Guards who recently captured and humiliated new era of U.S.-Iran cooperation in the wake of to those areas where cotton could be mained under 2% until the labor-in-
American sailors. the nuclear accord. “I think we grown. A large majority of all slaves duced shortage of World War I pro-
Iran honors the were devoted indirectly or directly to pelled the Great Migration of blacks
Iran state media reported can all imagine how a similar
cotton production. Notions of the ex- north.
Sunday that the Supreme commanders who situation might have played pansion of slavery via industrial use GENE DATTEL
Leader had awarded the Fath, out three or four years ago, and or the speculation of a Confederate Lakeville, Conn.
or Victory, medal to the head captured U.S. sailors. the fact that today this kind of slave empire doesn’t stand up to
of the Revolutionary Guards issue can be resolved peace- analysis.
navy and four commanders fully and efficiently is a testa- Cotton, like oil today, is a volatile The President’s Coal Policy
who were involved in seizing two U.S. Navy boats ment to the critical role diplomacy plays in keep- commodity dependent on the higher
in January. The two patrol boats were seized af- ing our country safe, secure, and strong,” Mr. law of supply and demand. When Mr.
Follows Precedent, Is Smart
ter they somehow entered Iran’s territorial wa- Kerry said. Bordewich quotes the misleading es- Your editorial “Obama’s Coal Last
ters. The Pentagon hasn’t publicly explained Mr. Kerry later said he was “infuriated” by timate of $2 billion to $4 billion, he Rites” (Jan. 23) completely misses
what happened, but the Revolutionary Guards the footage of the U.S. sailors and that “I imme- and the authors forget that the price the mark on both President Obama’s
of a slave was derivative of cotton. federal coal-leasing pause and the
have said they believe the boats entered their diately contacted my counterpart. And we indi-
Hence, a slave was “worth” very little coal market generally. According to a
waters by mistake. cated our disgust.” if the price of cotton was low. The recent report from Carbon Tracker, a
The Guards released the boats and crew, Apparently that disgust didn’t register with Confederacy didn’t understand that U.K.-based financial think tank, coal
but not before deliberately embarrassing the the people who really run Iran—that is, the Rev- there was a glut of cotton and cotton from federal leases in Wyoming’s
sailors, the Navy, and the U.S. by broadcasting olutionary Guards and the Ayatollah, who has textiles in Britain in 1861. Therefore, Powder River Basin enjoys nearly $3
photos of the Americans in captivity, including now slapped the U.S. again by awarding medals Britain had no urgent reason to inter- billion a year in various tax breaks,
the one nearby of the U.S. sailors on their to those who humiliated our sailors. Maybe the vene on behalf of the Confederacy. well below market royalty rates and
knees with their hands behind their heads un- Ayatollah will give Mr. Kerry a medal too. Cotton production exploded after land-reclamation assistance. The sub-
the Civil War until the Great Depres- sidy—nearly $8 per ton—is approxi-
sion. Importantly, raw cotton was the mately 80% of this coal’s current
Sanders vs. the Machine leading American export from 1803 to
1937.
market price. American taxpayers de-
serve better.

T
The coal-mining industry’s woes
he voters finally get their first say in people have made 3.25 million donations to the are largely driven by an acquisition
Iowa on Monday, and thank heaven. Sanders campaign, which speaks to his populist We Won’t Toast Rhodes, binge that incurred enormous debt. A
We’ll finally be able to count votes for appeal on the political left. coal glut driven by companies incapa-
the presidential nominations, His problem is that while But We’ll Take His Money ble of reducing production hurts too.
rather than dissect polls that The Democratic the Republican “establishment” Kudos to Oxford University Chan- It is untrue that Wyoming coal com-
have been notably inaccurate establishment has all is largely a fiction, there really cellor Chris Patten for opposing the petes with Australian or Indonesian
in recent elections. is a Democratic establish- removal of the Cecil Rhodes statue coal in global markets, and a strong
The Republican caucuses lined up for Clinton. ment—and it’s lined up for Hil- (“Rhodes Must Not Fall” by Gordon dollar makes it even less competitive.
will test whether Donald lary Clinton. This Democratic Crovitz, Information Age, Jan. 25). If Like President Obama, both Presi-
those scholars truly think Rhodes was dents Nixon and Reagan paused fed-
Trump can translate his large machine includes public
so bad, then anything short of return- eral coal leasing to ensure the pro-
crowds and celebrity into actual voters who will unions, especially the teachers who endorsed ing their scholarship money is hypo- gram better served the national
sit in a cold gymnasium for hours; whether the Mrs. Clinton much earlier than they normally do. critical. But doing so might make interest. Coal is fading from energy
Christian right has the clout to deliver the vic- It includes the lobbies of the cultural left, such their “safe space” a little too uncom- markets, and it’s time to review the
tory that Ted Cruz has long predicted; or as Planned Parenthood that has endorsed Mrs. fortable. federal coal program and plan for
whether Marco Rubio’s recent momentum will Clinton despite Mr. Sanders’ progressive bona fi- STEVE SHAW economic transition in coal regions.
make him the leading alternative to the top two des. It even includes President Obama, who pub- Wake Forest, N.C. BILL CORCORAN
heading into New Hampshire next week. In any licly tilted to Mrs. Clinton in a Politico interview Sierra Club
event the Iowa vote won’t come close to decid- only days before the Iowa voting. So last year’s Rhodes scholars, in a Los Angeles
ing the GOP nominee. This machine is all coming together in Iowa gesture that must have seemed a cou-
The Iowa stakes are far higher for the Demo- to knock Mr. Sanders out in the first round. Even rageous statement of principle to Letters intended for publication should
them, insisted that imperialist Cecil be addressed to: The Editor, 1211 Avenue
crats because Bernie Sanders needs to win to if he wins next week in New Hampshire, an Iowa
Rhodes not be named in a toast at of the Americas, New York, NY 10036,
show he can be a viable national candidate. The defeat will show how hard it would be for Mr. their annual Oxford dinner. I wonder or emailed to wsj.ltrs@wsj.com. Please
Vermont socialist has been getting plenty of me- Sanders’ idealistic irregulars to beat the Demo- if they would consider omitting his include your city and state. All letters
dia attention, and his fund raising from small cratic machine in the rest of the country. But if name from their résumés? are subject to editing, and unpublished
donors has been impressive, including $20 mil- he does win in Iowa, it will be a bigger upset ANNA DUFF letters can be neither acknowledged nor
returned.
lion in January. His campaign says 1.3 million than anything on the Republican side. Clyde Hill, Wash.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
Trump and the Obama Power Temptation
By Kimberley A. Strassel
O
f all the Republicans
campaigning in Iowa,
perhaps none is cam-
paigning harder than Ben
Sasse, a Republican sena-
tor from Nebraska. Mr. Sasse isn’t
running for president. He’s running
against Donald Trump. The particu-
lar focus of his opposition deserves
a lot more attention.
Mr. Sasse is a notable voice in
this debate. He’s a heavyweight con-
servative—a grass-roots favorite,
the furthest thing from the
“establishment.” Before winning his
Senate seat in 2014, he had never
held elected office. He was the pres-
ident of Midland University in Fre-
mont, Neb., when he decided that he
had to try to get to Washington and
help restore the constitutional vi-
sion of the Founders.
A history of using lawsuits
or government to silence
critics and rivals raises
the question: How would
he behave in office?
Which is his point in Iowa: “We
have a President who does not be-
lieve in executive restraint; we do
not need another,” said Mr. Sasse in
a statement announcing that he
would campaign with Marco Rubio,
Ted Cruz and other “constitutional
candidates.” On Twitter, Mr. Sasse
issued a string of serious questions
for Mr. Trump, including: “Will you
commit to rolling back Exec power &
undoing Obama unilateral habit”?
That’s a good question for every
Republican candidate. President
Obama has set a new lawless stan-
dard for Washington that might
prove tempting for his successor
from another party. Why suffer
Democratic filibusters when you
can sign an executive order? Why
wait two years for legislation when
Tech-Challenged Pentagon Searches for a Silicon Ally
By Mackenzie Eaglen
S
ilicon Valley is a popular desti-
nation for the feds lately. Pres-
ident Obama’s intelligence
team trekked there last month to ask
for help defeating Islamic State’s
propaganda on social media. Less
noticed has been the steady parade
of Pentagon leaders heading west.
Last summer the Pentagon leased
12,000-square feet of Class A real
estate in Sunnyvale for a new office:
the Defense Innovation Unit-Experi-
mental. Why? Commanders are wor-
ried about the accelerating erosion
of the American military’s techno-
logical superiority. They believe
Silicon Valley’s talent and tech can
restore agility and innovation.
But Defense Secretary Ash Carter
faces two challenges. The first is
getting Americans and their elected
representatives to recognize the
technological stagnation.
Today almost none of the new
military equipment coming online is
revolutionary in design or technol-
ogy; most is merely an upgraded ver-
sion of something from the Cold War.
A half-century ago, the Pentagon had
more than a dozen combat aircraft in
development. Last year it had only
the late and overbudget F-35 and a
new bomber. The American public
believes its military is No. 1, but its
commanders and its enemies increas-
ingly know differently.
The Pentagon has fallen behind
the pace of commercial innovation.
During the Cold War, the defense
industry created GPS and pioneered
computer networking. Today de-
fense companies scramble to learn
from businesses that have developed
self-driving cars, 3-D printers, bio-
metric scanners and microsatellites.
Advances in computer processing
and cloud management have been
largely driven by commercial firms
and university partnerships.
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Rupert Murdoch
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you can make it happen overnight?
The temptation to cut constitu-
tional corners would be powerful
given the pent-up conservative
desire for a Washington overhaul.
Here’s another question for the
Republican contenders, a corollary to
the Sasse challenge: Do you promise
to reject dark power?
How the candidates answer
ought to matter to every conserva-
tive voter. For almost a decade con-
servatives have suffered under a
liberal movement that has honed
the tactic of deploying government
against its political opponents.
The Internal Revenue Service
targeted conservative nonprofits—
after Mr. Obama and Democrats
encouraged the tax agency to act.
Prosecutors hostile to Wisconsin
Gov. Scott Walker staged predawn
raids on conservative activists, part
of a secret John Doe probe into
bogus campaign-finance violations.
Powerful Democratic senators
harassed and intimidated conserva-
tives for giving money to free-mar-
ket groups like the American Legis-
lative Exchange Council. Democrats
singled out conservative donors,
who found themselves subject to
government audits.
The Republican presidential con-
tenders would undoubtedly decry
those nefarious acts—and be of-
fended if asked whether they would
do the same. Yet power is seduc-
tive, and plenty of voters are angry
enough to embrace a “Republican
Obama”—that is, someone who
would go after their perceived
political enemies. Witness the
Washington Republicans who last
year called on the IRS to hound the
Clinton Foundation. Somewhere,
Lois Lerner was smiling.
Mr. Trump’s broadsides are no
doubt part of his allure. But how
would he conduct himself in a post-
Obama White House? Mr. Trump,
after all, doesn’t merely call out
opponents; in this campaign he has
threatened individuals and organi-
zations for daring to criticize him.
In September he sent a cease-and-
The Air Force uses Xbox control-
lers to fly drones and Android tab-
lets to call in airstrikes. Marines
maneuvering behind enemy lines
use a water-purification tool devel-
oped for extreme-sports enthusiasts.
The CIA contracted out its cloud-
based storage to Amazon, and the
Pentagon is trying to do the same.
Leasing a 12,000-foot space
in Sunnyvale, hoping to
bolster defense innovation.
America’s challengers abroad,
meanwhile, are catching up and sur-
passing us. China’s air-to-air mis-
siles outrange those of the U.S. Air
Force, and Beijing continues to
invest in developing hypersonic mis-
siles, which travel so fast that
defending against them would be
almost impossible. Russia has taken
the lead in electronic warfare, even
as the U.S. continues to rely on
Russian rocket engines to launch
satellites and the Soyuz capsule to
transport American astronauts to
the international space station. In
August the former commander of
the Army’s electronic-warfare divi-
sion said this of the Russians: “We
can’t shut them down one-tenth to
the degree they can us. We are very
unprotected from their attacks on
our network.”
Declining technological superior-
ity is felt even more as the U.S. mili-
tary continues to shrink and is now
36% smaller than at the end of the
Cold War. Falling margins of pre-
eminence sow doubt in the ranks;
the U.S. military isn’t accustomed to
fighting fair. Combat without a tech-
nological advantage will mean
mission failures, higher casualty
rates and longer wars.
Losing is no longer unthinkable.
Robert Thomson
Chief Executive Officer, News Corp
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OPINION
On the campaign trail in Davenport, Iowa, Jan. 30.
desist letter to the Club for
Growth, promising a “multi-million-
dollar” lawsuit if the group didn’t
stop running ads in Iowa highlight-
ing his tax ideas.
In December Mr. Trump’s repre-
sentatives sent a letter threatening
litigation to a wealthy Florida busi-
nessman, Mike Fernandez, who ran
an ad against the candidate in a
local newspaper. Another Trump
letter threatened to sue a political-
action committee backing presiden-
tial rival John Kasich. The company
StopTrump.us, which was selling
anti-Trump merchandise, was an-
other object of Mr. Trump’s litigious
saber-rattling. He has also threat-
ened lawsuits against newspapers,
including this one. Mr. Trump in No-
vember threatened to sue The Wall
Street Journal if it didn’t retract
and apologize for an editorial that
criticized him for not understanding
the Trans-Pacific Partnership trade
deal. The Journal refused, and his
lawyer withdrew the threat.
This follows a lifetime of Mr.
Beginning in 2014, former Pentagon
force planner David Ochmanek ran
war games examining whether the
U.S. and NATO could defend the
Baltics against an attempted Russian
takeover. He ran 16 war games with
eight different teams of military
personnel; the U.S. lost every time.
The exercise disproved the assump-
tion that America’s supposed tech-
nological edge would make up for
U.S. forces’ being outnumbered in
Europe.
Although these facts weigh on
military leaders, they are received
coolly by Congress. Many lawmakers
deny that a problem exists, or think
that these claims are made up to
justify a bigger military budget.
Secretary Carter’s second chal-
lenge is to repair the cultural and
regulatory divides between the Pen-
tagon and tech companies. The truth
is that the military cannot easily tap
ObamaCare’s Wallet-Buster Health Plans
By Nathan Nascimento
O
n the campaign trail in Iowa,
Hillary Clinton claimed that
President Obama’s Affordable
Care Act is little different than her
health-care plan in 1993. “It was
called HillaryCare before it was
called ObamaCare,” she told support-
ers on Jan. 21.
Her timing was awkward. That
same day, the Department of Health
and Human Services announced that
health-insurance premiums on the Af-
fordable Care Act exchanges rose an
average of 9% between 2015 and 2016.
But the HHS data account for less
than half of individual-exchange con-
sumers buying coverage only on the
38 states using the federal exchange.
The overall premium increases were
significantly higher.
Freedom Partners Chamber of
Commerce, where I work, has ana-
lyzed all publicly available informa-
tion for health-insurance premiums
from healthcare.gov and state insur-
ance departments. It then calculated
the weighted averages for all health-
insurance plans available on the
Affordable Care Act’s exchanges. The
weighted average gives a more accu-
rate view of overall premium in-
creases, because it takes into account
each insurance plan’s market share.
The findings: Nationally, premi-
ums for individual health plans in-
creased on average between 2015
and 2016 by 14.9%.
Consumers in every state except
Mississippi faced increased premiums,
and in no fewer than 29 states the
average increases were in the double
digits. For a third of states, the aver-
age premiums rose 20% or more.
Health-insurance premiums rose
by more than 30% in Alaska and
Hawaii; Oregon’s average rate increase
Monday, February 1, 2016 | A13
RICK WILKING/REUTERS
Trump’s using the judicial branch,
or simply the threat of legal action,
to try to silence his critics. He (un-
successfully) sued the author of a
book that claimed he wasn’t really
a billionaire. He (successfully) sued
a Miss USA contestant for claiming
the pageant process was “rigged.”
He threatened legal action against
an activist who had ginned up a
campaign to get Macy’s to stop
selling Trump-branded products (he
didn’t sue in the end).
Sometimes Mr. Trump’s legal
actions are less about hushing crit-
ics than blocking business competi-
tion. He sued New York state for
letting bars offer a lottery game
that might have cut into his casino
revenue. He sued New Jersey for
funding a tunnel project that would
have funneled more people to a
rival casino owner’s resort.
More worrisome is Mr. Trump’s
willingness to use government to
punish a critic. In September on Fox
News, National Review’s Rich Lowry
praised GOP candidate Carly Fiorina
into private-industry innovation.
Washington’s debates over forcing
tech companies to open back doors
into encrypted communications
systems, along with the leaks about
NSA surveillance by Edward
Snowden, have fomented enormous
distrust. Skilled entrepreneurs and
engineers are not interested in
working for the government. Worse,
structural problems in the Penta-
gon’s acquisition system deter non-
traditional contractors from doing
business with the military.
Mr. Carter should set realistic ex-
pectations for tech-industry partner-
ships. The Pentagon should work to
identify useful commercial technolo-
gies while sending defense profes-
sionals to learn how new business
processes might rekindle innovation
within the Defense Department. It
should promote Silicon Valley in-
volvement in military acquisition, an
was 23.2%. California’s premiums on
average rose by a modest 1.5%.
Consumers in Kansas, Missouri,
Iowa and Illinois faced increases
exceeding 20% on average. The East
Coast north of Maryland was the
least hard hit (New York’s average
premium increase was 6%), although
Pennsylvania and New Jersey con-
sumers faced premium increases of
14.6% and 13.1% respectively.
While insurance premiums
and deductibles soar,
Hillary Clinton takes credit
for the president’s mess.
In 11 of the 16 states defined as
southern by the U.S. Census Bureau,
premiums rose by more than 10%.
Premiums rose on average by 13.9%,
and by more than 20% in Maryland,
Delaware, West Virginia, Alabama,
North Carolina and Oklahoma. In
Texas, where data was only available
for 98.5% of individual-market health-
care plans, premiums rose by 14.1%.
Average premiums in Tennessee
rose 35.2%—mostly because of the
state’s largest individual-market in-
surer, BlueCross BlueShield of Ten-
nessee, which sold 82% of all ex-
change plans in 2015. After losing
$141 million on these plans last year,
the company had little choice but to
request average premium increases
of 36.3%. The state insurance com-
mission approved this request, lest
the company leave the exchange
altogether and leave 231,000 Tennes-
seans in the lurch.
Minnesota holds the dubious
honor of having the highest year-
over-year premium increases, 47.7%.
by saying that in a debate exchange
with Mr. Trump, she had “cut his
balls off with the precision of a
surgeon.” Mr. Trump—who often
derides political correctness—called
on the Federal Communications
Commission to fine Mr. Lowry.
Mr. Trump is a fan of government
power generally, as alarmed constitu-
tional conservatives will tell anyone
willing to listen. He has never of-
fered deeply considered views about
the office of the presidency—on its
obligations, the limits of its power,
the need to exercise restraint.
“The current administration has
resurrected Nixon’s weaponization
of the bureaucracies against its
opponents,” says Mr. Sasse. “And I
don’t have great hope that a guy
who brags, ‘If someone screws you,
screw them back,’ is going to
return to the rule of law.”
Mr. Trump on Friday night last
week finally responded, sort of, to
Mr. Sasse’s tweeted queries. “@Ben-
Sasse looks more like a gym rat than
a U.S. Senator. How the hell did he
ever get elected?” Mr. Trump
tweeted. Mr. Sasse responded:
“Thanks. As the sonuva football
&wrestling coach, this is high
praise.” Then he went back to prod-
ding Mr. Trump about how he would
wield power if elected president.
A few of Mr. Trump’s GOP rivals,
perhaps caught up in the public
anger or desperate to catch him in
the polls, have also flirted with sug-
gesting that they would govern be-
yond the law. Maybe that’s what
some voters want. But as those
voters weigh their choices, they
might spare five minutes to remem-
ber the years-long IRS nightmare
suffered by dozens of tea party
groups, or the fear that grass-roots
conservatives felt as Wisconsin
police swept into their homes.
Government possesses a terrible
power that must be used sparingly.
Conservatives should prefer a pres-
ident who agrees.
Ms. Strassel writes the Journal’s
Potomac Watch column.
effort that could be profitably linked
to Sen. John McCain’s push to re-
form the acquisition process. The
secretary might also weave this
effort into his “Force of the Future”
initiative, intended to build a flexi-
ble, modern personnel-management
system.
The Pentagon’s leaders are fo-
cused on building relationships with
companies in Silicon Valley because
they know the U.S. military cannot
regain its technological superiority
without them. Mr. Carter’s outreach
is a start. But it will take a tolerance
for risk-taking and years of commit-
ment into the next administration
for our combat forces to regain their
fighting edge.
Ms. Eaglen is a resident fellow in
the Marilyn Ware Center for Security
Studies at the American Enterprise
Institute.
Why? Because that state’s BlueCross
BlueShield, the largest insurer, with
over 90% of the market, lost tens of
millions of dollars during the Afford-
able Care Act’s first two years. The
company requested an average 49%
rate increase, which was approved
by state regulators.
Remember: These premium in-
creases are only one piece of the
health-care cost puzzle. Deductibles
are also rising under the Affordable
Care Act. Silver plans—the most pop-
ular on the exchanges—had average
deductibles of nearly $3,000 in 2016,
according to the Robert Wood John-
son Foundation. This represents an
8% increase over last year.
Millions of Americans are coming
to believe that the Affordable Care
Act’s costs far outweigh its benefits.
In 2014, the latest year for which
data is available, roughly 7.5 million
Americans paid the IRS penalty
rather than purchase the law’s insur-
ance. This penalty is rising to an
average $969 per household in 2016
in an attempt to force people onto
the exchanges. Yet even a $1,000 fine
is cheap compared to thousands—and
sometimes tens of thousands—of
dollars for an Affordable Care Act-
compliant plan.
Nevertheless, Mrs. Clinton refuses
to acknowledge the law’s widespread
problems. At the Dec. 19 Democratic
presidential debate, she responded to
a question about rising premiums and
deductibles by calling them “glitches,”
and a month later she was claiming
credit for the health-care law alto-
gether. But if ObamaCare is Hillary-
Care by a different name, shouldn’t
voters hold her responsible?
Mr. Nascimento is senior policy
adviser at Freedom Partners Cham-
ber of Commerce.
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A14 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

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CITY NEWS A16, A17 | PROPERTY MONDAY A18 | HEARD & SCENE A19 | SPORTS A20
LEAD BELLY ARCHIVES
WSJ.com/NY
Brokerages Chase the Surge Tourist Flights
STEVE REMICH FOR THE WALL STREET JOURNAL
Firms jockeying for
position in Brooklyn
amid flood of rental
and condo openings
BY THERESA AGOVINO
It’s game-on in Brooklyn
among the city’s residential
brokerage firms as a post-
crash record number of new
apartments hit the market.
Firms are bat-
THE tling to repre-
COMMISH sent the devel-
opers of
thousands of
new condominiums and rental
units in downtown Brooklyn,
Park Slope, Williamsburg and
other hot neighborhoods. At
stake are tens of millions of
dollars in sales and rental
commissions.
About 6,000 new units are
Sale Lets Seminary Update Campus
BY KEIKO MORRIS
Leaders of the Jewish Theo-
logical Seminary have tapped
New York City’s strong real-
estate market to fund the
modernization of its Morning-
side Heights campus.
The 130-year-old educa-
tional institution said it com-
pleted a $96 million deal to
sell a parcel of land on the
eastern edge of its Morning-
side Heights campus, air rights
to develop that land and an
off-site residence hall to Sa-
vanna, a real-estate invest-
ment and development firm.
The money from the sale,
which closed Thursday, will
In Iowa, Mayor Bill de Blasio and his wife, Chirlane McCray, try to
persuade undecided voter Joel Kruse to vote for Hillary Clinton.
Back on Stage
A tribute to Lead Belly ARTS | A19
* * * ** THE WALL STREET JOURNAL.
Brooklyn Building Boom
A post-crash record number of new
rental and condominium apartments
are hitting the market in Brooklyn.
Some of the major projects:
10 Nevins St.
expected to flood the Brooklyn 170 units
market this year, according to
brokerage firms. CityRealty in
September projected that about 365 Bond St.
22,000 units would be deliv- 700 Units
ered by 2019, more than double
the 10,000 from 2010 to 2014.
“We will never see anything
like this again,” said David
Maundrell III, executive vice 1/2 mile
president of Citi Habitats. Sources: Corcoran; Citi Habitats;
Competition is expected to Halstead Property; CityRealty
intensify because of signs the
THE WALL STREET JOURNAL.
market is beginning to soften,
especially with rentals, which
make up most of the units Residential towers are rising in downtown Brooklyn and beyond, as
coming to market this year. Af- seen in this photograph taken from a rooftop on Duffield Street.
ter years of robust growth, me-
dian apartment rents in Brook- said.
lyn were stagnant in the fourth Up until the recent boom,
quarter of last year compared the Brooklyn market was dom-
with a year earlier, according inated by homegrown firms.
to a report by Miller Samuel But Manhattan-based firms
Real Estate Appraisers & Con- have been moving in, partly by
sultants for Douglas Elliman. acquiring niche players. Hal-
“We are going to be work- stead Property gained market
ing very hard,” Mr. Maundrell share by purchasing Brooklyn-
fund the redevelopment of its strengthening the seminary’s
complex at 3080 Broadway, endowment.
adding features that include a Savanna has hired architec-
performing-arts space and a ture firm Beyer Blinder Belle
residence hall built above a to design a 250,000-square-
new library that will house foot residential condominium
and display its renowned Ju- building on the lot on the
daic collection of rare books, complex’s east end. That par-
manuscripts and scrolls. cel includes a small parking
“We want to be the oppo- lot and a portion of the land
site of the ivory tower,” said where the soon-to-be demol-
Arnie Eisen, chancellor of the ished library now sits. The
Jewish Theological Seminary. real-estate company assigned
“…We want to be a community the right to purchase the off-
open to our neighbors where campus dormitory on West
there is the constant flow of 120th Street to an undisclosed
people and ideas into and out buyer, who also closed on the
of the buildings.” deal Thursday.
Remaining proceeds from Savanna managing director
the sale will go toward Tom Farrell described the ac-
In Iowa, Mayor Does the Leg Work 55°
BY JOSH DAWSEY
INDIANOLA, Iowa—New
York Mayor Bill de Blasio
didn’t appear with Hillary Clin-
ton as he campaigned for her
in Iowa. He didn’t interact with
thousands of political insiders
who descended on the trendier
bars and restaurants down-
town ahead of Monday’s Iowa
caucus. He often found people
here didn’t know who he was.
JOSH DAWSEY/THE WALL STREET JOURNAL
The mayor, who leads the
nation’s biggest city, a bureau-
cracy of 315,000 workers and
an army of political consul-
tants, instead took to low-level
volunteer work, walking
through slushy sidewalks in
boots and often finding voters
weren’t home, wouldn’t answer
their doors or didn’t know him.
Mr. de Blasio said he didn’t
mind doing the work usually
reserved for low-level volun-
149 Kent Ave.
180 units
275
120 Nassau St.
270 units
180 Myrtle Ave.
228 units
351 Waverly Ave.
461 Dean St. 191 units
363 Units
550 Vanderbilt Ave.
278 Units
B R O O K LY N Prospect
Park
626 Flatbush Ave.
254 units
based Aguayo Real Estate
Group in 2013. And at the end
of last year, Citi Habitats, part
of the Corcoran Group, bought
aptsandlofts.com, a firm
founded by Mr. Maundrell in
2002.
Citi Habitats, which is par-
Please turn to page A18
quisition and development op-
portunity in Morningside
Heights as rare, noting the
neighborhood’s parks, cultural
institutions, history and ame-
nities.
The sale is similar to real-
estate strategies pursued by
the city’s other landowning
nonprofit organizations to
cash in on Manhattan’s high
real-estate values and fund ev-
erything from operations and
upkeep to endowments. The
price of land per buildable
square foot in New York City
rose from $240 in 2014 to
$284 last year, an 18% in-
crease, according to real-es-
Please see SALE page A16
teers and college students,
even as he has crafted himself
a national leader of the liberal
flank of the Democratic Party.
“I started doing this in my
school-board race in 1999,” he
said in an interview while door
knocking. “This is a quintes-
sential part of democracy. You
have a chance to turn a vote,
move a vote. A single person
can change the outcome of a
caucus.”
Over the course of the week-
end, Mr. de Blasio canvassed in
two towns, made calls and gave
short, casual speeches to small
groups of volunteers. He often
found turning votes wasn’t so
easy, and that he didn’t have
much star power here. On Sun-
day afternoon, Judy Sherman, a
69-year-old retired Iowa voter,
opened the door to Mr. de Bla-
sio before quickly closing it.
“I like your shirt, though,”
Artful Utensils
For New Year’s
URBAN GARDNER | A16
Monday, February 1, 2016 | A15
On Helicopters
To Drop by Half
BY MARK MORALES
New York City officials and
the helicopter tourism indus-
try announced a deal Sunday
to reduce the number of tour-
ist helicopter flights in the
city by 50% by next year.
The agreement, brokered
by the city’s Economic Devel-
opment Corp. and representa-
tives of the helicopter indus-
try, is being put into place for
the benefit of some New York-
ers living along flight paths
who say the noise from air-
craft hurts their quality of life.
“What we have now is im-
mediate relief,” said City
Councilwoman Helen Rosen-
thal, whose district includes
the Upper West Side and pro-
posed banning the flights al-
together. “This is a huge vic-
tory for our residents.”
The deal requires tour op-
erators to reduce the number
of flights to and from the
Downtown Manhattan Heli-
port at Pier 6 in lower Man-
hattan—where all tour flight
in Manhattan originate—by
half by 2017, according to offi-
cials. That would eliminate an
estimated 30,000 flights a
year, they said.
In addition, there will be no
flights on Sundays starting on
April 1 of this year, and trips
over Governors Island will be
prohibited, officials said.
“The nonstop din of heli-
copters has been a major
quality of life issue for New
Yorkers living near heavily
trafficked routes,” said Mayor
Bill de Blasio.
Chris Vellios, chief operat-
ing officer for Liberty Helicop-
ter Inc., said the deal would
most likely cost the company
millions in revenue and would
prevent it from hiring 20 to 25
part-time workers during their
busy season. But still he sup-
ports the accord.
“We’re grateful to have
saved the jobs and the reve-
nue, given that the City Coun-
cil was trying to eliminate the
tours altogether,” said Mr.
Vellios. “I think this was an
extremely positive outcome.”
The agreement also calls
for helicopter operators to
A helicopter lifted off from Pier 6 in lower Manhattan last February.
Mr. de Blasio said as Ms. Sher-
man, wearing a University of
Iowa T-shirt, closed the door
on him.
Ms. Sherman later told re-
porters “I did not know and I
did not care” that he was
mayor of New York. She said
she was tired of political ads
and didn’t plan to vote for Mrs.
Clinton so she had nothing to
talk to the mayor about.
The trip was the mayor’s
idea, and aides and advisers
had mixed feelings about him
leaving New York for four days
for such a low-level role in
Iowa. A person close to the
Clinton campaign said “we are
fine with him here, but we
would have been fine without
him being here.” A spokesman
Please see IOWA page A16
 Coverage on the eve of Iowa’s
caucuses............. A1, A4, A6, A7
make environmental strides,
officials said.
Helicopter operators will
have to monitor the air qual-
ity as part of the deal, offi-
cials said. Idling helicopters
must also be reduced, and
new technology aimed at re-
ducing noise and pollution
must be researched and im-
plemented when possible, offi-
cials said.
The reduction of flights will
be phased in over time, ac-
cording to officials. Flights
will be reduced by 20% start-
ing in June, by 40% starting in
October, and reaching an
There will also be
no flights Sundays
starting on April 1,
and trips over
Governors Island
will be prohibited,
officials said.
overall reduction of 50% as
compared with flights in 2015
by January 2017, officials said.
Starting in July 2016, heli-
copter operators will provide
a monthly written report to
the Economic Development
Corp. and the city council on
the number of flights and
routes taken, officials said. If
any of the terms aren’t met by
helicopter operators, the city
can further reduce the num-
ber of flights as a penalty, of-
ficials said.
“I think it’s a significant re-
duction and I think it will
bring relief. And if it doesn’t,
the City Council has our eye
on the ball,” said Ms. Rosen-
thal.
Chapin Fay, a representa-
tive with the Helicopter Tour-
ism and Jobs Council, said he-
licopter operators negotiated
with the city in good faith and
would never sign a deal they
weren’t going to follow.
“We’re pleased with the
deal,” said Mr. Fay. “It allows
us to keep flying and allows
us to keep jobs at the heli-
port.”
KEITH BEDFORD FOR THE WALL STREET JOURNAL
TODAY’S
Weather
Real Feel
9 a.m. 44°
HIGH
5 p.m. 50°
Record High
67° (1989)
MILD, Sunrise/Sunset
PM RAIN 7:06 a.m./5:14 p.m.
Tuesday’s High
47°
N.Y. Sports Lineup
7:30 p.m.
Monday
Pistons @ Nets
7:30 p.m.
Tuesday
Celtics @ Knicks
For N.Y. sports coverage, see A20
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A16 | Monday, February 1, 2016 * *** THE WALL STREET JOURNAL.

CITY NEWS

Where Chopsticks
Serve as Symbols,
Not Just Utensils
W
ith Lunar New Year thing, this place is a combi-
next Monday, now nation of FAO Schwarz (may
is probably the it rest in peace), Cartier and
time to take inventory of perhaps Zabar’s. But with so
your chopstick collection. many options, one requires
What, you don’t own a expert advice. So I consulted
chopstick collection? Mei Zhang, the salesperson
Actually, neither do I. But on duty.
I like to think that the pairs “Most people like the
of chop- very nice ones,” Ms. Zhang
sticks that said as she pointed out a
have accu- pair of black mahogany

MARK ABRAMSON FOR THE WALL STREET JOURNAL (2)

mulated in chopsticks with gold-plated
my silver- tops and priced at $122. “It
ware drawer depends on the person.”
URBAN over the I was thinking of some-
GARDNER years thing more in the $3 to $5
RALPH amount to range. Which prompted a
GARDNER JR. an im- discussion about whether
promptu col- certain chopsticks are easier
lection. to use because of the mate-
It also raises some inter- rial from which they’re fash-
esting practical questions. ioned.
For example, are fancy chop- I pride myself on my rel-
sticks better than the cheap ative dexterity with these
wooden kind that come with implements. Yet rice is my
Chinese takeout and splinter downfall. I experience awe
when you split them. at the ease with which
Because the genius of Asians I’ve observed manage
chopsticks, at any price to shovel quantities of the
point, and in any material stuff into their mouths at
from plastic to mahogany, is great speed.
that they get the job done. My inability to herd the
(Assuming you’re reasonably rice kernels onto my sticks
proficient with chopsticks.) is a source of recurring em-
barrassment.
In that case, Ms. Zhang
There is probably no counseled, perhaps I should
simpler, more avoid plastic, though they’re
the only kind she deemed
efficient or sanitary dishwasher safe.
device for eating. Or stainless steel, for that
matter.
“A little more slippery
When it comes to shovel- than wood,” she explained.
ing calories into your Somebody mentioned
mouth, there is probably no noodles, probably Ms. Zhang,
more simple, efficient de- who immigrated to the U.S.
vice, except the human hand. from China a decade ago.
And that is a lot messier “For me no problem,” she
and probably less sanitary. boasted.
My appreciation for It is for me. Noodles are
chopsticks—sparked at a the only dish that gets me
young age when my father sheepishly to summon the
took us to House of Chan, a waiter and request a knife
Chinese restaurant in the and fork. There are few
West 50s, on Sunday sights more mortifying than
nights—explains my satisfac- a noodle, a cellophane noodle
tion upon discovering Yun- in particular, sliding off your
hong, a shop on Mott Street chin and back toward your
in Chinatown that sells only plate. Their ability to squirm
chopsticks. out of reach is almost life-
If chopsticks are your like.
At Yunhong, on Mott Street in Manhattan’s Chinatown, chopstick offerings range from beginner pairs to $1,000 wedding-gift sets.
For that reason, my favor-
ite chopsticks at the moment
are a pair that are notched
near the tips. I believe they
help me get purchase on
things like noodles.
An effort to help a friend
avoid similar public shame is
apparently also what moti-
vated three friends visiting
the city from St. Louis—Mark
Palmer, Chelsea Schoenbach
and Katelyn Clayton—to drop
by Yunhong during my visit.
A fourth member of their
group, who wasn’t present,
had just had an unfortunate
experience at a dim sum par-
lor. So they decided to buy
him a pair of children’s
chopsticks, the kind that are
connected at the top.
The packaging claimed
that the utensils promote
fine motor skills and brain
development. Ms. Zhang said
that while Chinese children
typically learn on adult
chopsticks, she’s noticed a
decline in chopstick profi-
ciency among Asian-Ameri-
can children.
She attributes it to less
time spent mastering chop-
stick technique and more
time spent on personal de-
vices, such as iPads. “They’re
playing games,” she ex-
plained. “Spoon is easier.”
Nonetheless, she showed
me a pair of silver chop-
sticks, the equivalent of a
silver baby spoon. They cost
$288. “Maybe the grandpar-
ents want to give them to
their grandkids to have a ful-
filled life,” Ms. Zhang said.
“It’s symbolic. In years be-
fore they gave out ivory.
Now it’s illegal.”
In the end, I didn’t buy
any chopsticks. There were
just too many choices. But at
least I know where to go if I
run out or feel like upgrad-
ing.
And to continue my con-
versation with Ms. Zhang,
who hadn’t yet expressed an
opinion on perhaps the most
inscrutable issue regarding
chopsticks—whether Asian
food tastes better using
them rather than knives and
forks.
I’m convinced it does.
ralph.gardner@wsj.com

SALE IOWA for Mr. Sanders, of New York

City’s mayor. “Neither one of us
know who he is,” said her
friend Gabriel Sparks.
Continued from page A15 Continued from page A15 To Mr. Kruse, the mayor de-
tate services firm Cushman & for the campaign didn’t return fended Mrs. Clinton’s honesty
Wakefield. a call for comment. when the voter questioned her
Union Theological Seminary Mr. de Blasio paid for his use of a private email server.
in the City of New York, which trip, and aides said it was a va- Mr. de Blasio later told report-
is across the street from Jew- cation from City Hall. ers that Iowa voters were un-
ish Theological Seminary, has “I can imagine in his gut, he concerned about the issue. Mr.
drawn criticism from some of just felt like he had to be part Kruse seemed convinced by the
PETER J. SMITH FOR THE WALL STREET JOURNAL (2)

its students and alumni over of it,” said Ken Sherrill, a polit- mayor’s pitch, but later told a
plans to sell development ical scientist at CUNY-Hunter. reporter he was unlikely to vote
rights and bring in a developer Mr. Sherrill said he thought the because he was going to work
to build a luxury condo to fund mayor had mishandled his de- on Monday instead.
renovations to historic build- layed endorsement of Mrs. In the interview, Mr. de Bla-
ings. Officials at Jewish Theo- Clinton, not backing his former sio said Mrs. Clinton’s push for
logical Seminary said it has re- boss for six months. After that,
ceived widespread student and plus his failed effort to stage a
faculty support for its plan. presidential forum in Iowa in
‘I started doing this
“Most of these groups don’t the fall, he appeared to be try- in my school-board
have a lot of capital money ing to redeem himself, Mr.
available, and it’s challenging Sherrill said.
race,’ said the mayor,
to do this [major building im- “Going door to door cam- knocking on a door.
provements] on their own,” Jewish Theological Seminary’s Manhattan campus, above. Below, the entrance to a residence hall at the paigning is the equivalent po-
said David Lebenstein, head of school. Below left, ‘Prayers for the Ten Days of Penitence,’ part of the seminary’s trove of documents. litically of wearing sack cloth
the not-for-profit practice at and ashes and repenting for universal health care in the
real-estate-services firm Cush- your sins,” he said. 1990s, along with her ability to
man & Wakefield. He wasn’t Ben LaBolt, a longtime aide move things in Washington,
involved in this transaction. to President Barack Obama, said made her the best candidate.
“When they can tap hidden surrogates for candidates can “She stood in the fire and kept
value in their real estate it’s a bring out larger crowds or de- going,” he said. “That is liter-
big win for them.” fend their workers’ records ally one of the reasons we got
Built in 1929, the Jewish more forcefully. “But there’s a Obamacare 15 years later.”
Theological Seminary’s cam- little bit of a sensitivity around Mr. de Blasio’s aides didn’t
pus has been a training ground too many highly produced publicize much of his schedule
for rabbis, cantors and lay ed- crowd events and too many out- and seemed to make plans im-
JEWISH THEOLOGICAL SEMINARY

ucators of all denominations of-state people creating an echo promptu. They said the restric-
through its undergraduate and chamber, and sometimes the tions were so Mr. de Blasio
graduate programs and its smaller events are what really could have genuine interactions
Rabbinical School. Over the turns voters in Iowa,” he said. with voters.
years, there have been some Mr. de Blasio, who has long On Sunday, an aide to Mr. de
physical changes to the cam- wanted to push his party to the Blasio asked reporters to leave
pus at Broadway and West left, said he backs Mrs. Clinton’s a Clinton campaign volunteer
122nd Street. But today, a bold candidacy in part for practical event as the mayor spoke,
reimagining to create a more reasons: she could effect change though a Clinton representative
“outward-facing” campus is scripts and fragments were ished. The institution has panels and speakers to engage quickly, and Sen. Bernie Sand- invited reporters in. They later
clearly needed, officials said. discovered in the late 19th hired architects Tod Williams the community who are not in ers, though with many good sent brief audio of the mayor.
“Part of what all of our stu- century. Preserved in its col- and Billie Tsien. A new resi- this area,” said Alisa Doctoroff, ideas, wasn’t as qualified to be De Blasio aides said he was
dents want is interaction with lection are letters by the Span- dence hall will be designed to an alumna and board member president. He made the argu- planning to return to New York
students across faiths,” said ish philosopher and Rabbi nurture a sense of community, of the school. ment that Mrs. Clinton could do Tuesday.
Mr. Eisen, noting the institu- Maimonides and Sephardic contrasting the organization’s As important is a techno- more than Mr. Sanders because
tion’s relationships with poet Judah Halevi. older outdated residences logically advanced auditorium of her institutional knowledge
nearby Riverside Church, “One of the things we fo- scattered off-campus, officials and performance space to and range of intelligence. We Want to Hear
Union Theological Seminary cused on is exhibition space said. highlight the arts. The institu- When he approached Joel From You
across the street and the Mus- that allows us to preserve New conference facilities tion’s approach has been to Kruse, an undecided voter who Have something to say about
lim community. many fragile pieces,” said equipped with advanced tech- study and understand Judaism lives in a green house with a an article in Greater New
Officials point out that its Marc Gary, executive vice nologies and other building not just as a religion but also Santa Claus still outside in Des York? Email us, along with
library had been built before chancellor. “…So we want to improvements will help the in- as a civilization, Mr. Gary said. Moines, Mr. de Blasio had to your contact information, at
the Internet took off. Leaders create state-of-the-art display stitution ensure its learning That has translated into an ex- wait at the end of the driveway gnyltrs@wsj.com. Your letter
want to increase access to its cases to show them, perhaps reaches a global audience, offi- ploration of all of the arts, in- for several minutes before mak- could be published in our
trove of rare books and manu- even show them in an interac- cials said. cluding cinema, visual arts and ing his pitch for Mrs. Clinton. weekly Feedback column on
scripts that include more than tive manner.” “We are experimenting like especially music. Two volunteers for Mr. Sanders Friday. Letters will be edited
40,000 pieces from the Cairo Under redevelopment plans, all other educational institu- “We wanted to make sure were at the door. for brevity and clarity. Please
Genizah, the synagogue store- still in the early stages, the tions with distance learning that that was a spotlight of “Who is that?” said Gina include your city and state.
room where a cache of manu- current library will be demol- and live-streaming of different our campus,” Mr. Gary said. Rasnic, a 45-year-old volunteer
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. * * Monday, February 1, 2016 | A17

Ex-Prosecutor
Seeks Skelos’s
Old Senate Seat
BY CORINNE RAMEY
AND ERICA ORDEN
New York State Assembly-
man Todd Kaminsky on Sun-
day said he would run for the
Long Island state senate seat
vacated by former Senate Ma-
jority Leader Dean Skelos, who
was convicted in December of
public-corruption charges.
Mr. Kaminsky, a Democrat
and former federal prosecutor,
CITY NEWS
Engineered for Competition
ficials and fixing the cam-
paign-finance system—all is-
sues that have arisen annually
in Albany, to little avail. Lo-
cally, he said, “Long Islanders
are overtaxed and underser-
viced,” and he would work to
change that.
The Nassau County Republi-
can Committee last week se-
lected Christopher McGrath as
its candidate, according to
spokesman Michael Watt. Mr.

PETER J. SMITH FOR THE WALL STREET JOURNAL

said he was intent on rooting
out corruption in Albany and
linked this fight to his advo-
cacy for local issues such as
better schools and lower taxes.
“We need to make system-
wide changes that will make
our government more honest
and return it to where it be-
longs: back to you,” the first-
term Assembly member said
outside an elementary school
in Long Beach, on Long Island.
Mr. Kaminsky framed his
candidacy as one that would
“kick in the doors of the
smoke-filled rooms of Albany”
and “break up the old-boys
network,” to the benefit of
Long Island constituents. Mr.
Skelos, a Republican, had held
the seat since 1985.
“Every time a lawmaker
looks out for his interests, he’s
not looking out for yours,” Mr.
Kaminsky said, flanked by sev-
eral dozen supporters.
That a former federal pros-
ecutor who handled pubic-cor-
ruption cases might claim a
seat vacated by a lawmaker
felled by federal prosecutors
hasn’t been lost on some
around Albany, though Mr.
Kaminsky’s law-enforcement
pedigree hasn’t always made
him a welcome presence in the
halls of the Capitol.
Mr. Kaminsky said his pri-
orities include eliminating or
significantly reducing lawmak-
ers’ outside income, taking
away pensions for corrupt of-
McGrath hasn’t formally an-
nounced his candidacy.
A victory for Mr. Kaminsky
would inch Democrats closer
to reclaiming the state senate
ahead of the Legislature-wide
elections in November, but
wouldn’t seal the deal. Mr.
Skelos’s expulsion left Repub-
licans with 31 seats, and one
Democrat caucuses with the
GOP conference. That means
the Republican conference
now has 32 members, the min-
imum needed to maintain a
majority, even if Mr. Kaminsky
were to emerge victorious.
Republican control in that
chamber has proved useful to
Gov. Andrew Cuomo, a Demo-
crat, on economic issues in-
cluding taxes, and the gover-
nor has been accused at times
of devoting halfhearted sup-
port to the notion of flipping
the senate to Democratic con-
trol. On Sunday, though, he
endorsed Mr. Kaminsky.
Mr. Kaminsky, 37 years old,
was born and raised on Long
Island. For six years before be-
ing elected to the Assembly,
Mr. Kaminsky worked as a fed-
eral prosecutor in New York’s
eastern district.
Mr. Cuomo on Saturday set
Tuesday, April 19, the date of
the state’s presidential pri-
mary election, for a special
election to fill vacancies in
four districts.
Mr. Skelos held the ninth
senate district seat.
A BALL WITH BOTS: High school and middle school students competed at a VEX Robotics Competition held Sunday at Adelphi
University in Garden City, N.Y. Snowy weather during the prior weekend had prompted the regional tournament to be postponed.
Greater
New York
Watch
HARLEM
Man Slashed in Face
On Subway Platform
A 27-year-old man was
slashed in the face early Sunday
morning, the latest in a string of
subway attacks, police said.
The victim was arguing with a
woman on the southbound plat-
form of the No. 2 subway at Le-
nox Avenue and 110th Street
near Central Park around 3:14
a.m., police said.
The unidentified woman
alerted another person, who then
attacked the victim, slashing him
in the face, police said. The vic-
tim was taken to Mount Sinai St.
Luke’s Hospital where he is listed
in stable condition. Police are
searching for the attacker.
The incident is the sixth
slashing so far this year, accord-
ing to the New York Police De-
partment.
“New Yorkers have a right to
be alarmed and concerned,” Po-
lice Commissioner William Brat-
ton said in an interview on
AM970 radio Sunday morning,
adding that he will be increasing
patrols on the subway.
—Mark Morales
NEWARK
Two Are Shot Dead
In an Apartment
Two people were fatally shot
at a Newark apartment, where
three young children were also
found unharmed.
No arrests have been made,
and a motive for the slayings re-
mains under investigation.
Essex County prosecutors
said 23-year-old Ashley Jones
and 28-year-old Jarrell Marshall,
both Newark residents, were
found Saturday night in the
apartment. Both had been shot
multiple times.
The three children—ages 1, 3
and 4—found with them are
now being cared for by relatives.
It wasn’t clear Sunday if ei-
ther victim lived in the apart-
ment.
Newark Public Safety Director
Anthony Ambrose blamed the
deaths on “the availability of too
many guns.” He said the slayings
were “senseless” and “tragic.”
The county’s homicide task
force is leading the investigation.
—Associated Press
MANHATTAN
Pedestrian Is Killed
In Hit and Run: Police
A pedestrian was struck and
killed in Washington Heights by
a drunken driver who fled the
scene early Saturday morning,
police said.
The victim, a 46-year-old man
was taken to a hospital, where he
was pronounced dead, police said.
Police said the car also hit a
46-year-old woman. She is hos-
pitalized in stable condition.
Police said the driver fled the
scene and returned a short time
later. Thirty-four-year-old Jona-
than Segura, of the Bronx, was
arrested on charges including
driving while intoxicated, vehicu-
lar manslaughter and leaving the
scene of an accident. It wasn’t
clear if Mr. Segura had an attor-
ney who could speak for him.
—Associated Press
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A18 | Monday, February 1, 2016
MARVEL ARCHITECTS
A rendering of the ground floor of the Brooklyn Navy Yard’s Building 77, where Russ & Daughters will lease 14,000 square feet.
What’s the
Deal
BROOKLYN
Russ & Daughters
Heads to Navy Yard
A 102-year-old New York City
food company known for its
Jewish specialties will anchor a
new public food hall and manu-
facturing space at the Brooklyn
Navy Yard.
Russ & Daughters, founded
on Manhattan’s Lower East Side
in 1914, will lease 14,000 square
feet on the ground floor of Build-
ing 77, a 1-million-square-foot in-
dustrial structure undergoing a
$185 million renovation. Russ &
Daughters will relocate its bak-
ery and food production opera-
tions from Brooklyn’s Bushwick
neighborhood to the building,
where it also will have shipping
and catering operations and a
shop serving breakfast and lunch.
Visitors will be able to view
Russ & Daughters’ manufactur-
ing operation through glass
walls, a concept that will be rep-
licated throughout the 60,000-
square-foot food hall, which
Navy Yard officials hope to lease
to smaller food manufacturing
and retail companies.
“You can see through the big
glass windows our bagels being
made and smoked salmon being
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sliced, said Niki Russ Federman,
fourth-generation co-owner who
runs the business with her
cousin Josh Russ Tupper. “So to
have that connection with the
process and people who make
the food…is very fulfilling.”
The ground floor of Building
77 is meant to be a gateway for
the public to peer into the Navy
Yard and see a hub where man-
ufacturing in the city is viable
and dynamic, said David Ehren-
berg, Brooklyn Navy Yard presi-
dent and chief executive.
—Keiko Morris
QUEENS
Developer Makes Bet
On LIC Retail Growth
A New York developer with
residential projects under way in
Long Island City has invested in
a commercial building there in
anticipation of the neighbor-
hood’s population growth.
The Hakimian Organization
signed a 99-year ground lease
with the land owner, 44-16 23rd
Operating Co., for the two-story,
22,254-square-foot commercial
building at 44-16 23rd St. The
Hakimian Organization’s execu-
tive director for marketing and
sales, Shawn Hakimian, declined
to comment on the price.
The developer plans to start
a gut-renovation of the building
in coming weeks. The work will
include a new storefront, eleva-
tor, mechanics and lighting, ac-
cording to Mr. Hakimian.
The Hakimian Organization’s
two nearby rental projects are ex-
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pected to open in 2017. While re-
searching the neighborhood, “we
realized the retail is already un-
der-serviced,” Mr. Hakimian said.
He estimated there are
24,000 apartment units planned
for the neighborhood and 31 ho-
tels in development. “We needed
to find a building that would
service these new residents and
guests,” he said.
JRT Realty Group Inc. will
handle the leasing. Monthly
rents will range from $45 to $65
a square foot, according to JRT
President Greg Smith. “After just
one week of marketing, we al-
ready received an offer from a
tenant to lease the entire build-
ing,” he said. He declined to dis-
close the tenant.
Mr. Smith said the building
may be leased to a single tenant
or split up, with retail on the
ground floor and office space
above. The company is consider-
ing restaurant, retail, gym and
co-working tenants, he said.
“It’s an exciting market, con-
sidering this is one of the fast-
est-growing communities in the
five boroughs,” he said.
—Emily Nonko
BROOKLYN
Rental Conversion
Fetches $31 Million
A developer who converted a
stalled condominium develop-
ment in Brooklyn’s Greenpoint
neighborhood into a rental build-
ing has sold it for a profit.
Ronny Ben-Dov sold the 38-
unit, 53,124-square-foot building
at 305 McGuinness Blvd. for $31
million, according to Brendan
Maddigan, a director of Cush-
man & Wakefield. The buyer, ac-
cording to public records, is
Westchester-based investment
firm GDC Properties.
Mr. Ben-Dov in 2010 bought
the then-stalled condo project
for $13.4 million, Mr. Maddigan
said, and converted it into rent-
als. Mr. Ben-Dov declined to
comment. The buyer has no im-
mediate plans to change the
building, Mr. Maddigan said.
Today, rents at the building
average about $45 a square
foot, according to Mr. Maddigan.
“At that time, 305 McGuinness
was a good example of a stalled
condo project of the last down-
turn,” he said.
Cushman & Wakefield listed
the development for $32.5 mil-
lion last summer. One concern of
the brokers, according to Mr.
Maddigan, was that the building
was in its seventh year of a 15-
year 421A tax exemption. But
within 45 days there were about
two dozen offers, he said.
“Literally the entire water-
front of Northern Greenpoint is
being developed,” Mr. Maddigan
said. “These buildings are be-
coming great assets.”
The building was marketed
for $25 million in 2012 by Mar-
cus & Millichap and never sold.
“We had two offers for the full-
ask price, but the owner decided
not to sell,” said Shaun Riney, a
Marcus & Millichap broker who
offered the listing.
—Emily Nonko
* **** THE WALL STREET JOURNAL.
Brokerages Chase
Brooklyn’s Boom
Continued from page A15
ticularly strong in rentals, is
leading the battle over new
developments, representing
more than 10 projects with
more than 100 units. The
buildings it is representing in-
clude 248 Duffield St., a for-
mer department store that is
being converted into Soho-
style lofts with huge windows.
Other forces in the new
rental market include Manhat-
tan-based Douglas Elliman as
well as Nancy Packes, who was
president of Feathered Nest
before selling it to the owners
of Brown Harris Stevens in
1998 and opening her own
marketing firm in 2009. Ms.
Packes’s assignments include
the largest new development
scheduled to open this year:
The Hub, a 750-unit project at
333 Schermerhorn St. by
Steiner Development.
Meanwhile, Manhattan-
based firms like Halstead,
Douglas Elliman and Corcoran
Sunshine are dominating much
of the new development sales
market. Compass, a two-year-
old firm that claims to have
more advanced technology
than its competitors, plans to
open offices in Park Slope and
Williamsburg partly to get
more of the new development
sales and rental business, ac-
cording to Billy Goldstein, who
heads the firm’s nine-person
new development team. “We
see five to 10 new opportuni-
ties per week in our group and
half of those are in Brooklyn,”
he said.
Some Brooklyn firms like
MNS remain in the mix. An-
drew Barrocas, the firm’s chief
executive, said it is handling
some 3,000 sales and rental
units in Brooklyn. He said MNS
clients like to deal with princi-
pals who can make decisions
on the spot rather than execu-
tives of bigger firms that
“have to jump through red
tape.”
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momath.org
Developers typically hire
brokers when they are in the
planning phase of projects.
The firms often get involved in
layout, design, choosing ame-
nities and determining prices.
“The good firms bring their
most value at the front end of
the process,” said Mitchell
Hochberg, president of the
Lightstone Group, which plans
in March to open the first
phase of 365 Bond St., a
rental project overlooking the
Gowanus Canal.
Brokers sometimes get paid
a nominal fee for their early
work. But they make most of
their money from the sales
and brokerage commissions
long after they start working
on projects. “I don’t make any
money until people move in ei-
ther,” Mr. Hochberg said.
“There’s definitely going to
be more competition this year
Some developers are
working with
different brokers as
competition grows.
than there has been in this cy-
cle,” said Brendan Aguayo, se-
nior vice president in Hal-
stead’s development division.
That will pressure brokers and
developers to distinguish their
apartments “through the prod-
uct itself or...marketing and
advertising,” he said.
As competition increases,
some developers are working
with different brokers. For ex-
ample, Lightstone has used
aptsandlofts.com on several
Long Island City projects but
opted to go with Douglas Elli-
man for 365 Bond St. Devel-
oper Adam America Real Es-
tate hired MNS as sales agent
for projects in Williamsburg,
but chose Halstead for its 251
First St. condo project in Park
Slope.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Lionel Richie Entertains, This Time at the Dinner Table
We might normally greet
the fact that Lionel Richie has
just launched a home collec-
tion—including dinnerware
and glassware—with our fa-
vorite emotion: apathy. But
because we
went to a
swishy dinner
at the St. Regis
hosted by Dom
Pérignon for
MARSHALL Mr. Richie’s
HEYMAN new line, our
feelings are a
teensy bit
deeper than that this time
around.
On one side of the coin, we
are still sussing out whether
the world has just gone
topsy-turvy, a truth that has
already proved itself self-evi-
dent time and again. Who
needs gilded plates designed
by Nicole Richie’s dad? A set
of four chargers will set you
back $320 on Mr. Richie’s
website.
On the other side of the
coin, isn’t this another exam-
ple of how we all just have to
remember to dream big? That
there are no limitations on
the potential of success to-
day?
“Originally,” said Mr.
Richie, “When I was growing
up, I wanted to be an Episco-
pal preacher.”
At this particular dinner,
the amiably charming 66-
year-old singer/songwriter
seemed as surprised as any-
one that he is now a tabletop
czar.
“You want to know about
New York Fans
Ready a Tribute
To Lead Belly
BY ALAN PAUL
Lead Belly is remembered
as many things: an epochal
figure in blues and folk mu-
sic, a son of the Deep South
and a convicted murderer
who reportedly sang his way
out of prison.
He isn’t often remembered
as a New Yorker who per-
formed in the city’s top jazz
spots, had a radio show on
WNYC and liked to play for
children in his neighborhood
park.
On a recent afternoon, a
small gathering convened
outside 414 E. 10th St. in Al-
phabet City to recognize the
legendary musician’s connec-
tion to the nation’s culture
capital, where he galvanized
his far-reaching musical leg-
acy.
As folk musicians Tom
Chapin, Guy Davis and Ernie
Vega led the crowd in a sing-
along of Lead Belly’s “Good-
night Irene,” a brass plaque
was unveiled, marking the
house where he lived with
his beloved wife Martha
Promise Ledbetter in the lat-
ter years of his life.
He will be celebrated in a
Feb. 4 tribute concert at Car-
negie Hall, featuring Messrs.
Chapin and Davis, Buddy
Guy, Eric Burdon, Kenny
Wayne Shepherd and others,
including Tom Paley, who as
a member of the New Lost
City Ramblers, sang with
Lead Belly at his final per-
formance, in 1949 at Carne-
gie Hall.
Born Huddie Ledbetter in
1888 on a plantation near
Shreveport, La., Lead Belly
* * * *
this silliness?” asked Mr.
Richie, there with his girl-
friend, Lisa Parigi. “Because
at my age, basically I’ve been
putzing around. This is sup-
posed to be putzing time.”
“It happened because of
Instagram,” Mr. Richie ex-
plained. “In the age of Insta-
gram, I didn’t want to go on
vacation and sit at a pool and
have to take selfies all day
long with people.”
lived in Manhattan for most
of the years between his par-
don from the Louisiana State
Penitentiary, widely known
as “Angola,” in 1934 and his
death in 1949.
He moved to Manhattan
with folklorists John and
Alan Lomax, whose discov-
ery of Lead Belly while trav-
eling the South collecting
songs for the Library of Con-
gress helped facilitate his re-
lease from Angola. It was the
second time Ledbetter had
been pardoned and released
from jail; he served seven
years for murder in Texas.
“He took New York by
storm,” said Mr. Chapin. “Ev-
eryone wanted to see this
discovery John Lomax had
made.”
Not only was Ledbetter an
authentic country-blues mu-
sician with an impressive ar-
ray of songs he had collected
or written—and a wonderful
performing style—but people
were captivated by the leg-
end of the singing ex-con-
vict, said Mr. Chapin.
He died a year too early
to reap the benefits of the
folk renaissance he helped
spark during his New York
years.
The Weavers’ cover of
“Goodnight Irene” topped
the Billboard charts for 13
weeks in 1950. In 1956, Irish/
Scottish singer Lonnie Done-
gan recorded Lead Belly’s
“Rock Island Line,” launching
the skiffle craze that in-
spired a generation of Brit-
ish musicians and eventually
led George Harrison to de-
clare, “No Lead Belly, no
Beatles.”
HEARD & SCENE
“So instead,” he went on,
“I entertain at home. And I
live in Beverly Hills so I en-
tertain a lot. And I love to en-
tertain.”
Part of entertaining for Mr.
Richie has always been hav-
ing—and collecting—nice
plates. Eventually, when
guests complimented his
taste, he realized that “for the
longest time, I’ve actually
been a secret designer.”
ARTS & ENTERTAINMENT
Lead Belly, at right, accompanies Bunk Johnson in 1946. A Feb. 4 concert at Carnegie Hall will honor Lead Belly, who died in 1949.
“New York City was not
his hometown, of course, but
it became home and it was
absolutely essential for him
to become such a large influ-
ence,” says Alvin Singh, the
singer’s great-nephew and
curator at the archives at the
Lead Belly Foundation. “For
instance, Harry Belafonte
walked into the Village Van-
guard and saw Lead Belly
and was deeply impacted to
become a singer.”
Huddie and Martha Led-
better hosted a steady
stream of musical luminaries
in their fifth-floor walk-up,
including Woody Guthrie,
Burl Ives, Josh Davis, Pete
Seeger and Paul Robeson.
Guthrie, another Southern
folk-music icon who made
the city home, helped Lead
Belly land a weekly 15-min-
“And this is a passion
project now,” he continued.
“Someone said to me, ‘Lio-
nel, your future’s getting
shorter, so whatever you
were planning on doing, do
it now.’”
Among the folks who sat
down to a table set with Mr.
Richie’s plates and goblets—
consistently filled with Dom
Pérignon—were Christine
and Steve Schwarzman; Mar-
ute radio show on WNYC in
1940.
In her memoir, the late
producer and ethnomusicolo-
gist Henrietta Yurchenco de-
scribed the singer as
prompt, courteous and pro-
fessional during the record-
ings of “Folk Songs of Amer-
ica.”
“I could set my clock by
his arrival, neatly dressed in
a double-breasted grey suit,
white shirt and dark bow
tie,” Ms. Yurchenco
wrote. “Lead Belly would ad-
lib commentaries about his
life…his experiences with co-
caine, backbreaking field
work, his sexual exploits and
disappointments, and his
years on prison farms…After
each broadcast [he] would
ask me, ‘Did you understand
everything I said? Folks up
Monday, February 1, 2016 | A19
Top left: Jordyn Braff and
Trevor Noah. Above: Robert De
Niro, Martha Stewart and Lionel
Richie. Below left, Mr. Richie
performs with singers Valerie
Simpson and Freddie Jackson.
tha Stewart; late-night TV
host Trevor Noah; Katie Lee;
Prudence and Jerry Inzerillo,
and Robert De Niro and
Grace Hightower, who had
just come from Nobu Fifty
Seven, where Ms. Hightower
was hosting her own cocktail
party to launch a project she
is working on with her
friend Somers Farkas. They
are raising money to make a
documentary for WNET’s
“Treasures of New York” on
the New York Fire Depart-
ment. One plan is to have a
ladies lunch at a firehouse.
“Wouldn’t that be hot?”
asked Ms. Hightower, who
suffered through a house fire
in 2012.
Also pretty hot was the
fact that after dinner, which
included poached butter lob-
ster and a floating island
with crème anglaise, Mr.
Richie took, unexpectedly, to
the piano for an impromptu
serenade.
Though he ignored our re-
north don’t understand
southern talk, and I want
them to know what I’m talk-
ing about.’ ”
Lead Belly was a snappy
dresser who took offense
when promoters wanted him
to perform or be photo-
graphed in overalls or prison
stripes. He also didn’t want
to associate only with folk or
blues musicians.
Mr. Singh said the singer
had significant relationships
with Harlem Renaissance
leaders Langston Hughes,
Zora Neale Hurston and Gor-
don Parks, the photographer
and filmmaker who directed
the 1976 biopic “Leadbelly.”
“Hughes and Hurston
viewed him as the compass
of the type of authenticity
they were trying to capture
in their work, like the great
Above, Gracious Home owner
Dottie Mattison and husband
Craig attended, as did investor
Ron Perelman, below.
ANGELA PHAM/BFA (5)
peated request to hear
“Hello” by Adele—one of Mr.
Richie’s most popular songs
also has that title—he did
serenade the crowd with
“Easy Like Sunday Morning”
and “Stuck On You.” As he
played and sang, the
Schwarzmans slow-danced in
a corner while Mr. De Niro
filmed the mini-concert with
his iPhone.
“He loves to take pictures
of and film everything,” said
Ms. Hightower. We sug-
gested perhaps the actor
should start a YouTube chan-
nel and Ms. Hightower
agreed that was a good idea.
When Mr. Richie finished,
all the guests acted as if this
was the best dinner they’d
ever been to and lingered on,
actually, to take more and
more and more selfies.
“I started this line so that
great friends can have great
fun,” said Mr. Richie. “And if
a party’s a great party, it’s
never truly over.”
LEAD BELLY ARCHIVES
archetype of an old Southern
uncle,” said Mr. Singh.
Lead Belly reveled in his
ability to live and mix freely
with people of all races in
New York, a welcome relief
after the racial tension of his
native Louisiana, said Mr.
Singh.
And he enjoyed playing
for children in nearby Tomp-
kins Square Park and fre-
quently in schools. Mr.
Singh’s said his father, Alvin
Sr., grew up downstairs from
Lead Belly on 10th St., and
fondly recalls the joy his
great-uncle took singing to
him and his young friends.
“He took his career and
his legacy seriously,” said
the younger Mr. Singh. “He
did not hold bitterness and
he just wanted to play his
music and be appreciated.”
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A20 | Monday, February 1, 2016
Heard On
The Field
KATHY WILLENS/ASSOCIATED PRESS
Knicks Fall to Stephen
Curry, Golden State
The Golden State Warriors strug-
gled a bit early, looking either tired
or jittery to start, but the defending
champions quickly regained their
composure to breeze past the
Knicks, 116-95, at Madison Square
Garden Sunday night.
Sunday’s game had a weird be-
ginning, with a total of eight turn-
overs between the teams in the
first five minutes of play. The War-
riors (44-4) scored the first seven
points to start the action, but then
watched the Knicks
GSW 116 (23-27) score the
NYK 95 next 14.
But unlike the
Warriors, who have a
number of players who can ignite
quickly on offense, the Knicks were
largely limited to just Carmelo An-
thony (24 points), as No. 2 scorer
Arron Afflalo—who’s been inconsis-
tent all year—had one of his worst
games of the season, shooting just
2-of-12 for five points.
Knicks rookie sensation Kristaps
Porzingis was OK offensively, pouring
in 14, but got in foul trouble and
couldn’t figure out how to go about
defending versatile Golden State for-
ward Draymond Green (9-of-9), who
logged his NBA-leading ninth triple-
double with 20 points, 10 rebounds
and 10 assists. Warriors swingman
Klay Thompson also had his way
with the Knicks, lighting them up for
34 points on just 18 shots.
Reigning MVP Stephen Curry had
a quiet 13 points, missing each of
his first five jumpers, but had three
of Golden State’s 16 three-pointers
on the night.
New York led by two points after
one quarter, holding the Warriors to
a season-low 18 points in the first
quarter. But Golden State, thriving
on back cuts and solid cross
screens, which freed up shooters
behind the arc, shot 14-of-17 in the
second quarter before going on a
24-4 run during the third that es-
sentially put the contest out of
reach. Put another way: Once the
Warriors—who are on pace to post
the best single-season record in the
NBA history—stopped turning the
ball over, the Knicks couldn’t do
enough defensively to stop their
small, speedy lineups.
The Knicks, who’ve lost five of
six since reaching the .500 mark,
will have an opportunity to redeem
themselves Tuesday, when they
host the Boston Celtics.
—Chris Herring
All-Star Recognition a Long Time Coming for Devils’ Schneider
Devils goalie Cory Schneider had
to wait until he was nearly 30 to be
named an all-star for the first time.
But it’s not like he just started to play
well. In fact, the numbers suggest
Schneider has been one of the
league’s best net minders for years.
Take a Number
Why Schneider is receiving all-star
recognition only now is down to the
unusually long time it took him to be
given a starting job. Schneider backed
up and then shared the net first in
Vancouver with Roberto Luongo and
then with future Hall of Famer Martin
Brodeur after joining the Devils in a
trade in 2013.
But Schneider was an elite shot
stopper long before he became the
Devils’ unquestioned starter in
2014-15. Since 2010-11, Schneider
leads all goalies who have played at
least 200 games in save percentage.
He’s turned back an astounding 92.7%
of shots and this year has been even
better at 92.9%.
Schneider’s trademark is his con-
sistency. Only five other goalies have
Knicks star Carmelo Anthony, left, chatting with teammate Langston Galloway during a recent game, has taken a more vocal role this season.
Anthony Aims to Be Leading Man
In his 13th NBA season,
there are signs the Knicks’
franchise player is growing
into the role of team leader
BY CHRIS HERRING
On the eve of training camp, Car-
melo Anthony, the Knicks’ franchise
player, was asked a question on a
subject he has been quizzed about
many times during his NBA career:
leadership.
Specifically, he was asked
whether now, in his 13th season as a
pro, he planned to become a more
vocal leader for his team. Anthony
demurred. “If you saw me on the
court yelling and screaming, you’d
be like, ‘Melo is bugging; what is he
doing?’” Anthony said. “That’s just
not my personality.”
Behind the scenes, though, An-
thony has quietly done more to take
the reins and assume a greater lead-
ership role than in prior years; a
noteworthy shift, given that many
analysts and fans assumed he was
too far into his career to alter that
part of his identity.
Some actions—like Anthony’s
choice to invite several new team-
mates to Puerto Rico for informal
workouts in August, or asking Knicks
coaches to emphasize his mistakes
during team film-watching sessions—
happened months ago, and have al-
ready received some attention.
Less well known is Anthony’s
growing admiration for rookie Kri-
staps Porzingis, who quickly won the
nine-time All-Star’s respect with his
work ethic and inquisitive nature
over the summer.
“When we played one-on-one,
he’d keep stopping me midgame to
ask how I do certain moves,” An-
thony said in an interview, adding
that Porzingis asked about the Dirk
Nowitzki-style fadeaway, and how to
best create separation with it.
Net Savings
How the top 10 goalies in the NHL since 2010-11 to have played in at
least 200 games compare according to save percentage.
GOALS AGAINST SHOTS
PLAYER AVERAGE ALLOWED
Cory Schneider 2.11 6,774
Tuukka Rask
Henrik
2.24 7,173
2.22 9,282
Lundqvist
Carey Price 2.30 9,225
Roberto Luongo 2.30 8,359
Braden Holtby 2.37 6,257
Ben Bishop 2.29 5,472
Pekka Rinne 2.33 8,687
Corey Crawford 2.31 8,272
Semyon 2.56 8,178
Varlamov
Source: Hockey-Reference
a save percentage that’s better than
Schneider’s worst season, 2013-14,
when he turned back 92.1% of shots.
He also leads all 27 qualifying net
minders since 2010-11 in goals-
against average (2.11) and in quality
starts (games with a save percentage
of at least .885).
SPORTS
“[Working with Porzingis] has been
fun. For me, it’s knowing that one
day I’ll be gone, and somebody else
will be here. And he’s the future.”
In a way, Anthony has literally
taken Porzingis under his wing. Be-
fore every game now, he makes sure
the 7-foot-3 forward is standing be-
side him when the teams line up for
the national anthem.
“Right before the first preseason
game, when we were lining up, he
grabbed me and moved me right next
to him during the first game of the
preseason,” Porzingis said. “And ever
since that game, it’s been that way.”
“I watch everything he does: How
he interacts with the fans, how he
shakes everybody’s hand, and how
he’s a true professional on and off
the court,” Porzingis continued.
“Those are all things I’m seeing and
learning from him.”
It remains unclear whether An-
thony is ready to shed the widely
held perception that, as former
teammate and ESPN analyst
Chauncey Billups said last year, he
isn’t a vocal leader capable of inspir-
ing an entire locker room.
But there are some tangible signs
of such a transformation, both in
how Anthony interacts with his
teammates and in his play, which has
been far more complete than in
years past.
Down the stretch of the team’s
overtime victory against Utah earlier
this month, it was noteworthy that
Anthony led the players’ huddle dur-
ing a timeout late in the game. Every
now and then, on the sideline, An-
thony can be seen pulling a team-
mate aside and walking him through
an opposing team’s coverage or
showing him in-game screen shots
that a member of the coaching staff
has printed off.
Even this past week, in an over-
time loss to Oklahoma City that he
missed due to a sore left knee, An-
thony could be spotted in a full suit,
getting off the bench during a break
SAVES SAVE PCT.
6,281 .927
6,629 .924
8,575 .924
8,515 .923
7,708 .922
5,679 .922
5,035 .920
7,984 .919
7,600 .919
7,513 .919
While many goalies are late-
bloomers when it comes to all-star
honors— since 1991-92, there are 14
goalies who were older than Schnei-
der before they were recognized as
all-stars for the first time—none had
anything approaching Schneider’s
shot-stopping resume. But this year,
* ****
in the action to lay into teammate
Derrick Williams for passing up an
open jumper.
“We got a 3-pointer out of it [be-
cause Langston Galloway hit a tri-
ple], but he said something because
he didn’t think I was being aggres-
sive enough,” Williams said. “I up-
faked and second-guessed myself,
and he told me that’s a shot I’ve got
to take. It was just one of those
things where our leader was telling
me I’ve got to be more aggressive.”
The sight of Anthony coaching up
his teammates on a Knicks squad
contending for a playoff spot would
have been hard to imagine during
last season’s franchise-worst 17-65
campaign, which rendered Anthony
all but speechless.
Anthony is playing what
may be the best extended
stint of all-around
basketball of his career.
If anything, the iconic image of
last year came in a game against
Washington, when Cole Aldrich
missed a hook shot against Washing-
ton so badly that it hit the wrong
side of the backboard. When the
camera panned to Anthony, dressed
in a suit, sitting on the bench and
contemplating season-ending sur-
gery on his knee, he buried his face
in his hands.
Beyond his smaller, quieter inter-
actions with teammates, Anthony’s
leadership has also been apparent on
the court, where he has pieced to-
gether perhaps the best extended
stint of all-around basketball of his
entire pro career.
Some of that stems from his new-
found commitment on defense. (“In
order for us to be in these games
that come down to the last few min-
utes, it’s going to come down to [de-
fense], and knowing that my team-
the Devils are giving him ample op-
portunity to shine as he leads all
goalies in games played (42) and
minutes (2,510).
With an all-star in goal, the Devils
are suddenly a playoff contender.
They entered the all-star break just
four points behind the Rangers and
THE WALL STREET JOURNAL.
SAM FORENCICH/GETTY IMAGES
mates are going to follow my lead
out there,” Anthony said in Novem-
ber, when asked why he’s playing so
much better on that end.)
But he’s also never been this will-
ing to pass the ball before. Anthony
says he’s grown to trust his team-
mates, and certain situations, like
his choice to pass up a last-second
shot attempt and instead feed Jose
Calderon for a shot against San An-
tonio, have shown that.
Aside from his career-best assist
rate of more than four a game this
season, some other numbers stand
out. Anthony has begun passing the
ball to Porzingis far more fre-
quently—32% more often in January
than he did in November, according to
NBA.com’s player-tracking statistics—
as he’s grown more comfortable play-
ing with the rookie. And according to
SportVU, he’s passing the ball out of
post-up looks 54% more frequently
than he did two years ago, before the
triangle offense was installed.
It’s unclear exactly why Anthony
has taken a more hands-on approach
when it comes to team leadership.
It’s possible he simply feels like he
has to, given that he’s the team’s
longest-serving player and the only
one still left on the roster from be-
fore Phil Jackson took over two
years ago. Perhaps it’s that Anthony
has tried doing things his way—op-
erating as a devastating scorer, but
not much else—for long enough
without getting the desired results.
Swingman Arron Afflalo, who
played with Anthony in Denver be-
fore reuniting with him in New York
this season, said the Knicks’ star
simply wants to reach the playoffs
again after missing the postseason
the past two years.
“I just think you can see that he re-
ally wants to win right now,” Afflalo
said. “You can tell the pain from the
past few years has given him a will to
win that’s coming out of him and set-
ting a positive tone in the locker
room. And we feed off that.”
Devils goalie Cory
Schneider was
named an NHL All-
Star for the first
time this season.
one behind the Islanders in the Met-
ropolitan Division. Since 1999-00,
76.7% of teams with an all-star goalie
advanced to the postseason and
nearly half of those teams won at
least one playoff round, according to
Stats LLC.
—Michael Salfino
JULIO CORTEZ/ASSOCIATED PRESS
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
Lab-Grown Meat
On Front Burner
FOOD | B7
© 2016 Dow Jones & Company. All Rights Reserved.
Strong Dollar Batters Tech Firms Europe,
U.S. Race
Currency headwinds
pressure sales abroad;
hedging maneuvers
provide little relief
Many multinationals have
suffered from the impact of a
strong dollar, but few as se-
verely as U.S. technology com-
panies. There is little sign the
pain will ease soon.
By Don Clark, Daisuke
Wakabayashi
and Alistair Barr
Currency headwinds for
more than a year have dogged
the biggest names in the sec-
tor—including Apple Inc., Mi-
crosoft Corp. and International
Business Machines Corp.—and
once again loomed large in the
current quarterly earnings sea-
son. The problem, which is in-
creasingly defying traditional
K. HO/LOS ANGELES TIMES/GETTY IMAGES
Many in the movie business are eager to increase the percentage of tickets sold online and the total tickets sold each year, which has been trending slowly downward.
Hollywood Bets on New App to Fill Theaters
BY BEN FRITZ
Three studios are leading a
$50 million investment in a
new company looking to solve
one of Hollywood’s oldest
problems: How to get more
people into movie theaters.
Walt Disney Co., 21st Cen-
tury Fox’s Twentieth Century
Fox, and Lions Gate Enter-
tainment Corp. are backing
Atom Tickets, a mobile startup
that can organize groups to go
to movies and enable dis-
counts for less-popular screen-
ings, a controversial practice
in the industry.
Atom, which previously
raised $10 million, has been in-
cubated by Lions Gate.
The company has been op-
The End of Food Has Arrived, Finally
A
few times a week, I’m
faced with a dilemma
that is pretty much
universal. I’m hungry, but I
hardly have time to eat,
much less
buy some-
thing or
prepare it.
So I wolf
down what-
ever is at
KEYWORDS hand, and
CHRISTOPHER no matter
MIMS how hard I
try to make
it healthy, I
rarely feel good about it.
That is the “pain point,”
to use Silicon Valley par-
lance, that the latest itera-
tion of Soylent, the meal re-
placement of choice for
techies and early adopters, is
trying to solve. And I am
surprised to report that ver-
sion 2.0 of Soylent—avail-
WSJ.D B4 | MEDIA & MARKETING B6 | CROSSWORD B7 | SPORTS B8
BUSINESS & TECH.
Coke Steps Up
Push in Africa
MARKETING | B5
* * * * THE WALL STREET JOURNAL.
solutions, is also expected to
weigh down the numbers ex-
pected Monday from Google’s
parent Alphabet Inc.
Currency Woes
With Silicon Valley getting most of its revenue overseas, the dollar's
rise is pressuring sales.
Silicon Valley is suffering
disproportionately because of Revenue shortfalls in the most
its unusual success in hawking recent quarter caused by the
hardware, software and ser-
vices abroad. S&P Dow Jones
Indices estimates that U.S. in-
strong dollar, in billions
Apple $5
formation technology compa-
nies generated 59% of sales Microsoft $1.9
overseas in 2014, the latest an-
nual numbers available, com-
IBM $1.5
pared with 48% for companies
in the broader S&P 500 index. Oracle $0.54
“I would expect the tech-
nology sector to continue to
be the most affected of any Facebook $0.3
sector,” said Howard Silver-
blatt, an S&P Dow Jones ana- Sources: Company reports (revenue shortfalls);
lyst. “These companies have Tullett Prebon (currency)
enormous presence abroad.”
Currency headaches are be- for their products.
coming more pronounced as Apple provided a striking
tech companies run into eco- example last week. The con-
nomic weakness and other is- sumer electronics company,
sues that are slowing demand which gets 66% of its revenue
erating in three test markets and availability and suggest
since April and plans to launch screenings that meet every-
nationwide this summer, po- one’s criteria. People can then
tentially posing the first seri- buy a block of tickets together
ous challenge to Comcast but divide payments. No more
Corp.’s Fandango, which has rounds of emails and texts, in
long dominated the online other words, to figure out who
ticket market, since it and the wants to see what movie when
smaller MovieTickets.com and who owes how much
launched in 2000. money.
Many in the movie business With theaters’ consent,
are eager to increase the per- Atom can offer escalating
centage of tickets sold online, discounts as people buy more
currently around 15%, and the tickets together. Theaters
total tickets sold each year, can limit that option to cer-
which has been trending tain screenings of movies
slowly downward for more with poor box-office results,
than a decade, recently reach- or can choose not to partici-
ing about 1.3 billion in the U.S. pate at all.
and Canada. Atom earns revenue through
The Atom app can poll sev- ticket surcharges, a cut of pop-
eral friends’ movie preferences corn and soda preorders, and
visioned a future of meal
pills and synthetic food.
If you’ve heard about
Soylent at all, it’s likely as
JOSH EDELSON/AGENCE FRANCE-PRESSE/GETTY IMAGES
a saccharine, mealy, unappe-
tizing glop that a bunch of
journalists tried and failed to
live off of exclusively, just
like Soylent’s inventor, Rob
Rhinehart.
Marketed to coders and
people launching startups,
the entire Soylent phenome-
non came across as a cult
designed to deprive the rest
of the world of some of the
most basic pleasures of all—
good food and the fellowship
Soylent has evolved, like Uber. that comes with it.
But with an infusion of
able since August in matte $20 million in January 2015
white bottles that wouldn’t from venture-capital firm
look out of place on the Andreessen Horowitz,
shelves of an Apple store— Soylent the company piv-
delivers on the promise first oted from being a vehicle for
made in the 1950s by sci- its inventor’s quasi-apocalyp-
ence-fiction authors who en- tic notions about the future
Percentage change in how many
dollars each currency buys
0%
–10
Chinese
yuan
–20 Euro
–30 Turkish
lira
–40
Brazilian
real
–50
Russian
–60 ruble
2014 ’15 ’16
THE WALL STREET JOURNAL.
from outside the U.S., said last
week that the strong dollar had
cost it nearly $5 billion in reve-
nue in the quarter ended in De-
cember. Apple, if currency
advertising on its app.
“Variable pricing” has long
been controversial, with some
arguing different prices for
different films erodes the
value of moviegoing. Execu-
tives at the two cinema chains
that participated in Atom’s
tests, Regal Entertainment
Group and Carmike Cinemas
Inc., said they were open to
testing the idea, as did execu-
tives at Disney and Fox.
Lions Gate Vice Chairman
Michael Burns called it “as-
tounding” that variable pricing
isn’t a common practice, given
the potential to make more
money for movies that bomb
on their opening weekends.
Theaters set ticket prices,
Please see ATOM page B6
of humanity—Mr. Rhinehart
recently declared that “gro-
cery shopping is a multisen-
sory living nightmare,” while
lamenting that his apart-
ment came with a kitchen—
to a brand targeting people
who just need something
healthy and cheap to tide
them over until their next
proper meal.
All of us, in other words.
Here’s a typical day for
me: Wake up. Catch up on
the news. Beaver through a
list of personal and family
obligations. Get ready to
walk out the door, realizing
only as I collect my keys that
I forgot to eat.
And for the past few
weeks, that is when I grab a
bottle of Soylent. It is 400
calories and one-quarter of all
the nutrients I need for the
day, claims the company. It is
Please see MIMS page B4
moves were excluded, said it
would have generated $80.8
billion in revenue in the most
recent quarter versus its re-
ported $75.9 billion, knocking
an 8% increase down to 2%.
Besides taking customary
hedging actions to counter the
dollar’s rise, the company said
it had been forced to protect
its profit margins by raising
prices on products like
iPhones in Russia, Brazil and
Turkey and other countries.
Tim Cook, Apple’s chief ex-
ecutive, said extreme mea-
sures were necessary given
the unprecedented scope of an
issue that ordinarily affects a
few countries at once. This
time, he said in an interview,
the dollar is “incredibly strong
nearly everywhere.”
Since September 2014, Apple
estimated, the Russian ruble’s
value has fallen more than 50%
and the Brazilian real more than
Please see TECH page B4
Silver Screen Dims
Annual U.S. and Canada theater
admissions, in billions
1.5
1.4
1.3
1.2
1.1
1.0
’90 ’00
Source: National Association
of Theatre Owners
THE WALL STREET JOURNAL.
Time Warner-Hulu Tussle
Time Warner is concerned that streaming of current-season TV
shows, such as ‘Blindspot,’ above, could hurt its business. B3.
Cycling Scandal:
A Hidden Motor
SPORTS | B8
Monday, February 1, 2016 | B1
To Reach
Privacy
Agreement
BY NATALIA DROZDIAK
AND JOHN D. MCKINNON
BRUSSELS—U.S. and Euro-
pean Union negotiators are
scrambling to reach a deal on
new “safe harbor” data-pri-
vacy protections in advance of
a Tuesday deadline, hoping to
stave off a potentially signifi-
cant breakdown in trans-At-
lantic commerce.
Washington and Brussels
said they hoped to reach a
deal in time, but some issues
remained unresolved over the
weekend, with the EU seeking
more clarity from the U.S. on
transparency and on the over-
sight of data transfers and pri-
vacy protections.
The European Union’s highest
court in October struck down
the previous framework, known
as Safe Harbor, because of con-
cerns that Europeans’ data
wasn’t sufficiently protected in
the U.S. and could fall into the
hands of intelligence services.
If an agreement on the new
framework isn’t reached by the
deadline, the differences be-
tween the U.S. and EU quickly
could widen, negotiators and
corporate leaders fear, poten-
tially upending many types of
trans-Atlantic transactions.
Without the new Safe Har-
bor accord, for example, data-
privacy regulators in European
countries could move to invali-
date some of the alternative
legal methods that U.S. firms
have been employing, such as
so-called model contract
clauses, to enable them to
keep handling Europeans’ data.
Apple Inc. and Microsoft
Corp. are among the big com-
panies that say they have been
using the stringent terms writ-
ten into individual contracts.
At stake are billions of dol-
lars in online advertising and
other business, as well as
more mundane matters such
as the storage of human-re-
sources documents about Eu-
ropean employees.
Even more than big firms,
small and midsize U.S. compa-
2015: nies are concerned that a pro-
1.32 tracted dispute could under-
billion mine their operations.
The negotiations appeared
to get a boost last week when
the U.S. Senate Judiciary Com-
mittee approved legislation
that would give many citizens
of other countries the ability
to sue in U.S. court over data-
privacy breaches. The biparti-
san vote signaled the legisla-
tion could move through
’10 Congress relatively quickly.
Another major sticking
point, however, remains about
Please see SAFE page B2
PAUL SARKIS/NBCU PHOTO BANK/GETTY IMAGES
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Monday, February 1, 2016
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A
AbbVie.........................C6
Airbus Group...............B5
Alibaba Group ............. C6
Alifard ......................... B5
Alphabet.................B2,C1
Amazon.com.....B2,B3,B6
AMC Entertainment
Holding......................B6
American International
Group.........................C1
Appaloosa Management
.....................................A9
Apple......................B1,C1
B Impossible Foods........B7
Bank of New York
Mellon ....................... C1
Barclays..................C1,C2
BeiGene.......................A2
C J
Cambridge Associates C2
Canadian Pacific
Railway......................C1
Carlyle Group..............A9
Carmike Cinemas........B1
Chi................................B5
Chipotle Mexican GrillB3
Citigroup......................C2
Coca-Cola.....................B5
Comcast.................B1,B3
Credit Suisse..........C1,C2
D Universal Pictures......B6
Delancey Wealth
Management.............R8
Depository Trust
& Clearing .................. C1
DreamWorks Animation
.....................................B6
DuPont.........................C2
E MovieTickets.com.......B1
Editas Medicine..........A2
Electronic Arts............C6
Expedia........................B2
Experian ...................... R8
F Management ............ A2
Facebook......................C1
G Perdue Farms..............B7
Gilead Sciences......B3,C6
INDEX TO PEOPLE
A G
Abate, Joseph.............C2
Ackman, William.........C1
Aronson, Chris............B6
Asiri, Ahmed...............A8
B I
Badger, Madonna........B6
Balogun, Kelvin...........B5
Bass, Kyle...................A1
Bewkes, Jeff...............B3
C Koester, Wolfgang......B4
Carstens, Agustin.......C3
Chalupnik, David.........A2
Colas, Nick...................C2
Copper, Fred ................ C6
D dollar of revenue, but we ha-
DiClemente, Anthony.B3
Doshi, Neil .................. B2
Dudok, Evert...............B5
E-F
Einhorn, David............A1
Francis, Stacy ............. R4
Pilot Plan Could Raise Training Bar
BY ANDY PASZTOR
United Continental Hold-
ing Inc.’s bid to revamp
training for its pilots, start-
ing with an extra day of in-
struction for all cockpit
crews, harks back to ground-
breaking efforts the airline
championed nearly four de-
cades ago.
The latest initiative, ac-
cording to proponents, also
could have some impact on
whether record-low airline
accident rates continue
across the U.S. and other re-
gions.
The carrier confirmed on
Friday that during the next
three months, it will call
back each of its 12,000 pilots
for additional training aimed
partly at bridging the gener-
ation gap between veteran
captains and younger co-pi-
lots, or first officers. With
the global airline industry in
flux partly as a result of
looming pilot shortages in
many regions, United
spokesman Charles Hobart
said the initiative is all
SAFE
Continued from page B1
whether the U.S. has provided
enough information about the
way it collects EU citizens’
data for intelligence purposes.
Robert Litt, general counsel
for the Office of the Director
of National Intelli-
gence, said Friday that the U.S.
has explained to its European
counterparts “in great detail”
about the legal framework
governing the U.S. national se-
curity services, including the
privacy protections they afford
and the oversight they receive.
As of Saturday, European
officials said they were still
seeking more clarity on the ex-
ceptional circumstances in
which some bulk collection of
data might still be allowed for
national security purposes.
EU spokesman Christian
Wigand said at a Friday brief-
ing that “intense” negotiations
are continuing.
“We need an arrangement
that lives up to the benchmarks
that have been set” by the Eu-
ropean Court of Justice ruling
* ***** THE WALL STREET JOURNAL.
BUSINESS NEWS
Google..........................C1
Greenberg Traurig.......R4
Greenlight Capital......A1
H
Management.............C1
Petróleos Mexicanos .. C3
Pirate Capital..............C2
PointState Capital......A9
Google Offers Peek at Core Strength
R BY ALISTAIR BARR
Hayman Capital
Management ............ A1 Regal Entertainment
Hertz Global Holdings C1 Group.........................B1 Google reports its latest
Hon Hai Precision Royal Bank of Scotland financial results on Monday,
Industry.....................B7 Group.........................C2
with new details that may
HSBC............................C2 S
Hulu.............................B3 prompt some to see the
Scoggin Capital company in a different light.
I Management ............ A9
Icahn Enterprises........C2 Sharp...........................B7
The Internet search giant
Soros Fund reorganized itself as Alpha-
International Business Management ............ A9 bet Inc. last year, to sepa-
Machines...................B1 Soylent........................B1 rate its core businesses from
Investment Technology Sports Authority ........ B3
Starboard Value..........C6
its far-flung bets on driver-
Group.........................C2
less cars,
T
THE WEEK smart homes
Jana Partners..............C2 Third Point .................. C2
J.P. Morgan Chase......C1 Time Warner..........B3,B6 AHEAD and health
L TransUnion..................R8 care. Alphabet
Landmark Cinemas.....B6
Trian Fund Management will for the
..................................... C2 first time disclose the reve-
Lions Gate
Twitter ........................ B2
Entertainment..........B1
21st Century Fox nue, operating income and
Lukoil PJSC..................C6
.......................... B1,B3,B6 capital expenditures for the
Luxottica Group..........B3
U two segments on Monday
M
United Continental and provide historical fig-
Memphis Meats..........B7
Merck...........................C6
Holdings....................B2 ures dating to 2013.
For the parent company,
Microsoft................B1,C2
NOAH BERGER/AGENCE FRANCE-PRESSE/GETTY IMAGES
Mitsubishi UFJ Financial V Wall Street expects fourth-
Group.........................B7 Valeant Pharmaceuticals
quarter revenue of $21 billion
Mizuho Financial Group International.............C1
ValueAct Capital
and earnings per share of
.....................................B7
Modern Meadow.........B7 Management.............C2 $8.09, according to Thomson
Reuters data. But analysts
Morningstar................A2 W
Mosa Meat..................B7
Walt Disney ..... B1,B3,B6 and investors are more inter-
Warner Bros................B6 ested in the segment details.
N X With added spending on
Netflix....................B2,B3
Xerox............................C1 its new projects, Alphabet’s
News Corp ............. B3,B6
Nuveen Asset Y profit margins have been
Yahoo...........................C6 shrinking in recent years.
P Yahoo Japan................C6 Profit margin excluding in-
Z terest and taxes fell to 26.2%
Pershing Square Capital Zoetis...........................C1 in 2015, from 30.6% in 2007,
according to Michael Na- Google reorganized itself as Alphabet to separate its core units from projects like self-driving cars.
thanson, an analyst at Mof-
fettNathanson Research.
But Mr. Nathanson ex-
“If the new numbers reveal
this underlying leverage in
There is precedent for this.
In the past 1 1/2 years , Ama-
how much and whether the
core is getting more profit-
Rieschel, Gary E. ........ B4 pects the new numbers to Google’s main business, zon.com Inc., Netflix Inc. and able,” he said. “We want to
Galper, Josh ................ C2 Rothenberg, Randall...B6 show the core Google unit that’s bullish.” Expedia Inc. disclosed more see leverage there.”
H S with a 31.5% profit margin The analyst has put a information about different Alphabet shares may al-
Sanders, Bernie..........A1 last year—higher than the value on this new transpar- parts of their businesses. ready have received a boost.
Hobart, Charles...........B2
Schreiber, Zach...........A9 2007 figure. ency. Based on a clearer view Shares of all three rose. They are up more than 13%
Schroer, John..............A2 The analyst estimates the of higher profit in Google’s Amazon’s new numbers since Oct. 22, when the com-
Icahn, Carl ................... C1 Silverblatt, Howard .... C2 core Google unit made $32 core, he estimated in Decem- revealed a cloud-computing pany said it planned to re-
Iksil, Bruno..................C1 Soros, George.............A9 billion in earnings before in- ber the company was worth business that was a lot more port more detailed results.
K Stanley, Druckenmiller terest, tax, depreciation and $582.5 billion, or $840 a profitable than investors The Nasdaq Composite Index
.....................................A1 amortization last year. The share. That is up from a pre- thought. Expedia broke out is down almost 5% in the
Khan, Adil ................... B3
T other units, which Alphabet vious valuation of $558.5 bil- losses from a Chinese busi- same period.
M Tepper, David..............A1 calls “Other Bets,” lost $2.3 lion, or $805 a share. Alpha- ness called eLong, giving in- Then, there is this irony:
Mahaney, Mark...........B2 U billion, he projects. bet shares closed Friday at vestors a better view of the Profit margins of the main
“Google should get more $761.35, up $13.05. profits of its main business. Google business may be
Martin, John C............B3 Urquieta, Gorky...........C3
profitable with each new Put another way, an extra Mark Mahaney, an analyst dented by heavy investments
Mayer, Marissa...........C6 V
glimpse inside Alphabet’s at RBC Capital Markets, ex- in cloud computing, to keep
Milligan, John F..........B3 Velasquez, Eva............R8
ven’t seen that in recent main profit engine has pects Alphabet’s new disclo- pace with Amazon, said Neil
N Venkatakrishnan, C.S. C1
years because Google has added $24 billion to the sures to follow the Expedia Doshi, an analyst at Mizuho
Nathanson, Michael....B2 W
been investing in all these company’s value, or more pattern. Securities USA.
P-R Williams, Ben ............. B6 new businesses, and that’s than twice the value of “Core Google is more
Paleja, Ameesh...........B6 Y dragged overall profitability Twitter Inc., in the eyes of profitable than Alphabet as The Week Ahead looks at
Post, Mark .................. B7 Yoon, Eddie.................A1 lower,” Mr. Nathanson said. one analyst. a whole. The question is by coming corporate events.
about “looking forward and the captain failed to heed the
seeing what’s on the hori- co-pilot’s warnings about
zon” that promises to dwindling fuel. Within three
change operations. years, the airline was empha-
In the late 1970s, United sizing teamwork principles in
led U.S. carriers in develop- training.
ing and implementing train- Until the advent of such
ing principles that eventually training, captains often were
transformed the cockpits of seen as above challenge by
commercial planes and heli- more-junior pilots, and that
copters world-wide. Captains long-standing communication
barrier contributed to untold
numbers of fatal accidents,
United will call back and even more harrowing in-
each of its 12,000 cidents, during the years. To-
day, cockpit teamwork is a
pilots for additional fundamental requirement at
training. virtually every airline, char-
ter fleet and business jet op-
eration around the globe.
and co-pilots began to be United’s current foray into
trained in—and were ex- new training programs seems
pected to rigorously follow— to be a natural extension of
the basic concept that they that original concept. The
had to work closely together latest move is intended,
as a team. The principle was among other things, to find
called CRM, or cockpit re- the recipe that will help en-
source management. sure veteran captains pass on
The change was sparked their knowledge, experience
by the 1978 crash of a United and perhaps most impor-
jet that ran out of fuel and tant—internalized safety cul-
went down while trying to ture—to junior aviators who
land in Portland, Ore., after will replace them.
in September that invalidated
the 15-year-old safe harbor
agreement, Mr. Wigand said.
Mr. Litt said he believed the
The EU wants to ensure that
such an ombudsman would take
the complaints seriously and
wouldn’t simply be for
U.S. has provided enough infor-
mation to prove that its privacy
show, one of the people said.
But there are limits to the Love at First Sight
protections are essentially feedback the ombudsman
equivalent to those in Europe. could give individuals without 6.07-Carat oval Diamond Ring
He said there were some cases revealing too much about na-
where targeted intelligence tional intelligence operations, Incredible color. Grand size. Incomparable beauty. This captivating diamond
gathering might not be possible, the other person said. displays a perfect D-color with VS1 clarity that commands attention in
and bulk data-gathering might Commercial complaints un-
be needed—for example, when der the new framework would
this exceptional ring. Weighing 6.07 carats, the GIA-certified brilliant-cut
the U.S. and its allies have de- continue to be handled gem is among the most coveted for its brightness and complete lack of
ployed troops in harm’s way. through alternative dispute color. The extraordinarily rare stone is complemented by diamonds pavé
“That’s the kind of situation mechanisms, the Federal set within the ring’s platinum band. #30-4549
where tailored, targeted collec- Trade Commission and the
tion might not be feasible,” Mr. Commerce Department.
Litt said. “But I don’t think U.S. authorities have previ-
that even the European court ously said they received only
decision says bulk collection is four commercial complaints
never possible—it just has to from European national data
be necessary and proportionate protection authorities over the
in light of the circumstances.” span of more than a decade
Two people familiar with the under the previous Safe Har-
talks said the U.S. had proposed bor framework.
installing an ombudsman to Officials also are considering
handle individual complaints the future roles of EU privacy
and requests for information regulators in investigating com- 630 Royal Street, New Orleans, Louisiana • 877-677-2801 • ws@rauantiques.com • rauantiques.com
about alleged privacy breaches plaints, according to people fa-
by the U.S. government. The in- miliar with the matter. One is- Since 1912, M.S. Rau Antiques has specialized in the world’s finest art, antiques and jewelry.
dividual would be part of the sue that has been under Backed by our unprecedented 125% Guarantee, we stand behind each and every piece.
State Department, making that discussion is how their jurisdic-
person independent from the tion might be streamlined, a se- 14MRSA013-01-129849-5
national security services. nior U.S. official said.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. * * Monday, February 1, 2016 | B3

BUSINESS NEWS

Time Warner-Hulu Talks Heat Up CDC to Say

Chipotle
Key topics include
how much longer
cord-cutters can view
Outbreak
new TV shows on site Is Over
BY KEACH HAGEY BY JESSE NEWMAN
AND SHALINI RAMACHANDRAN AND JULIE JARGON

Just how much longer should The E. coli outbreak that

cord-cutters be able to watch sickened more than 50 Chi-
episodes from the current sea- potle Mexican Grill Inc. cus-
sons of TV shows on Hulu? tomers in nine states last
That is one question that has year is expected to be de-
emerged in negotiations be- clared over as soon as Mon-
tween media giant Time War- day, according to people fa-
ner Inc. and Hulu, which have miliar with the government’s
been heating up lately, according investigation.
to people familiar with the dis- Investigators haven’t been
cussions. The two sides have able to pinpoint the ingredi-
been in talks since late last year ent responsible for the con-
about Time Warner buying into tamination, these people
the streaming site as a part- said.
VIVIAN ZINK/ABC/GETTY IMAGES

owner. When the Centers for Dis-

Hulu, whose current owners ease Control and Prevention
include Walt Disney Co., 21st declares an outbreak to be
Century Fox and Comcast over, that means its investiga-
Corp., offers a smorgasbord of tion is closed, a CDC spokes-
current-season episodes of woman said.
broadcast shows such as Fox’s Chipotle’s sales and stock
“Empire” and ABC’s “Quantico.” price have been slipping since
That allows Hulu subscribers Hulu offers a variety of current-season TV shows on its site. A scene from the ABC show ‘Grey’s Anatomy,’ above, aired last year. news of the outbreak began
to catch up on many new shows surfacing in the Pacific
from the first episode onward, pressing issue for media com- 2014, is under pressure to cast networks—ABC, NBC and million U.S. users. Northwest in late October.
even late in the season, a key panies: how to make their pro- show investors it has a plan to Fox—with only limited excep- Time Warner isn’t inter- The outbreak spread to more
differentiator from its bigger ri- gramming available on stream- thrive in a TV environment tions. The owners have been ested in having full, current- states as customers across
vals Netflix Inc. and Ama- ing video services without where streaming media is on agreeing to short-term exten- seasons of shows from its net- the country reported having
zon.com Inc., which typically undercutting the pay-TV busi- the rise. (Until mid-2013, 21st sions of that agreement. works, which include TNT and gotten sick after eating at
only offer viewing after the end ness that continues to gener- Century Fox and The Wall Several Wall Street analysts TBS, appear on Hulu. But the Chipotle restaurants. No
of the first season, or later. ate the lion’s share of their Street Journal-owner News believe a significant part of company understands that it deaths have been reported,
Time Warner believes the revenue and profit. Corp were part of the same Hulu’s value and appeal to con- would be difficult for Hulu’s but 20 of the 53 people made
presence of full, current seasons The talks reveal the tension company.) Time Warner stock sumers is tied to its current- owners to pivot their strategy ill were hospitalized.
on Hulu—or anywhere else out- at the heart of Hulu for the closed at $70.36 in New York season deals with its owners. on current episodes overnight, It has been more than two
side the bounds of pay televi- media companies who own it: on Friday. However, Hulu has been according to people familiar months since any new ill-
sion—is harmful to its owners putting their best content on Hulu’s owners don’t have adding content beyond those with the matter. nesses linked to Chipotle have
because it contributes to people the service will help it grow plans to remove current sea- current-season offerings, strik- Long term, Time Warner been reported, according to
dropping their pay-TV subscrip- and compete with Netflix, but sons for now, according to peo- ing deals for old seasons of wants to reshape the subscrip- the CDC’s latest update on the
tions, or cutting the cord. that also could lure more cord- ple familiar with their thinking. shows such as “Seinfeld” and tion online video marketplace outbreak, which was issued
In the discussions about cutters from pay TV. But longer term, it is an open original series such as the to support pay TV—and, in Dec. 21. Chipotle executives in
taking a 25% equity stake in “If everybody in the indus- question, the people say. comedy “Casual.” That has particular, to send people to mid-January told investors
Hulu, Time Warner has told try is worried about Netflix Indeed, Hulu’s owners for helped reduce the service’s re- video-on-demand services and that they were hopeful the
the site’s owners that it ulti- driving cord-cutting, shouldn’t months have delayed finalizing liance on current-season epi- “TV Everywhere” apps tied to CDC would soon declare an
mately wants episodes from they be just as worried about the agreement that governs sodes, which today account for pay-TV subscriptions. end to the outbreak.
current seasons off the service, Hulu?” asks Nomura Securities how they license current sea- less than 25% of streams on Time Warner Chief Execu- The burrito maker also has
at least in their existing form, analyst Anthony DiClemente, sons to Hulu, as they debated Hulu, according to people fa- tive Jeff Bewkes told analysts grappled with a norovirus
although that isn’t a condition adding that Hulu offers many the issue. miliar with the matter. in November that the company outbreak that sickened about
for its investment, according shows a day after they air. A two-year licensing agree- The content investments was considering holding back 140 people in Boston in De-
to the people familiar with the Time Warner, whose stock ment that expired last year re- helped Hulu increase its sub- the rights to shows on its net- cember.
discussions. price has fallen back to around quired the owners to give Hulu scriber base to about 10 mil- works for longer on its own Chipotle has said it is plan-
As a result, the talks be- the level it was at before the full current seasons of every lion U.S. subscribers last year, on-demand platforms before ning an advertising and social-
tween Hulu’s owners and Time company rejected a takeover show produced by an in-house up from six million the previ- selling them to services such media campaign next month
Warner are highlighting a bid from 21st Century Fox in studio that airs on their broad- ous year. Netflix has about 45 as Netflix. to woo back customers.

Sports Authority Lays Off Workers

CARLOS GONZALEZ/MINNEAPOLIS STAR TRIBUNE/ZUMA PRESS

The Sports Authority Inc. company to skip an interest Following the layoffs, the
has laid off 100 employees, payment on a $300 million se- company employs 750 people
mostly from its corporate head- cured term loan, sparking con- at its Englewood headquarters.
quarters, further signaling trou- cern among vendors and indus- Sports Authority operates
ble at the sporting goods chain, try watchers. roughly 450 stores nationwide.
as the athletic retail market A spokeswoman for Sports The company was taken private
grows more competitive. Authority said the retailer con- in a $1.3 billion management-
The layoffs on Friday in En- tinues to work with advisers to led buyout by Leonard Green &
glewood, Colo., follow a deci- reduce debt and return the Partners LP 10 years ago.
sion earlier this month by the company to profitable growth. —Sara Germano

Business
ties will remain unchanged—and
an executive chairman, Mr. Del
Vecchio.
Watch The company said that the
move stems from Mr. Del Vec-
chio wanting more direct control
over the markets division, which
entails strategies in emerging
markets, digital development
LUXOTTICA and e-commerce.
Co-Chief Executive —Manuela Mesco
Exits Eyewear Maker GILEAD SCIENCES
Italian eyewear company Lux-
Operating Head
ottica said Friday one of its co-
chief executives, Adil Khan, is Will Take the Helm
leaving the company. Gilead Sciences Inc. said Fri-
The decision comes about 15 day that its President and Chief
months after his appointment Operating Officer John F. Milli-
and his tasks will be temporarily gan would take the helm of the
taken on by founder Leonardo company, with longtime Chief
Del Vecchio. Executive John C. Martin moving
Luxottica said that the board to the role of executive chair-
has decided to move back to a man.
more simplified structure, with Both men joined the drug
only one chief executive—Mas- company in 1990. Mr. Milligan
simo Vian, whose responsibili- became chief operating officer in
2007 and president a year later.
Mr. Martin has been CEO for
two decades.
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—Austen Hufford
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Monday, February 1, 2016
Shanghai Offers Way
To Recoup Bad Bets
BEIJING—Shanghai is roll-
ing out a new initiative to get
venture-capital firms to take
more risks: offering to bail out
some investors if certain bets
on tech startups go sour.
Starting in February, ven-
ture-capital firms that suffer
financial losses from invest-
ments in Shanghai technology
startups over the next two
years can apply for compensa-
tion of 30%-60% of their
losses, according to a notice
issued by the Shanghai Sci-
ence Technology Commission.
The percentage of compen-
sation will depend on the
startup’s size and revenue and
will be capped at three million
yuan ($456,000) per project
and six million yuan annually
per investor.
The commission has yet to
release details of how losses
will be calculated or which in-
vestors qualify.
Venture capitalists
may be able to
recover 30% to
60% of their losses.
The notice was dated Dec.
29, 2015, though it appeared
to have been posted online
Jan. 21.
While Shanghai is a finan-
cial hub, it has struggled to
build a high-tech scene as vi-
brant as Beijing’s or Shen-
zhen’s. A freeze in public list-
ings has also tempered
investor appetite in China’s
startups.
The subsidies are aimed at
spurring investment firms to
take risks on more early-stage
tech startups.
“You can’t figure out the
growth direction and possibil-
ity of future success for lots of
technologies when they are at
their early stage,” said Ma
Xingfa, deputy director of the
Shanghai technology commis-
sion, according to a transcript
of a closed-door meeting with
a few reporters from state me-
dia Tuesday that the commis-
sion provided to The Wall
Street Journal.
He said Shanghai wasn’t the
first city to adopt this kind of
subsidy, with previous tryouts
seen in provinces including
Guangdong and Jiangsu.
China’s brand of capitalism
often involves the state sup-
porting strategic industries,
subsidizing struggling compa-
nies and even bailing out los-
ers. The Shanghai plan comes
as the central government is
striving to sustain investment
in Chinese industry to prop up
employment and retain a man-
ufacturing edge.
But China’s central govern-
ment has also said addressing
supply-side overcapacity is an
economic priority this year.
The regulation has sparked
criticism from some who say
taking the risk out of venture-
capital investing would distort
the market. “The last thing the
world needs are VCs who
make bad decisions being
bailed out,” said Gary E. Rie-
schel, managing partner of
Qiming Venture Partners in
Shanghai, in an email.
Mr. Rieschel said the sub-
sidy sums were probably too
small to make much of a dif-
ference, but that investors
shouldn’t be rewarded for
making bad bets.
Early-stage startup inves-
tors generally expect that
many of their investments
won’t pan out. About three-
quarters of venture-capital-
backed firms in the U.S. don’t
return investors’ capital, ac-
cording to a 2012 study by
Harvard professor Shikhar
Ghosh.
Some investors in Shanghai
said they expected market dis-
tortion to be limited, as expe-
rienced venture-capital firms
are unlikely to pick invest-
ments based on the subsidies.
—Yang Jie, Eva Dou
and James T. Areddy
TECHNOLOGY
TECH
Continued from page B1
40%, while Canadian and Aus-
tralian dollars, Mexican peso
and Turkish lira are all down by
20% or more. What was $100 in
overseas revenue for Apple in
September 2014 translated to
$85 in December 2015, the com-
pany estimated.
“When the currencies move
to that degree for that period of
time, it’s meaningful to us,” said
Mr. Cook, who told analysts that
the combination of currency
shifts and slowing economies
has caused a “melee in virtually
every country in the world.”
Other tech companies also
blamed currency woes for sub-
optimal results in their most
recent quarter. Microsoft re-
ported last week that the
strong dollar had reduced its
revenue by about $1.9 billion
in the period ended in Decem-
ber. IBM put the fourth-quar-
ter impact of currency transla-
tion at about $1.5 billion.
Software maker Oracle Corp.
in December said exchange
rates reduced revenue by
about $540 million in the
quarter ended in November.
Most of these companies
generate enough profit to
counter currency shifts, which
hurt mainly when proceeds
from goods sold in foreign
currencies were translated
into dollars. But equally seri-
ous repercussions can follow
when the strong dollar makes
it more expensive to buy U.S.
goods. In such cases, potential
purchasers may hold off buy-
ing or try to find alternatives,
analysts say.
Market researcher Gartner
Inc. estimated that the U.S. dol-
lar’s rise took $217 billion from
global information technology
spending in 2015, a bigger effect
than the 2009 financial crisis.
The latest shifts have cre-
ated winners as well as losers.
Amazon.com Inc.’s cloud ser-
vice, for example, uses dollars
for purposes like constructing
data centers overseas, and it
cited financial benefits in its
fourth quarter. Meanwhile, tech
vendors from other countries—
‘When the currencies move to that
degree for that period of time,
it’s meaningful to us.’
TIM COOK, APPLE’S CEO
including the big German soft-
ware vendor SAP SE—have
seen a financial tailwind as
they get higher-valued dollars
in exchange for their products.
But most U.S. companies are
talking about the downside of
the dollar. More such commen-
tary may come Monday from Al-
phabet, whose flagship Google
unit and other businesses de-
rived about 53% of revenue
from abroad in the quarter end-
ing in September. The company
estimated the negative impact
MIMS
Continued from page B1
also $2.50 a bottle and “the
most ecologically efficient
food ever created,” wrote its
creator, being made entirely
from plant sources of protein,
carbohydrates and fats, in-
cluding oil from vat-grown al-
gae originally intended to
provide the U.S. Navy with a
ready source of biofuels.
The current version, much
evolved from its nearly unpal-
atable first version, also is in-
offensive and neutral-tasting.
(Many adherents of the
Soylent lifestyle flavor it to
their liking.) The closest anal-
ogy I can think of is that it
has the taste and texture of
the milk left over after you
finish a bowl of Cheerios.
Whatever it is, it staves
off the hunger and mental
fog that would inevitably ar-
rive if I just skipped break-
fast instead.
Now, it isn’t as if Soylent
invented meal replacement.
Along with wine and bacon,
soldiers of ancient Rome car-
ried with them a twice-baked
biscuit called bucellatum.
When traveling, the Aztecs
relied on a dry, toasted maize
called pinolli, which could be
quickly reconstituted with
water. Lewis and Clark
crossed the country with 93
pounds of portable soup, “a
concoction that was boiled
until gelatinous and then left
to dry until hard,” writes
Soylent founders Rob Rhinehart, Matt Cauble, David Renteln, and John Coogan (from left to right)
THE WALL STREET JOURNAL.
@wsjd | wsjd.com
Compounding the problem is
the increasing difficulty of mak-
ing effective hedging moves,
which include forward contracts
or options to buy or sell foreign
currencies. Companies in many
cases have failed to make hedg-
ing moves that match the mag-
nitude of the dollar’s rise, or ha-
ven’t hedged in enough of the
currencies that fell in relation to
the U.S. currency.
“The techniques didn’t work,
because the drop was so fast
and so widespread,” said John
Lovelock, a Gartner analyst.
Alphabet, for example, said
in October its hedging moves
only reduced negative currency
impacts by $300 million in the
third quarter. IBM has run into
the same issue. Martin Schroe-
ter, IBM’s chief financial officer,
estimated that currency transla-
tion would hurt pretax profit in
2016 by $1.3 billion—with
nearly three-quarters of that re-
duction coming from reduced
gains from hedging.
For the current quarter end-
DAVID PAUL MORRIS/BLOOMBERG NEWS
ing in March, Apple expects
currency issues to decrease
revenue by 4%. The company,
which didn’t quantify the im-
pact of its hedging activity in
the quarter ended in December,
said it plans to continue placing
hedges to counter the dollar’s
rise. It also hopes to get some
money back from suppliers.
Apple pays many of those
foreign firms in U.S. currency,
which means they have bene-
fited from the dollar’s strength.
The company said it plans to
take that factor into account as
it tries to negotiate new supply
deals with more favorable
terms.
Costs associated with for-
ward currency contracts can go
of currency rates at $1.3 billion up based on differences in inter-
in that period, following hits of est rates among countries, while
$1.1 billion in both the first and currency option prices rise in
second quarters. proportion to pricing volatility,
Ruth Porat, Alphabet’s chief said Wolfgang Koester, chief ex-
financial officer, mentioned cur- ecutive of FiREapps, a company
rency headwinds five times dur- that provides currency-analysis
ing the third quarter’s confer- services to companies. Despite
ence call with analysts. In the the complexities, Mr. Koester
fourth-quarter results due out said Google and others have de-
Monday, analysts from Ray- veloped sophisticated tools that
mond James & Associates ex- should be up to the hedging
pect U.S. dollar gains to trim task.
revenue by about $900 million, “It is very manageable, if you
excluding any hedging benefits. do it right,” he said.
food historian Tori Avey. And Ms. Carey, who has Soylent
until 1847 the British Navy for both breakfast and lunch
ran on hardtack, a tooth- every weekday. But you don’t
breakingly hard biscuit. have to be crushing anything
In other words, much as to occasionally feel like a
foodies idealize the notion of proper meal is more than
fresh, organic whole foods you can handle.
and the sit-down meal, there “The fear is almost that
is nothing more quintessen- we are bringing about a fu-
tially human than fast food. ture in which people will not
Along with fire and lan- have other food options—
guage, it is one of the inven- that this dystopian thing will
tions without which humans occur in which people will
could not have spread to the only drink Soylent,” says
far corners of the world. Soylent CMO and co-founder
Soylent is just the most David Renteln.
recent and highly evolved Such fears have always at-
version of the convenience tended the creeping industri-
foods without few of us alization of food. In the U.S.,
could function. suffragette Mary Elizabeth
“I feel like I’m doing ev- Lease predicted in 1893 that
eryone on my team a favor in a hundred years synthetic
by having Soylent days in- food would allow women to
stead of just chicken fingers unshackle themselves from
and pizza,” says Eileen the kitchen, a claim her de-
Carey, self-confessed eater of tractors pounced on.
junk food and co-founder and At the root of all our ear-
CEO of Glassbreakers, a com- liest memories, food is a
pany that makes enterprise deeply personal, cultural,
software for expanding di- and even political phenome-
versity in the workplace. non, which is one reason
Soylent’s evolution re- Soylent touches a nerve. But
minds me of Uber’s, in that it’s precisely the time in
both companies were born which we find ourselves—
out of a need experienced when our humble daily bread
only by a select few—Uber pales in comparison to the
CEO Travis Kalanick’s desire meals we see on social me-
to impress friends with a dia, and our health and envi-
private car service, Mr. ronmental consciousness be-
Rhinehart’s desire to stop comes more acute than ever
eating anything he might —that a generic and
have to prepare himself. And convenient food replacement
both companies have pivoted like Soylent starts to make
to serving a broader need. sense.
“I don’t have to go out
and get lunch or breakfast Write to Christopher Mims at
and I can just crush it,” says christopher.mims@wsj.com
RINGO CHIU/ZUMA PRESS
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 1, 2016 | B5

BUSINESS NEWS

Coca-Cola Deepens Its Push Into Africa

Deal for Nigeria’s the No. 2 juice player behind
Iran-based Alifard Co., with a
biggest juice maker 4.2% market share and $337
comes as company million in retail sales, according
to Euromonitor International.
strives to diversify In addition to its Chi and
Chivita juice brands, TGI’s Chi
BY MIKE ESTERL Ltd. sells evaporated milk and
drinkable yogurt under the
Coca-Cola Co. has agreed Hollandia brand and snack
to buy Nigeria’s largest juice foods including Muff the Muf-
maker, accelerating its push fins and Beefie Beef Rolls.
into Africa and deepening its “We are extremely optimis-
diversification drive in re- tic about Africa’s continued
sponse to slowing soda sales. economic and social growth
Coke said Saturday it ac- and recognize the importance
portunities, but reiterated that
Coke’s strategic focus remains
beverages.
The deal comes amid uncer-
tainty about Coke’s soda-bot-
tling partnerships in Africa af-
ter brewer Anheuser-Busch
InBev NV agreed last October
to acquire SABMiller PLC,
which bottles and distributes
Coke in South Africa and sev-
eral other markets.
AB InBev is a bottler in Latin
America for PepsiCo Inc., Coke’s
chief rival. Many industry ob-
servers also say AB InBev even-

CHRIS RATCLIFFE/BLOOMBERG NEWS

quired an initial 40% stake in
TGI Group’s Chi Ltd., which also
sells dairy products and snacks,
and intends to buy the remain-
ing 60% within three years. The
deal values Chi at a little less
than $1 billion, according to a
person familiar with the matter.
The investment in Africa’s
largest economy represents
Coke’s biggest overseas acqui-
sition since 2012, when it paid
about $980 million to buy
roughly half of Dubai-based
Aujan Industries, a leading
maker of juice and malt bever-
ages in the Middle East.
The Atlanta-based beverage
company increasingly is tar-
geting Africa for growth amid
sluggish sales in more devel-
oped markets. Coke said in
The transaction signals a redoubled effort by Coca-Cola to expand beyond its core soda brands.
2014 it would invest $17 bil-
lion in the continent this de-
cade with bottling partners,
about three times as much as
in the previous decade.
The transaction also signals
a redoubled effort to expand
beyond core soda brands in-
cluding Coke, Sprite and Fanta
at a time when health authori-
ties in many parts of the
world are singling out sugary
drinks for contributing to ris-
ing obesity and diabetes.
Last week a World Health
Organization commission rec-
ommended that governments
consider special taxes on
sugar-sweetened beverages,
following the example of Mex-
ico, which introduced levies on
soda and junk food in 2014.
of ensuring we stay one step
ahead of evolving consumer
tastes by broadening our port-
folio and introducing new
products,” said Kelvin Balo-
gun, president of Coca-Cola
Central, East and West Africa,
in a news release.
Coke and TGI, also known
as Tropical General Invest-
ment, said they would discuss
The commission estimated the other opportunities in the re-
number of overweight children gion to further develop their
younger than 5 in Africa has relationship. TGI owns several
nearly doubled to 10.3 million other companies ranging from
since 1990. poultry and fish farming to
Coke had a 45% share of the frozen foods and cotton. Its
$18.12 billion soda market in the businesses span a dozen coun-
Middle East and Africa last year, tries including South Africa,
but only 3.5% of the region’s Morocco and China.
fragmented $8.03 billion juice A Coke spokesman declined
market. Closely held TGI was to elaborate on potential op-
tually could try to acquire Coke.
Coke agreed in late 2014 to
combine bottling assets with
SABMiller and privately held
Gutsche Family Investments to
create a joint venture span-
ning 12 African countries and
about 40% of Coke’s soft-drink
volumes on the continent.
The venture is expected to
secure regulatory approval in
the first half of this year after
South African authorities held
it up over job-loss concerns.
As part of that bottling
deal, Coke also agreed to pay
$260 million for the world-
wide rights to SABMiller’s Ap-
pletiser, a carbonated apple
juice, and the rights to an-
other 19 nonalcoholic brands
in Africa and Latin America.

DataLink
To Space
+
Advances
BY ROBERT WALL

ARE NOW
LONDON—Airbus Group SE
has taken a big step toward
establishing a global data-re-
lay system in space that would
eventually use lasers to rap-
idly distribute spy photos and
other data from satellites and

ONE
drones.
On Saturday, a Proton
rocket launched the Eutelsat
9B data-communications satel-
lite from the Baikonour space
Cosmodrome in Kazakhstan.
The spacecraft, positioned
over Europe to beam video
signals, also carries a 110-
pound laser-communications
link that Airbus hopes will
help spur a new business to
quickly move large amounts of
data around the world.
The laser link is the key
feature of the European Data
Relay System, and lays the
foundation for what Airbus
wants to develop into what it
calls a global space data high-
way. “We see enormous poten-
tial here,” Evert Dudok, head
of communication, intelligence
and security at Airbus’s de-
fense unit, said in an inter-
view.
Satellites that take pictures
in low-earth orbit typically
circle the globe every 90 min-
utes but can transmit their
Today’s cross-platform world calls for precision, inventiveness and collaboration.
data for only about 10 minutes
of that time, while over a ded- We answered the call. By bringing together two leaders in measurement innovation,
icated ground station. That
limits how much information
can be transferred, adding de- the new comScore combines unmatched levels of proprietary digital, TV and movie
lays in getting images into
user hands. Missions such as
warning ships when water-
intelligence with demographic behavior from millions, to deliver the most precise
ways are blocked by ice often
require more timely informa- understanding of audiences, brands and consumers everywhere.
tion.
The two-way laser link
would allow imaging satellites
to rapidly pass data to an
EDRS terminal in a higher or-
bit at a data rate of 1.8 giga-
bits a second, or around 90
times as fast as an ordinary,
at-home Internet connection,
Mr. Dudok said. The link will
improve communications in
space just as fiber-optic cables
Together, we are creating the new model
have enhanced data speeds on
the ground, he added.
The EDRS-equipped satellite
then broadcasts the information
for a dynamic, cross-platform world.
to users on the ground using a
radio-frequency link. The setup
should allow an image from
space to be in user hands within
15 minutes to 18 minutes, in-
cluding the time needed to pro-
cess the data into a picture.
Mr. Dudok wouldn’t give an
annual revenue forecast for
the new line of business, but
Airbus considers it potentially
lucrative enough to fund a
third of the €500 million ($541 Please visit comscore.com/one
million) EDRS project. Airbus
will run and market the ser- to learn more.
vice. Defense agencies, includ-
ing the Pentagon, could even-
tually be customers, he said.
The first customer is the Eu-
ropean Commission, the Euro- ©2016 comScore, Inc.
pean Union’s executive arm, for
its Copernicus earth-observa-
tion satellites, used for environ-
mental and security monitoring.
B6 | Monday, February 1, 2016
CMO Today
Trade Group CEO
Hammers Ad Blockers
Randall Rothenberg, president
and chief executive officer for
the Interactive Advertising Bu-
reau, drew criticism for a fiery
speech last week during which
he took ad-blocking companies to
task for being “profiteers” stand-
ing in the way of free speech.
And he isn’t backing down.
The IAB chief, whose trade
organization represents compa-
nies across the advertising in-
dustry, delivered a keynote dur-
ing its annual leadership
IAB’s Rothenberg
criticized ad blockers
during a keynote
speech last week.
meeting in Palm Desert, Calif.
Ad-blocking companies’ “tech-
nologies indiscriminately ob-
struct competitive pricing data,
information about product fea-
tures, vital political opinions, site
content, user options, public-in-
terest communications, and
other intelligence necessary for
the functioning of democratic
capitalist societies,” he said.
In response, Ben Williams, op-
erations and communications
manager for Adblock Plus, said,
“As ever, we remain interested in
discovering better, more sustain-
able ways for publishers and
content creators to get paid.
“And we invite anyone and ev-
ATOM
Continued from page B1
though studios typically set
the minimum revenue they will
accept per ticket sold, which
can make discounts difficult.
“We think it’s a place the-
aters will evolve to and we’re
going to keep testing it,” said
Atom co-founder Matthew
Bakal, adding that variable
pricing won’t be among the
company’s offerings when it


    
 
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eryone to join us in doing so.”
Mr. Rothenberg says he can’t
hold back when the stakes are so
high. Adblock Plus reported that
15 million Americans had down-
loaded its software in November.
—Mike Shields
Executive Targets Ads
She Says Objectify Women
A 2½-minute video titled “We
Are #WomenNotObjects” has
been circulating on the Internet
for a few weeks. It features a
montage of ads for well-known
brands that show women scant-
ily clad or in suggestive poses in
the name of selling products.
The mission is to raise aware-
ness about the issue in hopes of
getting ad agencies and marketers
to stop using women as objects in
advertising and communications.
The video was created by Ma-
donna Badger, a well-known ad
executive who lost her three
young daughters and parents on
Christmas morning in 2011 when
Ms. Badger’s 19th-century Victo-
rian home in Connecticut caught
fire, a tragic accident that received
national attention.
In an effort to honor her chil-
dren, Ms. Badger says she is try-
ing to shine a light on how this
type of sexist advertising is harm-
ful to young women and can un-
dermine their self-esteem and
self-confidence.
“I want my life to have a pur-
pose,” said Ms. Badger, who is
co-founder and chief creative of-
ficer of Badger & Winters.
—Suzanne Vranica
launches nationwide.
Atom’s backers think an ag-
gressive new player would
help. “Shaking up this space
would be beneficial to every-
body,” said Kevin Mayer, Dis-
ney’s chief strategy officer.
But the market leader is
making aggressive moves of its
own.
On Friday, Fandango said it
had acquired M-Go, a video-
on-demand service, in order to
offer movie downloads along
with tickets. In addition, Fan-
dango has held talks with
LIM
OR
D
THE WALL STREET JOURNAL.
‘Panda 3’ Shows Box-Office Kick
BY ERICH SCHWARTZEL
DreamWorks Animation
SKG Inc.’s latest movie, “Kung
Fu Panda 3,” turned in a mixed
bag of a weekend. While the
animated movie made its pre-
miere in the U.S. and Canada
to the lowest returns of the
DREAMWORKS ANIMATION/ASSOCIATED PRESS
franchise, it made up for lost
ground with a record-setting
debut in China.
“Panda” grossed an esti-
mated $41 million to lead the
weekend box office domesti-
cally, below the original’s $60
million opening in 2008 and
the sequel’s $47.7 million de-
but in 2011. In China, the film
made $58.3 million, a record
for an animated movie there.
The movie is a co-production ‘Kung Fu Panda 3’ set a record
between DreamWorks and its
Estimated Box-Office Figures, for an animated film in China.
Chinese partners.
The “Panda” franchise is Through Sunday mid-2013 part of the same
popular in China, and Dream- SALES, IN MILLIONS company as The Wall Street
Works and its partner Oriental Journal.)
FILM DISTRIBUTOR WEEKEND* CUMULATIVE % CHANGE
DreamWorks have tried during “Panda” opened in a hand-
the past several years to en- 1. Kung Fu Panda 3 20th Century Fox $41 $41 ful of other countries and col-
sure a hit in what has become 2. The Revenant 20th Century Fox $12.4 $138.2 -23 lected a further $18 million.
the world’s second-largest box Neither of the weekend’s
office, after the U.S.-and-Cana- 3. Star Wars: The Disney $10.8 $895.4 -23 other new releases, “The Fin-
dian market. In addition to a Force Awakens est Hours” and “Fifty Shades
marketing blitz launched dur- 4. The Finest HoursDisney $10.3 $10.3 of Black,” opened well.
ing the past several months, a 5. Ride Along 2 Universal $8.3 $70.8 -33 The family drama “Finest
Mandarin version of the film Hours” from Walt Disney Co.
*Friday, Saturday and Sunday Source: Rentrak
was released. collected $10.3 million in
If it can fend off some local fourth place—a dismal show-
competition, the movie stands weeks before another ani- Twentieth Century Fox. ing for a movie that cost about
to benefit from the coming Lu- mated movie hits theaters—an “You can’t get that any time $70 million to produce.
nar New Year on Feb. 8, which advantage to taking the uncon- of year,” he said. “We’re going The parody “Fifty Shades of
is a popular time to see movies ventional January release date, to have a long-running movie.” Black” from Open Road Films
in China. It also has a long said Chris Aronson, president (Fox’s parent company, 21st only grossed $6.2 million to
runway in the U.S., with five of domestic distribution at Century Fox Inc., was until finish in ninth place.
Time Warner Inc.’s Warner
Bros. to acquire that studio’s
movie website Flixster in ex-
change for equity, a person
ecutive, and Ameesh Paleja, a
veteran engineer at Ama-
zon.com Inc. “There are not a
lot of tech people looking to
Atom users in the test mar-
kets, which included Knox-
ville, Tenn., and two smaller
towns, were between 13 and
well as Landmark Cinemas
Inc., a distant No. 2 in Canada.
A spokesman for AMC Enter-
tainment Holding Inc., the No.
with knowledge of the discus- help theaters,” Mr. Paleja 40 years old, the company 2 chain in the U.S., declined to
sions said. That would give noted. said. The average number of comment on whether his com-
Fandango, which is overseen “People have so many op- movies seen each year by pany would work with Atom.
by the head of Comcast’s Uni- tions at home, we need to people in that age group has Carmike CEO S. David Pass-
versal Pictures, two major stu- make the social experience of been declining, according to man said theaters that used
dios in its corner. Fandango moviegoing easier,” said Fox Motion Picture Association of Atom generated higher ticket
currently sells tickets online Chief Executive Jim Gianopu- America data. and concession sales than
and through a mobile app, but los. (21st Century Fox and The To launch nationwide, Atom comparable ones in other cit-
doesn’t focus on organizing Wall Street Journal-owner may need more partners than ies. David Ownby, Regal’s chief
groups or discounts. News Corp were part of the Regal and Carmike, the No. 1 financial officer, said it was
Atom was co-founded by same company until mid-2013.) and No. 4 chains in the U.S. by too early to gauge the impact
Mr. Bakal, a film-financing ex- Eighty-five percent of theater count, respectively, as Atom has had for his company.
The Great Works of Sacred Music
TIME O Taught by Professor Charles Edward McGuire
ED F 
IT
FE
70%
R

1. Hallelujah, Amen: The World of Sacred Music
off
11
RY
2. From Chant to Early Sacred Polyphony
ER
BY F E B RU 3. The Golden Age of Polyphony
4. The Age of Reformation: Who Will Sing?
5. Sacred Music in a Secular World
6. Man and Meaning: Bach’s Cantatas
7. Art for Art’s Sake: Bach’s Mass in B Minor
8. Handel’s Great Oratorio: Messiah
9. Messiah: From Entertainment to Ritual
10. Mozart’s Requiem: Praise and Memory
11. Haydn’s The Creation
12. God, Man, Music, and Beethoven
13. Mendelssohn’s Elijah
14. Elgar’s The Dream of Gerontius
15. Sacred Music in the Late 19th Century
16. Come, All Ye Faithful: Music of Christmas
The Great Works of Sacred Music
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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 1, 2016 | B7

BUSINESS NEWS

Sizzling Steaks Made in the Lab Foxconn

Startups are raising
Increases
funds to produce meat
from cells cultivated
Its Offer
inside bioreactors For Sharp
BY JACOB BUNGE Foxconn, the Taiwanese
iPhone assembler, has raised its
Several startups are racing to bid for control of Japanese elec-
be the first to fill U.S. consum- tronics maker Sharp Corp. to
ers’ plates with laboratory-de-
veloped hamburgers and sau- By Wayne Ma
sages that taste just as good as in Hong Kong and
the kind from cattle and pigs. Takashi Mochizuki
Memphis Meats Inc., a San in Tokyo

TOBY MELVILLE/REUTERS; TOP RIGHT: MEMPHIS MEATS

Francisco company founded by will be regulated. The FDA
three scientists, aims in three to would likely review the cultured ¥659 billion ($5.44 billion) in a
four years to be the first to sell meat before the USDA Food deal that would dilute existing
meat grown from animal cells in Safety & Inspection Service stockholdings, people familiar
steel tanks. Rivals including would begin regulating the with the matter said Friday.
Mosa Meat and Modern product and how it is processed, Foxconn doesn’t plan to buy
Meadow Inc. also aim to bring a USDA spokesman said. out Sharp shareholders, one of
such “cultured meat” to market Memphis Meats plans to the people said, clarifying the
in the next several years. eventually unveil its meat at structure of a bid whose de-
The competition highlights restaurants and retailers, includ- tails had been murky. Rather,
how these efforts have ex- ing Memphis-area barbecue res- it would inject ¥389 billion
panded since the 2013 taste taurants that are co-owned by into Sharp in exchange for
test of a burger grown in a lab William Clem, a tissue scientist new shares, after which it
through a multiyear, $330,000 who teamed up with Mr. Valeti would hold a roughly two-
project funded by Google Inc. Mark Post is a co-founder of Mosa Meat. At right, a meatball from another startup, Memphis Meats. and Nick Genovese, a stem cell thirds stake.
co-founder Sergey Brin and biologist, to start the company. In addition, Foxconn has of-
spearheaded by physiologist The potential payoff could be plant-based protein companies could be for sale in two to Mr. Clem said he has been fered to buy ¥225 billion of
Mark Post. Reviews of the enormous—American spent Beyond Meat and Impossible three years, according to pitching the cultured meat preferred shares held mainly
patty were mixed, but encour- $186 billion on meat and poultry Foods Inc. Sarah Sclarsic, business direc- idea to regular guests of his by Sharp’s two main banks,
aged Mr. Post, who co-founded in 2014—and this month, Mem- Memphis Meats grows meat tor for the Brooklyn, N.Y., com- chain, Baby Jack’s BBQ. Mitsubishi UFJ Financial
Netherlands-based Mosa Meat, phis Meats plans to announce by isolating cow and pig cells pany. Meat, she said, “is a lon- “This is probably the tough- Group Inc. and Mizuho Finan-
to press on. its strategy and about $2 mil- that have the capacity to re- ger-term mission for us.” est market you can imagine cial Group Inc., people familiar
The startups’ lofty goal is to lion in funding from venture- new themselves, and providing The meat startups say their for something like this. It’s with the matter have said. The
remake modern animal agricul- capital firms including SOSV the cells with oxygen and nu- main challenge will be scaling Memphis, Tenn., it’s all about preferred shares were issued to
ture, which the United Nations LLC and New Crop Capital. trients such as sugars and up production while keeping tradition,” Mr. Clem said. the banks last year after they
estimates consumes one-third of Some in the meat industry minerals. These cells develop costs low enough that cultured “We’ve got a road map to start agreed to bail out Sharp for
the world’s grains, with about a are skeptical that consumers, inside bioreactor tanks into meat costs—and tastes—about small and introduce it to peo- the second time in three years.
quarter of all land used for many of whom are demanding skeletal muscle that can be the same as meat sliced from ple and get some feedback.” The latest offer from Fox-
grazing. The companies say that “natural” or organic food made harvested in between nine and animals. Currently it costs Memphis Meats has discussed conn, formally known as Hon
growing meat with cells and without additives or genetically 21 days, Mr. Valeti said. about $18,000 to produce a its product with food service Hai Precision Industry Co., is a
bioreactors—similar to fermen- modified ingredients, will em- Mosa Meat, which Mr. Post pound of Memphis Meats’ distributors U.S. Foods Inc. slight upgrade from a previous
tors used to brew beer—con- brace meat grown from animal started with Maastricht Univer- ground beef, compared with and Sysco Corp., he added. package valued at ¥625 billion.
sumes a fraction of the nutri- cells. Representatives for major sity food technician Peter Ver- about $4 a pound in U.S. gro- Steve Lieber, global brand Foxconn has also offered to as-
ents, creates less waste and meat suppliers Tyson Foods strate, aims to sell cultured cery stores, according to the head of BurgerFi, a Florida- sume Sharp’s bank debts, which
avoids the need for antibiotics Inc., Hormel Foods Corp. and ground beef to high-end restau- U.S. Department of Agricul- based chain that serves burgers total about ¥700 billion.
and additives commonly used in Perdue Farms Inc. declined to rants and specialty stores in ture. Eventually Memphis from grass-fed beef on tables Foxconn’s bid is higher than
meat production. comment, saying the technol- four to five years, and is fielding Meats and Mosa Meat aspire made from recycled milk jugs, a competing offer from Inno-
“The meat industry knows ogy was too new. interest from potential inves- to sell more complex products said his company would con- vation Network Corp. of
their products aren’t sustain- But enthusiasm for new tech- tors, Mr. Post said. Though the like steak, and make meat sider using cultured beef for a Japan, or INCJ, a government-
able,” said Memphis Meats Chief nology to satisfy consumers’ method’s efficiency and environ- healthier by growing cells that seasonal special if it tasted as backed investment fund.
Executive Uma Valeti, a cardiol- hunger for meat is high among mental aspects strike a chord contain less saturated fat. good as BurgerFi’s current meat. INCJ is considering an offer
ogist and medical professor at venture-capital firms and Silicon with some consumers, “it will Memphis Meats officials say “We do want to be a cutting- to invest at most ¥300 billion
the University of Minnesota. Valley investors. Microsoft Corp. take time and early adopters” to they have had discussions with edge company in everything we in Sharp in return for control
“We believe that in 20 years, a co-founder Bill Gates and Twit- catch on, he said. the U.S. Department of Agricul- do,” he said. But “right now for and new shares, one of the
majority of meat sold in stores ter co-founders Biz Stone and Modern Meadow is working ture and the Food and Drug Ad- millennials, the tendency toward people said. Sharp and INCJ
will be cultured.” Evan Williams have invested in on cultured leather, which ministration on how their food natural is ingrained.” declined to comment.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
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B8 | Monday, February 1, 2016
Heard On
The Field
GLYN KIRK/GETTY IMAGES
Terry to Leave Chelsea
At the End of Season
Chelsea captain John Terry said
on Sunday that he would leave the
English soccer club and the Premier
League at the end of the season.
The team, he said, told him earlier
this month that it wouldn’t be re-
newing his contract. Terry gave no
indication of where he might go
next, but likely landing spots for any
35-year-old fading star are teams in
the U.S., China or the Middle East.
“It’s not going to be a fairytale
ending,” he said after Chelsea’s 5-1
win over MK Dons. “I’m not going
to retire at Chelsea, which it took
me a couple of days to get over.”
During his 17 years at Chelsea,
Terry won four Premier League ti-
tles, five F.A. Cups and the Champi-
ons League as one of the country’s
best defenders. But his career was
also marked by on- and off-field
scandals, which saw him stripped
of the England captaincy on two
occasions. Terry’s play declined in
recent years, but he still played ev-
ery minute of every game during
Chelsea’s run to the title last sea-
son, joining Manchester United’s
Gary Pallister in 1992-93 as the
only players in Premier League his-
tory to pull off the feat for a cham-
pionship side. —Joshua Robinson
Look Out for Williams
At the Net This Year
Serena Williams couldn’t make
tennis history in Melbourne, but fear
not: She could be a better player this
year if she stays healthy. Williams
won six matches in Australia, with-
out the dips and drama that were
common in her Grand Slam runs last
year. She’s working on something
new that, for her, is really something
old: going to the net.
“With her game, it makes sense,
there are so many high balls, so
many balls floating in the air,” said
her coach, Patrick Mouratoglou. Wil-
liams, 34, would benefit from
shorter points as she ages, espe-
cially in the early rounds of Grand
Slams. “When she’ll be able to do
that, it’s going to be even more dif-
ficult to beat her,” Mouratoglou
said. Williams has won 21 Grand
Slam singles titles, one fewer than
Steffi Graf’s record of 22 in the
Open era, which began in 1968.
—Tom Perrotta
Novak Djokovic Tightens His Grip as Tennis’s Best
BY TOM PERROTTA
Melbourne, Australia
After Novak Djokovic beat Andy
Murray to win his sixth Australian
Open title on Sunday evening here, a
big question was buzzing around the
tennis world: How long can Djokovic
possibly keep pummeling one oppo-
nent after another?
The 28-year-old Djokovic, ranked
No. 1 in the world, has advanced to
the finals of the last five Grand Slam
tournaments and won four of them.
His 6-1, 7-5, 7-6(3) victory over Mur-
ray gives him 11 major titles in his ca-
reer, the same as Rod Laver and Bjorn
Borg. Only four men in history have
won more: Roy Emerson (12), Rafael
Nadal (14), Pete Sampras (14) and
Roger Federer (17).
Djokovic has reached 17 straight
tournament finals (one fewer than
Ivan Lendl’s Open era record of 18),
beaten top-10 opponents in 17 of his
last 18 matches against them, and
piled up winning records against his
chief rivals (23-22 against Federer,
24-23 against Nadal, 22-9 against
Murray and 20-4 against Stan
Wawrinka). At the Slams, Djokovic
has won 34 of his last 35 matches. He
is the ultimate tennis measuring stick.
“Novak right now is a reference for
everybody,” Federer said.
Federer holds the all-time record
with 17 Grand Slam singles titles. The
soonest Djokovic could catch Federer
would be at Wimbledon in 2017, when
Djokovic would be 30 years old. That
would mean winning three more ma-
jor titles this year—including the
French Open, which Djokovic has
never won—and the first three in
2017. Yes, that’s a calendar-year Grand
Slam, which no man has won since
Femke Van den Driessche was
flagged for what the UCI
termed a ‘technological fraud.’
Cycling’s New Scandal Is a Motor
It’s ridiculous—and it’s actually
happened.
No, not the San Diego Chargers
wandering from San Diego to Los
Angeles and back to
San Diego in the
space of the month.
The feckless Char-
gers should be
forced to play the
JASON 2016 season on a
GAY rudderless barge
floating in the Pa-
cific.
Rather, I’m talking about an
elite-level cyclist getting busted this
weekend for a motor in a bicycle.
That’s right, a motor inside a leg-
powered bicycle. Just when you
think you’ve heard it all about ille-
gal performance enhancement in
sports, here comes …
vroooooooooom … perhaps the
goofiest scandal ever.
Let’s backtrack for a second, be-
cause there is a bit to unpack here.
Last summer I wrote about rumors
floating around pro cycling that
some rogue riders might be using
tiny motors inside their bicycles to
gain an advantage while racing.
A rumor was all it was. But it
was cycling, a beautiful sport with
a maddening history of cheating,
so you could never say never.
The chatter reached a point
where cycling’s governing body,
the Union Cycliste Internationale,
or UCI, began doing spot checks of
bikes to look for motors, including
during last year’s Tour de France.
Nothing was found.
Flash forward to this weekend’s
cyclocross world championships in
Belgium. Cyclocross is a grueling
discipline in which competitors
travel over road, gravel, mud and
Novak Djokovic won his 11th career Grand Slam singles title, after winning the Australian Open on Sunday.
Laver in 1969, sandwiched between
two years of three major titles each.
There’s every reason to think such
an unprecedented run of dominance
is impossible. Djokovic could pull a
muscle or roll an ankle. Someone
could figure out how to beat him. He
could lose a few fluky matches, eat a
bad meal or come down with the flu.
Heck, he might even get bored of win-
ning so much.
If Djokovic doesn’t win every fore-
seeable Slam to tie or break Federer’s
record, he’ll have to keep winning
well into his 30s. Federer still reaches
the late stages of majors at the age of
SPORTS
sand, sometimes dismounting and
carrying their bikes to clear obsta-
cles like barriers and steps. The
crowd-friendly, beer-friendlier
sport is huge in several European
countries—Belgium is a temple of
cyclocross—and has a devoted fan
base in the U.S., which hosted the
worlds in Louisville, Ky., a couple
of years ago. I’ve raced cyclocross
a few times as a weekend hack
amateur—you could have put a V8
Hemi in my bike and I’d still have
finished dead last—and found it
exhausting, but incredibly fun.
Anyway, over the weekend,
news broke that a competitor in
the women’s under-23 competi-
tion, a Belgian rider named Femke
Van den Driessche, had been
flagged for what the UCI termed a
“technological fraud.”
“There was a concealed motor,”
the UCI’s president, Brian Cook-
son, confirmed in a Sunday news
conference.
If you need, I’ll pause right
here for you to laugh for five to 10
minutes. A concealed motor! It re-
ally is bonkers.
It isn’t clear what type of motor
was detected inside the bike, which
was reportedly seized amid Satur-
day’s competition. Guy Vermeiren, a
spokesman for the Royal Belgian
Cycling Federation, told the Jour-
nal’s European sports correspon-
dent, Joshua Robinson, that a bike
belonging to Van den Driessche had
been confiscated, but it had not
been used in the race (depending
on course conditions, especially
mud, elite cyclocross racers will of-
ten switch bikes during a race,
working with mechanics who clean
and repair them in a pit area.)
Van den Dreissche strongly de-
34, and Djokovic could do the same.
But consider that Federer won his
16th major title at the same age Djok-
ovic is now, at the 2010 Australian
Open. Federer has only won one ma-
jor since then. Who would have pre-
dicted that? Back then, Djokovic had
a problematic serve and a losing re-
cord against Federer. The point: Ten-
nis changes quickly, players improve
and winning Grand Slams is exceed-
ingly difficult, no matter how easy it
sometimes looks.
Djokovic’s long odds have not
shaken the faith of Mats Wilander, the
former No. 1 who won seven major ti-
* ***** THE WALL STREET JOURNAL.
YORICK JANSENS/GETTY IMAGES
nied that the bike in question was been taking improved steps to po-
hers, telling Belgian media it be- lice itself and upgrade its image.
longed to an associate. While it would be foolish to con-
“That bike was not mine,” Van sider a sport with its history
den Dreissche said in Flemish on “clean,” there is general agreement
Sporza TV. “I would never cheat.” that better testing and enforce-
It sounds absurd, but such ment has at least diminished the
technology exists. Small, battery- pervasive abuse of prior decades.
powered motors have been made “I’m ashamed to have this hap-
that can fit inside the bottom pen in our sport,” said Tim John-
bracket of a bicycle, near the ped- son, a former U.S. cyclocross men’s
als, which can be turned on and national champ who’s also com-
off with the push of a hidden but- peted on the road. There are al-
ton. It isn’t as if the bike suddenly ways going to be racers who try to
turns into a Harley-Davidson—in- gain advantage through cheating,
stead, the motor gives the rider an Johnson said, but “to install a mo-
artificial push as he or she contin- tor…is a whole other level.”
ues to pedal the bike. This motor scandal is especially
It’s a tantalizing cheat for an en- aggravating within cyclocross,
durance sport in which first and which gets only a fraction of the at-
second place can be decided by less tention given to road events like the
than the length of a wheel. Cycling, Tour de France. Here in the U.S.,
of course, has witnessed all kinds of top riders serve as both athletes
illegal methods used to take mar- and ambassadors for a sport that is
ginal gains—most notoriously still unfamiliar to most. This week-
through blood doping, in which end, Johnson hosted a cyclocross
blood is drawn, stored and rein- world championships viewing party
jected later, and the use of perfor- which raised money for MassBike, a
mance-enhancing substances. cycling advocacy group.
But a motor? A motor feels like “Cross” may be rigorous, but it
a bizarre new leap. also has a reputation for being a
“I was so surprised,” said Katie less-uptight scene than road racing.
Compton, widely considered the Even at the elite level, riders and
best-ever U.S. cyclocross racer, a 12- their supporters tend to have a
time national champion who has sense of humor. Some cyclocross
won many races at the world level courses are famed for their beer
and finished 13th in Saturday’s elite tents, cowbell enthusiasts and for
women’s race. “I didn’t think that it the treasured ritual of “hand-ups,”
would actually ever happen.” in which fans dangle treats like
Still, “this has probably been beers, baked goods or even dollar
happening on the road more than bills for racers to try to snatch.
anyone realizes,” Compton said, It’s part of why people like me
pointing to the recent UCI bike in- love cyclocross. But a motor in a
spections. bike is probably a punch line too
If you enjoy cycling, I’ll just say far. “I laugh and you laugh, but it’s
it for you: ugh. After a generation really not funny,” Johnson said. “It
of doping scandals, cycling has sucks.”
defense and the way he manages him-
self mentally and physically,” Gilbert
said. “I’ve never seen anybody play
the game better, and I think he’s only
going to get better.”
Djokovic might be the most perfor-
mance-obsessed player in the history
of the sport. He follows a strict glu-
ten-free diet, munches on dates dur-
ing changeovers, practices yoga, med-
itates, abstains from alcohol and
coffee, and takes his water warm. In
Melbourne these past two weeks, he
spent many an hour in the hyperbaric
oxygen pods of a nearby clinic to aid
his recovery. Wilander says Djokovic’s
meticulous nature gives him both
physical and mental advantages.
Djokovic might be the
GREG WOOD/GETTY IMAGES
most performance-
obsessed player in the
history of the sport.
“Winning is just such a small part
of his life now, it seems,” Wilander
said. “He’s a father, has a baby, he’s
tles in his career. Djokovic won three got this diet, he’s got his workout, he
Grand Slam titles in 2011 and three does his yoga, he plays tennis, he
last year. Wilander said the fact that competes, he practices hard. Winning
Djokovic has put together two sus- is not why he’s here on Earth. That’s
tained bursts of dominance suggests the difference to me.”
he is more comfortable than ever as a Could Djokovic possibly play even
front-runner and capable of more. better in the months and years to
“This one is going to be like come? He’ll probably have to. As
Federer’s three or four years of win- Federer, Nadal and many others have
ning everything,” Wilander said. “This learned, someone will catch up to him
period might last four or five years, eventually, and do it quickly if com-
when he’s winning three a year. The placency settles in. As Djokovic said
others are far away.” himself, the wolves running up the
Brad Gilbert, the ESPN analyst and hill are hungrier than the one on top.
former coach of Andre Agassi, agreed. “I know that,” he said. “I can’t al-
“He’s the total package of offense, low myself to relax and enjoy.”
 MOVING THE MARKET C2 | MARKETS DIGEST C4 | INSIDER-TRADING SPOTLIGHT C5

Saudi Arabia’s
Mexico Heats Up
RICHARD CUMMINS/CORBIS

Upper Hand
HEARD ON
Bonds attract foreign investors GLOBAL FINANCE | C3 THE STREET | C6
© 2016 Dow Jones & Company. All Rights Reserved. * * THE WALL STREET JOURNAL. Monday, February 1, 2016 | C1
Last Week: DJIA 16466.30 À 372.79 2.32% S&P 1940.24 À 1.75% NASDAQ 4613.95 À 0.50% 10–YR. TREAS. À 1 4/32, yield 1.928% OIL $33.62 À $1.43 EURO $1.0833 YEN 121.13

‘Dark Pool’ Probes Settled ments in news releases Sunday, The SEC’s enforcement chief, “pleased to have resolved these
Bridge Too Far
An arrangement that permits dealers in repurchase agreements, or
repos, to trade with any securities dealer is on the verge of lapsing,
raising concerns about market tumult.
Credit Suisse, Barclays
after The Wall Street Journal Andrew Ceresney, said in a sep- matters” with the regulators. CURRENTLY An agreement allows dealers processing their
will pay combined published a report about the arate statement said the penal- Barclays said in a statement repos through Bank of New York Mellon to trade with dealers
$154.3 million to close impending settlements. ties show “firms pay a steep it was “pleased to have reached processing repos through J.P. Morgan Chase.
“These cases mark the first price when they mislead sub- agreement” with the regulators.
U.S. investigations major victory in the fight scribers.” The SEC alleged that “The agreement will enable us
against fraud in dark-pool trad- Barclays and Credit Suisse re- to focus all of our efforts on Repo clearing banks
BY BRADLEY HOPE ing that began when we first peatedly failed to police their serving our clients,” the bank Estimated market
AND JENNY STRASBURG sued Barclays: coordinated and trading venues, gave some cli- said. share*
aggressive government action, ents inaccurate information The agreements are the big- Goldman
Credit Suisse Group AG and admissions of wrongdoing, and about the venues and violated gest and second-biggest settle- J.P. Morgan BNY Mellon Sachs
Barclays PLC agreed to pay meaningful reforms to protect SEC rules aimed at ensuring ments related to dark pools, 15% 85%
$154.3 million combined to set- investors from predatory, high- market fairness and accurate which are privately run stock-
tle investigations by regulators frequency traders,” said Eric T. pricing of securities. trading venues that have come
into their “dark pools,” officials Schneiderman, the New York The SEC “will continue to under greater scrutiny in the Morgan
said. attorney general, in a state- shed light on dark pools to bet- past several years. Regulators Stanley
The record settlements are ment. ter protect investors,” the and other critics have accused
with the U.S. Securities and Ex- “We will continue to take the agency’s chairman, Mary Jo dark pools of providing unfair RBS
change Commission and the fight to those who aim to rig White, said in the statement. advantages to professional Citigroup
New York attorney general. The the system and those who look A Credit Suisse spokes- traders at the expense of big in- Credit
agencies announced the agree- the other way,” he said. woman said the bank was Please see POOLS page C2 Suisse
Bank of
HSBC America
Merrill Lynch

Measuring the Activists

Performance of activist stocks—and an
index that tracks them—has suffered in JULY 15, 2016
2016 amid the broad market decline. That arrangement
lapses, limiting
S&P 500 S&P U.S. Activist dealers to trading
Interest Index within their own
10% clearing bank pool.

*of interbank general collateral finance repos

Carl Icahn Source: Wall Street Journal analysis THE WALL STREET JOURNAL.
Chairman of
Icahn Enterprises ’15 ’16
William Ackman
CEO of Pershing
Square Capital
Market for Repos
Management
–10
Faces New Threat
BY KATY BURNE upon in the trade are trans-
ferred.
–20 A dispute over technology The suspension would mean
could pose a new threat to the DTCC unit couldn’t match
Wall Street’s plumbing by sev- up trades between dealers
ering a link that allows big that have cleared their inter-
banks to borrow freely from bank repos through Bank of
Performance this year –30 Performance this year one another, according to mar- New York Mellon Corp., a
Apple
8% Canadian Pacific Railway
5% ket participants. large clearing bank, and deal-
AIG
9% Valeant Pharmaceuticals
11% A unit of Depository Trust ers that clear through BNY’s
Hertz Global
36% Zoetis
10% & Clearing Corp., the domi- distant competitor in repo
nant processor of repurchase clearing, J.P. Morgan Chase &
–40 agreements, or repos, between Co. Since a unit of DTCC will
Sources: S&P Dow Jones Indices (activist index); FactSet Photos: Bloomberg News (Icahn); Axel Dupeux for The Wall Street Journal THE WALL STREET JOURNAL. securities dealers, has told no longer bridge the divide,
traders it will stop facilitating dealers will only be able to

Activists’ Sway Shows Its Limits

certain interbank repos as of trade with firms that process
July 15. The roadblock affects their trades through the same
an estimated $45 billion in clearing bank.
daily repo loans, short-term A handful of dealers have
BY DAVID BENOIT result of bad investment deci- such as Canadian Pacific Rail- nies including Hertz Global loans through which banks already scheduled some
sions and general market up- way Ltd. and Zoetis Inc. Holdings Inc., American In- and other financial firms ex- monthslong repos to expire
Activists’ returns aren’t heaval. January hasn’t been any ternational Group Inc. and, change cash and securities to before the cutoff, in a bid to
keeping up with their influence. Mr. Ackman’s Pershing better for Pershing, which has this past week, Xerox Corp., raise funds for their trading insulate themselves from
Investors such as William Square Capital Management been hurt by declines in hold- has suffered a 14% drop this activities. changing conditions as the
Ackman and Carl Icahn may be LP’s publicly traded fund re- ings such as Valeant Pharma- year at his publicly traded in- A clearing bank confirms break ripples through that
able to rattle corporate board- ported a negative return of ceuticals International Inc. vestment vehicle, bringing its the identity of parties to a corner of the roughly $3 tril-
rooms and send their targets’ 21% for 2015, its worst year The public fund has reported 12-month decline to 46%. Mr. trade and their terms, before lion U.S. repo market, accord-
stocks temporarily soaring. ever, according to the firm, an 11% slide through Tuesday. Icahn, who doesn’t manage processing the transaction. In ing to people with knowledge
But their portfolios have de- which has accumulated board Meanwhile, Mr. Icahn, who outside money or report the settlement, a third party en- of the contracts.
clined in recent months, the seats and power at companies has effected change at compa- Please see ACTIVIST page C2 sures the quantities agreed Please see REPOS page C2

Facebook Is Gaining on Google Barclays Adds New Risk Manager BY MAX COLCHESTER said it would cut more than
BY STEVEN RUSSOLILLO ground on Google. For exam- AND EMILY GLAZER through the aftermath of the 1,000 jobs across its invest-
Slower Pace ple, eMarketer estimates that financial crisis, will become ment bank as it withdrew
In the continuing battle Google's advertising revenue, Google’s net mobile Internet Barclays PLC unveiled a Barclays’s vice chairman of from several locations around
for world domination, a cool change from a year earlier ad revenue will rise to about management shuffle, replacing risk and strategy. the world. The bank also plans
$15 billion separates Google 70% of total net ad revenue long-serving chief risk officer The hire is the first major a strategic retreat from Africa.
parent Alphabet Inc. from 20% by 2017, up from just under Robert Le Blanc with J.P. Mor- management change that Bar- Mr. Staley is likely to make
Apple Inc. 50% in 2015. That is a brisk gan Chase & Co. executive C.S. clays Chief Executive Jes Sta- other new hires to freshen up
That is the 15 pace, but not as brisk as Venkatakrishnan. ley has made since taking on the bank’s management team,
AHEAD OF difference be- Facebook’s. Agility is impor- The U.K.-based lender said the job late last year. Mr. Sta- analysts say.
THE TAPE tween the two 10 tant given debate over that Mr. Venkatakrishnan ley, who also is a J.P. Morgan The bank may be in the
in terms of whether the future of mobile would join from J.P. Morgan alumnus, is assessing the market for a new chief execu-
market capital- 5 will be through the web or Chase in May. Mr. Le Blanc, bank’s strategy amid lackluster tive for its investment bank if
ization. Yet investors gauging apps. who helped steer the bank returns. Last week, Barclays Tom King steps down next
whether Alphabet’s run to Meanwhile, Google’s year, analysts have said.
0
market-cap supremacy has growth in total advertising Mr. Venkatakrishnan spent
legs may be better off sizing 2014 ’15 revenue has leveled off. several years as head of opera-
up the search giant against a Source: the company Some could argue inves- tional risk at J.P. Morgan.
smaller force: Facebook Inc. THE WALL STREET JOURNAL. tors are assuming Google will “I am pleased to join Jes
Wall Street has cheered do fine. The stock is up by and his management team as
Facebook’s recent mobile ful its search and advertising more than one-third in a lit- they work to deliver the per-
success. Last week, Facebook businesses are on mobile. tle over six months. Its valu- formance Barclays’s share-
said some 80% of total Google last year said ation, at around 22 times holders expect,” he said.
fourth-quarter advertising search traffic on phones sur- forward earnings, isn’t far off Mr. Venkatakrishnan was
revenue came from mobile, passed desktop traffic world- highs of the past five years. associated with J.P. Morgan’s
well ahead of estimates and wide. According to an eMar- Gains have come in part roughly $6 billion trading loss
up from 23% three years ago. keter estimate, Google had thanks to a new emphasis on known as the “London whale.”
Next up is Alphabet’s roughly 33% of global mobile cost control, hopes for capi- As head of the bank’s model
fourth-quarter earnings re- Internet ad revenues in 2015. tal returns and transparency risk group, he defended a risk
port, out Monday. Analysts That is ahead of Facebook, the company is promising. model that warned of a giant
SUZANNE PLUNKETT / REUTERS

estimate earnings of $8.10 a which the firm estimates had Maintaining progress, loss at the bank related to the
share, up 18% from a year around 17% of the total. though, will depend on being London whale that went un-
earlier. As with Facebook, a But Facebook has been fleet of foot in mobile. heeded. That was later in-
key question around Alpha- quicker to pivot toward mo- cluded in a Senate report from
bet’s Google is how success- bile, which could help it gain Email: tape@wsj.com its Permanent Subcommittee
on Investigations. U.S. regula-
tors dropped their case
INDEX Credit Markets................................................ C4 Currencies........................................................... C2 Global Finance................................................. C3 IPO Scorecard........................................... C4
Commodities............................................ C4 Closed-End Funds........................................ C5 Financial Flashback..................................... C4 Heard on the Street.................................... C6 Ticker.............................................................. C2 against the London whale
Barclays is likely to continue to freshen up its management team. trader, Bruno Iksil, in 2015.
C2 | Monday, February 1, 2016 * * THE WALL STREET JOURNAL.

MOVING THE MARKET

THE TICKER | Market events coming this week

Monday Earnings expected($) Jan., exp. 17.3 mil. EIA status report MetLife 1.36/1.38 4th qtr. prelim. exp. ICE 3.01/2.59 Nov., prev. $42.4 bil.
Estimate/Year Ago* Previous change in stocks in Mondelez 0.49/0.47 down 2.2% Mrsh. & McLen. 0.71/0.66 Dec., exp. $43.5 bil.
Personal income Earnings expected* millions of barrels
Aetna 1.21/1.22 Southern Co. 0.42/0.38 Unit labor costs Occidental (0.12)/0.72
Nov., prev. up 0.3% Estimate/Year Ago($) Crude oil up 8.4 Consumer Credit
Aflac 1.48/1.29 3rd qtr., prev. Philip Morris 0.81/1.03
Dec., exp. up 0.3% Dow Chemical 0.69/0.85 Gasoline up 3.5 Thursday Nov., prev. up $13.95 bil.
Alphabet 8.09/6.88 up 1.8%
Exxon Mobil 0.63/1.32 Distillates down 4.1 Dec., exp. up $13.30 bil.
Personal spending Cardinal Hlth. 1.26/1.20
Gilead Sci. 3.00/2.43
Initial jobless claims 4th qtr. prelim., exp. Friday
Nov., prev. up 0.3% Gen. Growth 0.19/0.30 ISM non-mfg index Previous 278,000 up 4.8%
LyondellBasell 2.14/2.48 Nonfarm payrolls Earnings expected*
Dec., exp. up 0.1% Sysco 0.41/0.41 Dec., prev. 55.3 Expected 275,000 Factory orders
Pfizer 0.52/0.54 Dec., previous 292,000 Estimate/Year Ago($)
Construction spending Jan., exp. 55.0 EIA report: natural gas Nov., prev. down 0.2% Jan., expected 186,000 AMETEK 0.63/0.63
UPS 1.42/1.25
Nov., prev. down 0.4% Tuesday Earnings expected*
Previous change in stocks in Dec., exp. down 2.8% CME Group 0.90/0.95
billions of cubic feet
Dec., exp. up 0.6% Total vehicle sales, Wednesday Estimate/Year Ago($) down 211 Earnings expected*
Unemployment rate Estée Lauder 1.11/1.13
Comcast 0.82/0.77 Dec., previous 5.0% Moody’s 1.04/1.12
ISM mfg. index domestically produced, Mort. bankers indexes Productivity Estimate/Year Ago($)
GM 1.21/1.19 Jan., expected 5.0% Tyson Foods 0.89/0.77
Dec., prev. 48.2 at an annual rate Purchase, prev. up 5% 3rd qtr., prev. ConocoPhil. (0.64)/0.60
Jan., exp. 48 Dec., prev. 17.3 mil. Refinan., prev. up 11% Merck 0.91/0.87 Dominion Res. 0.88/0.84 Int’l trade deficit Weyerhaeuser 0.24/0.27
up 2.2%
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES)
ADJUSTED FOR STOCK SPLIT NOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS

REPOS The decision is the latest

Continued from the prior page
twist in a long-running strug-
gle by bankers and the Federal
Reserve to reduce risk in re-
pos. Regulators accelerated
curities being exchanged be-
tween clients of the clearing
banks.
J.P. Morgan completed a se-
been shrinking in response to
new rules targeting banks.
“In a world where everyone
is concerned about lack of li-
ries of enhancements and the quidity, why take this away?”

72.4% How often the S&P 500

The shift “will further bi-
furcate” the repo market at a
time when it is already under
pressure from regulation, said
Josh Galper, managing princi-
pal at consultancy Finadium.
ends the year The change, which would have
to be signed off by the Securi-
the way it finishes January ties and Exchange Commis-
sion, also would likely lead to
the adoption of different repo
rates for Bank of New York
Mellon and J.P. Morgan cli-
those changes after the 2008
financial crisis exposed struc-
tural flaws. Under the over-
haul, BNY and J.P. Morgan re-
jiggered settlement times and
virtually eliminated the
amount of intraday credit they
have extended to dealers in
some repos, moves lauded by
the Fed.
Last year, the Federal Re-
serve Bank of New York said
the industry had met several
DTCC unit completed the ma-
jority of its own, but BNY de-
termined that the technology
work would have taken too
much time and resources, peo-
ple familiar with the situation
$45 billion
Value of daily repo loans
affected by the dispute
one large dealer complained of
the planned suspension.
Some traders said the sus-
pension could leave J.P. Mor-
gan and its clients—which
people familiar with the mat-
ter said include units of Credit
Suisse Group AG, Royal Bank
of Scotland Group PLC and
HSBC Holdings PLC—disad-
vantaged, with fewer trading
partners in a panic, and could
potentially complicate any at-

January’s End Bodes Ill ents, said Joseph Abate, an an-

alyst at Barclays PLC.
The trades that would be
repo-overhaul milestones but
that settlements of interdealer
GCF repos across clearing said. At the same time, BNY
tempts to resolve firm failures.
Representatives of those firms
declined to comment.
As January goes, so goes in oil prices and worries affected by the suspension are banks remained out of sync asked a unit of DTCC to accept Others said dealers on the
the year. about growth both in the repos between dealers that with other repos. It called the new limits on a credit facility J.P. Morgan side tend to have
That Wall Street maxim U.S. and abroad all weighed cross clearing banks and are misalignment a “potential the bank provides to the set- more cash than securities, but
doesn’t bode so well for U.S. on equities in the first backed by Treasurys, mort- source of market instability in tlement firm. they may have to pay more to
equities in 2016. month of the year. gage bonds and agency debt in periods of stress.” When they couldn’t resolve transact than BNY Mellon cli-
The S&P 500 finished Those factors continue to trades known as “general col- In an effort to align inter- their differences, the DTCC ents under the change. J.P.
with its 10th-worst January hang over the market, lateral finance.” Those GCF dealer GCF trades and other unit, called Fixed Income Morgan already has an ac-
on record, falling 5.1%, causing market watchers to trades account for about $45 repos, BNY, J.P. Morgan and Clearing Corp., chose to sus- count at BNY and could ex-
take a cautious outlook on billion, or 15% of the $300 bil- DTCC set out to build new pend its interbank GCF repo pand its own capabilities, said
MONEYBEAT stocks. Many expect the lion in daily interdealer repo technology for swapping infor- services. one person involved in the
market volatility that trading. mation about the cash and se- Repo volumes already have talks between the banks.
according to The Wall Street defined January trading to
Journal’s Market Data Group. persist this year.
The January barometer
holds that if the S&P 500
finishes January up, it will
“I doubt many investors
will shed a tear at
[January’s] passing,” said
ACTIVIST

PHOTOGRAPHS BY CHRISTOPHER DILTS/BLOOMBERG (LEFT); TODD KOROL /REUTERS

end the year in the black Nick Colas, chief market Continued from the prior page
and in the red if it ends the strategist at the brokerage performance of his funds,
month down. Convergex. “But it was owns roughly 90% of the vehi-
Over the years, the probably good practice for cle, Icahn Enterprises LP. The
barometer has proved fairly the year ahead.” firm holds his wholly owned
accurate at predicting —Stephen Grocer companies and invests in his
whether the index will finish funds. It has been hurt by
the year up or down, right ONLINE slumps in the energy stocks in
72.4% of the time, according his portfolio.
to Howard Silverblatt, senior For more The two men aren’t alone.
index analyst at S&P Dow
Jones Indices.
Volatility in China’s stock
WSJ
.COM
MoneyBeat blog
posts, go to
blogs.wsj.com/
The S&P U.S. Activist Interest
Index, which tracks companies
targeted by such investors, is
market, a continued plunge MoneyBeat down 30% over the past 12
months and 17% this year, in-
cluding dividends. That com-
pares with drops of 1% and
5%, respectively, for the S&P
Currencies 500.
“While no one here is en-
U.S.-dollar foreign-exchange rates in late New York trading thusiastic about delivering our
US$vs, US$vs,
Fri YTDchg Fri YTDchg worst performance year in his- Investors Carl Icahn and William Ackman effected change at Hertz and Canadian Pacific, respectively.
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) tory in 2015, it certainly does a
Americas Vietnam dong .00004520 22125 –0.1 good job reinforcing the hu- Activist funds tracked by vestors to agree to lock up Veremis of Cambridge Associ-
Argentina peso .0720 13.8980 7.4 Europe mility-side of the equation that HFR Inc. had net-asset out- their money for years. That ates Ltd., which advises large
Brazil real .2500 4.0001 1.0 Czech Rep. koruna .04008 24.950 0.3 is necessary for long-term in- flows of $1.5 billion in the made them more like private- institutions on where to in-
Canada dollar .7154 1.3978 1.0 Denmark krone .1451 6.8900 0.3 vestment performance,” Mr. fourth quarter after seven equity firms, which match fund vest. “I wouldn’t worry about
Chile peso .001403 713.00 0.6 Euro area euro 1.0833 .9231 0.3 Ackman wrote to investors in straight quarters with money duration to the multiyear time some of these brand-name ac-
Colombia peso .0003047 3282.16 3.4 Hungary forint .003480 287.32 –1.1
Ecuador US dollar 1 1 unch Iceland krona .007683 130.15 unch
an annual letter Tuesday. pouring in. They still ended up horizon of their buyout invest- tivists.”
Mexico peso .0552 18.1105 5.3 Norway krone .1152 8.6795 –1.8 In recent years, activist in- in 2015, with a record $123 bil- ments, and less like many Ultimately, the asset growth
Peru new sol .2878 3.475 1.8 Poland zloty .2451 4.0808 4.0 vestors, who build stakes in lion, HFR said. hedge funds, which can experi- the industry depends on for its
Uruguay peso .03226 31.0000 3.6 Russia ruble .01321 75.716 5.3 companies and push for Withdrawals bring up mem- ence large outflows with little increasing profile could wane
Venezuela b. fuerte .158603 6.3051 unch Sweden krona .1166 8.5784 1.6 change, have gained influence ories of the financial crisis, notice. if the performance numbers
Asia-Pacific Switzerland franc .9773 1.0232 2.1 as their big war chests and when investors in activist Mr. Icahn returned all out- don’t improve. And declining
Turkey lira .3385 2.9539 1.2
Australian dollar .7084 1.4116 2.9
Ukraine hryvnia .0391 25.5825 6.6
support from mainstream in- side capital after the crisis. Mr. returns may raise concerns
China yuan .1521 6.5761 1.3 stitutional shareholders have Ackman said in November that about why other investors
Hong Kong dollar .1285 7.7824 0.4
UK pound 1.4244 .7020 3.5
helped them take on compa-
The S&P U.S. few investors had pulled out should side with activists over
India rupee .01473 67.880 2.5 Middle East/Africa
Indonesia rupiah .0000731 13686 –1.1 Bahrain dinar 2.6556 .3766 –0.1 nies once thought beyond their Activist Interest across his funds. their corporate foes.
.008255 121.13 0.7 .1277 7.8301 unch reach. That means that while some The stocks activists tar-
Japan yen
Kazakhstan tenge .002703 369.94 9.2
Egypt pound
Israel shekel .2524 3.9616 1.8 Companies as big as Micro-
Index is down 17% small activists may struggle geted outperformed broader
Macau pataca .1247 8.0171 0.2 Kuwait dinar 3.2906 .3039 0.1 soft Corp. and DuPont Co. this year. with redemptions, and with markets in 2015 by a median
Malaysia ringgit .2414 4.1425 –3.7 Oman sul rial 2.5987 .3848 unch have agreed to a litany of de- raising new funds, the big 0.9% in the 60 days following
New Zealand dollar .6483 1.5425 5.4 Qatar rial .2745 3.643 unch
Pakistan rupee .00954 104.875 unch Saudi Arabia riyal .2666 3.7508 –0.1
mands that typically include names in the industry have the launch of a campaign, ac-
Philippines peso .0210 47.668 1.7 South Africa rand .0630 15.8830 2.6 divestitures, cost reductions, funds pulled out money in fa- more time to turn around per- cording to a study from bank-
Singapore dollar .7022 1.4241 0.4 executive changes or share vor of less-volatile offerings. formance. ers at Citigroup Inc., com-
South Korea won .0008279 1207.93 2.7 Close Net Chg % Chg YTD%Chg buybacks. Last year, activists Activists such as Pirate Capi- Not all funds are sliding pared with 5.8% in 2012.
Sri Lanka rupee .0069473 143.94 –0.2 WSJ Dollar Index 91.59 0.66 0.73 1.57 gained board seats in 127 cam- tal LLC, whose motto was sharply. Activists on average But highlighting activists’
Taiwan dollar .02988 33.469 1.7 paigns, blowing past the 2014 “surrender the booty,” col- own performance may do little
Sources: Tullett Prebon, WSJ Market Data Group returned 0.4% last year, ac-
Thailand baht .02803 35.680 –1.0
record of 107. lapsed. cording to HFR, beating the to help targets win support
The gains have been predi- But the biggest names in ac- average hedge fund. Big activ- from investors, advisers on
cated on activists’ ability to tivism, such as Trian Fund ist funds such as Third Point both sides of such fights said.
ADVERTISEMENT boost the stocks of their tar- Management LP, Jana Part- and ValueAct Capital Man- Companies have found that
gets. The sharp declines in ners LLC and Third Point LLC, agement LP hardly blew up, pointing out activists’ own
Legal Notices
To advertise: 800-366-3975 or WSJ.com/classifieds
their own portfolios would be
just a cheap irony except that,
survived the crisis and have
become more powerful in re-
down 1% and 2%, respectively,
last year, according to people
troubles can backfire, as some
investors see it as deflecting
if they continue, they threaten cent years. familiar with the matter. criticism instead of focusing
to cool what has been one of Looking to insulate them- “I wouldn’t be surprised if on the business, they said.
DEA the hottest areas of finance in selves against volatility in you saw some negative flows —Rob Copeland
recent years. their portfolios, they got in- for a change,” said Marcos contributed to this article.


 
LEGAL
POOLS

       
news release. The settlement comes less pool, called LX.

NOTICES
 ! " #$ % 

 
 & ' ('"
 ( Under the settlement, Credit than a month after Daniel Ma- Barclays admitted to mis-
(  
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& 
'' (
'  )* &  
 $85 million—$30 million each head of stock trading, said he securities laws, and agreed to
  ' ('    +, ADVERTISE TODAY Continued from the prior page to the SEC and New York attor- was leaving the firm in late have an independent monitor
  
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& "'' %  
   & stitutions. ney general, plus $24.3 million February to start a new busi- review operations of its elec-
   ' 
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(800) 366-3975 Previously, the biggest set- primarily in disgorged revenue ness in asset management, The tronic-trading division, accord-
& ( '  
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%  " #$ # /**//
 
 '- *01/10*/2  (  ' @wsj.com that New York brokerage In- Credit Suisse neither admit- ary. His group oversees the New York attorney general. Half
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vestment Technology Group ted nor denied the allegations, bank’s dark pools. of the amount Barclays is pay-
  3&-  /!  Place an ad with the Inc. agreed to pay the SEC in according to a person familiar Barclays will pay about $70 ing will go the SEC and half to
. ,
 '4
.5**..0  6- *71/710***
, self-service tool at: August. ITG admitted wrongdo- with the matter. The bank’s two million to settle charges that the New York attorney general.
-  50  2** 8 /59
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  3&-
wsj.com/classifieds ing in its case. trading venues named in the include those brought in a high- Both cases center in part on
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'4/5;,./*5;  /! 8
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00;7//  each made “false statements one of the stock market’s big- York attorney general against clients about how the bank-
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- )7,0; " and omissions in connection gest dark pools; and another, Barclays in connection with its owned trading venues priori-
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  3&-  /! ); '( =$ with the marketing of their re- much smaller platform called dark pools in June 2014. In that tized certain buy and sell or-
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6- *.1*210***
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high-speed electronic equities and offers to sell stocks like an general alleged Barclays misled withheld information that
All Rights Reserved. trading services,” the New York exchange does but has other clients about the extent of high- might have led clients to route
attorney general said in his characteristics of a dark pool. frequency trading in its dark orders elsewhere.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Mexican Bonds Draw Foreign Investors
Country is viewed as
resistant to factors
plaguing other
emerging nations
BY JULIE WERNAU
Bond investors have been
piling into Mexico, viewing it
as one of the few emerging-
market countries to withstand
some of the global forces
plaguing its peers.
Foreign investment in Mex-
ico’s government bonds hit a
high in January at 1.57 trillion
pesos ($85 billion), exceeding
the previous record set in No-
vember, according to the Insti-
tute of International Finance.
The country’s local debt
market has been enjoying in-
flows over much of the past
year, while emerging markets
overall have suffered big out-
flows. Local-currency debt
funds in emerging markets
suffered an outflow of nearly
20% during the past two years
through mid-December, while
funds invested in Mexico’s lo-
cal debt received a 1% inflow
from investors, according to
EPFR Global.
Many investors say Mexico
has shown some resilience to
China’s slowing growth, rising
U.S. interest rates and dwin-
dling commodity prices.
Mexico is “a safe haven, the
best of the worst, the least
ugly,” said Siobhan Morden,
managing director and desk
analyst for Latin America at
Nomura in New York.
The market’s attraction rel-
ative to peers represents a re-
versal for a country that has
served as the proxy for inves-
tor sentiment on emerging
markets.
Mexico burned foreign in-
vestors in 1994 after it deval-
ued the peso, sparking a rapid
selloff of its financial assets
that was dubbed the tequila
crisis.
But investment funds dedi-
Trade: What’s Next?
Exciting new pacts are pending, yet demand from China is slowing.
What’s the future of trade — 1, 10, even 30 years from now?
GLOBAL FINANCE
cated to Latin America and
emerging markets have to put
their money somewhere, and
often settle on one country
during tough times as the
least-bad option.
Mexico’s investment-grade
credit rating, the relative ease
of trading for its bonds and its
close ties with the recovering
U.S. economy have made it
stand out.
Mexico’s bond market is
one of the most liquid in the
developing world. Trading vol-
umes for Mexican debt rose
10% in the third quarter from
the same period a year before.
By contrast, overall volumes in
emerging-market debt
dropped 22% over the same
period, according to the
Emerging Markets Traders As-
sociation.
That difference reflects in
part credit downgrades last
year on other major emerging-
market countries, such
as Brazil.
Other countries, like Vene-
zuela, have raised investor
concerns about political insta-
bility.
All three major credit-rat-
ings firms have stable invest-
ment-grade ratings on Mex-
ico’s bonds.
“Mexico is one of the less-
risky countries if you go by rat-
ings, by exposure, by the qual-
ity of institutions, by reforms,”
said Gorky Urquieta, co-head of
the emerging-markets debt
team at Neuberger Berman,
which oversees about $6.5 bil-
lion and has an overweight po-
sition in Mexico’s local debt
relative to his benchmark.
Not everyone is con-
vinced Mexico can escape the
global troubles punishing most
developing countries.
“A third of the government
budget is based on oil; so,
that’s got to give you a little
pause and the currency contin-
ues to get killed. It makes you
queasy,” said Elisabeth Colle-
ran, portfolio manager for the
Loomis, Sayles & Co. emerging-
Monday, February 1, 2016 | C3
Ashmore Group.
The country’s biggest ad-
vantage compared with other
developing markets is its fa-
vorable trading relationship
with the U.S.
Because of the North Amer-
ican Free Trade Agreement,
80% of Mexico’s exports go to
its northern neighbor with lit-
tle or no tariffs. That has
made Mexico less vulnerable
than peers like Brazil and
Chile to China’s waning appe-
tite for raw goods.
For years, Mexico was a
risky boom-and-bust market.
Foreign-investor sentiment be-
SUSANA GONZALEZ/BLOOMBERG NEWS
gan to change in 1994 when
the trade agreement deepened
economic ties with the U.S.
and attracted more foreign
capital to Mexico’s financial
markets.
But a violent uprising later
that year in the Mexican state
of Chiapas and the assassina-
tion of a presidential candi-
Mexico’s bond market is one of the most liquid in the developing world. Aerial view of Mexico City. date spooked foreign inves-
tors.
Mexico’s peso has been under Then a botched devaluation
Sticking to Mexico pressure. The currency is in December of that year ig-
Investors are picking out Mexico as a resilient bet in emerging markets. down 5% against the dollar nited a currency crisis, causing
since the beginning of 2016 foreign investors to bolt. The
Investment flows into Mexico and hit a record low in Janu- U.S. coordinated a $50 billion
Cumulative foreign capital vs. other emerging-market ary. bailout, but Mexico’s growth
flows into Mexico countries Those declines came al- remained subdued for years.
1.75 trillion pesos 15%
though Mexico’s central Since then, policy improve-
bank raised rates in December ments have helped to buffer
Mexico local currency bonds by a quarter-point to 3.25%, Mexico from spiraling into an-
1.50 10
keeping pace with the Federal other financial crisis, says the
1.25 5 Reserve’s move. At the confer- Institute of International Fi-
ence of business and world nance. Its federal government
1.00 0
leaders in Davos, Switzerland, debt, at 35% of gross domestic
0.75 –5 in January, Mexico’s central product, is low compared with
bank chief, Agustin Carstens, other developing countries.
0.50 –10 said he intends to keep raising For now, many bond inves-
rates in tandem with the Fed tors seem content to seek
0.25 –15 to support the peso and Mexi- safety in Mexico as long as its
Local currency all
0 –20
emerging-markets bonds can financial assets. major trading partner stays
Mexico’s market for govern- economically healthy.
2014 ’15 ’16 2014 ’15 ment bonds denominated in “The U.S. economy is grow-
Note: 1 trillion pesos=$55.217 billion Sources: Institute of International Finance (foreign pesos lost 11% in dollar terms ing and one of the huge bene-
capital flows); EPFR Global (emerging-markets flows) THE WALL STREET JOURNAL. last year, versus a 15% drop in ficiaries is Mexico,” said An-
the J.P. Morgan GBI EM Global drew Stanners, investment
markets team, which has $1.3 the bulk of its oil revenue, has Diversified Index. Mexican manager at Aberdeen Asset
billion under management. suffered from depressed en- bonds gained 1.5% in pesos, Management PLC, which has
State-owned Petróleos ergy prices. compared with a 2.2% drop in $11.5 billion in emerging-mar-
Mexicanos, or Pemex, which Furthermore, like other local currencies for the ket debt and invests in five-
provides the government with emerging-markets currencies, broader index, according to and 10-year Mexican debt.
HSBC’s trade
experts and a
special guest
will answer
your questions
about trends and
opportunities.
Join us for a
Webinar
Wednesday,
February 3,
11:30 a.m. EST.
Co-produced by HSBC and
WSJ. Custom Studios, we’ll
share how the best companies
manage their complex global
supply chains.
And sign up for future webinars
on additional topics, exploring
the challenges corporations
face in the global economy.
To register and
learn more, visit
Bit.ly/HSBCtrade
WSJ. Custom Studios is a unit of The Wall
Street Journal Advertising Department.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
C4 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST
Dow Jones Industrial Average S&P 500 Index New to the Market
Last Year ago Last Year ago
16466.30 s 372.79, or 2.32% last week Trailing P/E ratio * 16.76 16.35 1940.24 s 33.34, or 1.75% last week Trailing P/E ratio * 20.93 19.79 Public Offerings of Stock
High, low, open and close for each of P/E estimate * 15.07 15.83 High, low, open and close for each of P/E estimate * 15.89 16.98
the past 52 weeks Dividend yield 2.71 2.54 the past 52 weeks Dividend yield 2.32 2.00 IPOs in the U.S. Market
All-time high 18312.39, 05/19/15 All-time high: 2130.82, 05/21/15
Initial public offerings of stock expected this week; might include some
offerings, U.S. and foreign, open to institutional investors only via the
Current divisor 0.14602128057775 65-day moving average Rule 144a market; deal amounts are for the U.S. market only
18500 2150
Symbol/ Pricing
200-day moving average Expected primary Shares Range($)
pricing date Filed Issuer/business exchange (mil.) Low/High Bookrunner(s)
18000 2100
2/1 8/25 Advanced Inhalation Therapies AITPU 0.7 15.00/ Joseph Gunnar & Co
2015 Biopharmaceutical Nq 15.00
17500 2050 company developing
products to treat
respiratory infections.
17000 2000 2/1 10/7 Nordic Realty Trust NORT 5.0 15.00/ Wunderlich Secs,
Week's high 2015 Real estate investment Nq 15.00 Compass Point,
DOWN UP 200-day moving average trust focused on office and Janney
16500 1950 industrial properties. Montgomery
t

Monday's open Friday's close

Scott, JMP Secs,
Friday's close Monday's open Nomura
t

16000 1900 2/1 10/5 PLx Pharma PLXP 3.8 17.00/ Raymond James,
Week's low 65-day moving average 2015 Developer of non-steroidal Nq 19.00 Maxim Group
anti-inflammatory drug
15500 1850 products.

Bars measure the point change from Monday's open 2/1 11/4 Shimmick Construction Co SCCI 6.3 11.00/ FBR Cptl Mrkts & Co
2015 Construction company Nq 13.00
15000 1800 offering general
JF M A M J J A S O N D J JF M A M J J A S O N D J construction, construction
management, and design-
Primary build services.
NYSE weekly volume, in billions of shares market Composite
t
t

Financial Flashback 2/2 1/4 Editas Medicine EDIT 5.9 16.00/ MS, JPM,
30
20 The Wall Street Journal, Feb. 1, 1998 Company engaged in
transformative genome
Nq 18.00 Cowen & Co

10 The global drug industry was roiled by news that editing.

0 SmithKline Beecham and Glaxo were engaged in merger 2/3 10/16 BeiGene BGNE 71.5 22.00/ GS, MS,
JF M A M J J A S O N D J talks to create world’s biggest drugmaker at that time. 2015 Engaged in research and Nq 24.00 Cowen & Co
* P/E data based on as-reported earnings from Birinyi Associates Inc. development in anti-
cancer drugs.

Major U.S. Stock-Market Indexes Nasdaq Composite 2/4 3/26 Mapi-Pharma MAPI 3.1 15.00/ JMP Securities
2014 Pharmaceutical Nq 17.00
Latest Week 52-Week Range % chg s 22.77, or 0.50% preparations.
High Low Close Net chg % chg Low Close (l) High % chg YTD 3-yr. ann.
Dow Jones
last week
Industrial Average 16466.30 15863.72 16466.30 372.79 2.32 15666.44 l 18312.39 -4.1 -5.5 5.7 Lockup Expirations
Transportation Avg 6927.96 6643.71 6906.76 128.22 1.89 6625.53 l 9178.48 -20.1 -8.0 5.5
4580 Below, companies whose officers and other insiders will become eligible
Utility Average 611.91 582.11 611.35 22.21 3.77 541.97 l 641.4 -4.1 5.8 8.9
to sell shares in their newly public companies for the first time. Such
Total Stock Market 19880.80 19203.11 19880.78 323.98 1.66 19071.84 l 22287.78 -4.5 -5.8 8.1
4520 sales can move the stock’s price.
Barron's 400 478.70 460.55 478.70 8.20 1.74 460.46 l 586.75 -8.9 -7.3 7.1
Lockup Offer Offer amt Through Lockup
Nasdaq Stock Market expiration Issue date Issuer Symbol price($) ($ mil.) Friday (%) provision
4460
Nasdaq Composite 4613.95 4447.50 4613.95 22.77 0.50 4468.17 l 5218.86 -0.5 -7.9 13.5 Feb. 1 Aug. 5, ’15 Aimmune Therapeutics Inc AIMT 16.00 184.0 –14.5 180 days
Nasdaq 100 4279.17 4111.93 4279.17 19.40 0.46 4016.32 l 4719.05 3.2 -6.8 16.0 Aug. 5, ’15 Planet Fitness Inc PLNT 16.00 248.4 –10.7 180 days
4400 Feb. 7 Aug. 11, ’15 Global Blood Therapeutics Inc GBT 20.00 138.0 –5.4 180 days
Standard & Poor's 22 25 26 27 28 29
1.75 l January Sources: Dealogic; WSJ Market Data Group
500 Index 1940.24 1872.70 1940.24 33.34 1859.33 2130.82 -2.7 -5.1 8.8
MidCap 400 1317.87 1259.86 1317.74 29.97 2.33 1254.93 l 1549.44 -8.2 -5.8 6.4 DJ US TSM
SmallCap 600 629.95 602.26 629.95 14.98 2.44 601.59 l 742.13 -6.0 -6.2 7.4 IPO Scorecard
s 323.98, or 1.66%
Other Indexes last week Performance of IPOs, most-recent listed first
Russell 2000 1035.38 997.37 1035.38 14.72 1.44
994.87 l 1295.8 -11.2 -8.8 4.5 % Chg From % Chg From
NYSE Composite 9632.71 9258.66 9632.70 205.80 2.18
9156.84 l 11239.66 -8.6 -5.0 2.5 Company SYMBOL Friday3s Offer 1st-day Company SYMBOL Friday3s Offer 1st-day
IPO date/Offer price close ($) price close IPO date/Offer price close ($) price close
Value Line 413.98 395.72 413.98 8.91 2.20
392.58 l 522.42 -14.8 -7.1 1.7 19700
Yirendai 6.82 –31.8 –25.1 Mimecast 7.59 –24.1 –24.9
NYSE Arca Biotech 3242.40 2832.07 2898.73 -306.06 -9.55 2866.32 l 4431.87 -21.8 -24.0 20.0 YRD Dec. 18/$10.00 MIME Nov. 19/$10.00
NYSE Arca Pharma 519.62 497.06 510.11 -3.79 -0.74 500.72 l 605.94 -5.7 -5.8 8.7 Atlassian 20.77 –1.1 –25.2 Square 8.77 –2.6 –32.9
19500
KBW Bank 63.87 60.03 63.86 1.60 2.57 60.10 l 80.41 -4.3 -12.6 5.8 TEAM Dec. 10/$21.00 SQ Nov. 19/$9.00
PHLX§ Gold/Silver 46.04 41.23 45.96 5.04 12.31 38.84 l 81.03 -42.1 1.5 -32.8 Axsome Thera 7.83 –13.0 –10.4 Instructure 17.33 8.3 –3.7
PHLX§ Oil Service 6.31 l 19300 AXSM Nov. 19/$9.00 INST Nov. 13/$16.00
148.12 131.39 148.05 8.79 128.61 224.32 -20.9 -6.1 -15.8
Duluth Hldgs 16.51 37.6 21.0 Mesoblast 5.40 –32.5 –33.4
PHLX§ Semiconductor 613.71 582.33 613.68 15.26 2.55 559.59 l 746.08 -6.0 -7.5 14.1 DLTH Nov. 19/$12.00 MESO Nov. 13/$8.00
CBOE Volatility 27.22 19.50 20.20 -2.14 -9.58 11.95 l 40.74 -3.7 10.9 14.9 19100 Match Grp 12.55 4.6 –14.9 Xtera Comm 4.05 –19.0 –19.0
22 25 26 27 28 29 MTCH Nov. 19/$12.00 XCOM Nov. 13/$5.00

Philadelphia Stock Exchange Sources: SIX Financial Information; WSJ Market Data Group January
Sources: WSJ Market Data Group; FactSet Research Systems

International Stock Indexes Commodities and Other Stock Offerings

Latest Week 52-Week Range YTD Currencies Secondaries and follow-ons expected this week in the U.S. market
Region/Country Index Close % chg Low Close High % chg Last Week YTD
Close Net chg %Chg % chg None expected this week
World The Global Dow 2177.64 1.85 2078.15 • 2639.52 –6.8
DJ Global Index 288.62 1.92 275.24 • 341.62 –6.3 DJ Commodity 448.75 12.60 2.89 -1.11
DJ Global ex U.S. 195.48 2.17 185.27 • 246.68 –7.0 Reuters-Jefferies CRB 166.75 2.95 1.80 -5.40 Off the Shelf
Global Dow Euro 1894.98 1.89 1795.71 • 2305.98 –6.4 Crude oil, $ per barrel 33.62 1.43 4.44 -9.23 “Shelf registrations” allow a company to prepare a stock or bond for
DJ TSM Global 2964.66 1.90 2828.40 • 3510.20 –6.4 Natural gas, $/MMBtu 2.298 0.157 7.33 -1.67 sale, without selling the whole issue at once. Corporations sell as
Global ex U.S. 1973.18 2.16 1870.90 • 2482.77 –7.0 Gold, $ per troy oz. 1116.40 20.10 1.83 5.29 conditions become favorable. Here are the shelf sales, or takedowns,
Developed ex U.S. 1960.24 1.72 1862.95 • 2403.18 –7.0
U.S. Dollar Index 99.53 -0.003 -0.003 0.85
over the last week:
Global Small-Cap 3884.40 2.09 3704.00 • 4716.91 –7.8
WSJ Dollar Index 91.59 -0.03 -0.04 1.57 Issuer/Industry
Takedown date/ Deal value Registration
Registration date ($ mil.) (mil.) Bookrunner(s)
Global Large-Cap 2829.00 1.88 2698.16 • 3337.56 –6.2
Euro, per dollar 0.9231 -0.0029 -0.31 0.26 ImmuCell Jan. 29 $5.9 $10.0 Craig-Hallum Group
Americas DJ Americas 460.73 1.90 439.67 • 524.44 –5.4
Yen, per dollar 121.13 2.36 1.99 0.70 Healthcare Oct. 27,315
Brazil Sao Paulo Bovespa 40405.99 6.24 37497.48 • 58051.61 –6.8
U.K. pound, in dollars 1.42 -0.003 -0.15 -3.34 Molson Coors Brewing Jan. 28 $2,350.0 UBS, BofA ML, Citi,
Canada S&P/TSX Comp 12822.13 3.49 11843.11 • 15450.87 –1.4
Food & Beverage Jan. 26,316
...
BMO Cptl Mkts,
Mexico IPC All-Share 43630.77 4.83 40265.37 • 45773.31 1.5 52-Week Range Mitsubishi UFJ, RBC Cptl
Chile Santiago IPSA 2956.17 4.82 2759.77 • 3359.04 0.4 Low Close(l) High % Chg
Mkts, WFS
Europe Stoxx Europe 600 342.27 1.16 322.29 • 414.06 –6.4 DJ Commodity 420.23 l 584.70 -16.49 Oasis Petroleum Jan. 28 $185.3 ... Citi
Stoxx Europe 50 2902.41 0.99 2738.91 • 3591.47 –6.4 Reuters-Jefferies CRB 156.32 l 231.77 -23.80 Oil & Gas July 15,314
Eurozone Euro Stoxx 322.94 1.07 304.71 • 392.35 –6.4 Crude oil, $ per barrel 26.55 l 61.43 -30.31
Euro Stoxx 50 3045.09 0.72 2882.59 • 3828.78 –6.8
Natural gas, $/MMBtu 1.76 l 3.02 -14.60 Borrowing Benchmarks | WSJ.com/bonds
Belgium Bel-20 3486.22 1.02 3265.59 • 3905.71 –5.8
Gold, $ per troy oz. 1050.80 l 1278.50 -12.68
France CAC 40 4417.02 1.85 4124.95 • 5268.91 –4.7
Germany DAX 9798.11 0.34 9391.64 • 12374.73 –8.8 U.S. Dollar Index 93.23 l 100.20 4.94 Money Rates January 29, 2016
Israel Tel Aviv 1452.17 0.85 1433.58 • 1723.56 –5.0
WSJ Dollar Index 84.11 l 91.66 6.58 Key annual interest rates paid to borrow or lend money in U.S. and
Italy FTSE MIB 18657.29 –1.95 17968 • 24031 –12.9
Euro, per dollar 0.86 l 0.95 4.23 international markets. Rates below are a guide to general levels but
Netherlands AEX 431.28 2.86 395.72 • 509.24 –2.4
don’t always represent actual transactions.
Spain IBEX 35 8815.80 1.07 8281.4 • 11866.4 –7.6 Yen, per dollar 116.95 l 125.62 3.06
Sweden SX All Share 469.40 0.05 446.99 • 564.90 –7.1 U.K. pound, in dollars 1.42 l 1.59 -5.44 Inflation Other short-term rates
Switzerland Swiss Market 8319.81 0.59 7966.34 • 9526.79 –5.7
Real-time U.S. stock
Dec. index Chg From (%) Week 52-Week
U.K. FTSE 100 6083.79 3.11 5673.58 • 7103.98 –2.5 level Nov. '15 Dec. '14 Latest ago high low

Asia-Pacific
Australia
DJ Asia-Pacific TSM 1279.14
S&P/ASX 200 5005.50
2.30
1.82
1210.15
4841.5
•
•
1619.39 –8.0
5982.7 –5.5
WSJ
.COM
quotes are available on
WSJ.com. Track most-
active stocks, new
U.S. consumer price index
All items 236.525 –0.34 0.7
Call money
2.25 2.25 2.25 2.00
China Shanghai Composite 2737.60 –6.14 2655.66 • 5166.35 –22.6
highs/lows, mutual
Core 243.779 –0.12 2.1 Commercial paper
Hong Kong Hang Seng 19683.11 3.16 18542.15 • 28442.75 –10.2
funds and ETFs. International rates
30 to 270 days n.q. ... ... ...
India S&P BSE Sensex 24870.69 1.78 23962.21 • 29593.73 –4.8 Commercial paper (AA financial)
Japan Nikkei Stock Avg 17518.30 3.30 16017.26 • 20868.03 –8.0 Plus, get deeper money-flows data and
Latest
Week 52-Week
High Low
90 days 0.53 0.57 0.64 0.06
Singapore Straits Times 2629.11 2.02 2532.70 • 3539.95 –8.8 email delivery of key stock-market ago
Euro commercial paper
South Korea Kospi 1912.06 1.74 1829.81 • 2173.41 –2.5 data. Prime rates 30 day n.q. n.q. -0.02 -0.12
Taiwan Weighted 8080.60 4.18 7410.34 • 9973.12 –3.1 All are available free at U.S. 3.50 3.50 3.50 3.25 Two month n.q. n.q. -0.01 -0.09
Canada 2.70 2.70 2.85 2.70 Three month n.q. n.q. 0.01 -0.08
Source: SIX Financial Information;WSJ Market Data Group WSJMarkets.com Japan 1.475 1.475 1.475 1.475 Four month n.q. n.q. 0.02 0.00
Five month n.q. n.q. 0.03 0.01
Policy Rates Six month n.q. n.q. 0.04 0.02
Consumer Rates and Returns to Investor Benchmark Yields and Rates Euro zone 0.05 0.05 0.05 0.05
Libor
Switzerland 0.50 0.50 0.50 0.50
U.S. consumer rates Selected rates Treasury yield curve Forex Race Britain 0.50 0.50 0.50 0.50 One month 0.42500 0.42650 0.43060 0.16950
Australia 2.00 2.00 2.50 2.00 Three month 0.61260 0.61860 0.62430 0.25210
A consumer rate against its New car loan Yield to maturity of current bills, Yen, euro vs. dollar; dollar vs. Six month 0.86025 0.85775 0.86575 0.35740
benchmark over the past year notes and bonds major U.S. trading partners Overnight repurchase One year 1.13975 1.14370 1.17800 0.61815
Bankrate.com avg†: 3.22%
U.S. 0.43 0.50 0.51 0.07 Euro Libor
Lake Elmo Bank 1.99% 5.00% 10% One month -0.233 -0.226 -0.004 -0.233
4.00% Lake Elmo, MN 651-777-8365 WSJ Dollar
U.S. government rates Three month -0.181 -0.156 0.032 -0.181
4.00 s index
PNC Bank 1.99% 5 Discount Six month -0.106 -0.070 0.095 -0.106
Prime rate 3.50
West Palm Beach, FL 888-PNC-BANK 1.00 1.00 1.00 0.75 One year 0.003 0.040 0.237 0.003
t 3.00 0
t 3.00 South State Bank 1.99% Federal funds Euro interbank offered rate (Euribor)
2.00 –5 One month -0.229 -0.231 0.003 -0.231
Savannah, GA 912-629-6500 Effective rate 0.2700 0.4000 0.4000 0.0600
New car loan s Three month -0.162 -0.152 0.055 -0.162
2.50 Friday 1.00 s High 0.5600 0.5600 0.5900 0.3100
t

Think Mutual Bank 1.99% –10 Yen Six month -0.089 -0.074 0.134 -0.089
One year ago Euro Low 0.2500 0.3400 0.3500 0.0100
t

Rochester, MN 800-288-3425 One year 0.015 0.032 0.271 0.015

2.00 0.00 –15 Bid 0.2500 0.3800 0.5500 0.0300
F M A M J J A S O N DJ J TrustCo Bank 2.12% Offer 0.2800 0.5000 0.5600 0.0500 Value 52-Week
1 3 6 1 2 3 5 710 30 2015 ‘16 Latest Traded High Low
2015 Albany, NY 518-436-9043 month(s) years Treasury bill auction
maturity 4 weeks 0.295 0.250 0.295 0.000 DTCC GCF Repo Index
Yield/Rate (%) 52-Week Range (%) 3-yr chg
Interest rate Last (l)Week ago Low 0 2 4 6 8 High (pct pts) Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group 13 weeks 0.305 0.255 0.305 0.000 Treasury 0.533 91.100 0.639 0.059
26 weeks 0.415 0.370 0.585 0.065 MBS 0.559 119.260 0.705 0.075
Federal-funds rate target 0.25-0.5 0.25-0.5 0.00 l 0.50 0.25
Prime rate* 3.50 3.50 3.25 l 3.50 0.25
Corporate Borrowing Rates and Yields Secondary market
Open Implied
Settle Change Interest Rate
Libor, 3-month 0.61 0.62 0.25 l 0.62 0.31 Spread +/- Treasurys, Fannie Mae
Yield (%) in basis pts, 52-wk Range Total Return DTCC GCF Repo Index Futures
Money market, annual yield 0.27 0.27 0.24 l 0.42 -0.23 Bond total return index Last Wk ago Last Low High 52-wk 3-yr 30-year mortgage yields Treasury Jan 99.504 -0.001 6962 0.496
Five-year CD, annual yield 1.30 1.33 1.30 l 1.53 -0.02 30 days 3.252 3.355 3.750 3.052 Treasury Feb 99.525 0.000 7029 0.475
10-yr Treasury, Ryan ALM 1.928 2.052 -0.26 3.03 60 days 3.284 3.386 3.788 3.105 Treasury Mar 99.470 -0.005 4483 0.530
30-year mortgage, fixed† 3.73 3.75 3.72 l 4.22 -0.03
DJ Corporate 3.350 3.414 -2.56 2.41
15-year mortgage, fixed† 2.97 3.00 2.94 l 3.42 -0.11 Notes on data:
Aggregate, Barclays Capital 2.340 2.440 63 42 65 0.17 2.15
Jumbo mortgages, $417,000-plus† 4.36 4.36 4.00 l 4.97 0.15 U.S. prime rate is effective December 17, 2015. Discount rate is effective December 17, 2015. U.S.
High Yield 100, Merrill Lynch 7.986 8.254 656 374 721 -6.203 0.506
Five-year adj mortgage (ARM)† 3.22 3.24 3.14 l 4.00 0.23 prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks;
Fixed-Rate MBS, Barclays 2.480 2.600 22 13 36 2.17 2.66 Other prime rates aren’t directly comparable; lending practices vary widely by location; DTCC GCF
New-car loan, 48-month 3.22 3.19 2.71 l 3.33 0.66 Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable
Muni Master, Merrill 1.569 1.612 -1 -10 7 2.399 2.949 CUSIPs. Value traded is in billions of U.S. dollars. Futures on the DTCC GCF Repo Index are traded on
HELOC, $30,000 5.01 4.98 4.24 l 5.01 0.40
EMBI Global, J.P. Morgan 6.825 6.972 494 359 519 0.682 0.041 NYSE Liffe US.
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest
banks.† Excludes closing costs. Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information;
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch General Electric Capital Corp.; Tullett Prebon Information, Ltd.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, February 1, 2016 | C5

CLOSED-END FUNDS
wsj.com/funds
Listed are the 300 largest closed-end funds as 52 wk 52 wk 52 wk Prem12 Mo Prem12 Mo
measured by assets. Prem Ttl Prem Ttl Prem Ttl Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld
Closed-end funds sell a limited number of shares and Fund (SYM) NAV Close /Disc Ret Fund (SYM) NAV Close /Disc Ret Fund (SYM) NAV Close /Disc Ret
invest the proceeds in securities. Unlike open-end Putnam Premier Income Tr PPT 5.23 4.73 -9.6 6.3 Single State Muni Bond
funds, closed-ends generally do not buy their shares Tri-Continental TY 22.19 18.69 -15.8 -6.8 Eaton Vance BuyWrite Opp ETV 13.74 14.30 +4.1 10.2 Swiss Helvetia Fund SWZ 11.44 9.93 -13.2 -4.2 Wells Fargo Multi-Sector ERC 12.89 10.96 -15.0 10.2 BlackRock CA Municipal Tr BFZ 16.06 15.94 -0.7 5.4
back from investors who wish to cash in their holdings.
Instead, fund shares trade on a stock exchange. Zweig Fund ZF 13.69 11.99 -12.4 -13.5 Eaton Vance Tax-Mng Div ETY 11.30 10.57 -6.5 5.5 Templeton Dragon TDF 18.17 15.81 -13.0 -7.6 World Income Funds BlkRk MuniHldgs CA Qlty MUC 16.10 15.05 -6.5 5.4
a-The NAV and market price are ex dividend. b-The Specialized Equity Funds EatonVanceTax-MngdOpp ETW 10.89 10.32 -5.2 0.1 Voya Infr Indls & Matls IDE 13.59 11.57 -14.9 -14.7 Abeerden Asia-Pacific FAX 5.42 4.46 -17.7 6.4 Blkrck MunHl NJ Qlty MUJ 16.07 14.49 -9.8 6.2
NAV is fully diluted. c-NAV is as of Thursday’s close. d-
NAV is as of Wednesday’s close. e-NAV assumes rights Adams Natural Rscs Fd PEO 19.76 16.66 -15.7 -24.0 EtnVncTxMngGlDvEqInc EXG 9.15 8.15 -10.9 -1.6 Wells Fargo Gl Div Opp EOD 6.72 5.78 -14.0 -14.2 Etn Vnc Short Dur Fd EVG NA 13.04 NA 8.0 BlRk MuHldg NY Qlty MHN 15.21 14.62 -3.9 5.6
offering is fully subscribed. f-Rights offering in process. AllnzGI NFJ Div Interest NFJ 13.59 11.50 -15.4 -18.7 Fiduciary/Clymr Opp Fd FMO 11.88 11.21 -5.6 -49.2 Prem12 Mo Legg Mason BW Glbl Incm BWG 13.30 10.93 -17.8 16.4 BlkRk MuniYld CA Fd MYC 16.56 16.12 -2.7 5.5
g-Rights offering announced. h-Lipper data has been
adjusted for rights offering. j-Rights offering has
AlpnGlblPrProp AWP 6.33 5.10 -19.4 -15.1 FT Energy Inc & Growth Fd FEN 21.61 20.85 -3.5 -35.2 Fund (SYM) NAV Close /Disc Yld MS EmMktDomDebt EDD 8.13 6.67 -18.0 12.6 BlkRk MuniYld CA Quality MCA 16.36 15.76 -3.7 5.6
expired, but Lipper data not yet adjusted. l-NAV as of BlkRk Enh Cap Inco CII 14.08 12.93 -8.2 -0.7 FstTrEnhEqtIncFd FFA 14.15 12.17 -14.0 -8.1 U.S. Mortgage Bond Funds PIMCO Dynamic Credit Incm PCI NA 17.48 NA 11.8 BlkRk MuniYld MI Qlty MIY 15.85 14.20 -10.4 6.1
previous day. o-Tender offer in process. v-NAV is BlkRk Engy Res Tr BGR 13.51 12.19 -9.8 -38.0 First Tr Engy Infr Fd FIF 16.12 13.97 -13.3 -31.7 BlRk Muyld NY Qlty MYN 14.58 13.63 -6.5 5.6
converted at the commercial Rand rate. w-Convertible BlackRock Income Trust BKT 7.01 6.47 -7.7 5.8 PIMCODynamicIncomeFund PDI NA 26.48 NA 14.5
Note-NAV (not market) conversion value. y-NAV and BlackRock Enh Eq Div Tr BDJ 8.27 7.25 -12.3 -2.8 First Tr MLP & Engy Incm FEI 13.07 11.48 -12.2 -40.4 Brkfld Mortgage Opp Incm BOI 16.60 14.65 -11.7 10.3 PIMCO Income Opportunity PKO NA 20.28 NA 10.5 Eaton Vance CA Mun Bd EVM 13.02 12.61 -3.1 5.6
market price are in Canadian dollars. NA signifies that Blackrock Global Trust BOE 13.12 11.43 -12.9 -5.7 Gabelli Hlthcr & Well GRX 11.07 9.23 -16.6 -8.1 Brookfield TR Fund HTR 23.06 NA 10.3 PIMCO Strat Income Fund RCS NA 8.61 NA 11.1 Invesco CA Value Mun Incm VCV 13.99 13.36 -4.5 5.9
the information is not available or not applicable. NS
signifies fund not in existence of entire period. BlkRk Health Sci BME 32.39 35.51 +9.6 1.4 Gabelli Utility Tr GUT 5.22 6.00 +14.9 -8.8 Nuveen Mtg Oppy Term Fd JLS 24.77 22.75 -8.2 6.6 Templeton Emerging TEI 11.27 9.50 -15.7 8.0 Invesco PA Value Mun Incm VPV 14.59 13.07 -10.4 6.0
12 month yield is computed by dividing income BlkRk Intl Grwth&Inco BGY 6.45 5.75 -10.9 -7.8 GAMCOGlblGoldNatRscs&Inc GGN 5.14 4.31 -16.1 -33.4 Investment Grade Bond Funds Templeton Global GIM 7.17 6.26 -12.7 4.7 Invesco Inv Grade NY Muni VTN 15.35 14.83 -3.4 5.6
dividends paid (during the previous twelve months for
periods ending at month-end or during the previous BlackRck Rscs Comm Str Tr BCX 7.68 6.41 -16.5 -27.3 GoldmanSachsMLPIncOpp GMZ 7.23 NA -55.3 AllianceBrnstn IncoFd ACG 7.90 7.72 -2.3 6.0 Wstrn Asset Emerg Mkts ESD 16.06 13.21 -17.7 9.5 Nuveen California AMT NKX 16.22 15.58 -3.9 5.6
fifty-two weeks for periods ending at any time other BlackRock Science & Tech BST 18.28 15.93 -12.9 -5.4 Goldman Sachs MLPEnergy GER 5.20 NA -60.9 Blackrock Core Bond Tr BHK 13.93 12.77 -8.3 7.0 Wstrn Asset Emerg Mkt II EMD 11.53 9.55 -17.2 8.8 Nuveen CA Div Fnd NAC 16.12 15.80 -2.0 6.0
than month-end) by the latest month-end market price
adjusted for capital gains distributions. BlackRock Utility & Infr BUI 19.27 16.84 -12.6 -11.3 John Hancock Finl Opps Fd BTO 23.29 23.06 -1.0 13.6 BlkRk Credit Alloc Incm BTZ 13.62 12.25 -10.1 7.8 Wstrn Asset Gl Def Opp Fd GDO 17.60 15.77 -10.4 8.6 NuveenCA 3 NZH 14.96 14.34 -4.1 5.7
Source: Lipper CBREClarionGlblRlEstIncm IGR 8.61 7.15 -17.0 -17.4 KayneAndersonEngyTRFd KYE 7.56 NA -64.9 John Hancock Income Secs JHS 14.56 13.39 -8.0 6.5 National Muni Bond Funds Nuveen CA Muni Value NCA 10.60 10.86 +2.5 4.3
Friday, January 29, 2016 Central Fund of Canada CEF 11.66 10.73 -8.0 -18.8 Kayne Anderson MLP Invt KYN 15.35 NA -50.7 MFS Inc Tr MIN 4.95 4.55 -8.1 10.0 AllianceBrnstn NtlMun AFB 15.41 14.08 -8.6 5.8 NuveenMDPremiumIncome NMY 14.95 12.82 -14.2 5.2
52 wk Central GoldTrust GTU NA NA NA Kayne Andrsn Midstr Engy KMF 10.26 NA -61.1 WstAstClymr InfLnkd Fd WIW 12.23 10.39 -15.0 3.5 Blackrock Invest BKN 16.46 15.64 -5.0 5.9 Nuveen MI Quality Income NUM 15.99 13.72 -14.2 5.7
Prem Ttl ClearBridge Amer Engy CBA 7.01 6.76 -3.6 -54.3 Macquarie Glbl Infrstrctr MGU 22.31 18.19 -18.5 -22.5 WstAssetClymr InflLnk Sec WIA 12.51 10.57 -15.5 3.3 BlackRock Municipal Trust BFK 15.01 14.90 -0.7 6.1 Nuveen NJ Div NXJ 15.94 13.74 -13.8 5.5
Fund (SYM) NAV Close /Disc Ret ClearBridge Engy MLP Fd CEM 13.33 12.63 -5.3 NeubergerBermanMLPIncm NML 6.46 7.17 +11.0 -57.1 NuvAMTFreeMuniIncm NRK 14.72 13.17 -10.5 5.4
-46.6 Loan Participation Funds BlackRockMuni BLE 15.64 15.42 -1.4 6.1
General Equity Funds Clearbridge Engy MLP Opp EMO 10.83 10.35 -4.5 -48.3 Neubrgr Brm Rl Est Sec Fd NRO 5.37 4.70 -12.5 -9.0 Apollo Sr Fltg Rate Fd AFT NA 14.45 NA 7.7 BlackRockMuni Tr BYM 15.70 14.80 -5.7 5.7 Nuveen NY Div Fnd NAN 15.58 14.19 -8.9 5.5
Adams Divers Equity Fd ADX 14.22 11.93 -16.1 -4.5 Clearbridge Engy MLP TR CTR 10.26 9.75 -5.0 -48.2 Nuveen Dow 30 Dynamic DIAX 14.98 13.24 -11.6 -6.4 BlackRock FR Incm Strat FRA 14.13 12.54 -11.3 6.1 Blackrock Mun Target Term BTT 24.14 21.94 -9.1 4.4 Nuveen Ohio Qual Income NUO 17.24 15.49 -10.2 5.5
Boulder Grwth & Inco BIF 7.03 NA -16.6 Cohen & Steers Infra UTF 22.08 18.18 -17.7 -13.9 NuvDivInco JDD 12.00 10.23 -14.8 -6.3 Blkrk FltRt InTr BGT 13.64 12.15 -10.9 6.0 BlkRk MuniAssets Fd MUA 14.25 14.52 +1.9 5.2 Nuveen Pa Investment Qual NQP 15.92 14.07 -11.6 6.0
Central Securities CET 22.65 17.79 -21.5 -5.8 C&S MLP Incm & Engy Opp MIE 8.37 7.79 -6.9 -54.8 Nuveen Engy MLP Fd JMF 9.41 8.99 -4.5 -45.5 BlackstoneGSO Strat Cred BGB NA 12.90 NA 9.4 BlkRk Munienhanced MEN 12.41 12.38 -0.2 6.1 NuveenVAPremiumIncome NPV 14.81 14.21 -4.1 5.2
CohSteer Opprtnty Fd FOF 11.79 10.48 -11.1 -12.1 Cohen & Steers Qual Inc RQI 13.07 11.39 -12.9 -2.7 NuvNASDAQ100DynOver QQQX 18.64 NA NA NA Blackstone GSO Sr Float BSL 15.53 14.10 -9.2 7.2 BlkRk MuniHldgs Inv MFL 15.57 14.93 -4.1 5.9 PIMCO California Muni PCQ NA 15.94 NA 5.8
Cornerstone Strategic CLM 13.94 13.64 -2.2 -12.6 CohnStrsPfdInco RNP 21.17 17.65 -16.6 -2.7 Nuveen Real Estate Fd JRS 11.26 9.92 -11.9 -9.1 Eaton Vance FR Incm Tr EFT 13.77 12.17 -11.6 7.1 BlkRk MuniHldgs Qlty II MUE 14.79 13.75 -7.0 6.0 PIMCO California Mun II PCK NA 10.08 NA 6.4
EtnVnc TaxAdvDiv EVT 20.29 18.26 -10.0 -2.5 Cohen & Steers TR RFI 13.20 11.90 -9.9 -4.9 NuveenS&P500Buy-Write BXMX 12.82 12.20 -4.8 3.0 EatonVnc SrFltRate EFR 13.37 12.06 -9.8 7.5 BlkRk MuniVest MVF 10.21 10.34 +1.3 6.2 52 wk
Gabelli Dividend & Incm GDV 19.64 16.71 -14.9 -13.6 CLSeligmn Prem Tech Gr Fd STK 15.90 16.46 +3.5 0.9 Reaves Utility Fund UTG 27.16 NA -12.5 1st Tr Sr Fltg Rt Fd II FCT 13.42 12.00 -10.6 BlkRk MuniVest II MVT 16.07 16.65 +3.6 6.0 Prem Ttl
7.1 Fund (SYM) NAV Close /Disc Ret
Gabelli Equity Trust GAB 5.40 4.87 -9.8 -13.9 Divers Real Asset Incm Fd DRA 17.33 14.95 -13.7 -7.3 Tekla Hlthcr Investors HQH 25.21 23.83 -5.5 -21.2 Invesco Credit Opps Fund VTA 11.77 10.17 -13.6 8.5 BlkRk MuniYield MYD 15.42 15.22 -1.3 6.2
Genl American Investors GAM 34.77 28.56 -17.9 -11.3 Duff & Phelps DNP 8.36 9.35 +11.9 -3.0 Tekla Healthcare Opps Fd THQ 17.16 15.76 -8.2 -13.1 Invesco Senior Income Tr VVR 4.38 3.85 -12.1 7.9 BlkRk MuniYld Quality MQY 16.33 16.02 -1.9 6.0 General Equity Funds
HnckJohn TxAdv HTD 23.15 20.72 -10.5 -2.0 Duff&PhelpsGblUtilIncFd DPG 16.71 13.91 -16.8 -27.3 Tekla Life Sciences HQL 19.11 18.16 -5.0 -25.1 BlkRk MuniYld Qlty II MQT 14.31 13.65 -4.6 Little Harbor MS Comp NA NA NA N
Nuveen Credit Strt Inc Fd JQC 8.77 7.51 -14.4 7.5 6.2
Liberty All-Star Equity USA 5.60 4.73 Tekla World Hlthcr Fd THW 16.21 13.60 -16.1 NS Specialized Equity Funds
-15.5 -6.3 Eaton Vance Eqty Inco Fd EOI 13.31 12.24 -8.0 -0.2 NuvFloatRteInco Fd JFR NA 9.84 NA 7.0 BlRkMunyldQltyIII MYI 15.08 14.94 -0.9 6.0
Tortoise Energy TYG 24.30 24.34 +0.2 -39.3 Corsair Opportunity:A 8.87 NA NA NS
Royce Micro-Cap RMT 7.96 6.58 -17.3 -17.0 Eaton Vance Eqty Inco II EOS 13.29 12.30 -7.4 -0.4 Nuv Float Rte Opp Fd JRO 10.56 9.42 -10.8 7.7 Deutsche Mun Income Tr KTF 13.57 13.88 +2.3 6.2 Corsair Opportunity:I 8.87 NA NA -10.7
Royce Value Trust RVT 12.71 10.47 -17.6 -16.6 EtnVncRskMngd ETJ 10.75 9.75 -9.3 3.2 Tortoise MLP Fund NTG 16.04 15.08 -6.0 -37.3 Nuveen Senior Income Fund NSL NA 5.57 NA 7.2 Dreyfus Mun Bd Infr Fd DMB 14.08 12.75 -9.4 6.0 Griffin Inst Access RE:C NA NA NA NS
Source Capital SOR 71.31 64.31 -9.8 1.4 Etn Vnc Tax Mgd Buy-Write ETB 14.68 15.34 +4.5 7.9 Voya Gl Equity Div IGD 7.60 6.55 -13.8 -9.5 Pioneer Floating Rate Tr PHD 11.94 10.51 -12.0 6.5 Dreyfus Strat Muni Bond DSM 8.72 8.29 -4.9 6.1 Griffin Inst Access RE:I NA NA NA NS
Income Preferred Stock Funds Voya Prime Rate Trust PPR 5.44 4.81 -11.6 6.6 Dreyfus Strategic Munis LEO 8.97 8.67 -3.3 6.0 Resource RE Div Inc:A 9.30 NA NA -5.8
Calamos Strat Fd CSQ 10.40 8.89 -14.5 -11.9 High Yield Bond Funds Eaton Vance Mun Bd Fd EIM 14.27 13.17 -7.7 5.9 Resource RE Div Inc:C 9.29 NA NA -6.6
New to the Market Cohen & Steers Dur Pfd LDP 24.64 22.85 -7.3 4.3 AllianceBernstein Glbl AWF 12.15 10.79 -11.2 10.2 Eaton Vance Mun Income EVN 13.46 14.02 +4.2 6.4 Resource RE Div Inc:D 9.44 NA NA NS
Cohen & Strs Sel Prf Inco PSF 26.30 25.44 -3.3 3.5 Babson Gl Sh Dur Hi Yd BGH 17.61 15.53 -11.8 12.0 EV National Municipal Opp EOT 22.93 21.74 -5.2 4.8 Resource RE Div Inc:I 9.80 NA NA -6.1
FT Interm Duration Pfd FPF 23.01 21.83 -5.1 5.8 BlackRock Corp Hi Yd Fd HYT 10.62 9.61 -9.5 10.1 Invesco Adv Mun Incm II VKI 12.75 12.08 -5.3 6.6 Resource RE Div Inc:T 9.28 NA NA NS
Public and Private Borrowing Flaherty & Crumrine Dyn DFP 23.73 23.02 -3.0 5.5 BlkRk Debt Strat Fd DSU 3.80 3.31 -12.9 8.0 Invesco Mun Incm Opps Tr OIA 7.67 7.45 -2.9 5.4 Resource RE Div Inc:U 9.30 NA NA NS
Flaherty & Crumrine Pfd FFC 18.51 19.91 +7.6 4.1 BlackRockDurInco Tr BLW 15.96 14.05 -12.0 8.2 Invesco Mun Opportunity VMO 14.24 13.44 -5.6 6.3 Resource RE Div Inc:W 9.44 NA NA -6.3
Treasurys John Hancock Pfd Income HPI 21.63 20.30 -6.1 5.9 Credit Suisse High Yld DHY 2.30 2.12 -7.8 12.6 Invesco Municipal Trust VKQ 14.17 13.04 -8.0 6.3 SharesPost 100 25.19 NA NA -0.1
John Hancock Pfd II HPF 21.36 19.96 -6.6 2.3 DoubleLine Incm Solutions DSL NA 15.72 NA 11.6 Invesco Qlty Mun Inco IQI 14.11 12.97 -8.1 6.0 Versus Cap MMgr RE Inc:F 26.67 NA NA 6.7
Monday, February 1 Tuesday, February 2 Versus Cap MMgr RE Inc:I 26.72 NA NA 7.1
John Hancock Pfd Inc III HPS 18.90 18.04 -4.6 6.0 Dreyfus Hi Yld Fd DHF NA 2.90 NA 11.3 Invesco Inv Grade Muni VGM 14.68 13.66 -6.9 6.6
Auction of 13-week bills; Auction of 52-week bills; JHancock Pr Div PDT 15.07 14.00 -7.1 5.5 Income Preferred Stock Funds
Fst Tr Hi Inc Lg/Shrt Fd FSD 16.14 13.73 -14.9 8.8 Invesco Value Mun Incm Tr IIM 16.80 16.94 +0.8 5.2
announced on Jan.28; settles on Feb 4 announced on Jan.28; settles on Feb.4 LMP Cap & Inco Fd SCD 13.70 11.34 -17.2 -26.5 CLA Strategic Alloc XSAFX NA NA NA NS
Guggenheim Strat Opps Fd GOF 17.00 16.13 -5.1 12.9 MainStay DefinedTerm MMD 19.83 19.00 -4.2 6.2
Nuveen Preferred & Incm JPI 23.96 23.64 -1.3 Convertible Sec's. Funds
10.9 Ivy High Income Opps Fund IVH 13.66 11.55 -15.4 12.9 MFS Munl Inco MFM 7.48 6.85 -8.4 5.7
Auction of 26-week bills; Auction of four-week bills; Calmos Dyn Conv and Inc CCD 18.78 16.35 -12.9 NS
Nuveen Preferred Inc Opp JPC 9.97 9.34 -6.3 6.8 NexPoint Credit Strat Fd NHF 21.77 18.12 -16.8 32.2 NuvAMTFreeMuniIncm NEA 15.27 13.83 -9.4 5.6 World Equity Funds
announced on Jan.28; settles on Feb 4 announced on Feb.1; settles on Feb.4 Nuveen Quality pf JTP 8.85 8.39 -5.2 5.9 Nuveen Gl Hi Incm Fd JGH 15.10 12.64 -16.3 11.4 NuvDivAdvMuniIncm NVG 16.48 14.72 -10.7 5.1 BMO LGM Front ME 7.65 NA NA -13.9
Nuveen Fd2 JPS 9.42 9.02 -4.2 4.0 Nuveen High Incm Dec18 JHA 9.42 9.96 +5.7 NS Nuveen Div Fnd NAD 15.89 14.59 -8.2 5.9 Prem12 Mo
TCW Strategic Income Fund TSI 5.22 NA -0.4 Pioneer High Income Trust PHT 9.08 9.39 +3.4 14.5 Nuveen Div Fnd 2 NXZ 16.23 14.39 -11.3 5.7
Public and Municipal Finance Zweig Total Return ZTR 13.00 11.41 -12.2 -9.8 Prud Gl Shrt Dur Hi Yd GHY 15.94 13.99 -12.2 10.0 Nuveen Div Adv NZF 16.23 14.54 -10.4 5.4
Fund (SYM) NAV Close /Disc Yld
Deals of $ 150 million or more expected this week U.S. Mortgage Bond Funds
Convertible Sec's. Funds Prudentl Sh Dur Hi Yd Fd ISD 16.23 14.54 -10.4 9.6 Nuveen Enhncd Mun Val Fd NEV 15.72 15.85 +0.8 6.1 Vertical Capital Income NA NA NA 3.5
Final Total Rating Bookrunner/ AdvntClymrFd AVK 14.89 12.37 -16.9 -19.2 Wells Fargo Incm Opps Fd EAD 8.03 7.08 -11.8 10.9 Nuveen Intermed Dur Mun NID 13.91 13.02 -6.4 5.3 Loan Participation Funds
Sale maturity Issuer ($mil.) Fitch Moody’s S&P Bond Counsel(s) AllianzGI Conv & Incm NCV 5.71 4.96 -13.1 -36.6 Wstrn Asset Glbl Hi Inco EHI 9.83 8.29 -15.7 13.2 Nuveen Invest Qual Muni NQM 16.37 15.73 -3.9 6.2 504 Fund 10.08 NA NA 3.0
AllianzGI Conv & Incm II NCZ 5.07 4.47 -11.8 -39.6 Wstrn Asset High Inco II HIX 6.65 6.01 -9.6 13.1 NuveenMuniAdvantageFd NMA 15.72 13.99 -11.0 5.7 Invesco Sr Loan A 5.91 NA NA 6.1
Feb. 1 July 1, 2041 King Co- 279.1 N.R. Aa2 AA+ Preliminary/ AllianzGI Equity & Conv NIE 19.90 16.97 -14.7 -8.1 Wstrn Asset Opp Fd HIO 5.03 4.46 -11.3 9.0 NuveenMuniIncoOpp Fd NMZ 13.73 13.87 +1.0 6.5 Invesco Sr Loan B 5.91 NA NA 6.1
Washington Foster Pepper Calamos Conv Hi Inco Fd CHY 10.70 9.49 -11.3 -25.2 West Asst HY Def Opp Fd HYI 14.95 13.42 -10.2 9.3 Nuveen Muni Mkt Opp NMO 15.64 13.95 -10.8 5.6 Invesco Sr Loan C 5.93 NA NA 5.3
Calamos CHI 10.11 8.99 -11.1 -22.6 Other Domestic Taxable Bond Funds Nuveen Mun Opportunity Fd NIO 15.94 14.62 -8.3 6.1 Invesco Sr Loan IB 5.92 NA NA 6.4
World Equity Funds Ares Dynamic Credit Alloc ARDC NA 12.64 NA 10.5 Nuveen Muni Value Fund NUV 10.38 10.28 -1.0 3.9 Invesco Sr Loan IC 5.92 NA NA 6.2
Feb. 4 July 1, 2037 Metro Atlanta 247.7 N.R. Aa2 N.R. Preliminary/
Alpine Tot Dyn Div AOD 8.64 7.12 -17.6 -8.5 Babson Cap Corp Inv MCI NA 16.44 NA 6.9 Nuveen Performance Plus NPP 16.59 15.25 -8.1 5.9 Invesco Sr Loan Y 5.92 NA NA 6.4
Rapid Transit Holland &
Calamos Glbl Dyn Inc CHW 7.75 6.51 -16.0 -16.0 BlackRock Multi-Sector IT BIT 17.86 15.40 -13.8 9.4 Nuveen Premium Inco Muni NPI 15.76 14.25 -9.6 5.8 Voya Senior Income:A 12.03 NA NA 5.6
Auth Knight Cdn Genl Inv CGI 22.80 16.81 -26.3 -7.2 Voya Senior Income:B 11.97 NA NA 5.1
BlackRock Taxable Mun Bd BBN 22.79 22.49 -1.3 7.5 Nuveen Prem Inco Muni 2 NPM 15.81 14.45 -8.6 5.9
China Fund CHN 15.45 13.51 -12.6 -20.7 Doubleline Oppor Credit DBL NA 25.11 NA 10.0 Nuveen Prem Inco Muni 4 NPT 14.69 13.68 -6.9 6.1 Voya Senior Income:C 12.00 NA NA 5.1
Feb. 5 prelim. Hawaii Co- 235.0 N.R. N.R. N.R. BoA Merrill/— Clough Glbl Eqty Fd GLQ 11.00 NA -13.8 Duff & Phelps Utl & Cp Bd DUC 10.10 9.24 -8.5 6.5 Nuveen Premier Muni Inc NPF 15.49 13.89 -10.3 6.0 Voya Senior Income:I 11.99 NA NA 5.9
Hawaii Clough Global Opp Fd GLO 9.40 NA -12.5 EtnVncLtdFd EVV NA 12.33 NA 9.5 Nuveen Quality Income NQU 16.13 14.40 -10.7 5.8 Voya Senior Income:W 12.03 NA NA 5.9
EtnVncTxAdvGblDiv ETG 15.93 14.13 -11.3 -3.8 Nuveen Quality Muni Fund NQI 15.51 13.84 -10.8 High Yield Bond Funds
Source:Thomson Reuters/Ipreo Franklin Ltd Duration IT FTF NA 10.72 NA 6.9 4.9
EatonVance TxAdv Opport ETO 21.65 19.76 -8.7 -8.4 WA Middle Mkt Inc WMF661.37 NA NA 13.1
GuggenhBondMnegDurTr GBAB 22.90 22.60 -1.3 8.2 Nuveen Select Quality NQS 16.02 14.20 -11.4 5.5
Other Domestic Taxable Bond Funds
Corporate Debt First Trust Dynamic Eur FDEU 18.07 15.59 -13.7 NS KKR Income Opps Fund KIO 15.18 13.15 -13.4 10.8 Nuveen Sel TF NXQ 14.83 13.87 -6.5 3.9
Capstone Church Capital 16.98 NA NA 1.7
Gabelli Glbl Multimedia GGT 7.94 6.92 -12.8 -19.1 MFS Charter MCR 8.82 7.81 -11.5 9.2 PIMCO MuniFd PMF NA 15.45 NA 6.3
Expected this week GDL Fund GDL 11.88 9.98 -16.0 4.8 GL Beyond Income 4.92 NA NA NE
MFS Multimkt MMT 6.34 5.54 -12.6 9.0 Pimco Muni Inc II PML NA 12.94 NA 6.2 Palmer Square Opp Income NA NA NA 5.4
Expected Years to Deal value Rating India Fund IFN 24.29 21.56 -11.2 -19.6 PIMCO Muni Inc III PMX NA 12.01 NA
Nuveen Build Am Bd Fd NBB 21.72 20.75 -4.5 6.7 6.4 Resource Credit Inc:A 9.30 NA NA NS
wk ending Issuer/Business maturity ($ mil.) Fitch Moody’s S&P Bookrunner(s) Japan Sml Cap JOF 10.77 9.54 -11.4 14.2 PIMCO Corporate & Incm PTY NA 13.10 NA 11.9 Pioneer Mun Hi Inc Adv Tr MAV 12.56 13.87 +10.4 7.6 Resource Credit Inc:C 9.28 NA NA NS
Feb. 4 Vizient Inc
$400.0 - - - Barclays Mexico Fund MXF 18.28 16.13 -11.8 -13.1 PIMCO Corporate & Incm PCN NA 13.48 NA 10.2 Pioneer Mun Hi Incm Tr MHI 13.45 13.28 -1.3 6.8 Resource Credit Inc:D 9.28 NA NA NS
Nationwidenetworkofcommunity- HY MS China a Shr Fd CAF 19.61 15.89 -19.0 -13.0 PIMCO HiInco PHK NA 7.84 NA 16.9 Putnam Tr PMM 8.08 7.43 -8.0 5.9
owned healthcare organizations.
Resource Credit Inc:I 9.30 NA NA NS
MS India Invest IIF 27.37 23.57 -13.9 -16.6 PIMCO Inco Str Fd PFL NA 9.29 NA 11.0 PutnamMuniOpportunities PMO 13.58 12.50 -8.0 5.8 Resource Credit Inc:T 9.28 NA NA NS
HY- High-yield index Source: Dealogic New Germany Fund GF 14.94 13.23 -11.4 2.0 PIMCO Incm Strategy Fd II PFN NA 8.41 NA 11.7 Wstrn Asset Mngd Muni MMU 14.50 14.70 +1.4 5.5 Resource Credit Inc:U 9.30 NA NA NS
Putnam Mas Inco PIM 4.76 4.32 -9.2 6.8 WesternAssetMunTrFund MTT 22.68 24.30 +7.1 4.3 Resource Credit Inc:W 9.28 NA NA NS

Insider-Trading Spotlight
Trading by ‘insiders’ of a corporation, such as a company’s CEO, vice president or director, potentially conveys
new information about the prospects of a company. Insiders are required to report large trades to the SEC
within two business days. Here’s a look at the biggest individual trades by insiders, based on data received by
Thomson Financial on January 29, and year-to-date stock performance of the company
KEY: B: beneficial owner of more than 10% of a security class CB: chairman CEO: chief executive officer CFO: chief financial officer
TENDER OFFER FOR
CO: chief operating officer D: director DO: director and beneficial owner GC: general counsel H: officer, director and beneficial owner
I: indirect transaction filed through a trust, insider spouse, minor child or other O: officer OD: officer and director P: president UT:
unknown VP: vice president Excludes pure options transactions
SHARES OF AFP HABITAT S.A.
Deadline: February 26, 2016 at 5:30 pm
Biggest weekly individual trades (Santiago, Chile time)
Based on reports filed with regulators this past week
No. of shrs in Price range ($) $ Value
Date(s) Company Symbol Insider Title trans (000s) in transaction (000s) Close ($) Ytd (%)
by Inversiones Previsionales Chile SpA,
a subsidiary of Inversiones La Construcción S.A. (ILC)
Buyers
Jan. 20-22 Wynn Resorts WYNN S. Wynn HI 573 53.21-59.19 31,864 67.34 -2.7
Jan. 25 Kinder Morgan KMI M. Morgan DI 180 14.20 2,556 16.45 10.3
Jan. 20 PNC Financial Services Group PNC A. Feldstein D 24* 84.68 1,999 86.65 -9.1
Jan. 25 General Electric GE A. Dimitrief OI 65 28.04 1,830 29.10 -6.6
Jan. 20 XenoPort XNPT J. Flynn BI 346 4.09 1,418 4.97 -9.5
Jan. 26-28 Biglari Holdings BH S. Biglari CEOI 4 361.33-374.07 1,365 378.18 16.1
Jan. 21-25 S. Biglari CEOI 3 349.27-354.76 1,143
Jan. 22 Citigroup C M. Corbat CEO 25 41.05 1,026 42.58 -17.7
Jan. 22 M. O'Neill DI 25 41.01 1,025
Jan. 26 American Express AXP R. Williams D 18 55.51 1,001 53.50 -23.1
Jan. 25 Raymond James Financial RJF F. Godbold OD 22 43.57 958 43.81 -24.4
Jan. 26 Legg Mason LM J. Sullivan CEO 25 29.81 745 30.62 -21.9
Jan. 26 P. Nachtwey CFO 20 29.92 598
Jan. 25-26 Sears Holdings SHLD B. Berkowitz BI 40 16.51-18.19 670 16.95 -17.6
Jan. 20-22 IMPAC Mortgage Holdings IMH R. Pickup BI 40 13.89-14.48 557 13.20 -26.7
Jan. 20 Tuesday Morning TUES S. Becker CEOI 87 5.06 439 5.57 -14.3
Tender offer for up to 131,015,503 shares of AFP HABITAT S.A.,
Jan. 26 Simmons First National SFNC G. Makris CEO 10 41.07 411 44.31 -13.7
Jan. 22 Texas Capital Bancshares TCBI C. Cargill CEO 10 33.52 335 35.70 -27.8
approximately equivalent to 13.10% of its total outstanding
shares, in connection with an association between ILC and
Sellers Prudential International Investments Corporation.
Jan. 22-26 Darden Restaurants DRI J. Smith DI 700 61.82-62.20 43,400 63.06 -0.9
Jan. 26 Adobe Systems ADBE S. Narayen CEOI 184 86.32-86.93 15,963 88.92 -5.3
Jan. 26
Jan. 25
M. Thompson
M. Garrett
O
CFO
73
53
86.84
87.90-88.81
6,339
4,727
Price per Share
Jan. 22 J. Warnock CBI 37 89.05 3,295
Jan. 26-27 Constellation Brands
Jan. 28 YRC Worldwide
STZ
YRCW
T. Mullin
M. Lasry
GC
BI
100
1,077
148.28-149.61
10.98
14,874 152.48
11,829 10.34 -27.1
7.0
CLP$899.90
Jan. 25 Costco Wholesale COST J. Sinegal D 44 151.97 6,706 151.12 -6.4 payable in Chilean Pesos, the national
Jan. 21-22 Douglas Emmett DEI D. Emmett CBI 140 27.72-28.35 3,910 29.58 -5.1
Jan. 26 McDonald's MCD D. Goare O 32 120.49 3,883 123.78 4.8 currency of Chile
Jan. 26 D. Hoffmann O 30 119.71 3,633
Jan. 25-26 Veeva Systems VEEV M. Armenante B 150* 24.03-24.81 3,662 24.10 -16.5
Jan. 19-20 Y. Sohn B 138* 23.23-25.00 3,284 The Notice of Commencement was published in the electronic newspapers
Jan. 25 PPL Corp PPL V. Staffieri O 105 33.99 3,578 35.06 2.7 El Líbero y El Mostrador on January 27, 2016. In addition, the Prospectus
Jan. 25 W. Spence CEO 64 33.99 2,186
for this tender offer is available at ILC’s website www.ilcinversiones.cl
Jan. 26 Illumina ILMN J. Flatley CEO 20 169.97-174.01 3,434 157.95 -17.7
Jan. 19-21 Etsy ETSY J. Breyer DI 474 6.41-7.07 3,207 7.76 -6.1 and on the website of the Lead Manager of the Tender Offer at www.imtrust.cl
Jan. 25-27 Salesforce.com CRM M. Benioff CEOI 38 67.45-71.04 2,608 68.06 -13.2
* Half the transactions were indirect **Two day transaction
p - Pink Sheets
TO PARTICIPATE IN THE TENDER OFFER PLEASE CONTACT:
Buying and selling by sector
Based on actual transaction dates in reports received this past week

Sector Buying Selling Sector Buying Selling

Basic Industries 418,515 615,339 Finance 14,213,917 14,046,772

Business services 73,859 7,500,317 Health care 2,197,341 16,239,677 OR YOUR REGULAR STOCK BROKER
Capital goods 0 0 Industrial 2,140,113 4,852,489
Consumer durables 0 172,484 Media 0 94,181
Email: opahabitat@imtrust.cl
Consumer nondurables 0 29,768,985 Technology 159,355 41,129,459
Phone: 600 450 1600 / +562 2450 1600
Consumer services 2,313,597 62,546,235 Transportation 0 14,374,362
Energy 285,756 4,396,042 Utilities 0 9,329,550
Address: Avenida Apoquindo 3721, 9th Floor, Las Condes, Santiago

Sources: Thomson Financial; WSJ Market Data Group

For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
C6 | Monday, February 1, 2016
Email: heard@wsj.com
Oil Poker: Why Saudi Arabia Won’t Fold
The game being played in
the global oil market today
bears more than a passing
resemblance to poker. No-
body wants to quit while
they are losing.
That is important for in-
vestors to keep in mind as
they ponder what have be-
come almost daily spikes and
drops in the price of crude.
So, too, is the role of Saudi
Arabia in the game.
It remains within Saudi
Arabia’s ability to foster at
least a partial recovery in
crude prices on its own. A
sharp rally in prices last
Thursday morning was based
on comments from Russia’s
energy minister that the Sau-
dis might get the ball rolling
on 5% output cuts. That was
quickly refuted, and oil gave
up much of the gains.
All major producers are
suffering financially at to-
day’s low prices—while oil
has bounced from its sub-
$30 nadir of January, it is
still down nearly 7% in 2016
and nearly 70% from its 2014
Electronic Arts on the Wrong Battlefront Can Yahoo Handle Its Moment of Truth?
Today’s videogame busi-
ness is about driving clicks
over disks, which poses a
problem for publishers who
come up short on the former.
An example: Electronic
Arts, whose shares took a
9% beating on Friday. That
followed an earnings report
for the fiscal third quarter
ended December that was
good by most measures. Rev-
enue adjusted for deferrals
jumped 26% year over year
to $1.8 billion. That com-
pares with a 9% drop in the
prior holiday quarter.
But the digital side of rev-
enue rose only 16%, falling
short of expectations. And
the culprit was “Star Wars
Battlefront.” EA says the
game met its shipment tar-
get of 13 million units during
Central Bank’s Move Makes Japan Bulls Happier
BY SARAH KROUSE
Some money managers who
loaded up on Japanese stocks
since the start of Abenomics
aren’t backing off their bets,
seeing the Bank of Japan’s
move Friday to lower a key in-
terest rate below zero as a
positive sign for the market.
“As an investor, the Bank of
Japan is your best friend
here,” said Peter Boardman, a
managing director at
Tradewinds Global Investors
who helps manage the Nuveen
Tradewinds International
Value Fund.
About one-quarter of the
fund’s roughly $250 million in
assets are invested in Japanese
equities, several percentage
points above the fund’s bench-
mark, the MSCI EAFE Index.
“Japan is the best house in
a very difficult neighborhood
around the world,” he said. He
said the fund would add to ex-
isting holdings “incremen-
tally.”
A rush into Japanese equi-
ties by some fund managers
over the past year, spurred by
a program of radical economic
stimulus introduced by Prime
Minister Shinzo Abe in 2013, is
being put to the test as the
country’s central bank takes
unprecedented steps to jump-
start growth.
Stocks’ reaction Friday to
the surprise move was posi-
tive: The Nikkei Stock Average
closed 2.8% higher and U.S.
benchmarks also gained more
than 2% on the day. Early
Monday, the Nikkei was up a
further 1.6%.
But some economists and
investors viewed the move as a
sign that all the efforts to date
aren’t working, raising doubts
about whether the latest mea-
sures will fare much better.
Negative interest rates are
viewed by some economists
and analysts as a drastic mea-
sure designed to spur inflation
and keep an economy from
sliding backward.
The negative-interest-rate
experiment “really does illus-
trate how dire the situation
is,” said Fred Copper, a senior
portfolio manager for the $619
million Columbia Overseas
HEARD ON THE STREET
Thicker Than Water
Oil output, millions of barrels a day*
’06 4.0
Iran
’15 2.9
5.0
U.S.
9.3
9.9
Russia
11.0
Saudi 10.4
Arabia
*September 2006 vs. third quarter 2015
Source: International Energy Agency
THE WALL STREET JOURNAL.
peak. And Saudi Arabia
hasn’t forfeited only a couple
of hundred billion dollars
and counting in forgone rev-
enue, but also market share.
That has mainly been to a
relative newcomer, U.S. shale
producers. But going forward
it may be to an old adver-
sary: Iran.
The Shiite powerhouse is
ramping up production fol-
Mobile
Loaded Subscriptions
Electronic Arts and advertising
digital revenue Expansion
content
segments Full-game
$800 million downloads
600
400
200
0 of expansion content, a
FY 2013 ’14 ’15
Note: Data for fiscal 3Q Source: the company
the quarter—three months
earlier than projected. But
the portion of the game sold
as a physical disk was higher
than anticipated, due to its
popularity as a holiday gift.
EA doesn’t disclose digital
sales for specific games but
confirmed Star Wars was
The Bank of Japan is seen in Tokyo. Japanese stocks jumped Friday after the central bank lowered a key interest rate below zero.
Value Fund, which has about
one-quarter of the fund’s as-
sets invested in Japan. “It’s so
critical that they change the
mind-set from that embedded
deflationary mind-set that
they’re actually willing to pur-
sue these policies.”
The fund’s managers have
added to stockholdings in the
country since the start of the
Abenomics stimulus program.
While they viewed Friday’s
move as positive, it did come
as a surprise, they said.
Fund managers who are
bullish on Japan say the move
announced Friday shows the
country has more tools avail-
able to support the economy
and that it could force more
FINANCIAL ANALYSIS & COMMENTARY
Union peak. But it may have
difficulty maintaining today’s
pace given a lack of invest-
ment in its aging Siberian
fields. The chief executive of
Russian oil giant Lukoil pre-
REUTERS/Bandar al-Jaloud/Saudi Royal Court
dicted that Russian output
would drop in 2016 for the
first time in several years.
And then there is the ad-
ditional wrinkle that Russia
is actively on Iran’s side in
Syria. For those reasons, not
only have occasional state-
ments from Russia about
12.2 nonexistent agreements been
something of a bluff, so too
might be the country’s will-
Saudi Arabia’s King Salman ingness to voluntarily curb
its own output.
lowing the lifting of nuclear In other words, Russia is
sanctions. And its export holding weak cards and the
surge is occurring against Saudis know it.
the backdrop of continuing That doesn’t necessarily
proxy wars in Syria and Ye- leave the game at a perma-
men. Those make it difficult nent impasse, though.
for Sunni champion Saudi The newest players at the
Arabia to take the lead with table are U.S. shale produc-
output cuts. ers. They helped the U.S. to
Russia, meanwhile, is increase output by 80% be-
pumping the most crude tween 2008 and 2014 and
ever, hitting a post-Soviet have the shortest stack of
lower than its average of be- For Yahoo, something
tween 20% to 30% of full has to give. Chief Executive
games sold as downloads. Marissa Mayer is expected
Digital content carries a to lay out a more detailed
higher profit margin for strategy for turning around
game publishers versus the company’s core business
physical games. But inves- when Yahoo reports fourth-
tors shouldn’t be too con- quarter results Tuesday.
cerned with a single game If that feels like déjà vu
below the average. Physical all over again, it is probably
game disks still drive sales because Ms. Mayer has been
struggling to define her
’16 larger contributor to EA’s strategy since she took the
digital business. Expansion job 3½ years ago. Yet, with
content was 44% of adjusted activists calling for a
digital revenues for the last change in leadership, Ya-
four quarters compared with hoo’s plan to spin off its
a 20% contribution from full- stake in Alibaba Group
game downloads. Holding abandoned and its
And with a new “Battle- shares down 34% over the
field” coming this holiday past year, the day of reckon-
season, EA should have ing may finally have arrived.
plenty more ammo in its dig- In a Jan. 6 letter to Ya-
ital clip. —Dan Gallagher hoo’s board, activist inves-
MONEY & INVESTING
company spending and weaken weight” Japanese stocks after
the yen. That, in turn, should his team pared some holdings
support exporters and poten- between October and the end
tially help tourism. of the year.
The move to negative inter- Of the 715 world stock funds
est rates “doesn’t change our tracked by research firm
stance,” said James Bristow, a Morningstar Inc., 69% have in-
London-based portfolio man- creased their exposure to
ager of the BlackRock Interna- Japan since the end of 2014.
tional Fund, in an email Friday. Those funds raised their expo-
The $553.6 million Black- sure to the country by an aver-
Rock International Fund was age of 2.5%, according to the
among international stock most recent data available.
funds that pursued Japanese Some retail investors have
equities in 2015. Many funds funneled money into funds
bet on stronger corporate that primarily invest in Japa-
earnings as Mr. Abe executed nese stocks. Assets in those
his economic-revival program funds rose more than 70% last
centered on a weaker yen. year to $6.6 billion at the end
Mr. Bristow said the fund of December, according to
was still “modestly over- Morningstar, pulling in net
* *** THE WALL STREET JOURNAL.
WSJ.com/Heard
OVERHEARD
chips at the table. Tougher competition in the
Unlike governments, there hepatitis C market is pressur-
is no OPEC of shale to coor- ing Gilead Sciences shares—
dinate output or absorb and raising the stakes for its
losses. Instead, there are fourth-quarter results.
loans to service and share- The Food and Drug Admin-
holders to placate. istration last week granted
Shale output will keep approval, as expected, for
shriveling at today’s prices Merck’s new hepatitis C
as companies slash spending treatment, Zepatier. Less ex-
and many go bust. On top of pected was Zepatier’s gross
that, tens of billions of dol- price, which Merck has set at
lars in deferred capital ex- $54,600 per course of treat-
penditure from private com- ment. That is well below the
panies on conventional oil list price of Gilead’s hepatitis
projects soon will begin to C offerings. Friday brought
affect output. more discomfort: AbbVie said
Private oil companies’ it expects $2 billion in sales
pain can help balance the of its drug Viekira this year,
market, but that will take slightly below forecasts. This
time. Russian overtures that could signal a crowded, less
include political and military lucrative hepatitis C market.
concessions might break the That would be bad for Gilead.
logjam and persuade the But those fears won’t be con-
Saudis to take the lead on firmed until they show up in
production cuts. Gilead’s results, due Tuesday.
For now, politics, if not Yet Gilead now trades at
economics, suggests the Sau- less than seven times for-
dis will remain all-in. That ward earnings. At that multi-
alone could keep a lid on an ple, pleasant surprises are
immediate oil-price recovery. easier to imagine.
—Spencer Jakab
tor Starboard Value threat- dropped its plan to spin off
ened to pursue a proxy fight the Alibaba stake due to tax
to replace a majority of di- concerns, Yahoo is working
rectors if the company on a plan to spin off its core
didn’t embrace a major stra- business and its stake in Ya-
tegic shift under new lead- hoo Japan instead. That
ership or pursue a sale of process is expected to take a
the core business. To have year or more, and investors
any hope of avoiding that, rightly are tired of waiting.
Ms. Mayer needs to present If Tuesday’s earnings re-
a massive overhaul of Ya- port and accompanying
hoo’s cost structure, includ- commentary don’t deliver
ing layoffs, the sale or exit the news Wall Street wants
of unprofitable businesses to hear, Ms. Mayer could
and an overhaul of the com- soon be out of a job. That
pany’s compensation. Even could happen either because
that might not be enough if the board moves to replace
Yahoo’s performance shows her or because it opts to
significant deterioration. give up on a turnaround and
Already the company’s sell the company instead.
operating income has tum- For investors, the latter
bled 89% in the past 12 may be the fastest way to
months versus a year ear- end the pain.
lier. Meanwhile, having —Miriam Gottfried
bank “just showed you in one
week’s time what a currency
war looks like,” Mr. Bass
added. “At Davos a week ago,
he told China to impose strict
capital controls to halt the de-
preciation of the yuan, and a
week later he depreciates his
currency 2% against the yuan.
If I were China I would be furi-
ous with Japan.”
Other managers say that
while they are more enthusias-
tic about Japan’s prospects
than they have been in years,
they have less committed to
investments in that country
than the benchmarks against
which they measure perfor-
mance.
One is James Davidson, who
helps manage the $108.2 mil-
lion J.P. Morgan International
Equity Income fund. The fund’s
net exposure to Japan rose to
‘Japan is the best
house in a very
difficult
neighborhood...’
about 17.2% at the end of De-
KIYOSHI OTA/BLOOMBERG NEWS
cember from about 5% at the
end of 2014. That share in-
creased in part, Mr. Davidson
said, because the country’s eq-
uities were attractive relative
to shares in other parts of the
world, such as emerging mar-
kets, and in part because the
fund’s mandate shifted from a
global reach that included the
flows of $2.5 billion during the U.S. to one that excluded U.S.
period. holdings.
Many investors in Japan Friday’s move, Mr. Davidson
benefited as the market gained said, is a positive for dividend-
ground early last year. How- producing stocks such as
ever, despite Friday’s jump, the Japan Tobacco Inc. and Japan
Nikkei Stock Average fell 8% in Airlines Co.
January amid global market Jed Weiss, a portfolio man-
turmoil and a rise in the yen. ager at Fidelity Investments
Some investors are skepti- who works on an international
cal that Friday’s rate cut will growth fund and a small-cap
provide a lasting boost. Hedge- fund that invest in Japan, said
fund manager Kyle Bass, head in an email Friday that smaller
of Hayman Capital Manage- Japanese companies still pro-
ment LP., described it as an vide “a wonderful fishing pond
“incremental” move that in which to invest.” The nega-
wouldn’t work in a period of tive rate experiment, he said,
rapid deflation. Hayman Capi- “doesn’t change my overall
tal exited from its Japanese view.”
positions in mid-2015. —Juliet Chung
The head of Japan’s central contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com

JOURNAL REPORT

Follo
The E w
THE WALL STREET JOURNAL. xper Monday, February 1, 2016 | R1
© 2016 Dow Jones & Company. All Rights Reserved.
A ts
Convn Online
e
DETA rsation
I LS , R2

Do Prestigious Colleges Pay Off?

It Depends on the Major.

STUART BRADFORD

More-selective schools help business and liberal-arts What You’ll Earn

majors make more money. But in science and tech fields, Top-ranked schools by salary potential for selected majors

where you get your degree may hardly matter. BUSINESS

Early-Career Mid-Career

University of California-Berkeley $72,800 $140,000

BY ERIC R. EIDE AND MICHAEL J. HILMER Georgetown University 60,500 136,000

F
Illinois Wesleyan University 51,000 128,000
OR ALL THE THOUGHT that families put into choosing a college, very often the decision is dominated Santa Clara University 64,700 124,000
by a simple line of reasoning: The more prestigious the school you attend, the higher your salary will
be after you graduate. 0 So, they focus their efforts on getting their children into the best possible col- SOCIAL SCIENCE
lege they can afford, figuring that even if they’re paying more tuition now, they’re maximizing earnings University of Pennsylvania $58,400 $140,000
down the road. 0 But that formula doesn’t always hold true. And following it blindly can leave graduates Colgate University 55,400 138,000
burdened with much more debt than necessary when they get out of school. 0 We reached that conclu-
Boston College 53,100 136,000
sion after analyzing a survey of thousands of college graduates and looking at what they were making
a decade after they got out of school. What we found: Diplomas from prestigious schools boost future Harvard University 62,400 129,000
earnings only in certain fields, while in other fields they simply don’t make a difference.
ENGINEERING
Specifically, for business and other The question of prestige and future used three broad classifications for Rice University $72,500 $145,000
liberal-arts majors, the prestige of the pay is complicated in other ways, too. college type: selective, which covers Manhattan College 60,900 140,000
school has a major impact on future Students may not actually be able to elite schools and other highly compet- Cooper Union 67,200 135,000
earnings expectations. But for fields like get into their desired major at a presti- itive institutions; midtier; and less se-
science, technology, education and gious school, for one thing, further un- lective, which covers schools with U.S. Naval Academy 78,000 134,000
math, it largely doesn’t matter whether dermining the value of their choice. open enrollment. HUMANITIES
students go to a prestigious, expensive And some who do land their major of What we found startled us. For Tufts University $56,200 $132,000
school or a low-priced one—expected choice may face other concerns: It may STEM-related majors, average earn-
earnings turn out the same. So, families take them longer to graduate than an- ings don’t vary much among the col- Duke University 55,400 109,000
may be wasting money by chasing an other major would—or they may not lege categories. For example, we find University of Pennsylvania 49,200 105,000
expensive diploma in those fields. graduate at all, which would limit or no statistically significant differences
Columbia University 56,100 103,000
erase the hoped-for salary advantage. in average earnings for science majors
Mr. Eide is a professor of economics between selective schools and either COMPUTER SCIENCE
at Brigham Young University, and Mr. When prestige matters midtier or less-selective schools. Like- University of California-Santa Barbara $71,700 $147,000
Hilmer is a professor of economics at In our study, we looked at about wise, there’s no significant earnings
Columbia University 98,900 145,000
San Diego State University. Mark 7,300 college graduates 10 years after difference between engineering gradu-
Showalter, a professor of economics graduation. We divided their majors ates from selective and less-selective University of California-Berkeley 96,400 145,000
at Brigham Young, contributed to this into several categories: business, engi- colleges, and only a marginally signifi- University of Delaware 66,700 143,000
article. All of them can be reached at neering, science, social science, hu- cant difference between selective and
reports@wsj.com. manities, education and other. And we Please turn to the next page Source: PayScale 2015-2016 College Salary Report THE WALL STREET JOURNAL.

INSIDE

A Strategy to Maximize Social Pull Up a Chair and Invest in It. The Gender Gap in Giving
Security Benefits Prices of furniture from the Studies show women are more
Answers to reader questions about mid-20th century have taken off. likely to donate—and to give more.
the ‘file and suspend’ strategy and You can thank ‘Mad Men’ for that. R7
other financial retirement issues. R6
R2 The Price of Membership
Tips for Filing 2015 Taxes Beware of the difference between
The Biggest Mistakes Estate A look at newly permanent tax what you pay and can deduct with
Executors Make breaks and some tricky issues. nonprofit member fees.
How to avoid some common R6 R7
pitfalls (and even getting sued).
R4 The Very Favorable Math Cyberthieves Have a New
Behind CRUTs Target: Children
A ‘Concierge’ for the Masses Charitable remainder unitrusts It could be many years before
Financial advisers offer more cli- allow art sellers to get an income victims discover their identities
ents help in managing their lives. stream from a sale, tax-deferred. have been stolen.
R4 R6 R8
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
R2 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | WEALTH MANAGEMENT

Do Prestigious Colleges Pay Off?
It Depends on the Major.
Continued from the prior page
midtier colleges.
What’s going on? For potential
employers, the skills that students
learn in these fields appear to trump
the prestige of a school—possibly
because curriculums are relatively
standardized and there’s a com-
monly accepted body of knowledge
students must absorb. So, a student
may not need to attend the best pos-
sible school to ensure a good salary
after graduation. (It’s important to
note that we controlled for numer-
ous other factors that might influ-
ence post-graduation earnings, such
as family income, race/ethnicity, gen-
der, marital status, SAT score, post-
graduate degree and age at gradua-
tion and more.)
Our findings are crucial for fami-
lies to understand because chasing a
prestigious STEM degree can leave
students burdened with huge
amounts of unnecessary debt.
Financial aid can certainly help,
but for many families, the cost of ed-
ucation can still differ dramatically
across schools. For example, if an
engineering student chose to attend
the University of Pennsylvania in-
stead of Texas A&M, the average
starting salary would differ by less
than $1,000, but the tuition differ-
ence would be over $167,000. At that
slightly higher salary, you’d have to
work for more than 150 years before
you make up for that vast tuition
difference.
That said, the earnings picture is
very different for other fields. Out-
side of STEM, it matters tremen-
dously where a student receives a
degree.
The starkest earnings differences
are for business majors, where grad-
uates from the selective institutions
earn 12% more on average than
midtier graduates and 18% more
than graduates from less-selective
colleges. Likewise, social-science ma-
jors from selective colleges earn 11%
more than their midtier counter-
parts and 14% more than those from
less-selective schools.
For education majors, the differ-
ences are 6% and 9%, respectively. In
humanities, graduates of selective
schools earn 11% more than those
from less-selective ones, although
they don’t earn more than those
from midtier schools.
There are many possible explana-
tions for the disparities in salary. In
business, more prestigious schools
may offer students better alumni
networks and other connections
with potential employers. In other
fields of study, more prestigious
schools may offer better peer con-
nections, faculty, university re-
sources and, at least in social sci-
ence and the humanities, access to
better graduate programs.
Whatever the reason for the sal-
ary disparity, parents and students
may be justified in looking for a
prestigious degree in these majors.
Digging into numbers
The obvious, practical takeaway
from all this is that families should
really dig into the numbers. Because
college is potentially one of the big-
gest investments a family will make,
students and their parents should
search out the information necessary
to calculate the costs and expected
future earnings associated with col-
leges and majors.
Colleges offer financial-aid calcu-
lators that let families figure out tu-
ition costs, and sites like Pay-
Scale.com and College Scorecard
offer information about median
Job Hunt
The Class of 2015's employment
expectations
What students want
93% Personal growth opportunities
86% Job security
80% Good benefits package
$40,547 Anticipated median starting
salary
Who wants them
63% Student job applicants who
received one job offer
27% Student job applicants who
received two job offers
Most popular fields
Health care and education
Fields with best job prospects
Accounting, computer science,
engineering, finance
Note: Some percentages are rounded
Source: The Class of 2015 Executive Summary, by the
National Association of Colleges and Employers
THE WALL STREET JOURNAL.
earnings by college or by major after
graduation; PayScale, for one, also
offers that information for specific
majors at specific schools.
Additionally, many academic de-
partments keep track of their gradu-
ates’ job placements, so families can
find out, for instance, how many lib-
eral-arts graduates from the Univer-
sity of Colorado ended up in man-
agement-trainee positions or
teaching posts compared with grad-
uates from Harvard University.
A closer look
But the data can often be more
nuanced than they appear. For one
thing, there’s the obvious point that
all of these numbers are averages:
The actual salary for any given indi-
vidual may fall above or below those
figures.
In addition, there’s the question
of opportunity costs. When choosing
a major, families must consider how
long it will take to complete it—be-
cause it might involve staying in
school longer, driving up the cost of
tuition and lowering potential earn-
ings.
Consider a student who is decid-
ing whether to major in engineering
or economics, and suppose that it
takes one year longer to complete an
engineering degree. The starting sal-
ary for economics majors in 2015 is
IN TRANSLATION
$52,100, according to PayScale.com,
So if it takes an extra year to com-
plete a degree in engineering rela-
tive to economics, then there is an
opportunity cost of $52,100 associ-
ated with engineering because the
student entered the labor force a
year later.
In practical terms, if engineering
graduates make about $10,000 per
year more than economics grads,
then it would be about five years be-
fore engineering students would
make up the lost salary. It could be
up to 10 years if you add in the di-
rect costs of tuition and living ex-
penses for that extra year if the stu-
dent is at a selective university.
Beyond dollars and cents
Families should also remember
that even if students get into a cho-
sen school, there’s no guarantee
they’ll be able to pursue the major
they want.
At some universities, high-de-
mand majors have limited enroll-
ment, which means facing another
selection process even after being
admitted to the school. Grades in
prerequisite courses are usually a
big part of the admission process, so
students should look at their record
and consider the odds of being ad-
mitted to the program.
Additionally, many students pur-
sue an undergraduate degree be-
cause of the option it gives them to
pursue their desired graduate-school
program. Someone may choose to
study liberal arts because they be-
lieve it’s good preparation for law
school, and they aren’t concerned
with the potential earnings with an
undergraduate degree in that field.
In such a case, the student should
seek information about graduate-
school placements from their desired
major at the schools they are consid-
ering.
Finally, it’s important to bear in
mind that the monetary costs and
benefits of a particular university
are just one part of the burden that
students will be carrying. There can
also be psychic costs for students to
consider. Most people find studying
and being evaluated to be stressful.
The more competitive the institu-
tion, the more academically able are
the peers, and so many students who
were at the top of their class in high
school will find they are average or
lower at a highly competitive insti-
tution or in a particularly challeng-
ing major. This can be a difficult ad-
justment.
On the other hand, the emotional
benefits that a school is able to
bring—such as living alone for the
first time, experiencing campus life
and being around new peers—may
be more important to some students
than a cold calculation of financial
rewards.
Ultimately, the decision on a col-
lege comes down to the student’s ap-
titudes, interests and preferences.
But families should be sure that
choice is informed by realistic infor-
mation about how college will affect
a student’s future.
ASK ENCORE | GLENN RUFFENACH
A Strategy to Maximize
Social Security Benefits
Answering often-asked questions
about retirement finances
Planning for retirement can be a daunting process that raises a
host of questions. So we introduce Ask Encore as a regular
feature in the Wealth Management and the Investing in Funds &
ETFs reports. Written by Glenn Ruffenach, a former reporter and
editor for The Wall Street Journal, and co-author of “The Wall
Street Journal Complete Retirement Guidebook,” the column will
examine financial issues for those thinking about, planning and living their retire-
ment. We welcome your questions and comments at reports@wsj.com.
i i i
I will be 66 in April, and my wife tion—I would urge you to run the
will be turning 65 in July. Given the numbers through an advisory ser-
new Social Security rules, what vice. Social Security remains far too
would be the most effective strat- complicated to try this on your own.
egy to optimize our benefits? My
i i i
wife devoted herself to a career as
a full-time mother, which unfortu- My husband and I have two
nately means that, in the eyes of daughters in college. How can we
the Social Security Administration, help them begin to build a good
she doesn’t qualify for retirement credit score?
benefits.
Start by sitting your daughters
Given your ages, you can still take down and explaining the possible
advantage of a claiming strategy that consequences of having a bad credit
has largely been curtailed. But you score, says Beverly Harzog, a con-
would need to act quickly. First, sumer-credit expert and author of
some background. “Confessions of a Credit Junkie.” As
The Bipartisan Budget Act of your children enter the workforce
2015, enacted in November, puts an and start their own households,
end, in most instances, to two Social their bills—for an auto loan, a mort-
Security filing strategies: “file and gage, health and life insurance—will
suspend” and a “restricted applica- likely be higher if they fail to build a
strong credit history.
If you haven’t already, ar-
Benefit Payments range for your daughters to
About 59 million individuals currently receive be an “authorized user” on
Social Security benefits. Among those, your credit-card account—
the following percentages are: and set up alerts (say, for a
purchase exceeding $50) to
Spouses and children monitor their spending.
of retired or disabled (Avoid co-signing for a
workers
credit card in a student’s
8% own name. You will be le-
Survivors of gally responsible for making
deceased 10% Retired payments if your child
workers workers
66% comes up short.)
Double check that your
15% credit-card issuer does re-
Disabled
workers port authorized-user infor-
mation to credit bureaus,
Note: Figures may not total 100% due to rounding. Ms. Harzog notes. Many is-
Source: Social Security Administration suers do—but not all.
THE WALL STREET JOURNAL. At some point, look for a
second form of credit: say,
tion” for spousal benefits. (You can a gas or department-store credit
find a summary of the changes at card, or installment debt, such as a
MarketWatch.com. Search for: “new personal or auto loan. For students
Social Security rules change claiming living off campus, monthly rent and
strategies.”) utilities payments won’t do much to
In the months since, we have help credit scores. But missing such
heard from numerous readers who payments (including cellphone bills!)
have asked, in effect, the same could end up being reported to
question: What do I do now? credit bureaus.
Broadly speaking, there are still Which leads, of course, to the
steps that would-be beneficiaries single-most important (credit) les-
can take to “optimize,” or maximize, son you can share with your daugh-
their benefits in retirement. (Exam- ters: Pay all your bills on time—ev-
ple: Each year you delay collecting ery time.
Social Security between ages 62 and If that message sticks, says Ms.
70, your payout increases about Harzog, “you really empower your
7%.) The best way to do the math kids.”
is to take advantage of the growing
i i i
number of tools and online advisory
services that help identify an individ- In an earlier column and ques-
ual’s (or couple’s) optimal claiming tion about Social Security, you
strategy. mentioned a “restricted applica-
At this point, most services have tion.” My wife and I are both 63
updated their computer coding to years old. She is planning to retire

ROLLING DOWN THE YIELD CURVE account for the new rules. Among
them: SSAnalyze! (free, at bedrock-
capital.com/ssanalyze); and Maxi-
at 66, her full retirement age, and I
plan to continue to work for an in-
determinate amount of time, possi-
Sometimes you’ll hear investors talk about its interest rate. Bond investors see more risk in mizeMySocialSecurity.com, SocialSe- bly until I turn 70. Is a restricted
rolling down the yield curve. lending for long periods of time than in doing so curityChoices.com and application still available in our sit-
The term refers to a strategy of selling bonds for short periods, and want to be rewarded more SocialSecuritySolutions.com. The uation?
before they mature in an effort to profit from ris- for doing so. A chart of the rates would show a latter three all charge a fee.
ing prices. In bond markets, prices rise when yields downward sloping curve. As for this specific question, the Yes, you can still take advantage
fall, which is what tends to happen as bonds ap- But because bond prices and interest rates Budget Act has several grandfather of this strategy—but only because
proach maturity. move in opposite directions, the lower interest rate clauses, one of which allows a per- you have already passed your 62nd
The concept, while confusing, is important to under- of the shorter security means the bond should gain in price son who has reached full retirement birthday.
stand, especially for those bond investors worried about as time passes. age to file and suspend—as long as Under the changes in Social Se-
rising interest rates. For example, when your 10-year bond becomes a seven- the request to do so is received be- curity claiming strategies, workers
In the simplest terms, when you own a bond there are year one, it’s price will be higher, if the general level of in- fore April 30. who reached age 62 before the end
two sorts of yield. One comes from the coupons, or the terest rates hasn’t changed. Sell the bond and you’ll get If you turn 66 before that date, of 2015 are still able to file a re-
cash payments based on the bond’s interest rate at the more than you paid for it, on top of the coupons already you could file and suspend, which stricted application when they reach
time it’s purchased. The other is “passive yield,” says Mi- received. would allow your wife to begin col- full retirement age. This means a
chael Gayed, portfolio manager at New York investment Basically you are earning money by rolling down the lecting a spousal benefit. (If you plan person could file for just a spousal
advisory Pension Partners LLC. Passive yield is a reflection yield curve. to do this, I would book an appoint- benefit, instead of his or her own
of the way bonds tend to increase in value as they near “One of the great misconceptions about the way the ment immediately with your local benefit.
maturity because of the way the bond market prices debt bond market works is that rising rates [always] mean Social Security office, or apply on- Let’s say your wife claims a ben-
securities over time. Here’s how that works: losses,” says Mr. Gayed. “It’s a nuance that’s not well un- line. You can do so four months be- efit of $2,000 a month at her full
When you buy a 10-year Treasury it doesn’t stay a 10- derstood.” fore turning 66.) Meanwhile, your retirement age. When you reach
year bond for very long. After three years, for all practical There are rare times when the short-term interest rates benefit, when you eventually claim it, your full retirement age, you could
purposes, it’s a seven-year bond, and after a further two are higher than long-term ones. But they are so unusual will have grown in size, thanks to claim a spousal benefit of $1,000
it’s a five-year bond. it isn’t worth worrying too much about. “delayed retirement credits.” (half of your wife’s benefit) and de-
In general, the nearer to maturity a bond is, the lower —Simon Constable But again—and without knowing fer claiming your own benefit to,
the specifics of your financial situa- say, age 70.

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THE WALL STREET JOURNAL. Monday, February 1, 2016 | R3

Is your portfolio TOO LOCAL

for a GLOBAL ECONOMY?

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equity market has been
outside the U.S.1
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Read it carefully.
Past performance is no guarantee of future results.
Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments.
Foreign securities are subject to interest rate, currency exchange rate, economic, and political risks, all of which are magnified in emerging markets.
1
Source: MSCI All Country benchmark returns 1983−2013.
2
Source: Gross domestic product based on purchasing-power-parity (PPP) share of world total. IMF, Haver Analytics.
3
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tradable securities.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2014 FMR LLC. All rights reserved. 675573.1.0
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
R4 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | WEALTH MANAGEMENT

The Biggest Mistakes Estate Executors Make

Settling an estate is often a thankless
task. Here’s how to avoid some of the
most common pitfalls (and maybe
getting sued).
BY VERONICA DAGHER
SERVING AS AN estate executor isn’t
for the faint of heart.
It can seem like an honor, at first.
When people make out their wills,
they typically name a trusted person
as their executor, who then has a le-
gal responsibility to distribute their
property according to the wishes of
the deceased, and make sure all
debts and creditors are paid.
But in addition to lots of paper-
work and deadlines, the job often
comes with a minefield of family is-
sues. And worst of all, executors can
be sued.
Here are some of the biggest mis-
takes executors want to avoid:
Paying bills too quickly
Often an executor will start re-
ceiving the deceased’s mail and pay-
ing credit-card bills and other in-
voices as they arrive, says Debra
Doyle, shareholder at the law firm
Greenberg Traurig in Chicago. They
do this, Ms. Doyle says, in the mis-
taken belief that timely payment is
required.
In truth, such bills are well down
the list of priorities for payment.
Paying these debts before all other
classes is a breach of fiduciary duty
and potentially exposes the executor
to personal liability, Ms. Doyle says.
Ms. Doyle recalls one estate that
carried a significant federal income-
tax liability the executor knew noth-
ing about. Once the tax bill became
known, there wasn’t enough money
left in the estate to pay it since the
executor had first paid other debts.
In cases like this, the executor po-
tentially has a personal liability to
pay the outstanding tax liability be-
cause the executor improperly paid
estate assets to satisfy lower-class
creditor claims before settling the
IRS claims, Ms. Doyle says. In some
cases, the IRS may be willing to set-
tle with the executor, but not in all
cases, she adds.
Before paying any creditors, exec-
utors should consult with a trust and
estate attorney to understand the
priority of payments. For example,
funeral expenses and federal and
state taxes take priority over other
debts such as the cable bill, she says.
In addition, the executor should
consult with the estate’s accountant
for an estimate of all tax liabilities,
and consult with the estate’s attor-
ney to estimate all administration
expenses and payments, if any, due
to the surviving spouse or children
under a spousal or child’s award
from the probate court.
Even after setting aside sufficient
estate assets to satisfy the highest
priority creditors, executors should
consider satisfying all other debts
and creditors only after the entire
estate administration has been com-
pleted and all tax returns filed and
taxes paid. This process may take
nine months to two years, depending
on the complexities involved, Ms.
Doyle says.
Playing the market
Some executors are tempted to
invest an estate’s assets—in an at-
tempt to increase the value of the
estate—during the settlement pro-
cess. That can be a risky tactic. For
one, an executor generally has no
obligation to increase the value of an
estate’s holdings, even if the distri-
bution to heirs is prolonged.
It’s especially risky when an estate
plan calls for giving a trust or indi-
vidual a “pecuniary” amount, which
is a precise amount based upon the
value of assets reported on the es-
tate tax return, says Hugh Magill,
Northern Trust’s chief fiduciary offi-
cer. That specific amount must be
Tough Duties
The most difficult part of serving as
an executor (among those who served)
29% Commitment of time required
28% Having access to and knowledge
about records and information
25% Having sufficient legal/
financial knowledge
25% Managing expectations/disagree-
ment among heirs or beneficiaries
23% Filing tax return
14% Paying bills or debts owed
13% Distributing assets without clear
instructions from the deceased
13% Determining the value of assets
10% Not compensated adequately
for time
9% Sharing decision-making with
co-executor
Source: 2014 U.S. Trust Insights in Wealth and Worth survey
distributed to the trust or individual,
regardless of fluctuations in the
value of the assets before funding.
One father named his three adult
sons as executors under his estate
plan, which included a pecuniary
formula for funding the trust for the
surviving spouse, with the balance of
the estate passing to the sons. The
estate consisted largely of high-qual-
ity bonds, which the sons sold
shortly after their father’s death to
invest in a much riskier portfolio of
small-cap stocks, which they hoped
would grow, Mr. Magill says. But the
value of those stocks declined more
than 50% before the spouse’s trust
was funded at the full amount re-
quired. The sons’ resulting share
bore the entire decline in the stocks’
value, resulting in a loss to them of
more than $5 million.
If the decline in the stock portfo-
lio had been so large that the
spouse’s trust could not be fully
funded, the sons’ actions could have
subjected them to a lawsuit for
breach of fiduciary duty, he says.
Don’t “play the market” during
the estate-settlement process, Mr.
Magill says. In most states, the exec-
utor has an obligation to conserve,
Up for the Job
What people considered in naming
an executor and/or trustee
Trustworthiness
78%
Financial skills and knowledge
52%
Objectivity and fairness
52%
Organizational skills
34%
Health or longevity
25%
Emotional state
19%
Time availability
18%
Mental health
15%
THE WALL STREET JOURNAL.
but not to increase, the value of the
assets during estate settlement.
Mishandling real estate
Real estate is often one of the
hardest assets to administer, says
Ms. Doyle. One beneficiary might be
living in the house, while another
might want it sold quickly. The exec-
utor must decide the listing price
and the commission to pay the real-
estate agent, Ms. Doyle says. Unless
amicable decisions can be reached
among all of the beneficiaries, the
executor may be forced to seek pro-
bate-court assistance, she says.
In addition, real-estate agents
may recommend certain improve-
ments to the property before the
sale. Before authorizing any im-
provement, the executor needs to
consider whether he or she is autho-
rized to spend estate assets to make
such improvements.
Executors also should be careful
not to hold on to a house for too
long. Insurance companies don’t like
to insure empty houses for extended
periods, Ms. Doyle says. If the home
is vacant, the executor also needs to
beware of maintenance issues. If a
pipe breaks, significant damage can
be done before anyone discovers it.
Repairs can cost thousands of dol-
lars and delay a property’s sale.
Executors should maintain the
homeowner’s insurance on the dece-
dent’s house in case of a fire or acci-
dent, says Avi Kestenbaum, partner
at the Meltzer, Lippe, Goldstein &
Breitstone law firm in Mineola, N.Y.
Losing tangible assets
Executors sometimes don’t realize
that assets—tangible and intangi-
ble—belong to a new entity, the es-
tate, as of the date of death. It’s the
executor’s responsibility to keep the
assets safe while arrangements are
made to distribute them according
to the decedent’s plan, says Paulina
Mejia, managing director and head
of wealth strategies at Atlantic Trust
in New York.
Ms. Mejia says she knew an exec-
utor who was a family friend of the
deceased and didn’t realize the son
was helping himself to his late fa-
ther’s works of art and valuable
items while the estate was being set-
tled. This caused many problems, be-
cause the will bequeathed the art to
a museum. The executor could have
been sued, she adds. The executor
should have immediately taken an
inventory of the assets and arranged
to appraise and securely store the
art until it was ready to be distrib-
uted to the museum, Ms. Mejia says.
Executors must find all of the de-
ceased’s assets and sort through all
of their personal belongings to ac-
count for the entire estate, says Vic-
tor Ngai, an executive at Guardian
Life Insurance Co. of America in New
York. They also may need to get se-
curity for the home.
One other word of advice from
Mr. Ngai: Don’t succumb to family
pressure to make distributions too
soon. It may result in insufficient as-
sets to pay off creditors, he says.
“Money has a habit of changing
the attitudes of a lot of people,” Mr.
Ngai says, “but an executor’s job
isn’t simply to distribute wealth.”
Ms. Dagher is a Wall Street
Journal reporter and host of the
Watching Your Wealth podcast.
Email: veronica.dagher@wsj.com.

THE GAME PLAN

A ‘Concierge’ for the Masses A Hard-Core Spender Turns

Financial advisers offer more clients help in managing their lives
BY ANNE TERGESEN
PRIVATE BANKS that cater to
the superrich have long offered
clients so-called concierge ser-
vices, from negotiating the
purchase of a private plane to
vetting household staff.
Now, a growing number of
firms with clients of more mod-
est means are adding their own
version of concierge services,
helping these clients with life-
style management as opposed
to just money management.
Many advisers, no doubt, be-
lieve they have little choice. For
ers whose services are “highly
customized” to their needs.
Indeed, some offer unique
services that they advertise by
word-of-mouth or on their
websites. Others just pitch in
when clients express a need.
Emerson Bell, a fee-only plan-
ner in Dallas, says he accompa-
nied an older client on tours of
three senior-living facilities.
Mr. Bell says he reviewed the
contract of the client’s top
choice and was able to negoti-
ate annual rent increases of 3%
rather than 5%.
Some risks
financial planning. The former
doctor says she “kicks into high
gear” when clients have health
crises. She recently helped a
client with cancer get a second
opinion at New York’s Memo-
rial Sloan Kettering Cancer
Center. After the man’s death,
Ms. McClanahan worked with
his widow to close his business.
To help the widow learn to
manage her finances, Ms. Mc-
Clanahan met with her every
other week for five months to
pay the bills, balance the check-
book and budget for the future.
The adviser says she raises her
flat fee for heavy users of such
Her Financial Life Around
BY VERONICA DAGHER
In the space of a few years, Rachel Grif-
fin, a 37-year-old Los Angeles publicist,
transformed into a saver from a spender.
When she graduated from college in
2000, she had racked up nearly $20,000
in credit-card debt, thanks in part to a
move across the country, dinners out,
travel, clothes and other expenses.
“I charged everything,” she says.
She also had $30,000 in student loans.
After graduating and working as an ex-
ecutive assistant, she found a job in public
ANASTASIA STANECKI

years, they didn’t feel much
need to go beyond giving finan-
cial advice, other than to send
birthday cards and gifts mark-
ing special occasions, in an ef-
fort to show clients they cared.
Now, with stocks in a rut
and competition from low-cost
robo-advisers rising, advisers
are taking their show of caring
to another level. Currently, al-
most 20% offer concierge and
lifestyle services, according to
Cerulli Associates, a research
firm that specializes in the as-
set-management industry.
Some accompany clients on
visits to assisted-living facilities
and negotiate discounts on
home and car prices. Others ar-
range for medical appointments
or provide consulting services
to clients who, like themselves,
run small businesses.
“The goal is to free you up
and make your life easier,”
says Stephen Stull, chief exec-
utive of Storehouse Financial
LLC in Fort Worth, Texas. Mr.
Stull’s company offers clients’
adult children career coaching,
and helps those with small
businesses install and use ac-
counting software.
“It helps build client rela-
tionships and opens doors to
meet other clients,” he says.
Fees included
These types of services can
help advisers justify fees that
typically amount to 1% of a cli-
ent’s assets a year, says Angie
Herbers, chief executive of Ka-
leido Inc., a San Diego-based
consultant to advisers. They
also can give advisers an edge.
Ms. Herbers says an adviser
she knows provides such little
extras as helping clients maxi-
mize their credit-card rewards
points. With some effort, she
adds, consumers can find advis-
There can be some down-
sides for advisers. Robert So-
fia, chief operating officer at
Platinum Advisor Strategies, a
Summerfield, Fla.-based con-
Almost 20% of
financial advisers
offer concierge and
lifestyle services.
sultant to advisers, points out
that if clients feel their ad-
viser is using concierge ser-
vices to justify a high fee, they
may seek out a lower-cost ad-
viser who solely focuses on
their finances and a lower-cost
provider for the concierge ser-
vice as well. Mr. Sofia says he
also has seen some advisers
try to cement loyalty with
concierge services to cover for
bad investment performance.
That kind of approach isn’t
likely to end well for the ad-
viser. Industry consultants
urge clients to remember that
no matter how nice a con-
cierge-type service may be,
they are paying for it in the
investment-management fee.
“Sometimes there is a lot of
value in these services,” Mr.
Sofia says, “but you have to ask
yourself, ‘Is what I am getting
what I want to be paying for?’ ”
Most advisory firms are too
small to offer all of the “life-
style” services of private banks,
which can dedicate staff to
such tasks as arranging luxury
travel. What advisers should of-
fer instead, consultants say, are
services that tap into their own
interests and expertise.
Carolyn McClanahan, an in-
vestment adviser in Jackson-
ville, Fla., specializes in inte-
grating health care and
services when she reassesses
her fee every other year.
Accounting help
Five years ago, Mr. Stull in
Fort Worth started giving ad-
ditional help to clients who
own small businesses after
learning that one of his clients
had used vacation time to
work on his business’s taxes.
Mr. Stull, a CPA, says that
by helping his clients learn to
use “low-cost bookkeeping
software,” he helps them save
thousands of dollars that they
would otherwise have to
spend on hiring bookkeepers.
“Often I can save them the
equivalent of my first year’s
fee as an adviser,” he says.
The accounting-software
service has been so successful,
Mr. Stull says, that he and his
partner have added a second
concierge service: career men-
toring for clients’ children.
Mr. Stull says his company
sets up lunches at which the
young job seekers meet with
people he knows who are will-
ing to serve as mentors to
them. Mr. Stull also conducts
mock job interviews and offers
tips on salary negotiations.
Of course, being a friend to
the job seekers and their par-
ents isn’t the only reason Mr.
Stull offers these services. In
addition to earning their par-
ents’ gratitude, he says “my
hope is that someday, I can
manage the kids’ money too.”
“With investment advice
becoming a commodity,” Mr.
Stull says, “we are trying to
add value in as many other
ways as we can.”
Ms. Tergesen is a reporter
for The Wall Street Journal
in New York. Email her at
anne.tergesen@wsj.com.
relations. For a while, Ms. Griffin says, she
played the “credit-card shuffle,” repeatedly
transferring balances to 0% interest credit
cards, and scrambling to live from paycheck
to paycheck. But she quickly realized her
credit-card debt was a problem.
By limiting new charges and working a
second job as a waitress on the weekends
for two years, she managed to pay off her
credit-card debt after about five years.
But in 2007, she decided to quit her job
and backpack through Europe for four
months. During this time, she again accu-
mulated credit-card debt. “The trip was
worth it,” she says.
Then Ms. Griffin moved to New York to
take care of her sick mother. This enabled
her to minimize her expenses and not use
her charge cards while she did public-rela-
tions consulting part time.
But when her mother died, Ms. Griffin
had trouble finding a full-time publicist job
again. She worked in a diner for a while,
then moved to London to live with a friend
and work as a waitress. During this time,
Ms. Griffin vowed not to charge up her cards
again. Her two 401(k)s grew in value as well.
In 2009, she landed a new job in public
relations, in California, and started to save
as judiciously as she once spent.
Today, Ms. Griffin is senior director of
public relations at a toy maker and no lon-
ger carries a credit-card balance from
month-to-month. She has more than six
months of expenses in an emergency sav-
ings account, and roughly three years’ worth
of expenses in three 401(k)s, which include
stock and bond mutual fund investments.
She has several thousand dollars in a
529 college savings plan for future children,
and a small amount in “penny stocks” that
some clients recommended to her. “That’s
my ‘play’ investment money,” she says.
In addition, she has a timeshare in Ari-
zona and is a small investor in a bar in Los
Angeles named Now Boarding.
She rents her Los Angeles apartment
but would love to buy a home once the
real-estate market cools. Meanwhile, she
limits herself to two restaurant meals a
week. And when she travels on business,
she tries to tack on a few days to be with
Rachel Griffin can “supercharge” her house
savings by cashing in penny stocks, suggests
an adviser.
friends and family. She takes a more expensive
trip for herself every two years.
She donates at least $1,000 a year to chil-
dren’s charities. She also budgets about
$1,000 a year to take part in triathlons.
And while she can’t imagine retiring, Ms.
Griffin stays familiar with her Social Security
statement so she knows how much she may
receive of the benefit down the road. “It keeps
me motivated to make more money and save
for experiences, not things,” she says.
ADVICE FROM THE PRO: Rachel gets big
kudos for paying down her credit-card debt and
building an emergency fund, says Stacy Francis,
a fee-only financial planner in New York.
Now Ms. Francis says she should transfer her
old 401(k)s into a rollover IRA, since the former
have more limited investment choices, and max-
imize her contributions to her current 401(k) to
make sure she’s on track for retirement and
make up for any missed contributions.
The adviser urges Ms. Griffin to start saving
for a home down payment. “Purchasing a
house sooner than later would be ideal to take
advantage of still-low interest rates,” she says.
She could also “supercharge” her house sav-
ings by cashing in her penny stocks and the in-
vestment in the bar. “These investments are
very risky and typically not appropriate for
someone who hasn’t completed their retirement
savings,” Ms. Francis says.
While Ms. Griffin gets high marks for plan-
ning ahead, putting money away for a future
child’s education may not be the best plan, Ms.
Francis says. “No one will give Rachel a loan for
retirement,” she says, “however, her child may
be able to get a loan for college.”
Ms. Dagher is a Wall Street Journal reporter in
New York. Email: veronica.dagher@wsj.com. If
you would like to have an adviser look at your
finances, email reports@wsj.com.
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R6 | Monday, February 1, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | WEALTH MANAGEMENT

TAXES | TOM HERMAN
Pull Up a Chair. As the Tax Deadline Nears,
And Invest in It. Here’s a Look at Things
That Are New—and Tricky
Prices of furniture It is Feb. 1. For tens of millions of sales taxes—but not both. This is a
from the mid-20th taxpayers, that means the same
thing: Plenty of time to procrasti-
very important break for millions of
people who live in Florida, Texas,
century have taken nate.
Resist that temptation. Getting
Washington and other states with
no state income tax. But don’t make
off in recent years. started early can help make one of
America’s most exasperating, frus-
the mistake of assuming that this
rule applies only to taxpayers in
You can thank trating and time-consuming annual
chores less taxing.
those states. It applies throughout
the country—and can help many
‘Mad Men’ Procrastination may be hazardous
to your wealth even if you pay a tax
other people in other states, too.
“A lot of people in states with an
for that. professional to do your returns or if
you use tax-preparation software.
income tax forget to check to see if
the sales-tax deduction might be a
After all, it takes considerable time better option than the state-income-
BY STEVE ROSENBUSH
and patience to collect all the neces- tax deduction,” says Mark Luscombe,
sary forms and documents. And principal federal tax analyst for Wolt-
“MAD MEN” HAS COME and gone, even if you aren’t affected by any ers Kluwer Tax & Accounting.
but demand for furniture from the new laws, IRS pronouncements, or Figuring out how to calculate the

DAN STASSER; BAXTER & LIEBCHEN

mid-20th century continues. court decisions, you may need to sales-tax deduction can be tricky. “If
Prices of chairs, tables, sofas take a fresh approach to your taxes you saved your receipts throughout
and other pieces, particularly those if you experienced major life changes the year, you can add up the total
of Scandinavian origin, from the last year, such as a marriage, birth, amount of sales taxes you actually
late 1940s through the early 1960s A Finn Juhl lounge chair from 1953 divorce or death. But perhaps most paid and claim that amount,” the
have increased dramatically in re- and a Borge Mogensen easy chair important, our tax laws have grown IRS says. If you didn’t save receipts,
cent years and show no sign of fall- from 1955 (below) so complex that it is easy to misun- don’t give up. “If you didn’t save all
ing soon, experts say. derstand the mountains of fine print. your receipts, you can still choose to
“Midcentury furniture is really We asked tax experts for a few claim state and local sales taxes,”
important for us,” says Anna suggestions that might be helpful to the IRS says. Check out the work
Brockway, the president and co-founder of Chairish, a cu- for about $18,000, he says. taxpayers this filing season, includ- sheet and optional general sales tax
rated online marketplace for used and vintage furniture. ing what’s new as well as tricky is- tables in the Instructions for Sched-
“We see a strong interest in Scandinavian cabinetry,” she What to look for sues that are easy to misunderstand: ule A (Form 1040)—or use the IRS’s
adds. Three years ago, prices were half of what they are Collectors buying for investment value should give Deadlines: Everyone knows the Sales Tax Deduction Calculator.
now, or even less, she says. preference to pieces that have original labels, and make filing deadline for most taxpayers is Charitable giving: If you deduct
Interest in midcentury furniture was sparked years sure not to remove them. Labels can add dramatically to April 15, right? charitable donations, make sure you
ago by connoisseurs drawn to its simplicity, sleekness a piece’s value, especially when it is in mint condition. Not this year. This year, it will be understand the record-keeping rules.
and craftwork, says Ms. Brockway, who adds that inter- Desirable design features include curvaceous organic Monday, April 18, because of Emanci- For example, be sure to get all the
est got a further boost from the television series “Mad forms, “details that do more than obvious functionality, pation Day, an official holiday in necessary acknowledgments before
Men,” which employed sets that took extra effort to
carefully constructed from construct,” Mr. Kevelson
original period pieces. says. Danish craftsmen of Tax Returns
the period used hardwoods The IRS expects to receive about 150
Price check such as rosewood and million individual income-tax returns
Andrew Kevelson, owner wenge that had been air- this year, about the same as 2015.
of Baxter & Liebchen, a vin- dried for as long as 50
tage furniture dealer in New years. That produced a su- 2015 2014
York, says the run-up in val- per hard material that Returns received 150.9 million 149.7 million
ues of Scandinavian furni- doesn’t twist or crack, even
ture in recent years reflects as it is bent into extremely Total refunds 109.4 million 109.5 million
an increase in overall real- challenging shapes. Total amount $306.02 billion $305.73 billion
estate activity, which in turn Scandinavian furniture
has driven a demand for from the mid-20th century Average refund $2,797 $2,792
furniture. The economy has is about craftsmanship as
been strong enough to drive much as design, according
the auction market for high- to William Lee, founder of
end furnishings and artwork Modernlink furniture in
to new highs, he says. New York. The Danish cabi-
Collectors who buy now net makers of the period
shouldn’t expect a quick return on their investment, spent as much as a decade studying their craft as an aca- Note: Data through Dec. 25, 2015 compared to Dec. 26, 2014
however. Recent rapid increases notwithstanding, Ms. demic discipline, Mr. Lee says. Many of the pieces these Source: Internal Revenue Service THE WALL STREET JOURNAL.
Brockway cautions that “you will have to stick with this craftsmen produced were made in small runs of 150 to
for a really long time” to see further dramatic increases 200 units, which helps boost their value in today’s mar-
in prices in such furniture. ket, he adds. Washington, D.C., celebrating the free- you file your return, says Martin
Mr. Kevelson agrees that the recent pace of increase ing of slaves in the district on April Hall, partner in the Boston office of
may not continue. But he expects prices for mid-20th Standout designers 16, 1862. Because Emancipation Day Ropes & Gray LLP and head of the
century furniture to keep rising, partly due to shrinking Mr. Lee’s favorite designers of the period include Ja- falls on a Saturday this year, it will be law firm’s private client group.
supplies over time. cob Kjaer, a Danish furniture designer and cabinet maker. observed on Friday, thus pushing the “Donors should get their ‘docs in
“Fifteen-plus years ago, most people went to antiques One of his chairs might now cost $10,000 to $50,000, in tax-filing deadline to Monday for a row’ before filing returns,” Mr. Hall
for high-end furnishings,” Mr. Kevelson says. “I think the Mr. Lee’s opinion. Five years ago, a collector might have most of the nation, the IRS says. quips. He cites a law referring to
trend to go to quality, midcentury furnishings for high- found a great piece for $5,000, or even $3,000, he says. There are some exceptions. The getting a “contemporaneous” writ-
end décor is here to stay for a long time.” A pair of Finn Juhl lounge chairs from the 1940s or deadline will be Tuesday, April 19, in ten acknowledgment. “An acknowl-
Chris Mitchell, publisher and chief revenue officer of 1950s, in good condition, would cost about $30,000, ac- Maine and Massachusetts, because edgment is contemporaneous if ob-
Condé Nast’s Vanity Fair magazine, has collected cording to Mr. Kevelson. Three years ago, a set would of Patriots’ Day, a holiday in those tained on or before the earlier of the
mid-20th century Scandinavian furniture for the past 10 have cost $20,000 to $25,000, he says. Age, condition, states commemorating the battles of date on which the return is filed
years. patina and provenance will effect price, he advises. Lexington and Concord in 1775. claiming the deduction or the due
“What I love about the Danish stuff is the delicate- If a Finn Juhl lounge chair is out of reach, take heart Many taxpayers in places jolted date (including extensions) for filing
ness,” he says. “It is unmatched. I am talking about a in the fact that hundreds of designers and cabinet mak- by severe storms get even more the return,” he says. “The taxpayer
level of craftsmanship you could not touch today. No- ers were active in this period. time. For example, the IRS said re- flunks—and flunks badly—if he or
body is making this. It is modern, but also very warm.” “They made beautiful things,” Mr. Lee says. “The work cently that storm victims in Missis- she waits to get the acknowledg-
Mr. Mitchell says his only regret is not buying more they produced was just mind-blowing.” sippi and Missouri will have until ment until the audit letter is pushed
such furniture when it was more affordable. He says he May 16 to file returns and pay any through the mail slot,” he says.
once passed on a daybed by Danish designer Poul Kjaer- Mr. Rosenbush is the editor of CIO Journal in New York. taxes due. “All workers assisting the Don’t forget about record-keeping
holm, because of the $8,000 price. The piece now sells He can be reached at steven.rosenbush@wsj.com. relief activities who are affiliated rules for noncash gifts. Mr. Luscombe
with a recognized government or says, “While a lot of people keep track
philanthropic organization also qual- of their cash charitable contributions,
ify for relief,” the IRS says. For more they are not so good at keeping docu-
details, see the websites of the In- mentation of contributions of noncash

The Very Favorable Math Behind CRUTs
BY DANIEL GRANT
A GROWING number of art and col-
lectibles owners are having their
cake and eating it, too: by earning
money from sales of their art, tax
deferred, within trusts earmarked
for eventual charitable donations.
Here’s how it works: Owners
transfer a work of art to what is
known as a charitable remainder
unitrust, or CRUT, whose appointed
trustee is authorized to sell the art
when, presumably, the market is at a
high point. Any profit on the sale is
tax deferred and the proceeds get
reinvested. The trust beneficiaries,
meanwhile, receive an annual fixed
percentage of the assets’ value for
their lifetimes. And upon the last
beneficiary’s death, the rest goes to
charity.
The tax deferral is just one of the
popular features, considering how
big a bite taxes can take when art is
sold at a profit: The IRS takes 28% in
capital-gains tax, the Affordable Care
Act takes 3.8% from sellers with in-
comes above $200,000, and some
states take a cut as well: New York
tags on 12%.
“If I make a $1 million profit on
the sale of a painting, I’ll pay the
41% [the combination of IRS, ACA
and state taxes for a New York resi-
dent] and be left with $590,000 of
the profit,” says Ramsay Slugg,
wealth strategist for U.S. Trust. “If I
put the painting in a CRUT and then
sell it, I’ll get that $1 million working
for me, and I’ll pay capital gains on
a deferred basis.”
Yearly distributions equaling 5%
to 50% of the trust’s fair market
Ways to Give
How charitable remainder unitrusts compared with other charitable
giving vehicles in 2014
Donor-advised funds
Charitable remainder unitrusts
Private foundations
Charitable remainder annuity trusts
Charitable lead trusts
Pooled income funds
Source: National Philanthropic Trust
value, which is recalculated annually,
are paid to the beneficiaries, who
tend to be the donor and spouse.
Typical distributions are in the 5% to
8% range. Although some CRUTs are
designed to last a specified number
of years, most will end at the death
of the last noncharitable beneficiary,
and the remaining funds will then go
to designated charities.
Meanwhile, “it functions very
much like a 401(k) or IRA,” says
John Sare, partner in the tax-exempt
organizations practice and the trusts
and estates group of Patterson
Belknap Webb & Tyler LLP. “The as-
sets can be reinvested and grow on
a tax-deferred basis.”
Frequently, those considering a
CRUT are planning for their retire-
ment. They want to maximize in-
come and reduce costs. Long-time
art collectors may have highly ap-
preciated assets that carry a high
cost for storage, security and insur-
ance and would generate large capi-
tal-gain taxes if sold.
ternal Revenue Service or the Federal
Emergency Management Agency.
If you need even more time to file,
items or out-of-pocket expenses in-
curred on behalf of a charity.”
Excess Social Security: This
you can request a six-month exten- could be an important issue for
sion until Monday, Oct. 17. You don’t many upper-income workers who
need to give the IRS a reason, and worked for two or more employers
millions of people do it every year. last year. If that is you, look at how
NUMBER OF TOTAL ASSETS Just remember that a filing exten- much all your employers withheld
FUNDS (in billions) sion won’t give you additional time from your pay in Social Security
to pay whatever you might owe. taxes. For 2015, the maximum
238,293 $70.70
Educator expenses: Late last amount of Social Security tax that
88,262 $78.71 year, Congress resurrected many should have been withheld from all
popular tax breaks that had expired your paychecks was $7,347. (That is
82,045 $695.30
at the end of 2014 and made them 6.2% of $118,500, which was the
12,459 $5.52 permanent. Among them is one that maximum amount of wages subject
benefits millions of elementary and to Social Security tax last year.) If
6,414 $28.20 secondary-school teachers and other more than that was withheld, claim
1,267 $1.21 educators. Under this provision, an the excess amount as a credit.
eligible educator can deduct as much Here is an example from IRS Pub-
THE WALL STREET JOURNAL. as $250 of unreimbursed costs of lication 17, a handy guide for individ-
classroom supplies, such as books, ual income taxes: Suppose you are
“People in that situation may be computer equipment and software. married and file a joint return with
looking to simplify their lives by This applies to “a kindergarten your spouse. Your spouse had no in-
shedding some of their art assets, through grade 12 teacher, instructor, come last year. During 2015, you
but they also prefer not to have a counselor, principal or aide in school worked for one company that paid
big tax bill when they do,” Mr. Sare for at least 900 hours during a $66,500 and withheld $4,123 in So-
says. In such cases, he says, a CRUT school year,” an IRS publication says. cial Security tax. Another employer
can provide “a stream of income and It is especially valuable since they paid you $55,000 in wages and with-
a smaller tax than you might have can deduct it from their total in- held $3,410 of Social Security tax.
paid.” come, using line 23 on Form 1040, Thus, the total amount of Social Se-
Another attractive feature of rather than as a miscellaneous item- curity tax withheld was $7,533, or
CRUTs, some say, is the intended ized deduction, the IRS says. (If you $186 more than the maximum. Thus,
charity recipients don’t have to be file Form 1040A, deduct these ex- claim a $186 credit on your return.
designated at the time the trust is penses on line 16, the IRS says.) Reinvested dividends: Many in-
created. Sales-tax deduction: This is an- vestors instruct a company or mu-
“People change their minds about other popular tax break that Con- tual fund to reinvest their dividends
which charities they want to sup- gress recently revived and made per- in new shares. That can be a great
port,” says Andy Augenblick, presi- manent. It also is easy to overlook. idea, but keep good records. “A lot
dent of Emigrant Bank Fine Art Fi- Here’s how it works: If you file Form of people with reinvested dividends
nance. 1040 and itemize your deductions, fail to add those previously taxed
Some art collectors also see such you have a choice. You can deduct dividends to their basis in determin-
trusts as a way to help a museum, or either your state and local income ing the taxable gain on the sale of a
other charity, that won’t accept a taxes or your state and local general stock,” Mr. Luscombe says.
gift of the art itself.
Mr. Herman is a writer in New York City. He was formerly The Wall Street
Mr. Grant is a writer in Amherst, Journal’s Tax Report columnist. Send your comments and tax questions to
Mass. He can be reached at taxquestions@wsj.com. Please include your full name, address and phone
reports@wsj.com. number in case we need to contact you to get more details about your question.
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THE WALL STREET JOURNAL. Monday, February 1, 2016 | R7

JOURNAL REPORT | WEALTH MANAGEMENT

The Gender Gap in Giving Beware of the Difference

Studies show that women
Between What You Donate—
are more likely to donate— And What You Can Deduct
and to donate more BY DANIEL GRANT
gift even if they don’t use it. The
Whitney Museum of American Art
in New York has a basic annual in-
THE PERKS OF supporting non- dividual membership of $85, but
BY DEBRA MESCH
profits are sometimes more valu- members may choose among five
able than donors realize. And that plans. The most popular is the “so-
MANY NONPROFITS have never tai- can lead to trouble at tax time. cial membership,” which includes
lored fund-raising efforts to reach At many nonprofits, only part of opportunities for social events at
women. Here, in black and white, are a membership fee is tax deductible. the museum, drink tickets and two
a few reasons why they should: The size of the deduction depends one-time-use guest passes, says
Women are more likely to give, on what tangible perks and benefits Tara Sheena of member services at
and to give more, than men in simi- a member receives, according to the Whitney. Because of the fair-
lar situations. Our research at the the Internal Revenue Service. In market value of those drinks and
Women’s Philanthropy Institute at other words, donors should sub- passes, the tax-deductible portion
the Indiana University Lilly Family tract the fair-market value of any of the $85 membership is only $9.
School of Philanthropy has found thank-you gifts or other benefits Even if you don’t attend, you
consistently that women and men from the price of a membership, still can only take that $9 deduc-
give differently. In one study, baby- and what is left is the
boomer and older women gave 89% amount they can deduct.
more to charity than men their age, Take the membership
and women in the top 25% of perma- for Minnesota Public
nent income gave 156% more than Radio. Individuals can
men in that same category. choose from various
We have found evidence that membership levels, with

SPENCER PLATT/GETTY IMAGES

women give more than their male some eligible for a gift:
peers at virtually all income levels, a music CD, T-shirt or
even though women in general earn water bottle. If donors
less and have less money in retire- opt to receive a gift—
SERGE BLOCH
ment than men, and have a greater and most do, according
life expectancy. In other words, even to membership director
though women tend to have fewer Nancy Huynh—it will
available resources as they age, they cost them. The water
are giving larger portions of their prestige, while women tend to view come is associated with a more than bottles, for instance, ‘Patrons’ of New York’s Metropolitan Museum
wealth to charity than men. money in terms of personal security, 5% rise in total household giving, have a listed fair-market of Art can’t deduct 100% of their $10,000
In trying to explain such differ- freedom and a way to achieve goals. while a similar rise in the man’s in- value of $20. So the tax annual membership.
ences, our research has found that A 2013 U.S. Trust survey on come is associated with a nearly 3% deduction those donors
women tend to be more altruistic women and wealth found that rise in total giving. This study sup- get is the membership fee less $20. tion, “because you had the oppor-
and empathetic than men, partly be- “women are nearly twice as likely as ports earlier research suggesting On a larger scale, joining New tunity to go,” says Michael Wyland,
cause of the way men men to say that giv- that women influence household York’s Metropolitan Museum of Art partner at Sumption & Wyland, a
and women are so- ing to charity is the charitable decision making. These at the “patron level” costs $10,000 nonprofit consulting firm in Sioux
cialized regarding
In one study, most satisfying as- findings demonstrate how complex annually. But only $9,252 of that is Falls, S.D.
caring, self-sacrifice Baby-boomer and pect of having and nuanced charitable decision tax-deductible, says museum Charities are required to inform
and the well-being of wealth.” making is for both sexes, as well as spokeswoman Elyse Topalian. The donors of the value of perks and
others. Research also
older women Research also finds for couples. $748 is the Met’s assessment of a gifts. The Whitney and Minnesota
suggests that men gave 89% that marriage has a Let this be a wake-up call to non- year’s worth of free admission, exhi- Public Radio, for instance, state the
tend to make charita-
ble gifts when an ap-
more than men. positive effect on giv-
ing. Married couples
profits everywhere. A better under-
standing of gender’s role in charita-
bition previews, curatorial talks, ac- fair-market value of their gifts and
cess to the member’s dining room, benefits on their websites and note
peal frames the dona- tend to give more ble behavior can help organizations store discounts and other benefits. the tax implications in their sup-
tion as being in the than single-head engage men and women more effec- Clearly the rule has greater im- port-acknowledgment letters. They
man’s self interest or as a way of households. Recently, we explored tively—according to how they wish pact when perks or gifts carry a also send tax-substantiation forms
maintaining the status quo, while the extent to which the income of to be engaged. higher value. But people who join to donors, as required by the IRS.
women tend to give to promote so- each member of a couple affects giv- lots of nonprofits and charities also Some smaller nonprofits may
cial change or help others who are ing. For high-net-worth couples, Dr. Mesch is Eileen Lamb O’Gara may get in trouble if they don’t fol- not follow such procedures, though,
less fortunate. changes in a partner’s income did Chair in Women’s Philanthropy low the right procedures. If many so donors should ask what portions
Another possible reason that not affect giving. In the general pop- and Director of the Women’s Phi- small overstated deductions add up of a membership are deductible.
women give more than men is the ulation, however, changes in men’s lanthropy Institute at the Indiana to one big number, it may trigger
two sexes have different attitudes and women’s income affected a cou- University Lilly Family School of an IRS audit. Mr. Grant is a writer in Amherst,
toward money. For men, money may ple’s overall giving differently. Philanthropy. She can be reached In some cases, members must Mass. He can be reached at
represent power, achievement or A $10,000 rise in the woman’s in- at reports@wsj.com. subtract the value of the perk or reports@wsj.com.

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JOURNAL REPORT | WEALTH MANAGEMENT

Cyberthieves Have a New Target: Children ADVISERS’ VOICES

It could be many years before victims discover their identities have been stolen
BY PRIYA ANAND
TO THE LIST of things we wish we
could shield children from, add iden-
tity theft.
Cyberthieves target children be-
cause their identities offer a clean
slate with which to apply for bank
accounts, credit cards or loans, gov-
ernment benefits and tax breaks.
Criminals will often combine a
child’s Social Security number with
a fake date of birth and address to
avoid suspicion, experts say.
Making matters worse, while
adults can learn quickly that their
identities have been stolen, say, after
being rejected for a credit card or
loan, it can take years to find out
that a child has been a victim of
identity theft. Families often find
out a child’s identity was stolen
when applying for college loans or
scholarships, or after tax returns are
filed in the child’s name, says Eva
Velasquez, president of the Identity
Theft Resource Center, a San Di-
ego-based nonprofit that helps iden-
tity-theft victims.
When those children become fi-
nancially independent, an early and
undetected identity theft can create
huge barriers for them, Ms. Velas-
quez says. “They don’t have the
[good and legitimate] history behind
them to fall back on.”
Surprise at 19
When Axton Betz-Hamilton rented
an apartment at 19, a utility company
required her to pay a $100 deposit
because her credit score was low.
She was shocked to discover she had
a history of canceled credit cards
and actions against her by collection
agencies, even though she had
opened only one credit card and
taken out federal student loans in
her name, she says.
Theft of her identity at age 11 had
saddled her with a credit score “in
the second percentile of the whole
nation,” says Ms. Betz-Hamilton,
now 34 and an assistant professor of
consumer studies at Eastern Illinois
University, where her research in-
cludes identity theft.
The three major credit-reporting
companies, Experian, Equifax and
Who Are You ...
Identity-theft complaints
in 2014, by age
7% 6%
13% 18%
19%
18%
19%
19 and under 40-49
20-29 50-59
30-39 60-69
70 and over
Source: Federal Trade Commission's Consumer Sentinel Network
TransUnion, say they don't track
figures on child-identity theft. Iden-
tity Theft Resource Center, however,
says it received 298 calls related to
child identity theft in 2015, or about
5.4% of the cases it heard. That was
down from 6.4% in 2014, but up from
4.8% in 2013.
Because child-identity theft tends
to be detected long after the fact,
such numbers may vastly underesti-
mate the scope of the problem.
Credit-reporting companies add that
thefts of minors’ identities are hard
to uncover because children can have
legitimate credit records if parents
add them to a credit card as an au-
thorized user. Meanwhile, data
breaches exposing children’s personal
information online are becoming
more common.
One-in-five U.S. households has
been notified by a school of a data
breach that exposed the students’ in-
formation, according to a survey re-
leased in October by the National
Cyber Security Alliance. Breaches af-
fecting children also can occur in the
commercial realm. VTech Holdings
Ltd., a Hong Kong-based digital-
learning toy maker, said in December
that names, genders and birth dates
of 6.5 million of its child users were
exposed in a data breach. About 2.9
million were U.S. children.
The credit-reporting companies
... and What Happened?
How victim information
was misused
Government documents/benefits fraud
38.7%
Credit-card fraud
17.4%
Phone/utilities fraud
12.5%
Bank fraud
8.2%
Employment-related fraud
4.8%
Loan fraud
4.4%
Other
21.8%
THE WALL STREET JOURNAL.
say the onus is on parents to detect
thefts of their children’s identities.
Parents can protect their children a
number of ways, starting with teach-
ing them not to share too much in-
formation online, says Ms. Velas-
quez. “If your kids are allowed to
have access to the Internet, it leaves
them vulnerable the same way it
would if you let them play in the
park by themselves,” she says.
Here are some other ways to pro-
tect children from identity theft.
 Look for warning signals. Be vigi-
lant for signs that a child’s identity
already may have been stolen. Well
before college-loan applications or
tax returns are filed, a teen may be
denied a driver’s license because one
already exists. Other warnings may
come in the form of mail sent to the
children, Ms. Velasquez says, such as
solicitations for loyalty programs.
 React when there is a breach. If a
data breach affecting a child occurs,
parents should initiate free credit
monitoring for the child. This will al-
low the parents to receive alerts if
accounts are opened in the child’s
name, says Rod Griffin, director of
public education at Experian.
 Contact credit-reporting compa-
nies. Parents should check with the
companies at least once a year to
see if credit reports exist in their
children’s names, Mr. Griffin says. In
most cases, children only have credit
reports when they’ve been added to
a parent’s credit card as an autho-
rized user. So if parents find that
there is already a report in their
child’s name, they should request a
copy. TransUnion also has an online
form where parents can submit
child-identity-theft inquiries.
 Put a credit freeze in effect. Only
23 states have laws allowing parents
and legal guardians to put a security
freeze on a minor’s credit report, the
National Conference of State Legisla-
tures says. This blocks opening a
line of credit using the child’s iden-
tity. In states without such laws,
Equifax will let parents and guard-
ians initiate a report and then freeze
it. But TransUnion and Experian will
freeze only if there is already an ex-
isting report for the child.
If a report is frozen, the credit-
reporting companies cannot release
information to lenders or others who
request to screen credit unless the
individual lifts the lock. Assad Laza-
rus, senior vice president of product
and consumer experience at Equifax,
says a credit freeze is the most pro-
active solution because it blocks the
possibility that a swindler could mis-
use the child’s credit.
Movement in Congress
A bill has been introduced in Con-
gress to allow parents in any state to
freeze their children’s credit files.
“Without a frozen report, the
child’s Social Security number will
still be clean and therefore very at-
tractive to thieves,” says U.S. Rep.
Jim Langevin, a Rhode Island Demo-
crat, and sponsor of the bill.
Ms. Betz-Hamilton knows how
hard it can be to repair a bad credit
history—even a false one. She says it
took her eight years to repair damage
done to her credit. During that time,
she says, her first credit card was
canceled, and when she got a new one
it had a $300 limit and 29.9% interest
rate. She also was forced to pay
18.23% for a car loan, she says.
“I still on occasion get collection-
agency letters in the mail,” she adds.
Ms. Anand is a reporter for Mar-
ketWatch. She can be reached at
panand@marketwatch.com.
IVORY JOHNSON
THE PROTECTION
PEOPLE NEGLECT
People are focused on making
money, but once they have it, they
often don’t think about how to
protect it. They see headlines
about the market going up or
down but rarely do they hear
about a middle-class person who
was sued after a car accident and
didn’t have the proper insurance
to protect his or her assets.
Two often overlooked areas de-
signed to protect wealth from un-
foreseen events are long-term-
care insurance and umbrella
liability insurance.
When you’re in your 50s, it is
easy to put off buying long-term-
care coverage because you aren’t
likely to need it for a while. I help
my clients combat this impulse by
showing them what their retire-
ment will look like based on how
we have planned it, and what
would happen to that plan if they
had to pay for long-term care
without insurance for just three
years. You can do all of the saving
in the world, but if you have to go
into a nursing home, all of a sud-
den you may have $6,000 in un-
expected monthly expenses.
Consider the toll that would
take on you and your loved ones.
If you can’t afford a nursing
home, who is going to take care
of you? Are your children going to
be able to take on that burden?
Another common oversight in-
volves having adequate protection
against a lawsuit. You could face
legal liability if, say, someone falls
down the steps at your house. We
live in a litigious environment, so
an umbrella liability-insurance pol-
icy for extra coverage is something
to consider. You may think you
have enough coverage already, but
what if something happens and
you have to take $200,000 out of
your retirement plan? Ask yourself
if you can withstand such a blow.
Mr. Johnson is the founder of
Delancey Wealth Management
LLC in Washington, D.C. He can
be reached at reports@wsj.com.

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