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Get Your Regular Iran’s Mahan

Flies Against
Digital Privacy Checkup U.S. Sanctions
PERSONAL JOURNAL | A8 OPINION | A11
THURSDAY, FEBRUARY 4, 2016 ~ VOL. XXXIV NO. 4 WSJ.com EUROPE EDITION
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Shakespeare Comes to a Refugee Camp in France China

What’s
Chases
News
Business & Finance
Overseas
C hinese companies have
launched a wave of for-
Assets
eign acquisitions this year
BY KATHY CHU
amid China’s slowing econ-
AND JULIE STEINBERG
omy and falling currency. A1
 China National Chemical
Chinese companies have
said it would pay $43 billion
launched a wave of foreign ac-
for Syngenta, narrowing the
quisitions in the first few
field of merger partners for
weeks of 2016 as they seek in-
agriculture-sector rivals. B1
roads into overseas markets
 Ford plans to cut hun- amid China’s slowing economy
dreds of jobs and eliminate and falling currency.
models in Europe as it seeks China National Chemical
to maintain profits there. B1 Corp., known as ChemChina,
on Wednesday said it would
 Amazon plans to open as
pay $43 billion to buy Swiss
many as 400 bookstores,
pesticide maker Syngenta AG
DAN KITWOOD/GETTY IMAGES

the CEO of mall operator

in a deal that, if approved by
General Growth said. B1
Syngenta shareholders and
 NAB exited U.K. banking to regulators, would be the larg-
focus on Australia and New est foreign takeover by a Chi-
Zealand, floating its CYBG nese company.
arm at a sharp discount. B5 Including the ChemChina
deal, the combined value of
 Hedge funds face mount-
THIS ABOVE ALL: Actors from Shakespeare’s Globe performed ‘Hamlet’ for migrants in the northern French city of Calais on Wednesday. China’s outbound mergers and
ing problems as global mar-
The Globe, which is doing a world-wide tour, included refugee camps after being unable to take the performance to war-torn Syria. acquisitions has reached about
kets retreat. Activist fund Or-
$68 billion, already more than
ange plans to shut down. B5
half of 2015’s record annual

Germany Steps Up Security

 GM’s quarterly profit tally, according to deal tracker
surged amid growth in China Dealogic.
and booming U.S. sales of Chinese companies, such as
SUVs and pickups. B2 Haier Group and China Cinda
Asset Management Co., have
 Lenovo said its PC and
been ramping up their foreign-
smartphone sales declined
last quarter and warned of Officials struggle to heaviest police presence in re- The stepped-up efforts aim know how many unregistered asset purchases in recent years
cent memory. to reassure a public unsettled people there are in the coun- as China looks to bolster its
“market challenges.” B3 assess threats after In Cologne, a top destina- by a perceived crime spike and try,” said Rainer Wendt, head capabilities in industries in-
 Luxembourg said it is inflow of migrants tion in a region known for its repeated terror threats. Yet of one of Germany’s two police cluding agribusiness, real es-
seeking to invest in com- big Carnival celebrations, po- behind the show of force, Ger- unions. “We don’t know where tate and energy.
mercial asteroid mining. B1 BY RUTH BENDER lice are doubling their pres- man security officials make no they are and with what inten- The flurry of deals is focus-
AND ANTON TROIANOVSKI ence from 2015 and boosting secret of their concern that tion they came here. That is ing attention on the world’s
video surveillance of the pa- the country is barely begin- disconcerting.” second-largest economy after
World-Wide BERLIN—When revelers de- rades and raucous street par- ning to address the security Recent terror attacks in the U.S. as it suffers from its
scend on Germany’s Rhineland ties that precede the season of challenge posed by last year’s Paris and Istanbul involving Please see DEALS page A6
 Cameron defended the region Thursday, kicking off Lent and define one of the big- record inflow of migrants. terrorists posing as refugees
EU proposal to change Brit- five days of Carnival festivi- gest open gatherings of the “We are facing a very ab- and alleged sexual assaults in  Syngenta deal could raise
ain’s relationship with the ties, they will do so under the year. stract risk: We don’t even Please see SECURE page A2 U.S. security issues................. B1
bloc after facing criticism
for not going far enough. A3
Tense Times in the West Bank
 German police are boost-
ing security ahead of Carni-
val festivities in an effort to
reassure a public unsettled
Venezuela Orders Up
by the influx of migrants. A1
Planeloads of Bank Notes
ABED AL HASHLAMOUN/EUROPEAN PRESSPHOTO AGENCY

 A U.N. envoy announced

a pause in Syrian talks, cit-
ing poor progress address- BY KEJAL VYAS President Nicolás Maduro’s ad- billion notes the U.S. Federal
ing humanitarian issues. A4 ministration authorized over Reserve and the European Cen-
CARACAS—Millions of the latter half of 2015 as the tral Bank each print annually—
 Three armed Palestinians pounds of provisions, stuffed government boosts the supply dollars and euros that unlike
attacked Israeli forces at an into three-dozen 747 cargo of the country’s increasingly bolivars are used world-wide.
entrance to Jerusalem’s Old planes, arrived here from worthless currency, according Four spokesmen from Vene-
City, killing one officer. A4 countries around the world in to seven people familiar with zuela’s central bank didn’t re-
 Saudi Arabia ordered recent months to service Ven- the deals. spond to calls and emails
gender segregation at local ezuela’s crippled economy. And the Venezuelan govern- seeking comment.
council meetings, in a set- But instead of food and ment isn’t finished. In Decem- Economists say the pur-
back to women’s rights. A4 medicine, the planes carried ber, the central bank began se- chases could exacerbate Vene-
another resource that often cret negotiations to order 10 zuela’s economic meltdown:
 A blast that blew a hole in HALT: An Israeli soldier stopped a man for a search in Hebron runs scarce here: bills of Vene- billion more bills, five of these injecting large numbers of
a jet leaving Somalia is stok- Wednesday amid rising tensions. Three Palestinians attacked Israeli zuela’s currency, the bolivar. people said, which would effec- freshly printed notes is likely
ing concerns terrorists may security forces at an entrance to Jerusalem’s Old City, killing an officer. The shipments were part of tively double the amount of to stoke inflation, which the
have attacked the flight. A4 a massive import of at least cash in circulation. That order International Monetary Fund
 Ireland will hold a gen- five billion bank notes that alone is well above the eight Please see MONEY page A2
eral election Feb. 26, the
prime minister said. A3
 A Ukraine minister re- Democrats In Myanmar, Elected Officials
Oracle #1
signed, citing what he said
Head to the Dorms
was official corruption. A3
 Kentucky Sen. Paul quit
Battle Over i i i
the race for the Republican
Party’s
presidential nomination. A7

Direction
New members of parliament live in
modest rooms; ‘life as a college student’ Cloud ERP
The app that delivers BY LAURA MECKLER BY SHIBANI MAHTANI lege student,” said Khin Maung
instant briefings on the Soe, a new member of parlia-
City’s most important Hillary Clinton’s razor-thin NAYPYITAW, Myanmar— ment, sitting by a dormitory
financial players, deals win over Sen. Bernie Sanders Myanmar’s remote capital was bed lined with a thin foam mat-
and markets data. in Iowa is magnifying a battle built in part as a tribute to the tress covered with printed fab-
among Democrats over country’s ancient royal rulers. ric from the 2006 Disney movie
Download on the App Store whether they should empha- The name Naypyitaw means “Cars.” “We get up at a stipu-
size idealism or pragmatism. “The Abode of Kings,” and it lated time, we live in a small
As the Democratic presi- comes with an 840- hostel, we go every-
CONTENTS Money & Inv...... B5-8 dential race heads toward its acre parliament where in groups.”
Arts & Ent............... A9 Opinion.............. A10-11
second contest—Tuesday’s complex and 20-lane Newly elected 1,675 150
Business & Tech. B1-3 Personal Journal.. A8
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Crossword.............. A12 U.S. News.................. A7 candidates have signaled that past a presidential have a hard time Oracle Cloud Workday Cloud
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Markets Digest..... B6 World News........ A2-5
the ideological clash over the But as the new suitable to live in
€3.20; CHF5.50; £2.00; party’s direction. parliament convened their nations’ capi- “Oracle has their act together better than SAP”
U.S. Military (Eur.) $2.20
On issue after issue, Mr. on Monday, the tals. In Washington, Aneel Bhusri, Workday CEO
Sanders sees a more robust country’s fresh in- some lawmakers
role for government than Mrs. take of lawmakers NLD member have been known to
Clinton does, and he calls for after the first demo- make a virtue out of
significant new taxes and pro- cratic elections in decades are camping in their offices to
grams to address what he con- finding that their accommoda- show they aren’t part of the
Midsize and large scale Enterprise Fusion ERP Cloud customers.
Please see DIVIDE page A6 tions aren’t quite as resplen- mainstream political machine.
s Copyright 2016 Dow Jones & dent. Myanmar’s new MPs, oracle.com/modern-finance or call 1.800.ORACLE.1
Company. All Rights Reserved
 GOP’s Paul ends presidential “Life as a member of parlia- though, the bulk of them from Copyright © 2015, Oracle and/or its affiliates. All rights reserved.
campaign...................................... A7 ment is just like life as a col- Please see DORMS page A6
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 | Thursday, February 4, 2016
U.S. Debt Burden: It’s Gotten a Bit Less Bad
B
udget watchdogs for
years have warned of a
looming debt crisis in
the U.S. The federal debt, al-
ready its highest as a share of
the economy since 1950, is
poised to rocket higher as re-
tiring baby boomers draw on
Medicare and Social Security.
Here’s the surprise: Com-
pared to seven years ago, the
long-term budget outlook
has gotten bet-
ter, not worse,
thanks to
slower health-
care inflation
and, more im-
CAPITAL portant, much
ACCOUNT lower interest
GREG IP rates.
The hands
on the dooms-
day debt clock have been
moved back.
Yes, the debt is still on an
unsustainable path. Entitle-
ments still have to be fixed—
the sooner, the better. But that
need not entail an immediate
attack on the debt. So con-
cludes a new study co-written
by Doug Elmendorf, who as
head of the Congressional
Budget Office from 2009 to
2015 was the country’s most
influential deficit scold.
Historically, financial cri-
ses have wreaked havoc on
national budgets, and the
U.S. is no exception. As Pres-
ident Barack Obama was
rolling out aggressive mea-
sures to combat the financial
crisis and recession in 2009,
his first full budget pre-
SECURE
Continued from Page One
Cologne on New Year’s Eve—
which police and victims have
blamed largely on migrant
men—have highlighted the
hazards of large-scale, uncon-
trolled migration.
Yet lack of resources, bu-
reaucratic bottlenecks, legal
obstacles, and the sheer scale
of the migrant inflow mean
German authorities are in the
dark about hundreds of thou-
sands of foreigners in the
country, security officials say,
and unable to tell actual and
would-be criminals from those
fleeing war and violence.
One result: While domestic
intelligence agencies say they
are receiving record numbers
of tips about alleged terrorists
among migrants, they can’t al-
ways verify them for lack of
available data on people
streaming in from abroad, of-
ten without papers.
“There are so many people
here we simply don’t know
anything about,” said Jochen
Hollmann, head of the domes-
tic intelligence agency of Sax-
ony-Anhalt. “Of course not ev-
ery unregistered migrant is a
terrorist or criminal, but if
someone doesn’t have a pass-
port, we have to believe what
he or she says.”
In contrast to the U.S.,
where only a small number of
refugees have been allowed in
the country after extensive se-
curity checks, anyone who en-
MONEY
Continued from Page One
estimates will this year hit
720%, the world’s highest rate.
Central-bank data show
Venezuela in 2015 more than
doubled monetary liquidity, a
measure used to gauge all
money in the economy, includ-
ing bank deposits.
Printing more bolivars is
weakening the currency fur-
ther. This week, the bolivar
broke the psychologically im-
portant level of 1,000 per dol-
lar for the first time on the
country’s thriving black mar-
ket. The country has several
official exchange rates, includ-
ing 6.3 bolivars to the dollar.
Venezuela’s 30 million peo-
ple can’t seem to get cash fast
enough, said Steve H. Hanke,
an expert on troubled curren-
cies at Johns Hopkins Univer-
sity. “People want cash be-
cause they want to get rid of it
as fast as they can,” he said.
While use of credit cards
and bank transfers is up, Vene-
zuelans have to carry stacks of
cash as many vendors try to
avoid transaction fees. Dinner
at a nice restaurant can cost a
brick-sized stack of bills. A
cheese-stuffed corn cake—
called an arepa—sells for
nearly 1,000 bolivars, requiring
dicted the federal debt
would climb from around
40% of gross domestic prod-
uct in 2008 to 69% by 2016.
Reality has turned out
worse. When Mr. Obama un-
veils his last budget next
week, it will be with the fed-
eral debt at 75% of GDP.
That’s largely because the
economy has grown much
more slowly than he pre-
dicted back in 2009. Actual
deficits have been slightly
wider than projected, despite
spending caps championed
by Republicans in Congress
and lower interest rates.
Yet the real problem was
never the debts the U.S. in-
curred at the depths of reces-
sion, but those that will pile
up in coming decades as an
aging population sends the
bill for Social Security and
Medicare through the roof.
It is on that front that the
outlook has changed for the
better. In 2009 the CBO pre-
dicted that with then-current
tax and spending policies
continuing, the debt would
top 100% of GDP by 2023.
While strict apples-to-apples
comparisons aren’t possible,
by last year, it had moved the
date back to 2030. Mr. Elmen-
dorf, now at Harvard Univer-
sity, and his co-author Louise
Sheiner, policy director at the
Brookings Institution’s Hutch-
ins Center, a think tank, now
think that will happen in
2032. (They will present their
study at Brookings on Friday.)
One reason for the re-
ters Germany without proper
documentation can stay as
long as they intend to request
asylum.
As a first step, police run
the person’s name and finger-
prints against the German po-
lice database and the so-called
Schengen Information System,
a criminal watch list used to
vet non-EU citizens entering
the bloc, officials say.
But fingerprints aren’t
saved until the person for-
mally requests asylum, which
can be months later. And only
then are applicants checked
against the domestic intelli-
A police officer operated a camera in a video-surveillance vehicle in Düsseldorf on Tuesday.
10 bills of the highest-denomi-
nation 100-bolivar bill, each
worth less than 10 U.S. cents.
Rigid state price controls
have only made matters
worse, economists say, gener-
ating a thriving black market
for just about every good,
from car tires to baby diapers,
in which cash is the preferred
form of payment.
The bank-note buying spree
is costing the cash-strapped
leftist government hundreds
of millions of dollars, said all
seven of the people, who have
been briefed on the deals Ven-
ezuela has entered with bank-
note producers.
The high cost of the printing
binge is an especially heavy
burden as Venezuela reels from
the oil-price collapse and 17
years of free-spending socialist
rule that have left state fi-
nances in shambles.
The central bank’s own
printing presses in the indus-
trial city of Maracay don’t
have enough security paper
and metal to do the job, said
the people familiar with the
matter. The difficulties stem
from the same dollar short-
ages that have plagued Vene-
zuela’s centralized economy,
as the Maduro administration
struggles to pay for imports of
everything, including cancer
medication, toilet paper and
insect repellent to battle the
WORLD NEWS
Improved Outlook
While the federal debt is still on an unsustainable course, lower health-care inflation and interest rates
have given the U.S. much more breathing room for dealing with the problem.
Projections of the publicly held federal debt
as a share of GDP*
350%
CBO 2009
300
CBO 2015
Elmendorf and Sheiner 2016
250
Actual figures
200
150
100
50
0 –1.5
1960s ’70s ’80s ’90s ’00s ’10s ’20s ’30s ’40s ’50s
*The three debt projections make differing assumptions about future policy changes.
†Interest rates and GDP are adjusted for inflation. Three-year moving averages of real 10-Year Treasury rates minus real GDP growth rates.
Sources: Congressional Budget Office (2009 and 2015 debt projections); Doug Elmendorf and Louise Sheiner, 2016 debt projections and interest
rate-growth spread.
prieve is plunging health-
care inflation. That’s thanks
to the Affordable Care Act’s
cuts to Medicare providers,
and even more to changed
behavior by consumers, em-
ployers and private insurers.
The second factor is in-
terest rates. When interest
rates exceed the economic
growth rate, debt tends to
grow faster than the coun-
try’s ability to support it.
The spread between those
two numbers is thus a key
gence agency’s database,
which includes terror sus-
pects. Absent a concrete suspi-
cion, authorities don’t gener-
ally run the person’s details
through foreign databases.
With immigration offices
swamped by asylum applica-
tions, only 476,649 of the 1.1
million migrants who reached
Germany last year had filed
for asylum by the end of 2015.
This means there are now
more than half a million mi-
grants in Germany about
whom authorities here know
little, if anything.
The gaps in the system be-
mosquito-borne Zika virus.
That means Venezuela has
to buy bolivars from abroad at
any cost. “It’s easy money for
a lot of these companies,” said
one of the people with details
on the negotiations.
The huge order for 10 bil-
lion notes can’t be satisfied by
any single printer, the people
familiar with the deals said.
So it has generated interest
from several of the world’s
largest commercial printers,
each vying for a piece of the
pie at a time when low profits
in bank-note printing have
pushed many of them to cut
back on capacity.
Dinner at a nice
Caracas restaurant
requires a brick-
sized stack of bills.
According to the people fa-
miliar with the deals, the com-
panies include the U.K.’s De La
Rue, the Canadian Bank Note
Co., France’s Oberthur Fiduci-
aire and a subsidiary of Mu-
nich-based Giesecke & Devri-
ent, which printed currency in
1920s Weimar Germany, when
citizens hauled wheelbarrows
of cash to buy bread.
All of the printing firms de-
clined to comment except the
Interest rate on federal debt minus
GDP growth†
2.0 percentage points
1.5
1.0
0.5
0
–0.5
–1.0
2020
determinant of debt risk. Mr.
Elmendorf and Ms. Sheiner
note that in 2005, the CBO
thought rates would run 1.2
percentage points higher
than economic growth over
coming decades.
In recent years, however,
the Federal Reserve, the CBO
and most economists have
concluded rates are going to
be systematically lower, even
after the Fed has returned
them to normal from near-
zero. The CBO now thinks
came evident after a man was
shot while attacking a Paris
police station last month. In-
vestigators discovered he had
lived at a refugee shelter in
the small German city of Reck-
linghausen and applied for
asylum in seven European
countries under 20 different
identities, including four in
Germany.
After the incident came to
light, the mayor of Reckling-
hausen ordered background
checks on 960 asylum seekers
in town. Legal safeguards
mean the process has been
slow and far from thorough.
Canadian company, which
didn’t respond to requests to
comment.
Currency experts say the
logistical challenges of im-
porting and storing massive
quantities of bank notes un-
derscore an undeniable truth:
Venezuela is spending a lot
more than it needs because
the government hasn’t
printed a higher-denomina-
tion bank note—revealing a
misplaced fear, analysts say,
that doing so would implicitly
acknowledge a hyperinflation
the government publicly de-
nies.
“Big bills do not cause in-
flation. Big bills are the result
of inflation,” said Owen W.
Linzmayer, a San Francisco-
based bank-note expert and
author who catalogs world
currencies. “Larger bills can
actually save money for the
central bank because instead
of having to replace 10 deteri-
orated notes, you only need
five or one,” he said.
The Venezuelan central
bank’s latest orders have been
exclusively for 100- and 50-bo-
livar notes, according to the
seven people familiar with the
deals, because 20s, 10s, 5s
and 2s are worth less than the
production cost.
Mr. Maduro and his allies
say galloping consumer prices
reflect a capitalist conspiracy
THE WALL STREET JOURNAL.
Projections
2005
2009
2015
’25 ’30 ’35 ’40 ’45 ’50
THE WALL STREET JOURNAL.
rates will run slightly below
the growth rate.
That shift increases the
amount of debt the govern-
ment can comfortably borrow.
Whether it should is a differ-
ent question, the answer to
which hinges on why interest
rates are low, Mr. Elmendorf
and Ms. Sheiner note.
Americans are probably
saving more to prepare for
the future, and the federal
government shouldn’t undo
that saving with bigger defi-
To comply with German law,
which bans blanket checks, the
mayor made the requests on
an individual basis.
Immigration offices in Ger-
man cities can file individual
requests to different intelli-
gence agencies based on spe-
cific security concerns. In
Recklinghausen, such requests
can include only a person’s
name, not fingerprints, a
spokeswoman for the city said.
That can be of limited use
given how many migrants first
register under false names, ac-
cording to police and aid
workers.
“We are aware this won’t
provide all answers but it’s a
signal to our citizens,” said
the spokeswoman, acknowl-
edging the limitations of the
exercise.
Some of the difficulties
Germany has faced keeping
track of its booming migrant
population have deep roots in
history. Police and intelligence
services are strictly sepa-
rated—a legacy of the coun-
try’s experience with Nazi and
Communist dictatorships—
while surveillance and security
measures often get bad press.
When media reported in
2014 that Germany’s foreign
spy agency had been regularly
questioning migrants in Ger-
many to harvest intelligence,
the agency said it would re-
strict this activity, even
DPA/ZUMA PRESS
though it hadn’t broken any
law. Cooperation between im-
migration offices and intelli-
gence agencies to seek out se-
curity-relevant information
to destabilize their govern-
ment.
The president in late De-
cember changed a law to give
himself full control over the
central bank, stripping it of
congressional oversight just as
his political opponents took
control of the National Assem-
bly for the first time in 17
years.
CORRECTIONS 
AMPLIFICATIONS
President Barack Obama
and House Speaker Paul Ryan
support a proposal to increase
the earned-income tax credit
offered to childless workers
and to expand the number of
people eligible. A U.S. News
article Wednesday about the
proposal incorrectly implied
the credit isn’t already avail-
able to childless workers.
The name of Cowen and
Co., the research arm of Co-
wen Group, was misspelled as
Cowan and Co. in a Personal
Journal article Wednesday
about ways to avoid overage
charges with wireless data
plans.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com.
cits. On the other hand, for-
eigners are desperate to own
Treasurys, banks need to own
them for regulatory reasons,
and business investment is
unresponsive to cheap credit,
all of which justify the federal
government borrowing to cut
taxes or, as Mr. Elmendorf
prefers, invest in education,
research and infrastructure.
In addition, higher federal
borrowing puts upward pres-
sure on interest rates. That
makes it less likely interest
rates will have to fall to zero
in the next recession, leaving
the Fed with no monetary
ammunition.
M
r. Elmendorf does
worry that feckless
politicians will seize
on the study as a reason to do
nothing about the debt. After
all, the study bluntly states
that interest rates are unpre-
dictable, the country has to
save more to support an aging
population, and the sooner it
legislates either higher taxes
or lower spending, the less
convulsive the change. Mr. El-
mendorf would enact a long-
term deficit fix now, wait an-
other decade before attacking
the debt, and use that breath-
ing room to boost federal in-
vestment (though his logic
also applies to tax cuts).
Nonetheless, the persis-
tence of low interest rates, he
says, is something he didn’t
expect just a few years ago.
“And that really does change
things,” he said.
still exists, officials say, but it
is more targeted and not sys-
tematic.
People close to Chancellor
Angela Merkel insist the chan-
cellery is aware of the security
risks related to the influx in il-
legal migration. Even so, they
say, the migrants are less of a
threat than, say, homegrown
radicals and European jihad-
ists returning from Syria. They
also say terror fears may not
be as acute in Germany, which
has so far been spared a large-
scale attack, as in other West-
ern countries.
Still, the government has
moved to plug some of the se-
curity holes in its refugee poli-
cies. In the fall it reinstated
border checks to better screen
newcomers, and a new central
data system approved by par-
liament in January and due to
come online by midyear
should give authorities a bet-
ter overview of who is in the
country, Interior Minister
Thomas de Maizière has said.
In one improvement, the new
system will prevent migrants
from registering for asylum
multiple times under different
names, the minister said.
For Gregor Golland, a con-
servative regional lawmaker in
the state of North Rhine-West-
phalia, the goal should be sys-
tematic security checks for all
new arrivals—still a distant
prospect.
“It’s not about putting all
migrants under a general sus-
picion,” he said. “But it’s legit-
imate to want to know who is
here.”
“To stop excessive printing
we have to undo that law and
restore autonomy to the cen-
tral bank,” said Elías Matta, an
opposition lawmaker who fo-
cuses on state finances.
THE WALL STREET JOURNAL.
Europe Edition ISSN 0921-99
The News Building, 1 London Bridge Street,
London, SE1 9GF
Thorold Barker, Editor, Europe
Bruce Orwall, Senior Editor, Europe
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Anna Foot, Advertising Sales
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Stuart Wood, Operations
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THE WALL STREET JOURNAL. Thursday, February 4, 2016 | A3

WORLD NEWS
Greeks Brace for More Austerity Ahead
Nationwide strike opments.”
The deeper the contraction,
called to protest cuts the more the government is
as talks to unlock likely to fall short of its budget
targets, leading to pressure
bailout loans progress from creditors to enact more
spending cuts and tax increases.
BY STELIOS BOURAS In an ominous start to the
latest talks, IMF head Chris-
IERISSOS, Greece—The out- tine Lagarde told Mr. Tsipras
look for Europe’s most de- in Davos, Switzerland, in late
pressed economy hinges on January that Greece needs
how talks progress between pension cuts to hit its fiscal
the Greek government and its targets, according to people fa-
creditors, say businesspeople, miliar with the meeting.
officials and economists here. Mr. Tsipras has vowed pro-
“I don’t think there will be a tect current pensions. The gov-

solution anytime soon,” says
Yannis Stathoris, who owns a
cheese factory in this beach-
side town. His company Sta-
thoris Dairy, launched a de-
cade ago, has grown despite
the debt crisis, and even holds
the record for making the
world’s largest goat cheese,
weighing over 2,000 pounds.
But Greece’s latest talks
with the International Mone-
tary Fund and European insti-
tutions, began this month,
raising fears that more sharp
spending cuts and tax in-
creases will be needed to un-
lock bailout loans.
Mr. Stathoris worries the
talks could revive doubts
about Greece’s place in Eu-
rope’s common currency. “I
fear we could be heading for
bankruptcy and an exit from
the euro,” he says.
The government of Prime
Minister Alexis Tsipras is
caught between creditors’ de-
mands for fiscal retrenchment
including pension cuts, and
pressure from an austerity-
Drivers walking next to parked trucks Wednesday on a road blocked by farmers protesting the elimination of some tax breaks.
weary public.
Public and private-sector
unions have called a nation-
wide strike for Thursday to
protest proposed pension
changes, the third such walk-
out since Mr. Tsipras’s left-
wing Syriza party was re-
elected in September.
They will be joined by farm-
ers, who have been fighting in
recent weeks against the aboli-
tion of tax breaks for agriculture
by impeding highway traffic.
Prolonged disagreement be-
tween the government and
creditors could damage business
and consumer confidence and,
at worst, revive the specter of
Greek debt default and euro ex-
ALEXANDROS AVRAMIDIS/REUTERS
ernment wants to shrink the
system’s huge financial short-
fall by other means, including
raising contributions by busi-
nesses and the self-employed.
The government’s proposal
hasn’t convinced the IMF, but
it is already sparking resis-
tance among Greeks.
Athina Karantona says the
proposal would threaten the
pulsion, in a replay of last year. dicted in its bailout plan, But the main reason cited survival of the bar she owns in
An agreement wouldn’t drawn up last summer with for concern is the renewal of the village of Stratoni, near
bring much relief either, since it the eurozone and the IMF. Athens’s struggle with the IMF Ierissos. Among other changes,
might well entail another round Other forecasters are less and the eurozone. the overhaul would scrap
of austerity that saps demand. optimistic. A survey of 10 If Greece is forced to cut lower contribution rates for
With the economy still economists by The Wall Street pensions—a vital prop for businesses in rural areas.
struggling under capital con- Journal found that, on average, dwindling household incomes, Her sales have already de-
trols imposed in June, many the forecasters expect GDP to but a bill that the IMF says clined by around half during
economists say another year of contract by 1.5%. Forecasts Greece can’t sustain—the gov- the crisis years, she says. Con-
recession is likely, deepening vary greatly, ranging from con- ernment’s fragile majority in stant fear of unemployment
an eight-year slump that has tractions of 2.9% to 0.2%. But Parliament could crack, trig- prompts customers, mostly
wiped out a quarter of eco- the more recent the forecast, gering a political crisis. workers from a nearby mine,
nomic activity and pushed un- the worse it tends to be, and “Sky-high unemployment, to cut their spending.
employment to 25%. even optimists are tempering capital controls and tighter fis- “From whiskey they
The government hopes this their enthusiasm. cal policy will continue to keep switched to beers. From beers
recession will at least be shal- Partly, that reflects con- the economy under pressure,” they are now switching to cof-
low. The finance ministry fore- cerns about global growth, said Diego Iscaro, economist at fees,” says the energetic bar
casts gross domestic product whose weakening could hurt London-based consultancy IHS owner. “For the time being, the
will shrink by 0.7% this year, Greece especially through its Global Insight. How bad it gets coffees are keeping my busi-
versus a 1.3% contraction pre- vital tourism sector. “will depend on political devel- ness alive.”

Cameron Defends EU Reform Deal Irish Leader Sets Vote

British Prime Minister Da-
vid Cameron defended the
proposed reform package he
secured from the European
Union, as he prepared for a
battle abroad and a potentially
tougher one at home over a
deal that will form the basis of
a referendum on the U.K.’s
membership in the bloc.
By Jenny Gross in
London and Laurence
Norman and Valentina
Pop in Brussels
red lines laid down by major
capitals.
workers under Mr. Tusk’s pro-
posals. The question of
For the End of February
Officials from Berlin to whether to change the EU BY PAUL HANNON Ireland’s economy has been
Warsaw indicated difficult treaties to entrench the agree- the fastest-growing in Europe
talks could lie ahead on the ment also still looms over Ireland’s prime minister for the past two years and is
details of the package. talks. said the country will hold a likely to repeat that feat this
But none of the U.K.’s Euro- Still, while there may be lit- general election at the end of year. Ireland’s central bank
pean partners said the propos- tle enthusiasm for the conces- the month, firing the starting last week estimated the econ-
als put forward Tuesday by sions Mr. Cameron was of- gun on a campaign expected to omy grew by 6.5% in 2015, and
European Council President fered, EU leaders are eager to be dominated by the degree to forecast it will grow by 4.8%
Donald Tusk were unaccept- focus on the bloc’s myriad which the country’s economic this year.
able. other problems, above all the recovery is being felt by vot- The recovery’s strength has
Detailed negotiations on the migration crisis. ers. led to a surge in tax revenues
proposals will take place “Tusk’s proposals as such The election is expected to that has reduced the budget
among senior officials from are reasonable,” said one se- return Prime Minister Enda deficit and government debt
NEIL HALL/REUTERS

The proposals were met
with immediate criticism from
some U.K. media and lawmak-
ers for not going far enough.
But Mr. Cameron said the pro-
posed changes to the U.K.’s re-
lationship with the EU directly
addressed the concerns of the
British people and that the
draft deal would help jobs, in-
vestment and growth in the
U.K.
“These are good proposals
that I think will have the back-
ing of the British people,” Mr.
Cameron said.
He acknowledged there
were challenges ahead. “I am
not saying this is perfect, I am
not saying the European Union
will be perfect after this
deal—it certainly won’t be—
but will the British position be
stronger and better? Yes it
will.”
European politicians raised
reservations about the propos-
als—particularly an emergency
mechanism that would let
Britain restrict certain bene-
fits for other EU workers in
the U.K. But there were few
signs the package would cross
the 28 EU countries on Friday
and then on Feb. 11, to be fol-
lowed by talks among leaders
at an EU summit on Feb 18-19
that could complete the pack-
age. That would allow a refer-
endum as soon as June.
In the British media, Mr.
Cameron’s efforts received a
mixed reception. An editorial
in the Financial Times said the
prime minister “looks set to
secure a reasonable deal for
Britain.” The front page of the
Sun tabloid newspaper carried
the headline “Who do EU think
you are kidding Mr. Cam-
eron?”
The Sun is owned by News
Corp, which owns the pub-
lisher of The Wall Street Jour-
nal.
Opinion polls show the pub-
lic is divided on the issue of
whether they want Britain to
remain in the EU, with gener-
ally more people saying they
would vote to stay than leave.
But there remains a large
section of the public that are
undecided on the issue—
about 20% of voters, poll-
sters say—who will be crucial
in determining the outcome
nior official from a eurozone
country. “We are not thrilled
about some of them but we
are willing to accept them if
this allows the EU to move on
Prime Minister David Cameron
in London on Wednesday.
to other burning issues.”
The reaction was also
mixed among British politi-
of the vote. cians, as some, including
Matthew Goodwin, politics members of Mr. Cameron’s
professor at the University of Conservative Party, criticized
Kent, said if the final deal is the absence of more funda-
along the lines of the propos- mental reform.
als, it would help persuade “The thin gruel has been
some of the undecided British further watered down,” said
public. “While it will be diffi- Jacob Rees-Mogg, a Conserva-
cult for Cameron to satisfy tive lawmaker. The prime min-
public appetite for more radi- ister “has a fortnight, I think,
cal reform on immigration, in which to salvage his reputa-
when it comes to convincing tion as a negotiator.”
swing voters about the need to Mr. Cameron, though, got a
stay in the EU, he might just boost from one of the most in-
have enough,” he said. fluential EU critics in his cabi-
Eurozone governments have net when Home Secretary The-
warned they will ensure the resa May issued a statement
fine print of a deal prevents on Tuesday calling the EU pro-
London from scuttling further posals “a basis for a deal.”
integration among the group. Ms. May has expressed
Poland, Hungary and others frustrations with the EU in the
want to ensure their citizens past, particularly its freedom-
don’t face permanent discrimi- of-movement rules, which she
nation because of benefit re- says has hindered Britain’s
strictions the U.K. would be ability to deport foreign crimi-
able to impose on EU migrant nals.
Kenny to office, according to more quickly than expected.
pollsters, albeit likely at the
head of a more diverse and
fragile coalition. A victory for
Opinion polls point
Mr. Kenny would make Ireland to a return for Fine
the first eurozone country to
give a second term in office to
Gael, but with a
a leader who has pursued aus- smaller vote share.
terity policies.
Mr. Kenny’s term is due to
end in April, but the timing of But the election campaign
the election for Feb. 26 was won’t be without difficulties
his choice. The aim is to re- for Mr. Kenny. Despite falling
convene parliament March 10. steadily over recent years, un-
“The choice that you face is employment remains well
as stark as it is clear,” Mr. above precrisis levels. Wages
Kenny said in a video posted haven’t recovered, and inter-
via Twitter on Wednesday. “It est rates are among the high-
is a clear choice between con- est in Europe.
tinuing on the path of recov- Opinion polls indicate that
ery, or putting your hard-won Mr. Kenny’s Fine Gael remains
progress at risk.” the most popular party but
For five years, Mr. Kenny that it is set to gain a smaller
and his center-right Fine Gael share of the vote than it did in
party have led a government 2011. Support for its coalition
that began by pushing through partner, the left-of-center La-
tax rises and spending cuts bour Party, appears to have
under a bailout program from collapsed, pollsters say.
the European Union and the Fine Gael’s traditional rival
International Monetary Fund, for power, the similarly cen-
but last year declared an end ter-right Fianna Fáil, has yet
to unpopular austerity with to recover the support it lost
some small tax cuts and in- as the crisis broke during its
creases in spending. last term in office.

Ukraine Minister Quits, Citing Corruption in Government

BY NATHAN HODGE
KIEV, Ukraine—Ukraine’s
economy minister unexpectedly
announced his resignation, say-
ing he had been thwarted in ef-
forts to roll back deeply en-
trenched official corruption.
Minister of Economic Devel-
opment and Trade Aivaras
Abromavicius said Wednesday
that he would step down amid
“increasing pressure” to make
patronage appointments in
state-owned enterprises—as
well as within his own ministry.
“I and my team don't want
to be a cover for blatant cor-
terests of some individuals are
solved behind my back.”
The resignation prompted
an unusual joint declaration of
dismay by Western embassies
in Kiev, saying he had “deliv-
ered real reform results for
Ukraine” since his appoint-
ment in December 2014.
Ukraine’s faltering economy
has long been plagued by offi-
cial corruption, and is heavily
dependent on international as-
sistance. The World Bank last
month forecast 1% growth in
gross domestic product this
year, after a 12% contraction
last year amid a conflict in the
tions to open creaking state would cooperate. lated to “a statement of dissat- tives,” Mr. Kononenko told the
businesses to privatization and Mr. Kononenko, the deputy isfaction with his work that I news agency Interfax-Ukraine.
attract new investment. head of Mr. Poroshenko’s fac- made” at a faction meeting. The president said he had
Specifically, Mr. Abromav- tion in parliament, said he “There are positives in his supported and would continue
icius complained that Ihor thought Mr. Abromavicius’s work on the post of the minis- to support Mr. Abromavicius’s
Kononenko, a lawmaker close “emotional statement” was re- ter, but there are also nega- overhauls, and urged him to
to President Petro Poroshenko, stay on as minister. “He has
had “actively lobbied” to install gone to think” about it, Mr. Po-
his loyalists in state-owned en- roshenko said.
terprises. Mr. Abromavicius The ambassadors to Ukraine
said the lobbying culminated of Canada, France, Germany,
with a bid by Mr. Kononenko to Italy, Lithuania, Sweden, Swit-
install “one of his own” as a zerland, the U.K., and the U.S.
deputy economy minister. registered strong disappoint-
“I can only consider such ment in the resignation.
action as a persistent attempt “During the past year, Abro-
to establish control over cash mavicius and his professional
flows at state enterprises,” Mr. team have made important
VALENTYN OGIRENKO/REUTERS

ruption or controlled puppets
for those who want old-style
government to establish con-
trol over public money,” he
said. “I don't want to go to Da-
vos to meet with foreign inves-
tors and partners and tell
them about our successes,
while certain issues in the in-
east with Russia-backed sepa-
ratists. The region controlled
by the separatists used to rep-
resent a quarter of Ukraine’s
industrial production.
Mr. Abromavicius, a native
of Lithuania, was seen as part
of a promising new generation
of technocrats who had ambi-
Abromavicius said. “And I re- strides—implementing tough
fuse to work in such a system.” but necessary economic reforms
Mr. Poroshenko said on his to help stabilize Ukraine’s econ-
Facebook page after meeting omy, root out endemic corrup-
with Mr. Abromavicius that tion, bring Ukraine into compli-
the assertions should be inves- ance with its IMF program
tigated by the National Anti- obligations, and promote more
Corruption Bureau, and that openness and transparency,”
Mr. Kononenko had said he Economy Minister Abromavicius in parliament in December 2014. their statement said.
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WORLD NEWS

U.N. Suspends Syria Peace Negotiations

Envoy says delivery of launched a new military offen-
sive on the city of Aleppo,
humanitarian aid is backed by Russian air bom-
more urgent matter; bardments, in the midst of the
U.N. struggles to get the talks
talks to resume Feb. 25 off the ground.
The U.S. State Department
BY ASA FITCH said the Syria talks in Geneva
AND SAM DAGHER were halted partly because of
ongoing Russian airstrikes tar-
GENEVA—The United Na- geting opposition forces near
tions suspended Syrian peace Aleppo and disrupting the de-
talks after days of fruitless ef- livery of humanitarian aid.
forts to kick-start the negotia- U.N. envoy Staffan de Mis-
tions, saying the process tura, who was spearheading
The opposition delegation warplanes, pro-Iran Shiite mi-
was demanding the implemen- litiamen and regime forces
tation of humanitarian mea- have recaptured since the start
sures under U.N. Security of the week at least four vil-
Council Resolution 2254 be- lages near Aleppo from Presi-
fore any discussion of a politi- dent Bashar al-Assad’s oppo-
cal transition. The U.N. frame- nents. Fighting continued on
work calls for a transitional Wednesday around a critical
government in six months, fol- supply line for rebels to neigh-
lowed by a new constitution boring Turkey, according to
and elections within 18 opposition activists and Syrian
months. state media.
Washington and its Euro- An adviser to the opposi-
pean allies, worried about the tion delegation said that de-
threat of Islamic extremists spite Washington’s best inten-

DENIS BALIBOUSE/REUTERS
shouldn’t take precedence over the peace process, insisted and the massive refugee crisis tions, pushing talks while
relieving the suffering of the that the talks hadn’t failed and both emanating from Syria, Russia bombed and the regime
Syrian people. would resume on Feb. 25. had gone all out to try to facil- besieged opposition areas
The U.S. and the U.N. tried, “The U.N. cannot allow pro- itate the negotiations, which couldn’t work. “This was going
but ultimately failed, to pre- cedural matters to become were supposed to begin on Fri- to be a morally bankrupt pro-
vent rival stakeholders, includ- more important than the re- day but never really got cess,” he said.
ing Russia and Iran on one sults for the humanitarian sit- started. Speaking from Oman during
side and Saudi Arabia and Tur- uation of the Syrian people The two sides never agreed U.N. mediator Staffan de Mistura in Geneva on Wednesday. an official visit on Wednesday,
key on the other, from acting who have been waiting for us to meet face-to-face. So Mr. de Russian Foreign Minister Ser-
as spoilers in the negotiations to deliver this time not a con- Mistura acted as a go-between, don’t produce results, we need Turkish official in Geneva. gei Lavrov said his country
in Geneva. ference but something con- holding separate talks with to go deeper, [and] that’s what Turkey, along with Saudi Ara- wouldn’t stop its current cam-
The Western-backed oppo- crete for them,” Mr. de Mis- each delegation. we’re doing.” bia, is a key backer of the op- paign in Syria started at the
sition steadfastly refused to tura said. “I’ve therefore taken Mr. de Mistura said he It was clear from the start position. end of September until it de-
talk about a political resolu- this decision to take a tempo- wasn’t frustrated or disap- that the talks depended less on Russia was unhappy with feats “terrorist groups.” He
tion before the end of air- rary pause. It is not the end.” pointed by this delay. the Syrian parties themselves the makeup of the opposition said instead of pressing Russia
strikes by regime ally Russia, The talks were intended to “You have to be determined and more on the will of their delegation, which was domi- over its actions in Syria, the
the lifting of sieges on rebel- map a political transition to but also realistic,” he said. international backers. nated by figures supported focus should be on stemming
held areas and the release of end Syria’s nearly five-year “When you see things going a “Having this exercise while and funded by Saudi Arabia the flow of weapons and assis-
detainees. conflict, which has killed more certain direction...we decide Russian bombing was ongoing and Turkey but excluded those tance to rebels from Turkey,
Not only did the regime fail than 250,000 people and dis- when the conference is pro- was going to legitimize Rus- close to Moscow. calling that “one of the most
to meet those conditions, it placed millions. ducing results or not. If they sian actions,” said a senior With the help of Russian urgent tasks.”

Saudi Councilwomen Suffer Setback Israeli Officer Killed

Saudi Arabia has ordered
the segregation of men and
women in local council meet-
In Old City Attack
ings, in a setback to women’s
rights in the ultraconservative BY RORY JONES Israel’s military is coordinat-
kingdom. ing with forces from the Pales-
TEL AVIV—Three Palestin- tinian Authority to calm the vio-
By Margherita ians carrying knives, guns and lence, Nitzan Alon, the Israeli
Stancati in Jeddah, explosives attacked Israeli secu- military’s head of operations,
Saudi Arabia, and rity forces at an entrance to Je- told reporters in Tel Aviv,
Ahmed Al Omran in rusalem’s Old City on Wednes- though he warned it could con-
Riyadh day, killing an officer and tinue.
seriously wounding another. “I don’t think this wave will
Under the new rules, which The attack happened after Is- end in a month or two,” he said.
FAISAL AL NASSER/REUTERS

follow the recent election of raeli security forces stopped the “We should adjust.”
women to Saudi Arabia’s local Palestinians at Jerusalem’s Da- After the attack in Jerusa-
councils, female representa- mascus Gate. Police later said lem, the Israeli military said it
tives must now participate in the trio opened fire on the po- was restricting movement in
the council meetings through a lice before being shot and killed. and out of Kabatiya, a city in the
video link. The men will be The dead officer was identified northern West Bank where the
able to hear their female col- as 19-year-old Hadar Cohen. assailants lived.
leagues, but not see them. Women and men sit together in the Shura Council, which is appointed by the king and not segregated. The attackers were found to In five months of violence,
Females represent a frac- be carrying explosives, and Palestinians have killed 29 Is-
tion of the council mem- ipation before the election Thuraya al-Arrayed, a mem- a partition wall and insisted were planning a larger attack, raelis and wounded nearly 300
bers—38 out of 2,106 offi- over concerns that it would ber of the Shura, said the new on being at the same table as according to Israeli authorities. others in lone-wolf stabbings,
cials—but the same-room ban lead to gender mixing and regulation for the local coun- the men, triggering a quarrel No group claimed responsibility shootings and car-ramming at-
is a reminder of the challenges Westernization of society. cils goes against the precedent with the hard-liners among for the attack. tacks, according to Israel’s For-
women face in Saudi Arabia, Sheikh Abdulrahman al-Bar- set by King Abdullah, who al- them, according to people fa- Jerusalem has been at the eign Ministry. More than 140
where they still can’t drive or rak said in a fatwa last August lowed women and men to sit miliar with the matter. center of a wave of Palestinian Palestinians have been killed by
travel abroad without the per- that it was “forbidden for in Shura Council together. Jeddah has the reputation attacks against Israeli security Israeli security forces and civil-
mission of a male relative. women to participate in the Ms. al-Arrayed said “some- of being less conservative than forces and civilians that began ians, mostly while attacking Is-
The rules were introduced municipal councils elections, body just didn’t do his home- the capital, Riyadh. Hard-liners in September and spread across raelis, the Palestinian Health
last week by the Ministry of elected or appointed, and it is work” when the decision was and moderates are more likely Israel and the Palestinian terri- Ministry has said.
Municipal and Rural Affairs forbidden for everyone to elect made to separate the women to clash there than elsewhere. tories. Increased security in Je- Israeli security forces also
but only gained national atten- them.” from the men in the municipal The two women who were rusalem has reduced the num- conducted raids Monday night
tion in recent days. Still, female candidates did councils. elected in the coastal city are bers in recent weeks. in villages in East Jerusalem.
The government order rep- better than expected in the “A decision from a much Rasha Hefzi, a well-known so-
resents a particularly strict Dec. 12 nationwide municipal higher level was made when cial worker, and Lama al-Sulai-
imposition of the country’s election, winning 21 out of 979 we were appointed to the man, a prominent business-
widely applied gender segre- elected seats. The local coun- Shura Council,” she said. “We woman who previously served
gation policy. It is in contrast cils are the only elected bodies aren’t separated behind a glass as the deputy head of Jeddah’s
with the Shura Council, an un- in the country, and this was wall or in a separate room. It Chamber of Commerce.
ATEF SAFADI/EUROPEAN PRESSPHOTO AGENCY

elected advisory body to the the first time women were al- is full membership with full “Every step toward having
king, where women and men lowed to participate as both participation.” more women participating in
sit in the same assembly hall. voters and candidates. The Ministry of Municipal society—through economic,
The elections in December The inclusion of women in and Rural Affairs didn’t re- political or social ways—is im-
were widely hailed at the time the vote was announced by the spond to a request for com- portant,” Ms. al-Sulaiman said
as a small but symbolic turn- country’s late monarch, King ment. on the day she was elected.
ing point for women’s rights in Abdullah, who also appointed The regulation followed “The more women are there,
the kingdom. Yet the recent women in the Shura Council heated discussions in the first the more you know that there
ruling underscores the contin- for the first time in 2013. meeting of the local council of is a full representation of the
ued sway of the country’s Both female and male mem- Jeddah, Saudi Arabia’s second- people of Saudi Arabia.”
hard-line conservatives. bers of the Shura have spoken largest city. At the first meet-
Conservative clerics pro- out against the segregation in ing, the two women council  MoneyBeat: Saudi Arabia’s
tested against women’s partic- the municipal councils. members refused to sit behind tough budget choices .......... B8 Israeli medics carrying a wounded officer after Wednesday’s attack.

Blast Forcing Somalia Jet to Land Stokes Terror Fears

BY HEIDI VOGT Wednesday said two people
were injured in the blast. Local
NAIROBI, Kenya—An explo- media reported that the body
sion that blew a hole in the of a man who apparently fell
side of a commercial flight from the Djibouti-bound air-
leaving Mogadishu on Tuesday plane was found near the town
is stoking concerns that ter- of Balad, about 18 miles from
rorists may have carried out Mogadishu, close to where the
an attack on the jet. aircraft turned around to re-
Somali authorities investi- turn to the airport.
gating the cause of the blast A Somali aviation official
said they had found no evi- told The Wall Street Journal
dence of an explosive, but the that there was no evidence to
plane’s pilot told a Belgrade suggest any sort of bomb or
magazine he believed there explosive device.
was a bomb. “No clue has been found
No group has claimed re- about an explosive,” said Ali
sponsibility for the explosion, Gaal, the director general of
which forced an Airbus A321 the Ministry of Transport and
with 74 passengers aboard to Civil Aviation. “It was all de-
make an emergency landing in pressurization. It was only
the Somali capital. that.” He said it appeared
Al-Shabaab has regularly there was a problem with the
carried out armed strikes air-pressure system that led to
against targets in the Horn of an imbalance and blew the
Africa nation, but getting a hole in the plane as it climbed.
bomb aboard a commercial Mr. Gaal said the investiga-
airliner would represent a new tion was to figure out what
approach for the Islamist mili- might have caused the depres-
Mogadishu on Tuesday, the air-
line said. “The aircraft landed
safely and all of our passengers
were evacuated safely. A thor-
ough investigation is being
conducted by Somalia Civil Avi-
ation Authority.”
The pilot of the airliner,
Vladimir Vodopivec, a Serb,
told the Belgrade magazine
Blic he thought the explosion
was a bomb.
He said the blast didn’t
damage the plane’s control
system.
“We lost cabin pressure.
Thank God everything ended
well,” said Mr. Vodopivec, who
was employed by JAT Airways
and Montenegro Airlines be-
fore moving to Africa to work
for Daallo.
In video footage shot as the The Mogadishu-Djibouti
plane descended into Mogadi- flight was operated by Hermes
shu for a landing, wind can be Airlines, a Greek charter air-
heard ripping through the fu- line company, said Daallo,
selage as passengers move which flies routes between Dji-
quickly toward the rear of the bouti and the Middle East and
cabin. The video, shot by Africa. A Daallo employee
Awale Kullane, shows some reached by phone in Dubai de-
passengers caked in dust and clined further comment.
debris, and others breathing Airbus said from its head-
through oxygen masks. quarters in Toulouse, France,
that it hadn’t yet been asked
to provide any on-site exper-
tise, though it was ready to
support authorities.
The European Union, citing
safety concerns, has barred all
Djibouti carriers, including
Daallo Airlines, from operating
at its airports.
An aviation-security expert
said a bomb wasn’t the only
possible cause of the hole.
“It could be that there was
damage to the window, and
that caused it to blow out. It
could be a device, but not a
particularly large one. It would
be really too early to call,” said
ASSOCIATED PRESS

tant group. It has previously surization and whether the pi- Matthew Finn, managing di-
staged attacks against civilian lot was aware of the problem rector at London-based Aug-
targets in locations such as before he took off. mentiq Ltd., an aviation-secu-
restaurants, hotels and even a The Daallo Airlines flight rity company.
shopping mall in Kenya. “experienced an incident” —Robert Wall in London
Somali authorities on shortly after taking off from A hole is seen in a plane operated by Daallo Airlines as it sits on the runway in Mogadishu. 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. Thursday, February 4, 2016 | A5

WORLD NEWS

Zika Virus Saps Brazil’s Tourism Hopes

Infection fears imperil declined sharply during the
Rapid Rise 5,000 2009 “swine flu” panic, for in-
country’s plans to Cumulative Brazilian stance, to West Africa during
build on Olympics cases of microcephaly, the Ebola epidemic in 2014, and
a birth defect that 4,000 to much of Asia in previous
to lure more travelers may be linked to years amid fears about SARS
Zika virus and avian influenza.
BY PAUL KIERNAN infection* 3,000 Brazil, located in the oppo-
AND ROGERIO JELMAYER site hemisphere from most in-
ternational travelers, has strug-
RIO DE JANEIRO—Brazil’s 2,000 gled to draw visitors even in the
status as ground zero in the lat- best of times.
est global health scare is raising In 2014, when it hosted soc-
fears that travelers are cancel- 1,000 cer’s World Cup, Brazil notched
ing plans and dashing hopes 6.4 million international tourist
that this summer’s Olympics arrivals, up about 10% from the
would buff the country’s image 0 previous year. But that
as a tourist destination. amounted to a fraction of the
International concern has 2015 2016 29.1 million guests to Mexico,
been mounting in recent weeks Latin America’s most popular
SILVIA IZQUIERDO/ASSOCIATED PRESS

*Suspected cases since Oct. 22,

when reporting became mandatory;
after Brazilian authorities some cases have been ruled out.
destination country, that year.
linked the little-understood Zika Source: Brazilian Health Ministry Brazil’s distance from the
virus to microcephaly, a rare THE WALL STREET JOURNAL. rest of the world only partly ex-
birth defect in which babies are plains its underperformance.
born with undersized heads and Viviane Oliveira, who is three Argentina, a much smaller na-
brains. The World Health Or- months pregnant, danced next tion that lacks world famous
ganization on Monday declared to a sign reading ‘Get out, sights like Rio’s Christ the Re-
the virus a global public-health Zika!’ on Rio de Janeiro’s deemer statue, has received
emergency, two weeks after the Ipanema beach on Sunday. similar numbers of tourists as
U.S. Centers for Disease Control Brazil in recent years. Australia,
and Prevention recommended lowly 42nd-place ranking for in- Virginia’s George Mason Univer- matic by the day,” he said the combat mosquitoes,” Mr. Silva a 20-hour flight from much of
that pregnant women avoid ternational tourist arrivals. sity who was planning a three- virus could become a deciding said. the U.S. and Europe, gets more.
travel to countries affected by “If there’s one thing that week trip to Brazil as a gradua- factor for prospective visitors. At a news briefing Tuesday, Experts say other factors—
the outbreak, including Brazil. transforms a country into an at- tion present in June, the news “It’s one more hit to the im- Mario Andrada, the spokesman some of them self-inflicted—are
Health officials there say as tractive tourist destination, it’s reports were enough to make age of the country,” said Mr. for Rio’s Olympic organizing also at play. For instance, Brazil
many as 1.5 million Brazilians the Olympics,” President Dilma her cancel her plans. Vasques, managing director for committee, talked about the requires U.S. citizens to apply
may be infected by the mos- Rousseff said in an October “I consciously decided to South America at hospitality torch relay, ticket sales, test for tourist visas before travel-
quito-borne virus. On Tuesday speech. “The eyes of the world cancel my trip because the virus consultancy HVS. events and a new mobile app. ing, an often cumbersome pro-
the health ministry released are turned to Brazil…. We will still seems relatively unknown,” Brazilian tourism officials He then briefly addressed the cess. The procedure involves mi-
new figures showing that the make the Olympic year a mark Ms. Phan said. “Anytime there say there hasn’t been a major Zika issue and was bombarded nor bureaucratic hoops, such as
number of suspected and con- of consolidation as a tourist are medical dangers regarding a impact from Zika. Vinicius Lum- with questions on the virus. “It mailing flight confirmations and
firmed cases of babies born destination.” trip, I don’t take the risk.” mertz Silva, president of gov- worries us just as it worries the other documents to the nearest
with undersized skulls and But instead of lush rain for- São Paulo-based hospitality ernment tourism agency Em- World Health Organization and consulate and paying a $160 fee.
brains continues to rise. ests, tropical beaches and exotic consultant Cristiano Vasques bratur, said he still expects everyone else,” he said, adding Though the requirement is in-
The news couldn’t come at a wildlife, the photos coming out said Brazil’s brand can ill afford some 400,000 foreigners to ar- that Olympics organizers ha- tended as reciprocity for coun-
worse time for Brazil. The gov- of Brazil since December have another blow after a year of rive for the Olympics in August. ven’t issued any travel recom- tries that charge Brazilians to
ernment has spent billions of largely been of weeping moth- headlines about water pollution “Our estimate is the same, as mendations in response to the apply for visas, some say it
dollars in the past half-decade ers, infants with tiny heads, and in Rio de Janeiro, economic cri- long as there isn’t an explosive epidemic. amounts to a shot in the foot
preparing to host global sport- soldiers cleaning out garbage- sis and corruption, all on top of increase in mosquito-related Health scares can have a se- when applied to the U.S., the
ing events, a high-stakes gamble strewn ditches and other mos- longer-standing concerns about diseases, which I don’t think rious impact on tourism in world’s second-largest source of
aimed at lifting the world’s quito breeding grounds. violent crime. With global fears will happen because the govern- countries viewed as centers of international travelers after
fifth-biggest country out of its For Juliann Phan, a senior at of Zika becoming “more dra- ment is taking measures to an epidemic. Travel to Mexico China.

U.S. Urges China Clarity on Yuan

BY IAN TALLEY
WASHINGTON-—U.S. Trea-
sury Secretary Jacob Lew
urged Chinese Vice Premier
Wang Yang to ensure Beijing’s
transition to a market-deter-
mined exchange rate is “or-
derly and transparent” and
said authorities need to
clearly communicate their pol-
icies and actions to markets.
Mr. Lew’s comments, made
in a phone call Tuesday night,
came as China’s mixed mes-
sages on currency policy have
spurred global market turmoil.
Investors are assessing China’s
yuan policy as a signal of
CARLOS GIUSTI/ASSOCIATED PRESS
communicating its policies
and actions to the market,”
the U.S. Treasury said on
Wednesday.
China has said it is transi-
tioning the yuan away from a
dollar peg, allowing greater
market influence on the cur-
rency’s value. It has also said
it intends to target a basket of
currencies.
Last year, China’s surprise
2% devaluation spooked inves-
tors, who initially thought the
move could be the beginning
of larger devaluation and a
last-ditch effort to stimulate
the country’s decelerating
economy. Chinese officials
markets.
At a panel discussion at the
World Economic Forum in
Switzerland last month, Inter-
national Monetary Fund chief
Christine Lagarde suggested
the need for better communi-
cation, saying it would be
helpful for China in managing
its current economic transi-
tion.
The U.S. Treasury
chief says mixed
messages spur global
market turmoil.
global economy hangs on
whether China can smoothly
transition from a credit-
fueled, export-led model to
one based more on domestic
consumption, a task that in-
cludes managing a dangerous
buildup of debt and overca-
pacity.
That policy overhaul is nec-
essary to ensure that the
country can continue to grow
at healthy rates, helping to
drive global growth instead of
sap output around the world.
“Secretary Lew reiterated
the importance of China sup-
porting household income and
rebalancing towards consump-

whether growth in the world’s
second-largest economy might
be stalling.
“Secretary Lew and Vice
Premier Wang continued their
discussion on the importance
of China making its transition
to a market-determined ex-
change rate in an orderly and
Treasury Secretary Lew spoke to Vice Premier Wang on Tuesday. transparent way, while clearly
have since sought to clarify
their policies, but the yuan’s
value and questions about Bei-
jing’s intent have left markets
on edge.
Chinese officials have in re-
cent weeks said that their
government recognizes the
need for clearer communica-
tion to avoid roiling global
“We should do a better
job,” Fang Xinghai, a senior
economic adviser to the Chi-
nese leadership, said on the
panel. “We’re learning and do-
ing it. I’m here to communi-
cate.”
Many economists have cau-
tioned that the fate of the
tion-led growth, including
through appropriate fiscal pol-
icies,” the Treasury said. “Sec-
retary Lew expressed confi-
dence that if China
implements the reforms it has
set out, it has the necessary
tools to support domestic de-
mand and succeed in this eco-
nomic transition.”

Australia Court Backs Offshore Asylum

BY ROB TAYLOR drawn condemnation from the boats at sea, while pledging more than 80 children, would
United Nations and rights that even people assessed as be forcibly sent back to Nauru. 2016 Promotions to Partner
CANBERRA, Australia—Aus- groups, should be illegal. Suc- genuine refugees would never But Prime Minister Mal-
tralia’s highest court backed cessive Australian govern- be resettled in Australia. colm Turnbull said the govern-
the government’s hard line on ments since 2001 have over- The latest legal challenge ment’s approach had helped Michelle Doo Hong Kong
detention of asylum seekers in seen policies of detaining was brought by a Bangladeshi prevent deaths at sea. Ashwin Saboo New Delhi
poor Pacific nations, in a rul- asylum seekers in Nauru and woman sent to an Australian “Our commitment today is
ing likely to be watched glob- Papua New Guinea while detention center in Nauru. simply this: The people smug- C.K. Guruprasad Bangalore
ally as Europe battles its own claims for refugee status are Canberra’s approach has glers will not prevail over our
migrant crisis. assessed. been criticized by rights sovereignty. Our borders are Takashi Kameda Tokyo
In a setback for refugee ad- Those policies hardened groups and the U.N. as poten- secure. The line has to be
vocates, the High Court of ahead of the last election in tially violating international drawn somewhere and it is Niccolo Calabresi Milan
Australia rejected an argu- 2013, won by the conserva- refugee laws. drawn at our border,” Mr.
ment that offshore detention tives. Former Prime Minister Amnesty International said Turnbull told Parliament.
Oliver Schiltz Zurich
of asylum seekers in a third Tony Abbott deployed the the ruling meant some 260 —Rebecca Thurlow Chris Bray London
country, a policy that has navy to turn back asylum people in Australia, including contributed to this article.
Niren Thanky London
majority, had declined an invita- Eurostat said retail sales rose CHINA Adam Vaughan London
World tion from the king to try to form
a government, saying he lacked
by an expected 0.3% in Decem-
ber from November, and by 1.4%
Journalist Emerges Pedro Rocha e Silva Lisbon
Watch sufficient support from other
parties.
from the final month of 2014. It
was the first increase since Au-
From Disappearance
A Chinese journalist who dis-
Ann Jones Minneapolis
Mr. Sánchez accepted the gust. appeared from Thailand while Bill Ward Chicago
charge, pledging to create “pro- Also Wednesday, data pro- seeking refuge there in January
gressive” government that vider Markit said a headline has re-emerged in China, his Dennis Baden Boston
would focus on unemployment, measure of activity based on wife said on Wednesday, in cir-
SPAIN economic inequality, corruption surveys of 5,000 companies cumstances she said resemble Inge Casteleyn Mexico City
and the secessionist movement around the eurozone, known as those of other recent missing-
King Tries to Break in the wealthy Catalonia region. the composite purchasing man- persons cases. Kevin Parker Dallas
Election Impasse —Matt Moffett agers index, fell to 53.6 in Janu- The journalist, Li Xin, told his Michael Foley Boston
King Felipe VI asked the So- ary from 54.3 in December. A wife, He Fangmei, that he had
cialist leader to try forming a EUROZONE reading above 50 indicates an willingly returned to China and Renee Neri New York
government, but the push to increase in activity. was now under investigation for
break the impasse from Decem-
Data Suggest Rate The data suggest economic an alleged crime that he didn’t
ber’s inconclusive election faces Of Growth Is Steady growth has continued at the specify, Ms. He said. She added Congratulations to each of our new Partners.
obstacles inside the party as Retail sales in the eurozone same moderate pace since the that she believes her husband’s
well as outside. rose for the first time in four start of the recovery in statement was coerced.
They are building on Heidrick & Struggles’
The king’s move came after months in December, according mid-2013. The expansion hasn’t Chinese and Thai government legacy of providing leadership and talent to top
meetings with Socialist leader to European Union statistics been strong enough to lift infla- officials didn’t respond to re- organizations globally.
Pedro Sánchez and Prime Minis- agency data, while surveys of tion. Underlining that message, quests to comment.
ter,Mariano Rajoy. purchasing managers indicated the surveys of purchasing man- Mr. Li is the third person in
Mr. Rajoy, whose conservative that economic activity slowed agers found that businesses cut recent months to disappear www.heidrick.com
Popular Party won the most less sharply than first estimated their prices at the fastest pace abroad and reappear in China.
seats in Parliament but lost its as 2016 began. since March. —Paul Hannon —Ned Levin
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 | Thursday, February 4, 2016
DORMS
Continued from Page One
Nobel Peace Prize winner Aung
San Suu Kyi’s National League
for Democracy, have to put up
with more than most. For the
next five years, many will bunk
down in rooms like Mr. Khin
Maung Soe’s: spartan rooms, 15
by 15 feet, in long rows of pas-
tel-green dormitories. The
dorms were originally built to
provide opposition lawmakers
a place to stay.
The rooms are a far cry
from the sprawling compounds
and mansions where lawmak-
ers from the departing mili-
tary-linked government lived.
The former ruling party head-
quarters was deserted on a re-
cent visit.
“It isn’t a good feeling, be-
ing here,” said Kyaw Thein, one
of the few Union Solidarity and
Development Party lawmakers
who won a seat in November’s
election, who now lives in the
party headquarters. “We had so
many seats before, but now we
have so few, and this building
is now so empty.”
But many of the mansions
remain home to former gener-
als who are choosing to retire
here.
Furnishings in NLD’s dorms
are little more than wooden
beds lined with an inch-thick
foam mattress and a flat pillow.
The small bathrooms attached
to the rooms lack water heat-
ers. Reddish-brown water
comes sputtering out of the
taps. There are no stoves or fa-
cilities for cooking.
“It isn’t so great for the old
MPs who live here, because the
weather gets so cold some-
times and there is no hot wa-
ter,” said Yan Lynn, a new NLD
lawmaker who just moved in to
DIVIDE
Continued from Page One
siders unmet needs. Enacting
his agenda, he says, will re-
quire a “political revolution’’
in which Americans demand
change so loudly that Con-
gress cannot ignore them.
In Keene, N.H., on Tuesday,
Mr. Sanders was asked
whether Mrs. Clinton is a pro-
gressive. “Some days,” he re-
plied. “Except when she an-
nounces she’s a moderate.
Then she’s not a progressive.”
For her part, Mrs. Clinton
frequently describes herself as
a “progressive who gets things
done.”
In her view, a more tar-
geted and in some cases more
modest approach can best
solve problems. Better to find
consensus on something
achievable than to wage an ex-
tended battle that will only
lead to gridlock.
“It is rare that we have the
opportunity we do now: to
have a real contest of ideas, to
really think hard about what
the Democratic Party stands
for,” Mrs. Clinton said Mon-
day night in Des Moines, after
the slimmest of victories in
the Iowa caucuses, the open-
ing contest in the presidential
nominating season.
The debate is important for
Democrats’ identity and for
setting the party’s course on
policy, as well as for its politi-
cal implications.
Many Democrats fear Mr.
Sanders is too liberal to win a
general election, and some are
concerned that Mrs. Clinton
will be pressured to take left-
leaning positions that could
hurt her, if she wins the nomi-
nation.
DEALS
Continued from Page One
weakest growth in 25 years
and its volatile stock market
unsettles investors globally.
Companies such as Chem-
China that are run by China’s
government are among those
buying. A push by President Xi
Jinping to boost overseas
trade through the “One Belt,
One Road” initiative aims to
open up new markets from
Central Asia to Europe for Chi-
nese companies that previ-
ously focused at home.
The policy, invoking the
spirit of the old Silk Road trad-
ing route between East and
West, means government cash
may be available to help fi-
nance state-owned enterprises,
or SOEs, wanting to buy for-
eign assets. But the purchase
of foreign assets may still
draw scrutiny in Beijing, as the
deals come at a tricky time for
National League for Democracy lawmakers arrive in Naypyitaw, Myanmar, where many stay in spartan dorm-style accommodations.
the guesthouse. He reckoned
his room “a bit small.”
The MPs aren’t compelled to
stay in the dormitories. But
with a salary of $3,880 a year,
it is their only realistic option.
Many, like Ms. Suu Kyi, were
political prisoners or activists,
and some don’t have much in
the way of private financial
means. Building their own
homes as some members of the
departing military government
did isn’t an option.
Kan Chon, a member of the
Naypyitaw city council, a gov-
ernment body that has jurisdic-
tion over the dormitories, said
it has been providing addi-
tional furniture in the rooms,
like shelves, and has started
Others say there is strong
support for liberal policy and
that these positions would
help either candidate in the
fall.
Final results from Iowa on
Tuesday showed the former
secretary of state winning
49.9% to Mr. Sanders’s 49.6%,
or four more state delegates
out of more than 1,400 at
stake. The race has now
moved to New Hampshire.
Before the primary, Demo-
crats will have two chances to
assess their choices—on
Wednesday evening at a CNN
forum, and on Thursday in
what will be the candidates’
first one-on-one debate. A
third candidate, former Mary-
land Gov. Martin O’Malley,
dropped out Monday.
When Mrs. Clinton’s hus-
band was running for presi-
dent in 1992, the centrist
wing of the Democratic Party
was ascendant, with Demo-
crats seeking to shed their
image as tax-and-spend liber-
als and address middle-class
concerns. As president, Bill
Clinton declared that the “era
of big government” was over.
He signed a welfare overhaul,
negotiated a balanced budget
and focused on reducing
crime, among other things.
Since the 1990s, the party
has moved to the left on a
swath of issues as voter anger
over the financial crisis and
slow recovery has swelled.
Nothing demonstrates the
shift more clearly than the
rise of Mr. Sanders, a political
independent from Vermont
who identifies himself as a
democratic socialist. Some
Democrats worry that the
term “socialist” would scare
off independent voters in a
general election. But for many
primary voters, it represents
China’s economy.
Beijing is stepping up ef-
forts to stem a flood of money
leaving the country in re-
sponse to the slowdown and a
currency that has fallen 5.5%
against the U.S. dollar since
August. China’s latest efforts
involve curbing the ability of
foreign companies in China to
repatriate earnings and ban-
ning yuan-based funds for
overseas investments, people
with direct knowledge of the
matter have said.
The Chinese government’s
concern over capital out-
flows—which by some esti-
mates reached as high as $1
trillion last year—could lead
regulators to look more closely
at certain acquisitions of for-
eign assets, analysts said. But
the government will still likely
support foreign deals that are
seen as a cornerstone of Chi-
nese companies’ overseas ex-
pansion, they said.
“It’s the nature of the assets
that determines Beijing’s sup-
FROM PAGE ONE
providing meals to MPs living
there. “Any big improvements
would have to wait until the
next government is in power,
because of budget concerns,”
he said. The NLD government
will fully take over in April.
Worst of all might be Nay-
pyitaw itself.
The country’s old military
regime relocated the capital
here from the main population
center around Yangon, about
200 miles south, in 2005, back
when many NLD lawmakers
and Ms. Suu Kyi herself were
still locked away. The idea was
to build a monument to what
the old junta believed would be
its unwavering power.
Though much has changed
Supporters of Hillary Clinton at a get-out-the-vote event in Derry, N.H., on Wednesday.
a commitment to fight for
their causes.
“We love Bernie Sanders,”
said Amy Noon, 28 years old,
a massage therapist in Iowa
City, Iowa. “He stands for ev-
erything we wish the country
was and is not. [Mrs. Clinton]
stands for everything the
country already is.”
In Iowa, the party’s “very
liberal’’ and “moderate’’
wings were equal in size at
the Democratic caucuses but
had different memberships,
surveys taken Monday at cau-
cus sites showed.
Caucusgoers who called
themselves “very liberal’’
tended to be younger, and
more of them had at least a
four-year college degree.
Their top issue was income
inequality.
By contrast, more than half
of the self-described moder-
ates were age 60 or older, and
port,” said Derek Scissors, res-
ident scholar at the American
Enterprise Institute, a Wash-
ington-based think tank.
Chinese acquisitions of key
Western technologies are
likely to face stiff scrutiny
overseas.
In the U.S., a federal agency
that screens corporate take-
overs for security concerns re-
cently rebuffed a deal by a Chi-
nese investment fund to buy
the lighting business of Royal
Philips NV. The business had
manufacturing and research
and development facilities in
the U.S. The agency, the Com-
mittee on Foreign Investment
in the U.S., is likely to look
closely at the ChemChina-Syn-
genta deal because most of
Syngenta’s seed business is in
the U.S.
Overall, “we see the deals
getting bigger and bigger,”
said Patrick Yip, mergers and
acquisitions leader for Deloitte
China, referring to Chinese
companies’ overseas forays. “I
since then, the capital still
hasn’t attracted the kind of
crowds the army expected. Its
oversize buildings dwarf the
few people on the streets, most
of them gardeners tending to
the manicured plants and trees
that line the sidewalks. Its
highways have just a handful of
cars on them at any one time.
There are some attractions
to divert the new MPs, many of
whom haven’t visited Naypyi-
taw before.
There is a gem museum
showcasing chunks of jade and
blood-red rubies mined from
the country’s north, and an
herb garden displaying medici-
nal plants from all over the
country.
60% of them didn’t have a col-
lege degree. The economy and
jobs were their top issues.
The two groups also had
different views of the direc-
tion the nation should take
once President Barack Obama
leaves office, with “very lib-
eral’’ caucusgoers saying they
wanted the next president to
pursue more-liberal policies,
and moderates saying they
wanted to “generally con-
tinue’’ Mr. Obama’s course.
As her party has changed,
Mrs. Clinton has shifted to the
left on some issues. In 2008,
for instance, she opposed new
Social Security taxes on the
wealthy; now, she supports
them. Her anti-Wall Street
rhetoric has risen, too, and
she now talks about jailing ex-
ecutives who break the law.
Her backers tend to mini-
mize the differences with Mr.
Sanders, saying that many of
am working on a number of
them. Chinese companies want
brand power and high technol-
ogy.”
David Brown, transaction
services leader for Pricewater-
houseCoopers China and Hong
Kong, predicts around 50%
growth for outbound Chinese
mergers and acquisitions every
The purchase of
overseas assets may
come under scrutiny
at home in China.
year, for the next several
years. There is “huge pent-up
demand,” said Mr. Brown, as
Chinese companies gain confi-
dence to pursue global deals.
The depreciation of the
yuan—and the expectation
that it will continue falling—
motivates Chinese companies
to buy now before foreign as-
sets get more expensive for
THE WALL STREET JOURNAL.
lived together. Now it feels
very isolated.”
Some lawmakers from Ms.
Suu Kyi’s party who won their
seats in by-elections a few
years ago say Naypyitaw just
takes some getting used to.
“For me, since I have spent
such a long time in prison in
much more difficult conditions,
it isn’t too bad,” said Thein
Swe, a lawmaker who has lived
in these guesthouses since
2012. He was a political pris-
oner who spent about 10 years
in prisons for his allegiance to
Ms. Suu Kyi.
Many lawmakers said they
were so happy to be able to
serve in government that the
strangeness of their new homes
was secondary. They said they
would enjoy having Wi-Fi or a
library in their guesthouses.
Still, there is some good
news for the NLD. Improve-
SOE ZEYA TUN/REUTERS
ments are being made to the
parliament building, which
boasts a new cafe selling dim
sum and a souvenir shop. Their
guesthouses too are slowly be-
ing improved.
“They have started to up-
grade the bedding now that we
Then there is the water park are in government,” said Thin
where a fountain lights up at Pa Pa Mying, who splits her
night and a zoo where the air- time between Yangon and the
conditioning in the penguin en- Naypyitaw guesthouse where
closure wasn’t cold enough, she accompanies her father, an
killing all 10 birds over the NLD lawmaker elected in the
course of two years. A zoo- earlier round of by-elections.
keeper said they never took to “For example we now have
Naypyitaw’s hot and dry new silicone pillows. Before
weather. they were like one-time-use ob-
Many new MPs say it feels jects,” she said.
eerie. —Myo Myo
“The roads and buildings contributed to this article.
here are so different from any-
thing I have seen in the past,” VIDEO
said U Myo, a new lawmaker
who visited the capital for the See video about
first time last week. “There are
no people here, but I came
from a place that is highly pop-
WSJ
.COM
Myanmar’s
parliament living
quarters at
ulated, where many people wsj.com/ahedvideo.
mental ways: on their view of
the economy, and on their
view of how much govern-
ment is needed to address so-
ciety’s problems.
On the role of government,
Mr. Sanders wants to expand
the suite of benefits offered to
all Americans, while Mrs.
Clinton favors more targeted
ideas. For example, Mr. Sand-
ers would increase Social Se-
curity benefits across the
board, while Mrs. Clinton
wants an increase targeted to
the poorest senior citizens.
Mr. Sanders would give all
JUSTIN SULLIVAN/GETTY IMAGES
Americans government-run
health insurance, while Mrs.
Clinton wants to patch holes
in the Obama health law.
Mr. Sanders also wants to
make tuition free at public col-
leges. Mrs. Clinton has a plan
that would allow students to
attend college without taking
on debt, but it wouldn’t be free.
Mrs. Clinton’s plans—such as Many also see a difference
her $350 billion, 10-year col- in how the candidates see the
lege plan—are bold. But Mr. economy. Mr. Sanders de-
Sanders and his aides see dif- scribes the economy as unfairly
ferences in stark terms. rigged to favor the rich, while
“This is a fight for the soul Mrs. Clinton offers a more tex-
of the Democratic Party,” tured explanation for economic
Sanders strategist Tad Devine pressures, including the impact
said. of technological change.
One clear divide is tactical. “Sanders says that the rules
Mrs. Clinton regularly warns are unfair because specific in-
that trying to enact a single- dividuals have crafted those
payer health-care plan, as Mr. rules to their advantage,” said
Sanders favors, would lead to William Galston, a Brookings
gridlock and endanger progress Institution scholar who was an
made under Mr. Obama’s Af- adviser in the Bill Clinton
fordable Care Act. Better to act White House and now writes
incrementally to deal with lin- an opinion column for The
gering issues, such as high out- Wall Street Journal. “The cen-
of-pocket costs, she has said. ter left is more inclined to
Mr. Sanders has said noth- give at least equal weight to
ing in his agenda will come long-term processes like glob-
about without a revolution, alization and technological
but he is vague about how the change in explaining what’s
revolution will come to pass. going on in the economy.”
The two candidates’ per- —Jennifer Levitz
spectives differ in two funda- contributed to this article.
them, said Rocky Lee, a Bei-
jing- and Hong Kong-based
partner at law firm Cad-
walader.
Shanghai-based principal at
China Market Research Group.
“One of the issues they’re run-
ning into is they’re out of
China’s yuan, after room to grow in their home
strengthening by more than market.”
30% over the past decade, has ChemChina, when it agreed
fallen 8% against the U.S. dol- to buy Italian premium-tire
lar since the start of 2014 as maker Pirelli for roughly $7.7
policy makers seek to make billion last year, had secured
the yuan more market-driven funding from an overseas in-
and grapple with a deepening vestment vehicle championed
economic slowdown. by China’s president.
Some analysts believe the Under the deal, Silk Road
yuan could fall by as much as Fund Co.—an investment vehi-
10% more by year-end amid cle controlled by China’s State
fears that the Chinese econ- Administration of Foreign Ex-
omy is slowing faster than change and other state-owned
projected and as government entities—took a 25% stake in
efforts to contain market the ChemChina subsidiary set
forces send capital flooding up to acquire Pirelli’s shares.
out of China. Beijing is likely to continue
Chinese state-owned enter- providing financial support for
prises for now are receiving SOEs to buy foreign assets in
strong backing from the cen- areas such as technology, en-
tral government for strategic ergy and infrastructure, said
foreign acquisitions. Mr. Lee of Cadwalader.
“A lot of the [state-owned —Brian Spegele
enterprises] are fairly cash- and Anjani Trivedi
rich,” says Ben Cavender, a 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. Thursday, February 4, 2016 | A7

Ryan Heightens Outreach to Conservatives
New House speaker
seeks to establish a
rapprochement with
outside groups
BY KRISTINA PETERSON
WASHINGTON—Two years
ago, then-House Speaker John
Boehner lambasted conserva-
tive groups off Capitol Hill for
encouraging a partial shut-
down of the federal govern-
ment. On Wednesday, his suc-
U.S. NEWS
dates attacking Washington And Mr. Ryan cautioned
have led the pack so far. conservatives to not allow
“You’re seeing it Iowa, I’m smaller-scale fights, for in-
seeing it in Indiana,” said Rep. stance on spending-bill amend-
Marlin Stutzman (R., Ind.), in a ments, to derail their ability to
week in which Sen. Ted Cruz present a unified GOP. “We
(R., Texas) won the Iowa GOP can’t let how you vote on an
caucus, trailed by businessman amendment to an appropria-
Donald Trump. “A big part of tions bill define what it means
the problem is that our base to be a conservative,” he said.
wasn’t hearing from our lead- But the speaker also empha-
ership the way that they ex- sized that congressional Re-
pect to.” publicans were open to input
That is changing. Mr. Ryan from the conservative groups
has become a recurring pres- who had faced a chillier recep-
ence on talk radio—with both tion on Capitol Hill under Mr.

J. SCOTT APPLEWHITE/ASSOCIATED PRESS

cessor, Paul Ryan, traveled to
one of those organizations to
deliver a keynote address at its
policy summit.
The Wisconsin Republican’s
approach to conservative out-
reach may be the most visible
departure he has taken from
Mr. Boehner in his first three
months on the job. Mr. Ryan
has been a frequent guest on
conservative talk-radio shows,
an influential source of news
and analysis for the Republi-
can voters who have vilified
GOP leaders and upended the
party’s presidential primary.
Mr. Ryan has also shown
more public distance from the
White House than Mr. Boehner,
who during his final month in
office cut a two-year budget
and debt-ceiling deal with
President Barack Obama.
Mr. Ryan hadn’t met for-
mally with Mr. Obama until
Tuesday, when the two had a
private lunch at the White
House after a meeting with
Senate Majority Leader Mitch
McConnell (R., Ky.)
Mr. Ryan’s rapprochement
with conservatives coincides
with their growing importance
in the tumultuous GOP pri-
mary contest, where candi-
national heavyweights and lo-
cal hosts—interspersed with
his regular television appear-
ances. House Republicans said
his efforts at broadcasting
their message have helped
mitigate some of the misinfor-
mation that can spread over
talk radio and show constitu-
ents that Washington isn’t ig-
noring them.
“Talk radio is the lifeline of
the conservative movement,”
said Rep. Ken Buck (R., Colo.)
“It’s very difficult to go home
and face groups who are angry
at D.C. and angry at leader-
ship.”
Mr. Ryan’s challenge—as the
highest-ranking elected Repub-
lican—is that he is indisput-
ably part of that leadership. In
recent weeks he has tried to
acknowledge the anti-Wash-
ington sentiment coursing
through the GOP electorate
without sidelining his cham-
ber, saying such anger must be
“channeled” into action.
Taking to the airwaves is
one way Mr. Ryan seeks to
frame the House’s agenda to
conservative voters frustrated
with the limits of a GOP-con-
trolled Congress bumping
against a Democratic White
Boehner. “As far as I’m con-
cerned, if you have ideas,
we’re all ears,” said Mr. Ryan.
By the end of his career, Mr.
Boehner had far less public af-
fection for the outside groups
that attacked his legislative
compromises with Democrats
and stoked enthusiasm for the
push to defund the Affordable
Care Act, which helped lead to
House Speaker Paul Ryan is taking a different approach from predecessor John Boehner. the partial government shut-
down in the fall of 2013.
House. That may help shield versity of Pennsylvania. And as Wednesday’s gathering at the In December 2013, Mr. Boe-
lawmakers at home when the for their listeners, “if you lose conservative think tank’s lob- hner said conservative groups
House has to pass contentious them, like Speaker Boehner did bying arm. At the summit, Mr. had “lost all credibility” and
bills requiring bipartisan sup- to a large degree, it becomes Ryan called on conservatives criticized their opposition to a
port, such as legislation tack- really hard to govern.” to set realistic expectations for bipartisan budget deal forged
ling Puerto Rico’s debt crisis For this year at least, Mr. what a GOP-controlled Con- by Mr. Ryan, then chairman of
later this year. Passing such Ryan will have fewer legisla- gress can achieve while Mr. the House Budget Committee,
bills won’t be easy. tive deadlines to navigate, Obama is in office. and his counterpart in the Sen-
The biggest talk-radio hosts thanks in large part to Mr. “We can’t promise that we ate, Patty Murray (D., Wash.).
draw weekly audiences in the Boehner himself. Before he can repeal Obamacare when a Democrats said Mr. Ryan
millions. Rush Limbaugh, for left, Mr. Boehner reached a guy with the last name Obama would encounter the same re-
instance, attracts more than 13 budget deal with the White is president,” Mr. Ryan said at sistance from House Republi-
million weekly listeners, and House that includes the com- Heritage, which has backed re- cans and their constituents as
Sean Hannity more than 12.5 ing fiscal year, and Congress peated Republican efforts to Mr. Boehner did, when he has
million, according to estimates won’t have to raise the debt defund the health law. “When to pass legislation requiring
from Talkers magazine. limit until mid-March 2017. voices in the conservative bipartisan support.
Talk-radio “hosts matter That gives Mr. Ryan more movement demand things that “Speaker Ryan faces the
politically because they have time and energy to devote this they know we can’t achieve same challenge that Speaker
this friendship with their lis- year to work on polishing the with a Democrat in the White Boehner did: Will you accept
teners and can rally their lis- House GOP’s message and in- House, all that does is depress compromise?” said Rep. Gerald
teners behind a cause or teracting with conservatives at our base and in turn help Dem- Connolly (D., Va.) “I don’t
against a cause,” said Brian venues such as Heritage Action ocrats stay in the White think any of that dynamic has
Rosenwald, a fellow at the Uni- for America’s policy summit, House,” he said. changed.”

GOP’s Rand Paul Ends

Presidential Campaign
BY JANET HOOK
AND REBECCA BALLHAUS
Kentucky Sen. Rand Paul on
Wednesday said he was quit-
ting the race for the Republican
presidential nomination, fol-
lowing his fifth-place finish in
Monday’s Iowa caucuses, turn-
ing his attention to his Senate
re-election and freeing up a
and New Hampshire, who had
flocked to the 2012 presiden-
tial campaign of his father, for-
mer Texas Rep. Ron Paul.
But his campaign never took
off as the senator struggled to
define a profile that was more
mainstream than his father’s,
an effort that cost him support
first in the race to criticize Re-
publican Donald Trump.
Mr. Paul’s withdrawal could
benefit Mr. Cruz because the
Texas senator has already
been courting libertarians and
in some cases winning con-
verts from the Paul camp in
his effort to consolidate con-
servative support behind his
campaign. A video the Cruz
NATI HARNIK/ASSOCIATED PRESS

cache of libertarian-leaning
voters who could bolster Sen.
Ted Cruz in New Hampshire.
“It’s been an incredible
honor to run a principled cam-
paign for the White House,”
Mr. Paul said. “Today, I will
end where I began, ready and
willing to fight for the cause
of liberty.”
It was an anticlimactic end
to the campaign of a man who
displayed an unconventional
combination of libertarian and
conservative views and tried
to broaden the GOP’s appeal.
He had hoped to build his cam-
paign on—but reach beyond—
the passionate libertarian base
of voters, particularly in Iowa
Mr. Paul’s withdrawal
could benefit Texas
Sen. Ted Cruz in
New Hampshire.
among Ron Paul’s devoted fans.
Mr. Paul drew only 4.5% of the
vote in the Iowa caucuses Mon-
day night; his father had drawn
21% and finished third in 2012.
The senator espoused views
that set him apart from the rest
of the field, calling for reducing
the U.S. military role abroad
while his rivals were advocat-
ing more involvement in the
fight against Islamist militant
groups. He was also one of the
campaign has been showing at
events prominently features
interviews with former Ron
Paul supporters who are back-
ing Mr. Cruz.
Mr. Paul’s supporters are
less likely to gravitate to Flor-
ida Sen. Marco Rubio, whose
foreign-policy views are far Sen. Rand Paul of Kentucky will focus on re-election to the Senate after halting his presidential bid.
more hawkish. But Mr. Rubio
was gracious in reaction to Mr. ticularly important in New He engineered a change in Ken- ing out to young voters and mi-
Paul’s announcement. Hampshire, where Ron Paul tucky’s presidential-nominating norities who traditionally vote
“Rand is someone I disagree finished second with 23% of process—switching from a pri- Democratic. But the antiestab-
with on a lot of issues, but as the vote in the 2012 primary. mary to a caucus system—to lishment voters of 2016 have
I said the other night at the Mr. Paul said he would run enable him to do both. flocked to louder and better-or-
debate...he believes strongly in for re-election to the Senate Mr. Paul, who launched his ganized candidates such as Mr.
what he stands for,” Mr. Rubio this year. He has faced some campaign in April, had tried to Cruz and Mr. Trump.
said in New Hampshire. “And I criticism at home for trying to carve out a distinctive niche —Heather Haddon
respect that. run for president and Senate that stood apart from the party and Patrick O’Connor
The libertarian vote is par- re-election at the same time. establishment, including reach- contributed to this article.

California Extends Water Restrictions

tify. An attorney representing Mr.
U.S. Earley couldn’t be reached to
comment. Ms. Hedman couldn’t

BY JIM CARLTON far below the historic average
of 77%, according to Depart-
California officials late ment of Water Resources
Tuesday extended water re- data.
strictions on the state’s urban Many water experts believe
areas into the fall after deter- California would need twice its
mining that abundant snow normal precipitation to
and rain this winter is still in- get over the drought this year.
sufficient to offset a historic And even if the snow keeps
Western drought. falling, Ms. Marcus said a
JUSTIN SULLIVAN/GETTY IMAGES
Watch be reached to comment.
Flint has been embroiled in a
water crisis for months, since
switching its water source to the
Flint River in April 2014 caused
lead levels in drinking water to
CONGRESS rise to dangerous levels.
—Amy Harder and
Subpoenas Planned Kris Maher
Over Michigan Water
The chairman of the House ECONOMY

The move by the State Wa-
ter Resources Control Board
came after electronic readings
by the California Department
of Water Resources showed a
snowpack in the Sierra Nevada
mountains of 20.4 inches, or
114% of average.
A manual survey con-
ducted Tuesday by the agency
in the northern Sierra, the
wellspring for much of the
state’s water supplies, showed
a reading of 25.4 inches, or
130% of average, but officials
had hoped for an even
higher figure before lifting wa-
ter cutbacks on cities.
Felicia Marcus, chairwoman
of the Water Resources Con-
trol Board, said her staff
would reassess whether the
restrictions were still needed
at the end of April, when the
extent of extra mountain
snowfall in a year augmented
by the El Niño weather phe-
California will reassess water-conservation measures in the spring.
nomenon becomes clear.
“To use a Super Bowl meta-
phor, we’re at halftime here,”
Ms. Marcus said.
“We will feel a lot better if
snowpack and reservoirs are
way above average,” she
added.
California’s wet season typi-
cally runs from late October
through March.
Storms fueled by El Niño
have dumped prodigious
amounts of precipitation on
the parched state, elevating
the mountain snowpack to its
highest level in five years.
warm spell during the spring
could melt much of it before it
can be stored by reservoirs, as
has happened in the past. The
uncertainty, she added, is why
the state’s conservation mea-
sures are so important.
California cities through
December had saved almost 1.1
million acre feet of water and
“Clearly, we want to see are on track to save 1.2 million
this keep coming,” Frank by mid-February as part of
Gehrke, chief of the depart- Gov. Jerry Brown’s call to cut
ment’s cooperative snow-sur- urban water use by 25% from a
veys program, said on Tues- 2013 base year, Ms. Marcus
day after helping to take said.
measurements in more than 6 Most urban agencies have
feet of snow off a highway met their conservation targets,
near Lake Tahoe. but some in cities with exten-
Reservoirs remain low, sive landscaping or in an ex-
however, even though they treme desert climate have had
have been refilling a tougher time.
from storms. One of the big- The water board on Tues-
gest, Lake Shasta, has in- day also reduced some of the
creased to 52% of its capacity conservation targets based on
from 44% at the same time factors including climate and
last year, though that is still geography.
Oversight and Government Re-
form Committee said Wednesday
Private-Sector Hiring
that he was issuing subpoenas to Rises, ADP Says
two officials to force them to tes- Private-sector hiring was bet-
tify within the next month regard- ter than expected in January,
ing the water crisis in Flint, Mich. the latest indication that the
The committee had invited U.S. labor market remains solid
former Environmental Protection even as some pockets of the
Agency Regional Administrator economy show signs of cooling.
Susan Hedman, who resigned Private payrolls in the U.S. in-
Monday over the crisis, and for- creased by 205,000 last month,
mer Flint Emergency Manager said payroll processor Automatic
Darnell Earley to testify at a Data Processing Inc. and fore-
hearing Wednesday. The officials casting firm Moody’s Analytics.
didn’t appear at the hearing, so The report is based on data col-
Rep. Jason Chaffetz (R., Utah), lected from ADP clients, in addi-
chairman of the panel, said he tion to lagged government data.
would use subpoenas, which Monthly gains in private pay-
have legal force, to get the offi- rolls continued to be powered by
cials to the hearing room. The the service sector, which repre-
committee accepted the decision sents most of the economy’s jobs
of Miguel Del Toral, a water offi- and has been offsetting a manu-
cial at the EPA, not to testify. facturing sector beset by a stron-
Five other witnesses, including ger dollar and sharply lower en-
an official from the EPA and the ergy prices. Service-providing firms
director of Michigan’s Department added 192,000 workers in January.
of Environmental Quality, did tes- —Lisa Beilfuss
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 | Thursday, February 4, 2016 THE WALL STREET JOURNAL.

PERSONAL JOURNAL.

A One-Hour Security Drill: Don’t Be Hacker Bait

Make your digital self and encrypt your computer. The
Mac’s OS X and Windows 10 both
less attractive to hackers, have it built in, though you have to
phishers and marketers turn it on separately. If you get an
external drive, even for backup,
BY GEOFFREY A. FOWLER use a disk utility to encrypt that,
too.
Ask a hacker if your digital se-
curity is at risk and the answer is 4. Bolster your browser privacy
always yes. It’s no reason to feel Why it matters: The browser is
helpless. the No. 1 venue snoopers and ag-
You can bolster your security gressive marketers use to exploit
and data privacy to make yourself you.
less of an easy target for hackers, Quick fix: Start with a clean
money-hunting phishers and sweep of everything in your
overly aggressive marketers. I’ll browser—sometimes called “clear
show you how to do it in an hour browsing data” or “remove web-
or less. site data.” This will delete pass-
The foundation of smartphone words saved in the browser, and
and laptop safety may require you to re-login to
is software up- some sites that previously remem-
dates, smarter bered you.
passwords and 1. The browser is the No. 1 venue for This check-up provides a good
more defensive snoopers and marketers to exploit chance to shake off some un-
Web browsers. you. Start with a clean sweep of wanted marketers, too: Activate
PERSONAL Then it comes everything in your browser. Do Not Track in the settings for
TECHNOLOGY down to learning 2. Add a fingerprint screen lock. your browser, and install a
a few new digital Encryption makes it much harder to browser extension like Ghostery,
habits to avoid retrieve anything without your Disconnect or EFF’s Privacy Bad-
being duped by criminals. permission. ger to block spying ads and track-
If you suspect your computer is 3. Use a different password on every ers.
already in trouble because it’s slow site so if one get compromised, a Deeper dive: Disable Adobe
or keeps flashing shady-looking of- hacker can’t use your stolen Flash in your browser. It is one of
fers, your first step should be to password somewhere else. The best the most common means of trans-
ISTOCK (3)

check for malware—damaging passwords are long, random strings mitting malware.
software you might have unwit- of numbers and letters.
tingly picked up on the Web. I rec- 5. Conduct an app census
ommend downloading the free Why it matters: The rise of the
MalwareBytes, which does a great On iPhone or iPad: Plug in Windows Update. Be sure Win- Facebook (called “login approv- app economy means more busi-
job at finding and removing your device and connect to Wi-Fi. dows Defender is on, unless you als”), Microsoft and Twitter nesses are watching where you’re
worms, Trojans and other nasty Tap Settings, then General, then have a better antivirus program. (called “login verification”). going.
stuff on Macs and PCs. Software Update. To update apps, Deeper dive: Update the soft- Deeper dive: To maximize Quick fix: On your phone,
Then dedicate an hour, and tap the App Store app, then Up- ware that runs your Wi-Fi router, safety, use a different password on check to see which apps have ac-
work your way through this check- dates in the bottom right corner. an often-overlooked backdoor for every site. The best passwords are cess to your location and other
list. Even if you only get through a To turn on auto updates, select hackers, either with its app or by long, random strings of numbers data. Turn off access or delete any
few areas, you’re less likely to be Settings, then iTunes & App pointing a Web browser to its and letters that our brains can’t you don’t really use. (Bonus: This
hacker bait. Stores, and toggle Updates to on. setup page. remember on their own. will save you battery life!)
On Android: Every handset I strongly recommend using a On iPhone: Go to Settings, then
1. Update your software maker handles updates slightly dif- 2. Fix your passwords password manager such as Dash- Privacy, and be sure to check Lo-
Why it matters: Software ferently. Look for Settings, and Why it matters: A good pass- lane or 1Password to collect and cation Services, Contacts and
changes constantly now, which can then System Updates. To update word is truly all that stands be- keep these passwords in sync Health.
be annoying—but helps it address apps, go to the Google Play Store tween you and a hacker. Using across all of your devices. On Android: To review permis-
new vulnerabilities. The golden app, then My apps, then Updates. them the right way can contain sions based on category such as
rule of security is that if you in- To turn on auto updates, inside the threat when sites get compro- 3. Encrypt your drives location in the latest Android 6
stall something, you have to stay the Google Play Store app, select mised, and keep out snoopers Why it matters: If you lose (Marshmallow), go to Settings,
on top of it. Settings, then Auto-update apps. closer to home, too. your phone or laptop, criminals or then Apps or Application Manager,
Quick fix: Update your phone On Mac OS X: Open the App Quick fix: Go to your most- even governments could access and tap the gear icon and App per-
and computer OS, then move on to Store, and select updates in the used Internet services and turn on valuable information. Encryption missions. On Android 5 (Lollipop),
your apps. If you browse the Web toolbar. To turn on auto updates, what’s called two-factor authenti- makes it much harder to retrieve you have to check the permissions
with Chrome or Firefox, make sure select System Preferences, then cation. They ask you for additional anything without your permission. of each app individually.
they update automatically in Set- App Store, and check Automati- information when you log in, and Quick fix: Add a password or
tings. cally check for updates. notify you if someone else is try- fingerprint screen lock to your For healthy habits and more de-
Before a major update, it’s also On Windows 10: Select Set- ing to access your account. Start iPhone or Android phone. tailed instructions, please see
a good idea to backup your device. tings, then Update & security, then with the big five: Apple ID, Google, Deeper dive: Password protect wsjd.com

Eugène Delacroix, Lion Hunt (detail), 1861 © The Art Institute of Chicago, Illinois

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Exhibition at the National Gallery

Exclusively for WSJ+ members. This landmark exhibition at the National Gallery is the first presentation of
Delacroix’s art in Britain for more than 50 years. See firsthand his influence on celebrated artists such as
Manet, Cézanne, Van Gogh, Matisse, Kandinsky and more. Members will enjoy breakfast before the tour,
receive an exhibition catalog for their personal collection and have full access to the gallery for the day.

WHERE: LONDON | WHEN: FEBRUARY 19, 2016

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THE WALL STREET JOURNAL. Thursday, February 4, 2016 | A9

ARTS & ENTERTAINMENT

Banksy, Unauthorized Coldplay’s

Chris Martin
TELEVISION

BY DION NISSENBAUM

FREQUENTLY PAINTED OVER, cov-

ered up or chopped out of walls to
be sold to the highest bidder, Brit-
ish street artist Banksy’s politi-
cally charged work has found an
improbable new home in Istanbul,
where a Turkish investment firm
is hosting an unauthorized retro-
spective that includes a “fake” gift
shop doing brisk business.
Organized by the elusive artist’s
former agent, Steve Lazarides,
along with the Turkish Ministry of
Culture and Tourism and some of
the country’s top businessmen,
A British Super
DION NISSENBAUM/THE WALL STREET JOURNAL (3)

“The Art of Banksy” brings to-

gether more than 80 original
works, assembled from collectors,
that helped make the renegade one
Bowl Invasion
of England’s most celebrated mod-
BY MIKE AYERS
ern-day political satirists.
The opening last month fea-
tured a surreal collection of actors IN THE OLD DAYS, Super Bowl halftime
dressed up as some of Banksy’s shows featured a who’s who of march-
most famous images: a masked ing bands. Acts chosen for today’s big
protester throwing a bouquet of spectacles tend to fall into two camps:
flowers; a winged policeman in classic rock or Top-40 pop. This year’s
riot gear with a yellow smiley face; pick, Coldplay, may be the best blend of
a young girl hugging a bomb. It those two schools since Irish band U2
left many wondering if the exhibition was an- wish from this site for TAGGED ‘The Art of Banksy,’ above, includes an ‘unofficial’ gift shop, performed in 2002. When Coldplay
other of the artist’s subversive parodies, like personal use. However, below, with bags, figurines and more featuring the artist’s images. takes the field this Sunday, the band will
“Dismaland,” last year’s dark commentary on making your own art or join a growing list of British artists
amusement parks, or news-dominating stunts, merchandise and pass- who’ve infiltrated the big game over the
like his monthlong New York “residency” in ing it off as ‘official’ or past 15 years. Below, a brief history.
2013, which led to a frenzied scavenger hunt authentic Banksy art-
each day for new works. work is a criminal of- 2000: Super Bowl 34 marked the begin-
It isn’t. In fact, the artist’s team said fence.” The statement ning of the British invasion, but it was a
Banksy has nothing to do with the exhibition. went on to say that the subtle start. Amid a lavish production
Instead, Kemal Gürkaynak, chief executive of artist has never pro- put on by Disney, with an orchestra,
Istanbul Entertainment Group, which worked duced “greeting cards, dancers and performances by Christina
with Mr. Lazarides on the exhibition, said it is mugs or photo canvases Aguilera and Enrique Iglesias, Phil Collins
a tribute to the artist and activist—one he of his work“ and isn’t sang “Two Worlds” from “Tarzan.”
hopes will bring Banksy’s ideas to a global represented by any com-
audience in ways the artist hasn’t been will- mercial gallery, includ- 2005: A year after Justin Timberlake
ing to do himself, especially the mass produc- ing the one run by Mr. and Janet Jackson performed what re-
tion of his images. “My aim is to make him Lazarides, which plans mains the most controversial halftime
more commercial and more commercial and to celebrate its 10 year show to date, spawning the phrase
more commercial,” Mr. Gürkaynak said. anniversary this month “wardrobe malfunction” into popular con-
In the exhibition gift shop, visitors are with an exhibition fea- sciousness, Paul McCartney made the
greeted by a panoply of Banksy parapherna- turing work by various Super Bowl family-friendly again with
lia. People can walk away with calendars, artists including Banksy. hits like “Drive My Car” and “Hey Jude.”
notebooks, stools, necklaces and cuff links. In an attempt to meet the artist’s condi-
There are $5 key chains, $15 T-shirts and tions, “The Art of Banksy” gift shop makes it 2006: Another British heavyweight was
$150 Banksy prints, including one of pigeons clear that everything sold there is “unauthor- brought in the next year: the Rolling
carrying a “migrants not welcome” banner to ized,” “unofficial” or “fake” Stones. And it’s safe to say that Mick
protest the arrival of a tropical bird that’s Mr. Lazarides, who parted ways with Jagger’s signature skinny pants were
landed on their telephone wire—a 2014 work Banksy in 2008, said it isn’t likely to sit well likely the tightest on the field that night.
that was painted over shortly after it ap- with his former client. “I’m sure he’d quite Promoting 2005’s “A Bigger Bang,” the
peared in Clacton-on-Sea, England. happily drop me off on an ice floe some- band played a short set list: “Start Me
Mr. Lazarides called the shop a “cheeky where,” he said. “But I’m not sure he wants to Up,” “I Can’t Get No Satisfaction” and
nod” to Banksy’s Oscar-nominated 2010 docu- spend his career trying to chase down people the “Bigger Bang” tune “Rough Justice.”
mentary, “Exit Through the Gift Shop,” which making fridge magnets.”
explored the rise of street art and the transfor- But there is one aspect of the show that 2010: After a few years of classic
mation of one Banksy fan into a celebrity art- might appeal to the artist: Mr. Lazarides be- American rock acts like Tom Petty and
ist. Organizers plan to use the proceeds to take lieves Banksy’s activist artwork could have an Bruce Springsteen, the Who were
the show to Berlin, Barcelona, Rome, Milan impact in Istanbul, which is at the epicenter called up for the big game. The band
and other cities in the months and years of the global refugee crisis. “The power of the played hits like “Pinball Wizard,” “Baba
ahead. A small portion will go to charities that work outweighs everything else in the cur- O’Riley,” and “Won’t Get Fooled Again,”
help refugees and the visually impaired. rent climate if it brings hope and inspiration which seamlessly segued into each
When asked about the exhibition and shop, to people,” said Mr. Lazarides. other over the course of 12 minutes.
a spokesman at Pest Control, the operation that Turkey is home to more than 2 million Syr-
serves as the only point of contact for original ian refugees who have fled the nearly five- Mr. Gürkaynak said the piece helped hu- 2012: Rapper M.I.A. joined Madonna for
new works by the artist, said that “neither Pest year conflict. Their plight has dominated manize refugees for millions of people around Super Bowl 46 and in the process
Control nor the artist Banksy knew anything Banksy’s recent work. Last month, a mural the world. Taking “The Art of Banksy” on the helped create another controversial
about this show until the day it opened.” across from the French embassy in London de- road could cost Mr. Gürkaynak a significant moment in halftime history. It wasn’t
EL UNIVERSAL/ZUMA PRESS

While Banksy has long resisted the commer- picted Les Misérables’s Cosette crying as a amount of money, he said, but if he could bring as scandalous as 2004’s “wardrobe
cialization of his work, the much-copied artist’s plume of gas rose from a can of tear gas. In Banksy’s message to just one person, it would malfunction,” but during “Give Me All
options are limited. In 2010, his attorney December, in a migrant camp in Calais, France, be worth it. “Every night I pray that the next Your Luvin’,” from Madonna’s 2012
posted this message on the artist’s website: known as the Jungle, he created an image of morning, when the sun comes up, I hope that “MDNA,” M.I.A. slyly gave the middle
“Banksy has a much publicised casual attitude Steve Jobs, the son of a Syrian immigrant, day will be more peaceful and will bring more finger to the camera, setting off a fren-
towards recreational copyright infringement with a sack over his shoulder and a Macintosh hope to us where we are living,” he said. zied debate about her punk-rock ethics.
and you are invited to download whatever you computer in his other hand. “That’s why I invested in this Banksy business.”

Jazz Energy Meets

Electronica Beats
REVIEW only of Winter Jazzfest, but of the
sense of adventure in contempo-
JIM FUSILLI rary popular music.
“Man Made Object” finds an
acoustic trio performing through-
Man Made Object compositions, pieces derived from
GoGo Penguin jams, and songs that began as a
Blue Note series of tones and beats created
on sequencing software. An exam-
ple of the last of these, “Protest”
New York features racing rhythms, a funk in-
GoGo Penguin has been called terlude from Mr. Blacka and a
the British Bad Plus, which is un- stately top line played by Mr. Il-
derstandable. The groups share a lingworth. Similarly, “Branches
lineup of piano, bass and drums as Break,” which builds slowly and
well as the gift for exploration be- beautifully with chiming piano
yond customary genre boundaries. chords, was inspired by the elec-
But whereas the Bad Plus is a jazz tronic improvisational music of
trio that taps into rock and the Four Tet. The electronic compos-
avant-garde, GoGo Penguin’s mu- ers Aphex Twin and Amon Tobin GoGo Penguin
EMILY DENNISON

sic, as evidenced on its new re- are among the trio’s influences, as defies genre,
lease, “Man Made Object” (Blue is Esbjörn Svensson, the late jazz pulling in trip-hop,
Note), is derived in large part from pianist. classical and more.
the syncopated rhythms and angu- On the new album, the trio also
lar melodies of electronica and reveals its affection for classical
trip-hop. music. “All Res,” the first track, which they played be-bop and Mercury Prize. The band has built ally jazz,” said Mr. Blacka. But at
What GoGo Penguin borrows opens with an impressionistic pi- straight-ahead jazz. Mr. Blacka a fan base in Europe by ignoring the gig and the following night at
from jazz isn’t its harmonies or ano motif by Mr. Illingworth, who studied jazz at the Leeds College genre. Mr. Illingworth pointed to a Mercury Lounge, a club on the
rhythmic complexities, but its en- is accompanied by Mr. Blacka on a of Music. Despite their affection recent tour in which the band per- Lower East Side, the band mem-
ergy and spontaneity. For its New bowed bass that sounds much like for the form, the members agree formed at a house-music festival bers discovered fans knew their
York City debut, the trio per- a cello. During a conversation, the that they aren’t a jazz trio. They in Croatia and a concert hall in music and were eager to hear it
formed at the mid-January Winter members referred to compositions are experimentalists in pursuit of Germany. He said GoGo Penguin’s unfold in concert. The bottom line:
Jazzfest. During its set at (Le) by Chopin, Debussy and Mahler to superior improvisational music. intent is to stir a visceral reaction “People were dancing,” said Mr. Il-
Poisson Rouge, a Greenwich Vil- illustrate the emotional subtext of The groove matters most, they akin to the one the band members lingworth. As “Man Made” proves,
lage club, the audience was at their music. said, but it helps to have the foun- felt as they composed their pieces. the trio knows what it’s doing and
times mesmerized by the jittery Yet the feel of jazz is an unde- dation to extemporize; or, as Mr. Signed now to Blue Note, the does it exceptionally well.
tension in the music of bassist niable presence in the music of Turner put it, “There’s freedom, venerable jazz label, GoGo Penguin
Nick Blacka, pianist Chris Illing- GoGo Penguin, as in Mr. Turner’s but you have to know the notes.” wondered how it would fare at Mr. Fusilli is the Journal’s rock
worth and drummer Rob Turner. swinging performance in “Surren- “Man Made Object” is GoGo Winter Jazzfest. “Here’s this trio and pop music critic. Email him at
To ask whether GoGo Penguin der to Mountain.” Messrs. Illings- Penguin’s third album; its second, from the north of England playing jfusilli@wsj.com and follow him
plays jazz misses the point, not worth and Turner met at a gig in 2014’s “v2.0,” was nominated for a at a jazz event and we’re not re- on Twitter @wsjrock.
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 | Thursday, February 4, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
Hillary’s Iowa Scare
Hillary Clinton’s third- points among voters earning more than
Happy Iowa Aftershocks place finish in the 2008
Iowa caucuses upended
$50,000 annually. This time, researchers
asked about education rather than in-

T
he candidates are off and running in tant, well behind the other three. Government her candidacy. By con- come, but the two are closely related.
New Hampshire, but before the shout- spending was number one at 32%, the econ- trast, she scored a nar- Mrs. Clinton fought Mr. Sanders to a tie
row victory Monday among college graduates and topped him
ing gets loud again it’s worth sorting omy was second (27%) and terrorism third
through the voter and turn- (25%). POLITICS night. What changed by 53% to 39% among caucusgoers with
over those eight years, postgraduate education.
out data from Monday’s Iowa Encouraging political Among the immigration- & IDEAS
and what does it teach Looking ahead, the strengths and
caucuses for some early elec- first voters, Donald Trump By William
tion-year lessons. There’s
news on ethanol (44%) and Ted Cruz (34%) did A. Galston
us about the current weaknesses of the two Democratic can-
state of America’s Dem- didates are sharply etched. Mrs. Clinton
some good news for pro- and immigration. best while Marco Rubio won ocratic Party? prevailed among caucusgoers who cared
growth Republicans. only 10%, well below his to- Let’s begin with what didn’t change. most about the economy, health care and
Start with King Ethanol, tals among voters who cared Mrs. Clinton did better among women terrorism, while Mr. Sanders won 60%
whose throne looks wobbly after Ted Cruz be- more about the other three issues. This isn’t than men in both contests. She also did support among those who identified in-
came the first Republican in recent memory surprising given the priority that Messrs. better among Democrats than indepen- come inequality as their top concern.
dents both times. She lost to Mr. Obama
to win the caucuses while refusing to bow Trump and Cruz put on closing the U.S. bor-
among caucusgoers who regarded them-
down before the Iowa ethanol lobby. Corn is ders and deporting illegals in the U.S. In poli- selves as “very liberal” and similarly lost The state’s Democrats are
Iowa’s leading crop, and some 47% goes to tics you are what you emphasize. to Bernie Sanders. She trailed Mr. Obama
make ethanol. But immigration clearly wasn’t the killer app among first-time caucus attendees, a
significantly more liberal
But this is an industry that exists largely in Iowa that Mr. Cruz hoped it would be against group she also lost to Mr. Sanders. than they were in 2008.
because Washington decrees that the na- Mr. Rubio. The Texan repeatedly threw the “am- And in both races she did much bet-
tion’s gasoline include an increasing amount nesty” charge at his Senate colleague for having ter among middle-aged and elderly vot-
of the biofuel. Republican philosophy rejects voted for the Gang of Eight reform in 2013. Yet ers. In 2008, she ran even with Mr. As for the candidates’ personal quali-
mandates and subsidies, but every presiden- Mr. Rubio survived the attack and staged a rally Obama among voters 45 to 64 years old ties, Mr. Sanders led Mrs. Clinton by 3 to
tial year this principle runs up against etha- in the final week to come close to beating Mr. and trounced him by 27 points among 1 among voters who wanted someone
nol and the Iowa caucuses. Most Republicans Trump for second place. voters 65 years and older. This time she who “cares about people like me” and by
trailed Mr. Sanders among young adults 8 to 1 among those most interested in a
surrender. Mr. Rubio has disavowed the Gang of Eight
by 70 points and by 21 points among candidate who is honest and trustwor-
That’s the path Donald Trump chose, but effort and now says such a large reform bill voters aged 30 to 44. She did better thy. But Mrs. Clinton led by an even
Mr. Cruz said he opposes all energy subsidies isn’t possible because Americans don’t trust among voters aged 45 to 64 than she larger margin among the 28% of caucus-
and mandates, including ethanol. He also ar- government to police the border well enough. did eight years ago, racking up a 23- goers who were looking for a candidate
gued that a free market would be better for He favors incremental reform starting with point edge, and garnered 69% of the el- with the right experience to be presi-
Iowa farmers. For this brazen disrespect he border security. This is politically realistic derly vote. dent. And among the 20% of attendees
was attacked by Iowa Gov. Terry Branstad, even if Mr. Rubio does sometimes seem to Here’s what did change. Mirroring who identified winning in November as
who called on Iowa Republicans to defeat Mr. duck and cover a little too much. national trends, Iowa Democrats and their top concern, Mrs. Clinton beat Mr.
Cruz because he is the “biggest opponent of Then again, Mr. Rubio has refused to call Democratic-leaning independents are Sanders 77% to 17%.
renewable fuels” and whose son is state direc- for deporting the 11 million illegals esti- significantly more liberal than they In addition to her strong ties with
tor of a pro-ethanol group. mated to be in the U.S., and he says they were eight years ago. In 2008, 18% of minority voters, which will matter once
caucus-attendees reported that they the nominating contest moves past
That’s a powerful lobby, but Mr. Cruz pre- could qualify for legal working status (not were very liberal, 36% somewhat lib- New Hampshire, the second straight
vailed. Perhaps his supporters cared more citizenship) after a lengthy process. He also eral, and 40% moderate. This time mostly white state, Mrs. Clinton enjoys
about other issues, but in any case their votes exposed Mr. Cruz’s hypocrisy as a Trumpian- around, 28% were very liberal; 40% another significant advantage. She beat
showed that opposing ethanol subsidies is no come-lately given the Texan’s support for an were somewhat liberal; the moderates’ Mr. Sanders by 42 points among cau-
longer the third rail of the Iowa caucuses. amendment to the Gang of Eight bill that share fell by 12 points to only 28%. Mrs. cusgoers (55% of the total) who want
We have our differences with Mr. Cruz. But would have allowed legalization for millions Clinton edged out Mr. Sanders in a the next president to continue Presi-
by taking the political risk of opposing ethanol of illegals. more left-leaning environment than she dent Obama’s policies.
mandates, he has liberated future Republican Conservative Iowa is supposed to be the faced with Mr. Obama. Not surprisingly, Mr. Sanders led by
candidates from feeling they must first genu- red-hot center of anti-immigration politics led Compared with 2008, on the other 55 points among those who prefer a shift
flect before corporate welfare that even Al by Rep. Steve King, who backed Mr. Cruz. But hand, the balance of caucus veterans to to more-liberal policies. Unfortunately
first-time attendees worked in her favor. for him, that support amounted to only
Gore now admits was a mistake. even in the Hawkeye State immigration
On Monday night, 56% of those who at- one-third of those who caucused. And
i i i doesn’t appear to be the presidential litmus tended had gone at least once before. nationwide, according to the Pew Re-
Then there’s immigration, which we have test for Republican voters that some on the Eight years ago, only 43% had attended search Center, the share of Democrats
been told by countless voices on the right is right have tried to make it. GOP voters are previously. Mr. Sanders mobilized lots of preferring a candidate who continues Mr.
the driving force behind populist anger smart enough to know that reviving economic new participants, but not nearly as many Obama’s plans and policies rises to 61%.
against “the establishment,” whatever that is. growth and preventing terrorism are higher as Mr. Obama did. If he had matched Mr. Unless Mr. Sanders can change their
But according to the Iowa entrance polls, the priorities. Obama’s appeal, he would have scored a minds, Mrs. Clinton appears well-posi-
anti-immigration rage is overrated. The immigration debate isn’t over this year, handsome victory over Mrs. Clinton. tioned to prevail in the end. She will
Pollsters asked voters entering the caucus and on Tuesday in New Hampshire Mr. Cruz The largest shift came along what has then face the task of persuading general-
sites to select the issue that was most impor- launched another assault on Mr. Rubio. But emerged as a major fault line for both election voters that continuing President
tant to them, offering four choices in the GOP the Iowa results suggest that the Floridian can parties: education and class. Eight years Obama’s policies will produce the change
ago, Mrs. Clinton lost to Mr. Obama by 13 they say they want.
contest: immigration, the economy and jobs, neutralize the attack if he isn’t defensive and
terrorism, and government spending. Only 13% fights back. He’d be that much better posi-
of voters chose immigration as most impor- tioned for the general election if he does.
America’s New Fault Line
Obama’s Democratic Divide In the Entitlements Debate
H
illary Clinton is campaigning as a bet- The question is why this issue is resonating
ter heir than Bernie Sanders to sus- so much with Democrats this year, and we Ted Cruz engineered in the 2012 Obama-Mitt Romney race,
tain President Obama’s legacy, but if think Mr. Obama gets the credit in two ways. his Iowa triumph by though not yet fully formed. It surfaced
she wants to know why she’s The President himself has coaxing evangelicals again in the 2013 tea party fight over
How the President to participate in the debt limit, a Kabuki play that alleg-
having such a hard time clos- made income inequality an Iowa’s quirky caucus edly threatened national default. The Ka-
ing the deal, she might want created Bernie’s abiding concern across his process. His victory buki was driven, recall, by the demand
to blame . . . President time in office, and his follow- hardly makes him a of Mr. Cruz and other tea party types
Obama. best political issue. ers have come to believe him. BUSINESS
shoo-in for the nomi- that ObamaCare be “defunded.”
That’s one of the intrigu- “I believe this is the defining WORLD
nation any more than “Ted Cruz left with few friends after
By Holman W.
ing messages from the en- challenge of our time,” Mr. Mike Huckabee’s or ObamaCare fight fails,” went a typical
Jenkins, Jr.
trance polls of Democratic Iowa caucus voters. Obama said on Dec. 4, 2013. Rick Santorum’s did. headline at the time. All the polls
The pollsters asked caucus-goers to choose Mr. Obama’s other contribution is that his But now we know showed tea party Republicans the big
one of four issues that mattered most to them economic policies have, if anything, widened why every third word out of Donald losers in the showdown. Mr. Cruz
in voting for a candidate. Mrs. Clinton easily the income gap. Middle-class income gains Trump’s mouth in the past week was earned the enmity that still resonates
“evangelical.” Mr. Trump is a game the- among many professional Republicans
won on health care, terrorism, and even the have been meager thanks to the historically
orist. He clearly understood that shift- today. Most Republicans share his op-
economy and jobs (51% to 42%). slow economic expansion, while Americans ing evangelical votes to his column position to ObamaCare and his rhetori-
But Mr. Sanders won big on the fourth is- who own stocks or other assets have seen from the Cruz column was his highest- cal commitment to repeal—but because
sue: income inequality, which 27% of voters their wealth and incomes increase thanks to leverage strategy for fending off the they think ObamaCare is bad policy and
said was most important. The Vermont social- U.S. Federal Reserve policies targeting asset Texas senator who had become his are convinced Republicans have better
ist won 61% of those voters while Mrs. Clinton prices. main threat. approaches to health-care reform.
settled for 34%. This no doubt reflects that When a President calls an issue “defining” Though finishing one and two, nei-
Bernie has made inequality a major theme in and then makes the problem worse, it’s no sur- ther Mr. Cruz nor Mr. Trump comes
his campaign, but then again socialists have prise that some other politician will take up away with the aura of a coalition ex- There’s been a shift away
been railing about the gap between rich and the cudgel. Mr. Sanders’s political obsession pander who can prevail in more diverse from reform and toward a
poor for decades. is Mr. Obama’s creation. electorates, beginning with New Hamp-
shire next week. Marco Rubio, who fin- defense of existing programs.
ished third, does come across as a co-

Mobile Static From Brussels alition expander, while handily

relegating the rest of the so-called es- The tea party animus toward Obama-

B
tablishment candidates into the also- Care is something different: Implicitly,
russels faces another test of its ability magic number of operators. Her view is shared ran category. such means-tested new entitlements
to promote a digital economy for Eu- by Sharon White, head of Britain’s telecom regu- Mr. Rubio, to those willing to bet on that benefit working-age folks and peo-
rope, and on current evidence it’s fail- lator Ofcom, who came out against the Three-O2 something resembling a reversion to ple (read minorities) who typically vote
ing again. Look no further deal this week. normalcy, is now the front-runner. To Democrat are viewed as a threat to the
than its hostility to a pro- Opposition to This isn’t fact-based policy those who think we’re not done with traditional, universal, “earned,” middle-
posed tie-up between two of making. Some studies have weirdness, particularly the Donald class retirement programs of Social Se-
Britain’s mobile-phone net-
telecom mergers hurts found average monthly tariffs Trump weirdness, at least Mr. Rubio is curity and Medicare.
in the running to become Mr. Trump’s Mr. Obama didn’t help himself, in his
works, Three and O2, on digital innovation. increase in markets that have main rival. phony-baloney budgeting for Obama-
which Brussels is expected to undergone consolidation. But Mr. Trump will now have to show he Care, when he specified in 2010 that his
rule this spring. data also suggest that those can do some coalition expanding too, or new benefit program would be financed
The deal, in which Three’s owner, Hutchi- price hikes have been accompanied by heavier he’s likely to fade. That means putting by cuts to Medicare.
son Whampoa of Hong Kong, would buy O2 usage of mobile services, meaning the average to rest the fears of Republicans who Not only did Mr. Cruz live to fight
from Spain’s Telefónica for around £10.5 bil- price a user pays per unit of data sent or re- have something to lose from chaos in another day. The unspoken tea-party
lion ($15.13 billion), is the latest attempt to ceived has fallen. national policy making—who aren’t stance of defending the good old-fash-
rationalize Europe’s market for mobile-phone This is particularly so as competition from treading water and bereft of hope on ioned entitlements of “real” Americans
services. Britain, which now has four network new technologies challenges established opera- one hand, or living on Social Security is increasingly, in dog-whistle terms,
operators, would be left with three. The com- tors. Revenue from text messaging already has and Medicare on the other. what differentiates one Republican
Which brings us to the meaning of from another.
bined company would be the country’s largest plummeted as free or nearly free services such
Trumpism. One of his consistent bits of Chris Christie, who went nowhere in
in number of subscribers, ahead of EE and as Apple’s iMessage and Facebook’s WhatsApp wisdom, voiced in April even before he Iowa, did himself no favor by dragging
Vodafone. proliferate. The current threat is the expansion launched his campaign, goes like this: Social Security and Medicare into every
That’s plenty competitive for a country of of Wi-Fi coverage that allows users to surf the “Every Republican wants to do a big debate, however much those programs
Britain’s size, especially considering that re- Web or make phone calls over the Internet number on Social Security, they want to need to be addressed. Mr. Rubio was just
cent waves of consolidation have also left Aus- without paying an operator for data transmis- do it on Medicare, they want to do it on as quick to modify any implication that
tria, Germany and Ireland with three operators sion or calling minutes. Medicaid. And we can’t do that.” Republicans therefore are entitlement re-
each—and each time with Brussels’s approval. These and numerous other developments Mr. Trump is a political harbinger formers: “We are talking about reforms
Consolidation gives the remaining operators impose as much pricing discipline on a mobile here of a new strand of populist Republi- for future generations. Nothing has to
the scope to set prices at a level that will sus- operator as its peers do. The point of consoli- canism, largely empowered by Obama- change for current beneficiaries.”
Care, in which the “conservative” posi- Welcome to an important new fault
tain investments in new technologies. dation is for operators to try to find a market
tion is to defend the existing entitlement line in a slow-growth, resource-con-
But that’s not how Competition Commis- structure that will allow them to fund invest- programs from a perceived threat posed strained America. Though many Ameri-
sioner Margrethe Vestager, who took office in ments in new technologies, too—investments by a new-style Obama coalition of hand- cans believe the entitlement programs
2014, sees things. Ms. Vestager last year effec- that over time lead to lower prices and better out seekers that includes the chronically need to be reformed, success will come
tively blocked the proposed tie-up between services for consumers. If Europe wants a unemployed, students, immigrants, mi- increasingly to Republicans who pose as
Telenor and Telia in her native Denmark, and thriving digital economy, the best policy for norities and women. “conservative” defenders of Social Se-
she has expressed a general view that four is the Brussels is to get out of its way. This political rationale was emerging curity and Medicare.
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.
Rubio’s Rise Amid Trump’s Slump
By Jason L. Riley
S
o, it turns out that you
can’t call Iowa voters
“stupid,” skip a debate in
Des Moines because you
don’t like the moderators,
and still expect to prevail in the
state’s caucuses. Who knew?
Donald Trump’s loss Monday
night, which is far more conse-
quential than Ted Cruz’s victory,
could mean a return to Republican
normalcy in an election year that
has been almost freakish. Mr.
Trump’s poll numbers have soared
above his rivals’ for months—the
Real Clear Politics average puts
him at nearly 36%, while none of
the other GOP candidates is above
20%—yet he lost handily in the
state where the first votes were
cast.
The Donald’s loss was more
significant than Ted Cruz’s
win as the GOP’s political
world starts to make sense.
Thanks to the voters of Iowa,
conservatives awoke Tuesday
morning to a political world that
made sense again for the first time
since Mr. Trump’s rise began last
summer. They learned that bluster
and incivility have not become po-
litical virtues. Well-attended rallies
are no substitute for traditional
campaigning. Sarah Palin is no GOP
kingmaker. And religious conserva-
tives—real ones in the mold of
Mike Huckabee and Rick Santo-
rum—still win the Iowa caucuses.
By Emanuele Ottolenghi
M
ahan Air is an Iranian pas-
senger airline that also hap-
pens to be a favorite with
the country’s Islamic Revolutionary
Guard Corps. The IRGC uses Mahan
planes to ferry weapons and person-
nel to aid the Syrian regime. That’s
according to the U.S. government,
which has repeatedly committed it-
self to grounding the airline. Yet
Mahan continues to fly the friendly
Middle East skies and is even ex-
panding its operations.
Of all Iranian entities still under
U.S. sanctions, Mahan is arguably
the most significant. The U.S. Trea-
sury sanctioned it in October 2011
for “providing financial, material
and technological support to the Is-
lamic Revolutionary Guard Corps-
Qods Force (IRGC-QF)” and for pro-
viding transportation services to
Iran’s Lebanese terror proxy, Hez-
bollah. In October 2012, Treasury
blacklisted 117 Iranian commercial
planes, including all of Mahan’s air-
craft, because “Iran used Iran Air
and Mahan Air flights between Teh-
ran and Damascus to send military
and crowd control equipment to the
Syrian regime.”
The Islamic Republic continued to
By Steven Stalinsky
P
resident Obama on Wednesday
was scheduled to visit a U.S.
mosque for the first time in
his presidency. According to the
White House, during this visit he
planned to “celebrate the contribu-
tions Muslim Americans make to
our nation and reaffirm the impor-
tance of religious freedom to our
way of life.” Over the past two
years, in the president’s efforts to
counter violent extremism, he has
emphasized the responsibility of
Muslim “scholars and clerics” to
help ensure that mosques aren’t
used as a platform to preach Isla-
mist extremism.
Such extremism isn’t limited to
out-of-the-way mosques where radi-
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Hawkeye voters find Mr. Trump
entertaining but not very presiden-
tial. Many Republicans haven’t
made up their minds, and among
those tasked with casting the first
votes, Donald Trump ranked closer
to the third-place candidate, Marco
Rubio, than the winner.
According to CNN entrance sur-
veys of Republican voters, evangeli-
cals made up 64% of the Iowa elec-
torate, and 34% of them went for
Mr. Cruz, which is the main reason
he won. Perhaps more impressive,
however, was Mr. Rubio’s strong
showing in a state that doesn’t play
to his strengths. He wasn’t sup-
posed to win, only to exceed expec-
tations, and he did. Mr. Rubio
finished third, one point behind Mr.
Trump and five points behind the
winner. Mr. Trump performed best
among caucusgoers who prefer
someone who “tells it like it is,”
while Mr. Rubio won voters who
said electability is their top candi-
date quality. Put another way,
Trump supporters want to make a
point. Rubio supporters want to
elect a president.
Mr. Trump’s defeat is a serious
blow because a large part of his ap-
peal is that he doesn’t lose. Iowa
Republicans performed a public ser-
vice in puncturing the media-gener-
ated Trump hype, and future cover-
age of the candidate ought to be
more balanced. Heading into the
Feb. 9 New Hampshire primary,
Messrs. Cruz and Rubio both have
the momentum. But Mr. Rubio is in
a better position to win over eclec-
tic Granite State voters, who are less
enamored of Mr. Cruz’s social con-
servatism than are Iowans. And to
the extent that Mr. Trump remains
a factor in the coming contests, he
Flying in the Face of U.S. Sanctions
rely on civilian aircraft to supply the
Assad regime throughout the talks
leading to last year’s nuclear deal. A
Western intelligence report leaked
to Reuters in 2012 confirmed that
Mahan was at the center of the IRGC
airlift to the Assad regime. So has a
United Nations panel in charge of
monitoring implementation of inter-
national sanctions against Iran.
Treasury in 2012 raised concerns
about Mahan violations of civil-avia-
tion rules, including the use of “a
combination of passenger and cargo
flights and declaring illicit cargo as
humanitarian and other licit goods.”
Nearly five years into Syria’s civil
war, Mahan continues to offer the
IRGC steady logistical support. In
late July, Qods Force commander
Qasem Soleimani flew to Moscow to
enlist Russian support for a counter-
offensive to salvage the Syrian re-
gime’s corridor from the capital, Da-
mascus, to Latakia and Tartous, the
two Mediterranean port cities hous-
ing Moscow’s naval bases.
Shortly thereafter, Mahan flights
to Syria increased. Since August,
my own flight tracking counted al-
most daily trips from Tehran to Da-
mascus or Latakia. Syria-bound Ma-
han flights have also occasionally
stopped in Baghdad, most recently
A Mosque as Extremist Megaphone
cal clerics operate in the shadows. It
is occurring in mainstream and
leading mosques world-wide, includ-
ing at one of the most important re-
ligious institutions in Islam, the Al
Aqsa mosque in Jerusalem.
Consider a Jan. 16 sermon at Al
Aqsa by Sheikh Abu Taqi Al-Din Al-
Dari, a Palestinian cleric who called
for jihad against the West and
Europe, and for the burgeoning
Islamic State to “conquer Rome,
Washington and Paris.”
Despite Al Aqsa’s importance to
Islam—it is considered the religion’s
holiest site outside Saudi Arabia—
few Westerners are aware of the
content of the sermons, lectures and
lessons offered there. Many of these
sermons are posted on the mosque’s
two official YouTube channels and
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OPINION
GOP presidential contender Marco Rubio at his caucus-watch party in Des
Moines, Iowa, Feb. 1.
probably damages Mr. Cruz more
than he does Mr. Rubio.
The Republican field is poised to
shrink significantly after New
Hampshire, but there is still a
chance that the number of Demo-
crats running, perhaps in the guise
of an independent, could expand.
Hillary Clinton’s narrow victory in
Iowa did nothing to assuage liberals
who are concerned about her weak-
nesses as the would-be nominee.
Mrs. Clinton isn’t worried about
losing the nomination to Bernie
Sanders. She’s worried that he’ll ex-
on Jan. 9, despite pleas by the
Obama administration to the Iraqi
government to close its airspace to
Iranian arms shipments to Syria.
These flights aren’t on Mahan’s
regular schedule. Tickets for Teh-
ran-Damascus routes aren’t rou-
tinely available for sale. Nor do the
flights appear on published airport
schedules.
Mahan Air ferries
Tehran’s weapons and
personnel to Syria thanks
to a lack of U.S. leverage.
Publicly available tracking infor-
mation shows the same Mahan
planes flying to commercial destina-
tions within hours of their return
from Damascus. An airline that, ac-
cording to U.S. Treasury, delivers
IRGC arms to Syria also flies to Gulf
Arab states that supposedly oppose
Iranian expansionism. Rather than
shrinking due to the carrier’s sup-
porting role in the Syrian civil war,
Mahan’s international route network
is expanding. It already introduced
three flights to Russia last summer
have been translated from the Ara-
bic by my organization, the Middle
East Media Research Institute.
What we have found at Al Aqsa is
a steady stream of calls for jihad
and martyrdom, venomous attacks
on Jews, Christians and other non-
Muslims, and praise for al Qaeda, Is-
lamic State and other jihadist
groups.
Calls for the destruction of the
U.S. and the West, including prom-
ises that Islam will take over the
world, are other common themes. On
July 24 last year, Sheikh Ahmad Al-
Dweik—a frequent lecturer at the
mosque and Palestinian cleric, like
the other religious leaders quoted
here—said: “The caliphate will come
to be, and the nuclear bomb will be
produced,” adding that this future Is-
lamic caliphate—will “fight the U.S.
and will bring it down” and “elimi-
nate the West in its entirety.”
On July 6, 2015, Sheikh Muham-
mad Abed, known as “Abu Abdal-
lah,” declared that from “the land of
the Prophet’s nocturnal journey”—a
reference to Jerusalem—“armies
will set out to conquer Rome, to
conquer Constantinople,” and then
he added to the list “Washington
and London.”
In an Oct. 27 address at Al Aqsa,
Sheikh Khaled Al-Maghrabi called
for the annihilation of the Jews all
over the world, providing justifica-
tion by quoting the well-known ha-
dith (sayings of the Prophet Mu-
hammad) of the stone and the tree:
“Oh Muslim there is a Jew behind
me, come and kill him.” Earlier at
the mosque, on May 29, Sheikh Al-
Maghrabi explained why Jews were
killed in the Holocaust. “On Pass-
over,” he said, the Jews “would
knead the dough for these matzos
Thursday, February 4, 2016 | A11
Mrs. Clinton may well lose big in
New Hampshire to Mr. Sanders,
whom Real Clear Politics shows
leading by 18 points. We somehow
doubt that Mr. Bloomberg, a bil-
lionaire who could finance his own
campaign, has been reassured that
the Democratic front-runner has
everything under control.
But even a weakened Mrs. Clinton
could win against the wrong Repub-
lican nominee. Messrs. Trump and
Cruz are more popular among con-
servatives but fare worse than Mr.
Rubio in head-to-head matchups
with the former first lady among the
swing voters in battleground states
who often decide elections. Mr. Ru-
bio polls better than both GOP rivals
among white women, seniors and in-
dependents. Among moderates and
AARON P. BERNSTEIN/REUTERS
suburban women, he trails Mrs.
Clinton, but unlike Messrs. Trump
and Cruz, Mr. Rubio is at least
within striking distance.
Among Hispanics, all three Re-
publicans trail Mrs. Clinton badly,
but some of this may be guilt-by-
association for Mr. Rubio. Of the
three, he is the only one who hasn’t
gone out of his way to antagonize
Hispanics while discussing illegal
pose her vulnerabilities and invite immigration, which means he is
others to hijack her coronation. better positioned to make inroads
Last month Mrs. Clinton assured with this fast-growing voter bloc
former New York Mayor Michael should he become the nominee.
Bloomberg, who is weighing an Messrs. Trump and Cruz are bet-
independent White House bid, that ting that the GOP can win in No-
she’ll win the nomination and so vember by deepening its appeal.
he needn’t run. Since then, we’ve Mr. Rubio wants to widen it.
learned that nearly two dozen
emails on the private server she Mr. Riley, a Manhattan Institute
used as secretary of state weren’t senior fellow and Journal contri-
only classified but so sensitive that butor, is the author of “Please Stop
no portion of them can be released Helping Us: How Liberals Make It
publicly, even in redacted form. Harder for Blacks to Succeed”
And after barely surviving Iowa, (Encounter Books, 2014).
and plans to add new routes to Eu- Milan, Munich or Stockholm speaks
rope as European sanctions against volumes to the lack of U.S. leverage
Iran are lifted. to enforce sanctions. Only Saudi
After last summer’s nuclear deal Arabia and Bahrain have thus far
with Tehran, the Obama administra- halted flights to and from Iran.
tion kept Mahan under sanctions. In That drastic step came in response
Senate testimony shortly after the to the ransacking of the Saudi em-
accord was signed, Acting Under Sec- bassy in Tehran and its consulate in
retary of Treasury for Terrorism and Mashhad last month and had noth-
Financial Intelligence Adam Szubin ing to do with enforcing U.S. sanc-
warned that regardless of the agree- tions against Mahan’s support role
ment, “a foreign bank that conducts in Syria.
or facilitates a significant financial To restore credibility, Treasury
transaction with Iran’s Mahan Air . . should take immediate action
. will risk losing its access to the U.S. against those financial institutions
financial system.” that transact on Mahan’s behalf in
These were empty words. If the Asia, Europe and the Gulf, and
administration were serious, Mahan should slap heavy fines on European
would be grounded by now. Instead, and Asian ground-service companies
its international routes are expand- working with the airline. To pay for
ing. Worse, on Jan. 16, the White such services, Mahan needs, and
House agreed to lift an Interpol red likely receives, access to financial
notice against Mahan’s chief execu- services in the countries in which it
tive and a senior manager whom the flies. The ground services it hires
U.S. Treasury said was responsible are indispensable to Mahan’s opera-
for the airline’s sanctions-evasion tions. The airline would be forced to
operations. Such a move may have cancel routes if such services were
few consequences on paper, but it no longer available.
will make Mahan’s life easier, not
harder, as was the sanctions’ origi- Mr. Ottolenghi is a senior fellow
nal purpose. at the Washington-based Foundation
The fact that Mahan can fly the for Defense of Democracies and its
IRGC to Damascus and, the next Center on Sanctions and Illicit Fi-
day, use the same planes to land in nance.
with children’s blood. When this an Islamist radical decapitated his
was discovered, the Israelites were employer and then crashed his vehi-
expelled across Europe . . . It got to cle, causing an explosion. “The Mus-
the point where they were burned lims have given rise to ISIS, and to
in Germany.” vehicular attackers,” the cleric said.
Such anti-Semitism is familiar at “They are courageous.” He added his
Al Aqsa. In another sermon there, on wish that “Allah soon reward the Is-
Nov. 28, 2014, cleric Omar Abu Sara lamic nation with a second rightly
called the Jews—to whom he said guided caliphate.” Destroying “the
Jewish entity”—Israel—could then be
achieved, he said.
Even at leading Islamic Al Qaeda also comes in for praise
at Al Aqsa. The day Osama bin Laden
institutions like Al Aqsa in was killed, May 2, 2011, an unnamed
Jerusalem, praising Islamist preacher eulogized him. In an Al
Aqsa video uploaded to YouTube, the
radicalism is common. speaker vowed that despite bin
Laden’s death, the “nation of one bil-
lion Muslims will give birth to hun-
“every single vile trait has been attri- dreds of millions” of bin Ladens.
buted”—the “most evil creatures to Then came a threat to President
have walked this Earth.” He added Obama: “You personally gave the
that “it was the Jews whom Allah order to kill Muslims. . . . The day
turned into apes and pigs.” will soon come when you find your-
If incendiary sermons such as self hanging from the gallows.”
those at Al Aqsa were being deliv- Our research at Memri indicates
ered in any Western city, authorities that the hateful rhetoric on display
wouldn’t tolerate them. Over the past at Al Aqsa is hardly unique to that
year in Europe, several sheikhs have institution—similar incitements
been prosecuted or expelled for simi- can be found at prominent
larly extremist rhetoric. In Germany, mosques and Islamic institutes
an imam from Denmark who spoke in throughout the world. Our video
2014 at the Al Nur mosque in Berlin archive at memritv.org contains
faced criminal charges after calling thousands of examples.
for the killing of Jews, saying: A year ago in Washington, at the
“Count them and kill them to the opening of the Summit on Counter-
very last one.” Two months ago, he ing Violent Extremism, President
was fined €1,300 ($1,418). Italian, Obama urged Muslims to “push
Spanish and Danish authorities have back” against extremism in mosques.
handled similar matters involving Acknowledging the Islamist threat,
hateful sermons. and those who support it, must be
At Al Aqsa, support is also strong part of any realistic attempt at coun-
for jihadist groups. On June 26, Pal- tering violent extremism.
estinian cleric Issam Amira praised
an Islamic State-inspired attack in Mr. Stalinsky is the executive di-
the small French town of Saint-Quen- rector of the Middle East Media Re-
tin-Fallavier, southeast of Lyon, after search Institute (Memri).
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
A12 | Thursday, February 4, 2016 THE WALL STREET JOURNAL.

WEATHER & CROSSWORD

What’s Selling Where? The Bloody Mary, Around the World

The St. Regis luxury hotel chain says its best-selling Bloody Mary cocktail was born in 1934, when a bartender at its New York location, Fernand Petiot, perfected a recipe for a vodka and tomato juice cocktail.
Today, the 36 St. Regis hotels around the world serve versions of the typically spicy concoction, incorporating local flavors and garnishes. The chain shares each recipe online and in a cookbook. “We want to
encourage people to replicate it,” says Jim Petrus, St. Regis’s global brand leader. Below, some of the far-flung iterations of the St. Regis Bloody Mary. — Ellen Byron

ST. REGIS HOTELS & RESORTS (5)

NEW YORK DUBAI ROME SINGAPORE KAUAI, HAWAII

Red Snapper Golden Mary Mary Chilli Padi Aloha Mary

More than 60 Bloody Mary cocktails
are sold every day at the King Cole bar
The St. Regis in Dubai, which
opened last November, has its own
Terranean Mary The “Aloha Mary” cocktail has lime
juice, wasabi powder, sriracha and a
in the St. Regis in New York. Bloody Mary recipe called “Golden The “Mary Terranean” is the Bloody The “Chilli Padi Mary,” sometimes garnish of sea asparagus. Locally
“People come in at all hours for Mary,” Mr. Petrus says. Mary of the St. Regis in Rome. “No served in a short tumbler instead of a sourced organic Hawaiian vodka and
this drink because we’re known for it,” It calls for, among other things, surprise, this has virgin olive oil, a traditional highball, includes guava wood-smoked sea salt add a
Mr. Petrus says. yellow tomato juice, a dash of edible splash of oregano, a dash of red hot lemongrass, ginger and thinly sliced local twist.
The New York version, called the gold-leaf flakes and a lot of patience: pepper powder and basil leaves,” Mr. chilli padi, a popular hot pepper in Mr. Petrus says guests on a tropical
“Red Snapper,” is the original Petiot Rose petals are combined with a bottle Petrus says. Southeast Asia. island don’t drink a Bloody Mary any
recipe, including lemon juice, tomato of premium vodka and set aside for “We want to make sure that when differently than people in urban
juice, Worcestershire sauce, Tabasco, seven to 30 days people receive the drink, they are taken settings. “The Bloody Mary is enjoyed
cayenne pepper, celery salt and whole aback, by not only the flavors but also universally at all times of the day, no
black peppercorns the beauty,” Mr. Petrus says. matter where you are,” he says.

signed French striker Demba Ba,
and Jiangsu Suning, which paid
Heard on the Field a reported transfer fee of $36
million for Chelsea’s Ramires, un-
til then a record for Chinese soc-
cer. Guangzhou Evergrande, for
club said on its website. It said its part, picked up Brazilian inter-
China’s Latest Lavish Martinez will join winter training nationals Paulinho and Robinho.
merce giant Alibaba and a re-
cord $1.25 billion broadcast deal
signed last year with Beijing-
based Ti’ao Dongli.
That also jibes with a re-
structuring of the government’s
soccer management structure to
raise China’s level of play. The
SERGIO BARRENECHEA/ZUMA PRESS

Soccer Acquisition in Dubai on Feb. 9 after com- In all, Super League teams national team has been a persis-
Guangzhou Evergrande of the pleting his physical exam. spent $118 million on players tent laggard, qualifying for the
Chinese Super League said Despite a slowing economy, and coaches in the 2014-2015 World Cup just once.
Wednesday it has signed Atlé- Chinese clubs have continued to transfer market, according to Martinez had impressed as a
tico Madrid striker Jackson Mar- splash out big sums for foreign statistics from by Germany’s member of his national team
tinez for a record sum in the talent, hoping for greater glory Transfer Market, placing the and FC Porto, but was seen as
Asian transfer market. in both the long-underperform- league second behind the Eng- underperforming at Atlético. He
The 29-year-old Colombian ing domestic league and interna- lish Premier League. scored just three goals in 22 ap-
(pictured right) has signed to a tional competition. The spending has been fueled pearances for the 2014 Spanish
four-year contract for a fee of Among the biggest spenders both by big-name sponsorships champions. After a disappointing run at Atlético Madrid, Colombian striker
$45.8 million (€42 million), the is Shanghai Shenhua, who from the likes of Internet com- —Associated Press Jackson Martinez is looking to make a big splash in China.

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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Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 6 4 r 10 4 r Orlando 27 9 t 17 12 s Zurich 4 3 r 9 0 r P I T Y Y A P A T S Y S

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BUSINESS & TECH.
Lenovo Confronts a Slump
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© 2016 Dow Jones & Company. All Rights Reserved.
Syngenta Is Ripe for China Security Issues
BY JACOB BUNGE
China National Chemical
Corp.’s planned takeover of
Syngenta AG could give the
Swiss maker of pesticides and
seeds a leg up in China’s bur-
geoning agricultural market,
while narrowing the field of
potential merger partners for
rivals including Monsanto Co.
The state-owned Chinese
chemical company’s $43 bil-
lion cash offer for Syngenta,
announced Wednesday, is the
latest twist in a nearly year-
long deal-making dance
among the companies that
dominate the $100 billion
global market for crop seeds,
herbicides and insecticides.
The industry, which in-
cludes DuPont Co., Dow
Chemical Co., Bayer AG and
BASF SE, is grappling with a
three-year slide in grain and
soybean prices that has
slashed farmers’ incomes and
curtailed their spending on
seeds, sprays and equipment.
That revenue pressure has
Ford Will Trim Further in Europe to Bolster Profit
Auto maker to offer
buyouts to most of its
salaried workers, halt
sales of some vehicles
BY CHRISTINA ROGERS
Ford Motor Co. plans to
eliminate hundreds of jobs and
eliminate some models in Eu-
rope as part of a plan to im-
prove profit in a region that
long has bedeviled the auto
maker.
The No. 2 U.S. auto maker
by sales said Wednesday that it
plans to offer voluntary buy-
outs to most of its 10,000 sala-
ried employees in Europe.
Ford expects hundreds of
takers, saving it $200 million
annually. Ford also plans to
stop making some less-lucra-
tive models and refocus on
higher-profit cars and sport-
utility vehicles to compete bet-
ter in Europe, a market long
burdened by overcapacity and
price wars, the company said.
The Dearborn, Mich., auto
maker, which gets about 19% of
revenue from Europe, turned a
$259 million pretax profit in
the region last year after losing
more than $3 billion between
2012 and 2014.
“The goal is very simple,”
said Jim Farley, Ford’s Euro-
pean chief. “It is vibrant and
sustainable profitability, that
we make a return in good
times and bad.”
Ford is targeting long-term
operating margins in Europe of
between 6% and 8%, up from
about 1% last year, as it builds
on a massive restructuring
plan started in 2012 that re-
Amazon Floats Plan
To Open Bookstores
BY GREG BENSINGER
After dipping its toes into
brick-and-mortar retailing last
year with its first physical
bookstore, online giant Ama-
zon.com Inc. is poised to dive
into the deep end.
The Seattle company plans
to open as many as 400 book-
stores, Sandeep Mathrani,
chief executive of mall opera-
tor General Growth Proper-
ties Inc., said on an earnings
call on Tuesday.
“You’ve got Amazon open-
ing brick-and-mortar book-
stores and their goal is to
open, as I understand, 300 to
400,” said Mr. Mathrani in re-
sponse to a question about
mall traffic.
That plan compares to the
640 stores Barnes & Noble
Inc. operates and the 255 loca-
tions Books-A-Million Inc.
said it had as of last summer.
Growing Concentration
Pending approval of recent deals, just a handful of companies will
dominate the global seed and pesticide businesses.
2014 sales in billions
Dow Chemical/DuPont*
Syngenta/ChemChina*†
Monsanto
Bayer AG
BASF SE
*Pending deal †Estimate includes $3.2 billion in pesticide sales by Adama Agricultural
Solutions co-owned by ChemChina and Koor Industries.
Sources: Sanford C. Bernstein; Adama Agricultural Solutions
THE WALL STREET JOURNAL.
prompted agribusinesses to
turn to mergers as one way to
cut costs and boost profits.
Dow and DuPont are pursu-
ing their own tie-up, unveiled
in December, that will com-
bine them, and then split their
businesses into three stand-
alone entities, including one
focused on agriculture.
A Ford exhibit at the Brussels Motor Show last month. The auto maker is aiming for operating margins in Europe between 6% and 8%.
sulted in the company closing
three European factories and
cutting 5,700 jobs.
The plan has proved expen-
sive, given Europe’s powerful
unions and high severance
costs for dismissing workers.
But it has saved Ford money
by boosting factory use above
industry norms.
Mr. Farley declined to say
Both companies spent years
building their retail presence.
In addition to its one book-
store, Amazon also has a pres-
ence in Westfield Corp. malls,
where it has set up permanent
kiosks selling devices, cases
and branded apparel.
It wasn’t clear where Mr.
Mathrani got Amazon’s store
figure, but he could have spo-
ken with Amazon’s real-estate
executives about their plans.
Spokesmen for Amazon and
GGP declined to comment.
If Amazon were to open
hundreds of stores, it would
take years to pick locations,
reach leasing deals, and hire
staff. Physical stores would
give Amazon customers a
place to leaf through books be-
fore buying them.
Barnes & Noble shares were
off 7.5% at $7.48 and Amazon
was down 3.1% at $534.92 in
Please see AMAZON page B2
THE WALL STREET JOURNAL.
Pesticides Seeds
$9.4 $9.2
$15.0 $3.1
$4.9 $10.7
$11.1 $1.5
$7.3
Syngenta Chairman Michel
Demare said the planned sale
to ChemChina would help
shield the Swiss company
from some of the pressures
faced by the agriculture indus-
try. The deal also will allow
Syngenta to continue operat-
ing with its management and
workforce intact and require
which models Ford would elim-
inate. But sales of the com-
pany’s minivan-style B-Max
and S-Max posted double-digit
sales declines last year as Eu-
ropeans flocked to higher-rid-
ing crossovers and SUVs.
The restructuring plan, in
addition to attempting to sta-
bilize Ford’s long-challenged
European operations, also is a
Luxembourg to Invest in Asteroid Mining
BY ROBERT WALL
LONDON—The government
of Luxembourg is looking to
become Europe’s center for
commercial asteroid mining,
following U.S. efforts to pro-
mote such ventures.
U.S. President Barack
Obama in late November
signed a bill aimed at clearing
legal obstacles to asteroid
prospecting and exploitation.
The new law was welcomed by
companies interested in gath-
ering rare metals and other
resources in space for profit.
Luxembourg, which has
been studying possible involve-
ment in the sector since 2013,
is willing to invest in private
companies and finance related
research-and-development pro-
grams, Etienne Schneider, Lux-
embourg’s vice-prime minister
and minister for the economy,
said in an interview. The aim is
to “open access to a wealth of
previously unexplored mineral
no major restructuring that
could disrupt operations as
companies merge, he said.
Syngenta doesn’t plan cost
cuts beyond those already an-
nounced, and will retain its
flower- and vegetable-seed
units, which it previously
planned to sell to help fund
stock repurchases, Mr. Demare
said.
ChemChina’s ownership of
a top global supplier of seeds
and pesticides would help fuel
the expansion of Chinese agri-
cultural sector, as its govern-
ment looks for ways to im-
prove production, Mr. Demare
said. China is the world’s sec-
ond-largest market for crop
seeds.
Foreign companies sell
about 20% of seeds used in
China through joint ventures,
but the country has been
pushing its thousands of small
homegrown seed companies to
consolidate, in a bid to better
compete with established
Western rivals.
Please see DEAL page B2
significant test for Mr. Farley,
tapped by Chief Executive
Mark Fields to run the region
at the start of last year.
Ford and rivals racked up
billions of dollars in losses in
Europe over the past few years
amid a six-year sales slump
that knocked demand in the re-
gion to its lowest levels since
the early 1990s. Ford’s chief ri-
resources on lifeless rocks
[hurtling] through space, with-
out damaging natural habi-
tats,” he said.
The size of the investment
budget hasn’t been set, but
Mr. Schneider said the govern-
ment could fund as much as
45% of research-and-develop-
Luxembourg’s vice prime minister, Etienne Schneider, seen in
December, said the country is willing to invest in private firms.
INSIDE:
MONEY &
INVESTING
U.S. Hedge Funds’
Troubles Mount
FINANCE | B5
Thursday, February 4, 2016 | B1
Could Arise in U.S.
BY SHAYNDI RAICE ing facility for Syngenta,” ac-
cording its website. A recent job
Syngenta AG’s ownership of posting on several employment
U.S. chemical facilities that are websites describes the facility as
potential terror targets could “a large highly hazardous chem-
raise red flags with the gov- ical manufacturing facility.”
ernment body that monitors State-owned ChemChina
foreign acquisitions of Ameri- said Wednesday it offered to
can businesses, after the com- buy the Swiss pesticide and
pany agreed to sell itself to seed company for $43 billion
the government-owned China in cash. There is little business
National Chemical Corp. overlap between ChemChina
Syngenta’s St. Gabriel manu- and Syngenta, meaning the an-
facturing facility outside of Ba- titrust risk for the deal ap-
ton Rouge, La., and a facility in pears to be relatively low.
Houston, Texas, are registered If regulators require remedia-
with the Chemical Facility Anti- tion, ChemChina will sell certain
Terrorism Standards program, assets, said a person familiar
which through the U.S. Depart- with the matter. Syngenta will
ment of Homeland Security remain intact, the person added.
regulates high-risk chemical fa- But the deal could still face
cilities. The CFATS program was stiff obstacles if the Commit-
authorized by Congress in 2007 tee on Foreign Investment in
and updated in 2014 to protect the United States, or CFIUS,
hazardous chemical facilities determines that Chinese own-
from terrorist infiltration. ership of sensitive chemical
The St. Gabriel site is a “ma- facilities would pose a na-
jor crop protection manufactur- Please see RISK page B2
bulk of its results last year.
Ford spent years in the U.S.
cutting jobs and closing facto-
ries before borrowing $24 bil-
lion and paring businesses as
part of a turnaround.
Ford’s cuts in Europe have
been deeper than most other
car makers, including GM.
With North American profit
peaking, Ford is focused on
reaping gains abroad.
“Ford looked to be on the
front foot in dealing with ca-
pacity,” said Mark Fulthorpe,
an auto analyst with re-
searcher IHS Automotive.
GM, meanwhile, “tried to
make smaller cuts,” he added.
North America remains
Ford’s cash cow, generating
$9.3 billion in operating re-
sults in 2015.
European car sales have re-
LAURENT DUBRULE/EUROPEAN PRESSPHOTO AGENCY
bounded over the past two
years, but Ford executives
want to cut costs enough to
keep it solidly in the black for
the next downturn.
The auto maker is banking
on new models to lift profit
and is hoping to sell pricier
versions of its models under
the Vignale trim line. Ford
has five new or redesigned
SUVs slated for Europe in the
next three years, including a
new Edge crossover.
Ford aims to improve fac-
val, General Motors Co., gets tory usage by a 7% gain in ef-
about 13% of its revenue from ficiency. Ford has factories
Europe and has lost more than running at near-full capacity
$7 billion in the region since in Europe and has pledged in
2010, including $813 million in the past to expand sales there
red ink last year. GM expects to to 600,000 vehicles by 2020.
regain profitability this year.
Ford’s European restruc-  General Motors posts surge
turing aims to mirror its suc- in profit on tax gain ............. B2
cess overhauling its U.S. busi-  EU upholds tougher car-
ness, which contributed the emissions rules ....................... B2
ment projects.
Luxembourg has previously
mining, said Jean-Jacques
Dordain, the former head of
invested in space activities, in- the European Space Agency
cluding the now publicly who will also serve on the
traded satellite-services com- government’s advisory board.
pany SES. A former director of the
Luxembourg’s move should U.S. National Aeronautics and
keep investors from heading Space Administration also will
to the U.S. to bet on asteroid join the advisory board, Mr.
Schneider said, along with a
Chinese representative.
EMMANUEL DUNAND/AGENCE FRANCE-PRESSE/GETTY IMAGES
Legal questions over such
activities remain, though. The
1967 Outer Space Treaty
signed by more than 100 coun-
tries says outer space is free
for exploration and use by all
states, though some legal ex-
perts believe it might limit the
ability to lay commercial
claims on celestial bodies.
Mr. Schneider said extrac-
tion should be viewed like
fishing, with companies able
to harvest stocks without es-
tablishing territorial claims.
The commercial appetite
for asteroid mining has
Please see MINE page B3
 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 | Thursday, February 4, 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
Alibaba Group.............B5
Alphabet......................B3
Amazon.com ............... B1
Apple...........................B3
AstraZeneca................B3
B Industry.....................B3
Banco Bilbao Vizcaya
Argentaria.................B7
Banco de Sabadell......B8
Barnes & Noble...........B1
BASF............................B1
Bayer...........................B1
Books-A-Million..........B1
C maker.
China General Nuclear
Power........................B5
CYBG............................B5
D L
Dow Chemical........B1,B8
Dunkin' Brands Group B5
DuPont...................B1,B8
F Europe. The Detroit auto
Ford Motor..................B1
G W
General Growth
Properties.................B1
INDEX TO PEOPLE
A G
Abromavicius,
Aivaras......................A3
Archer, Greg................B2
B
Barra, Mary.................B2
Bezos, Jeff..................B2
Bienkowska, Elzbieta.B2
Brown, David..............A6
C Li Ka-shing..................B5
Cavender, Ben.............A6
Cohen, Hadar..............A4
D P
Demare, Michel.....B1,B2
Duffy, David................B5
DAVID RYDER/BLOOMBERG NEWS
E-commerce giant Amazon currently has a bookstore in Seattle.
AMAZON
Continued from the prior page
afternoon trading Wednes-
dayg.
Amazon opened a book-
store in Seattle in November,
its first foray into brick-and-
mortar retail. The store, in an
outdoor mall, sells books and
Amazon’s Kindle and Fire de-
vices. Amazon says it stocks
the location using data col-
lected from its website. The
store has about 5,000 titles at
any one time, compared with
millions on its namesake web-
site.
The Seattle bookstore car-
ries the same prices as Ama-
zon’s online store, generally at
a discount to other retailers. It
showcases customers’ online
book reviews for some titles
and, like many independent
stores, has curated sections
featuring selections from em-
ployees, including Chief Execu-
tive Jeff Bezos.
While Amazon can over-
whelm competitors with its
vast online inventory, it still
cannot rival the immediacy of
shopping at the mall. Not that
it isn’t trying: Amazon has be-
gun one-hour deliveries in
about 20 cities and same-day
drop-offs in other markets. At
a handful of U.S. colleges, Am-
azon has physical locations for
students can pick up or drop
ADVERTISEMENT
The Mart
TRAVEL
 
General Motors...........B2
GlaxoSmithKline.........B3
Goldman Sachs Group B5
H
N
National Australia
Bank..........................B5
Novartis.......................B3
Novo Nordisk..............B3
Haier Group ................ A1
Hon Hai Precision O
1Malaysia
HSBC ........................... B5 Development.............B5
HTC..............................B3
R amid growth in China and
I
Royal Bank of Scotland
IHS Automotive..........B1 Group.........................B8
J S
JAT Airways ............... A4 SCMP Group................B5
K Sharp...........................B3
Krispy Kreme Starbucks....................B5
Doughnuts ................ B5 Swatch Group ............. B8
Syngenta.....A1,B1,B5,B8
Lenovo Group..............B3 T est quarter included a $3.9 bil-
M Target..........................B2
McDonald's..................B5 V valuation of tax assets in
Mitsubishi UFJ Financial Volkswagen.................B2
Group.........................B3
Mizuho Financial
Group.........................B3 Wal-Mart Stores.........B2
Monsanto ......... B1,B5,B8 Westfield.....................B1
S
Gou, Terry ................... B3 Steel, Doug ................. B8
J Stevens, Chuck........... B2
Jonnaert, Erik.............B2 T past 52 weeks and trades well
K Thorburn, Andrew.......B5
Travis, Nigel................B5
Kononenko, Ihor ......... A3
L U
Ustaran, Eduardo........B3
Lee, Rocky...................A6
W
M Wai Wong Ming..........B3
Mathrani, Sandeep.....B1 Y home turf, where gasoline
Yang Yuanqing............B3
Peng, Nicole................B3 Yellen, Janet...............B5
Petrus, Jim ............... A12 Yip, Patrick ................. A6
off merchandise and speak to
Amazon representatives.
In addition to the Seattle
bookstore, Amazon footwear
division Zappos and Quidsi,
parent of Diapers.com, have
evaluated retail outlets.
Mr. Mathrani noted that
other online retailers, like
fashion site Bonobos and eye-
glasses seller Warby Parker,
are opening physical stores.
Online makeup-subscription
service Birchbox “is cutting
their overhead to open bricks-
and-mortar stores,” he said.
Such stores also can serve
as mini warehouses for home
delivery in urban centers, a
concept Wal-Mart Stores Inc.,
Target Corp. and others have
explored. Warby Parker has
said its physical stores are
profitable in their own right.
Amazon’s Seattle bookstore
has no apparent delivery com-
ponent, though people familiar
with its operations have said
the retailer is using it to ex-
periment with stocking shelves
quickly using nearby ware-
houses and doing other types
of data collection.
GGP’s Mr. Mathrani sug-
gested another possible moti-
vation for Amazon to open a
chain of physical stores: re-
turns. The CEO of the Chicago-
based firm said 38% of online
purchases for what are known
as softgoods, such as clothing
and paper products, are re-
turned to physical stores.
GM Net Jumps on Tax Gain
BY GAUTHAM NAGESH
AND CHRISTINA ROGERS
General Motors Co.’s
fourth-quarter profit surged
booming U.S. sales of pickup
trucks and sport-utility vehi-
cles, capping a record year for
the nation’s largest auto
GM reported $6.3 billion in
net income in the final three
months of 2015, up from $1.1
billion a year earlier. The lat-
lion noncash gain from the re-
maker’s full-year profit for
2015 more than tripled to a re-
cord $9.7 billion, up from $2.8
billion a year earlier.
But investors aren’t finding
a lot to cheer about even
though GM’s results beat ex-
pectations. Wall Street re-
mains trained on turbulence in
China and concerns U.S. auto
sales have peaked. GM’s stock
is down some 20% over the
below the company’s 2010
$33-a-share initial public of-
fering price. GM shares were
off 2% at about $29.02 in New
York Stock Exchange trading
on Wednesday.
There are red flags on GM’s
prices falling below $2 a gal-
lon, low interest rates and em-
ployment gains fueled record
auto sales in 2015. GM’s U.S.
sales in January were flat
amid mixed results from other
car makers. Industry invento-
ries and discounts are rising.
Car-Emissions Rules Upheld in EU
BY GABRIELE STEINHAUSER
BRUSSELS—The European
Parliament on Wednesday up-
held a new law requiring on-
the-road tests for certain
harmful car emissions, despite
objections from some lawmak-
ers and environmental groups
who claimed that it isn’t strict
enough.
The so-called real-driving-
emissions test was agreed to
shortly after Volkswagen AG
admitted last fall that it had
installed software in millions
of diesel cars that allowed it to
cheat on tests for nitrogen-ox-
ide emissions. On-the-road
tests are considered to be a
more accurate, harder-to-ma-
nipulate method for measuring
emissions than the current
laboratory tests.
There will be “no new
DEAL
Continued from the prior page
“We don’t expect to get any
kind of preferential treat-
ment,” Mr. Demare said in an
interview. “But I think we get
a lot of opportunities to to-
tally transform the landscape
for agriculture in China.”
China permits some culti-
vation of genetically modified
crops, which have been devel-
oped by Syngenta, Monsanto
and their rivals to confer re-
sistance to pests and herbi-
cides. But China is angling to
develop its own biotech crops,
and officials there believe con-
solidation of the domestic in-
dustry is one way to boost re-
search, observers say.
Analysts with Sanford
Bernstein & Co. said the deal
could help open the Chinese
RISK
Continued from the prior page
tional security risk.
The interagency body,
which comprises representa-
tives from 16 U.S. agencies in-
BUSINESS NEWS
GM reported stronger quarterly auto sales in the U.S. and China.
Some on Wall Street are
bracing for an economic slow-
down and questioning whether
GM and others can keep the
good times rolling. The auto
industry tends to be cyclical
and the financial crisis drove
GM and others to seek protec-
tion from creditors in 2009.
“We believe investors
should pay closer attention to
deteriorating [transaction
price] trends, which we expect
to accelerate,” wrote Joseph
Amaturo, a Buckingham Re-
search Group analyst.
GM executives contend Wall
Street is ignoring fundamental
improvements in the U.S.
economy and auto industry.
They argue U.S. car sales have
plateaued, rather than peaked,
and predict additional growth.
“We know there’s a lot of
concern from the capital mar-
kets on this, but we don’t sub-
scribe to that view,” said GM
finance chief Chuck Stevens.
Volkswagen cases in the fu-
ture,” Elzbieta Bienkowska, the
European Union’s industry
commissioner, said to lawmak-
ers assembled in Strasbourg,
France.
The Parliament’s environ-
ment committee in December
voted to reject the new testing
method, which was agreed to
in closed-door talks among of-
ficials from EU transport min-
istries. The committee said the
new rules would allow car
makers to exceed existing caps
on NOx emissions for too long
after the tests become binding
in the fall of 2017.
The bloc’s current limit on
such emissions is 80 milli-
grams a kilometer. However,
under the testing rules, cars
emitting as much as 168 mg
could still be approved for sale
in the EU’s 28 member states
market to other Western seed
companies.
If the Committee on For-
eign Investment in the U.S.,
which is expected to review
the proposed transaction, de-
cides the deal gives Syngenta
an unfair advantage in China,
the body could require China
to grant greater access to
other U.S. and European com-
panies, Sanford Bernstein told
clients in a research note.
The combination also di-
minishes the chances for more
deals among the Big Six seed
and chemical makers. That has
implications in particular for
Monsanto, which for years
pursued a deal with Syngenta.
During a lengthy and failed
courtship last summer, Mon-
santo said a bigger portfolio
of pesticides, which Syngenta
would have added, was central
to its long-term strategy.
Analysts said Wednesday
Lawyers who represent cli-
ents before CFIUS said Syn-
genta’s ownership of CFATS fa-
cilities means CFIUS is likely to
review the ChemChina deal,
but they added that it didn’t
necessarily preclude approval
of the agreement. “We are very
convinced there is no security
THE WALL STREET JOURNAL.
said.
“Breaking even in Europe in
2016 is a companywide focus
and we’re confident that we’re
going to achieve that,” Mr.
Stevens said.
Rival Ford Motor Co. turned
a profit in Europe last year af-
ter losing more than $3 billion
JEFF KOWALSKY/BLOOMBERG NEWS
between 2012 and 2014 and
said it would aim to cut hun-
dreds of jobs and kill models
to keep earnings growing.
GM’s fourth-quarter reve-
nue was flat compared with a
year ago at $39.6 billion.
GM earlier this year in-
vested $500 million in ride-
sharing startup Lyft Inc. and
purchased assets from its de-
“We believe we are well posi- funct rival Sidecar Technolo-
tioned for a downturn, we just gies Inc., with the eventual
don’t think it’s going to hap- goal of developing a driver-
pen any time soon.” less-car hailing service. The al-
The results suggest GM has liance can create “an autono-
weathered the worst of a
safety crisis that emerged
mous fleet of sharing vehicles
for use quicker than anybody
when Chief Executive Mary else,” Ms. Barra said.
Barra took over in early 2014. Equity income from GM’s
GM settled criminal charges, Chinese joint venture during
some litigation and a regula- the fourth quarter was $572
tory probe linked to a defec- million, up from $511 million a
tive ignition switch on mil- year ago. GM cited stronger
lions of recalled vehicles for margins in the world’s largest
more than $2 billion overall. auto market, and retail sales
GM plans to break even in up more than 14% in the
Europe this year for the first fourth quarter from a year
time in years. earlier.
GM pared losses in Europe GM’s revenue for 2015 was
in 2015 to $813 million from $152.4 billion, down from
$1.4 billion in 2014. GM $155.9 billion in 2014. GM said
doesn’t plan any further re- the decline was primarily due
structuring actions because to a foreign-currency exchange
the company has “the right impact of $9.3 billion.
cost structure now ” after re- GM reaffirmed recent guid-
moving the Chevrolet brand ance for 2016 that put ad-
from the region and leaving justed earnings per share be-
Russia altogether, Mr. Stevens tween $5.25 and $5.75.
until 2021. From then onward, the new rules will be difficult
cars would be allowed to emit for auto makers to comply
as much as 120 mg. with but remove regulatory
Ms. Bienkowska said that uncertainty.
despite the large margins, the “This regulation will be a
new testing method was a big major challenge for the indus-
improvement on the current try, with new and more strin-
lab tests. She also pledged to gent testing standards that
use the commission’s rights to will be extremely difficult to
review the new law to further reach in a short space of time,”
tighten the not-to-exceed lim- said Erik Jonnaert, ACEA’s sec-
its. The commission said that
the average diesel car on EU
roads emits about four times
as much NOx than is currently
retary-general. “However, au-
tomobile manufacturers wel-
come
clarity.”
the much-needed
allowed. Environmental groups,
NOx emissions from cars meanwhile, lashed out against
are a significant contributor to the vote. “It’s disgraceful that
air pollution, which is a factor the most powerful countries in
in the deaths of some 400,000 Europe think that keeping
people in the EU every year, dirty diesel is good for their
according to the European En- car industry while citizens are
vironmental Agency. poisoned,” said Greg Archer,
The European association of clean vehicles director at
car manufacturers, ACEA, said Transport & Environment.
that it was unlikely Monsanto
would mount a counteroffer
for Syngenta because of the
debt it would need to take on
together a bigger pesticide
portfolio by acquiring several
smaller players, according to a
research note from BMO Capi-
and Syngenta’s reluctance last tal Markets.
summer to formally negotiate A Monsanto spokeswoman
with the St. Louis-based com- said “this latest announce-
pany. Instead, Monsanto could ment does not change our
deepen its relationship with view on our leadership posi-
tion in the industry. We be-
lieve we’ll remain the innova-
Foreign-based firms tion partner of choice, given
sell about 20% of the breadth and depth of our
business and pipeline.”
seeds used in China Monsanto is the world’s
through ventures. largest seed maker by sales
and the fifth-largest seller of
pesticides, according to data
BASF, a major pesticide devel- compiled by Morgan Stanley.
oper that already works with Mr. Demare declined to
the company on some prod- comment on his most recent
ucts, even though Monsanto talks with Monsanto, but said
officials have said they would that “Monsanto had multiple
prefer owning chemical busi- chances to make their ideas
nesses over partnerships and known,” and that ChemChina’s
joint ventures. Alternatively, all-cash offer is “difficult to
Monsanto could try to stitch beat.”
of sensitive chemicals, CFIUS Nexen Inc., in 2013 CFIUS re-
could raise concerns if Syn- quired a change in the control
genta has partnered on re-
search with the U.S. govern-
of U.S. drilling leases because
it would have given the Chi-
ment, said one lawyer not nese company control of as-
involved in the case. Another sets in the Gulf of Mexico.
noted that CFIUS can become One person familiar with the
suspicious if they believe a Syngenta deal expects CFIUS to
state-owned actor isn’t gener- review it, and says the company
 
  
cluding Treasury, Homeland issue,” said Syngenta Chairman ally honest in its dealings. already is working on mapping
Security and Defense, is tasked Michel Demare. He said Syn- The definition of national out all its facilities in the U.S. to

 

with ensuring that foreign ac- genta plans to proactively seek security is kept purposely ensure they aren’t close to U.S.
quirers gaining control of U.S. CFIUS approval. vague, say CFIUS lawyers, and military bases. The types of

   assets don’t pose a risk to na- While CFIUS review techni- the connection to national se- chemicals produced at the

   Businesses For Sale. tional security. If CFIUS deter- cally is a voluntary process, it curity isn’t always clear. CFATS facilities and the high
mines there is a threat, the is incumbent upon companies Sometimes CFIUS can deny level of security at the site could
 president could quash the deal. engaging in what is termed a a transaction based on an ex- assuage any national security

  !"# The number of Chinese “covered transaction” to sub- panded view of control. In concerns, the person added.
Advertise in The Mart. deals CFIUS has reviewed has mit to CFIUS for review. The some cases, experts say a Chi- In Europe, CFIUS has most
increased since 2012. Experts panel monitors deal activity nese board member for a com- recently derailed the sale of
note the pattern reflects grow- and may request that a com- pany with a U.S. subsidiary Philips NV’s lighting business
  
 Call +44 (0) 207 572 2123 ing concern among U.S. na- pany file for review if it could trigger CFIUS concern. to Chinese investment group
   
 tional security experts about doesn’t do so on its own. Proximity to a U.S. military Go Scale Capital for $2.8 bil-



 Chinese acquisition of sensitive Other issues could arise base also could hurt a deal’s lion. The Philips business has
  

  U.S. technologies or facilities. that might cause CFIUS con- chances of receiving approval. a large U.S. patent portfolio
    

A spokeswoman for the Trea- cern, said the lawyers who When the China National Off- and sizable manufacturing and


 !"#$$% sury Department, which chairs represent clients and compa- shore Oil Corporation bought research-and-development fa-
CFIUS, declined to comment. nies before CFIUS. In the case Canadian oil and gas company cilities in the U.S.
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.
Regulators
Delay Call
On EU Data
Transfers
European Union privacy
regulators said Wednesday
that they will postpone a pos-
sible crackdown on trans-At-
lantic transfers of personal de-
By Sam Schechner
in Paris and
Natalia Drozdiak
in Brussels
tails about Europeans until
March or April, offering a tem-
porary reprieve that still
leaves thousands of companies
on uncertain legal footing in
Europe. A body representing
the EU’s 28 national data pro-
tection authorities said they
would take time to evaluate a
last-minute, data-sharing ac-
cord, agreed by the EU and the
U.S. on Tuesday, to determine
whether the U.S. has made
binding commitments that
protect the privacy of EU resi-
dents when their data is
stored on servers located on
U.S. soil.
The regulators had previ-
ously said they would begin
enforcing a landmark court
ruling that invalidated a prior
data-sharing framework if the
EU and U.S. couldn’t arrive at
a new deal. The court had ar-
gued the prior framework ex-
posed Europeans to mass sur-
veillance by the U.S.
government, but regulators
decided Wednesday that the
new agreement—dubbed Pri-
vacy Shield—meant they had
to take a fresh look.
“We are going to wait, but
not too long,” said Isabelle
Falque-Pierrotin, head of
France’s data-protection au-
thority and chairwoman of the
pan-EU group. She said the
group wants access to the full
agreement by the end of Feb-
ruary, and could make a deci-
sion by the end of March or
beginning of April. “We have
to see what is provided by the
United States in terms of com-
mitments,” she said.
The decision brings relief to
businesses that transfer infor-
mation about users, customers
and employees across the At-
lantic. Trade groups have ar-
gued that any interruption in
the flow of data—including so-
cial-media posts and human-
resources files—between the
EU and the U.S. would upset
the world’s largest trading re-
lationship. Some lobby groups
representing tech firms said
they welcomed regulators’ re-
view of the new framework,
but other tech executives and
industry lawyers said the an-
nouncement has only post-
poned a potential reckoning
that could upend the way they
do business in Europe.
“This extends the current
uncertainty by at least two
months,” said Eduardo
Ustaran, a privacy lawyer for
Hogan Lovells.
Business
Watch
GLAXOSMITHKLINE
Revenue Rises
In Line With
Expectations
GlaxoSmithKline PLC posted
fourth-quarter revenue and
profit in line with analyst ex-
pectations and reinforced guid-
ance that earnings would grow
strongly in 2016.
The company, based in the
U.K., said revenue in the quarter
ended Dec. 31 rose to £6.3 bil-
lion ($9.08 billion), thanks to a
strong performance from its
vaccine and consumer-health-
care arms. Core operating profit
fell 23% to £1.4 billion, largely
because of Glaxo’s shift to a
higher-volume, lower-margin
business after its $20 billion
three-part transaction with No-
vartis AG.
Restructuring costs from the
transaction meant that Glaxo
swung to a net loss of £354
million in the fourth quarter,
compared with a £1 billion
profit a year earlier, while reve-
nue climbed from £6.2 billion to
£6.3 billion.
Glaxo expects earnings to re-
Lenovo Warns of ‘Market Challenges’
BY EVA DOU
BEIJING—To the chagrin of
electronics makers, the world’s
consumers appear to have de-
cided that they already have
plenty of gadgets.
Lenovo Group Ltd., the
world’s largest personal-com-
puter maker, is the latest com-
pany grappling with slack de-
mand. On Wednesday, it
posted sales declines in its PC
and smartphone businesses
for its fiscal third quarter and
warned of “market chal-
lenges,” despite reporting a
surprise increase in net profit
and growth in sales of enter-
prise products.
For the past few years, elec-
tronics makers such as Lenovo
have offset a slowdown in PC
sales by doubling down on
smartphones. But this strategy
is reaping diminishing returns.
World-wide smartphone
shipment growth has eased
from 80% in 2010 to 11% in
2015 and is expected to slow
further, according to market-
research firm Canalys. Global
PC sales have slumped for sev-
eral years in a row, with ven-
dors hoping for the bottom in
2016.
Consumers have yet to em-
brace new technologies such
as smartwatches and virtual-
reality headsets on a scale that
can replace the slowdown in
PCs and smartphones.
Sharp Urged to Review Foxconn Bid MINE
TOKYO—The board of
Sharp Corp. is scheduled to
meet Thursday to weigh
competing takeover offers
from a Japanese-government-
By Eric Pfanner,
Takashi Mochizuki
and Atsuko Fukase
backed investment fund and
Foxconn, but it is under grow-
ing pressure to postpone a de-
cision to examine the Taiwan-
ese electronics assembler’s bid
more closely, according to peo-
ple familiar with the situation.
One person briefed on the
situation said Wednesday that
at least some of Sharp’s out-
side directors were pushing
fellow board members to take
another look at Foxconn’s
bid, which is higher than the
offer from the government-
backed investment fund known
as Innovation Network Corp.
of Japan.
Though Foxconn has offered
more than twice as much as
the fund, people familiar with
the situation have said the
fund holds the inside track be-
cause Tokyo is reluctant to let
Sharp’s expertise in mak-
ing smartphone screens fall
into foreign hands.
Foxconn Chief Executive
Terry Gou traveled to Japan
last week to make a personal
appeal for his bid, which Fox-
conn last week raised to ¥659
billion ($5.49 billion), accord-
turn to growth in 2016, when
the year-earlier comparisons
will no longer include the com-
pany’s old cancer-medicines
business. It reiterated guidance
that core earnings per share
would grow by a double-digit
percentage this year.
—Denise Roland
ASTRAZENECA
European Regulators
Approve Cancer Drug
AstraZeneca said European
regulators have approved a po-
tential blockbuster lung-cancer
drug that the company hopes
will form an important plank in
its growth plans.
The company believes the
drug, called Tagrisso, could gen-
erate as much as $3 billion a
year in sales, potentially helping
it achieve its ambition to in-
crease overall revenue to $45
billion by 2023, compared with
about $26 billion in 2014. How-
ever, analysts have been more
cautious about the drug’s po-
tential, with Citi’s Andrew Baum
forecasting sales of $1 billion by
2020.
AstraZeneca said Tagrisso
was the first new drug to win
accelerated approval by the Eu-
ropean Medicines Agency.
The decision comes two
months after Tagrisso was
given the green light by the
U.S. Food and Drug Administra-
tion.
—Denise Roland
TECHNOLOGY
“The golden years have
passed,” said Zhou Hao, an
economist at Commerzbank
AG, of global electronics sales
growth. “We maybe have to
wait for the next generation of
products that can trigger new
consumption.”
Even the strongest competi-
tors haven’t escaped the trend.
Apple Inc. forecast last month
that its revenue in the current
quarter would decline for the
first time in 13 years. Samsung
Electronics Co.’s quarterly
earnings showed a sharp slow-
down in profit growth from
chips, and the company
warned last week that smart-
phone competition would in-
tensify.
Many smaller vendors have
fared worse. Taiwanese smart-
phone maker HTC Corp. on
Wednesday said it swung to a
fourth-quarter net loss of 3.4
billion New Taiwan dollars
(US$101.4 million), from a
year-earlier profit.
Lenovo Chairman Yang Yu-
anqing said in an interview
Wednesday that his company
faced a “really challenging
market,” but aimed to carve
out top-line and profit growth
this year by taking over mar-
ket share from PC rivals and
redoubling smartphone efforts
in emerging markets.
“We think we can win
through our efficiency,” he
said. “How we can make
Sharp’s Fall
Sharp Corp. has suffered heavy losses in recent years because of a
drop in LCD prices and trouble in its consumer-electronics business.
Total sales
¥3 trillion
2 Sharp is under growing fi-
1 of liquid-crystal-display pan-
0
–1
FY 2011 ’12 ’13 ’14
Note: Fiscal years end in March.
Source: the company
ing to people familiar with the
matter. That compares with an
offer from INCJ that these
people say is valued at no
more than ¥300 billion.
Sharp and INCJ declined to
comment.
Foxconn, which has kept a
low public profile in the talks,
broke its silence on Wednes-
day, pledging a “lifelong in-
vestment and partnership.’’
“We believe that our offer
represents the best value for
Sharp’s shareholders, employ-
ees, business partners, credi-
tors, and communities where
it operates,” said Foxconn,
which is formally known as
GOOGLE
Self-Driving Cars Pull
Up to Washington
Google Inc. will begin testing
its self-driving cars in Kirkland,
Wash., later this month, the
third city where the tech giant
has spread the testing of its ve-
hicles since it began its project
in 2009.
Alphabet’s Google will begin testing self-driving cars in Kirkland, Wash., later this month.
Lenovo Group posted sales declines in its personal-computer and
smartphone businesses for the company’s fiscal third quarter.
money in this downturn pe-
riod? Because we have the
most competitive cost struc-
ture.”
Lenovo posted an increase
in its net profit for the quarter
ended Dec. 31 because of cost
cuts, while sales fell. The com-
pany said net profit rose 19%
to $300 million from a year
earlier, beating the $226.3 mil-
lion average estimate of 19 an-
alysts surveyed by Thomson
One Analytics. Revenue de-
clined 8.5% to $12.9 billion
from $14.1 billion a year ear-
lier.
Net income and loss
¥19.4 ¥11.5
billion billion
Forecast
’15 ’16 FY 2011 ’12 ’13 ’14 ’15
THE WALL STREET JOURNAL.
Hon Hai Precision Industry
Co. “We are prepared to invest
billions of dollars into Sharp.”
Sharp’s lenders, Mitsubishi
UFJ Financial Group Inc. and
Mizuho Financial Group Inc.,
also were asking the board to
give the Foxconn offer another
look, another person familiar
with the situation said. One
person said Sharp hadn’t pre-
sented a decision to the banks
as of Wednesday and said
there is no guarantee that the
company will choose or an-
nounce a winner on Thursday.
Company executives and
other insiders outnumber out-
side directors on Sharp’s
Kirkland, near Seattle, follows
Austin, Texas, as locations
where Google will test its vehi-
cles, which consist of autono-
mous Lexus RX450h hybrids
and low-speed “prototype” vehi-
cles that look like pods.
The rainy but temperate
weather in Kirkland gives
Google a chance to explore
more conditions to test the ve-
Thursday, February 4, 2016 | B3
@wsjd | wsjd.com
even for the first time in the
past quarter, meeting its fore-
cast of turning the business
profitable within a year and a
half of acquiring it from
Google Inc. It helped that Len-
ovo had taken a massive write-
down on smartphone inven-
tory clearing and
restructuring in its fiscal sec-
ond quarter, which had
dragged the company into its
first quarterly loss in more
than six years.
A bright spot for Lenovo
was its enterprise business,
NOOR KHAMIS/REUTERS
which includes servers and
networking products. The
group’s revenue rose 8% in the
quarter, while its business
groups catering more to regu-
lar consumers—PCs and
smartphones—recorded lower
sales.
With the addition of the
Depreciating currencies in Motorola business, Lenovo
emerging markets have hit was the world’s fourth-largest
gadget makers, which gener- smartphone maker by ship-
ally pay their suppliers in U.S. ments in the fourth quarter
dollars and ring up sales in lo- with 5.1% of the global market,
cal currencies. Lenovo said its according to market-research
revenue decline in the quarter firm IDC. It trailed Samsung,
would have only been 2%, not Apple and Huawei Technolo-
8%, without currency depreci- gies Co.
ation. Chief Financial Officer Canalys analyst Nicole Peng
Wong Wai Ming said on an in- said much of Lenovo’s head-
vestor call that Lenovo would way in smartphone sales in re-
consider raising product cent months has been due to
prices in emerging markets if competitively priced devices in
depreciation continues. emerging markets like India,
Lenovo reported its Motor- as the company has lost share
ola handset business broke in China to rivals like Huawei.
board by 8 to 5, so they could Continued from page B1
easily outvote the outsiders. shifted. For years, companies
But new regulations, ad- eyed extracting rare metals
opted after high-profile ac- found on asteroids as the prin-
counting scandals in Japan, cipal driver of their business
urge companies to pay more plans. Now, harvesting water
attention to outside directors that could be used for space
in an effort to improve corpo- missions is increasingly
rate governance. viewed as an easier first step.
Planetary Resources Inc.,
nancial pressure because of a the closely held company fi-
downward spiral in the price nanced partly by Larry Page
and Eric Schmidt, chief execu-
els, caused by a slowdown in tive and executive chairman,
No
forecast
the growth of smartphone respectively, of Google parent
sales and rising competition Alphabet Inc., is one of them.
from South Korean, Chinese The Redmond, Wash.-based
and other producers. company last year deployed a
The company’s consumer- test spacecraft from the Inter-
electronics and appliance op- national Space Station to vali-
’16 erations were already trou- date technologies that might
bled, and Sharp has turned to eventually be used in a system
its banks for bailouts twice in to land on an asteroid and
less than four years. harvest water or minerals.
Sharp is set to report quar- Chris Lewicki, CEO of Plan-
terly earnings on Thursday, etary Resources, said the com-
and analysts expect the figures pany would work with Luxem-
to deepen the company’s pre- bourg. Deep Space Industries,
dicament. They expect Sharp another privately held venture,
to forecast a record net loss also has ties to Luxembourg.
for the full financial year end- Mr. Schneider said U.S.
ing March 31. According to 11 firms are drawn by Luxem-
analysts surveyed by FactSet, bourg’s willingness to invest
Sharp is expected to re- and strong technology infra-
port ¥691.1 billion in revenue structure. Though U.S. compa-
and ¥7.2 billion in profit for nies are the first to have em-
the October-December period, braced the government’s
down from revenue of ¥762.7 move, he said European enti-
billion and profit of ¥22 billion ties are now likely to follow.
a year earlier. Luxembourg hopes to have
—Wayne Ma in Hong Kong most of the framework needed
and Eva Dou in Beijing to support asteroid mining
contributed to this article. ventures in place by year-end.
hicle before it attempts to de- location in the world. Google in-
ploy a commercial application of
its technology.
tends to spread to more areas
of the city as it builds its map.
Google, operated by parent
company Alphabet Inc., has
The tech company has 1,900
employees split between offices
been driving a single Lexus in Kirkland and Seattle.
RX450h around a few square —Mike Ramsey
miles in North Kirkland to create
a detailed map of the streets, a NOVO NORDISK
requirement for self-driving cars
to help them know their exact
Health Care Firm
Cuts Growth Target
Shares in Danish health care
giant Novo Nordisk A/S dropped
7% on Wednesday after the
company cut its long-term profit
growth target and said margins
would remain flat.
Novo Nordisk, the world’s
largest insulin maker by volume,
said its long-term target for op-
erating profit growth was now
10%, down from 15% previously.
It didn’t set a target for growing
operating margin, which it ex-
pects to remain at about 44%.
“It is a strategic priority to
continue to invest in future or-
NOAH BERGER/AGENCE FRANCE-PRESSE/GETTY IMAGES
ganic sales growth, and as a
consequence operating margin
improvement is not expected to
be a major contributor to oper-
ating profit growth,” the com-
pany said.
Investors were spooked by
Novo Nordisk’s expectation that
all of its long-term profit growth
will stem from increased sales,
without any contribution from
margin improvements, according
to Alm Brand analyst Michael
Friis Jorgensen.
—Christina Zander
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B4 | Thursday, February 4, 2016 THE WALL STREET JOURNAL.

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BBVA’s Net Rises
More Than Expected
BANKING | B7
© 2016 Dow Jones & Company. All Rights Reserved.
As of 4 p.m. ET EUR/GBP 0.7590 À 0.17%
Fed Can’t
Duck the
Buck’s
Strength
The U.S. dollar sits at the
center of a tangle of negative
feedback loops that are roiling
financial markets and econo-
mies around the world. It is
coming to the point where the
Federal Reserve may have to
try to cut through the snarl.
The dollar’s strength over
the past year and a half is un-
precedented. The currency fell
Wednesday,
but as of late
Tuesday, it
had gained
23% against
HEARD ON
THE STREET the
the euro and
17% against
yen—
JUSTIN moves that
LAHART are eclipsed
by what it
has done ver-
sus a host of emerging-market
currencies. The dollar was up
76% on the Brazilian real, 51%
on the South African rand and
121% on the Russian ruble.
These moves are making it
difficult for U.S. companies to
compete globally on price, and
also are cooling already low
inflation at a time when the
Fed wants it to go higher. Fur-
ther dollar strength risks mak-
ing the situation even worse,
while intensifying global pres-
sures that could put the U.S.
economy at risk. Recognizing
this, the Fed and its chair-
woman, Janet Yellen, may end
up not just pushing back rate
increases planned for this
Please see DOLLAR page B7
Sea of Green
Trade-weighted U.S. Dollar Index
25%
Major
20 currencies
Other
important
15 trading
partners
10
5 tional Chemical Corp., com-
0 Swiss pesticides and seed
2014 ’15
Source: Federal Reserve Bank of St. Louis
THE WALL STREET JOURNAL.
Dunkin’ Faces All-Day Headache
BY STEVEN RUSSOLILLO
As the breakfast wars
heat up, Dunkin’ Brands
Group Inc. is giving off a
worrisome chill.
Dunkin’s shares have
slumped 17% since early Sep-
tember, coincid-
AHEAD ing with
OF THE McDonald’s
TAPE Corp. announc-
ing its all-day
breakfast offer-
ings. The fear when Dunkin’
reports fourth-quarter re-
sults Thursday is that im-
pressive early results at the
golden arches are coming at
Dunkin’s expense.
Investors shouldn’t bank
on earnings giving the
shares a positive jolt, either.
The stock has dropped in the
trading session following
eight of Dunkin’s past 10
earnings releases.
Analysts polled by FactSet
forecast earnings for the pe-
riod ended in December of
50 cents a share, up from 46
cents a year earlier. Revenue
is expected to increase 5.2%.
The operator of the
Dunkin’ Donuts chain and
Baskin-Robbins ice-cream
shops has been hurt by wan-
ing store traffic and declin-
MARKETS DIGEST B6 | WEDNESDAY’S MARKETS B7 | FINANCE WATCH B8
YEN/DLR ¥117.85 g 1.76% GOLD 1141.30 À 1.24%
NAB Bows Out of U.K. Banking
British unit floated at
a sharp discount as
lender refocuses on its
domestic operations
BY MARGOT PATRICK
LONDON—National Aus-
tralia Bank Ltd.’s three de-
cades in the U.K. ended with a
whimper Wednesday as it
floated its British banking
arm at a sharp discount.
Down on the Farm
Dairy prices fell at a third consecutive international auction, leaving an index of prices in the sector about 20% below a recent peak
reached on Oct. 6. European exports are up and demand has been subdued in China and the Middle East. B8
Deal Vaults HSBC in M&A Ranks
BY JULIE STEINBERG
AND RICK CAREW
HONG KONG—Long re-
garded as a sleepy commercial
bank in Asia, HSBC Holdings
PLC has vaulted into the top
ranks of takeover-deal makers
in China in the past year.
The latest coup is its lead
role in advising China Na-
monly known as ChemChina,
on its $43 billion takeover of
maker Syngenta AG, China’s
biggest overseas deal ever. The
big win comes after a series of
Decaf
Share prices over the past 12
months
Starbucks Dunkin’ Brands
$70
60
50
40
30
2015
Source: FactSet
THE WALL STREET JOURNAL.
ing same-store-sales growth
for some time. In particular,
U.S. Dunkin’ Donuts stores,
which make up a majority of
overall revenue, have been
struggling for years. And the
increasingly competitive
landscape from Starbucks
Corp., Krispy Kreme Dough-
nuts Inc. and McDonald’s
might only exacerbate that
trend.
While Dunkin’ is no
stranger to all-day offerings,
it still hasn’t experienced
much success selling egg
sandwiches beyond tradi-
tional breakfast hours. More
than 60% of Dunkin’s sales
THE WALL STREET JOURNAL.
Scotland’s Clydesdale Bank
and northern England’s York-
shire Bank, together dubbed
CYBG PLC, were valued at
about £1.6 billion, or about
$2.3 billion, roughly 40% of
book value.
NAB Group Chief Executive
Andrew Thorburn said it was
a good response from inves-
tors in volatile markets. CYBG
Chief Executive David Duffy
said the newly independent
bank could play a key role in
an anticipated consolidation
smaller victories for HSBC’s
bankers in winning business
involving Chinese companies
prowling for assets overseas.
HSBC advised China Gen-
eral Nuclear Power Corp. in
November, when it snapped up
the energy assets of embattled
1Malaysia Development Bhd.,
or 1MDB, for $2.3 billion. It also
advised Hong Kong’s SCMP
Group Ltd. on the sale in 2015
of its flagship newspaper, the
South China Morning Post, to
Alibaba Group Holding Ltd. for
2.06 billion Hong Kong dollars
(US$264.1 million).
HSBC has also banked on its
take place between 4 a.m.
and 11 a.m., according to the
company. And while it has
explored other ways to in-
crease sales later in the day,
it has yet to experience
much success on that front.
The good news for
Dunkin’ is that its business
model is built for stability.
The company franchises a
majority of its Dunkin’ Do-
nuts-brand shops with royal-
ties set as a fixed percentage
of sales. That setup enables
’16 steadier profit margins even
when sales are fluctuating.
And Dunkin’ is seemingly
sanguine about heightened
competition. In October, CEO
Nigel Travis shrugged off
McDonald’s all-day offerings,
telling The Wall Street Jour-
nal they could actually help
Dunkin’ because it “reaffirms
that we’re an all-day dining
establishment.”
The stock market appears
more worried. While
Dunkin’s shares have tum-
bled, Starbucks and
McDonald’s have surged to
records recently. There is a
good chance Mr. Travis
might end up eating his
words.
Email: tape@wsj.com
Swatch Had Better
Watch Out for Apple
HEARD ON THE STREET | B8
OIL 32.28 À 8.03%
of Britain’s smaller banks.
NAB ended years of specu-
lation in November by laying
out plans to exit the U.K. and
focus on its more-profitable
operations in Australia and
New Zealand. It paid £420
million for Clydesdale Bank in
1987 and £900 million for
Yorkshire Bank in 1990, just
as Britain was entering a re-
cession and housing-market
downturn.
The businesses never
achieved the profit or scale
close ties with Hong Kong ty-
coon Li Ka-shing, helping him
restructure his power-to-tele-
com empire and buy British
cellphone operator O2 in a $14
billion deal.
The ChemChina deal tops
all of those and will result in a
hefty fee for HSBC. Syngenta
agreed on Wednesday to an of-
fer by the Chinese company af-
ter rejecting a $46 billion offer
from rival Monsanto Co.
HSBC’s bankers orches-
trated a delicate negotiation to
win over Syngenta’s manage-
ment, beginning with introduc-
ing the two management
Thursday, February 4, 2016 | B5
3-MONTH LIBOR 0.62060%
that NAB executives had
hoped for, and were hit hard
by souring commercial-prop-
erty loans after the U.K. fell
into another deep recession
in 2008.
The bulk of the commercial
real-estate debt was trans-
ferred to NAB in 2012 and
NAB began an effort to shrink
and simplify the U.K. busi-
ness.
“It was a burden for NAB
in historical terms when they
had not addressed the failings
teams in Germany nearly a
year before the deal was
struck, according to a person
familiar with the situation. It
helped ChemChina navigate an
accelerated due-diligence pro-
cess when it had less than a
month to strike a final deal in
early January, according to the
person.
HSBC has jumped to No. 2
in the China mergers & acqui-
sitions rankings and Asiawide
M&A league tables, trailing
only Goldman Sachs Group
Inc. That is up from No. 10 at
the end of 2015 for China and
No. 3 for Asia, excluding Japan.
DAVID PAUL MORRIS/BLOOMBERG NEWS
10-YR TREAS g 5/32 yield 1.881%
in the bank. Now it’s the larg-
est challenger in the U.K. in
SME lending and retail, and
one of the best-capitalized
banks,” Mr. Duffy said in an
interview.
A clutch of small banks, so-
called challengers to the five
big British banks that domi-
nate lending and mortgage
markets, have sprung up in
the past several years and are
expected to eventually merge.
Spain’s Banco de Sabadell SA
Please see NAB page B8
Problems
Mount at
U.S. Funds
BY ROB COPELAND
Troubles are piling up for
U.S. hedge funds as markets
pull back across the globe.
The activist hedge fund Or-
ange Capital, co-founded by
former Citigroup executive
Daniel Lewis, will notify inves-
tors in writing in coming days
that it plans to shut down and
hand back its remaining funds
BRENDON O’HAGAN/BLOOMBERG NEWS
of roughly $1 billion, the firm
said. Meanwhile, billionaire in-
vestors such as Charles
“Chase” Coleman and Larry
Robbins are nursing steep
losses on investments from
January alone.
The new adversity adds to
the challenges faced by hedge-
fund managers after a vexing
2015. Hedge funds as a group
posted a thin loss last year,
despite small gains for U.S.
stocks and a broad Barclays
bond index. Still, many manag-
ers were enthusiastic about
their chances this year, given
more volatility and a broader
dispersion among stocks that
offers the opportunity to pick
winners and losers.
While many managers have
yet to disclose monthly perfor-
mance to their deep-pocketed
investors, early measurements
from research firm HFR Inc.
show hedge funds down about
3% on average in January.
Stock-picking funds specifi-
cally were on track to lose
about 4.5%. The Dow Jones In-
dustrial Average ended Janu-
ary down 5.5%, its worst start
to a year since 2009.
Mr. Robbins, head of Glen-
view Capital Management, told
Please see FUNDS page B7
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
B6 | Thursday, February 4, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
17191.25 t 559.43, or 3.15% Year-to-date t 9.68% 329.43 t 5.16, or 1.54% Year-to-date t 9.95% 1912.53 s 9.50, or 0.50% Trailing P/E ratio * 20.93 19.79
High, low, open and close for each 52-wk high/low 20868.03 16017.26 High, low, open and close for each 52-wk high/low 414.06 322.29 High, low, open and close for each P/E estimate * 15.89 16.98
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.32 2.00
All-time high: 2130.82, 05/21/15

20300 380 2100

65-day moving average

19500 370 2050

18700 360 2000

65-day moving average

Session high 17900 350 1950

65-day moving average
DOWN UP
t

Session open Close

17100 340 1900
Close Open
t

Session low 16300 330 1850

Bars measure the point change from session's open

15500 320 1800
Oct. Nov. Dec. Jan. Nov. Dec. Jan. Oct. Nov. Dec. Jan.

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2145.56 3.82 0.18 2077.03 • 2643.78 –8.2 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1575.84 –5.02 –0.32 1516.51 • 1956.39 –8.2 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 726.80 –1.91 –0.26 691.21 • 1067.74 –8.5 5.500 Australia 2 1.830 110.8 114.9 97.0 132.7 1.887 2.030 1.839
4.250 10 2.534 65.5 72.2 55.5 49.7 2.574 2.825 2.290
Americas DJ Americas 454.51 3.24 0.72 439.73 • 525.25 –6.7
3.500 Belgium 2 -115.3 -138.8 -61.2 -0.383 -0.329 -0.100
-0.430 -112.2
Brazil Sao Paulo Bovespa 39588.82 992.65 2.57 37046.07 • 58574.79 –8.7
0.800 10 0.577 -130.2 -123.9 -129.5 -127.4 0.613 0.974 0.520
Canada S&P/TSX Comp 12595.65 153.39 1.23 11531.22 • 15524.75 –3.2
4.250 France 2 -0.405 -112.8 -113.3 -136.1 -60.2 -0.395 -0.302 -0.090
Mexico IPC All-Share 43221.21 128.72 0.30 39256.58 • 46078.07 0.6
1.000 10 0.610 -126.9 -120.0 -127.5 -121.3 0.652 0.994 0.580
Chile Santiago IPSA 2864.04 –33.89 –1.17 2730.24 • 3361.36 –2.7
0.500 Germany 2 -0.492 -121.4 -121.0 -139.8 -69.8 -0.472 -0.339 -0.186
U.S. DJIA 16336.66 183.12 1.13 15370.33 • 18351.36 –6.2
0.500 10 0.279 -160.0 -154.3 -163.8 -148.6 0.309 0.632 0.308
Nasdaq Composite 4504.24 –12.71 –0.28 4292.14 • 5231.94 –10.0
4.500 Italy 2 -0.015 -73.8 -74.1 -98.5 -20.5 -0.003 0.075 0.307
S&P 500 1912.53 9.50 0.50 1812.29 • 2134.72 –6.4
2.000 10 1.458 -42.1 -35.5 -67.3 -21.7 1.497 1.596 1.576
CBOE Volatility 21.66 –0.32 –1.46 10.88 • 53.29 18.9
0.100 Japan 2 -0.175 -89.7 -89.3 -107.0 -48.7 -0.154 -0.011 0.025
EMEA Stoxx Europe 600 329.43 –5.16 –1.54 322.29 • 414.06 –9.9 0.300 10 0.067 -181.2 -177.3 -200.4 -143.3 0.078 0.265 0.360
Stoxx Europe 50 2781.64 –46.90 –1.66 2721.63 • 3602.76 –10.3 0.500 Netherlands 2 -0.460 -118.2 -118.7 -143.8 -64.2 -0.449 -0.378 -0.130
Austria ATX 2092.09 –37.77 –1.77 2029.54 • 2695.57 –12.7 0.250 10 0.411 -146.8 -141.0 -146.6 -139.8 0.442 0.803 0.396
Belgium Bel-20 3375.43 –59.37 –1.73 3175.25 • 3910.33 –8.8 4.350 Portugal 2 0.058 -66.4 -65.1 -95.9 -27.9 0.087 0.101 0.233
France CAC 40 4226.96 –57.03 –1.33 4084.68 • 5283.71 –8.8 2.875 10 2.730 85.1 93.1 24.6 55.8 2.782 2.516 2.351
Germany DAX 9434.82 –146.22 –1.53 9314.57 • 12390.75 –12.2 0.500 Spain 2 -0.016 -73.8 -74.7 -105.4 -18.9 -0.009 0.006 0.323
Greece ATG 529.73 –22.77 –4.12 519.19 • 945.81 –16.1 2.150 10 1.570 -30.9 -26.0 -50.3 -33.2 1.592 1.767 1.461
Hungary BUX 23395.73 –162.75 –0.69 16743.24 • 24532.71 –2.2 3.750 Sweden 2 -0.572 -129.4 -128.9 -151.7 -54.6 -0.551 -0.457 -0.034
Israel Tel Aviv 1448.10 –9.30 –0.64 1427.45 • 1728.89 –5.3 2.500 10 0.526 -135.3 -126.6 -127.5 -117.4 0.586 0.994 0.619
Italy FTSE MIB 17412.04 –510.41 –2.85 17141.42 • 24157.39 –18.7 1.000 U.K. 2 0.381 -34.1 -36.0 -42.1 -12.8 0.378 0.639 0.384
Netherlands AEX 416.21 –4.44 –1.06 392.44 • 510.55 –5.8 2.000 10 1.538 -34.2 -30.7 -31.2 -33.2 1.545 1.958 1.462
Poland WIG 43630.57 66.69 0.15 41747.01 • 57460.44 –6.1 0.750 U.S. 2 0.722 ... ... ... ... 0.738 1.060 0.512
Russia RTS Index 696.96 –4.25 –0.61 607.14 • 1092.52 –7.9 2.250 10 1.879 ... ... ... ... 1.852 2.269 1.793
Spain IBEX 35 8314.50 –214.20 –2.51 8180.40 • 11884.60 –12.9
Sweden SX All Share 454.51 –4.71 –1.02 444.97 • 564.90 –10.0 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8123.74 –73.25 –0.89 7935.47 • 9537.90 –7.9 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 48535.48 506.24 1.05 45975.78 • 55355.12 –4.3 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 2/2/2016
Turkey BIST 100 73267.44 761.28 1.05 68230.47 • 90048.20 2.1
One-Day Change Year Year
U.K. FTSE 100 5837.14 –84.87 –1.43 5639.88 • 7122.74 –6.5 Commodity Exchange Last price Net Percentage high low
371.00 -1.50 -0.40% 373.75 348.50
Asia-Pacific DJ Asia-Pacific TSM 1269.94 –14.01 –1.09 1213.08 • 1621.10 –8.6 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 877.50 -8.75 -0.99 889.50 852.00
Australia S&P/ASX 200 4876.80 –116.50 –2.33 4841.50 • 5982.70 –7.9
Wheat (cents/bu.)
CBOT
CBOT 478.75 3.50 0.74% 488.50 456.00
China Shanghai Composite 2739.25 –10.32 –0.38 2655.66 • 5166.35 –22.6
Live cattle (cents/lb.) CME 135.950 1.200 0.89 138.550 127.150
Hong Kong Hang Seng 18991.59 –455.25 –2.34 18542.15 • 28442.75 –13.3
Cocoa ($/ton) ICE-US 2,836 69 2.49 3,215 2,738
India S&P BSE Sensex 24223.32 –315.68 –1.29 23962.21 • 29593.73 –7.3
Coffee (cents/lb.) ICE-US 121.25 1.40 1.17 126.30 111.05
Japan Nikkei Stock Avg 17191.25 –559.43 –3.15 16017.26 • 20868.03 –9.7
Sugar (cents/lb.) ICE-US 12.87 -0.12 -0.92 15.24 12.66
Singapore Straits Times 2550.74 –28.49 –1.10 2532.70 • 3539.95 –11.5
Cotton (cents/lb.) ICE-US 61.82 -0.48 -0.77 63.55 60.67
South Korea Kospi 1890.67 –15.93 –0.84 1829.81 • 2173.41 –3.6 Robusta coffee ($/ton) ICE-EU 1403.00 6.00 0.43 1,544.00 1,339.00
Taiwan Weighted 8063.00 –68.24 –0.84 7410.34 • 9973.12 –3.3
Copper ($/lb.) COMEX 2.0995 0.0445 2.17 2.1395 1.9355
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1142.00 14.80 1.31 1,146.20 1,061.90
Silver ($/troy oz.) COMEX 14.695 0.406 2.84 14.820 13.730
Currencies London close on Feb. 3 Aluminum ($/mt)* LME 1,524.00 8.00 0.53 1,524.00 1,451.50
Tin ($/mt)* LME 14,910.00 80.00 0.54 14,910.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 4,601.00 76.00 1.68 4,647.50 4,320.50
8% Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,766.50 51.50 3.00 1,766.50 1,598.00
6
Europe Zinc ($/mt)* LME 1,674.00 62.00 3.85 1,674.00 1,467.00
4 WSJ Dollar index
s
Bulgaria lev 0.5647 1.7707 –1.6 Nickel ($/mt)* LME 8,500.00 -25.00 -0.29 8,765.00 8,195.00
2
Croatia kuna 0.1441 6.939 –1.0 Rubber (Y.01/ton) TCE 153.80 0.20 0.13 164.50 153.60
0
Euro zone euro 1.1053 0.9048 –1.7
–2
s
Yen Palm oil (MYR/mt) MDEX 2543.00 32.00 1.27 2,548.00 2,425.00
Czech Rep. koruna-b 0.0409 24.458 –1.7
–4 Denmark krone 0.1481 6.7538 –1.7 Crude oil ($/bbl.) NYMEX 32.29 2.41 8.07 39.53 27.56
–6 0.003551 281.63 –3.0
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.0817 0.0708 7.00 1.2036 0.8605
–8 s Euro Iceland krona 0.007710 129.70 –0.4
–10 RBOB gasoline ($/gal.) NYMEX 1.0215 0.0207 2.07 1.3617 0.9670
Norway krone 0.1162 8.6092 –2.6
0.2501 3.9979 1.9
Natural gas ($/mmBtu) NYMEX 2.040 0.015 0.74 2.4930 1.9760
2015 2016 Poland zloty
Russia ruble-d 0.01281 78.068 8.6 Brent crude ($/bbl.) ICE-EU 35.02 2.30 7.03 40.11 27.83
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1179 8.4801 0.4 Gas oil ($/ton) ICE-EU 318.25 19.00 6.35 362.25 253.00
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 0.9931 1.0069 0.5
Turkey lira 0.3425 2.9201 0.1 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1283 7.7972 0.6
Ukraine hryvnia 0.0390 25.6260 6.8
Argentina peso-a 0.0707 14.1460 9.3
India rupee
Indonesia rupiah
0.0147
0.0000727
67.9185
13748
2.6
–0.6
U.K. pound 1.4564 0.6866 1.2 Cross rates London close on Feb 3
Brazil real 0.2540 3.9371 –0.6 Middle East/Africa
Japan yen 0.008485 117.85 –2.0
Canada dollar 0.7223 1.3845 0.04 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002666 375.07 10.7 Bahrain dinar 2.6557 0.3766 –0.1
Chile peso 0.001416 706.20 –0.3 Australia 1.4027 2.0427 1.3930 0.0119 0.1799 1.5502 1.0133 ...
Macau pataca 0.1245 8.0350 0.4 Egypt pound-a 0.1277 7.8308 0.01
Colombia peso 0.0002961 3377.00 6.4 Canada 1.3845 2.0159 1.3746 0.0118 0.1776 1.5299 ... 0.9869
Malaysia ringgit-c 0.2396 4.1740 –3.0 Israel shekel 0.2534 3.9460 1.4
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6652 1.5033 2.7 Kuwait dinar 3.3081 0.3023 –0.4 Euro 0.9048 1.3180 0.8987 0.0077 0.1160 ... 0.6536 0.6451
Mexico peso-a 0.0544 18.3793 6.9
Pakistan rupee 0.0095 104.730 –0.2 Oman sul rial 2.5972 0.3850 0.02 Hong Kong 7.7972 11.3550 7.7437 0.0662 ... 8.6170 5.6319 5.5586
Peru sol 0.2862 3.4940 2.3
Philippines peso 0.0209 47.856 2.1 Qatar rial 0.2747 3.640 –0.1 Japan 117.8520 171.6300 117.0700 ... 15.1140 130.2400 85.1327 84.0200
Uruguay peso-e 0.0322 31.070 3.9
Singapore dollar 0.7031 1.4222 0.3 Saudi Arabia riyal 0.2666 3.7505 –0.1 1.0069 1.4664 ... 0.0085 0.1291 1.1128 0.7275 0.7177
Venezuela bolivar 0.158603 6.31 unch Switzerland
South Korea won 0.0008251 1211.98 3.1 South Africa rand 0.0620 16.1406 4.3
U.K. 0.6866 ... 0.6819 0.0058 0.0881 0.7590 0.4960 0.4895
Asia-Pacific Sri Lanka rupee 0.0069411 144.07 –0.1 Close Net Chg % Chg YTD % Chg
0.7129 1.4027 0.02990 33.446 1.6 U.S. ... 1.4564 0.9931 0.0085 0.1283 1.1053 0.7223 0.7129
Australia dollar 2.2 Taiwan dollar WSJ Dollar Index 90.23 –1.14 –1.25 0.07
China yuan 0.1520 6.5777 1.3 Thailand baht 0.02796 35.770 –0.7 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 4 p.m. New York time

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Close Chg Chg Cur Stock Sym Close Chg Chg Cur Stock Sym Close Chg Chg Asia Titans 50
One month 0.42850% 0.17350% ¥ TakedaPharm 4502 5815.00 -2.27 -4.12 £ RioTinto RIO 1685.00 4.17 -14.88 Last: 121.61 t 2.44, or 1.97% YTD t 10.8%
Three month 0.62060 0.25510 Asia Titans HK$ TencentHoldings 0700 141.60 -2.75 -7.27 CHF RocheHldgctf ROG 257.30 -1.30 -6.91
150
Six month 0.86265 0.36080 38.95 -4.88 -16.42 1438.00
HK$ AIAGroup 1299 ¥ TokioMarineHldg 8766 4261.00 -3.60 -9.57 £ RoyDtchShell A RDSA 0.31 -5.77
One year 1.13040 0.62540 1690.50 -2.76 -2.37 70.85
¥ AstellasPharma 4503 ¥ ToyotaMtr 7203 6900.00 -5.53 -7.85 € SAP SAP -1.31 -3.45 140
Euro Libor AU$ AustNZBk ANZ 23.67 -2.99 -15.25 AU$ Wesfarmers WES 42.73 -0.21 2.69 € Sanofi SAN 73.48 -2.38 -6.51 t 130
One month -0.23714% -0.00429% AU$ BHP BHP 14.27 -4.36 -20.10 AU$ WestpacBanking WBC 29.43 -2.87 -12.31 € SchneiderElectric SU 47.52 -1.77 -9.58
Three month -0.18357 0.02571 HK$ BankofChina 3988 2.94 -1.67 -15.03 AU$ Woolworths WOW 23.59 -2.32 -3.71 € Siemens SIE 84.81 -1.37 -5.64 High 50–day 120
Six month -0.10714 0.09000 HK$ CKHutchison 0001 95.35 -1.80 -8.67 € Telefonica TEF 9.01 -3.23 -11.95 Close moving average 110
One year 0.00043 0.22643 HK$ CNOOC 0883 7.25 -3.97 -10.16 Stoxx 50 € Total FP 38.42 0.56 -6.89 Low 100
Euribor ¥ Canon 7751 3278.00 -2.79 -10.80 CHF ABB ABBN 17.26 -0.52 -3.90 CHF UBSGroup UBSG 15.44 -0.64 -20.90
One month -0.23200% 0.00100% ¥ CentralJapanRwy 9022 22735 0.60 5.25 € AXA CS 20.89 -4.92 -17.20 € Unilever UNA 39.84 -2.53 -0.67 6 13 20 27 4 11 18 25 31 8 15 22 29
Three month -0.16200 0.05500 HK$ ChinaConstructnBk 0939 4.51 -1.53 -15.07 € Allianz ALV 140.75 -2.19 -13.94 £ Unilever ULVR 3020.00 -1.88 3.19 Nov. Dec. Jan.
Six month -0.09600 0.13200 HK$ ChinaLifeInsurance 2628 17.36 -4.19 -30.84 € Anheuser Busch ABI 112.30 -2.98 -1.84 £ VodafoneGroup VOD 212.90 -3.90 -3.67
One year 0.00800 0.26300 HK$ ChinaMobile 0941 85.75 ... -2.00 £ AstraZeneca AZN 4412.00 -1.93 -4.43 CHF ZurichInsurance ZURN 215.00 -2.09 -16.80
Yen Libor AU$ CmwlthBkAust CBA 75.73 -2.94 -11.46 € BASF BAS 58.82 -0.15 -16.83
DJIA Stoxx 50
One month 0.37571% 0.23643% ¥ EastJapanRailway 9020 11360 -1.26 -0.79 £ BGGroup BG. 1016.50 0.25 3.20
Last: 2781.64 t 46.90, or 1.66% YTD t 10.3%
Three month 0.67464 0.38714 ¥ Fanuc 6954 15750 -2.36 -25.28 € BNP Paribas BNP 39.55 -3.24 -24.28 $ AmericanExpress AXP 54.11 0.85 -22.19
Six month 0.98321 0.54000 ¥ Hitachi 6501 556.00 -6.14 -19.60 £ BT Group BT.A 486.00 -2.02 3.03 $ Apple AAPL 96.35 1.98 -8.46 3350
One year 1.38454 0.84071 TW$ Hon Hai Precisn 2317 76.60 -2.30 -5.20 € BancoBilVizAr BBVA 5.48 -2.16 -18.74 $ Boeing BA 121.88 3.71 -15.71
63.27 4.29 -6.90 3200
Offer ¥ HondaMotor 7267 3189.00 -5.90 -18.44 € BancoSantander SAN 3.46 -4.07 -24.02 $ Caterpillar CAT
KRW HyundaiMtr 005380 129000 -0.39 -13.42 £ Barclays BARC 165.60 -4.69 -24.35 $ Chevron CVX 84.62 4.16 -5.94 3050
Eurodollars
HK$ Ind&Comml 1398 3.88 -0.77 -17.09 € Bayer BAYN 98.54 -1.80 -14.91 $ CiscoSystems CSCO 23.09 1.14 -14.97
One month 0.4500% 0.3500%
$ CocaCola KO 42.72 0.66 -0.56
2900
Three month 0.6500 0.5500 ¥ JapanTobacco 2914 4649.00 -2.45 3.98 £ BP BP. 332.35 -0.82 -6.12
¥ KDDI 9433 3104.00 -3.15 -1.59 £ BritishAmTob BATS 3805.00 -1.34 0.90
$ Disney DIS 95.11 2.14 -9.49 2750
Six month 0.8500 0.7500
¥ Mitsubishi 8058 1763.00 -6.89 -13.07 CHF FinRichemont CFR 64.60 0.62 -10.40
$ DuPont DD 58.74 4.56 -11.80 2600
One year 1.2000 1.1000
¥ MitsuUFJFin 8306 551.80 -4.60 -27.12 CHF CreditSuisse CSGN 16.53 -2.13 -23.79
$ ExxonMobil XOM 78.48 5.22 0.68
Latest 52 wks ago $ GenElec GE 28.67 1.52 -7.96 6 13 20 27 4 11 18 24 31 8 15 22 29
¥ Mitsui 8031 1262.50 -5.85 -12.66 € Daimler DAI 62.97 0.22 -18.83 Nov. Dec. Jan.
Prime rates $ GoldmanSachs GS 152.67 0.64 -15.29
¥ Mizuho Fin 8411 190.70 -1.75 -21.68 € Deutsche Bank DBK 14.74 -6.02 -34.56
U.S. 3.50% 3.25% $ HomeDepot HD 123.79 -1.18 -6.40
¥ NTTDoCoMo 9437 2783.00 0.07 12.04 € DeutscheTelekom DTE 15.64 -1.85 -6.29
Canada 2.70 2.85 $ Intel INTC 29.34 -0.68 -14.83
AU$ NatAustBnk NAB 26.36 -5.55 -12.72 £ 1869.50 -1.92 0.70
Japan
Hong Kong
1.475
5.00
1.475
5.00 ¥ NipponStl&SmtmoMtl 5401 1993.50 -7.92 -17.49 €
Diageo
ENI
DGE
ENI 12.46 -0.40 -9.71 $
$ IBM
JPMorganChase
IBM
JPM
124.68
57.41
1.42
0.67
-9.40
-13.05
Dow Jones Industrial Average P/E: 17
¥ NipponTeleg 9432 5346.00 0.66 10.55 £ GlaxoSmithKline GSK 1431.00 0.35 4.22 $ JohnsJohns JNJ 104.16 0.73 1.40 Last: 16336.66 s 183.12, or 1.13% YTD t 6.2%
Policy rates
ECB 0.05% 0.05%
¥ NissanMotor 7201 1124.00 -4.83 -12.15 £ HSBC Hldgs HSBA 449.45 -3.88 -16.18 $ McDonalds MCD 121.42 -2.04 2.78
Britain 0.50 0.50
¥ NomuraHldgs 8604 600.00 -10.27 -11.65 € INGGroep INGA 9.67 -3.02 -22.32 $ Merck MRK 50.04 -0.73 -5.26 17750
Switzerland 0.50 0.50
¥ Panasonic 6752 1059.50 -5.95 -14.59 £ ImpTobaccoGrp IMT 3728.50 -1.47 3.96 $ Microsoft MSFT 52.16 -1.58 -5.98 17250
Australia 2.00 2.25
HK$ PetroChina 0857 4.38 -4.16 -13.95 € IntesaSanpaolo ISP 2.34 -5.25 -24.09 $ NikeClB NKE 62.47 -0.13 -0.05
HK$ PingAnInsofChina 2318 32.95 -3.23 -23.19 € L'AirLiquide AI 94.57 0.58 -8.76 $ 16750
U.S. discount 1.00 0.75 Pfizer PFE 29.67 -0.57 -8.09
Fed-funds target 0.25 0.00
$ RelianceIndsGDR RIGD 28.50 -1.38 -6.86 € LVMHMoetHennessy MC 151.75 4.51 4.73 $ Procter&Gamble PG 81.09 1.08 2.12 16250
Call money 2.25 2.00
AU$ RioTinto RIO 37.03 -1.36 -17.18 £ LloydsBankingGroup LLOY 60.69 -2.02 -16.94 $ 3M MMM 152.47 3.11 1.21 15750
KRW SamsungElectronics 005930 1146000 -0.87 -9.05 £ NationalGrid NG. 974.80 -1.07 3.98 $ TravelersCos TRV 106.89 0.81 -5.29
Overnight repurchase rates 15250
U.S. 0.45% 0.23%
¥ Seven&I Hldgs 3382 5426.00 -1.27 -2.23 CHF Nestle NESN 75.20 -0.40 0.87 $ UnitedTech UTX 85.92 0.59 -10.57
Euro zone n.a. n.a.
¥ SoftBankGroup 9984 4996.00 -4.87 -18.62 CHF Novartis NOVN 76.40 -1.74 -11.98 $ UnitedHealthGroup UNH 112.78 -0.97 -4.13 6 13 20 27 4 11 18 24 31 8 15 22 29
¥ Sumitomo Mitsui 8316 3548.00 -2.87 -22.97 DKK NovoNordiskB NOVO-B 349.00 -7.60 -12.73 $ VISAClA V 74.37 1.32 -4.10 Nov. Dec. Jan.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 80.90 -2.82 -13.71 £ Prudential PRU 1235.50 1.48 -19.30 $ Verizon VZ 50.61 1.41 9.50 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 146.00 2.46 2.10 £ ReckittBenckiser RB. 6260.00 -0.21 -0.33 $ WalMart WMT 66.25 -0.91 8.08 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL. Thursday, February 4, 2016 | B7

MONEY & INVESTING

Dollar Tumbles as Growth Fears Build

Major European stock kiwi. Late Wednesday, the Hang Seng Index closed 2.3%
pound was at $1.4624 from lower.
indexes fall more than $1.4409, while the kiwi was Aversion to the perceived
1%; U.S. stocks ride big trading at US$0.6675 from risk of stocks trumped a rise
$0.6514. in oil prices and better-than-
gain in price of oil “This morning in London, it expected services data from
was very prominent that there China, Jasper Lawler, analyst
BY CAROLYN CUI was a squeeze of some of the at CMC Markets, said in a
AND LESLIE JOSEPHS popular trades that had note.
worked very well in January,” As the euro rose, Germany’s
Investors dumped the dol- said Richard Benson, a portfo- DAX fell, losing 1.5% to end at
lar on Wednesday amid falling lio manager at Millennium 9434.82. A rising currency is a
interest rates in the U.S. and Global Investments Ltd., a cur- negative for European export-
continued nervousness about rency manager with $16 billion ers, and particularly for Ger-
the global economy, crushing a of assets under management. many’s export-oriented econ-
slew of this Volatility began to spike in omy.

ANDREW HARRER/BLOOMBERG NEWS

WEDNESDAY’S year’s pop- currencies after the Bank of The U.K’s FTSE 100 fell 1.4%
MARKETS ular trades. Japan’s move on Friday to to finish at 5837.14 and
The dol- push yields down below zero, France’s CAC 40 lost 1.3% to
lar tumbled against the euro which triggered a decline in close at 4226.96.
and the yen, posting declines interest rates across the Downbeat results from
not seen in months. The euro board. some of the world’s biggest oil
gained 1.8% against the dollar, In equity markets, Euro- producers and weakness in oil-
trading late Wednesday in pean stocks closed lower, led dependent economies have
New York at $1.1115 from by a tumble in the financial worried investors, who are
$1.0919 late Tuesday. The dol- sector on the heels of a fall in Wells Fargo’s shares fell 1.8% after the bank agreed to pay $1.2 billion to settle a long-running suit. now positioning themselves
lar weakened 2.2% against the Asian markets. for a higher chance of a U.S.
yen, trading at ¥117.38 from The Stoxx Europe 600 shed Shares of Yahoo fell 4.7%. folio manager at the Wells Financial companies also recession this year following
¥119.96. 1.5% to end at 329.43, suffer- The company said after the Fargo Large Cap Core Fund. slipped. Lower yields tend to weeks of financial turmoil and
The WSJ Dollar Index, ing a third straight losing ses- market had closed on Tuesday General Motors dropped curb the revenue generated by uncertainty around global
which compares the greenback sion. that it would lay off 15% of its 2.5%. The auto maker reported banks from their lending busi- growth.
against a basket of 16 com- But advancers included workforce in a restructuring higher profits on sales growth nesses, raising renewed con- U.S. payrolls data will be
monly traded currencies, was Syngenta. The Swiss seed- effort. in the U.S. and China, but cerns about their underlying closely watched later this
off 1.7% at 89.79. and-pesticide giant’s shares The energy and materials some analysts have fretted financial health, traders said. week, with the Labor Depart-
Wednesday’s volatility be- climbed 2.7% after the com- indexes were up 2.5% and that auto sales may have Wells Fargo shares sank ment’s report on January hir-
gan in European trading pany received a $43 billion 2.6%, respectively, in late trad- peaked. 1.8% after the bank agreed to ing and unemployment.
hours, when the British pound takeover offer from China Na- ing as oil prices surged. U.S. Investors again piled into pay $1.2 billion to settle a “As long as there are sup-
and the New Zealand dollar tional Chemical Corp. crude futures jumped $2.40, or havens, including utilities, long-running lawsuit over the ports for households and con-
rose against the U.S. dollar af- U.S. stocks rebounded in af- 8%, to $32.28 a barrel. which were up 0.9% in late company’s lending practices. sumers, it’s extremely unlikely
ter the U.K.’s service sector ternoon trading, buoyed by a Despite the oil-led rally, tradeing. European equities had a there’s a [U.S.] recession,” said
showed a surprise expansion rally in energy and materials consumer sectors lagged, However, government-debt weak lead-in from Asia, where Patrick Zweifel, chief econo-
and the New Zealand central shares. The Dow Jones Indus- highlighting investor concerns prices slipped, pushing the Japan’s Nikkei Stock Average mist at Pictet Asset Manage-
bank painted a better outlook trial Average rose 183.12 over growth. yield on the 10-year Treasury stumbled 3.2% on weak corpo- ment.
for its economy. points, or 1.1%, to 16336.66, af- While the slide in oil prices note up to 1.881%. Still, it is rate earnings and as investors Mr. Zweifel is downgrading
The sudden strength in ter falling as much as 193 has cut consumers’ energy down 0.367 percentage point rushed into the safety of the his U.S. growth forecast
both currencies wrecked the points. The S&P 500 added bills, “there’s been an inexpli- from its 2016 high of 2.248% yen. slightly this year but believes
bets against them, triggering 0.5% to 1913.89. cable reticence or slowness on on Jan. 5. A signal from Bank of Japan a recession is unlikely, given
huge short coverings in which However, the tech heavy the part of consumers to Gold futures climbed $14, Governor Haruhiko Kuroda for that economic weakness in the
traders sold the dollar and Nasdaq was off 0.3% at spend that discretionary in- or 1.2%, to $1,141.30 a troy further stimulus didn’t aid U.S. is concentrated in the in-
bought back sterling and the 4504.24. come,” said Jeff Moser, port- ounce. Japanese shares. Hong Kong’s dustrial sector.

BBVA Posts 36% Profit Gain DOLLAR Continued from page B5

Worry that this might hap-
pen is adding to the pressure
on commodity prices, since a
depreciated yuan would make
is hitting the economy in
other ways, too: If it wasn’t
for the expanding trade defi-
cit, the pace of U.S. gross do-
BY JEANNETTE NEUMANN year, but tabling them for 2016 it harder for Chinese compa- mestic product would have
altogether. Already, futures nies to buy raw materials. And been 0.5 percentage points
MADRID—Banco Bilbao Viz- markets, which at the begin- it also feeds back into weak- higher in the fourth quarter.
caya Argentaria SA reported a ning of the year put even odds ness in other currencies as the While the Fed’s mandate re-
36% increase in fourth-quarter on a rate increase at the Fed’s market discounts the possibil- mains squarely focused on the
J.J. GUILLEN/EUROPEAN PRESSPHOTO AGENCY

net profit from a year earlier on March meeting, show inves- ity of a devalued yuan. U.S., those are hard things for
lower provisions for soured tors now expect the central Yuan worries are contribut- the central bank to ignore, and
loans, while also increasing its bank to take a pass. ing to the massive capital out- show how globalization has
capital ratio. Among the several related flows China is experiencing, as steadily increased the U.S.
Spain’s No. 2 bank by market forces behind the dollar’s rise: Chinese citizens move their economy’s exposure to the
value said fourth-quarter net The U.S. economy has per- money out of the country to rest of the world.
profit rose to €940 million formed better than many protect against future devalua- Moreover, with the Bank of
($1.03 billion), beating analysts’ other economies, making it a tions. Chinese policy makers Japan last week setting nega-
estimates of €808 million, ac- seemingly safer bet for global have been liquidating U.S. tive rates on some reserves
cording to a poll by data pro- investors. The Fed has moved Treasurys to hold the yuan and the European Central
vider FactSet. to push rates higher, while its steady amid the outflows, but Bank signaling it is ready to
The bank said its capital ra- major counterparts are adding as the decline in Treasury provide further stimulus next
tio under “fully loaded” Basel BBVA’s Carlos Torres said the bank aims for an 11% capital ratio. to economic stimulus. Oil and yields this year shows, there month, the divergence be-
III criteria was 10.3% at the end other raw-materials prices have been plenty of ready buy- tween the Fed’s and other cen-
of December, up from 9.8% in Net profit from the bank’s deposit-guarantee fund and by also have dropped sharply, ers for this debt. tral banks’ policy stances has
the previous quarter. Despite South American units fell 14% higher operating expenses as putting commodity producers In effect, the availability of widened. This threatens to
the improvement, the ratio re- to €212 million in the fourth the bank integrates Catalunya at risk and further straining these Treasurys may have give fresh impetus to the dol-
mains below those of many quarter compared with a year Banc SA, a bailed out lender it global growth. drained liquidity from other lar’s rise, and bolsters the case
peers and has been seen as a earlier. purchased in July 2014. The But the dollar’s rise is now dollar-denominated debt, mak- for the Fed to send a strong
weak spot by investors and an- BBVA executives said the banking unit doesn’t include intensifying many of the ing a bad situation worse. signal that it is putting its
alysts. bank had written down the losses from BBVA’s runoff unit strains that have helped pro- For the most part, the prob- rate-raising plans on hold.
Chief Operating Officer Car- book value of its Argentina unit for foreclosed property assets. pel it higher. lems driving the dollar higher The risk is that won’t be
los Torres said the bank aims to to €723 million in the fourth Mr. Torres’s outlook for the One channel for this is the are taking place away from the enough to stem the dollar’s
reach a “fully loaded” capital quarter from €900 million in Spanish banking unit was substantial amount of dollar U.S. But there is no escaping rise, and short circuit the
ratio of 11% “some time” in the previous quarter given the muted on a call with analysts. debt that has been extended to their adverse impact. The feedback loops. It certainly
2017. peso’s 27% annual drop against He said he expects “flattish” to- nonbank borrowers outside of combination of overseas weak- wouldn’t be a panacea for the
The lender’s ratio of nonper- the euro. The country’s new tal loan volumes in 2016, as the U.S. Many Turkish compa- ness and dollar strength has world’s problems. But given
forming loans to total loans fell government lifted currency many businesses and individu- nies, for example, borrowed driven import prices lower, the alternative of watching a
to 5.4% from 5.6% in the third controls in December. als continue to prioritize debt heavily in dollars in recent pushing the Fed’s goal of dangerous situation get even
quarter of last year. The bank reported overall repayment rather than taking years, even though they had reaching its 2% inflation target more perilous, the Fed may
BBVA shares shed 2.2% in net interest income was €4.4 out new loans. little in the way of dollar reve- ever further into the future. It have no choice.
Madrid trading as Spain’s billion, slightly below analysts’ Net interest income, Mr. Tor- nue. A rise in the dollar versus
benchmark index fell 2.5%. expectations, compared with res said, would likely grow 1% the lira over the past 18
A decline in many emerging- the €4.2 billion the bank re- to 2% in 2016. Fees, on the months has made those loans Dollar Discord
market currencies against the ported a year earlier. other hand, are likely to see hard to service and repay. The rising dollar is creating negative-feedback loops among assets
euro has been a drag on profit Net interest income, a key double-digit growth by the end Such debt strains darken and economies around the world.
growth. Emerging markets, pri- driver of profit for retail banks of this year. economic outlooks and inten-
marily Mexico and Turkey, gen- such as BBVA, is the difference BBVA also announced that it sify the need for dollars. But
erate around two-thirds of between what lenders pay cli- would propose to shareholders that serves only to send the
BBVA’s earnings. ents for deposits and charge for that Sunir Kapoor, a consultant dollar higher.
Despite the year-over-year loans. who had previously worked at Dollar-indebted commodity
fall in the Mexican peso against In its Spanish banking unit, Microsoft Corp. and Andrew producers are getting hit by a Chinese capital
the euro, BBVA posted a 2% in- BBVA reported net profit of €87 Stott, who has worked at Oliver double punch. The oil, iron ore takes flight
crease in net profit to €577 mil- million in the fourth quarter, a Wyman, succeed current board and soybeans that Brazil ex-
lion in the fourth quarter at decline of 44% from a year ear- members Ramón Bustamante y ports are quoted globally in
DOLLAR IS UP
Mexican lender Bancomer—its lier, pulled down by a required de la Mora and Ignacio Ferrero dollars. So when a rising dol-
biggest profit driver. contribution to the country’s Jordi. lar causes prices for those to
fall, these exporters earn less. China is pressured
Dollar debt to devalue
Coupled with the deterioration

FUNDS
ter said.
Mr. Coleman, who is backed
by longtime hedge-fund inves-
tor Julian Robertson, has been
Continued from page B5 hurt by declines in several of
investors last fall that he had his biggest positions, including
taken a “punch to the face” Netflix Inc. and Amazon.com
from poor health-care invest- Inc. The stocks were each
ments. In January alone, his down roughly 21% this year as
concentrated Glenview Capi- of late-afternoon Wednesday.
tal Opportunity fund fell 21%, Poor picks in software and
according to people familiar securities investments also
with the matter. Firmwide, dragged down San Francisco
Glenview was down more than hedge fund Criterion Capital,
$1 billion on paper in the off more than 8% in January,
year’s first month.
Mr. Robbins is raising more
wiping out more than half of
last year’s gain, according to a
money from existing investors person familiar with the mat-
for the $10 billion hedge-fund ter and an investor update.
firm even as he has posted Orange’s imminent closure
losses in recent months. is a reminder of how activist
January was one of the investors have struggled. They
worst months ever for Mr. gained new prominence in re-
Coleman, head of the $20 bil- cent years but have been bat-
lion, technology-focused Tiger tered of late by a downturn
Global Management. He lost for some of their more favored
about 14% in his hedge fund, investments.
people familiar with the mat- Orange, which last year
joined a shareholder fight at
U.S. mall owner Macerich Co.,
was down 9% in 2015, after
fees, a person familiar with
the matter said.
From inception in July
2005 to the start of last year,
it posted an average annual-
ized return of 11.5%, the per-
son said.
Orange’s Mr. Lewis said he
and his partner, Russell Hoff-
man, came to the decision to
shut down last month.
He said they wanted to
move into fixed-income invest-
ments that require a longer
time frame.
“We believe that credit in-
vesting through traditional,
liquid hedge-fund strategies
will prove challenging for in-
vestors as the credit cycle
turns,” Mr. Lewis wrote in an
email. “This includes our own
hedge-fund structure.”
—Liz Hoffman
contributed to this article.
is squeezed its currency
of the Brazilian real, this cre-
ates an intense need for dol-
lars that forces commodity
producers to sell at even
deeper discounts.
Meanwhile, the weakness in
other emerging-market cur-
rencies is making an already
slowing China less competitive Oil/commodities Other emerging
globally. That is putting more go down markets are hurt
pressure on Chinese policy
makers to further devalue the
yuan. THE WALL STREET JOURNAL.
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B8 | Thursday, February 4, 2016
Email: heard@wsj.com
Swatch:
Watch Out
For Apple
Talk about poor timing.
Unimpressive—and unsched-
uled—results from
Swatch made it the lone de-
cliner Wednesday in the Eu-
ropean luxury sector, which
was otherwise buoyed by
champagne-popping num-
bers from French bellwether
LVMH.
The maker of watches
railed against the “dismal
currency situation” that fol-
lowed the Swiss central
bank’s decision to lift its cur-
rency cap against the euro a
year ago. Swatch manufac-
tures in Switzerland but sells
internationally, so the franc’s
strength has weighed on
both revenue and margins.
But even at constant ex-
change rates, the group’s
sales fell 4.9% in the second
half—far worse than the
market was expecting af-
ter growth of 3.6% in the
first half. Unlike luxury bags
or clothes, most watches are
sold by small retailers. Faced
with “extremely volatile ex-
change rates,” said Swatch,
these scaled back their pur-
chases.
A bigger concern is the
Chinese slowdown. HSBC es-
timates that consumers from
the country account for 52%
of Swatch’s sales.
Then there is the Apple
Watch. The second-half slow-
down came shortly after the
launch of the tech giant’s
smartwatch last April.
LVMH, too, reported a
weak fourth quarter for
watches, but the strength of
its Louis Vuitton bag busi-
ness more than made up for
it. On 14 times forward earn-
ings—compared with nearly
19 times for the French lux-
ury conglomerate—Swatch
shares are cheap for a rea-
son: In rougher times, it
pays to be diversified.
—Stephen Wilmot
Dairy Prices Drop Again NAB
In International Auction
BY LUCY CRAYMER
Dairy prices fell for the third
successive auction on an inter-
national trading platform as
concerns about an abundance
of milk products continue to
weigh on the sector.
Demand has been subdued
in important markets, such as
China and the Middle East, at
the same time as Russia has
imposed a ban on imports of
food from the U.S. and Europe.
Production world-wide has
exceeded demand, partly be-
cause of the removal of quotas
on dairy output in Europe. The
European Union exported 6%
more skim-milk powder in the
11 months to Nov. 30, than in
the prior year.
The GDT Price Index, which
covers a variety of products
and contract periods in the
GlobalDairyTrade auction, fell
for Feb. 2 by 7.4% from the pre-
vious auction on Jan. 19. The
auction is an international
trading platform established by
New Zealand’s Fonterra Co-Op-
erative Group.
The GDT index is now
Finance
Watch
WELLS FARGO
Bank to Settle Suit
On ‘Reckless’ Loans
Wells Fargo & Co. said it has
agreed to pay $1.2 billion to set-
tle a long-running suit that ac-
cused it of “reckless” lending and
causing a federal insurance pro-
gram to pick up the tab.
The U.S. sued Wells Fargo in
2012, accusing the San Fran-
cisco-based mortgage lender of
engaging in “regular practice of
reckless origination and under-
writing” of government-backed
loans. The action was one of
several brought under the Fed-
HEARD ON THE STREET
Corporate Bonds: Distortion or Disaster?
Alarm bells are ringing in
the corporate bond markets.
The gap between yields on
investment-grade company
debt and government bonds
has widened so much that it
is potentially signaling a re-
cession; ratings downgrades
are piling up. But while the
direction of travel in spreads
is worrying, the destination
isn’t yet clear.
For a start, some of the
signals are conflicting. In the
U.S., the spread between
long-dated corporate bonds
rated in the Baa category by
Moody’s and Treasurys, at
3.4 percentage points, is at a
level that has historically
signaled a coming recession,
BlueBay Asset Management
noted in January. Indeed,
based on monthly data since
1970, this spread has only
been wider for 7.6% of the
time.
But the yield on these
bonds—of about 5.5%—is ac-
tually at the low end of the
range, and has only been
lower for 9% of the time
How ChemChina Can Guarantee Approval for Syngenta
For Syngenta shareholders,
accepting China Inc.’s largest-
ever foreign takeover bid is
penny-wise. But the compa-
nies also will need to be polit-
ically wise to make the deal
go through.
Swiss agrichemical giant
Syngenta confirmed Wednes-
day that it had agreed to an
all-cash offer by state-run
China National Chemical,
better known as ChemChina,
for 475 Swiss francs ($466) a
share, or about $43 billion in
total. Including an additional
special dividend of five francs,
the offer is generous, coming
in 26% higher than Syngenta’s
share price before news of the
deal broke Tuesday, and 60%
higher than a year ago.
Even with demand for ag-
ricultural products hurting,
Udder Misery
Ample supplies are hurting
prices. In dollars per metric ton.
Whole-milk powder All dairy*
$2,800
2,600
2,400
2,200
2,000
1,800
O N D J F
2015 ’16
*Whole-milk powder, skim-milk powder,
butter, cheese, lactose, rennet casein, butter
milk powder and anhydrous milk fat
Source: GlobalDairyTrade
THE WALL STREET JOURNAL.
around 20% below its recent
peak on Oct. 6, while whole-
milk powder prices have fallen
31%. The average selling price
for whole-milk powder was
US$1,952 a metric ton, down
10.4% from the prior auction.
eral False Claims Act against
lenders accused of bilking the
Federal Housing Administration.
The government’s suit
claimed Wells Fargo improperly
certified certain FHA mortgage
loans for Department of Housing
and Urban Development insur-
ance that didn’t qualify for the
program. The government also
argued Wells Fargo shouldn’t
have received insurance pro-
ceeds from HUD when some of
the loans defaulted.
Wells Fargo said Wednesday
that it couldn’t provide further
details about the settlement.
—Chelsey Dulaney
APOLLO
Earnings Fall Short
Of Expectations
Apollo Global Management
LLC’s fourth-quarter profit tum-
bled, as energy bets and shaky
credit markets dented the value
FINANCIAL ANALYSIS & COMMENTARY
since 1970. That is because
monetary policy and hence
underlying bond yields still
are in extraordinary terri-
tory. Indeed, the Treasury
yield curve only implies a 5%
probability of recession over
the next 12 months, BlueBay
estimates.
The situation is even more
marked in Europe. The
spread on Barclays’ index of
euro-denominated invest-
ment-grade corporate bonds
has risen above 1.5 percent-
age points—doubling since
early 2015—a level that also
looks like it might signal
trouble. But because under-
lying government bond
yields in the eurozone are
negative, the index sports a
yield of just 1.39%. That
hardly suggests many com-
panies are going to find
funding costs a barrier to in-
vestment, or struggle with
interest payments, one way
in which financial-market
turmoil can feed back into
the real economy.
Moreover, the makeup of
Seed Capital
Syngenta's 2014 agrichemical
sales by region
Europe, Africa
Latin America and Middle East
30% 31%
North America Asia Pacific
25% 14%
Source: the company
THE WALL STREET JOURNAL.
Syngenta has had the luxury
of entertaining a procession
of bids. U.S. rival Monsanto
first offered cash and stock
MONEY & INVESTING
“There is so much more
dairy coming out of Europe,
and that is keeping these prices
low, and it is making it look
like these prices will be lower
for longer, “said Doug Steel, se-
nior economist at the Bank of
New Zealand.
Sharp falls in dairy prices
are causing concern globally.
Fonterra Co-Operative
Group, the world’s largest milk
exporter, has slashed what it
expects to pay its 10,500
farmer-shareholders. Many
farmers now operate below
break-even levels. The National
Farmers Union, a British lobby
group, has warned that the low
prices will force a large number
of dairy farmers in the U.K. to
leave the industry.
Dairy prices rebounded
somewhat in the second half of
2015 because of expectations
that the El Niño weather phe-
nomenon would create dry con-
ditions in New Zealand, harm-
ing the grass that dairy cows
feed on. Output hasn’t fallen as
quickly as expected and so sup-
plies of dairy products remain
ample.
of its holdings.
The New York investment
firm had a profit of $6.1 million,
or two cents a Class A share,
down from $22.2 million, or four
cents a share, a year earlier.
Economic net income, a mea-
sure that reflects unrealized
gains or losses in Apollo’s port-
folio, was $32.9 million, or eight
cents a share, down from $106.1
million, or 26 cents a share.
—Matt Jarzemsky
BLOCKSTREAM
Firm Raises Funds
Blockstream, a bitcoin-focused
startup, raised $55 million in one
of the largest funding rounds in
the history of the virtual currency.
Investors including Horizons Ven-
tures, Tokyo-based Digital Garage
and AXA Strategic Ventures, the
investment arm of insurance gi-
ant AXA Group, contributed to it.
—Paul Vigna
Spreading Concern
Moody's long-dated Baa-rated corporate bonds
12%
10 Yield
8 credit blowups particularly
6 fear of missing out on a 0.1-
4 Spread over 10-year Treasury
2 being hit by a one-percent-
0 gle borrower’s bonds, Citi-
1986 1990
Note: Monthly data
Sources: Moody's, Federal Reserve Bank of St Louis
spreads in the postcrisis
world may be more nuanced.
Liquidity is a scarcer com-
modity with big banks pull-
ing back from trading; by
contrast, the apparent pres-
ence of plentiful liquidity
precrisis may have made
spreads artificially tight. The
average corporate bond rat-
ing has tended to fall over
time, implying a wider
last year, which the Swiss
firm rightly rebuffed, given
how Monsanto’s stock slid
26% in the past year. Chem-
China also has come knocking
a few times. Its current offer
is 5% higher than its first.
Syngenta shareholders can
be sure ChemChina, with Bei-
jing’s backing, can afford the
deal, no certainty if Monsanto
were the suitor. If Monsanto
tried to match ChemChina
with an all-cash bid, its net
debt would shoot up to 7.5
times earnings before inter-
est, taxes, depreciation and
amortization for the latest re-
porting period at the merged
entity. This ratio at Monsanto
is currently 1.7 times.
So Monsanto probably
won’t make a counterbid. Two
other potential suitors, Dow
Continued from page B5
snapped up TSB Banking
Group PLC last year, while
Royal Bank of Scotland
Group PLC is preparing to
sell or spin off its Williams &
Glynn unit, potentially spark-
ing further consolidation.
“We would be one of the
logical consolidators in the
market,” CYBG’s Mr. Duffy
said. “There is a logic to con-
solidation if and when it be-
comes appropriate for our
shareholders.”
Clydesdale Bank, based in
Glasgow, has around 140
branches across Scotland.
Yorkshire Bank, based in
Falling Behind in the Desert
BY MIKE BIRD
The recent plunge in oil
prices has been felt every-
where around the world,
most of all in the rapidly
worsening budgets of oil-
producing nations. And no
nation is more important to
the global oil trade than
Saudi Arabia.
A huge gap between
global oil prices and the
market level
MONEYBEAT at which
Saudi Ara-
bia’s budget
would be balanced—its so-
called fiscal break-even—
has opened up since the
middle of 2014. As a result,
Riyadh is now running a
large budget deficit, equal
to 15% of gross domestic
product last year.
Serious austerity efforts
in its 2016 budget have
helped to reduce the fiscal
break-even from just over
$100.40 in 2015 to an esti-
mated $77.60 in 2016, ac-
cording to a recent note
from analysts at Deutsche
Bank AG. The reduction is
$22.80.
That has been matched
practically dollar for dollar
by the oil-price decline.
Brent crude prices averaged
just over $53 a barrel in
2015, compared with an av-
THE WALL STREET JOURNAL.
2000 2010
THE WALL STREET JOURNAL.
spread for the market as a
whole. And some of the wid-
ening is due to the turmoil
in commodities hitting en-
ergy and metals-and-mining
companies, which clearly
face trouble; other sectors
are faring better.
Low yields may hold their
own dangers for investors,
too, however. The outlook
for future returns—particu-
Chemical and DuPont, are
themselves planning to merge.
The uncertainty with Chem-
China involves U.S. politics.
Syngenta is the biggest seller
of pesticides in North Amer-
ica, plus a key player in seeds.
The U.S. regulators who scru-
tinize foreign acquisitions list
food and agriculture as a criti-
cal sector, alongside defense
and finance. Some politicians
raised questions in 2013 when
a private Chinese pork proces-
sor acquired Virginia-based
Smithfield Foods, though they
didn’t block the deal.
A Chinese state firm con-
trolling a key part of the U.S.
food chain—and during an
election year—will surely
make U.S. lawmakers nervous.
Investors clearly see the un-
certainty, with Syngenta
Leeds, England, has around
180 branches in the north of
England and Midlands.
The shares offered in the
CYBG float were bought by
institutional investors in the
U.K., U.S. and Australia, Mr.
Duffy said.
CYBG’s chief sees a
potential role for it
as a consolidator in
U.K. banking.
Existing NAB shareholders
received 75% of the shares
through a demerger of the
unit from NAB.
NAB’s U.K. exit followed
the bank’s retreat from the
Low Rents of Arabia
Saudi austerity has failed
to match the rapid decline
in oil prices
Saudi Arabia’s fiscal
$120 a barrel break-even price
100
80
60
40
20
Brent crude-oil price
0
2014 ’15
Note: 2016 break-even price is an estimate.
Sources: FactSet (oil prices); Deutsche Bank
(break-even prices)
THE WALL STREET JOURNAL.
erage price of more like $31
so far this year: a $22 de-
cline.
Although oil rebounded
Wednesday, its plunge on
Tuesday added to worries
about Saudi Arabia’s ability
to sustain its budget. The
price investors are now pay-
ing to insure against a de-
fault by Saudi Arabia spiked
by 10%, leaving it nearly
three times higher than it
was a year ago.
As of Wednesday, a five-
year credit-default swap on
WSJ.com/Heard
larly in Europe—is poor. Vol-
atility has risen, and there is
a growing number of compa-
nies with problems that can’t
be swept under the carpet.
The thin cushion provided
by low yields makes these
painful. For investors, the
percentage-point tightening
in aggregate spreads may be
being trumped by the fear of
age-point widening in a sin-
group’s credit strategists
recently suggested. That can
have a corrosive effect on
confidence.
It is very likely that the
investment-grade corporate
bond market’s best days in
this cycle now lie in the past.
But distortions caused by
central-bank policies and
postfinancial-crisis regula-
tion could be muddling sig-
nals from the market. Past
rules of thumb may not be a
good guide to the future.
—Richard Barley
shares ending Tuesday 17% be-
low ChemChina’s offer price.
Yet there is a solution
shareholders can advocate:
ChemChina can acquire Syn-
genta and spin off part or all
of the North America busi-
ness. North America gener-
ates about a quarter of reve-
nue, not as much as Europe or
Latin America. Perhaps this is
the price to pay. It still would
give ChemChina access to a
fair chunk of Syngenta’s tech-
nology—as well as help Chem-
China pay down the debt it
takes to do the deal.
If Syngenta considers this
solution, investors should
happily push its stock closer
to the offer price. Otherwise,
politics, not price, will be
their obsession.
—Abheek Bhattacharya
U.S. last year when it sold
shares in subsidiary Great
Western Bank.
The moves come as banks
around the world are narrow-
ing their geographical and
business focus to adapt to
tougher regulatory condi-
tions.
CYBG represented 8.8% of
NAB’s total assets as of Sept.
30, but contributed only 3.3%
to pretax earnings, NAB told
shareholders last year. Over-
seeing the business was tak-
ing up “a disproportionate
share of NAB board and man-
agement resources.”
A series of fines and con-
duct charges at CYBG over
improperly sold products had
also cut into NAB’s cash earn-
ings, it said.
Saudi Arabian sovereign
debt will now set an inves-
tor back $198,000 a year for
$10 million of debt. On two
days this January, the level
increased to more than
$200,000.
The Saudi government
has more uncomfortable
choices to make. It can
slash government spending
further, raise taxes, issue
more debt, scrap the dollar-
riyal fixed exchange rate or
cut oil production. The
lower that oil prices stay,
the more pain Saudi Arabia
will feel, in one way or an-
other.
The government has de-
nied it has any intention to
scrap its dollar peg, and de-
spite some recent Russian
overtures about coordinating
a cut in production, there is
no solid sign that output will
be curtailed. As long as
those two factors hold, the
government budget will stay
under serious pressure, and
another round of austerity
seems inevitable.
MONEYBEAT
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