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C redit Suisse reported
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 Energy companies are
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 Martin Shkreli, who
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Heard on Street.... B8
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The Global Axis
Of Quantitative
Easing
OPINION | A11
* * FRIDAY - SUNDAY, FEBRUARY 5 - 7, 2016 ~ VOL. XXXIV NO. 5 WSJ.com EUROPE EDITION
S&P 500 1915.45 À 0.15% NIKKEI 17044.99 g 0.85% STOXX 600 328.76 g 0.20% OIL 31.72 g 1.73% GOLD 1157.60 À 1.43% EURO 1.1191 À 0.78% DLR ¥116.83 g 0.90%
Fiery Clashes in Greece During Protest Over Pensions Credit
Suisse
Reports
Big Loss
BY JOHN LETZING
It isn’t a good time to be a
bank.
Credit Suisse Group AG
made that clear Thursday, re-
porting substantial outflows in
its wealth-management divi-
ARIS MESSINIS/AGENCE FRANCE-PRESSE/GETTY IMAGES
sion and a bigger-than-ex-
pected loss. Investors pum-
meled shares of the Swiss
giant, sending them down 11%.
The weak results add to
carnage sweeping the banking
industry around the globe, and
especially in Europe. Shares of
Credit Suisse, Deutsche Bank
AG and Italy’s UniCredit SpA
are all off by about a third so
far this year.
They also raise the question
of what, exactly, banks should
EXPLOSIVE: Confrontations erupted Thursday between demonstrators and police in Athens as some 40,000 people protested pension reforms. It be doing. Deutsche Bank is
was the third such rally since Prime Minister Alexis Tsipras’s party was re-elected in September. A firebomb exploded near an officer, above. trying to bolster its core in-
vestment-banking and trading
business, but it has stumbled,
New Terror Fears in France
and the investment bank re-
ported a loss in the fourth
quarter.
Credit Suisse is pulling back
from investment banking and
turning its energy to wealth
Witness says leader ugees from Syria as part of a recent years, officials say. day, came from a woman who management. Crosstown rival
team of dozens of militants, The investigation into the provided information that led UBS Group AG has been head-
of Paris attacks said according to a key witness. Paris attacks has raised ques- French police to Abdelhamid ing that way for a while. But
he was part of a team If true, the testimony adds tions about Europe’s ability to Abaaoud, a Belgian who is be- both Swiss banks reported
urgency to a continentwide ef- screen those refugees for po- lieved to have orchestrated the outflows by wealth-manage-
BY MATTHEW DALTON fort by security services to tential threats. At least two Nov. 13 killing spree in Paris ment clients troubled by the
AND INTI LANDAURO track down people with links people involved in the Paris at- that left 130 dead and hun- wider financial-market tur-
to the extremist group. Au- tacks had registered as refu- dreds injured. moil. UBS’s shares are off 21%
PARIS—The presumed thorities fear that Islamic State gees on a Greek island in the The woman, who spoke un- this year.
leader of the Islamic State op- smuggled many of its fighters months before they surfaced in der the pseudonym Sonia, ac- Indeed, part of the net loss
eratives who attacked Paris in into Europe among the hun- Paris. companied Mr. Abaaoud’s of 5.8 billion Swiss francs
November boasted that he dreds of thousands of refugees The latest testimony, re- cousin, Hasna Aït Boulahcen, ($5.8 billion) that Credit Su-
slipped into Europe among ref- who have fled Syria and Iraq in ported by French media Thurs- Please see FRANCE page A3 isse reported in the fourth
quarter came from its move to
extricate itself from invest-
Please see LOSS page A2
ISLAMIC STATE EXPLOITS  Heard on the Street: Credit
Suisse returns to earth....... B8
A DIVIDED LIBYA Battered
Credit Suisse's daily share price
Rival factions struggle to form unity government to protect country’s oil industry 60 Swiss francs
BY BENOÎT FAUCON AND TAMER EL-GHOBASHY against escalating attacks by Islamic month amid killings, car bombings, gas 50
State. line sabotage and the burning of oil
MELLITAH TERMINAL, Libya—A 9- The political standoff has swelled storage tanks by extremists. The attacks 40 Thursday: 14.73
foot-high wall built of fabric, sand and U.S. worries of Libya turning into a appeared aimed at undermining the 11%
steel that can withstand a car bomb hub for international Islamic State op- peace process and Libya’s oil industry, 30
surrounds this seaside oil-and-gas erations. Top national security advisers which supplies 95% of state revenues.
complex, a barrier against militant at- met last week with President Barack Islamic State “fills the void” left by 20
tacks that many in Libya hope will Obama over Islamic State as military the lack of a unified government, said
soon be fortified by a national army leaders increasingly point to the need Fathi Ali Bashaagha, a Libyan lawmaker 10
under a central command. for stepped-up operations against the helping negotiate a United Nations-bro-
Two rival factions that have spent militant group, including in Libya. kered power-sharing agreement be- 0
years fighting for control of Libya are Libya’s National Oil Co., among the Please see LIBYA page A6 2009 ’10 ’11 ’12 ’13 ’14 ’15 ’16
now locked in a political battle to form country’s last functioning institutions Source: FactSet $1 = 0.99 Swiss francs
a unity government capable of defend- since the fall of dictator Moammar Gad-  Middle East Crossroads: The West THE WALL STREET JOURNAL.
ing their country and its oil industry hafi in 2011, issued a “cry for help” last ponders another intervention in Libya... A2
In Pregame Skirmish, Party On
Soccer Parents Take On NFL Amid Tight
i i i Security
Super Bowl takes over nearby fields; REVELRY WITH
CAUTION: Carnival
‘The flea on the back of the elephant’ celebrations began
in Germany on
Thursday under
BY ALEJANDRO LAZO these fields,” said Mr. Field, tight watch after a
manager of the 800-game series of alleged
KAI PFAFFENBACH/REUTERS
SANTA CLARA, Calif.—Burt schedule for the Santa Clara sexual assaults in
Field stood outside the fenced- Youth Soccer League, which Cologne on New
off Santa Clara sports 1,500 players Year’s Eve. Left,
Youth Soccer Park, between 6 and 18 police and revelers
lamenting the as- years old. at a Women’s
sortment of Super “I’d go up to Carnival celebration
Money & Inv...... B5-8 Bowl tents, mobile teams, and say, in Mainz.
Off Duty.............. W1-8
Opinion.............. A10-11
trailers, concrete ‘Guys! You can’t
Technology............... B3 blocks, portapotties have Gatorade out
U.S. News.................. A5 and transport carts here, man!’ ” Mr.
Weather................... A12 spread upon the Field said, adding
World News....... A2-4
soccer fields he
manages.
the complex for
years had enforced
Hot New Idea: Capital Controls Are Good
He watched two a strict water-only BY MIKE BIRD Amid the turmoil, financial- when he suggested that China
people tossing a rule, designed to and economic-policy makers might benefit from stricter
football back and protect the smooth The response to turbulent are advocating a tactic once capital controls. Both India
forth. When a van drove over but durable blend of Bermuda financial markets might be a anathema to all but the most and Nigeria tightened restric-
one field, Mr. Field groaned, grass and Kentucky bluegrass dose of unorthodox thinking. mismanaged economies: capi- tions on their citizens’ access
snapping photos with a digital on its two natural pitches. Small changes in the yuan tal controls. to foreign currency in recent
camera. Please see FIELDS page A6 have touched off big swings in Haruhiko Kuroda, governor Please see CONTROL page A2
“I have almost gotten into markets around the world, and of the Bank of Japan, seemed
fistfights stopping people  NFL players face pension the dollar has shot up against to deviate from standard eco-  Heard on the Street: BOE
from bringing coffee onto woes................................................ B5 just about every currency. nomic thinking late last month bows to markets..................... B8
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A2 | Friday - Sunday, February 5 - 7, 2016
West Ponders Another Intervention in Libya
MIDDLE EAST CROSSROADS
YAROSLAV TROFIMOV
With Islamic State gaining
ground in Libya, another
Western intervention there
looks increasingly likely. The
key question is whether it
will happen at the request of
a Libyan
unity govern-
ment, once
rival factions
endorse it, or
if the West
will be com-
pelled to go to war first.
The U.S. and other West-
ern countries helped topple
Moammar Gadhafi in 2011
but then turned their atten-
tion elsewhere.
By 2014, the country fell
into a civil war between an
Islamist-led administration
in Tripoli and an internation-
ally recognized government
based in the eastern city of
Tobruk.
Local affiliates of Islamic
State took advantage of that
division to grab the coastal
CONTROL
Continued from Page One
years, battling to limit capital
outflows caused by the wind-
ing down of the U.S. Federal Re-
serve’s bond-buying program.
Controls are making an in-
tellectual comeback, too.
“The general presumption
was that capital-account liber-
alization was always good, and
capital controls were nearly
always bad,” said Olivier
Blanchard, who arrived at the
International Monetary Fund
as chief economist in 2008
and left the fund last year.
“I’ve seen the thinking change,
partly because it was already
wrong then, and because it
was particularly wrong in the
crisis.”
On Thursday, IMF Managing
Director Christine Lagarde, at
a speech in Maryland, cited “a
growing recognition that the
short-term nature and inher-
ent volatility of global capital
flows are problematic.”
The current support for
capital controls builds on a
change of course at the IMF
half a decade ago. After long
urging countries to free the
movement of capital, the fund
surprised markets and eco-
nomic policy makers by en-
dorsing and even recommend-
ing the use of controls in some
cases to slow destabilizing in-
flows of investment.
The fund was in part influ-
enced by the lessons of the fi-
nancial crisis, when a handful
of advanced economies that
were entirely open to global
capital flows were hit hard.
Iceland and Spain both experi-
enced deep recessions when
the foreign investment that
had driven booms in their
economies evaporated.
Similar lessons were drawn
by some observers during the
eurozone crisis. Greece and
Cyprus, both facing sudden
outflows over fears that their
LOSS
Continued from Page One
ment banking. It took a 3.8 bil-
lion franc goodwill impairment
charge, primarily related to its
acquisition of U.S. investment
bank Donaldson, Lufkin & Jen-
rette for $11.5 billion in
2000—a price widely viewed
at that time as expensive.
The fourth-quarter loss
compared with a profit of 691
million francs in the same
quarter a year earlier.
Credit Suisse also said
Thursday that net revenue fell
34% to 4.2 billion francs. It
said it will cut about 4,000
jobs as part of an attempt to
reduce costs by billions of dol-
lars.
The bank had previously
flagged the likelihood of a
large quarterly loss. Still, ana-
lysts had expected a loss of
4.97 billion francs for the pe-
riod and 4.85 billion francs in
net revenue.
The latest report is the first
to reflect Credit Suisse’s new
city of Sirte, Gadhafi’s home-
town, last year. They later
seized some other areas and
inched closer to critical oil
fields, damaging vital infra-
structure.
With lawless Libya also
serving as a springboard for
migrants to Europe, European
nations—particularly Italy
and France, but also the
U.K.—have long pushed for a
stronger effort to stabilize
the country. The U.S., too, has
come to view continuing may-
hem in Libya as a threat.
“The last thing in the
world you want is a false
caliphate with access to bil-
lions of dollars in oil reve-
nue,” Secretary of State
John Kerry said about
Libya at a meeting of the
coalition against Islamic
State in Rome this week.
T
he preferred scenario
for any intervention,
senior Western offi-
cials say, is to be invited by a
widely recognized govern-
ment that would unite most
Libyans against the threat of
Islamic State, also called ISIS
or Daesh. But, some say, the
West may have to go it alone
if the situation deteriorates
dramatically on the ground.
The United Nations has
tried to cajole the two rival
administrations and their al-
Pensioners wait at a bank on the Greek island of Crete in July amid a banking crisis. The government restricted bank transfers.
banks would fail, put strict re-
strictions on bank transfers to
stop money from leaving.
Switzerland, meanwhile,
has struggled to keep its econ-
omy balanced amid huge in-
flows. Those flows put pres-
sure on the Swiss franc to rise.
A stronger currency pushes
down consumer prices that
have been falling for most of
the last four years, making it
harder for the Swiss National
Bank to fend off deflation. A
strong franc also hurts Swiss
exporters by making their
goods less competitive in
global markets. The central
bank sold huge quantities of
francs to keep the currency
from appreciating until decid-
ing a year ago it couldn’t sus-
tain the effort, allowing the
franc to rise sharply.
Capital controls have major
downsides. For one thing, they
can make it hard to attract in-
ward investment, because in-
structure under Chief Execu-
tive Tidjane Thiam, who took
over in July and announced
his strategic plans for the
bank in October. Those plans
include bolstering wealth
management, particularly in
regions such as Asia, while re-
ducing the resources directed
to its investment bank.
The bank’s new structure
includes a focus on the inter-
national wealth-management
business, but the private-
banking unit at that business,
as well as its Swiss private-
banking operation, had net as-
set outflows in the fourth
quarter.
Investors and analysts have
generally cheered Credit Su-
isse’s shift in direction, which
could spare it from some of in-
vestment banking’s volatility.
However, results posted
earlier this week by Credit Su-
isse rival UBS demonstrated
that wealth management is
also not without risk. UBS,
which has sharply reduced its
own investment bank, re-
ported billions of dollars in
outflows from its core wealth-
WORLD NEWS
lied militias into a unity gov-
ernment for more than a
year.
“ISIS is prospering be-
cause the state has been de-
stabilized,” said Karim Mez-
ran, Libya expert at the
Atlantic Council in Washing-
ton. “It is necessary to re-
solve the problem of Libya
before tackling ISIS, and not
the other way around.”
A U.N.-brokered govern-
ment of national accord was
announced in January, but
the deal has run into opposi-
tion from some factions. One
major area of disagreement
is the future of Gen. Khalifa
Haftar, the strongman of the
Tobruk administration.
Resolving these differ-
ences and empowering the
new government may take
months—and even then it
isn’t certain that such a gov-
ernment would actually in-
vite Western soldiers.
“The West is going to
push the unity government
pretty hard to acquiesce to
the extension of the anti-ISIS
coalition to Libya,” said
Lydia Sizer, North Africa an-
alyst at the Delma Institute
think tank in Abu Dhabi, and
a former State Department
official dealing with Libya.
“It could be the case that
the Libyans will not accept
anything. But the more ISIS
vestors may fear they won’t
easily get their money back
out. They also can be hard to
kick. After its collapse in
2008, Iceland imposed capital
controls that helped stem co-
lossal outflows, but also
crimped investment and fi-
nancing for Icelandic compa-
nies. Seven years later, the
country only now is inching
toward eliminating them.
But there is growing sup-
port for the idea that limits on
money flows may be neces-
sary. Any economics student
will have read about the so-
called impossible trinity that
supposedly binds policy mak-
ers’ hands. It holds that a
country that wants to control
its own monetary policy, such
as interest rates, can’t also
have both a fixed exchange
rate and a free flow of capital.
Financial and economic ortho-
doxy thus held that countries
should allow exchange rates to
management business, as cli-
ents withdrew money amid
challenging markets or de-
clined to invest.
“The environment has dete-
riorated materially during the
fourth quarter of 2015, and it
is not clear when some of the
current negative trends in fi-
nancial markets and in the
world economy may start to
abate,” Mr. Thiam said Thurs-
day.
Part of the net loss
came from a move to
extricate itself from
investment banking.
Credit Suisse last year
posted a series of ambitious
targets to reach by 2018, in-
cluding more than doubling
the pretax profit it makes in
Asia. During a conference call,
analysts asked Mr. Thiam if
the bank can still hit those
targets. He said it can. “We
have a clear strategy. Clearly,
we’re implementing it in diffi-
Burning oil storage tanks at the port of Ras Lanuf, Libya, last month.
poses a threat to the oil, and
the more Libya faces the
pressure of economic col-
lapse, the more they will
have an incentive to work
with the West to overcome
this challenge.”
If a Libyan government
ends up inviting foreign
troops, Italy, France, the U.K.
and the U.S. are likely to con-
sider creating a force that
would back Libyan units in
operations against Islamic
State, diplomats say. These
countries have worked for
months on contingency plan-
ning and the U.S. already
sent a small special opera-
tions team into Libya.
Richard Dalton, an associ-
float and keep themselves
open to movements of interna-
tional capital.
Helene Rey, an economist
at the London Business
School, believes the trinity is
actually even more impossible
than has been thought. In a
2013 paper presented to the
influential Jackson Hole, Wyo.,
gathering of monetary-policy
makers, she argued that the
tumultuous global financial
cycle showed that countries
hoping to control their mone-
tary policy could have neither
fixed exchange rates nor a free
flow of capital.
That view appears to be
spreading. Benoît Coeuré, a
member of the European Cen-
tral Bank’s executive board,
has referenced Ms. Rey’s work
in two speeches over the past
year. In November, Mr. Coeuré
said capital controls were
“once again part of the policy
discussion.”
cult markets,” he said.
Like UBS, Credit Suisse
cited a lower level of activity
among its clients in the quar-
ter. The lender’s private-bank-
ing unit in Asia, however, re-
ported three billion francs in
net new assets in the quar-
ter—up from a rise of 1.6 bil-
lion francs in the same period
a year earlier.
“We continue to believe
that wealth management, sup-
ported by our investment-
banking capabilities, remains a
uniquely attractive long-term
opportunity,” Mr. Thiam said.
Meanwhile, Mr. Thiam said he
has opted to accelerate a cost-
cutting program already in
place, designed to save about
3.5 billion francs by the end of
2018. The job cuts announced
by the bank on Thursday in-
clude contractors and consul-
tants, Credit Suisse said.
The bank’s operation in its
home country of Switzerland,
dubbed its Swiss Universal
Bank, is slated for a partial
initial public offering of shares
by next year. The business re-
ported that pretax profit fell
THE WALL STREET JOURNAL.
grants would once again sail
from Libya to Europe.
“We can’t imagine the
spring going by with the Lib-
yan situation still stalled,” It-
aly’s Defense Minister Ro-
berta Pinotti said in an
interview with Corriere della
Sera newspaper last week,
adding that Italy has already
moved warplanes to the
southern base of Trapani in
case military action is
needed.
While European and U.S.
officials recognize the risks of
REUTERS
unilateral action, this doesn’t
mean that the West wouldn’t
go to war anyway. Islamic
State’s Libyan branch, after
ate fellow at the Royal Insti- all, has already threatened to
tute of International Affairs attack Rome. If it succeeds, in
and a former U.K. ambassa- Rome or another European
dor to Libya, estimated the city, pressure to act would be
international force would hard to resist.
need at least 10,000 troops “A mandate from a legiti-
to be effective. Islamic State, mate government is impor-
he pointed out, operates out tant, but for European coun-
of at least four locations in tries it is not an absolute
Libya that would have to be requirement,” said Bruno
tackled simultaneously. Tertrais, senior research fel-
low at the Foundation for
Y
et, as the political Strategic Research in Paris
talks drag on, the pa- and a former French De-
tience of some Euro- fense Ministry adviser. “If
pean nations is wearing thin. there is a rapid Daesh ad-
Those with Mediterranean vance, especially into oil-
shores, in particular, fear producing areas, or a ter-
that with the arrival of rorist attack prepared in
warmer weather hundreds of Libya, they will not wait for
thousands of African mi- such a mandate.”
dispassionately about fluctua-
tions in capital flows that
rocked emerging markets. But
now that the swings in flows
are hitting the world’s second-
largest economy, how China
responds is the rest of the
world’s problem, too.
“There is a real contradic-
tion between what China
needs for internal balance—
lower interest rates, signifi-
cant credit easing via uncon-
ventional channels—and what
the exchange-rate conse-
quences of such easing mean
for both Chinese and global
external balances,” said
Karthik Sankaran of the Eur-
asia Group, a consulting firm.
Capital controls could help
Chinese authorities use mone-
tary policy to stimulate the
STEFANOS RAPANIS/REUTERS
economy without causing the
exchange rate to tumble.
“This makes it a lot easier
to deal with those situations
where the demands of internal
balance and external balance
point in opposite directions,”
Mr. Sankaran said.
Recently, Beijing has im-
Some of the change is evi- posed some added controls in
dent in financial policy al- an effort to halt a huge out-
ready. Poland, for example, has flow of funds from China. The
effectively halted new lending moves include curbing the
in foreign currencies for most ability of foreign companies in
people. Many Poles had taken China to repatriate earnings,
out mortgages in Swiss francs and forbidding foreign asset
and were hurt by the franc’s managers, including hedge
striking appreciation a year funds and private-equity
ago, which made their loans firms, from raising yuan-based
more expensive to pay off. funds aimed for overseas in-
The increasing focus on vestment, people with direct
those sorts of “macropruden- knowledge of the matter said.
tial” measures to limit finan-
cial instability can have the
same effect as capital controls,
Mr. Blanchard said.
CORRECTIONS 
“If you forbid someone in
your country from borrowing
AMPLIFICATIONS
in another country’s currency,
that’s macro-pru,” he said. Metairie, La., was mis-
“But stopping a foreign bank spelled as Metarie in a Page
from lending in your country One article Wednesday about a
is called capital controls.” cauliflower shortage sparking
The debate comes to a head a food frenzy among dieters.
with China. In the past, policy
Readers can alert The Wall Street
makers in high-income coun- Journal to any errors in news articles
tries could argue somewhat by emailing wsjcontact@wsj.com.
THE WALL STREET JOURNAL.
to 367 million francs in the
fourth quarter, compared with
707 million francs in the pe-
riod a year earlier.
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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Friday - Sunday, February 5 - 7, 2016 | A3

Somali Jet-Blast Probe Points to Bomber
Investigators say a The revelation comes amid
mounting evidence that the
passenger in a blast aboard Tuesday’s Daallo
wheelchair may have Airlines flight was a terror at-
tack. The passenger was
triggered explosion brought on board with the
wheelchair then transferred to
BY HEIDI VOGT a regular seat, the person said.
Both U.S. officials and the
NAIROBI, Kenya—Investiga- plane’s pilot on Wednesday
tors believe a passenger who said they believed a bomb ex-
boarded a commercial plane in ploded aboard the flight, while
a wheelchair may have been a the Western diplomat said in-
suicide bomber responsible for vestigators had swabbed the
WORLD NEWS
The Airbus A321 was forced both inside Somalia and in would have had more of an im-
to make an emergency landing neighboring countries. pact due to the pressuriza-
soon after takeoff from Moga- If it is confirmed as a bomb tion,” he said.
dishu on Tuesday after an ex- attack, it isn’t clear if those In video footage shot as the
plosion tore open a hole in the behind it would view it as a plane descended into Mogadi-
fuselage. Dubai-based Daallo success or a failure, given that shu for a landing, wind can be
Airlines said late Wednesday it didn’t cause the plane to heard ripping through the fu-
that the incident happened af- crash. At least one analyst said selage as passengers move
ter the flight was in the air the lack of a claim days after- quickly toward the rear of the
about 15 minutes. ward makes it unlikely that al- cabin. The video, shot by
Mohammed Ibrahim Yassin, Shabaab perpetrated an attack. Awale Kullane, shows some
the chief executive and co- “Al-Shabaab, if they did that passengers caked in dust and
founder of Daallo Airlines, said business, al-Shabaab would debris, and others breathing
in a phone interview that while claim it,” said Zakaria Yusuf, a through oxygen masks.

AWALE KULLANE/ASSOCIATED PRESS

an explosion that tore a hole in area of the explosion and there is some evidence of ex- Horn of Africa analyst with the Daallo said the Mogadishu-
the side of the jet as it took off found the residue of TNT. plosive residue, “it’s not 100% International Crisis Group think Djibouti flight was operated by
from Somalia’s capital, a West- A senior defense official sure,” adding, “they’re saying tank. Mr. Yusuf said the insur- Hermes Airlines, a Greek char-
ern diplomat briefed on the said an assessment of images it’s suspicious but it’s not con- gent group has been very quick ter airline company.
probe said. of the damaged fuselage led clusive.” to claim other attacks and The European Union, citing
Investigators’ theory is that the Defense Department to He said he didn’t have infor- would jump at the chance to safety concerns, has barred all
the man was able to use the view a bomb as a likelihood. mation about a passenger boast of having gotten a bomb Djibouti carriers, including
wheelchair to bypass rigorous The U.S. has had representa- boarding in a wheelchair but aboard a commercial plane. Daallo Airlines, from operating
security screening in Mogadi- tives assisting in the probe. said every scenario was being Scott Stewart, a former U.S. at its airports.
shu and then detonated a Somali officials continue to examined, including a terrorist The hole in the Daallo Airlines government terrorism investi- Daallo has said its aircraft—
bomb that ripped a hole in the blame the explosion on a mal- attack. “Every single passen- jet is seen from inside the plane gator now with the intelligence both owned and leased—are
fuselage but failed to down the function with the plane. The ger is being studied and pro- in Mogadishu on Tuesday. advisory firm Stratfor, said the registered and maintained un-
plane. The force of the blast director general of the Minis- filed,” he said. location of the blast is consis- der European regulations “and
ejected the alleged bomber try of Transport and Civil Avi- The company confirmed Somali authorities have ar- tent with a bomb on a passen- are being operated by highly
from the cabin and his body ation told The Wall Street that one passenger was miss- rested the person who was sit- ger, rather than underneath a qualified and experienced pi-
fell to earth near the town of Journal on Wednesday that no ing. Somali media have re- ting in the next seat, the West- seat or in the overhead bins. lots from Europe.”
Balad, about 20 miles from clue had been found that ported that the passenger’s ern diplomat said. “It really looks like it was at Mr. Yassin said that the air-
Mogadishu, where it was re- would indicate an explosive body was found near Balad. Though there have been no lap level,” Mr. Stewart said. He line had an unblemished safety
covered by authorities. and blamed the incident on de- The crew and the remaining 74 claims of responsibility, suspi- said the device, while small, record for 25 years, adding
“An individual got onto the pressurization. passengers survived, though cion has fallen on al-Shabaab, could have taken down the that while the airline sus-
plane in a wheelchair and is A transport ministry official two people were injured. the Islamist extremist group plane if it had exploded pended some flights following
suspected of being the suicide on Thursday said the govern- Investigators said they be- that is determined to over- slightly later. the explosion, it will keep op-
bomber,” said the diplomat, ment’s conclusions hadn’t lieve it was the wheelchair- throw the Somali government “It was the wrong time. If erating.
who is in direct contact with changed. “There was no bound passenger who was and has attacked military, gov- [the plane] had gotten up to a —Nicolas Parasie in Dubai
investigators. bomb.” sucked out of the plane and ernment and civilian targets higher altitude it probably contributed to this article.

Thousands Flee Regime Offensive in Aleppo U.N. Panel

Tens of thousands of Syri-
ans were fleeing the province
Rules in
of Aleppo and heading north
toward the Turkish border, try-
ing to escape a regime offen-
Favor of
sive backed by Russian air-
strikes after the latest
international efforts to end the
Assange
country’s conflict unraveled. A United Nations panel
found that WikiLeaks founder
By Dana Ballout in Julian Assange’s refuge inside
Beirut, Thomas Grove Ecuador’s Embassy in London
in Moscow and Emre amounts to arbitrary deten-
Peker in Istanbul tion, Swedish authorities said
Thursday, disclosing the
Turkish officials said Thurs- group’s nonbinding conclu-
THAER MOHAMMED/AGENCE FRANCE-PRESSE/GETTY IMAGES

day they were expecting a new sions a day ahead of their of-
wave of refugees, adding that ficial release.
people were finding it increas-
ingly difficult to move safely to By Charles Duxbury
Turkey from the Aleppo area and Dominic Chopping
because of the airstrikes. in Stockholm and
Turkish Prime Minister Ah- Alexis Flynn in London
met Davutoglu said 60,000 to
70,000 Syrians were moving The activist, who has been
from camps for displaced peo- holed up in the embassy for
ple north of the city of Aleppo 3½ years, had said earlier that
toward Turkey. They were he expected to have his pass-
walking toward Kilis, a Turkish port returned and be allowed
border town. to move freely should the U.N.
“We are prepared for a new panel deem Swedish and Brit-
influx, and we have the capac- A man comforted a boy Thursday amid the rubble of buildings after a reported airstrike on a rebel-held neighborhood in Aleppo. ish efforts to detain him unac-
ity,” another Turkish official ceptable. Mr. Assange had
said. than 10 villages, towns and cit- gan their Syrian air campaign added. Russia and Turkey, which said he would leave the em-
The latest effort to convene ies over the past four days as a in September. Speaking at a Syria donor have long been at odds over bassy and surrender to police
United Nations-brokered peace result of the heavy airstrikes,” Mr. Davutoglu, whose coun- conference in London on the war in Syria, traded new on Friday if the panel found
talks collapsed Wednesday af- said Yassin Abu Raed, a media try opposes Mr. Assad, said in Thursday, Iranian Foreign Min- accusations Thursday. Turkish U.K. and Swedish authorities’
ter days of fruitless attempts officer for the Syrian Revolu- London that the U.S. needed to ister Javad Zarif said Tehran President Recep Tayyip Erdo- actions legal.
to get negotiations started. The tionary Forces, an antigovern- confront Russia more directly supported U.N.-led talks toward gan said Russia’s air campaign The U.K. government said
U.N. said it was suspending the ment activist group. to stop its air campaign. a political transition in Syria, was effectively destroying the it would arrest Mr. Assange if
talks but hoped to restart them Many fleeing civilians were Saudi Arabian Foreign Min- according to the official Islamic chances of a political transition he leaves the embassy.
on Feb. 25. sleeping in agricultural areas ister Adel al-Jubeir put the Republic News Agency. in Syria. A spokeswoman at Swe-
The opposition delegation to without shelter on the Turkish onus for the breakdown of the Secretary of State John A senior Russian military of- den’s Foreign Ministry said
the talks had refused to discuss side of the border, said Mr. Abu talks on Mr. Assad, as did his Kerry warned Wednesday that ficial, however, charged that Sweden disagreed with the
a political transition in Syria Raed, who is at the Syria-Tur- German counterpart Frank- the regime and its support- Turkey might be preparing a panel’s findings but declined
until its demands for lifting key border. He said more than Walter Steinmeier. ers—a reference to Russia and military incursion into Syria. to comment further.
government sieges, ending 40,000 people had fled the The spokesman for the Iran—are pursuing a military Turkey has dismissed Mos- Swedish prosecutors, who
bombardments of rebel-held Aleppo area. Saudi-led coalition fighting in solution to the crisis rather cow’s charges that Ankara is want Mr. Assange extradited
areas and delivering humani- Some 60 opposition fight- Yemen, Brig. Gen. Ahmed Asiri, than a diplomatic one in a acting in bad faith since the for questioning on sex allega-
tarian aid were met. ers, 25 government forces and told Saudi-owned Al Arabiya move that will prolong the con- November downing of a Rus- tions, said the ruling had “no
The regime, for its part, tens of civilians have been television Saudi Arabia is ready flict and the suffering of the sian warplane by Turkish jets formal impact on the ongoing
launched the new offensive in killed in the Aleppo offensive, to contribute boots on the Syrian people. for breaching Turkey’s air- investigation, according to
Aleppo in the middle of the according to U.K.-based opposi- ground in the fight against Is- Donor nations on Thursday space. Swedish law.”
U.N.’s struggle to get the peace tion-monitoring group the Syr- lamic State in Syria if the U.S.- pledged $10.7 billion in aid to —Asa Fitch in Geneva, The U.N. finding is the lat-
talks started. Since then, fight- ian Observatory for Human led coalition decides to deploy Syrians over the next four Felicia Schwartz est twist in the activist’s at-
ing has been concentrated on Rights. The operation is one of ground forces there. years as representatives of in Washington tempt to avoid extradition to
the northern outskirts of President Bashar al-Assad’s The kingdom believes air- more than 60 nations met in and Ahmed Al Omran Sweden, where he is wanted
Aleppo city. largest military offensives strikes alone aren’t enough to London to address the human- in Riyadh for questioning over allega-
“People have fled from more since allied Russian forces be- defeat the militant group, he itarian crisis. contributed to this article. tions that he raped one
woman and molested another
in 2010. Mr. Assange hasn’t

FRANCE said.
Mr. Abaaoud asked his
cousin for help with the next
attack he was planning: as-
Continued from Page One saults on a commercial center,
to a hidden encampment along a police station and a nursery
a highway north of Paris in the school in La Defense, the busi-
days after the attack to meet ness district outside Paris, the
Mr. Abaaoud. friend testified.
She said Mr. Abaaoud told “I said to him, ‘You have
them that he arrived in Europe killed innocent people!’ ” the
without documents along with woman, speaking on RMC ra-
90 other operatives, including dio, said she told Mr. Abaaoud.
French, British, German, Iraqi “He said to me, ‘No, they aren’t
and Syrian citizens, an official innocent. You have to see
familiar with her testimony what’s happening with us in
said. The woman testified that Syria.’ ”
Mr. Abaaoud said his network A French official confirmed
had operatives in the Paris re- the woman on the radio was
gion and elsewhere in Europe, the one who had testified.
the official said. After the meeting, she con-
About 50 to 60 of the opera- tacted police several times to
tives in Mr. Abbaoud’s network disclose Mr. Abaaoud’s location
entered the European Union and his plans for another at-
through Greece, Bulgaria and tack.
Romania, according to a West- “Her testimony was crucial,”
ern counterterrorism official. said Clemence Bectarte, a law-
The operatives traveled from yer with the International Fed-
Syria through Turkey to reach eration for Human Rights who
the EU borders, the official is helping to represent her. “It
is the piece of information that
helped them get to Abaaoud.”
Mr. Abaaoud was killed dur-
ing a raid on an apartment
hideout in the Paris suburb of
St. Denis, shortly after the
woman tipped off the police.
Ms. Aït Boulahcen and another
accomplice in the Paris attacks,
a Belgian Islamic State fighter
named Chakib Akrouh, also
were killed.
‘I said to him, ‘You
have killed innocent
people!’’ the woman
said she testified.
Since then, authorities have
been looking for more accom-
plices. A focus of the investiga-
tion has been on the dozens of
people who arrived on the
Greek island of Leros on the
same day as the two attackers,
officials familiar with the in-
vestigation said. Austrian po-
lice arrested two of them at a
refugee shelter in Salzburg,
saying that they had used fake
Syrian passports to enter Eu-
complained that the French
government hadn’t done
enough to shield her identity
or protect her.
been charged and has denied
the allegations.
He argues that authorities’
efforts to bring him to Swe-
rope. Her lawyer said the den for questioning are a pre-
Last month, European Union woman's name and address are lude to an extradition to the
authorities threatened to im- in the confidential file that is U.S. to face charges for leak-
pose border controls on available to people who have ing thousands of classified
Greece, after an investigation been charged with assisting government documents. The
found that Athens wasn’t regu- the attackers. U.S. hasn’t charged Mr. As-
larly fingerprinting refugees, “This constitutes a major sange or issued an extradition
entering the data into a EU- threat for her security,” Ms. request for him.
wide database or checking Bectarte said. “She has been Mr. Assange asked the U.N.
travel documents for authen- moved from her home. What panel to examine his case,
ticity. we’re calling for are more saying his only protection was
Officials say Islamic State long-term and effective mea- to stay in Ecuador’s Embassy
also has acquired the ability to sures.” after that country granted
print passports using authentic Mr. Cazeneuve said on him asylum.
blanks and equipment seized in French radio that “we are do- The U.N. working group on
Raqqa and Deir Ezzour in Syria ing everything necessary in an arbitrary detention was
and Mosul, Iraq. France’s Inte- extremely difficult context.” formed to investigate whether
rior Minister Bernard Caze- Claire Andrieux, the re- states are complying with
neuve has called for the cre- porter who interviewed the their international obligations.
ation of a task force that would woman, said on air Thurs- A spokesman for the U.N.
have expertise in detecting day that the witness had con- High Commissioner for Hu-
such fakes. tacted the radio station man Rights said although the
In the interview with RMC, through its hotline. “It is im- panel’s conclusion isn’t bind-
the woman, with her voice dis- portant to say that she is the ing, it should carry weight.
guised, discussed her role in one who went to the media,” —Jenny Gross in London
finding Mr. Abaaoud—and Ms. Andrieux said. 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
A4 | Friday - Sunday, February 5 - 7, 2016
Draghi Presses Case on Inflation
ECB chief says more
stimulus may be
necessary to offset
effect of low oil prices
BY TOM FAIRLESS
AND TODD BUELL
FRANKFURT—European
Central Bank President Mario
Draghi on Thursday said it
could be risky to delay addi-
tional stimulus for the euro-
zone, hitting back at a warn-
ing from Germany’s
Bundesbank that the ECB
shouldn’t overreact to lower
inflation.
“Adopting a wait-and-see
attitude” to the steep fall in
oil prices “brings with it
risks,” Mr. Draghi said in a
speech at the Bundesbank’s
home in Frankfurt, namely
that weaker inflation could be-
come entrenched if people re-
duce their expectations of fu-
ture price growth.
“The risks of acting too late
outweigh the risks of acting
too early,” Mr. Draghi said.
The comments highlight the
debate taking place within the
ECB as it considers whether to
boost its €1.5 trillion ($1.64
trillion) stimulus next month
to bolster stubbornly low in-
flation.
Mr. Draghi surprised inves-
tors at a news conference in
January by pledging to “re-
view and possibly reconsider”
the bank’s stimulus in March,
just three months after an in-
Moves to Limit Eurozone’s Risks Have Their Own Perils
BY STEPHEN FIDLER
History seems to belie the
idea that policy makers can
build a crisis-proof financial
system: Each generation
needs to experience its own.
Governments have learned
much less in
BRUSSELS the past cen-
BEAT tury about how
to prevent
crashes than
they have about how to man-
age the consequences of
crashes.
But the eurozone authori-
ties are nonetheless trying
to actively to “derisk” their
financial system. In impor-
tant respects, this is part of
a grand eurozone bargain.
In it, Germany and other
strong economies agree to
back common eurozone
funds to help their weaker
brethren should they fall
again into crisis. But that is
conditional on weaker econ-
omies such as Italy agreeing
to rules aimed at ensuring
that if things do go wrong,
German money will be used
only as a last resort.
Data on Zika-Linked Defects Unclear
BY JOHN LYONS
SÃO PAULO—The number of
Brazilian newborns with a rare
birth disorder the World
Health Organization suspects
is linked to the Zika virus may
be lower than earlier feared,
Health Ministry data show.
The WHO declared compli-
cations from the mosquito-
borne virus a global health
emergency on Monday, citing
concern that its spread in Bra-
zil has caused a rise in disor-
ders including microcephaly, a
birth defect that leaves new-
borns with abnormally small
skulls.
But the magnitude of the
rise in microcephaly remains
uncertain. On closer review,
Brazilian health authorities
are finding that as many as
two-thirds of the suspected
cases aren’t microcephaly, or
aren’t the kind of microceph-
aly caused by a virus like Zika.
Further complicating mat-
ters, it is unclear how many
cases of microcephaly oc-
curred in Brazil before the ar-
rival of Zika, as it wasn’t man-
datory to report microcephaly
to a national registry until late
last year.
Microcephaly has dozens of
triggers, experts say, and with-
out knowing the prevalence of
microcephaly before Zika, it is
hard to gauge the virus’s role
in current birth-defect rates.
“There is a strong suspicion
of a link between Zika and mi-
crocephaly, but the magnitude
of the situation is still a ques-
Europe’s central banker is concerned cheaper oil will begin to undermine wages and other prices.
crease to its package that un-
derwhelmed investors.
While some ECB officials
think the sharp drop in oil
prices is likely to have only a
temporary impact on inflation,
and can therefore be ignored,
others argue that lower infla-
tion could become entrenched
if cheaper oil starts to feed
back into wages and other
prices.
Bundesbank President Jens
Weidmann had urged central
bankers last week to look
through an oil-price driven
drop in inflation, rather than
fixating on current price levels
like a “rabbit staring at a
snake.”
In the language of the Eu-
ropean Union, this bargain is
one between “solidity” and
“solidarity” as part of the
creation of the eurozone’s
so-called banking union. In
practice, if a eurozone bank
fails, the aim is to make sure
that many others are in line
to lose money before funds
are drawn from the common
eurozone pot.
B
ut there are pitfalls—
and continuing debate
about the new frame-
work. Jeroen Dijsselbloem,
the Dutch finance minister
who presides over meetings
of eurozone finance minis-
ters, is confident the euro-
zone is getting things right.
Pier Carlo Padoan, his Italian
counterpart, thinks solidarity
and risk mitigation can rein-
force one another but wor-
ries openly about whether
the new setup will work in
practice.
The issue is that shielding
German and other Northern
European taxpayers from
paying the bill for problems
in Southern Europe isn’t al-
Daniele Santos in Recife holds her baby, born with a small head.
tion,” said Dr. Denis Coulomb-
ier, head of surveillance and
response at the European Cen-
tre for Disease Prevention and
Control, the European Union
body that tracks infectious
diseases.
In its declaration on Mon-
day, the WHO also cited possi-
ble links between the Zika vi-
rus and Guillain-Barré
syndrome, a rare disorder in
which the body’s immune sys-
tem attacks nerve cells.
Brazil’s Health Ministry
didn’t respond to written and
telephone requests over sev-
eral days for detail on the col-
lection and dissemination of
national microcephaly data.
Confusion over the scope of
microcephaly in Brazil under-
scores the difficulties of track-
ing the potentially new effects
of a virus in a populous but
poor nation like Brazil. WHO
HK JP KO ML SI
WORLD NEWS
Bostjan Jazbec, the gover-
nor of Slovenia’s central bank
and a member of the ECB‘s 25-
strong governing council, said,
“We need to get the analysis
right, straight and then poten-
tially respond if necessary, but
for any decisions we need to
have a bigger picture.
“Monetary policy is not the
magic wand,” Mr. Jazbec said
in an interview with The Wall
Street Journal on Thursday.
Consumer price inflation in
the eurozone has languished
below the ECB’s target of just
below 2% for years. On Thurs-
day the European Commission,
the EU’s executive arm,
slashed its 2016 inflation fore-
ways the same as reducing
the fallout from financial ac-
cidents.
At the start of 2016, one
important element of the eu-
rozone strategy fell into
place. Under the Bank Recov-
ery and Resolution Direc-
tive—which aimed to mini-
mize the taxpayer-funded
bailouts that marked the
post-2008 financial crash—
losses will be imposed on
creditors and large deposi-
tors before taxpayers put in
a cent.
A further idea is to im-
pose so-called exposure lim-
its on government bonds.
That would place ceilings on
the amount banks can hold
of the debt of their own gov-
ernment, reducing the risk
that a government debt cri-
sis doesn’t automatically
bring down the country’s
banks, as happened in
Greece.
In a recent interview, Mr.
Dijsselbloem said he was
pressing for this measure to
be put in place gradually
over the years to 2024. He
sees such risk reduction as
officials say they suspect a
link between Zika and birth
defects in part because Zika
has been found in the placenta
of at least two confirmed mi-
crocephaly cases. But the ex-
tent of microcephaly in Brazil
remains uncertain.
Brazil has identified 4,783
cases of suspected microceph-
aly since it began requiring lo-
cal health authorities to report
them in mid-October. Brazil
health authorities have re-
viewed a quarter of those sus-
pected cases, and found that
of those 64% either weren’t
microcephaly or weren’t
caused by infection, Health
Ministry data show. Most
cases remain under review.
Brazilian states continue to
report new cases, and it isn’t
known whether authorities
will continue to rule out sus-
pected cases at the same rate.
IN UK FR MN PR THE WALL STREET JOURNAL.
EU Trims
Economic
central bankers over the true
state of the economy, and said
expectations around central
Forecasts
banks’ ability to steer the BY GABRIELE STEINHAUSER
economy are “less and less ap-
propriate.” BRUSSELS—Growth in the
“I wouldn’t say there is eurozone and the wider Euro-
nothing positive” in the econ- pean Union will be slightly
omy, he said in response to weaker this year than previ-
questions after his speech. “I ously forecast, the European
would also not say that every- Commission said Thursday,
GIORGIO ONORATI/EUROPEAN PRESSPHOTO AGENCY
thing is perfect.” warning that the economic
Mr. Mersch said he saw in- slowdown in China and a rein-
creased odds that consumer troduction of systematic bor-
prices would turn negative on der controls could hurt the
an annual basis in the euro- economy.
zone, echoing recent com- The economy of the 19-
ments he made in a Wall country eurozone is expected
Street Journal interview. But to grow 1.7% this year. While a
he was noncommittal about slight improvement from the
any fresh stimulus measures 1.6% growth in 2015, that is
the ECB may take at its March lower than the 1.8% expansion
meeting. the commission forecast in
Some critics of fresh ECB November. In 2017, the euro-
stimulus have warned that the zone will now likely expand
bank’s current ultraloose pol- 1.9%, the commission said, in
cast for the eurozone to just icy is creating distortions in line with earlier predictions.
0.5%, half the pace it forecast the financial sector and inflat- Growth in the 28-country
in November. It also trimmed ing asset-price bubbles. EU is expected stay at 1.9%
its estimate for economic Former Bundesbank Presi- this year, in line with 2015, but
growth in the region to 1.7% dent Axel Weber, now chair- down slightly from the com-
from 1.8%. man of UBS Group AG, warned mission’s November forecast.
“The longer inflation stays in Davos, Switzerland, in Jan- The commission sees the EU
too low, the greater the risk uary that additional easing by economic output expanding
that inflation does not return the ECB would “have a much 2% next year, also slightly be-
automatically to target,” Mr. lower impact in the future,” low the 2.1% forecast earlier.
Draghi said. while the side-effects of its “The recovery is slow, both
But speaking in Zurich on policy—such as distortions to in historical perspective and
Thursday, ECB Executive banks’ behavior—were grow- compared to other advanced
Board member Yves Mersch ing stronger. economies,” the commission
said policy makers should be Mr. Draghi played down said.
“modest” and “prudent” as such concerns. If the ECB does The new forecasts highlight
they seek to stimulate the eu- decide to adopt more stimu- how the EU continues to
rozone economy. lus, “the risk of side effects struggle in its recovery from
He highlighted the “limita- would not stand in our way,” the 2008 financial crisis and
tions to the understanding” of he said. the debt crisis that followed.
could be storing up problems
for the future. Even if the fi-
nal structure is robust, there
could be problems of transi-
tion caused, for example, by
the lack of a eurozone-wide
deposit insurance fund.
“Policy makers in Europe
will have to be very careful
in how we actually phase in
and implement this new re-
ALESSANDRO BIANCHI/REUTERS
gime at a time when the
euro-area credit system is
still very fragile,” Mr. Padoan
said of the new rules govern-
ing bank failures.
One thing seems pretty
sure, though: The Northern
Europeans aren’t going to re-
Italian Finance Minister Pier Carlo Padoan in Rome this week. vise the new rule book at the
behest of their Southern
the corollary of a eurozone- His opponents could ar- partners. Mr. Dijsselbloem
wide deposit insurance plan, gue Mr. Padoan, a longtime insists they will be applied.
which Germany is resisting. professor of economics, is “Politically, it makes a lot
talking his own book. Italy of sense in protecting tax-
M
r. Padoan is opposed. has the largest government payers…economically it
“I would argue debt in the eurozone; forcing makes a lot of sense,” he
against the idea that Italian banks to dump Italian said. “If you want the finan-
this actually mitigates risk,” government bonds would cial sector to price in the
he told The Wall Street Jour- raise the cost of borrowing, risks—and not hide the risks
nal. He said that worries perhaps sharply. and then present a bill at the
about a bank surpassing its But he isn’t alone in his end of the day to the public
sovereign risk threshold concerns that the structure sector—make sure that they
could destabilize the market. the eurozone is building understand it.”
Mr. Helmy has ensured
World “Egypt’s full cooperation to iden-
tify the authors of the killing,”
So far, some 404 cases of mi- Watch the Italian ministry said.
—Giada Zampano
crocephaly caused by infection
have been confirmed. There is GREECE
evidence of Zika present in 17
of these cases.
Demonstrators Clash
One reason so many cases EGYPT With Police at Rally
are being discarded is that Clashes erupted between
Brazil cast a very wide net
Italy Summons demonstrators and police in cen-
when it sought to identify mi- Envoy Over Death tral Athens as some 40,000
crocephaly in Brazil. In Octo- Italy summoned the Egyptian people marched during a nation-
ber, authorities asked hospi- ambassador in Rome, asking for wide walkout against pension
MARIO TAMA/GETTY IMAGES
tals to report newborns with a full and urgent investigation overhauls.
skull circumferences less than into the death of an Italian stu- Lenders are demanding that
33 centimeters as suspected dent who was found dead after Greece cut its main pensions in
microcephaly cases. But 23% disappearing in Cairo. a bid to shore up its creaking
of all female and 13% of all Giulio Regeni’s body was dis- social security system. The gov-
male newborns have heads covered late Wednesday by ernment has proposed that em-
that size. Egyptian authorities. Citing a se- ployers pay higher contributions.
On Dec. 9, Brazil reduced curity official, state-run Egyptian A small group of hooded
the threshold to the interna- newspaper Al-Ahram reported youths broke off from the main
tional standard of 32 centime- that Mr. Regeni’s corpse had crowd and threw Molotov
ters. In doing so, the Health been found dumped in a ditch bombs and rocks at police, who
Ministry said its previous along a major highway connect- responded by firing tear gas and
standard had unnecessarily ing Cairo and the coastal city of stun grenades.
anguished parents and ex- Alexandria. Bruises were found The crowd quickly dispersed
posed newborns to the un- on the body but not stab or bul- but a short while later a group
needed radiation of further let wounds, it said. of some 40 youths threw fire-
testing for microcephaly. The Italian Foreign Ministry bombs at the nearby offices of
“The criteria has been too said Secretary-General Michele the socialist Pasok party, causing
broad, allowing for too many Valensise met the Egyptian Am- minor damage. Two youths were
false positives,” said Dr. Ana bassador Amr Mostafa Kamal detained, police said. There were
Brito, an epidemiologist at Helmy and asked for full cooper- no immediate reports of injuries.
medical research institute ation in a joint Italian-Egyptian The rally, one the of the big-
Foundation Oswaldo Cruz in investigation into Mr. Regeni’s gest seen in Greece in recent
Pernambuco, the epicenter of death. Rome has asked for Ital- months, was held in opposition
Brazil’s outbreak. ian experts to be involved in the to pension overhauls demanded
Brazil is considering reduc- investigation and has canceled by lenders in exchange for fur-
ing the skull-size threshold the final day of a trade visit of ther rescue funding. It is the
again in the coming days, Bra- some 60 Italian companies to third such walkout since Prime
zilian researchers who consult Egypt following the news. Minister Alexis Tsipras’s Syriza
with the health ministry say. Mr. Valensise has stressed party was re-elected in Septem-
Other statistical questions that Italy is expecting Egypt to ber.
remain open, such as why a offer the “maximum cooperation Several smaller demonstra-
third of all suspected micro- at any level” in light of the “ex- tions were also held on Thurs-
cephaly cases have been found ceptional seriousness” of the day in other cities across the
in one state, Pernambuco. case. country. —Stelios Bouras
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. Friday - Sunday, February 5 - 7, 2016 | A5

Republican Centrists Battle for Survival
Presidential candidates
Bush, Kasich, Christie
face pivotal primary in
New Hampshire
BY REID J. EPSTEIN
AND HEATHER HADDON
RAYMOND, N.H.—For three
current or former Republican
governors still running for
president, Tuesday’s New
Hampshire primary is a make-
or-break contest—and
strong finish by Florida Sen.
U.S. NEWS
ers and business-focused do- high fever,” he said of Mr.
nors, groups Mr. Rubio hopes Christie. “He sounds frus-
to win after his better-than- trated that his political aspira-
expected third-place finish in tions are coming to an end.”
Iowa on Monday. Mr. Bush has enough cam-
The governors need a solid paign funds to continue even
showing here after each got with a weak showing in New
less than 3% support in Iowa. Hampshire, but party officials
That contest and the one after say there would be pressure for
New Hampshire, in South Car- him to quit his campaign, and
olina, tend to favor more con- rival camps are already recruit-
servative candidates. ing Bush donors to join them af-
Texas Sen. Ted Cruz, the ter New Hampshire.
Iowa winner, is now certain to The former governor was
advance even if he loses New forced on CNN to answer for
a Hampshire. Mr. Trump placed Sen. Lindsey Graham’s asser-
second in Iowa and has been tion that his campaign would

MATTHEW CAVANAUGH/GETTY IMAGES

Marco Rubio could render
them also-rans when the cam-
paign moves on.
With stakes so high, the
signs of stress have become
evident this week in cam-
paigning here. New Jersey
Gov. Chris Christie, sixth in
the Real Clear Politics polling
average of New Hampshire,
has declared the GOP primary
here a two-man race between
him and Mr. Rubio.
Ohio Gov. John Kasich, frus-
trated by persistent questions
about his appeal to core con-
servative Republican voters,
has insisted he is fighting for
every vote.
And former Florida Gov.
Jeb Bush is waging a two-
front battle, arguing on televi-
sion that he is superior to Mr.
Rubio, while his campaign
aired a two-minute television
ad attacking Donald Trump.
Messrs. Christie, Kasich and
Bush are fighting to appeal to
the party’s more centrist vot-
leading in polls here. be doomed if he loses to Mr.
Jim Graczyk and his wife, Rubio. “That’s not going to
Darlene, who came to see a Ka- happen,” Mr. Bush said. “We’re
sich town hall in Raymond, doing great.”
said they were still deciding There is some acknowledg-
between the Ohio governor and ment among each of the candi-
Messrs. Christie and Rubio. dates that only one of them
Mr. Graczyk, a retired elec- can survive next week.
trical engineer from Atkinson, Mr. Christie on Wednesday
said he likes Mr. Christie’s declared that he would be the
bluntness, Mr. Kasich’s cen- GOP candidate Chris Christie has said the New Hampshire primary is between him and Marco Rubio. only one left standing when
trist politics and Mr. Rubio’s the campaign shifts to South
chance to defeat Messrs. Cruz mary season last year, seven minstrels that can’t get people “This primary is down to Carolina. “The rest of the guys
and Trump. Mrs. Graczyk, a current or former governors to come to our shows,” he said between me and Marco Rubio are all nice guys,” he said in
retired nurse, said she is look- were counted among the con- at a breakfast hosted by and everyone else,” Mr. Chris- Concord. “But I’ve been the
ing for a candidate who can tenders. Their leadership and Bloomberg Politics. tie told reporters Wednesday leader of this group.”
win a general election. executive experiences were Mr. Christie, who has been in Concord. “That’s why he’s Mr. Bush’s campaign pub-
“After Iowa, we have to widely viewed as coveted as- trying to goad Mr. Rubio into engaged with me and I’m en- lished a full-page advertisement
have somebody who is elect- sets. But in a race driven by a fight for weeks, declared gaged with him.” in the Union Leader of Man-
able,” she said. GOP voters frustrated by their something of a victory when Mr. Kasich laughed off Mr. chester Wednesday featuring an
As much as the governors own party leaders, a billionaire the senator responded by tell- Christie’s Marco-and-me dec- open letter from former Florida
publicly discard the Iowa re- businessman and two rookie ing a local television reporter laration. “I’m not going to talk state-house speakers urging
sults, the Bush, Kasich and senators have risen to the top. that Mr. Christie has “had a about Chris Christie,” he said. people here to reject Mr. Rubio
Christie campaigns must now Mr. Kasich acknowledged rough couple of days.” Mr. “He’s a nice man. I’m not in- and vote for Mr. Bush to “reset
contend with a New Hamp- his plight Wednesday, saying Christie on Tuesday called the terested in talking about his the race for the Republican
shire electorate that is using he would end his campaign if Florida senator a “boy in the view.” nomination by voting for a
the Iowa finish to judge their he “gets smoked” next week. bubble” for what he said was Mr. Kasich’s top strategist, trusted conservative.”
campaigns. “We’re not going to be drag- his repeated delivery of John Weaver, showed no such —Patrick O’Connor
At the start of the 2016 pri- ging around like some band of canned answers. restraint. “Maybe he has a contributed to this article.

Case Against Cosby Poll: New Hampshire Favors Sanders

Allowed to Proceed BY JANET HOOK

Sen. Bernie Sanders of Ver-

mont has a commanding lead
BY KATE KING over Hillary Clinton in New
Hampshire ahead of the Feb. 9
TRACIE VAN AUKEN/EUROPEAN PRESSPHOTO AGENCY
ton won by a fraction of a per-
centage point. Mr. Sanders
portrayed the near-tie as a vic-
tory for his underdog campaign.
The New Hampshire survey
illustrates the huge advantage
likely voters under age 30, Mr.
Sanders is supported by 76%,
while Mrs. Clinton has 24%.
ers who identify as Democrats,
his lead is narrower, 51%-46%.
Mrs. Clinton’s supporters ac-
Mr. Sanders leads even knowledge that Mr. Sanders is
among young women, a cor- likely to win New Hampshire
nerstone of the coalition Mrs. and are hoping to keep her mar-

NORRISTOWN, Pa.—A for-
mer district attorney’s decade-
old promise not to prosecute
comedian Bill Cosby for al-
leged sexual assault wasn’t le-
gally binding, a judge has
ruled, clearing the way for
Montgomery County prosecu-
tors to move forward with
their case against the former
television star.
Mr. Cosby’s defense team
had sought to have his felony
charges dismissed based on a
2005 discussion between the
county’s former district attor-
ney, Bruce Castor, and Mr.
Cosby’s then-lawyer, who has
since died.
Mr. Castor testified that he
had told the attorney that
county prosecutors would
never charge Mr. Cosby for al-
legedly drugging and sexually
assaulting a former Temple
University employee, Andrea
Constand, in January 2004.
Democratic presidential pri-
mary, enjoying a 20-point edge
that budged little after Iowa’s
closely contested caucuses, a
new Wall Street Journal/NBC
News/Marist poll finds
Powered by lopsided sup-
port among millennials, Mr.
Sanders is the first choice of
58% of likely Democratic pri-
mary voters in New Hamp-
shire, compared with 38% who
favor Mrs. Clinton, the former
Bill Cosby entering a courthouse secretary of state.
in Pennsylvania on Wednesday. That is about the same as
the 57%-38% lead Mr. Sanders
but that it was consensual. had in a Journal/NBC/Marist
Mr. Castor testified that he poll taken in New Hampshire
believed Mr. Cosby had “inap- last week, before the two can-
propriately touched” Ms. Con- didates fought to a near-draw
stand but didn’t believe the evi- in Iowa’s Feb. 1 caucuses.
dence was strong enough to The poll, conducted Feb. 2-3,
win a criminal case against him. suggests that neither candidate
The former district attorney gained any bounce from the re-
said he promised not to prose- sults in Iowa, where Mrs. Clin-
cute Mr. Cosby—with the aim
of forcing him to testify in a
Mr. Sanders enjoys in the state
that neighbors his Vermont
home. A looming question is
whether a New Hampshire vic-
tory would be Mr. Sanders’s
high-water mark, never to be
matched again, or a spring-
board to gains in less hospita-
ble states that follow.
The two states that hold
nominating contests after New
Hampshire—South Carolina
and Nevada—include far larger
shares of minority voters, who
in opinion surveys support
Mrs. Clinton by large margins.
“So far in New Hampshire,
it’s all Sanders, as Clinton faces
an uphill fight,’’ said Lee M.
Miringoff, director of the Mar-
ist Institute for Public Opinion.
The poll found that Mr. Sand-
ers leads Mrs. Clinton among al-
most all key voting groups, es-
pecially the young. Among
Clinton is seeking to build. He gin of defeat to single digits.
has support from 64% of The Clinton camp is banking on
women under age 45, while a much stronger finish in South
Mrs. Clinton has 35%. Among Carolina, where the large share
women over 45, Mrs. Clinton of African-American voters
leads by nine points. likely gives Mrs. Clinton an ad-
vantage. Among the Democratic
primary voters in the New
The poll found Mr. Hampshire poll, less than 1%
Sanders leads Mrs. were black and 1% were Latino.
There aren’t a lot of unde-
Clinton among almost cided voters left for the candi-
all key voting groups. dates to persuade in New
Hampshire, the poll found.
Among those who say they are
Independents are especially likely to vote in the Demo-
important in New Hampshire, cratic primary, only 3% are un-
because voters with no party decided, and 6% say they
affiliation can decide on Elec- might change their mind about
tion Day to participate in ei- their candidate preference
ther party’s primary. Among The Journal/NBC/Marist
independents who say they are survey included 567 likely
likely to vote in the Democratic Democratic voters. The margin
primary, Mr. Sanders leads of error was plus or minus 4.1
69%-26%. Among primary vot- percentage points.

Flint Water Woes Hit Home Market

Montgomery County Ad-
ministrative Judge Steven
O’Neill ruled Wednesday that
Mr. Castor’s promise wasn’t
valid and thus didn’t prevent
the county from prosecuting.
The comedian was charged
by prosecutors in late Decem-
ber with aggravated indecent
assault and released on $1 mil-
lion bail. He faces as many as
10 years in prison if convicted.
Mr. Cosby denied the sexual-
assault allegations in the 2004
incident in a civil deposition he
gave a decade ago. He said that
sexual contact had occurred
U.S.
Watch
ECONOMY
Worker Productivity
Fell in Fourth Quarter
U.S. worker productivity fell in
the final months of the year,
capping a year of steady em-
ployment growth alongside mod-
erate economic expansion.
The productivity of nonfarm
workers, measured as the out-
put of goods and services per
hour worked, decreased at a 3%
seasonally adjusted annual rate
civil case he knew Ms. Constand
was prepared to file. The only
written proof of this promise
was a news release he signed in
February 2005, Mr. Castor said. BY JOE LIGHT pull out of purchasing his Flint either to prove the home isn’t and potability is affirmed, it
Mr. Cosby’s defense attor- house last month. Mr. Wolfe, on the city water supply or will be difficult to lend,” said
ney, Christopher Tayback, said Flint, Mich., residents have who has moved from the area, have a test done to prove the the spokeswoman.
Wednesday that failure to up- a new concern on top of lead had cut the listing price a cou- water meets Environmental A Bank of America spokes-
hold the promise would violate in their drinking water: Some ple of times after putting the Protection Agency standards. man said it sometimes re-
his client’s constitutional right mortgage lenders say home house up for sale in September. The area’s Realtors’ associa- quires appraisers in Flint and
of freedom from unlawful pros- buyers must prove there is no “I hope that when this clears tion planned to meet with lo- elsewhere to verify a property
ecution. “The current district contamination at a property or up we’ll get back to where we cal lenders to see how Flint’s has potable water.
attorney is trying to get out they won’t make a loan for its were before the lead problem water troubles are affecting At issue, lenders say, is how
from underneath [Mr. Castor’s] purchase. appeared,” said Mr. Wolfe. mortgage availability. to interpret government mort-
promise,” Mr. Tayback said. “In Local real-estate agents and As a condition for making a “This thing is changing so gage guidelines. The Federal
this case, the prosecution lenders worry the new restric- mortgage, lenders often re- quickly that honestly we’re Housing Administration, which
should be stopped in its tracks.” tion could be another blow to quire that a home meet certain just hanging on and trying to backs loans to less-creditwor-
the city’s housing market, which minimum standards of livabil- figure out how we are going to thy borrowers, states that a
has long suffered from economic ity, including potable water. operate,” said Mr. Theodoroff, home must have “a continuing
POLITICS distress after the departure of Government agencies, which president of the East Central and sufficient supply of safe
Personal Data Exposed major auto-industry employers.
“The tragedy is an already
back most U.S. home loans,
also have such requirements.
Association of Realtors in
Michigan.
and potable water.”
So far, Fannie Mae and
On Iowa GOP Website
A security gap on the website
depressed community is now
likely to see housing values
As a result, several mort-
gage lenders over the past few
A Wells Fargo spokeswoman
said the bank was reviewing
Freddie Mac, the largest back-
ers of mortgages, haven’t
of the Republican Party of Iowa plummet not only because of weeks notified loan officers government lending guide- changed their loan require-
left personal information on the hazardous water, but be- that borrowers in Flint need lines. “Until [water] testing ments in Flint.
more than 1.5 million people ex- cause folks cannot obtain fi-
posed, including names, phone nancing,” said Daniel Jacobs,
numbers and voting records. an executive with Michigan
The database, which was re- Mutual, which recently issued a
moved from IowaGOP.org after an notice to its employees requir-
inquiry by The Wall Street Journal, ing that homes pass a water
included information on Republi- test before it will make a loan.
cans, Democrats and independents. Similar notices have been
The records include birth dates, ad- sent out by other lenders, while
dresses and party affiliations. some major banks, including
The records don’t say who a Wells Fargo & Co. and Bank of
person voted for, just whether America Corp., said obtaining a
or not they voted. It includes loan could be difficult if a home
presidential-primary and general- doesn’t have potable water.
election records, as well as state, Flint’s water troubles began
local and school-board elections when the city began using the
BRETT CARLSEN/GETTY IMAGES

in the fourth quarter, the Labor
Department said Thursday.
Hours worked climbed 3.3%, and
unit labor costs rose 4.5%, reflect-
ing a 1.3% rise in hourly compensa-
tion. For the full year, productivity
rose 0.6% from the prior year.
—Jeffrey Sparshott
and Josh Mitchell
dating back decades. Flint River as a water source in
The database, which is a collec- April 2014. The water corroded
tion of public records, can be pur- a protective coating in pipes,
chased, typically for $1,500 to which caused some pipes to
$1,800. Buyers must promise to release lead. In October, resi-
only use the information for politi- dents were told not to drink
cal purposes. The Iowa GOP didn’t tap water.
respond to a request for comment. Doug Wolfe, a 67-year-old
—Ryan Knutson retiree, said he had a buyer The American Red Cross distributing bottled water last month in Flint, Mich., where housing has struggled.
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 | Friday - Sunday, February 5 - 7, 2016
LIBYA
Continued from Page One
tween the two rival factions.
Libya’s fight against extremists
has fallen largely to militias
with varying allegiances.
The government talks,
which have dragged for
months, gained new urgency
for Libya and the West with
the stepped-up assaults. The
U.S., which has conducted
drone surveillance in Libya,
said last week a small group of
U.S. military personnel in Libya
has been collecting intelligence
and coordinating assistance.
Wait and see
The Obama administration,
concerned for months about
the threat posed by Islamic
State in Libya, has, along with
European allies, taken a wait-
and-see approach as it awaits
formation of a unity govern-
ment.
“Right now, the interna-
tional community has no gov-
ernment to work with,” said
Mr. Bashaagha, the Libyan
lawmaker. “We have only one
key and if we lose this key, we
lose everything.”
A newly empowered Libyan
parliament took halting steps
toward peace last week, voting
to accept formation of the
U.N.-brokered unity govern-
ment that unites the two fac-
tions that have split the coun-
try. But the parliament also
rejected creation of a 32-mem-
ber cabinet and had set a
deadline of Thursday for
agreement on a cabinet made
up of fewer government minis-
ters.
But the presidential council
forming the government re-
quested two extra days to an-
nounce its cabinet, after the
first line-up was deemed too
large. The parliament in To-
bruk is due to vote again on
the cabinet on Sunday.
The U.N. envoy to Libya,
Martin Kobler, said last week
that changes could be made to
the peace agreement to bring
the sides together.
European Union foreign min-
isters have said over the past
year they may target with sanc-
tions those who stand in the
way of an agreement. The EU’s
28 member states could decide
on an asset freeze and travel
At stake are Libya’s
47 billion barrels of
crude oil reserves,
the largest in Africa.
ban as early as Monday, target-
ing members of the factions en-
gaged in violence and refusing
to abide by the U.N. deal.
At stake are Libya’s 47 bil-
lion barrels of crude reserves,
the largest in Africa and the
source of virtually all of the
country’s wealth. “We can sta-
bilize,” said Mustafa Sanallah,
the chairman of Libya’s Na-
tional Oil Co. “Or we can de-
scend into chaos.”
Islamic State has tightened
its grip on the city of Sirte, a
port connecting with Libya’s
so-called oil crescent on the
central coast and the only terri-
tory held by the extremist
group outside of Syria and Iraq.
“They will be looking to
seize more here, and look for
FIELDS
Continued from Page One
“And now they allow this!”
“This!” is the occupation by
the National Football League
of his prized fútbol greens for
use during Super Bowl 50,
which is to be played at the
adjacent Levi’s Stadium, home
to the 49ers.
In other words, the world’s
football is getting trumped by
U.S. football.
Soccer players and parents
in this soccer-crazed town are
kicking mad after Santa Clara
handed over their 11-acre com-
plex of world-class, emerald-
colored, youth soccer fields to
help make room for the hordes
of media that cover the Super
Bowl spectacle—and to secure
the perimeter of Levi’s Sta-
dium for safety reasons.
The two strongest teams in
football, the Carolina Panthers
and the Denver Broncos, are
set to face off at Levi’s Sta-
dium on Feb. 7. The NFL has
promised to return the park to
the city in its original condi-
tion or better by March.
But for now soccer teams
say they are being penalized.
And despite the NFL’s as-
Firefighters battled an oil tank fire last month in the Libyan port city of Es Sider, one in a series of recent attacks by Islamic State.
more ways to fund their opera-
tions and taking the oil ports
and fields in east Libya would
be a very big win for them, one
we can’t afford,” said Ismail
Shoukry, Libya’s head of mili-
tary intelligence for the region
that includes Sirte.
Islamic State last month
launched attacks in Ras Lanuf,
about 400 miles east of Trip-
oli, setting fire to oil-storage
tanks and severing a gas line
that supplied cities to the
west, a security official said.
Earlier in the month, attackers
used machine guns and car
bombs in Ras Lanuf and the
nearby port city of Es Sider.
The assaults killed at least 10
guards and set on fire at least
seven tanks at both facilities,
Libyan officials said.
The Islamic State attacks
hamper an already struggling
oil industry. Libya produces
about 400,000 barrels a day, a
quarter or so of its capacity.
The extremist group has
urged recruits to head to Libya
to help form a militant base
with strategic proximity to Eu-
rope. Libya is a launching
point for migrants headed to
Italy, giving Islamic State ac-
cess to the human-smuggling
network. The country also
supplies Europe with oil and
natural gas.
Attacks on Libyan oil facili-
ties test the ability of Islamic
State to spread beyond its
strongholds in Syria and Iraq,
where it has seen recent set-
backs.
“The control of the Islamic
State over this region will lead
to economic breakdowns espe-
cially for Italy and the rest of
the European states,” Islamic
State’s leader in Libya, Abul
Mughirah al Qahtani, told the
group’s magazine last fall. He
was killed in November in a
U.S. drone strike, the first Is-
lamic State militant success-
fully targeted outside Iraq and
Syria, officials said.
Competing factions
Conflict between rival mili-
tias has also posed problems
for oil production. An Islamist-
leaning government has oper-
ated out of the capital Tripoli
in the western half of Libya. A
Burt Field is one of many parents in Santa Clara, Calif., annoyed
that the NFL has booted youth league teams out of their fields.
surances, soccer fans fear the
two natural grass fields could
be ruined by Super Bowl inter-
lopers. They are also con-
cerned the weight of the vehi-
cles and heavy equipment on a
third, artificial turf field will
leave permanent undulations.
The soccer league even took
the NFL and the city to court
in an attempt to reclaim the
field after getting the boot. A
judge sided with the football
Goliaths, declining to stop the
FROM PAGE ONE
Libyan Oil Squeeze
Libya's oil production and revenue have crashed amid mounting security challenges and freefalling global
oil prices.
Oil production
1.5 million barrels a day
1.0
0.5
0 2014 Oil prices
2010 ’11 ’12 ’13 ’14
*Through November Source: Organization of the Petroleum Exporting Countries
rival government is based in
the eastern city of Bayda.
Those two sides clashed vio-
lently until the U.N.-brokered
agreement was reached in De-
cember.
The peace agreement calls
for creation of a national
army, as well as placing the
central bank and national oil
company under control of the
new central government.
The council responsible for
forming a cabinet is working
to pare down a 32-ministry
government that was rejected
by parliament a week ago. The
proposed cabinet was larded
with redundant ministries, re-
flecting the difficulty of form-
ing an inclusive government
from Libya’s competing politi-
cal and military factions.
In the absence of a central
military command or national
police force, many Libyan oil
facilities fall under the protec-
tion of the Petroleum Facility
Guard, a loosely knit group un-
der the direction of militia
leaders around the country.
“We need help on the ground,”
said Mohamed Boubagousha, a
guard official in the eastern oil
port of Sidra.
The 9-foot-high wall that
surrounds the Mellitah Oil and
Gas Complex, on the Mediter-
ranean coast in Libya’s north-
western corner, is large
enough to encircle Central
Park in New York City. It was
built last summer after Islamic
pigskin incursion. The city has
offered up alternative sites for
the teams to play. But passions
are still running high.
“Our city officials gave into
the 49ers and the NFL and let
them do whatever they want,”
said Gabe Foo, a board mem-
ber of the soccer league. Janu-
ary games had to be played on
opposing teams’ fields, and the
league had to decline a chance
to host some of the NorCal
State Cup Championship
Petroleum revenue, in billions
2010
Civil war cuts
2011
production
2012
Peace brings
oil boost
Militia blocks
2013
oil ports
$14.9
crash
’15*
Hot Spots
In the past year, the Islamic State has been using its stronghold of
Sirte to launch attacks on oil facilities.
Recent Islamic State attacks
Mellitah Oil and
Gas Terminal
TUNISIA
Tripoli
I T A LY
L I B YA
ALGERIA E G Y P T 100 miles
NIGER CHAD 100 km
State opened training camps
about 12 miles east.
Western and Libyan secu-
rity officials believe Islamic
State plans to attack Mellitah
from an encampment about 12
miles away in palm groves
near the town of Sabratha.
Workers at the oil-and-gas
complex said the facility was
prepared for any assault.
“We have to be ready for the
worst,” said Mayuf Rabia, chief
security officer of the sprawl-
games, he said.
The 49ers, who normally
play at Levi’s Stadium, said the
soccer complex and other mu-
nicipal land was committed by
the city in its 2013 bid for the
Super Bowl. The NFL, in court
filings, argued that it needs a
place to put staff for national
ALEJANDRO LAZO/THE WALL STREET JOURNAL
and international broadcast
media and house its security
headquarters. A spokesman for
the league said, “the NFL and
49ers have already committed
to replace at no cost to the
City of Santa Clara the two
natural grass fields.”
Soccer has soared in popu-
larity in the U.S. in recent
years. The men’s national team
performed beyond expecta-
tions during the World Cup in
2014 and the U.S. women’s
team last year took home their
third World Cup champion-
ship, beating Japan. Youth soc-
cer is gaining in participation.
But football, with its huge
ratings and massive fan base,
far outweighs soccer as Amer-
ica’s favorite sport. And noth-
ing quite brings that home like
a Super Bowl—annually the
most-watched event on televi-
sion. The field skirmish has re-
ignited old feelings of defen-
siveness among those in the
local soccer community.
THE WALL STREET JOURNAL.
owned by Libya’s National Oil
Co. and Italy’s largest oil com-
pany, Eni SpA, which declined
to comment on the plant’s se-
curity arrangements.
Italy’s defense minister Ro-
berta Pinotti discussed the Is-
lamic State’s threat in Libya
with French and U.S. officials
in Paris last month, saying
outside military action re-
quired approval by a Libyan
unity government.
Fears extend to Libya’s off-
shore oil industry, according
to interviews aboard the Far-
wah production vessel, a facil-
ity in the Mediterranean about
60 miles off the coast. Mi-
grants heading from Libya to
Italy sometimes pass and ask
for medical help, food or wa-
ter, said workers, who worry
whether the next group might
be Islamic State militants in
disguise.
One worker, recalling the
date of the Paris attacks, said:
“We fear they could do like
they did Nov. 13.”
Islamic State surfaced a
year ago in Libya with a
REUTERS
deadly attack on a luxury hotel
in Tripoli, followed by the be-
heading of 21 Coptic Christian
Egyptians. The group, flying
its black flag, later led a pa-
rade of fighters and vehicles
rigged with heavy weapons
through Sirte and launched its
first oil-field assaults, driving
out most expatriate workers of
international oil companies.
$47.2 Libya’s oil industry has so
far withstood the attacks. It
continues to transfer oil reve-
nue around the country, en-
$18.6
abling the payment of wages to
public employees.
$60.7 Islamic State doesn’t have
control of Libyan oil fields to
put them into production. In
$44.4 Syria and Iraq, by contrast,
the group and its local allies
pump oil and refine it for sale
to the Syrian government in
Damascus and to traders in
Turkey.
THE WALL STREET JOURNAL. For now, Islamic State is
working to sabotage Libyan fa-
cilities, causing trouble for the
economy and the few remain-
ing European countries that
rely on Libyan energy. A Lib-
yan official said the group was
likely using the attacks to
seize gasoline for sale through
black market networks that
M ed i ter ra nea n S ea smuggle fuel to Tunisia and
Malta.
The group has used social
media and its magazine to re-
Sirte cruit extremists with technical
Islamic State- expertise to Libya, Mr. Shoukry
held city said, suggesting it was only a
matter of time before Islamic
State tries to employ seized oil
Es Sider facilities to feed the oil market
Mabruk Ras Lanuf through the port in Sirte.
Libyan oil workers who are
in the cross hairs of Islamic
State say the threat isn’t far
L I B YA from their minds.
Not long ago at Mellitah,
members of the plant’s staff
were startled from their bunks
one night by gunshots, prompt-
THE WALL STREET JOURNAL.
ing fears of an Islamic State at-
tack. The facility is a maze of
ing facility, a 90-minute drive pipes and storage tanks loaded
west from Tripoli on a road with natural gas that can easily
controlled by militias. ignite. The shots turned out to
Three boats are moored be a gunfight between mem-
nearby to carry off employees bers of two local armed groups
in case of attack. The company over a kidnapping.
plans to install watchtowers Coming to work requires a
and remote cameras, said Mus- steely resolve, one Mellitah
tafa Ali Elfard, manager of the worker said. “Do I look
complex. scared?” he asked.
The plant supplies 10% of —Gordon Lubold,
Italy’s natural gas imports via Hassan Morajea
a pipeline running beneath the and Laurence Norman
Mediterranean Sea. It is jointly contributed to this article.
“I kind of equate it to like a
big corporation versus the
mom-and-pop shop,” said
Kassie Gray, director of the
ternative, or, why aren’t they
sharing?”
Santa Clara officials argue
they have committed no pen-
nonprofit group Female Foot- alty. The city, which owns the
ballers. “There is definitely fields, struck an agreement in
kind of an underdog and a 2013 to let the NFL use the
big—not a bully, I don’t want fields as part of its bid.
to use that word—but a bigger “It’s cool that there are peo-
presence, for sure.” ple coming from all around the
Mr. Field said the soccer country, but those are our
teams will keep fighting fields,” said Sophie Mendoza, a
against the NFL’s “arrogance” 15-year-old high-school sopho-
but he acknowledged it is more and a forward for nation-
hardly on equal footing with ally-ranked Santa Clara Sporting
football. “The NFL is a multi- 99 Girls Green Team. “We de-
billion industry, OK, I get it,” serve to have a place to play just
he said. “The fact of the mat- as much as the professionals.”
ter is we are the flea on the The Super Bowl scrum is
back of the elephant.” only the latest skirmish be-
Veronica Cashman, a youth tween youth soccer and the
soccer coach from Santa Clara, NFL in Santa Clara. The 49ers
equated it to an unwelcome sought to lease the existing
guest taking over your home. fields from the city, a proposal
“It’s like somebody basically abandoned after soccer players
moving into your house and and parents showed up en
destroying it,” she said. masse to a city council meeting.
Marisa Orozco, mother of 8- Mr. Field said he might have
year-old Amaya, a competitive treated the soccer fields differ-
player with the league, said ently, had he known: “We
the seizure of the field has left would have had tailgating out
some parents scrambling. there, some barbecues.”
“She will never be a 49er On Sunday, he says he’ll
fan,” Ms. Orozco said of her probably skip the game and
daughter. “She has gone to a work in the yard. “Just not in-
lot of the City Hall meetings, terested,” he said. “I am sure it
and she can’t just under- is a big day for everybody
stand—why isn’t there an al- else.”
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.
‘Courage kept, but ready to vanish at first touch. / Fear, but just held. Poets were luckier once / In the hot fray swallowed and some magnificence.’ —Ivor Gurney
All Changed, Changed Utterly
1916
By Keith Jeffery
Bloomsbury, 436 pages, £22.60
BY BRENDAN SIMMS
IN JANUARY 1916, the outlines of
old Europe had been obscured by
more than a year of fighting, but they
were still clearly visible. The Conti-
nent had lost its innocence in the
early carnage, but most of those who
would be killed in the war had yet to
die. Britain was still fielding an all-
volunteer army; measured by cost
and casualties, it had hardly broken a
POPPERFOTO/GETTY IMAGES
sweat. Across Europe, generals and
political leaders hoped to end the
conflict with a decisive blow. There
was rumbling discontent in the great
empires, to be sure, but none had yet
experienced a major revolt.
All this was about to change. As
Keith Jeffery’s important chronicle
shows, 1916 was the year in which
the iron entered Europe’s soul. It
began with the introduction of con-
scription in Britain, enabling the
establishment of a huge army to hurl
against the German lines in France.
Around the same time, the French
and British forces withdrew from
Gallipoli, where they had attempted
to knock Turkey out of the war
quickly and failed disastrously. This
pulling back condemned the British
armies in Egypt, Mesopotamia and
elsewhere to a long and hard slog
against “Johnny Turk.”
Meanwhile, a German attempt to
“bleed the French white” at Verdun
nearly succeeded—the German of-
fensive began in late February 1916—
but was frustrated by the inspired
leadership of Gen. Philippe Pétain
and the courage of his men, which
included not only ordinary poilus
but Algerian and African levies. Not
long after, the Italian army launched
yet another offensive, at terrible
cost, against the Austro-Hungarians
along the Isonzo Front (parts of
which now lie in Slovenia).
As Mr. Jeffery shows, this once lit-
tle-known sector—given vivid atten-
tion by Mark Thompson in “The
White War” (2009)—pitted men from
every part of Italy against the various
nationalities of the Habsburg Empire,
including Hungarians, Slovenes,
Czechs, Poles and indeed Italians. A
similarly multinational struggle was
in train on the Eastern Front, where
an offensive led by the Russian Gen.
Aleksei Brusilov in June 1916
confronted the peoples of the czarist
empire—Russians, Poles and Central
Asians—with the equally heteroge-
neous Austro-Hungarian forces.
Getting Away With Murder
The Butcher’s Trail
By Julian Borger
Other Press, 400 pages, £17.99
BY MARK YOST
IT MIGHT BE reasonable to assume,
while reading about the ghastly car-
nage in Syria and Iraq today, that the
men responsible for the worst atroci-
ties will be brought to justice when
the wars are over. The crimes are all
too apparent, and the criminals are
even boastful about their deeds. But
Julian Borger’s “The Butcher’s Trail:
How the Search for Balkan War Crim-
inals Became the World’s Most Suc-
cessful Manhunt” suggests a different
conclusion, if at times inadvertently.
Mr. Borger covered the 1990s wars in
Bosnia and Kosovo for the BBC and
the Guardian newspaper. His well-re-
searched chronicle—which includes
the 1995 massacre of more than
8,000 men and boys at Srebrenica, a
village in eastern Bosnia—is a timely
reminder of how feckless interna-
tional efforts can be when it comes to
stopping war crimes or, later, holding
their perpetrators to account.
The Balkans in the 1990s weren’t
unlike Syria and Iraq today. The in-
ternational community, appalled by
revanchist fighting and mass slaugh-
ter, issued condemnations and tried
to put together a coalition to stop it.
In the early and mid-1990s—in the
midst of Yugoslavia’s post-Cold War
splitting apart—the most vicious acts
were perpetrated by Christian Croats
and Serbs against Muslims in Bosnia.
But when it came to doing some-
thing, Mr. Borger writes, “blue-
THE OTHER FRONT LINES British troops at a makeshift barricade in Dublin, April 1916.
The most important event of the
year, however, was the great Allied
offensive on the Somme in July 1916.
Here Mr. Jeffery, a professor of his-
tory at Queen’s University in Belfast,
reminds us that the substantial
French contribution to the battle has
often been overlooked; it was in fact
more effective than that of other Al-
lied armies in terms of ground
gained. That said, the Somme was
perceived on both sides as a titanic
Anglo-German confrontation, pitting
the Reich against the English, Scots,
Welsh and Irish from the home is-
lands, as well as the Australians, New
Zealanders and Canadians from the
dominions.
Sixty thousand Britons became ca-
sualties on the first day of the battle
alone, 20,000 of them killed. There
were more Australian casualties at
the Somme (and at nearby Fromelles)
than at Gallipoli, where their losses
were heavy. Irishmen from both sides
of the divide, Catholics and Protes-
tants, unionists and Home Rulers,
fought side by side. Some vainly
hoped that this joint effort would
bring the two communities together,
but as Winston Churchill observed af-
ter the war, the “integrity” of that
particular quarrel survived even the
cataclysm of the Western Front.
One of the great merits of “1916: A
Global History” is that Mr. Jeffery
embeds the central events of the
year—the slaughters at Verdun and
the Somme—in the larger picture.
The book is a work of military, diplo-
matic and above all global history
that seeks to broaden the perspective
beyond the classic set pieces of the
Western Front while still keeping the
helmeted UN troops . . . arrived
shackled with restrictive rules of
engagement that allowed them to
open fire only to defend themselves,
not to protect the civilian victims.”
They could “stop Bosnians from
starving, but not from being shot or
blown apart.”
The United States, the de facto co-
alition leader, could be equally weak-
kneed. On the campaign trail in 1992,
“Bill Clinton had promised to use
American military might to stop the
mass killing in Bosnia, but once he
The Balkans in the 1990s
were not unlike Syria
and Iraq today. The
international community
condemned the slaughter
but did little to stop it.
was in office that promise was
quickly forgotten.” When the U.S.
committed troops to NATO’s “stabili-
zation force” in the mid-1990s, the
Clinton administration proved to be
gun-shy about outright confronta-
tion, remembering all too vividly the
October 1993 “Black Hawk Down” de-
bacle in Somalia.
Much of “The Butcher’s Trail” is
devoted to the manhunts that began
after the International Criminal Tri-
bunal for Yugoslavia—installed in
The Hague in 1993—started issuing
its first indictments, as well as to
the manhunts that followed Kos-
ovo’s separatist rebellion and
NATO’s bombardment of Serbia in
BOOKS
main story firmly in view. Rather
than trying to cover everything si-
multaneously, Mr. Jeffery has wisely
opted to focus each of his 12 chapters
on a month and a theater of opera-
tions. The result is a remarkable pan-
orama in which the only continent
not represented is neutral Latin
America. The writing is excellent,
with Mr. Jeffery describing the
spearing of German troops by Indian
lancers on the Somme as “surely
among the oddest and unluckiest
Western Front casualties.”
The war broke nations.
The rebels in Dublin
saluted the Germans
as their ‘gallant allies.’
Insights and vignettes abound. For
example, Jews in the Ottoman Em-
pire were generally keen to serve in
order to bolster their claim to a
homeland in Palestine but found
themselves shunted into labor battal-
ions alongside Christians after the
Turks declared a jihad against the Al-
lied forces. “I shall never forget the
humiliation of that day,” Mr. Jeffery
quotes one Jewish memoirist writing,
“when we, who, after all, were after
all the best-disciplined troops of the
lot, were first herded to our work of
pushing wheelbarrows and handling
spades, by grinning Arabs, rifle on
shoulder.”
This anecdote sums up much of
what was already wrong about the
Middle East at the time. It was about
1999. The criminals themselves were
often hiding in plain sight or living
under the protection of the govern-
ments they had served. Of the 161
names on the list of war-crime sus-
pects drawn up by the ICTY, Mr.
Borger tells us, 10 died before they
could be tried and an additional 20
had the charges against them
dropped. Of the rest, only 65 were
tracked down and arrested.
DEFIANT Slobodan Milosevic on trial at The Hague in 2003.
Among the main targets of the
criminal court’s investigations were
the Serbian President Slobodan
Milošević; the leaders of the Bosnian
Serbs, Radovan Karadžić and Gen.
Ratko Mladić; and Franjo Tudjman,
the president of Croatia, which was
responsible for the ejection of hun-
dreds of thousands of ethnic Serbs
from Croatia’s Krajina region and for
ethnic cleansing in Bosnia. In the
event, Milošević was seized in Bel-
grade in 2001 and taken to The
Hague for prosecution. He died in
custody in 2006 after years of
Friday - Sunday, February 5 - 7, 2016 | A7
Jeffery, who is an expert on Anglo-
Irish relations as well as British im-
perial history.
The only serious criticism that one
might level at “1916” is that it relies
a little too much on British or other
Anglophone sources. Events in
France, Italy, Russia and elsewhere
are narrated through the eyes of Brit-
ish observers, newspapers or intelli-
gence agents. While this approach
has the merit of novelty, it is a cum-
bersome way of presenting the story
and sometimes leads to longueurs.
For example, the space given to re-
ports by the London Times “Special
Correspondent with the Russian
Forces,” Stanley Washburn, might
better have been used to tell us more
about Brusilov’s offensive and how it
effectively destroyed the Habsburgs
as a military force in the east.
In 1916, nations and empires were
weighed in the balance. Some stood
the test. Britain took fearful
casualties, but its determination to
“finish the job” was undimmed. The
to become worse, however, as a re- most important power of all, the
sult of Britain’s machinations in 1916. United States, was still uncommitted.
In the infamous Sykes-Picot agree- As Mr. Jeffery shows, the U.S. was al-
ment, Britain carved up with France ready strongly tilting toward the Al-
the same territory that, not long be- lies, partly because of German viola-
fore, the British high commissioner tions of international law, especially
in Egypt, Henry McMahon—in the violation of Belgian neutrality at
correspondence with the Arab leader the start of the conflict and the be-
Sharif Hussein of Mecca—had havior of Germany’s submarines on
suggested might become indepen- the high seas.
dent. The effects of these decisions— Almost all the other nations and
contested boundaries and conspiracy empires, however, were showing
theories, among others—remain with signs of severe strain. The terrible
us to this day, as Mr. Jeffery is not French casualties at Verdun were a
the first to point out. major factor in the mutinies that
By the spring of 1916, the first ma- erupted in the following year. Mili-
jor cracks had begun to appear in the tary failure was delegitimating the
great empires. Russian Central Asia, Romanov dynasty in Russia, leading
groaning under conscription and to rumors about pro-German feeling
other war-related exactions, erupted in the royal family dominated by the
in full-scale revolt, which was sinister Rasputin, whose murder in
crushed by the czar’s forces with December 1916 is described by Mr.
considerable savagery. The United Jeffery in gripping detail. The Ger-
Kingdom was rocked by the Easter mans had not only suffered griev-
Rising, in which radical Irish nation- ously at the Somme but come away
alists, dissatisfied with the limited with a debilitating sense of British
Home Rule on offer after the war, re- “toughness.” German civilian morale
belled against British rule. plummeted in the “hunger winter”
Mr. Jeffery puts this event very of 1916-17 as the British blockade
much in its European context, titling began to bite.
his chapter “Ypres on the Liffey.” No doubt 2016 will be a long year
“Germany fights today,” the Irish of anniversaries: Verdun, the Easter
conspirator Roger Casement said, Rising and the Somme, to name only
against “the hordes of Russian bar- the most prominent. What better
barism, the sword of French hatred companion on this journey than Mr.
and the long purse of British greed . Jeffery’s global history, reminding
. . as an Irishman I say from my us that incendiary events in one
heart—God save Germany.” One troubled part of the world may rip-
might add that the iconic proclama- ple out to consume far-flung conti-
tion of the Irish Republic by the reb- nents and peoples?
els in front of Dublin’s General Post
Office referred to the Germans as Mr. Simms is the author of “Eu-
their “gallant allies in Europe.” These rope: The Struggle for Supremacy,
connections are well made by Mr. From 1453 to the Present.”
courtroom gamesmanship. Karadžić war crimes and crimes against hu-
remained at large until 2008, when manity.” He glosses over the post-
he was captured in Belgrade. He had World War II Nuremberg and Tokyo
grown a full beard to mask his iden- trials, saying that neither “succeeded
tity, but his neighbors and a friendly in drawing a line in human history.”
government knew who he was. What is more, Mr. Borger’s de-
Mladić, who received help from a tailed reporting shows how many bu-
public that revered him as a hero, reaucratic hurdles were faced by the
was arrested in 2011. (The trials of policemen, soldiers and intelligence
both Karadžić and Mladić are fitfully agents who were in search of war
under way.) As for Tudjman, the criminals. This obstructionism was
not accidental. Among the leaders of
the occupying forces, Mr. Borger
makes clear, there was a constant
fear of taking casualties. According
to the British ambassador in Sara-
jevo, the rules of engagement were:
“Don’t pick him up, unless you actu-
ally trip over him.”
Mr. Borger describes Hervé Gour-
PAUL VREEKER/AFP/GETTY IMAGES
melon, a French army major in Sara-
jevo whose job it was to “liaise with
the Bosnian Serb leadership” in
1995-96, after Karadžić’s indictment.
Not only did he meet with Karadžić
once a month, but he was widely sus-
pected of warning the Serbs of pend-
ing sweeps. Mr. Gourmelon, Mr.
Borger notes, was merely carrying
out French policy, since “Paris did
Hague tribunal didn’t indict him be- not want to lose any more lives in a
fore his death in 1999, though in the ‘misunderstanding’ with Karadžić’s
years since he has been implicated in bodyguards.”
the crime of ethnic cleansing and One lesson of “The Butcher’s
members of his circle have been Trail” is that, whatever the crimes of
found guilty of war crimes. ethnic and tribal conflict, the post-
Mr. Borger tries to make the case war quest for justice may well be
that the capture, punishment or cen- thwarted by the recalcitrance of re-
sure of such figures, and many oth- gional loyalties and the tangled im-
ers, has amounted to a moral victory peratives of geopolitics. Today’s war
for international law, but he gives the criminals have little to fear.
Hague tribunal and its creators more
credit than they deserve. He argues Mr. Yost, an editorial-page writer
that before the ICTY “there was no for The Wall Street Journal Europe
institutional framework for judging in the 1990s, lives in Chicago.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A8 | Friday - Sunday, February 5 - 7, 2016
‘Whosoever desires constant success must change his conduct with the times.’ —Niccolò Machiavelli
For All Practical Purposes
Realpolitik
By John Bew
Oxford, 395 pages, £14.99
BY GEORGE MELLOAN
BARACK OBAMA TOLD an inter-
viewer in 2007 that he admired the
philosophy of the theologian Rein-
hold Niebuhr, who counseled that we
should be “humble and modest” in
our belief we can eliminate the
world’s evils. Mr. Obama has indeed
been modest, effectively withdraw-
ing from Iraq, sharply reducing the
U.S. presence in Afghanistan and
fighting shy of new foreign adven-
tures. Rahm Emanuel, the former
Obama adviser and now Chicago
mayor, has characterized Mr.
Obama’s outlook as a form of “real-
politik.” Once in office, Mr. Obama
himself argued that America can ill
afford major military ventures
abroad when the government is al-
ready borrowing heavily and large
sums are needed for economic
“stimulus.”
To test the validity of Mr. Eman-
uel’s claim, though, it is first neces-
sary to define “realpolitik.” There
have been many definitions over the
years, and John Bew, who teaches at
King’s College London, explores
them all in “Realpolitik: A History.”
His book is about far more than defi-
nitions, however. It’s a heavily re-
searched, readable and comprehen-
sive review of political and
diplomatic history.
Mr. Bew ranges from the counsel
given by the 16th-century Florentine
Niccolò Machiavelli—whose cold-
hearted advice to princes is notori-
ous—to the modern endeavors of Mr.
Obama, Bill Clinton and John Kerry.
In between is a sweeping array of
political actors and earthshaking
events. These include the Austrian
Prince Klemens von Metternich, a
master of European politics in the
FICTION CHRONICLE: SAM SACKS
IN THE OVERTURE
to Alexander Chee’s
extravagant five-act
grand opera of a
novel, “The Queen
of the Night”
(Houghton Mifflin Harcourt, 561
pages, £19.07), Lilliet Berne intro-
duces the theme that will guide her
story: “The first thing determined in
the career of a singer is her Fach.
The word is German and sounded
like Fate to me the first time I heard
it. It is a singer’s fate, for it describes
the singer’s range and the type of
roles the singer will sing.” Lilliet is
what is known as a tragic soprano.
Her voice is fragile but can carry
high notes with surprising force. The
pathos of such a voice is that it is
vulnerable to breakdown—one wrong
performance can end her career.
Lilliet views her life as
a perpetual masquerade,
part opéra bouffe,
part high tragedy.
When Mr. Chee’s novel begins in
the beau monde of 1870s Paris, Lil-
liet’s stature as a celebrity diva is in
jeopardy for a different reason. For
years she has cultivated an inscruta-
ble mystique. Nothing is known of
her background, and she rarely
speaks in public, giving rise to the
legend that her voice works only in
song. Then an eager young writer
presents her with a novel titled “The
Settler’s Daughter” and asks her to
commit to the lead role of an opera
being adapted from it. Lilliet is flat-
tered but alarmed because the
novel—though the writer doesn’t ap-
pear to know it—contains details
from her own past.
The drama then proceeds on paral-
lel tracks, retracing Lilliet’s serpen-
tine route to fame and following her
attempts to pinpoint the person who
has disclosed her secrets. Her story,
very loosely based on the real life of
opera singer Jenny Lind, is full of out-
landish twists. Raised on the Minne-
sota prairie, Lilliet travels to New
York after her family dies from an
outbreak of flu. From there she em-
barks to Europe as an equestrienne in
a circus. In France she befriends a
early 19th century who fashioned a
balance-of-power system for Europe;
British foreign secretary Viscount
Castlereagh, who, with Metternich,
clipped the wings of Napoleon Bona-
parte; Neville Chamberlain, who
thought that appeasing Hitler was a
kind of realpolitik; George Kennan
and Harry Truman, who after World
War II fashioned a U.S. policy of con-
taining Soviet expansionism; and
Richard Nixon and Henry Kissinger,
who adroitly manipulated the mutual
suspicions of China and the Soviet
Union to win concessions from each.
To be wary of idealism
may seem sensible, but is
it really possible to extract
ideology from politics?
Mr. Kissinger’s friends and ene-
mies alike have often linked him to
the term realpolitik or its related
label, “realism,” not least for his
detente policies in the 1970s and
for his more recent willingness to
“engage” with China despite its hu-
man-rights record. Mr. Kissinger
has never accepted the label,
though, and Mr. Bew thinks his re-
sistance stems from the fact that
he saw “a trend toward absolutism
and academic escapism in American
realism.”
So what is realpolitik? The dic-
tionary definition is simple: politics
based on practical rather than moral
or ideological considerations. But is
it really possible to extract ideology
from politics? Mr. Bew doesn’t think
so. Out of the many uses of the term
he selects for our particular atten-
tion the one offered by a 19th-cen-
tury German journalist and political
activist named Ludwig von Rochau.
His 1853 book, “Foundations of Real-
politik,” set out the term’s interlock-
ing assumptions. Among them were
In Praise of Prima Donnas
glamorous courtesan and finds her-
self contracted to work in a brothel.
(“The night,” her procuress tells her,
“is a wonderful country to rule.”) Af-
ter hearing her sing, one besotted cli-
ent, a famous Prussian tenor, declares
his intention to sponsor her career,
and she begins voice training.
But these are only some of her im-
probable transformations, which also
include prisoner, nun, maid to the
French Empress Eugénie and spy for
the Comtesse de Castiglione, the no-
torious mistress of Napoleon III
whose intrigues helped to topple the
Second Empire. At one point Lilliet
steals the identity of a dying cellmate.
At another, during the massacres of
the 1871 Paris Commune, she escapes
the city in a hot-air balloon.
If these coups de théâtre seem
over the top, that is, of course, the
whole point. Lilliet views her life as
a never-ending masquerade, part
opéra bouffe, part high tragedy. “I
saw myself tumbling and falling
through the air, in and out of dis-
guises, on and off horses, leaping,
singing, changing as I became whom-
ever I had to be next.” Eventually the
BOOKS
the ideas that “the law of the strong
is the determining power in poli-
tics”; that “the most effective form
of government is one that incorpo-
rates the most powerful social forces
within the state” and brings about “a
balance among them”; and that the
zeitgeist, or spirit of the age, “is the
single most important factor in de-
termining the trajectory of a nation’s
politics.” An example of this last as-
whirligig story settles into its funda-
mental conflict: The ruthless Prus-
sian tenor wants to marry Lilliet, but
she is in love with another man, a
brilliant composer. Her destiny
seems predetermined by the fatal
love triangles of “Un Ballo in
Maschera,” “Carmen” and “Il Trova-
tore.” “I feared this role already con-
trolled me,” she says of the last,
“choosing me before I chose it.”
APIC
Mr. Chee’s writing is cultured and
confident, and the elite society he
depicts is dazzling. Perhaps too
much so, as the endless parade of
opulence—the jewelry, the dresses,
my God, the dresses—comes to
weary the mind’s eye (nonbeautiful
people have not been permitted in-
side these pages, except occasionally
to serve tea). And the mighty themes
of fate and freedom are hammered at
with all the subtlety of the thunder
and lightning that accompany the
book’s climactic scenes.
But readers willing to submit to
the spell of this glittering, luxuriantly
paced novel will find that it rewards
their attention, from its opening mys-
teries to its satisfying full-circle fi-
Machiavelli
GETTY IMAGES
sumption might be the unified de-
mand by Americans for retaliation
after the 2001 al Qaeda attack.
Mr. Bew finds elements of
Rochau’s outlook in the writings of
influential political philosophers
down through the ages, such as
Friedrich Meinecke and Max Weber
at the turn of the 20th century or
Walter Lippmann and Friedrich
Hayek in the 1930s. He offers some
nale. Mr. Chee could be speaking of
his own work when he exalts “the ri-
diculous and beloved thief that is op-
era—the singer who sneaks into the
palace of your heart and somehow
enters the stage singing aloud the se-
cret hope or love or grief you hoped
would always stay secret, disguised
as melodrama.” The highest compli-
ment one can pay this book is that it
is easy to imagine a version of it tri-
umphing on the stage.
In Darryl Pinckney’s “Black
Deutschland” (Farrar, Straus & Gir-
oux, 294 pages, £18.36), Chicago-
born Jed Goodfinch moves to Europe
dreaming not of opera houses but of
the cafes and cabarets of Weimar Ger-
many. When he arrives in the early
1980s, however, the pansexual under-
world of Christopher Isherwood’s
“Berlin Stories” is a thing of the past,
and West Berlin is instead a place of
entrepreneurship and commercial
growth. “The conquered city had be-
come the subsidized city.”
Jed—28, black, gay and on the
wagon after a stint in rehab—works as
an assistant to a successful architect
and lives with his well-to-do cousin
Cello, a concert pianist. But though his
connections give him access to the
traditional high culture to which re-
spectable black families are supposed
to aspire, he prefers to moon around
drinking cola in a dive bar called the
ChiChi, vainly hoping to re-create the
glory days of Herr Issyvoo: “I’d lived
my life camping out in other people’s
stories, waiting for my own to begin,
but unable to get out of the great
head and into my actual.”
Mr. Pinckney writes with impos-
ing intelligence, but it’s hard to get
a purchase on this novel. Jed rides
sidecar on the projects of his friends
and relatives—Cello’s musical ca-
reer, the architect’s high-profile
commissions—yet seems indifferent
to their outcomes. “There’s no there
where you are,” Cello scolds him,
meaning both that the Berlin he en-
visions doesn’t exist and that he has
become a cipher. So the novel
rushes along without having any
place to go. In fairness, this is faith-
ful to the experience of youth, when
everything is urgent but nothing
quite matters. But it leaves the
reader feeling every bit as lost and
as disillusioned as Jed.
According to Greek myth, the na-
iad Daphne escaped the clutches of
THE WALL STREET JOURNAL.
thoughts of his own, too. He be-
lieves, with Rochau, that realpolitik,
properly understood, is the enemy of
“habitual self-delusion” and “naively
accepted catchwords.” It avoids the
traps of fatalism, absolutism and
pessimism that have infected some
versions of “realist” thought.
“Anti-realpolitik,” Mr. Bew ob-
serves, “has been the default set-
ting of Anglo-American foreign pol-
icy for many years,” a period in
which various forms of “idealism”
have triumphed, although often
only rhetorically. Indeed, he says,
idealistic policies, based in rights
and moral crusades, may obscure a
“hidden realism.”
Mr. Bew quotes a Berlin professor
who, in 1916, said to William Weyl,
the editor of the New Republic, that
Germans “write fat volumes about
realpolitik but understand it no bet-
ter than babies in a nursery.” Ameri-
cans, he says with a hint of envy,
“understand it far too well to talk
about it.”
Has Mr. Obama practiced realpo-
litik, as Mr. Emanuel claims? Mr.
Bew doubts it. “A ‘smart foreign
policy’ . . . can only be assessed
only on the grounds of its successes
or failures, rather than its coher-
ence or intellectual lucidity,” he
writes. The difficulties faced by the
Obama administration haven’t been
conceptual, though in Syria, Libya
and elsewhere they have shown the
limits of concepts.
Mr. Obama, in other words, has
chosen Niebuhrian modesty about
what can be accomplished. Unfortu-
nately, no such modesty exists
among the likes of Vladimir Putin,
the Ayatollah Ali Khamenei and the
bestial mob that calls itself Islamic
State.
Mr. Melloan is a former deputy ed-
itor of the Journal editorial page.
His book “When the New Deal
Came to Town” will be published
by Simon & Schuster in the fall.
the lust-crazed god Apollo by trans-
forming into a laurel tree. In South
Korean novelist Han Kang’s “The
Vegetarian,” the metamorphosis be-
gins more prosaically, when Seoul
housewife Yeong-hye wakes from a
night of bad dreams and announces
that she will no longer eat or prepare
meat. Her husband is incensed and
her parents indignant, but when she
is presented with stir-fried beef or
octopus noodles she stubbornly re-
sponds with the Bartleby-like refrain,
“I won’t eat it.”
This is only the start of her behav-
ioral changes, which soon include sit-
ting naked in the sun as though she
were a plant soaking up light. More
than just meat, what she “had re-
nounced was the very life that her
body represented.” We view this re-
gression through the eyes of three re-
lations. The first is her boorish hus-
band, who is outraged that his once
docile, “completely unremarkable”
wife has become a social embarrass-
ment. If he views Yeong-hye purely in
terms of domestic utility, her
brother-in-law, a video artist, sees
her as an object of desire. The artist
becomes fixated with a vision of her
nude form covered in flowers, and a
disturbing sexual phantasmagoria un-
folds, like a lost chapter from John
Fowles’s “The Collector.”
Only Yeong-hye’s sister, In-hye, the
focus of section three, has any sympa-
thy for the mad compulsion to “shuck
off the human” and disappear into a
kind of vegetative dream-state. By
now two households have come un-
done, and Yeong-hye, confined to a
psychiatric hospital, is refusing food
altogether. In Deborah Smith’s capa-
ble translation, the book develops
powerfully from the husband’s clunky
first-person narration to In-hye’s
fiercely poetic imaginings: “Had
Yeong-hye mistaken the hospital’s
concrete floor for the soft earth of the
woods? Had her body metamor-
phosed into a sturdy trunk, with
white roots sprouting from her hands
and clutching the black soil?”
But what exactly has Yeong-hye
renounced? Is it killing animals? Is it
marriage, or the obligation to bear
children? Some intolerable quality of
humanness itself? There are no an-
swers to the questions in this eerie
and beautiful novel, except perhaps
those found in the reader’s own un-
settled dreams.
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.
The Threats From Within
United States of Jihad
By Peter Bergen
Crown, 387 pages, £19.78
BY WALTER RUSSELL MEAD
PETER BERGEN HAS written what
in effect are two books about terror-
ism. Both are valuable. One is a riv-
eting, thoroughly researched account
of the evolving state of the threat as
a growing number of American citi-
zens join the ranks of foreign terror-
ist movements—and of how U.S. in-
telligence and law-enforcement
agencies are addressing the con-
stantly shifting threat. The other is
a skilled defense of what Mr. Bergen
would say is the moderate, middle-
of-the-road approach that has char-
acterized the Obama administra-
tion’s antiterror effort: one that
attempts to steer between the per-
ceived extremes of panicky overreac-
tion and a failure to acknowledge
how politically and socially devastat-
ing terror attacks can be.
The author, a CNN national-secu-
rity analyst who has written four
books on al Qaeda, is a skilled and
sensitive reporter with unparalleled
access to the law-enforcement and
intelligence communities. In “United
States of Jihad: Investigating Amer-
ica’s Homegrown Terrorists,” he
takes on the story of the 330 Ameri-
can citizens who, since the attacks of
Sept. 11, 2001, have, in one way or
another, become involved in what he
calls “Binladenism,” the ideology
that underpins both al Qaeda and its
more radical Islamic State offshoot
and that separates both groups from
less violent forms of Salafism and Is-
lamic fundamentalism.
These homegrown terrorists have
an average age of 29; more than
one-third of them are married.
Though 12% have served time in
prison, Mr. Bergen insists that “they
are, on average, as well-educated
and emotionally stable as the typi-
cal citizen.”
American-born jihadists seem to
come in three basic types. The larg-
est group is made up of marginal
figures who seem to stumble into
terror plots—often with an assist
from undercover federal agents. As
an example, Mr. Bergen describes
the case of Matthew Llaneza, a Cali-
fornian diagnosed with bipolar dis-
order and paranoid schizophrenia.
The religious and political beliefs of
this convert to Islam seemed more
an aspect of his mental disorders
Flying Rats and Festive Fireworks
The Gunpowder Age
By Tonio Andrade
Princeton, 432 pages, £27.95
BY JEFFREY WASSERSTROM
TWO SETS OF explosions go off
near the start of “The Battle of
China,” a 1944 propaganda film that
was part of the “Why We Fight” se-
ries made by director Frank Capra.
The first burst accompanies footage
of a 1937 Japanese aerial bombard-
ment of Shanghai that caused death,
destruction and distress. The second
plays alongside images of strings of
firecrackers going off as people re-
joice. This juxtaposition gives the
smooth-voiced narrator a chance to
repeat an oft-told tale about Chinese
civilization. Americans can learn a
lot about our most important Asian
ally, he intones, from the fact that
the Chinese invented gunpowder
more than a millennium ago, but
rather than developing it into “a
weapon of war,” they simply used it
to accompany rituals, leaving the
creation of guns and cannons to peo-
ple in more bloodthirsty lands.
Capra didn’t make up this story,
but it is definitely a made-up tale. In
reality, from the time gunpowder
was invented late in the Tang
Dynasty (618-907), Chinese figures
consistently played important roles
in the development of the deadly de-
vices that relied on it. Failing to ap-
preciate this, as Emory historian To-
nio Andrade notes in “The
Gunpowder Age,” keeps us from get-
ting an accurate picture of a “vital
part of global history.” It also leads
us to miss just how “fascinating and
bizarre” the story of gunpowder’s
evolution really is.
The author illustrates this neatly
by describing early on a slew of
‘The object of terrorism is terrorism.’ —George Orwell
FALLEN A memorial for the victims of Nidal Hasan at Fort Hood, Texas.
than a conscious embrace of a radi-
cal ideology. A federal agent, who
worked undercover in the office of
Llaneza’s probation officer, encour-
aged Llaneza to elaborate his vio-
lent delusions and then take steps
to carry them out until Llaneza was
ready to detonate what he thought
was a car bomb at a Bank of Amer-
ica office in Oakland, Calif., in Feb-
ruary 2013.
Somewhere between mentally unstable drifters
and the superstars of global jihad are lone wolves
like the San Bernardino, Calif., killers.
A significant number of home-
grown terrorists are, like Llaneza,
emotionally and mentally unstable
individuals. Mr. Bergen suggests that
without the attention of overzealous
law-enforcement officials, little
deadly gunpowder-related Chinese
inventions. These included “fire-
spewing devices that leapt around
unpredictably,” called “flying rats,”
as well as a machine whose name
translates as “flying incendiary
club for subjugating demons,” dis-
cussed in an 11th-century military
treatise. Less colorful examples of
later Chinese experiments come in
chapters that describe such things
as the speed with which local man-
ufacturers, when new types of Por-
tuguese guns made their way into
China in the 16th century, repro-
duced these armaments en masse
and then made lighter localized
variations of them.
In the premodern era
groups from all across the
world shared technologies
—gunpowder included.
There is also more myth than his-
tory, Mr. Andrade shows, in broader
narratives that overstate the degree
to which China’s was a basically
peaceable past. It is simply not true,
as even the great John King Fairbank
sometimes contended, that after the
long-ago military-minded Warring
States era (475-221 B.C.), China’s of-
ficials and rulers tended to focus on
the arts of peace rather than on
those of war. Even the era of the fa-
bled Song Dynasty (960-1279), which
is often associated with nonmartial
developments—the civil-service
exam system expanded during that
period, and there was a general
flourishing of commerce, art and
trade—was marked by so much
fighting among armies that it can
justly be called a second “warring
states” period. Song rulers and other
BOOKS
would come of the fantasies of these
lost souls. “Since 9/11 the FBI has or-
ganized more jihadist terror plots in
the United States than any other or-
ganization,” he writes.
At the other end of the spectrum,
a handful of American jihadists have
emerged as serious actors at the
global level. Anwar al-Awlaki, the
cleric from Falls Church, Va., who
was once a go-to source for outlets
like the Washington Post, became a
major international force in al Qaeda.
He was one of the most dangerous
terrorists to focus on attacks in the
U.S. until 2011, when he was killed in
Yemen in a drone strike.
later dynasties, such as the Ming
(1368-1644)—the last ethnically Chi-
nese ruling family—used force to try
to subdue neighboring states and
bring them into their empire. They
often succeeded, as did the ethni-
cally Manchu Qing Dynasty
(1644-1911), though only at first, for
‘REVOLVING WHEEL EXPLOSIVE’ From an 18th-century Chinese manuscript.
toward the end of their rule they be-
gan to suffer humiliating defeats at
the hands of better-gunned Western
and Japanese troops.
One key thing to appreciate, “The
Gunpowder Age” makes clear, is that
dynasties involved in civil wars, the
suppression of rebellions and impe-
rial expansion showed plenty of in-
terest in improving old weapons,
creating new ones, and buying and
then adapting novel devices created
elsewhere, such as those 16th-cen-
Friday - Sunday, February 5 - 7, 2016 | A9
threat. Unfortunately, as he notes,
when terrorists maintain “good op-
erational security,” as Tashfeen
Malik and Syed Rizwan Farook did
in San Bernardino, Calif., they can
escape detection with horrifying
consequences.
When it comes to thwarting
homegrown terrorism, Mr. Bergen
identifies and defends what he sees
as the sane middle ground that, in
his view, this White House has
mostly occupied. Rash law enforce-
ment, he warns, can undermine civil
liberties and alienate those Muslim
communities in the U.S. who pro-
vide many of the most important
warnings about potentially violent
individuals.
But public perceptions of the dan-
ger from jihadist terrorism have a
deeper foundation than Mr. Bergen
seems to acknowledge. As he notes,
ill-timed reassurances from the
Obama administration that jihadist
terrorism had been contained, or
that Islamic State is a “junior var-
sity” group, have undermined the
public’s confidence. Combine that
concern with the chaos spreading
throughout the Middle East, and the
danger seems real enough.
JIM WATSON/AFP/GETTY IMAGES
Yet Mr. Bergen insists that jihad-
ist terror, unlike the existential cri-
ses of the Civil War, World War II
and the Cold War, is “not such a
threat.” Jihadists have not gotten
their hands on WMDs; since 9/11
they have not managed another
high-profile attack in the U.S. And
improved security measures are
making the U.S. safer by the day.
Also in this category: David Cole- One hopes that Mr. Bergen is
man Headley, a DEA informant and right: Lone wolves will remain a
father of four based in Washington, danger, yet the risk from self-radi-
D.C., who contacted Lashkar-e-Taiba, calized actors without access to the
a jihadist group allied with al Qaeda, resources of large terror groups is
on a trip to Pakistan in 2000. Head- unlikely to rise to the level of strate-
ley played a major role in planning gic threat.
and orchestrating the 2008 Mumbai But as Americans observe events
attack that killed 166 people, includ- like the Paris attacks, as they read
ing six Americans. about women and children being
Somewhere between the under- openly sold in Syrian slave markets
world of dazed and confused drifters and Islamic State gleefully burning
and the superstars of global jihad is prisoners alive, they wonder
a middle group: lone wolves like whether the Obama administration
Army Maj. Nidal Hasan, who killed really understands the convulsions
13 people at Fort Hood, Texas, in sweeping through the Islamic world
2009. Often self-radicalized through and whether what we are seeing
a combination of embittering per- now is the full fury of the storm or
sonal experiences and exposure to merely the first scenes of a drama
online jihadist materials, these peo- still to unfold.
ple pose the most complex problem
for law enforcement. Mr. Mead is a professor at Bard
Mr. Bergen argues that, thanks College and a distinguished
to improved analytic methods, the scholar in American strategy and
FBI is getting better at identifying statesmanship at the Hudson
which individuals pose the greatest Institute.
tury Portuguese guns. We need to work. This book has much to offer
think of the premodern world as one general readers, especially those
where the norm for groups based ev- with a passion for military history, as
erywhere from Beijing to Budapest well as specialists.
was to keep “passing technologies What will interest that last group
and techniques back and forth”— most is the way Mr. Andrade takes
gunpowder-based ones very much an important new angle on debates
included. over a theory that takes its name
from Kenneth Pomeranz’s “The Great
Divergence: China, Europe, and Mak-
ing of the Modern World Economy”
(2000). The “great divergence” argu-
ment is based on the idea that Max
Weber and many others were wrong
to assume that age-old contrasts be-
tween Confucian and Western views
of the world resulted inevitably in
the West’s hegemonic position by
the late 1800s. Mr. Pomeranz
stresses how similar, economically,
the most vibrant parts of Europe and
China were circa 1750, after which
point a chasm began to open, due
largely to contingent factors, such as
the location of coal deposits (impor-
tant in the steam age) and the differ-
ent effects of holding an overseas
empire as opposed to a land-based
one, like that of the Qing.
WWW.BRIDGEMANART.COM
Mr. Andrade’s book buttresses the
claims of Mr. Pomeranz and his sup-
porters—who have tended to empha-
size economic rather than military
factors—even while he challenges
some of their specific claims. He
thus makes a major contribution to
a significant area of academic con-
Canards like those that show up in cern while opening the eyes of non-
Capra’s “The Battle of China” persist, specialists. He shows convincingly
frequently appearing in works meant that to do justice to the history of
to educate or entertain—though, in China and gunpowder, we need to
periods such as our own, when there make room for “flying rats” and
is worry over Chinese military ambi- other things far deadlier.
tions, films advancing these ideas
tend to be made in China rather than Mr. Wasserstrom teaches at UC
in Hollywood. Will Mr. Andrade’s Irvine and is the author of the
book finally put a halt to this trend? forthcoming “Eight Juxtaposi-
Probably not. Still, “The Gunpowder tions: China Through Imperfect
Age” is a boldly argued, prodigiously Analogies From Mark Twain to
researched and gracefully written Manchukuo.”
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 | Friday - Sunday, February 5 - 7, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
America’s Economy
Mutual Funds Are Risky Trumps Everything
W
e invest in mutual funds like millions would be convertible to cash within a certain
of others, and thank goodness mar- number of days: one business day; 2-3 business Donald Trump, it may lary Clinton will sink Bernie Sanders
truly be said, drove to once she gets to the family’s automatic
kets still allow the risk without which days; 4-7 calendar days; 8-15 calendar days; the surface of our poli- black votes in the South. Don’t be
there can be no reward. 16-30 calendar days; and more tics heretofore unrec- shocked, though, if Bernie’s economic
Whether a mutual fund holds A new liquidity rule than 30 calendar days.” ognized degrees of populism finds an ear there, too.
stocks, bonds or something may exacerbate the As with previous SEC regu- voter anger. It may be The unemployment rate for black
more exotic, it is an investment latory train wrecks, this will Mr. Trump’s misfor- men in South Carolina was 12.2% when
next financial panic. WONDER
product, not a bank account. present a misleading picture of tune that he has last measured in the first quarter of
LAND
But U.S. financial regulators are mathematical precision and By Daniel
wrongly calculated the 2015. In Arkansas it was 13.2% and
again trying to conjure the illu- certainty for what is really a core reason for that more than 9% in Texas. Mrs. Clinton
Henninger
sion of safety around this industry. series of guesses about how markets will behave anger. better hope young black males are still
The Securities and Exchange Commission is in the future. The system will also create new He believed the big mooning over a Clinton presidency that
revelation of his June presidential an- ended 15 years ago.
crafting a final rule to impose new “liquidity” risks. As funds start categorizing their assets,
nouncement speech was support for his “It’s the economy, stupid” is a fa-
standards for the investments held by open-end there may be pressure to conform so as not to criticism of U.S. immigration policy. mous phrase about the importance of
funds, including mutual funds and exchange- be viewed as the outlier without ample liquidity. And so he rode it. political messaging in a presidential
traded funds. The idea is to make sure that funds And so the agency may end up herding everyone Elections are won or lost at the mar- campaign. Most Americans, who aren’t
have plenty of assets on hand that they can eas- into the same popular assets, as they did before gin, and the margin is where Mr. stupid, know that in the eighth year of
ily sell if they need cash to meet customer re- the last crisis. Trump lost Iowa to Ted Cruz by three Barack Obama’s presidency, the U.S.
demption requests. More specifically, regulators Perhaps most dangerous, the SEC also pro- points. economy is simply not normal.
are demanding that funds report which of their poses to formally enact a current agency guide- The Iowa entrance polls reveal that U.S. economic growth in last year’s
assets can be sold quickly without materially af- line that is intended to make funds safer but Mr. Trump got 44% of the vote from final quarter was 0.7%. The stock mar-
fecting their price. could inflame a panic. The agency aims to pro- people who believe immigration is the ket has taken up cliff-diving. That’s
“Liquidity” belongs in quotes in this context hibit a fund from investing more than 15% of its campaign’s top issue. Unfortunately, at tough on the former savers who de-
least in Iowa, only 13% think that. Mr. cided they couldn’t survive two presi-
because no one knows which securities will en- money in “illiquid assets,” meaning anything
Cruz got 34% of their vote. Immigra- dential terms with the U.S. Federal Re-
joy a liquid market come the next financial crisis. that can’t be sold within seven days for roughly tion matters, but Messrs. Cruz and serve’s microscopic interest rates, and
A significant contributor to the 2008 financial the value assigned to it by the fund. Trump may be overweighting its im- moved into stocks.
panic was regulators’ insistence that financial This is intended to protect fund investors, but portance in election outcomes.
firms follow the judgments of government- by preventing funds from buying anything that On the central conservative issue of
anointed credit-ratings agencies. Highly rated would nudge them above the 15% level, it could government spending—Iowa Republi- The Donald and Ted Cruz
mortgage-backed securities were officially prevent flexibility at moments when markets cans’ top concern at 32%—Mr. Cruz have defaulted the economy
sound as a pound, yet turned out not to be. and investors most need it. In a falling market, led with 27% to Mr. Trump’s meager
The government also systematically misled more and more assets could land in the “illiquid” 19%. Mr. Trump also trailed Marco Ru- and jobs to Marco Rubio.
investors into thinking money-market mutual category and become untouchable to mutual bio here.
funds were as safe as bank deposits by bless- funds, even if fund managers spot bargains that Sophists might argue that spending is
Republican code for suppressing outlays This newspaper reported days ago
ing the reporting of fixed net asset values, as their investors should own. A market rout could on Social Security and Medicare, which that the number of initial public offer-
if the prices of the underlying securities never accelerate as regulation prevents falling assets Mr. Trump, with an eye toward the gen- ings from young companies in January
fluctuated. from finding buyers. eral election, has said he won’t do. Then was . . . zero. The reason is “a broad
Now the SEC plans to repeat these cata- There are other potential problems. How can let’s move on to the less partisan subject retreat from risk by investors.”
strophic mistakes by creating a new liquidity re- a fund precisely track a volatile stock index if it of jobs and the economy, which Iowa Re- Let us not forget China, which per-
gime that is bound to fool some investors into is pressured to hold things other than the stocks publicans’ identified as their second mits us not to forget Mr. Trump’s role
thinking there are no liquidity risks in funds. The in the index to meet a liquidity standard? Will most-pressing issue. Mr. Rubio won in all this.
agency has long provided general “guidelines” it employ more derivatives to try to offset the them with 30% of the vote. Last year China’s economy grew at
on this subject but is about to get much more regulatory distortion? At the margin, Mr. Trump lost votes its slowest rate in more than 20 years.
prescriptive. And while the agency isn’t planning Investments carry risks, including liquidity to Messrs. Cruz and Rubio on spending The International Monetary Fund has
and to Mr. Rubio on the economy. lowered its 2016 growth estimates for
to dictate which securities a fund must buy—at risks. Misleading people into thinking risk can
For the purposes of my argument— the world economy.
least not yet—its proposed rules could be nearly be controlled by regulation would be another that the U.S. economy should be domi- Amid nearly every arrow out there
as destructive. SEC disservice to investors. The agency should nating the 2016 primaries—I combine pointing downward, Mr. Trump floated
The SEC will require funds to classify each as- instead rescind its existing guidelines and urge government spending and economy/ the idea of imposing a 45% tariff on Chi-
set into one of “six liquidity categories that fund clients to beware. jobs into one issue. For Iowa Republi- nese goods imported into the U.S.
cans, that puts economic concerns at Another Republican television debate
nearly 60%. bubbles up this Saturday. The Trump
A NATO Message for Mr. Putin Meet the Democrats. The economy
and jobs are the top concern for 33% of
tariff came up the last time he partici-
pated, and one wonders if this time

D
efense Secretary Ash Carter said this Mr. Putin believes should never have left the So- Iowa Democrats. As an ideological ob- someone will push the argument fur-
week that the U.S. faces a world of ex- viet Union. Poland could also use some reassur- session, they substitute “income in- ther—to the 1930 Smoot-Hawley tariff
equality” for spending, at 27%. Toss in and the Great Depression. He may win
panding security threats, and we’d add ance, especially given that it is one of the few
“health care” at 30% and the economy New Hampshire, but if the others close
that those include the rising NATO members that is meeting is the only issue for Democrats. the gap, doubts about his economic
authoritarian states that want A new combat brigade its commitment to spend at What makes Iowans’ elevated eco- statements will be the reason.
to dominate their regions— could deter ‘a little least 2% of GDP on defense. nomic worries intriguing as a proxy Mr. Cruz also tanked on the econ-
Iran, China and Russia. So Lithuanian Foreign Minister for the primaries is that their state omy and jobs in Iowa, receiving a sur-
we’re glad to see the Obama green men’ incursion. Linas Linkevičius called the isn’t doing badly. Iowa’s nominal un- prisingly small 18% of that vote. He’s
Administration finally doing new commitment “a coming employment rate is 3.4%. New Hamp- doing all right on the two issues he has
more to secure NATO’s eastern back to Europe” for the U.S. “It shire’s is 3.1%. politicized—immigration and Washing-
front against Russia. is as it should be, and very important for Euro- But in South Carolina, which votes ton spending—but has little voter reso-
The White House announced Tuesday that its Atlantic security.” on Feb. 20, unemployment is 5.5% nance on the economy itself.
fiscal 2017 budget includes $3.4 billion for the The Russians aren’t reacting well, though Three days later come the caucuses in The details of Iowa’s voting suggest
Nevada, whose jobless rate is 6.4%. At Mr. Cruz is self-defining himself out of
Pentagon’s European Reassurance Initiative, up what else is new. They are accusing the U.S. of least three states in the March 1 Super the economic-growth issue. For now,
from $789 million. The Pentagon launched the violating a 1997 U.S.-Russia agreement that pro- Tuesday primary are hurting—Georgia, Mr. Rubio has taken control of the one
ERI in 2014 following Russia’s illegal annexation hibits large troop deployments on the territory Tennessee and Alabama. subject with the biggest base in Ameri-
of Crimea. of new NATO states. But that agreement was Conventional wisdom holds that Hil- can politics—the economy and jobs.
The breakthrough in this year’s budget is that made in the post-Cold War era when many in the
the Pentagon plans to outfit and deploy a bri- West hoped that even Russia might eventually
gade-size force that will rotate positions across join NATO.
NATO’s front line, including in Poland and the Mr. Putin has since used NATO’s peaceful ex-
Baltics. The brigade will be combat-ready and pansion eastward as an excuse to revive his
The Right Mix of Migrants
able to call on heavy equipment that will be pre- dreams of Greater Russia. The Kremlin has in-
positioned on the Continent. vaded Georgia, trampled the 1994 Budapest To Meet Germany’s Needs
The combat brigade represents a substantial Memorandum that guaranteed Ukraine’s territo- By Klaus F. Zimmermann heed. The reality is that the need for
improvement on the current deployment of about rial integrity, and repeatedly violated NATO air-

T
150 U.S. soldiers rotating into Poland and each of space. Because the NATO brigade will rotate he debate inside Germany over
the Balts for joint training. A brigade couldn’t among several countries, it won’t violate the refugees is becoming ever more
stop an armored invasion, but it certainly could 1997 agreement in any case. heated, dividing Germans be-
deter and respond to the kind of “little green Russia may respond with some new deploy- tween those wanting to welcome as
men” invasion that Vladimir Putin deployed in ments on its western front, but Mr. Putin is less many people as possible and those
Crimea and eastern Ukraine. likely to do something rash if he sees Western who wish to close their doors
The U.S. commitment should reassure NATO’s resolve. The point is to have a significant enough completely.
eastern members, especially the Baltic states that NATO force to deter Russian aggression. What’s getting lost in all this is the
long-term perspective. From the view-
points of both demographics and eco-
low- and even medium-skilled manu-
facturing workers has been greatly di-
minished since the 1960s. Today, more
and more tasks are being completed
by industrial robots.
The challenge therefore is to pass
an Immigration Act that, like Austra-
lia and Canada, matches the skills of
these new arrivals with the needs of
the nation. Germany must attract pro-
ductive workers from all over the

Lessons From the Drop-Outs nomics, Germany needs a regular in-

flow of immigrants, including refugees.
world, not just one war-torn region.
Leaving it up the migrants to unilat-

N
Some estimates have put the number erally choose the country they want
ow that the voting has begun, the U.S. hard against him, and Mr. Paul will have to at a net gain of several hundred thou- to live in will undoubtedly lead to
presidential field is thinning out fast. shore up his political standing at home after so sand people every year for many years predictable problems. Skill mis-
Mike Huckabee ended his campaign much time on the presidential road. to come. At a minimum, there needs to matches will result in high unemploy-
on Monday, and on Wednes- Messrs. Santorum and be at least twice the past decade’s av- ment; language deficits can become a
day Rand Paul and Rick San- The list of presidential Huckabee no doubt expected to erage of 200,000 people. The question barrier to integration.
torum joined the list of drop- do better given their victories is what the proper composition of this Integrating refugees is a very costly
outs who couldn’t translate
losers piles up. in the Iowa caucuses in 2012 immigrant inflow should be. and time-consuming undertaking. That
For reasons of compassion, it be- task must be shouldered, but it must
their substantial talents into and 2008. They lost after Iowa hooves Germany to take in a sizable be properly balanced with other goals.
voter appeal. because they couldn’t expand number of refugees, primarily from If Germany doesn’t work hard to
Mr. Paul’s exit is perhaps the most revealing their appeal much beyond evangelicals. This war-torn Syria. Yet Germany also help integrate its newest arrivals into
about the public mood this election year. The time they were outflanked among Iowa evangeli- needs to be prudent. There must be a its economy and society, there is a
free-marketeer introduced some good ideas cals by Mr. Cruz’s chameleon conservatism, clearer sense of what is actually feasi- very great risk that Chancellor An-
into the debate and was right to say that Repub- while Donald Trump pre-empted some of their ble, and what the nation’s long-term gela Merkel’s present open-arms pol-
licans must reach beyond their comfortable working-class appeal. Mr. Santorum in particular needs will be. icy will soon lead to a backlash. A
white voting base. But in hindsight the Ken- struck us as a better candidate this year with his A comprehensive approach would mismanaged refugee crisis could con-
tucky Senator’s chances probably vanished with focus on middle-class voters who are struggling be best realized by the long-overdue vince many Germans to take the op-
the rise of Islamic State in 2014. He had a brief economically, and on Wednesday night he en- passage of the Immigration Act, which posite stance, believing that they no
spells out specific criteria and proce- longer want any more foreigners in
moment of anti-interventionist political celeb- dorsed Senator Marco Rubio.
dures for new arrivals. As an aging their midst. This has already hap-
rity, and Time magazine put him on the cover We should add a word about Martin O’Mal- country with a highly developed econ- pened in Sweden and other countries
in October 2014 as “the most interesting man ley, the former Maryland Governor who omy, it’s quite easy to foresee when that have long practiced great open-
in American politics.” dropped out of the Democratic race this week and for whom integration in Germany ness to refugees.
Time editors aren’t the best judges of Repub- after barely registering in Iowa. Even Demo- will work. In past decades, Germany has
lican politics, and the rise of the jihadist caliph- crats recognize that Mr. O’Malley left behind a The most important thing a foreigner made great strides with the integra-
ate reminded Americans that the world’s secu- mess in Annapolis, as his designated successor needs in order to integrate into a new tion of foreigners. Those achieve-
rity problems inevitably roll onto their shores. lost the 2014 gubernatorial race to Republican society is a job. If an immigrant can ments must be defended prudently
Mr. Paul was also too principled to follow Ted Larry Hogan in one of the nation’s most liberal start work right away, integration will and balanced with the country’s de-
Cruz, who initially slip-streamed Mr. Paul’s lib- states. Progressive voters looking for an alter- be quick. He will immediately become a mographic challenges. Indiscrimi-
productive member of his new society nately admitting all refugees from
ertarian positions against surveillance and de- native to Hillary Clinton seem to want a real so-
and his personal life will gain additional war, including often illiterate and un-
fense spending only to pivot and endorse “car- cialist this year. meaning and direction, with many di- skilled youths, is bound to undermine
pet bombing” Syria. We’ll admit to a soft spot for men and rect opportunities to learn about his these very impressive gains.
Mr. Paul will now focus on retaining his Sen- women (or at least most of them) who are will- newly adopted country.
ate seat, which the GOP may need to maintain ing to run for President. Unless you win, or are But for all the compassion that Ger- Mr. Zimmermann is the founding di-
its majority in 2017. The Democratic mayor of merely out to get a TV talk show, it’s a humbling mans feel for the refugees, there are rector of the Institute for the Study of
Lexington, Ky., Jim Gray, is already running experience, but someone’s got to do it. also undeniable facts that they must Labor in Bonn, Germany.
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THE WALL STREET JOURNAL.
Why Bloomberg Could Become President
By Douglas E. Schoen
A
s the results from the Iowa
caucuses rolled in Monday,
it became clearer than
ever: If former New York
Mayor Michael Bloomberg
ran for president as an independent,
he would be a serious contender for
the White House. I work for Mr.
Bloomberg as a pollster, and as this
campaign has unfolded I have been
struck by the gap between voters’
concerns and how the media has
portrayed them.
Record numbers of U.S.
voters are independents
who won’t be satisfied with
Clinton, Cruz or Trump.
Talking heads say that voters are
angry and polarized. This misses the
mass of Americans in the middle.
Only 16% of voters participated in a
primary or caucus four years ago,
according to the Bipartisan Policy
Center. Even the strong turnout
Monday—more than 180,000 Repub-
licans and 170,000 Democrats—rep-
resents a mere fifth of the 1.6 million
Iowans who voted in November
2012.
That’s the new silent majority: the
millions of Americans who don’t
participate in Democratic or Republi-
can primaries. They are equally as
fed up with the status quo, but they
have a different approach to prob-
lem-solving and different policy pre-
scriptions than those on the ideolog-
ical extremes.
The bulk of the people who voted
in Iowa were distinctively liberal or
conservative. Of Republicans caucus-
By Diana Choyleva
M
ajor central banks have
been under so much pres-
sure in recent years to
jump-start their stalled domestic
economies that they’ve taken their
eyes off the real economic prize: an
end to global savings imbalances.
This lapse is most obvious in the
case of the Bank of Japan and the
European Central Bank. The BOJ has
already helped ruin a golden oppor-
tunity to put global growth back on
track, and the ECB looks set to fol-
low its misguided lead.
The key is China, which still is at
the center of a global savings glut.
Households, firms and the state all
save excessively to produce a na-
tional savings rate that for the past
10 years has hovered around 50% of
gross domestic product. Beijing used
to either recycle its nation’s savings
into low-yielding U.S. Treasurys,
stoking America’s debt crisis, or
pour them into wasteful investment
at home, driving up demand and
prices in commodity markets while
flooding the world with an excess
supply of manufactured goods.
Over the past two years Chinese
policy makers have started to make
real progress liberalizing the coun-
try’s financial markets, thus ad-
dressing one of the underlying
By Karl Rove
I
t was quite a turnaround. After
he led in Iowa most of December,
Ted Cruz’s numbers started fall-
ing Jan. 6, after Donald Trump de-
clared him ineligible for the presi-
dency because he was born in
Canada. But Mr. Cruz unleashed a
disciplined, data-driven get-out-the-
vote effort aimed at social conserva-
tives. The Texan won Iowa with 28%
of the vote, four points ahead of
where he stood going into caucus
day, according to the Real Clear Poli-
tics polling average.
Then Mr. Cruz gave the evening’s
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goers, only 14% said they were mod-
erates, down one percentage point
from 2012. Of the Democrats, 28%
were moderates, down 12 points
from 2008. It shows in the results:
Half of the GOP caucusgoers sup-
ported either Ted Cruz, the most
dogmatic conservative, or Donald
Trump, the bombastic populist. On
the Democratic side, Bernie Sanders
is leading a lurch toward socialism,
and Hillary Clinton is seeking to
match if not exceed his leftist
agenda.
Who is appealing to the center?
Most Americans, the new silent
majority, don’t share the aims of the
activist caucusgoers. The share of
voters who identify as independents
hit 43% last year, a new record
according to Gallup. Only 26% were
Republicans and 30% Democrats.
Moreover, 60% of Americans told
Gallup in September that the Republi-
cans and Democrats “do such a poor
job” representing them that they
want to see a third major party
emerge. That’s up from 40% when the
question was first asked in 2003.
Who fits the bill? Michael
Bloomberg, a centrist with a clear
(and arguably unique) record in
business as an entrepreneur and in
politics as a three-term mayor of
New York. Mr. Bloomberg is a fis-
cally prudent conciliator who ad-
vances pro-growth policies and takes
tough stands. He supports compre-
hensive immigration reform to
strengthen the American economy,
environmental protections to protect
our planet for the next generation,
and social policies to promote inclu-
siveness, public health and commu-
nity safety. In short, his agenda is
very different from what’s being of-
fered by Ted Cruz, Donald Trump
and Marco Rubio or Bernie Sanders
and Hillary Clinton.
The Global Axis of Quantitative Easing
causes of the malign savings glut.
Ensuring China can generate a sus-
tainable increase in household con-
sumption over time would be highly
beneficial for the world economy,
which eight years after the global
financial crisis is still short of genu-
ine consumer demand.
Eliminating past excesses and
shedding its reliance on investment
has been a painful process for China,
which naturally has been accompa-
nied by a structural weakening of
growth. It hasn’t helped that among
the major economies China has been
the only country with an overvalued
currency. Its real effective exchange
rate has been well above its long-term
average, spurring its manufacturers to
cut yuan export prices continually for
more than three years.
The solution, both for China’s sake
and for the sake of fostering stronger,
better-balanced global growth, is for
the leading central banks to allow
China to effect an orderly deprecia-
tion of the yuan to smooth its diffi-
cult adjustment. If both investment
and export income dwindle at the
same time as China tries to reduce its
pile of bad debts, it will be very diffi-
cult for the Chinese economy not to
slump into recession.
Freeing capital outflows in China
and making its exchange rate mar-
ket-driven is highly likely to weaken
How Donald Trump Blew an Easy Win
most undisciplined victory speech,
droning on for 32½ minutes, nearly
as long as the other major candi-
dates combined. He said his win
meant that the GOP nominee would
not be chosen by “the media,” the
“Washington establishment” or “lob-
byists.” Yet The Donald is champi-
oned by none of those.
Mr. Cruz expressed, at length, his
thanks for 800,000 contributions, a
volunteer who quit his job to help
in Iowa, two Chicago law students
who spent their break canvassing
the state, a teenage Texan who
made 823 phone calls in one day,
his campaign’s top Iowa officials,
Robert Thomson
Chief Executive Officer, News Corp
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
Ashley Huston, Chief Communications Officer;
Paul Meller, Chief Technology Officer;
Mark Musgrave, Chief People Officer;
Edward Roussel, Chief Innovation Officer;
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OPERATING EXECUTIVES:
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DJ Media Group:
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Commercial; Edwin A. Finn, Jr., Barron’s;
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
Former New York City Mayor Michael Bloomberg in Paris in December.
As America becomes more polar-
ized, the desire grows for a candi-
date in the center focused on build-
ing consensus and getting results.
This is the hidden message of Mon-
day’s caucuses, the one that Mr.
Bloomberg is contemplating as he
considers a run for president.
The numbers bear this out:
Shortly after the 2014 election a poll
by this newspaper and NBC News
showed that 63% of Americans
favored compromise, not confronta-
tion, to achieve policy goals. A
majority, 52%, wanted the govern-
ment to do more problem-solving.
These attitudes suggest a constitu-
ency for a candidate who eschews
partisanship and produces results.
That’s exactly what Mr. Bloomberg
did in New York, and what he has
advocated for 10 years in speeches
on reforming the political system
and fixing Washington.
A January poll by Frank Luntz—
which was not commissioned by Mr.
Bloomberg or me—illustrates the
mayor’s potential. Mr. Luntz, who
advised Ross Perot’s independent bid
the yuan and push up domestic in-
terest rates. Higher interest rates
would transfer income from firms to
households as savers get rewarded
properly. Allowing savers to earn
more return from less saving is the
fastest way for China to lower its ex-
orbitant savings rate.
The BOJ and ECB
compete to drive down
the yen and the euro.
At the same time, the resulting
disinflationary pressures from stron-
ger currencies in Europe, the U.S.
and Japan would provide a further
windfall for consumers in those
places, who have already benefitted
from a slump in commodity prices
caused partly by weaker Chinese
growth. Rising consumption thanks
to cheaper imports would also help
revive business investment.
Unfortunately, the leading central
banks are far from willing to allow
the yuan to depreciate as China lib-
eralizes capital outflows. The BOJ’s
Governor Haruhiko Kuroda has urged
China to tighten its capital controls
as Japan’s central bank last week cut
its official interest rate into negative
territory. The unexpected easing sent
his cousin Bebe, and his parents.
Approaching the half-hour mark, his
promise that “morning is coming”
seemed a threat about how long he
would speak.
As impressive as his win was,
Iowa is a state tailor-made for Mr.
Cruz. His challenge now is New
Hampshire, which lacks Iowa’s sub-
stantial number of evangelicals, and
where he hasn’t spent the time or
built the same kind of organization.
Going into Monday’s caucus Mr.
Trump led by nearly five points in
the Real Clear Politics average. But
he barely came in second, with 24%
of the final vote. Mr. Trump’s re-
fusal to attend the last debate, focus
on the ground game or even have
surrogates at many caucus meetings
contributed to his defeat. He acted
as if traditional rules didn’t apply to
him, and killed his chance for an
easy victory.
Mr. Trump’s speech was the eve-
ning’s shortest—four minutes—and
surprisingly gracious. Yet he bragged
that he was up by 28 points in New
Hampshire (seven points higher than
his actual lead in the polling aver-
age). He may prevail, but why raise
expectations?
Speaking of expectations, Florida
Sen. Marco Rubio beat his, running
six points ahead of his polling aver-
age, ending with 23%, just behind
Mr. Trump. He gave the evening’s
best speech, describing himself as
the underdog, assailing President
Obama, and saying that Hillary Clin-
ton’s emails show “she thinks she’s
above the law.” Mr. Rubio’s Reagan-
like challenge for Republicans was
Friday - Sunday, February 5 - 7, 2016 | A11
the center weren’t successful. In
1992 Mr. Perot went as high as 37%
in the polls, but finished with 19% of
the popular vote. In 1980 John An-
derson hit the mid-20s, but then
stalled and won only 7% on Election
Day. But their candidacies were sunk
by poor temperament, meager re-
sources or an inability to get on the
THIBAULT CAMUS/ASSOCIATED PRESS
ballot. Mr. Bloomberg would have
none of those problems.
Commentators have mistakenly
characterized Mr. Bloomberg’s may-
oral tenure as exclusively focused on
a relatively limited (but widely
known) social and public-health
agenda, including laws to prevent gun
violence and discourage smoking.
They’re missing the bigger picture.
Over more than a decade in office Mr.
in 1992, found that 84% of voters Bloomberg governed with (and artic-
could support a generic candidate ulated) sensible alternatives on re-
who matches Mr. Bloomberg’s profile. forming taxes and government ser-
When asked about the former mayor vices, as well as revitalizing the
by name, 55% said they would con- economy. He kept New York safe from
sider supporting him. That includes a terrorist attack for 12 years and
57% of Democrats, 45% of Republi- stood firm with law enforcement to
cans and 62% of swing voters. reduce crime by 32% and make it the
In direct matchups—three-way safest big city in America.
races against Mrs. Clinton and Mr. A Bloomberg candidacy would
Cruz, or Mrs. Clinton and Mr. Ru- make no effort to kowtow to the reli-
bio—the poll puts Mr. Bloomberg at gious right or labor unions. Mr.
28%, and the election almost within Bloomberg would not and has never
the margin of error. And that’s be- made deals with special interests.
fore he has announced a candidacy Because he has always been able to
or run a single ad. finance his campaigns himself, his
In short, the Bloomberg message independence is indisputable.
would be unique in a year when As this politically frenetic Febru-
Republicans have moved sharply to ary wears on, the primary process
the right and Democrats sharply to will demonstrate to voters how di-
the left. The Luntz survey shows that vided and dysfunctional the nation
35% of voters either have no opinion has become. For Americans in the
about Mr. Bloomberg or have never middle, a Mike Bloomberg candi-
heard of him. That gives him huge dacy will become more compelling
potential for growth among voters by the day.
who are disappointed and dissatis-
fied with the two major parties. Mr. Schoen served as a pollster
The past two independents to be- for President Bill Clinton and has ad-
gin presidential candidacies from vised Michael Bloomberg since 2001.
the yen tumbling further and put ment on crisis economies such as
pressure on the ECB to relax its own Greece. Now, instead of expanding
policy next month, something ECB QE to further devalue the euro, the
President Mario Draghi had practi- ECB should concentrate on pushing
cally promised to do anyway. through the clean-up of bad debt and
The U.S. Federal Reserve last year rely on its existing QE program to
increased its policy rate by a quarter- ease the pain.
point and has signaled further in- That’s unlikely to happen. Mr.
creases may be delayed, somewhat Draghi faces enormous pressure
undermining the recent trend toward from politicians and markets to con-
dollar strength. The Bank of England tinue expanding asset purchases
keeps delaying its own rate rise, un- and push the ECB’s deposit rate
dermining the pound against the dol- deeper into negative territory. Since
lar and the euro and in effect achiev- this is all geared toward driving
ing a competitive devaluation. down the euro, it amounts to an-
The risk that the global currency other beggar-thy-neighbor devalua-
war will enter a dangerous phase has tion when the currency already is
thus increased. Policy makers are hovering close to a 13-year low
acting locally instead of reasoning against the dollar.
globally. But central bankers aren’t To the extent eurozone policy
the only ones to blame. Both the eu- makers worry about imbalances,
rozone and Japan need deep policy they have focused on fixing the cur-
reforms that are outside the remit of rency union’s internal imbalances by
the ECB and the BOJ. But the BOJ imposing drastic fiscal adjustments
has acted irresponsibly by focusing on smaller economies while hoping a
on pushing down its exchange rate, cheaper euro benefits larger export-
thus boosting corporate earnings ers. This is a policy that has already
and exacerbating Japan’s own sav- added to the global savings glut by
ings glut, which is mainly on corpo- increasing the eurozone’s current-
rate balance sheets. Instead it should account surplus. In a world of inade-
allow the yen to appreciate. quate demand, it’s hard to see how
The ECB’s mistake wasn’t that it this approach will work.
launched an asset-purchase program,
known as quantitative easing, but Ms. Choyleva is chief economist
that it did so too late, inflicting huge and head of research at Lombard
income losses and mass unemploy- Street Research.
steeped in optimism. “We will em- supporters that by fighting Mrs.
brace all the principles that made Clinton to a virtual draw, they had
America great,” he said, “and we will beaten “the most powerful political
apply them to the unique challenges organization in the United States.”
of this new century.” Iowa, he declared, has sparked “a
But if Mr. Rubio wants to emerge political revolution.”
from the pack, he must keep his mo- Unlikely. Mr. Sanders leads in New
mentum in New Hampshire, which Hampshire by 18 points, according to
doesn’t often follow Iowa’s lead. His the polling average, and it’s unclear
whether Mrs. Clinton’s organization
alone can make up the difference.
He acted like the But when the race turns to the
South, her advantage among non-
traditional rules didn’t white and moderate Democrats will
apply. This race could probably sink Mr. Sanders, though
he has enough money and youthful
go to the convention. left-wing enthusiasm to ride on until
the convention.
The future on the GOP side re-
challenge is that others—Ohio Gov. mains opaque. New Hampshire will
John Kasich, former Florida Gov. Jeb further narrow the field, but only 2%
Bush and New Jersey Gov. Chris of delegates will be selected there
Christie—have all invested more and in Iowa. By February’s end less
time there. than 5% will have been chosen. In
On the Democratic side, Mrs. Clin- 2012 the contest didn’t dwindle to
ton said Monday night that she was one candidate until May 14, and Mitt
“breathing a big sigh of relief.” Not Romney didn’t secure his delegate
long ago it seemed she could lose majority until May 29. This year, if
Iowa to Vermont Sen. Bernie Sand- three or maybe four Republicans are
ers, a self-proclaimed democratic so- still standing after South Carolina, it
cialist. Mr. Sanders had enthusiasm: could take until June—or the con-
43% of likely Democratic caucus- vention—for anyone to clinch the
goers described themselves as “so- nomination.
cialist” in a Jan. 10 survey for If Donald Trump had won Iowa,
Bloomberg Politics and the Des he could have run the table. Not
Moines Register. now. We’re in for a long haul.
But Mrs. Clinton invested mil-
lions in the ground game that pro- Mr. Rove helped organize the po-
duced her narrow win. Her victory litical-action committee American
speech was angry, joyless and plain- Crossroads and is the author of “The
tive, as she begged Democrats to re- Triumph of William McKinley: Why
member “we have to be united.” By the 1896 Election Still Matters” (Si-
contrast Mr. Sanders told raucous mon & Schuster, 2015).
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 | Friday - Sunday, February 5 - 7, 2016 THE WALL STREET JOURNAL.

ARTS & ENTERTAINMENT

Making and
Looking
MASTERPIECE “Woman With Leaves” as that of a figurine.
Out of wet plaster, a matchbox-size rectan-
CHARLES RAY gle with round holes for eyes forms the fig-
ure’s head. The corrugated cardboard be-
comes drapery in folds, an abstract
Woman With Leaves garment. Leaves fully imprinted in plaster
Pablo Picasso create the image of the mythic Daphne be-
1934 coming a tree—or, if one moves around the
axis of the sculpture, the imprinted forms
become like wings. Around again, and they
I RECENTLY VISITED “Picasso Sculpture” at remind one of an ancient figure holding a
the Museum of Modern Art and was sur- docile animal. These shifting associations
prised by how taken I was with “Woman are not occurring from one stationary view,
With Leaves” (1934). It’s a small figurative but appear because you are drawn into and
work, and it easily could be overlooked in around the small figure.
the exhibition, as it’s placed in a room full But soon the viewer is returned to the
of larger and more imposing sculptures. It’s real world of masking tape, razor knives
a scrappy little piece made of dingy cast- and the construction of the sculpture. Im-
plaster forms assembled and stacked into a age recedes and Picasso’s hands emerge, so
figure of a woman. At first glance it is so evident in the process. This shifting back
Picassoesque that you almost need go no and forth between elements and processes
further: Assembled forms becoming parts of construction, then giving way to ren-
of another whole. The relation of one to dered images—form and content—vibrates
the other is charming and easily under- and dances, with neither one dominating.
stood. But if you stop and look, this sculp- The creative process here is not simply
ture’s stack of plaster shapes and forms be- a means to an end. This little sculpture is Picasso’s ‘Woman With

2016 ESTATE OF PABLO PICASSO / ARTISTS RIGHTS SOCIETY (ARS), NEW YORK
comes a precariously balanced and dynamic not just made of stuff from the world fil- Leaves’ establishes a
event. tered into the art by artist and studio—im- communion between
By “precariously balanced” I don’t mean pressions of cardboard molds, leaf forms, creator and viewer.
that it’s about to fall apart before our eyes. and an armature of Greek myth, all juxta-
Rather, it is possessed of a quality that posed, stacked and composed until an im-
keeps the viewer intimately engaged by age appears. It is also “made” as the
forcing him to juggle dual perceptions si- viewer is brought into and around the work
multaneously. “Woman With Leaves” holds in the act of visual investigation that the
together both as a physical object and as elements and evidence of its construc-
an image. At the same time, part of the vi- tion invite.
sual experience of the sculpture is its The magic of the sculpture
clearly visible separate sections. is how the artist and the viewer
The sculpture reads to me as an essay join their intuitions. Picasso
centered on the human act of making. As used his in the construction of
you walk around it, decisions Picasso made the sculpture, and the sculpture
when casting and imparting forms in plas- is understood only through an intuitive
ter become apparent. These seem both method of looking. This relationship of
technical and intuitive. The process of mak- making and looking is what makes the
ing small impromptu molds from card- sculpture.
board, filling them with wet plaster, stack- The most electric and energetic force
ing the resulting forms, and imprinting field of creativity arises in this small yet namic of becoming. This little sculpture rounded by rooms of greater art.
garden textures and shapes of leaves in the powerful artwork that cannot be separated stood its ground. Picasso’s hand was every-
plaster itself gives this sculpture a fluid from the space and time of its own making. where in it, and as he seemed to be present Mr. Ray, a sculptor who lives and works in
physicality that creates a complex narrative This experience does not come from a in the making, I became present in the Los Angeles, recently had an 18-year
of art-making and sculptural becoming. reading of the image or the process by it- viewing. This, I think, is how a good sculp- retrospective at the Art Institute of Chicago
The viewer perceives the scale of self, but from an engagement with the dy- ture can steal an exhibition even when sur- and Kunstmuseum Basel.

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.
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 62 Capture the PUZZLE
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Global Forecasts City
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A look ahead from

The Wall Street Journal.
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BUSINESS & TECH.
London Auctions Falter
Sotheby’s and Christie’s sales are down 45%
© 2016 Dow Jones & Company. All Rights Reserved.
Oil Firms’ Dilemma: Dividend or Rating
BY SARAH KENT
AND BRADLEY OLSON
The world’s biggest energy
companies have a tough deci-
sion to make amid languishing
oil prices: Do they keep their
coveted investment-grade
credit ratings or maintain cen-
tury-old practices of paying
shareholders annual dividends
worth billions in cash?
Exxon Mobil Corp. and its
peers are grappling with the
collision course between the
two, which appears unavoid-
able as crude continues to
hover around $30 a barrel.
Even with announced spending
cuts that exceed $92 billion,
ChemChina’s Boss Follows ‘Different’ Path
Amid Syngenta bid,
state firm’s chairman
values performance
over political concerns
BEIJING—As he spends tens
of billions of dollars to buy Eu-
ropean businesses, the chair-
man of China National Chemi-
cal Corp. likes to set himself
apart from other chiefs of
state-owned Chinese compa-
nies, saying he is more inter-
ested in performance than pol-
itics.
By Brian Spegele
in Beijing and
Wayne Ma in Hong Kong
In meetings with reporters
and business associates, Ren
Jianxin often recalls his entre-
preneurial roots: taking a
$3,600 loan to found an indus-
trial-cleaning company that
grew into a chemicals empire
GEORGIOS KEFALAS/ASSOCIATED PRESS
that the government then took
over and made him head.
“We’re 100%-owned by the
government,” he told journal-
ists last March, “but our path
of development has been dif-
ferent.”
Just how different Mr. Ren’s
company is from China’s other
hulking state-owned enter-
prises is likely to be an impor-
tant question for regulators in
Europe and the U.S. as they
consider his latest bid: a $43
billion offer for Swiss seed gi-
ant Syngenta AG. In addition
to antitrust reviews, the deal
is also subject to scrutiny by
the Committee on Foreign In-
vestment in the U.S., or CFIUS,
which screens deals for na-
tional-security concerns.
The 58-year-old Mr. Ren—
who raised cattle and sheep
and tended to wheat and corn
fields as a teenager during the
Cultural Revolution, but now
cuts a determined figure as
head of a global conglomer-
ate—is positioning himself as
China’s most ambitious global
deal maker.
Over the past year before
the Syngenta offer, his com-
pany, known as ChemChina,
agreed to purchase Italian tire
maker Pirelli & C. SpA, joined
a consortium to buy German
equipment maker KraussMaffei
News Corp Profit Falls Shipping Merger Likely to Roil Sector
As Ad Revenue Slides
BY LUKAS I. ALPERT
News Corp reported a drop
in net income in its fiscal sec-
ond quarter, weighed down by
foreign-exchange fluctuations
and lower advertising revenue
at its news and information
services unit.
The company—which pub-
lishes The Wall Street Journal
as well as other newspapers in
Britain, Australia and the
U.S.—reported profit of $63
million, or 11 cents a share,
down from $143 million, or 24
cents a share, a year ago.
Revenue fell to $2.16 billion
from $2.26 billion a year ear-
lier as the company saw an 8%
* *
producers are losing money on
almost every barrel they take
out of the ground. Paying divi-
dends makes their cash short-
fall even worse.
Four of the biggest Western
oil companies—Exxon, Royal
Dutch Shell PLC, Chevron
Corp. and BP PLC—are poised
to pay more than $35 billion in
dividends to investors this
year, an amount equal to about
40% of their combined cash
flows, says Oppenheimer & Co.
To do so, they face increased
pressure to borrow, a strategy
that has alarmed ratings firms.
“The question is, how bad
are things going to get in
2016?” said Simon Redmond,
ChemChina Chairman Ren Jianxin this week in Basel, Switzerland, where he discussed the Chinese firm’s $43 billion offer for Syngenta.
Shopping Overseas
Since 2006, ChemChina has looked abroad to build up its businesses and buy foreign brands.
Top five ChemChina outbound deals
Announced Target (Country)
Feb. 3, 2016* Syngenta (Switzerland)
March 23, 2015 Pirelli & C. (Italy)
Jan. 11, 2011 Elkem (Norway)
Oct. 11, 2010 Makhteshim Agan Industries (Israel)
Jan. 11, 2016* KraussMaffei Group (Germany)
*Pending
Sources: Syngenta, ChemChina (Syngenta deal value); Dealogic
Group and took a stake in Mer-
curia Energy Group, a closely
held oil trader.
In pulling off these deals—
and Syngenta would be the
largest foreign acquisition by a
Chinese company to date—Mr.
Ren keeps ChemChina’s inter-
ests aligned with the govern-
ment’s. He has tapped into
government funds for his ac-
A New Master of the Oceans
drop in revenue at the news
and information services seg-
ment, which accounts for two-
thirds of News Corp’s total
revenue. Meanwhile, the digi-
tal real-estate business posted
a 35% jump in revenue. The
company reported adjusted
earnings per share of 20 cents.
News Corp’s earnings be-
fore interest, taxes, deprecia-
tion and amortization fell 20%
in the period to $280 million
because of declines in revenue
at the news and information
services, book publishing and
cable network programming
units. Foreign-currency fluctu-
ations reduced Ebitda by $25
million, the company said.
THE WALL STREET JOURNAL.
director of oil and gas corpo-
rate ratings at Standard &
Poor’s Ratings Services. “For a
company to focus on continued
cash distribution is not credit
positive.”
Since the start of the year,
all three of the world’s top rat-
ings firms have warned that oil
company credit standings are
at risk. S&P has already down-
graded Shell and Chevron and
raised the prospect that
Exxon—whose top-tier AAA
rating outlasted even the U.S.
Treasury’s—could face a down-
grade.
Nowhere is the tension
more pronounced than at
Exxon, which has increased its
Industry Deal value excluding debt, in billions
Agribusiness
Auto/truck
Chemicals
Chemicals
Machinery
quisition of Pirelli and talked
of playing a role in Beijing’s
new Silk Road initiative to
spread Chinese investment
across Asia and Europe.
Under his leadership, Chem-
China has become one of
China’s biggest state-owned
enterprises, with $45 billion in
sales and 140,000 employees.
That is nearly three times as
BY COSTAS PARIS
China Cosco Shipping Corp.,
the shipping leviathan formed
by the merger of Cosco Group
and China Shipping Group, is
expected to change the dynam-
ics in seaborne trade and
prompt further consolidation in
the industry when it starts op-
erations later this month.
The merger will free the Chi-
nese shipping groups from
competing against each other at
home and abroad, in an indus-
try facing oversupply and de-
pressed freight rates. China’s
economic slowdown has hurt
the prices of commodities such
as oil and coal, damaging the
shipping firms’ profitability.
The merged entity, which
BUSINESS NEWS | B2
dividend for 33 straight years
and made the payouts for more
than a century. The company’s
bond rating has endured for
decades through a number of
commodities price crashes, the
As crude slumps,
borrowing for share
payouts puts credit
standing at risk.
Valdez oil spill in Alaska’s
Prince William Sound and even
megamergers with Mobil and
XTO Energy.
Exxon is better managed
$43
7.9
2.2
1.4
1.0
THE WALL STREET JOURNAL.
many employees as Dow
Chemical Co., where sales last
year were slightly higher than
ChemChina’s at roughly $49
billion.
Given to wearing black
trousers and open-collar shirts
instead of suits, Mr. Ren is
driven by a vision that acquisi-
tions can transform Chem-
China, helping it catch up with
supplants A.P. Møller Maersk
A/S of Denmark as the world’s
largest shipping company by
ship value, will begin opera-
tions Feb. 18. Shareholders and
Chinese regulators recently ap-
proved the government-in-
spired merger, which has been
in the works for about a year.
Industry executives said that
while shipping mergers are
rare, when companies of such
size come together, further con-
solidation likely will follow. An
example came in December,
when French shipping company
CMA CGM SA agreed to buy
Neptune Orient Lines Ltd. of
Singapore for $2.4 billion.
“The [China Cosco Shipping]
merger will put an end to the
Please see SHIP page B2
INSIDE:
MONEY &
INVESTING
Pension Troubles
At U.S.’s NFL
FINANCE | B5
Friday - Sunday, February 5 - 7, 2016 | B1
than most countries, said Joe
D’Angelo, an energy consultant
at investment bank Carl
Marks Advisory Group LLC.
“For them to have lived
through so many hurdles and
now this one trips them, you
have to stop and think.”
So far, the chief executives
at the biggest publicly traded
energy companies have chosen
dividends over higher debt rat-
ings. But many smaller rivals,
including ConocoPhillips, have
slashed their hefty payouts.
Conoco last year told investors
its dividend was sacrosanct,
but on Thursday cut its first
quarter payment by 66% to 25
cents a share as it reported a
international rivals and be-
come a creator of leading-edge
chemical products, according
to people familiar with him.
“He’s quite different from
other executives at state-
owned enterprises who define
themselves first as govern-
ment officials,” said Pang
Guanglian, deputy secretary
general of the China Petro-
leum and Chemical Industry
Federation. “He is more of an
entrepreneur.”
Mr. Ren was ahead of the
curve in China in tapping for-
eign investment and manage-
ment expertise. In 2007 he
sold a 20% stake in a unit of
ChemChina to a U.S. private-
equity firm, the Blackstone
Group. Two Blackstone execu-
tives joined the unit’s board
and assisted the company with
financial and strategic plan-
ning. Earlier this year, Chem-
Please see REN page B2
China Cosco Shipping Corp., the result of the merger of
two Chinese companies, starts operations this month as
the world's largest shipping concern by ship value.
Number of
Company vessels
China Cosco Shipping 832
A.P. Møller Maersk 262
MOL 221
NYK Line 249
K Line 178
Teekay LNG Partners 45
Qatar Gas Transport 31
MSC 203
Shoei Kisen 155
CMA CGM 95
Source: VesselsValue.com
$3.5 billion loss for its fourth
quarter.
Shell, which posted a $1.8
billion fourth-quarter profit,
off 60% from a year earlier, its
worst profit in over a decade,
reiterated plans to keep paying
its dividend this year, helping
boost its shares.
Shell’s fourth quarter-profit
tumbled to $1.8 billion down
from $4.2 billion a year earlier,
on a current cost-of-supplies
basis—a number similar to the
net income that U.S. oil com-
panies report. Its profit for the
year dropped 80% to $3.8 bil-
lion, compared with $19 billion
in 2014.
Please see OIL page B2
Li Presses
Regulators
To Approve
U.K. Deal
BY WAYNE MA
HONG KONG—Asian tycoon
Li Ka-shing came out swing-
ing against European regula-
tors on Thursday, with his
right-hand man defending a
proposed $15 billion deal to
buy U.K. cellphone operator
O2.
In a statement, CK Hutchi-
son Holdings Ltd.’s managing
director, Canning Fok, said
the combination of O2 and
Three, CK Hutchison’s exist-
ing British carrier, would be
followed by a five-year price
freeze for consumers.
He added that the com-
bined company would invest
£5 billion ($7.3 billion) in the
business over the same pe-
riod.
Mr. Fok said that Mr. Li’s
Hong Kong-based flagship
company would also allow
competitors to buy fractional
ownership stakes in its U.K.
mobile network as opposed to
buying wholesale network ca-
pacity.
Such a move would elimi-
nate the middleman and al-
low competitors on CK
Hutchison’s mobile network
to offer lower prices to con-
sumers.
“CK Hutchison’s move is
the opening salvo in what is
likely to be a long and intense
period of negotiation with
the European Commission,”
wrote Kester Mann, an ana-
lyst at CCS Insight.
“Today’s announcement is
the first step, but it is un-
likely to appease [the com-
mission’s] competition chief
Margrethe Vestager, who has
adopted a hard-line on in-
market mergers.”
Last week, the head of U.K.
telecommunications regulator
Ofcom warned that the pro-
posed merger could raise
prices for consumers and
hurt competition among U.K.
mobile carriers.
Mr. Mann said that CK
Please see O2 page B3
Total value, in billions
$21.90
$12.30
$11.30
$8.90
$6.70
$6.60
$5.80
$5.80
$5.50
$4.60
THE WALL STREET JOURNAL.
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 | Friday - Sunday, February 5 - 7, 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
Anglo American..........B5
A. P. Moller-Maersk ... B1
Apple...........................B3
B F
Bank of America.........A5
Bank of East Asia ...... B8
Bank of England.........B8
Beijing Enterprises
Holdings....................B4
BHP Billiton................B5
Blackstone Group ....... B1
BP................................B1
C Honda Motor...............B2
CaixaBank....................B8
Chevron ....................... B1
China Cosco Holdings.B1
China Merchants Energy
Shipping....................B2
CK Hutchison
Holdings....................B1
CMA CGM....................B1
ConocoPhillips.............B1
Continental..................B2
CRCC............................B2
Credit Suisse
Group...................A1,B8
CSR..............................B2
D O
Daimler........................B2
INDEX TO PEOPLE
A Fok, Canning ............... B1
Alexander, Lewis........B7
B Geanacopoulos, David B2
Blanchard, Olivier.......A2
Brainard, Lael..............B5
C Jensen, Lars................B2
Campbell, Kurt............B7
Coeuré, Benoit............A2
Colao, Vittorio.............B3
Curran, Dennis............B7
D Lertwangpong, Perk ... B7
Detweiler, David.........B2
Dudley, Bob.................B1
F
Fischer, Stanley..........B7
Fisher, Richard............B7
Fitzpatrick, Liam.........B5
VW Picks New Lawyer
To Represent U.S. Arm
BY WILLIAM BOSTON
BERLIN—Volkswagen AG
said Thursday it has replaced
its chief counsel in the U.S.
with an outside lawyer from
Clifford Chance LLP, while the
former head is taking charge
of a new public affairs division
in Washington, D.C.
The move comes as Volks-
wagen remains at loggerheads
with U.S. environmental au-
thorities and faces regulatory
and criminal investigations
into its decision to deploy
software on some of its diesel
engines designed to cheat on
emissions tests.
Effective Feb. 1, David Det-
weiler, an attorney from the
law firm Clifford Chance, re-
placed David Geanacopoulos
as Volkswagen Group of Amer-
ica’s top attorney. Previously,
Continental Warns Part
In Air Bags May Be Flawed
BY MIKE SPECTOR
Continental Automotive
Systems Inc. recalled five mil-
lion potentially defective air-
bag control units for problems
that cause the safety equip-
ment to inadvertently deploy
or fail to activate altogether.
Honda Motor Co., Fiat
Chrysler Automobiles NV and
Daimler AG’s Mercedes-Benz
are among the car makers that
purchased the affected equip-
ment for possible use in vehi-
cles globally, according to doc-
uments Continental filed with
U.S. regulators.
Fewer than two million of
the affected vehicles are in the
U.S., according to a spokes-
woman for Continental in Au-
burn Hills, Mich. Continental
Automotive is a division of
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Deutsche Bank............A1
E
Elliott Management ... B8
Oversea-Chinese
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P
Exxon Mobil................B1 Pirelli & C....................B1
R AND KELLY CROW
Fiat Chrysler Rio Tinto ..................... B5
Automobiles ............. B2 Royal Dutch Shell.......B1
G S
Georg Jensen.............W6 Sharp...........................B3
Glencore.................B3,B5 Sinotrans & CSC
H Holdings....................B2
S&P Global..................B5
Sumitomo Mitsui
Hyundai Motor............B3
Banking.....................B8
I Syngenta................B1,B4
ING Groep....................B8 T theby’s and Christie’s this
International Tripartite
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Toshiba........................B3
L
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Ligne Roset................W6
V impressionist and modern art,
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McGraw Hill Financial B5
Vittorio Colao..............B8
N Vodafone Group.....B3,B8
Neptune Orient Lines.B1 W they are considered a bell-
Wells Fargo.................A5
Ofcom..........................B1 Wing Hang Bank.........B8
R million. The house failed to
G Redmond, Simon.........B5
Ren Jianxin ................. B1
Glasenberg, Ivan.........B5 Rey, Helene.................A2
J Rooker, Tyler...............B2
S
K Sankaran, Karthik.......A2
Ka-shing, Li.................B1 Singer, Paul.................B8
Sonluksub, Uthai........B7
L Eni’s stock has declined less
T
Liew, C.S ..................... B2 Thiam, Tidjane............A2
M W
Malone, John .............. B3 Watson, John..............B2
P Y
Pang Guanglian...........B1 Yaras-Davis, Miki........B7
Peterson, Douglas L...B5 Yellen, Janet...............B5
Mr. Geanacopoulos served as
Volkswagen’s head of legal and
public affairs. In his new role,
Mr. Geanacopoulos will focus
on government relations.
Mr. Detweiler is no stranger
to Volkswagen. A U.S. citizen,
Mr. Detweiler worked in Clif-
ford Chance’s offices in Frank-
furt, Germany, and was a key
adviser to the German car
maker.
The difficulty reaching
agreements with the Environ-
mental Protection Agency and
the California Air Resources
Board of proposed repairs sur-
rounding Volkswagen’s
planned recall of nearly
600,000 diesel-powered cars
in the U.S. has shown the com-
pany that it needs to focus
more on government relations,
a person familiar with the sit-
uation said.
Germany’s Continental AG. It
isn’t clear where the rest of
the vehicles with the suspect
component were sold.
The Continental spokes-
woman said the company is
working closely with affected
car makers and providing
them with relevant informa-
tion.
The spokeswoman said each
auto maker determines
whether a defect exists in
their respective vehicles.
Continental in regulatory
filings said variations in the
manufacturing process for a
power-supply component can
cause a semiconductor mate-
rial to corrode and eventually
cut electrical connections. As
a result, air bags can fail to
deploy in a crash or inadver-
tently fire.
Art Sales Down at London Auctions
BY ANNA RUSSELL
LONDON—Midway through
London’s winter auctions, the
art market is looking as mottled
as a Claude Monet. In yet an-
other sign of the art market’s
decline, collectors sniffed at
some of the priciest pieces of-
fered in a series of impression-
ist and modern art sales at So-
week.
The houses collectively sold
high-profile evening sales of
total for similar sales last year.
These sales matter because
wether for the market overall,
and market watchers are mon-
itoring them to gauge whether
the market is slowing.
On Wednesday, Sotheby’s
sold only 67.6% of its 37 of-
fered lots for a total of $114
meet its own expectations of
$123.6 million. The day before,
OIL
Continued from the prior page
A ratings downgrade isn’t
the worst thing for most inte-
grated oil companies because
they are unlikely to lose access
to capital markets or see their
financing costs soar. This week
Bob Dudley, BP’s chief execu-
tive, said a ratings cut
wouldn’t have a significant im-
pact on his company.
But ratings cuts would rep-
resent a loss of prestige, a sign
that the ability of these com-
panies to dominate world mar-
kets has diminished with this
latest downturn.
“We get value from the AAA
credit rating in our business,
whether it be access to finan-
cial markets or access to re-
sources,” Jeff Woodbury, an
Exxon vice president, said this
week. “There is a benefit that
we get from it, and we see it as
being important.”
Many oil and gas executives
paying high dividends this year
have pledged repeatedly not to
cut the payouts in virtually any
circumstance. One early out-
REN
Continued from the prior page
China hired a former Bayer ex-
ecutive to run the ChemChina
unit, China National BlueStar,
a rare foreign head for a state-
owned company.
Mr. Pang, who has attended
meetings with Mr. Ren, said
targeting mature companies
with experienced managers is
a way to enhance ChemChina’s
brand and expand its sales
channels. Mr. Ren’s offer for
Syngenta keeps the company
in Switzerland and its manage-
ment intact.
Tyler Rooker, assistant pro-
fessor of Chinese business at
the University of Nottingham,
said Mr. Ren runs his overseas
businesses through monitoring
and budgeting rather than
through interference. “They’re
willing to keep the manage-
ment on,” said Mr. Rooker,
who has studied the overseas
acquisitions of Chinese state
companies. “This is very pa-
tient capital.”
Mr. Ren was Communist
Youth League secretary at a
state chemicals research insti-
tute in his hometown, the
western city of Lanzhou, be-
fore taking a 10,000 yuan
loan—about $3,600 at the offi-
cial exchange rate back then—
to launch an industrial-clean-
SHIP
Continued from the prior page
BUSINESS NEWS
Picasso’s ‘Head of a Woman’ sold for $27.1 million this week.
Christie’s managed to find
buyers for 75% of its 48 of-
fered lots, achieving a total of
$96 million during its impres-
sionist and modern art eve-
ning sale. The house expected
a minimum of $89 million.
(Auction houses typically aim
to sell at least 80% of their of-
ferings in any given sale.)
Sotheby’s sold the week’s
most expensive work, Picasso’s
lier: Italy’s Eni SpA cut the div-
idend in March and its shares
fell 7% on the news. Since then
than Chevron, BP and Shell.
Dividends put a strain on
big oil companies because they
are trying to spend only as
much cash as they take in from
their operations. Even if they
manage to achieve that, they
have to come up with more for
dividends. To afford the pay-
ments means going deeper in
debt or selling assets, a chal-
lenging proposition while
prices are so low.
“It’s a terrible market to be
trying to sell most assets out
there,” John Watson, Chevron’s
CEO, said last week. But he
added that maintaining and
even growing the dividend re-
mains Chevron’s “number one
financial priority.”
Such promises are essential
to luring investors in the face
of the worst oil crash in de-
cades. For millions of retirees,
who buy stock directly or
through investment funds, div-
idends are a key source of in-
come. Some could see a cut as
a betrayal, analysts said.
“To a lot of generalist inves-
ing company in 1984. In an
interview with the McKinsey
Quarterly in 2008, he said he
got the idea after learning that
eight million tons of coal a
year were being wasted by
dirty boilers and he had read
about an acidic cleaning agent
while at the institute.
In the 1990s, he began a
spree of acquisitions to expand
BlueStar. He eventually relo-
cated its headquarters to Bei-
jing, where in 2004 his com-
pany was absorbed by
ChemChina as part of a gov-
ernment-initiated restructur-
He is positioning
himself as China’s
most ambitious
global deal maker.
ing of China’s chemicals indus-
try. Leaders installed him as
ChemChina’s president.
At ChemChina’s headquar-
ters, Mr. Ren frequently takes
morning strolls with his man-
agement team and eats lunch
with employees at the com-
pany cafeteria. Inside is a
branch of his Malan Noodle
Fast Food Chain Store Co.,
which makes noodles in the
style of Mr. Ren’s hometown.
Mr. Ren founded the chain
after he couldn’t find authen-
tic-tasting Lanzhou noodles in
Another issue is that Cosco
Group and China Shipping
Group currently belong to sepa-
rate global shipping alliances,
in which operators pool ships
colorful 1935 oil “Head of a
Woman,” a portrait of the art-
ist’s muse and mistress, Marie-
Thérèse Walter. The house sold
it for $27.1 million to a tele-
phone bidder, who paid just
more than the work’s low esti-
mate of $23.4 million. The last
time that painting came up for
sale three years ago, Sotheby’s
sold it for $40 million.
Some of the week’s better-
tors, there’s a view that an in-
vestment in Exxon or Chevron
is safe,” said Norman Mac-
Donald, a portfolio manager at
fund manager Invesco Ltd. The
companies are “painted into a
corner,” he said.
Oil companies insisting on
the payments have turned
more actively to spending cuts
Profit Drop
Royal Dutch Shell’s quarterly
net profit/loss*, in billions
$8
6
4 dend policies, said Fadel Gheit,
2 Co. who has repeatedly called
0 payouts.
–2
–4
–6
2012 ’13 ’14
*Current cost of supplies basis
Source: the company
THE WALL STREET JOURNAL.
China’s capital for him and his
employees, said a person who
helped Mr. Ren analyze deals.
Such is his fondness for Lan-
zhou hand-pulled noodles that
he drops noodle analogies into
business conversations. He
once likened the difference be-
tween his company and Pirelli
to the difference between Ital-
ian and Chinese noodles. “They
are two different tastes,” he
said last March.
In the McKinsey interview,
Mr. Ren said he created the
chain in a bid to “create jobs
for the unfortunate.”
C.S. Liew, managing direc-
tor at Pacific Agriscience, a
Singapore pesticides trading
company, ran into Chem-
China’s deal-making ambitions
when he traveled to Beijing in
2007 to meet with the team
responsible for acquiring over-
seas companies in the agricul-
tural-chemicals sector. He
pitched the strategy of buying
several small companies to
gain a foothold in the U.S., but
that approach was rebuffed.
“They told me they had a fi-
nancial arsenal of $10 billion
and wanted to make a huge ac-
quisition. They weren’t looking
for a $500 million or even $1
billion deal,” Mr. Liew said.
As with top executives at
other Chinese state-owned en-
terprises that have tried to go
global, Mr. Ren has said he is
aware of the risk of opposition
be an easy task.”
China Cosco Shipping execu-
tives said the merged entity
probably would become part of
a single alliance, likely in the
THE WALL STREET JOURNAL.
BEN PRUCHNIE/GETTY IMAGES
’15
performing works contained
eye-popping colors. At Chris-
tie’s, a tender 1928 painting by
Marc Chagall, “The Wedding
Party on the Eiffel Tower,”
which depicts the artist and
his wife embracing beneath
Gustave Eiffel’s icon, sold for
$10.1 million, above its low es-
timate of $7.2 million.
During a separate sale of
surrealist art on Tuesday,
Christie’s sold a Max Ernst oil
painting from 1941, “The Sto-
len Mirror,” for $11 million,
over its low estimate of $9.9
million. That is a wincing loss
for the seller, who bought the
work for $16.3 million from
Christie’s five years earlier.
Jay Vincze, Christie’s head of
impressionist and modern art in
London, said his house’s sale
managed to draw bidders from
35 countries, and said last year’s
material was stronger than the
latest batch, resulting in a lower
total. Helena Newman, a So-
theby’s expert, said she was
pleased that her sale’s trophy
works found buyers, calling it a
“solid, functioning market.”
and layoffs to reduce their
cash shortfall, a decision that
could threaten their future via-
bility, analysts said.
If oil and natural gas com-
panies don’t spend money to
find new fuel reserves to re-
place what they pump out of
the ground, they will eventu-
ally run out of opportunities.
BP replaced just 61% of the oil
it pumped last year with new
reserves, while Shell’s reserves
declined by 20% in 2015 as it
gave up on 1.4 billion barrels of
fuel it had expected to develop.
The boards of directors at
these companies, and at oth-
ers, should push management
teams to reconsider their divi-
an analyst at Oppenheimer &
for oil companies to reduce the
“The board has a fiduciary
responsibility to shareholders,
and right now they are taking
money that is needed for the
sustainability of the business
model,” Mr. Gheit said. “They
are cutting the muscle of the
company. If you don’t reinvest
back in the business, you are
on the road to liquidating.”
in Europe to large-scale Chi-
nese investment.
At a packed news confer-
ence Wednesday at Syngenta’s
headquarters in Basel, Swit-
zerland, Mr. Ren played to his
audience. He said he loves
Switzerland and saw it as
“symbol of peace and quality
products.”
Similarly last March, when
ChemChina agreed to buy Pire-
lli, he hosted a three-hour
briefing with Italian and other
journalists at ChemChina
headquarters in Beijing—a rare
encounter for a state-owned
enterprise head. He insisted on
serving Italian coffee before
gushing over his love of Italian
history and culture.
Pressed for details about
the political sensitivities that
might arise when big state-
owned companies such as
ChemChina try to acquire for-
eign businesses, Mr. Ren said
he attached huge importance
to China’s national interests.
“But in an era of globaliza-
tion, national interests are not
necessarily against the inter-
ests of a company’s business,”
he said. ChemChina’s journey,
he said, “has been a tough
path of entrepreneurship and
has been totally market-ori-
ented.”
—Lilian Lin in Beijing
and John Revill
in Basel, Switzerland,
contributed to this article.
lion containers.
The merger comes as China
attempts to restructure its
state-owned businesses, aiming
to create leaner and stronger
 
  
two companies competing for and port calls to cut costs. first half of this year. national champions that can
the same clients in container Industry executives said this The new Chinese company better compete abroad.

 

trade, but it doesn’t come with- would raise issues with regula- will own a total fleet of 832 Beijing is also pushing two
out challenges,” said Lars Jen- tors in the U.S. and Europe, vessels, including container other state-owned shipping

   sen, chief executive of SeaIntel- which must approve the ships, dry-bulk ships and tank- companies, China Merchants

   Businesses For Sale. ligence Consulting in merger so that China Cosco ers, valued at roughly $22 bil- Energy Shipping Co. and Si-
Copenhagen. “An obvious one is Shipping can operate globally. lion. In comparison, A.P. Møller notrans & CSC Holdings Co.,
 that cargo owners, especially in The merged company is work- Maersk’s Maersk Line owns 262 to merge some units, though

  !"# China, will now have fewer ing toward obtaining regula- container ships valued at $12.3 talks are at an early stage. The
Advertise in The Mart. choices to ship their goods and tory approval by July. billion, according to data pro- Chinese government earlier
may abandon CCSC if a foreign “They will either have to vider VesselsValue.com, which this year merged two of its big-
competitor gives them better pull out from at least one of the doesn’t track chartered ships. gest train makers—China CNR
  
 Call +44 (0) 207 572 2123 pricing.” alliances or pull out from both In terms of container capac- Corp. and CSR Corp.—into
   
 Mr. Jensen said shipping and form a separate alliance ity alone, Maersk Line’s 262 CRCC Corp., in a bid to



 mergers usually take years to hoping to attract other opera- ships keep it in first place, with strengthen their competitive-
  

  bring about concrete financial tors to join them,” Mr. Jensen a capacity of about two million ness when bidding for overseas
    
 benefits, especially if layoffs said. “But with capacity com- containers. China Cosco Ship- contracts.


 !"#$$% aren’t part of the deals. That is mitments and other sharing of ping will be second, with 209 —Joanne Chiu
the case in most Chinese tie-ups. assets already in place, it won’t ships and a capacity of 1.6 mil- contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Friday - Sunday, February 5 - 7, 2016 | B3

TECHNOLOGY @wsjd | wsjd.com

O2 Vodafone Gains as Europe Recovers

Continued from page B1
Hutchison’s pledges came in
advance of an expected
“statement of objections”
from the commission that is
likely to “raise significant
concerns over the prospect of
negative outcomes for con-
sumers.”
A similar statement de-
railed a planned merger of
two Danish carriers last year,
he said.
The European Commission
said in October that it had
opened an in-depth investiga-
tion into the sale of O2 to CK
Hutchison, warning that the
merger could lead to higher
prices and less choice for U.K.
customers.
Europe’s central antitrust
regulator later refused a re-
quest from Britain’s competi-
tion authorities to review the
deal, arguing that Brussels
was better placed to assess
BY SIMON ZEKARIA It is Vodafone’s sixth con- utive Vittorio Colao. Vodafone service packages keep down to jointly house their busi-
secutive quarter of improving cited improving top-line trends churn, or the rate at which nesses in the Netherlands. The
LONDON—Vodafone Group revenue by that metric. in Germany and Italy as coun- customers leave services. move came four months after
PLC on Thursday lauded a re- In Europe, Vodafone posted tering Spain’s worsening per- “We have maintained our it shelved the so-called asset-
covery in Europe, its most im- revenue of £6.04 billion ($8.82 formance and a slowdown in good commercial momentum swap talks with Liberty—me-
portant market, as the tele- billion), off 0.6% on the same mobile sales. in mobile and are beginning to dia mogul John Malone’s U.S.
communications operator cited basis. That compares with a Shares in Vodafone fell 1.2% accelerate in fixed [services],” cable giant, which is also fo-
improved revenue trends in its to 210.25 pence. Mr. Colao said. cused on Europe. On Thursday,
latest quarter. Analysts say telecom com- Vodafone is spending bil- Mr. Colao declined to comment
The U.K.-based group said
Telecom operator’s panies in Europe are benefit- lions of dollars to improve its further on any talks with Lib-
its revenue, excluding handset revenue increased ing from demand for faster- world-wide fixed and mobile erty.
sales, acquisitions and merg- speed mobile Internet data and telecom networks to raise con- In emerging telecom econo-
ers, rose 1.4% for the three
1.4% by a preferred media-driven bundled sub- sumer sales from increased In- mies, Vodafone reported a
months ended in December on sales measure. scriptions, as well as a recov- ternet browsing. It is particu- strong quarterly performance
a constant-currency basis, the ery in consumer spending. larly focused on building in South Africa.
company’s preferred sales Vodafone also says the burden speed, capacity and coverage Mr. Colao noted disappoint-
measure. This was a turn- 2.7% decline a year earlier and of regulation is easing. in Europe, including with fi- ing results in India, Vodafone’s
around from a 0.4% decline in a 1% fall in the prior quarter. Central to Vodafone’s reve- ber-optic cable rollouts. major developing market along
its year-earlier fiscal third In nominal terms, excluding nue growth are efforts to build To cement its recovery in with Turkey, but said plans for
quarter, and up from 1.2% handset sales, Vodafone’s over- customer loyalty by connect- Europe, Vodafone is also seek- an initial public offering of its
growth in the prior three all revenue fell 6.3% to £9.17 ing products and services for ing partnerships. Indian business are on track.
months. Vodafone’s perfor- billion, in line with forecasts. retail bundling, such as high- Wednesday, Vodafone said
mance was in line with market “We have taken another definition television and Inter- it is discussing a potential ven-  Heard on the Street: Why a
forecasts. step forward,” said Chief Exec- net broadband. These multi- ture with rival Liberty Global LIberty deal is needed. ....... B8

Sharp Favors Foxconn Deal

the deal’s impact on consum-
ers.
The commission opened
similar investigations into
Mr. Li’s efforts to acquire and
merge telecommunications
businesses in Austria and Ire-
land. Those deals, however,
were ultimately approved.
Mr. Li’s latest proposed ac-
quisition, which would create
the largest mobile-network
operator in the U.K., is the
most recent deal in Europe
that would reduce a given
country’s number of mobile-
telecom operators from four
to three.
The commission has until
April 18 to decide whether to
approve the sale or ask the
companies for concessions to
ease its concerns.
If the commission fails to
reach an agreement on how
to bring the acquisition in
line with European Union
competition rules, it can also
decide to block the merger.
But Spain’s Telefónica SA,
which is selling the O2 busi-
ness, said in November it ex-
pected the European antitrust
regulator would approve the
deal.
TOKYO—Taiwanese iPhone more than twice as much. But
assembler Foxconn is pushing Sharp Chief Executive Kozo
to wrap up a takeover of Takahashi said Thursday the
Sharp Corp. within days, peo- company would focus its atten-
ple familiar with the situation tion on the talks with Foxconn,
said Thursday, after the Japa- without shutting out INCJ.
nese electronics company said “The two offers are not
it favored Foxconn’s offer over equal,” he said. He cited poten-
a government-backed bailout. tial synergies and the scale of
Foxconn, which has $125 billion
By Takashi Mochizuki in annual sales. It is the largest
and Eric Pfanner assembler of Apple Inc. smart-
in Tokyo and phones, making them and a
Wayne Ma in Hong Kong range of other electronics de-
vices at factories in China.
Sharp’s embrace of Foxconn Foxconn Chairman Terry
marked a striking turnabout in Gou was traveling Thursday to
a battle that has come to be meet with Sharp officials at
seen as a test of Japan’s open- the company’s headquarters in
ness to foreign investment and Osaka, a person familiar with
highlighted the role of its gov- the situation said. Mr. Gou of-
ernment in restructuring a fered Sharp a ¥200 billion
troubled electronics industry. ($1.7 billion) deposit, and law-
Until this week, a govern- yers for the two companies
ment-backed fund, Innovation were hashing out other de-
Network Corp. of Japan, ap- tails, the person added.
peared to have the inside track Prime Minister Shinzo Abe
toward a deal with Sharp, even has urged Japan to put out a
though people familiar with welcome mat to foreign inves-
the situation said Foxconn’s $5 tors, but deals have been
billion-plus bid was worth scarce. Japanese firms, on the
other hand, are pushing over-
seas aggressively to seek
growth beyond a stagnant do-
mestic market.
Sharp’s tilt toward Foxconn
“shows that Japan is open to
foreign capital,” said Nicholas
Benes, a Tokyo-based corporate
governance expert. “The gov-
ernment must have realized that
this was going to be viewed as a
bellwether deal for Abenomics,”
as Mr. Abe’s plan to revive
Japan’s economy is known.
INCJ, which describes its
role as fostering technological
innovation and globalization,
has helped to keep foreign suit-
ors at bay by taking part in
several rescues of troubled Jap-
anese tech firms, including
smartphone-panel maker Japan
Display Inc. and chip maker Re-
nesas Electronics Corp.
On Thursday, Sharp said its
net loss in the three months
through December more than
doubled from a year earlier, to
¥25 billion. Revenue fell 13%.
Sharp’s shares surged 17% on
news of its shift toward Foxconn.
Complex Relationship
Since 2012, Taiwan-based iPhone assembler Foxconn has fallen in
and out of love with Japanese electronics company Sharp.
¥700 SHARP SHARE PRICE
1 3
600
500
2
400 6
300 5
200 4
100
2012 ’13 ’14 ’15 ’16
1 March 2012: Sharp agrees to 4 January 2016: Foxconn
sell a 10% stake to Foxconn for offers ¥625 billion to take over
¥66.9 billion. Foxconn chairman Sharp, higher than a ¥300 billion
Terry Gou agrees to acquire a bid from Japanese government-
stake in Sharp's plant in Sakai. backed investment fund
Innovation Network Corp. of Japan
2 August 2012: Foxconn pulls
out of the deal to buy a stake in 5 January 2016: Foxconn
Sharp after Sharp’s share price raises its bid for control of Sharp
falls steeply. to ¥659 billion.
3 May 2013: Foxconn sets up 6 Feb. 4, 2016: Sharp says it's
two research centers for display leaning toward Foxconn's
panels in Japan. takeover offer.
Sources: Thomson Reuters (share price); staff and news reports
THE WALL STREET JOURNAL.

HYUNDAI MOTOR must be liquefied, shipped and

Business
Watch
DAIMLER
Shares Fall on
Subdued Outlook
Shares in Daimler AG closed
down 3% after the German auto
maker that owns the Mercedes-
Benz luxury car brand said Thurs-
day growth in earnings and sales
this year is likely to be slower
than in 2015.
The share fall came despite
Daimler posting record sales and
strong earnings last year.
The Stuttgart-based automo-
tive company said Mercedes-Benz
sold more than two million cars
for the first time last year, driven
by strong sales of its new C-Class
models, luxury-compact cars and
sport-utility vehicles.
Earnings before interest and
taxes, or EBIT, from ongoing busi-
nesses rose 36% to €13.8 billion
($15.3 billion). Revenue rose 15%
to €149.5 billion. Earnings per
share were €8.94, up 23%.
“2015 was a good year for
Daimler,” Dieter Zetsche, chairman
of the Board of Management and
head of Mercedes-Benz Cars, said
in a statement.
Daimler’s revenue rose 13% in
the three months to Dec. 31 to
€40.4 billion from a year ago.
EBIT in the same period rose 22%
to €3.5 billion. Earnings per share
in the period rose 86% to €1.90.
—William Boston
Auto Maker Sees turned back into gas, costing
more than Russia’s product,
Indian SUV Demand
South Korea’s Hyundai Motor
which is transported by pipeline.
“There is no need for us to
Co. plans to sell half a million launch any price war,” Mr. Med-
vehicles in India this year be- vedev told investors in London.
cause of rising demand for its “We are very relaxed about U.S.
Creta sport-utility vehicle and i10 LNG, though very attentive.”
and i2o hatchbacks, the manag- However, he added that if U.S.
ing director and chief executive LNG prices did fall, Gazprom
of its local unit said Thursday. would seek to cut its own costs.
Hyundai India sold 476,001 European governments have
cars and SUVs in the domestic been hoping that U.S. LNG ex-
market in 2015, surpassing the ports, due to start this year,
company’s combined sales in 28 would help the region diversify
European nations by 5,800 units, its energy supplies away from
Young Key Koo said. Russia. Relations between Rus-
“India market is very big for sia and the European Union
us. India is our third-largest out-
side of Korea, after China and
have soured amid the crisis in
Ukraine and western sanctions.
CUBA’S CULINARY REVOLUTION
the U.S.,” said Mr. Koo. Gazprom has long been the
The company plans to launch single biggest gas supplier into
a small SUV in the country in Europe. Last year, Russian gas
the near future. It also will amounted to almost 31% of Eu-
launch the Tucson SUV in India ropean gas consumption, up
in the second half of the year, from 30.2% in the previous year.
he added. —Selina Williams
—Santanu Choudhury
ASTRAZENACA
GAZPROM
Profit Warning Causes
Gas Giant: No Plans Dip Share Price
For an LNG Price War AstraZeneca PLC warned
Russia’s state-controlled gas earnings would fall this year as
giant Gazprom PAO doesn’t plan it continues to plow investment
a “price war” against U.S. ex- into research and development
ports of liquefied natural gas to and expects a sharp drop in
its most lucrative market in Eu- sales for one of its blockbuster
rope, a senior company official drugs, surprising investors and
said Thursday. sending shares down more than
U.S. LNG suppliers will find it 5%.
hard to compete in Europe with London-based Astra said it
Russian gas prices under current expected “core” earnings per
market conditions, Gazprom’s share—which strip out excep-
deputy chairman Alexander tional items—to decline in the
Medvedev said at an investor low to mid-single digits range in
meeting in London. U.S. gas 2016, at constant currencies.
That surprised investors, who
had expected the company
would keep earnings guidance
flat.
Astra also said that it antici-
pates sales for Crestor, its cho-
lesterol drug, to fall this year as
its patent expires.
THOMAS KIENZLE/AGENCE FRANCE-PRESSE/GETTY IMAGES

Despite those headwinds, As-

tra said it would continue to fund
its costly research and develop-
ment at 2015 levels throughout
the coming year. It said, however,
it would “materially reduce” sales WITH THE WALL STREET JOURNAL
and general administrative ex-
penses to help rein in costs. NEXT FRIDAY.
The profit warning came as
Astra posted net income of $808
million in the quarter ending Dec.
31, compared with a loss of $321
million in the year-earlier period.
It reported revenue of $6.4 bil-
lion, a 5% decrease from $6.7 bil- ©2016 Dow Jones & Company, Inc. All rights reserved. 3DJ3580
Daimler CEO Dieter Zetsche at a news conference in Stuttgart on lion a year ago.
Thursday. Earnings and sales growth are likely to slow in 2016. —Denise Roland
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Friday - Sunday, February 5 - 7, 2016 * * THE WALL STREET JOURNAL.

BUSINESS NEWS

Renewable Energy Loses Steam in Europe

BY JUSTIN SCHECK
LONDON—Europe is tired
of paying for renewable en-
ergy.
For more than a decade,
countries across Europe used
big financial incentives to be-
come world leaders in wind
and solar development. In
2004, renewable sources ac-
counted for about 14% of Eu-
ropean Union electricity gen-
eration; by 2013 it exceeded
25%, according to the most re-
cent EU data.
But in the past few years,
Spain, the U.K., Italy and oth-
ers have cut incentives for re-
newable-energy projects, cit-
ing efforts to reduce
government spending and
electricity rates during a pe-
riod of economic turmoil. In
turn, the number of new proj-
ects receiving approval has
fallen as investors turn away
from an industry that offered
the assurance of steady, gov-
ernment-backed profits.
Now, in much of Europe, so-
lar and wind farms will com-
pete with conventional power
sources with less government
support.
Cutting subsidies “sends a
very strong message that re-
newable energy has to stand
on its own feet,” said Alex
Chavarot, a banker with Ac-
cess Corporate Finance Part-
ners LLP who works on renew-
able-energy transactions.
Only one new large-scale
solar-energy project was ap-
proved in EU countries other
than the U.K. in the first 11
months of 2015, for a total of
2 megawatts of new genera-
tion capacity—a five-year low,
and down from 14 new proj-
ects for 240 megawatts in
2010, according to an Ernst &
Young analysis of data com-
piled by Bloomberg.
In 2010, EU countries ap-
proved close to 6,000 mega-
watts of new onshore wind
projects. That dropped to
1,020 megawatts in the first 11
months of last year, according
to Ernst and Young. Offshore
wind projects also declined,
but not as much.
The number of approvals
for new U.K. onshore-wind and
solar projects fell in 2015. The
U.K. government last year cut
renewable incentives and is
ending subsidies for onshore
wind farms starting this year.
At the same time, the govern-
ment raised tax breaks for oil
production.
In Europe, new investment
in renewable energy totaled
$120.7 billion in 2011, says Re-
newable Energy Policy Net-
work for the 21st Century, or
REN21, a group of government
and industry organizations
that tracks the industry. In
2014, new investment came to
$57.5 billion.
Still, Ernst & Young partner
Ben Warren said several Euro-
pean nations rank among the
best for renewable-energy in-
utility Dong Energy this week Energy Department said sub-
Running Out of Juice said it would move ahead with sidy reductions, which aren’t
European renewable-energy projects have fallen... a plan to build the world’s retroactive, were necessary to
New investment in renewable power and fuels largest offshore wind farm off keep power rates down for
northeast England, a project consumers.
Europe U.S. China
$120 billion that could power more than a The reduced incentives in
million homes. many European countries fol-
100 But Ernst & Young says the low promises their leaders
U.S., China and India are now made last year at the world
80
better places than most of Eu- climate-change talks in Paris
60 rope to fund clean-energy to cut carbon emissions, in
projects primarily because of part through increased renew-
40 assurances by governments able-energy production.
20 that incentives won’t change EU states agreed to reduce
in the short-term. greenhouse-gas emissions by
0 Investors have responded to 40% from 1990 levels by 2030.
2004 ’10 ’14 2004 ’10 ’14 2004 ’10 ’14 European subsidy cuts with Mr. Nadal said Spain is in
dozens of international arbi- line to meet its 2020 emis-
...after a period of increasing renewable-energy tration cases—the cross-bor- sions-reduction goals and
production and consumption der equivalent of lawsuits—ac- commitments under the Paris
Share of wind and solar in electricity production cusing governments of deal. The U.K. spokesman,
Europe U.S. China improperly changing their meanwhile, said the country
10% business terms. remains on track to get 30% of
8 An arbitration panel ruled its electricity from renewable
in January that Spain’s gov- sources by 2020.
6 ernment didn’t act illegally by Companies like U.S.-based
lowering subsidies and Silver Ridge Power plowed
4
wouldn’t have to pay any com- money into giant solar farms,
2 pensation to an investor. including about $750 million
Spain’s Deputy Industry into Italy alone. Erik Bue, the
0 minister Alberto Nadal, who former chief of Silver Ridge’s
2004 ’10 ’14 2004 ’10 ’14 2004 ’10 ’14 heads energy policy for the Italy business, said one plant
Sources: Renewable Energy Policy Network for the country, said Spanish subsi- was to be Europe’s biggest so-
21st Century (investment); Enerdata (consumption) THE WALL STREET JOURNAL dies launched in 2007 caused lar-energy installation.
renewable-energy-production By early 2011, Mr. Bue’s
vesting, including Germany, generation capacity from the capacity to soar to levels the company had permits to build
France and the Netherlands. year-earlier period, according government couldn’t afford to the project. At that time,
Germany have largely main- to the European Wind Energy keep subsidizing. southern Europe was strug-
tained significant levels of Association. The group says it “In the end, financial insta- gling. Spain in 2010 cut solar
subsidies, he said. expects investment in offshore bility was the main reason subsidies. Italy followed in
Several offshore wind proj- wind—which hasn’t been sub- [for] stopping investment in 2011.
ects approved years ago came ject to subsidy cuts in the U.K the energy sector here,” Mr. “My investors lost faith,”
online in 2015, resulting in a and elsewhere—to remain ro- Nadal said. Mr. Bue said. Construction
doubling of new electricity- bust in coming years. Danish A spokesman for the U.K.’s was halted.

EQT Sells Waste-to-Energy Company to Beijing Enterprises

BY WILLIAM WILKES
AND EYK HENNING
Swedish private-equity fund
EQT on Thursday said it would
sell its German holding EEW
Energy from Waste to Beijing
Enterprises Holdings Ltd. for
an equity price of €1.44 billion
($1.6 billion), the latest in a
string of foreign acquisitions
by Chinese companies.
The overall price is
slightly above €1.8 billion in-
cluding debt and liabilities,
according to people familiar
with the deal, making it the
largest direct Chinese invest-
ment in a German company
on record.
The transaction should close
by the end of the month, EQT
said.
The Wall Street Journal re-
ported Wednesday that BEH
had emerged as the front-run-
nerner to buy the company.
Volatility on the Chinese
stock market hasn’t damped
the country’s appetite for for-
eign acquisitions. On Wednes-
day, China National Chemical
Corp., also known as Chem-
China, made a $43 billion offer
for Switzerland’s Syngenta
AG, an amount already well
above the $31 billion Chinese
companies spent on European
acquisitions in all of 2015, ac-
cording to Dealogic.
Last month, ChemChina
also agreed to buy German
machine maker KraussMaffei
for $1 billion.
EQT acquired a 51% stake in
EEW in March 2013 from Ger-
man utility E.ON SE. It ac-
quired the rest of the company
about two years later when
E.ON embarked on a restruc-
turing program.
EEW operates plants that
burn waste materials to create
steam for heating and electric-
ity production.
Most of its plants are in Ger-
many, with others in the Neth-
erlands and Luxembourg.
Chinese companies are keen
on gaining access to technolo-
gies in sectors deemed crucial
to infrastructure, as the coun-
try copes with a growing
amount of garbage and an ever-
increasing energy requirement.
In a 2012 report, the World
Bank said the amount of munic-
ipal solid waste is increasing
fastest in China, which sur-
passed the U.S. as the world’s
largest waste generator in 2004.
With EEW, BEH will
strengthen its sewage and wa-
ter-treatment operations. BEH
is also active in the pipeline
and gas business, and runs
beer brewery Yanjing, China’s
third-largest brand.

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Top Rubber Growers
To Reduce Exports
COMMODITIES | B7
© 2016 Dow Jones & Company. All Rights Reserved.
As of 4 p.m. ET EUR/GBP 0.7682 À 1.03%
S&P Cuts Glencore Rating
BY SCOTT PATTERSON
AND ALEX MACDONALD
LONDON—Standard & downgraded the Swiss miner
Poor’s Ratings Services cut
Glencore PLC’s credit rating
to a notch above junk status
on Thursday, citing new con-
cerns about low commodity
prices and putting the mining
titan perilously close to a rat-
ing level it has vowed to
avoid.
The action comes despite a
series of moves Glencore has
made to shore up its balance
sheet, including a $2.5 billion
share issue in September, in
DUSTIN BRADFORD/GETTY IMAGES
The National Football League has 72% of the assets needed to cover future retirement benefits for current and former players.
Hard Knocks: NFL’s Pension Plan Agents Raid Offices
BY TIMOTHY W. MARTIN
America’s most popular
sport has a very American
problem: Its pension plan
doesn’t have enough money.
The National Football
League has just 72% of assets
needed to cover future retire-
ment benefits for more than
12,000 current and former
players, according to officials
from the league and the union
representing its players. That
compares with an industry av-
erage of 85% for its peers
among multiemployer pen-
sions.
The NFL has been trying to
close the funding gap. Just
three years ago, the league
had less than half of assets re-
Weak ISM Clouds Job Market McGraw Hill to Shed Name
BY STEVEN RUSSOLILLO
After a tough start to
2016, one of the few bright
spots for investors has been
a sturdy labor market. That
might not last for long.
Friday’s headlines on Jan-
uary job growth should be
decent, but not
AHEAD as good as in
OF THE recent months.
TAPE Economists
polled by The
Wall Street
Journal estimate January
nonfarm-payroll gains of
185,000, compared with an
average of 221,000 for the
past 12 months.
Decelerating economic
growth and weak manufac-
turing activity cast a cloud
over the labor market—one
that historically has boded
poorly for future job gains.
Earlier this week, the Insti-
tute for Supply Manage-
ment’s manufacturing index
fell below 50 for a fourth
month in a row, putting the
sector in contraction.
Typically, one or two
weak readings can be
MARKETS DIGEST B6 | THURSDAY’S MARKETS B7 | FINANCE WATCH B8
YEN/DLR ¥116.83 g 0.90% GOLD 1157.60 À 1.43%
the hope of protecting its in-
vestment-grade rating.
The credit-rating firm
and trader one notch to BBB-
from BBB, saying that “com-
modity prices will remain very
unsettled while the impact of
China’s slowdown plays out.”
Glencore has previously
said a one-notch downgrade
shouldn’t materially affect its
business, as long as the com-
pany continues to have invest-
ment-grade debt. Its debt-
laden trading division relies
heavily on a solid credit rating
to keep a lid on financing
quired. Since then, owners of
the league’s 32 teams have
contributed a combined $571
million to shore up a shortfall
of about $1.5 billion, according
to the NFL.
The NFL plans on funding
all of the existing liabilities by
the end of the collective bar-
gaining agreement, which runs
through the 2020 season, ac-
cording to league officials.
“The plan is safe,” an NFL
spokesman said.
The funding shortage for
ex-players stands out in a
league that is the economic
engine of American sports.
The NFL’s annual reve-
nue surpasses $12 billion,
compared with roughly $9 bil-
lion for Major League Base-
Drilling Down
ISM manufacturing index
60
55
50
45
40
2014 ’15
Source: Institute for Supply Management
THE WALL STREET JOURNAL.
shrugged off. But four in a
row suggests something
more problematic is at hand.
Over the past 30 years,
there have been six prior oc-
casions in which the ISM
was at 50 or below for at
least four consecutive
months. Job growth slowed
in the year that followed
each of those instances.
For example, the economy
was adding an average of
255,000 jobs a month in the
12 months through the
THE WALL STREET JOURNAL.
costs.
S&P analyst Simon Red-
mond said on a conference call
that Glencore’s profit was
likely to remain uncertain un-
less commodities post a sus-
tained rebound. “We just want
to recognize the lower degree
of certainty that we have
around our forecast,” he said.
One potential bright spot
for now, the analyst said, is
Glencore’s trading arm, which
the company has said can pro-
vide steady results no matter
what direction commodity
prices are going.
Credit Suisse analyst Liam
ball, and its coffers are in-
creasing because the league
remains a reliable draw on
television even as consumers
flee traditional media.
Last year’s Super Bowl was
watched by more than 114 mil-
lion people, the largest audi-
ence in TV history. The Caro-
lina Panthers face the Denver
Broncos in this year’s champi-
onship on Sunday.
The NFL is a rarity in cor-
porate America: an employer
that still offers traditional
pension coverage to new hires.
Just 7% of companies of-
fer only a traditional pension
benefit to workers, down from
62% in 1979, according to an
Employee Benefit Research In-
stitute analysis of federal data.
spring of 1989. Then, the
manufacturing sector started
struggling and job gains
slowed, presaging the reces-
sion of the early 1990s.
Even in nonrecessionary
CONTRACTING EXPANDING
periods, that pattern has
prevailed. In the mid-1990s,
the labor market was consis-
tently adding about 300,000
jobs monthly. In a 12-month
stretch beginning in May
1995, when ISM’s index
started wavering, the econ-
omy only added about
’16 175,000 jobs a month, on av-
erage, before regaining
steam.
Jobless claims have been
trending higher and employ-
ment indicators in many re-
gional manufacturing sur-
veys have been weak. U.S.
economic growth slowed to a
crawl in the fourth quarter.
Perhaps only a mild labor
slowdown is in the cards. Fi-
nancial markets, though, are
pricing in the possibility of
something worse. Weak job
data on Friday would am-
plify those fears.
Email: tape@wsj.com
For Vodafone, Liberating
Broadband Is Critical
HEARD ON THE STREET | B8
OIL 31.72 g 1.73%
Fitzpatrick said in a note that
the move by S&P wasn’t a sur-
prise and that the impact on
Glencore’s debt costs would be
minimal. Moody’s Investors
Service downgraded Glencore
in December to one notch
above junk, also citing weak
commodity prices.
Ivan Glasenberg, Glencore’s
chief executive, has said the
company’s cash-raising efforts
would protect its balance
sheet against a doomsday sce-
nario for commodities.
Copper has rebounded re-
cently, buoyed by a weakening
dollar. The soft dollar fueled a
The number of traditional de-
fined-benefit plans at Fortune
500 companies plummeted to
34 in 2013 from 251 in 1998,
according to an analysis by
consulting firm Willis Towers
Watson.
Like a lot of pension funds,
the financial crisis of 2008
caused the NFL plan’s funded
ratio—the basic measure of
assets versus liabilities—to fall
to 53% in 2009 from 76% in
2008. In 2011, the NFL im-
proved benefits for retirees,
causing the pension plan’s lia-
bilities to balloon by more
than $600 million, according
to league officials.
As recently as 2013, the
NFL had the worst-funded
Please see NFL page B7
BY TIMOTHY W. MARTIN
McGraw Hill Financial Inc.
is preparing to change its
name to S&P Global Inc. later
this year, a symbolic move
that underscores the firm’s
shift away from its publishing
roots.
The new name has received
approval from McGraw Hill’s
board, and company officials
will soon file a proposal seek-
ing to amend the firm’s moni-
ker, Chief Executive Douglas L.
Peterson said in an interview.
Shareholders will vote on the
matter on April 27 at the com-
pany’s annual meeting.
The New York firm, which
owns Standard & Poor’s Rat-
ings Services, disclosed the
planned name change Thurs-
day as it reported that it
swung to a fourth-quarter
profit, driven largely by the
company’s nonratings opera-
tions. The boost in earnings
was a surprise due to a slow-
down in global bond issuance.
McGraw Hill’s shares rose
7.6%, to $86.92, in late after-
noon trading.
On the company’s earnings
Friday - Sunday, February 5 - 7, 2016 | B5
3-MONTH LIBOR 0.62020%
VALERIAN MAZATAUD/BLOOMBERG NEWS
A Glencore zinc mine in Canada, shown last year.
powerful rally in mining
stocks Thursday, propelling
Glencore 16% higher despite
At Fed, Go-Slow
Backer Has Sway
BY HARRIET TORRY
AND JON HILSENRATH
Federal Reserve governor
Lael Brainard thinks there are
strong reasons to go slowly on
further interest-rate increases.
That opinion is an impor-
tant one: The 54-year-old
economist is emerging as a
significant influence at an un-
certain time for monetary pol-
icy and market tumult, and
her arguments have traction
with the Fed’s leadership.
Her concern is that stresses
in emerging markets including
China and slow growth in de-
veloped economies could spill
over to the U.S. “This trans-
lates into weaker exports,
business investment and man-
ufacturing in the United
States, slower progress on hit-
ting the inflation target, and
Of Former Magnate
BY MARK MAREMONT
AND LESLIE SCISM
U.S. federal investigators
recently searched the Manhat-
tan offices of an investment
firm once headed by young in-
surance magnate Alexander
Chatfield Burns, whose empire
collapsed in 2014 amid allega-
tions that millions of dollars
had been siphoned off into un-
usual or nonexistent invest-
ments.
The Jan. 14 raid by federal
agents, confirmed by people
familiar with the events, ap-
pears to be the first indication
call Thursday, Mr. Peterson
said he expects global eco-
nomic growth to remain in
line with prior years. He also
expects the Federal Reserve to
raise interest rates twice in
2016 but remain on hold in
March.
“Excessive pessimism is
probably not warranted,” Mr.
Peterson said. “Recent stock-
market volatility probably
overstates the likelihood of
slumping global growth this
year.”
Overall, McGraw Hill re-
ported a fourth-quarter profit
of $248 million, or 91 cents a
share, compared with a year-
earlier loss of $846 million, or
$3.11 a share, topping analysts’
estimates.
The prior-year results in-
cluded legal settlements re-
lated to crisis-era lawsuits
over inflated grades of resi-
dential-mortgage deals. Reve-
nue increased 7%, to $1.37 bil-
lion. Excluding currency
effects, the growth was 8%.
Global bond issuance fell
22% in the fourth quarter, and
revenue at the S&P ratings di-
vision—McGraw Hill’s largest
EPA/GETTY IMAGES, BLOOMBERG NEWS
10-YR TREAS À 5/32 yield 1.864%
the rating cut by S&P. Its stock
remains 63% lower than where
it stood a year ago.
financial tightening through
the exchange rate and rising
risk spreads on financial as-
sets,” Ms. Brainard said Mon-
day in response to questions
from The Wall Street Journal.
“Recent developments rein-
force the case for watchful
waiting,” she said.
The Fed raised its bench-
mark rate from near zero in
December and penciled in four
more increases this year. Mar-
kets, rattled by trouble in
China and the oil industry,
don’t agree. Traders in futures
markets now assign a low
probability to the central bank
raising rates at all this year.
Ms. Brainard is an impor-
tant piece of that puzzle as an
ally of Fed Chairwoman Janet
Yellen. That wasn’t so clear in
October, when she publicly
Please see FED page B7
of an active criminal investiga-
tion into Mr. Burns’s insurance
dealings.
About a dozen federal
agents, who included repre-
sentatives of the Federal Bu-
reau of Investigation and the
Internal Revenue Service,
showed up unannounced at
the downtown offices of
Southport Lane Management
LLC. They produced a search
warrant and carted off more
than 20 boxes of material
along with copies of computer
hard drives, said one person
familiar with the matter.
Please see RAID page B7
unit—declined 7%. But other
divisions selling commodities
pricing or index funds buoyed
the firm’s performance, lead-
ing to results and outlook that
“were not as bad as feared,”
said William Bird, an analyst
for FBR & Co., in a note to in-
vestors. The company’s profit
also got a boost from lower-
than-expected tax rates.
For the year, McGraw Hill
forecast per-share earnings of
$5 to $5.15 and revenue
growth in the mid-to-high-sin-
gle-digit percentages.
The move to drop the
McGraws from the company’s
name for the first time in its
128-year history follows deci-
sions in recent years to spin
off an education division and
move the corporate headquar-
ters from a midtown Manhat-
tan skyscraper bearing the
founder’s name to a location
downtown.
“The name of McGraw Hill,
which is an absolutely fantas-
tic brand, didn’t necessarily fit
the rest of the company,” Mr.
Peterson said. “McGraw Hill is
definitely seen as a publishing
brand.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B6 | Friday - Sunday, February 5 - 7, 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
17044.99 t 146.26, or 0.85% Year-to-date t 10.45% 328.76 t 0.67, or 0.20% Year-to-date t 10.13% 1915.45 s 2.92, or 0.15% Trailing P/E ratio * 20.93 19.79
High, low, open and close for each 52-wk high/low20868.03 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

Session high 17900 65-day moving average 350 1950

DOWN UP 65-day moving average
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
Nov. Dec. Jan. Nov. Dec. Jan. 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 2165.45 24.15 1.13 2077.03 • 2643.78 –7.3 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1587.44 16.87 1.07 1516.51 • 1956.39 –7.5 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 741.06 19.41 2.69 691.21 • 1067.74 –6.7 5.500 Australia 2 1.872 114.6 110.4 95.6 146.0 1.830 1.996 1.952
4.250 10 2.585 72.0 64.7 51.5 72.3 2.534 2.761 2.474
Americas DJ Americas 456.11 1.86 0.41 439.73 • 525.25 –6.4
3.500 Belgium 2 -111.6 -115.6 -139.0 -58.7 -0.430 -0.351 -0.095
-0.390
Brazil Sao Paulo Bovespa 40821.74 1232.92 3.11 37046.07 • 58574.79 –5.8
0.800 10 0.604 -126.2 -131.1 -133.4 -122.0 0.577 0.911 0.530
Canada S&P/TSX Comp 12772.85 179.83 1.43 11531.22 • 15524.75 –1.8
4.250 France 2 -0.405 -113.1 -113.2 -133.4 -58.1 -0.405 -0.294 -0.089
Mexico IPC All-Share 43765.07 507.53 1.17 39256.58 • 46078.07 1.8
1.000 10 0.630 -123.5 -127.8 -130.9 -115.6 0.610 0.937 0.595
Chile Santiago IPSA 2924.54 60.50 2.11 2730.24 • 3361.36 –0.7
0.500 Germany 2 -0.482 -120.8 -121.8 -138.9 -67.3 -0.492 -0.349 -0.181
U.S. DJIA 16416.58 79.92 0.49 15370.33 • 18351.36 –5.8
0.500 10 0.306 -156.0 -160.9 -167.9 -142.0 0.279 0.566 0.331
Nasdaq Composite 4509.56 5.32 0.12 4292.14 • 5231.94 –9.9
4.500 Italy 2 -0.007 -73.3 -74.2 -101.6 -18.7 -0.015 0.024 0.306
S&P 500 1915.45 2.92 0.15 1812.29 • 2134.72 –6.3
2.000 10 1.512 -35.4 -43.0 -68.7 -22.4 1.458 1.559 1.527
CBOE Volatility 21.90 0.25 1.15 10.88 • 53.29 20.3
0.100 Japan 2 -0.175 -90.1 -90.1 -105.2 -45.6 -0.175 -0.012 0.036
EMEA Stoxx Europe 600 328.76 –0.67 –0.20 322.29 • 414.06 –10.1 0.300 10 0.060 -180.5 -182.1 -198.0 -137.0 0.067 0.266 0.380
Stoxx Europe 50 2770.95 –10.69 –0.38 2721.63 • 3602.76 –10.6 0.500 Netherlands 2 -0.456 -118.2 -118.6 -141.0 -62.3 -0.460 -0.370 -0.131
Austria ATX 2113.90 21.81 1.04 2029.54 • 2695.57 –11.8 0.250 10 0.433 -143.2 -147.6 -151.4 -133.5 0.411 0.732 0.416
Belgium Bel-20 3348.42 –27.01 –0.80 3175.25 • 3910.33 –9.5 4.350 Portugal 2 0.051 -67.6 -66.8 -95.8 -27.9 0.058 0.082 0.213
France CAC 40 4228.53 1.57 0.04 4084.68 • 5283.71 –8.8 2.875 10 2.827 96.2 84.3 32.1 51.4 2.730 2.567 2.265
Germany DAX 9393.36 –41.46 –0.44 9270.09 • 12390.75 –12.6 0.500 Spain 2 -0.014 -74.0 -74.2 -104.7 -17.6 -0.016 -0.008 0.316
Greece ATG 509.45 –20.28 –3.83 504.99 • 945.81 –19.3 2.150 10 1.619 -24.6 -31.7 -54.1 -33.5 1.570 1.705 1.416
Hungary BUX 23556.51 160.78 0.69 16955.64 • 24532.71 –1.5 3.750 Sweden 2 -0.560 -128.6 -128.4 -152.1 -52.6 -0.558 -0.481 -0.034
Israel Tel Aviv 1454.56 6.46 0.45 1427.45 • 1728.89 –4.9 2.500 10 0.553 -131.2 -134.7 -132.0 -109.8 0.541 0.925 0.653
Italy FTSE MIB 17626.04 214.00 1.23 17141.42 • 24157.39 –17.7 1.000 U.K. 2 0.370 -35.7 -34.5 -45.0 -8.7 0.381 0.590 0.406
Netherlands AEX 417.94 1.73 0.42 392.44 • 510.55 –5.4 2.000 10 1.568 -29.7 -35.0 -36.6 -21.6 1.538 1.879 1.535
Poland WIG 44557.64 927.07 2.12 41747.01 • 57460.44 –4.1 0.750 U.S. 2 0.726 ... ... ... ... 0.726 1.040 0.492
Russia RTS Index 738.82 41.86 6.01 607.14 • 1092.52 –2.4 2.250 10 1.865 ... ... ... ... 1.888 2.245 1.751
Spain IBEX 35 8468.10 153.60 1.85 8180.40 • 11884.60 –11.3
Sweden SX All Share 461.55 7.04 1.55 444.97 • 564.90 –8.6 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8003.40 –120.34 –1.48 7935.47 • 9537.90 –9.2 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 49627.53 1092.05 2.25 45975.78 • 55355.12 –2.1 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 2/3/2016
Turkey BIST 100 74505.36 1237.92 1.69 68230.47 • 88651.88 3.9
One-Day Change Year Year
U.K. FTSE 100 5898.76 61.62 1.06 5639.88 • 7122.74 –5.5 Commodity Exchange Last price Net Percentage high low
368.75 -2.25 -0.61% 373.75 348.50
Asia-Pacific DJ Asia-Pacific TSM 1279.19 14.07 1.11 1213.08 • 1621.10 –8.0 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 876.25 -0.50 -0.06 889.50 852.00
Australia S&P/ASX 200 4980.40 103.60 2.12 4841.50 • 5982.70 –6.0
Wheat (cents/bu.)
CBOT
CBOT 473.50 -6.50 -1.35 488.50 456.00
China Shanghai Composite 2781.02 41.78 1.53 2655.66 • 5166.35 –21.4
Live cattle (cents/lb.) CME 135.450 -0.300 -0.22 138.550 127.150
Hong Kong Hang Seng 19183.09 191.50 1.01 18542.15 • 28442.75 –12.5
Cocoa ($/ton) ICE-US 2,773 -70 -2.46 3,215 2,738
India S&P BSE Sensex 24338.43 115.11 0.48 23962.21 • 29593.73 –6.8
Coffee (cents/lb.) ICE-US 123.25 1.70 1.40% 126.30 111.05
Japan Nikkei Stock Avg 17044.99 –146.26 –0.85 16017.26 • 20868.03 –10.4
Sugar (cents/lb.) ICE-US 12.94 0.05 0.39 15.24 12.66
Singapore Straits Times 2558.49 7.75 0.30 2532.70 • 3539.95 –11.2
Cotton (cents/lb.) ICE-US 60.28 -1.66 -2.68 63.55 59.99
South Korea Kospi 1916.26 25.59 1.35 1829.81 • 2173.41 –2.3 Robusta coffee ($/ton) ICE-EU 1437.00 35.00 2.50 1,544.00 1,339.00
Taiwan Weighted 8063.00 … Closed 7410.34 • 9973.12 –3.3
Copper ($/lb.) COMEX 2.1200 0.0250 1.19 2.1395 1.9355
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1156.50 15.20 1.33 1,157.90 1,061.90
Silver ($/troy oz.) COMEX 14.905 0.171 1.16 14.930 13.730
Currencies London close on Feb. 4 Aluminum ($/mt)* LME 1,511.50 -12.50 -0.82 1,524.00 1,451.50
Tin ($/mt)* LME 14,800.00 -110.00 -0.74 14,910.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Thu YTDchg Copper ($/mt)* LME 4,580.50 -20.50 -0.45 4,647.50 4,320.50
8% Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,765.50 -1.00 -0.06 1,766.50 1,598.00
6 WSJ Dollar index
s Europe Zinc ($/mt)* LME 1,679.00 5.00 0.30 1,679.00 1,467.00
4
Bulgaria lev 0.5715 1.7499 –2.8 Nickel ($/mt)* LME 8,465.00 -35.00 -0.41 8,765.00 8,195.00
2
Yen
s Croatia kuna 0.1461 6.845 –2.4 Rubber (Y.01/ton) TCE 155.80 -1.50 -0.95 164.50 153.60
0
Euro zone euro 1.1191 0.8936 –2.9
–2 Palm oil (MYR/mt) MDEX 2522.00 -21.00 -0.83 2,557.00 2,425.00
Czech Rep. koruna-b 0.0414 24.156 –2.9
–4 Denmark krone 0.1499 6.6702 –2.9 Crude oil ($/bbl.) NYMEX 31.68 -0.60 -1.86 39.53 27.56
–6 0.003601 277.67 –4.4
s Euro
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.0823 0.0037 0.34 1.2036 0.8605
–8 Iceland krona 0.007844 127.48 –2.1
–10 RBOB gasoline ($/gal.) NYMEX 1.0265 0.0128 1.26 1.3617 0.9670
Norway krone 0.1177 8.4965 –3.9
0.2533 3.9484 0.6
Natural gas ($/mmBtu) NYMEX 1.978 -0.060 -2.94 2.4930 1.9540
2015 2016 Poland zloty
Russia ruble-d 0.01310 76.340 6.2 Brent crude ($/bbl.) ICE-EU 34.43 -0.61 -1.74 40.11 27.83
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1190 8.4067 –0.5 Gas oil ($/ton) ICE-EU 318.00 6.50 2.09 362.25 253.00
Thu Thu
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0055 0.9945 –0.7
Turkey lira 0.3439 2.9078 –0.3 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1284 7.7877 0.5
Ukraine hryvnia 0.0397 25.1630 4.9
Argentina peso-a 0.0704 14.2060 9.8
India rupee
Indonesia rupiah
0.0148
0.0000735
67.5788
13601
2.1
–1.7
U.K. pound 1.4569 0.6864 1.1 Cross rates London close on Feb 4
Brazil real 0.2584 3.8696 –2.3 Middle East/Africa
Japan yen 0.008560 116.83 –2.9
Canada dollar 0.7287 1.3724 –0.8 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002752 363.40 7.3 Bahrain dinar 2.6518 0.3771 unch
Chile peso 0.001436 696.40 –1.7 Australia 1.3866 2.0205 1.3945 0.0119 0.1781 1.5517 1.0106 ...
Macau pataca 0.1267 7.8900 –1.4 Egypt pound-a 0.1277 7.8299 0.001
Colombia peso 0.0003014 3317.52 4.5 Canada 1.3724 1.9993 1.3797 0.0118 0.1762 1.5355 ... 0.9895
Malaysia ringgit-c 0.2435 4.1068 –4.6 Israel shekel 0.2562 3.9026 0.3
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6730 1.4859 1.5 Kuwait dinar 3.3256 0.3007 –0.9 Euro 0.8936 1.3021 0.8988 0.0076 0.1147 ... 0.6513 0.6445
Mexico peso-a 0.0549 18.2076 5.9
Pakistan rupee 0.0095 104.785 –0.1 Oman sul rial 2.5970 0.3851 0.03 Hong Kong 7.7877 11.3466 7.8307 0.0667 ... 8.7150 5.6747 5.6165
Peru sol 0.2876 3.4770 1.8
Philippines peso 0.0210 47.563 1.5 Qatar rial 0.2747 3.641 –0.1 Japan 116.8280 170.2300 117.4800 ... 15.0020 130.7300 85.1420 84.2500
Uruguay peso-e 0.0321 31.140 4.1
Singapore dollar 0.7165 1.3957 –1.6 Saudi Arabia riyal 0.2666 3.7506 –0.1 0.9945 1.4490 ... 0.0085 0.1277 1.1127 0.7248 0.7171
Venezuela bolivar 0.158603 6.31 unch Switzerland
South Korea won 0.0008430 1186.30 0.9 South Africa rand 0.0632 15.8273 2.3
U.K. 0.6864 ... 0.6901 0.0059 0.0881 0.7682 0.5002 0.4949
Asia-Pacific Sri Lanka rupee 0.0069257 144.39 0.1 Close Net Chg % Chg YTD % Chg
0.7212 1.3866 Taiwan dollar 0.03028 33.022 U.S. ... 1.4569 1.0055 0.0086 0.1284 1.1191 0.7287 0.7212
Australia dollar 1.0 0.3 WSJ Dollar Index 89.32 –0.59 –0.65 –0.95
China yuan 0.1523 6.5652 1.1 Thailand baht 0.02813 35.550 –1.3 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 0.42770% 0.17100% ¥ TakedaPharm 4502 5698.00 -2.01 -6.05 £ RioTinto RIO 1858.00 10.27 -6.14 Last: 123.22 s 1.61, or 1.32% YTD t 9.6%
Three month 0.62020 0.25610 Asia Titans HK$ TencentHoldings 0700 141.90 0.21 -7.07 CHF RocheHldgctf ROG 253.50 -1.48 -8.29
150
Six month 0.86490 0.36240 39.90 2.44 -14.38 1525.50
HK$ AIAGroup 1299 ¥ TokioMarineHldg 8766 4110.00 -3.54 -12.78 £ RoyDtchShell A RDSA 6.08 -0.03
One year 1.12850 0.62900 1658.50 -1.89 -4.22 69.90
¥ AstellasPharma 4503 ¥ ToyotaMtr 7203 6752.00 -2.14 -9.83 € SAP SAP -1.34 -4.74 140
Euro Libor AU$ AustNZBk ANZ 24.30 2.66 -13.00 AU$ Wesfarmers WES 42.91 0.42 3.12 € Sanofi SAN 72.39 -1.48 -7.90 t 130
One month -0.23714% -0.00714% AU$ BHP BHP 15.45 8.27 -13.49 AU$ WestpacBanking WBC 30.48 3.57 -9.18 € SchneiderElectric SU 49.35 3.84 -6.11
Three month -0.18529 0.02571 HK$ BankofChina 3988 3.01 2.38 -13.01 AU$ Woolworths WOW 23.93 1.44 -2.33 € Siemens SIE 85.14 0.39 -5.27 High 50–day 120
Six month -0.10900 0.09071 HK$ CKHutchison 0001 96.90 1.63 -7.18 € Telefonica TEF 9.26 2.77 -9.51 Close moving average 110
One year 0.00043 0.22857 HK$ CNOOC 0883 7.70 6.21 -4.58 Stoxx 50 € Total FP 39.23 2.12 -4.92 Low
100
Euribor ¥ Canon 7751 3314.00 1.10 -9.82 CHF ABB ABBN 17.53 1.56 -2.39 CHF UBSGroup UBSG 15.34 -0.65 -21.41
One month -0.23400% 0.00100% ¥ CentralJapanRwy 9022 22600 -0.59 4.63 € AXA CS 20.91 0.07 -17.14 € Unilever UNA 38.34 -3.01 -4.39 6 13 20 27 4 11 18 25 31 8 15 22 29
Three month -0.16600 0.05100 HK$ ChinaConstructnBk 0939 4.58 1.55 -13.75 € Allianz ALV 140.60 -0.11 -14.03 £ Unilever ULVR 2953.50 -1.45 0.92 Nov. Dec. Jan.
Six month -0.10200 0.13200 HK$ ChinaLifeInsurance 2628 17.14 -1.27 -31.71 € Anheuser Busch ABI 109.90 -2.14 -3.93 £ VodafoneGroup VOD 210.25 -1.24 -4.86
One year 0.00200 0.26200 HK$ ChinaMobile 0941 85.65 -0.12 -2.11 £ AstraZeneca AZN 4143.00 -6.10 -10.26 CHF ZurichInsurance ZURN 214.30 -0.33 -17.07
Yen Libor AU$ CmwlthBkAust CBA 77.36 2.15 -9.55 € BASF BAS 59.33 0.87 -16.11
DJIA Stoxx 50
One month 0.37107% 0.23500% ¥ EastJapanRailway 9020 11025 -2.95 -3.71 £ BGGroup BG. 1057.50 4.03 7.36
Last: 2770.95 t 10.69, or 0.38% YTD t 10.6%
Three month 0.67150 0.38500 ¥ Fanuc 6954 15990 1.52 -24.15 € BNP Paribas BNP 40.97 3.58 -21.57 $ AmericanExpress AXP 54.38 0.50 -21.81
Six month 0.97393 0.53857 ¥ Hitachi 6501 512.60 -7.81 -25.87 £ BT Group BT.A 485.50 -0.10 2.93 $ Apple AAPL 96.60 0.80 -8.23 3350
One year 1.37090 0.84214 TW$ Hon Hai Precisn 2317 76.60 -2.30 -5.20 € BancoBilVizAr BBVA 5.77 5.33 -14.41 $ Boeing BA 123.61 1.43 -14.51
65.95 4.24 -2.96 3200
Offer ¥ HondaMotor 7267 3182.00 -0.22 -18.62 € BancoSantander SAN 3.66 5.66 -19.72 $ Caterpillar CAT
KRW HyundaiMtr 005380 132500 2.71 -11.07 £ Barclays BARC 173.65 4.86 -20.67 $ Chevron CVX 84.79 0.20 -5.75 3050
Eurodollars
HK$ Ind&Comml 1398 3.94 1.55 -15.81 € Bayer BAYN 98.47 -0.07 -14.97 $ CiscoSystems CSCO 23.54 1.90 -13.31
One month 0.4500% 0.3500%
$ CocaCola KO 42.50 -0.51 -1.07
2900
Three month 0.6500 0.5500 ¥ JapanTobacco 2914 4610.00 -0.84 3.11 £ BP BP. 350.85 5.57 -0.89
¥ KDDI 9433 3115.00 0.35 -1.24 £ BritishAmTob BATS 3753.50 -1.35 -0.46
$ Disney DIS 95.39 0.27 -9.22 2750
Six month 0.8500 0.7500
¥ Mitsubishi 8058 1823.50 3.43 -10.08 CHF FinRichemont CFR 64.95 0.54 -9.92
$ DuPont DD 59.05 0.49 -11.34 2600
One year 1.2000 1.1000
¥ MitsuUFJFin 8306 557.80 1.09 -26.32 CHF CreditSuisse CSGN 14.73 -10.89 -32.09
$ ExxonMobil XOM 79.81 1.69 2.39
Latest 52 wks ago $ GenElec GE 29.17 1.74 -6.36 6 13 20 27 4 11 18 24 31 8 15 22 29
¥ Mitsui 8031 1287.50 1.98 -10.93 € Daimler DAI 60.94 -3.22 -21.45 Nov. Dec. Jan.
Prime rates $ GoldmanSachs GS 156.40 2.44 -13.22
¥ Mizuho Fin 8411 190.40 -0.16 -21.81 € Deutsche Bank DBK 15.15 2.78 -32.74
U.S. 3.50% 3.25% $ HomeDepot HD 121.12 -2.16 -8.42
¥ NTTDoCoMo 9437 2765.50 -0.63 11.33 € DeutscheTelekom DTE 15.48 -0.99 -7.22
Canada 2.70 2.85 $ Intel INTC 29.77 1.47 -13.58
AU$ NatAustBnk NAB 26.87 1.93 -11.03 1828.00 -2.22 -1.54
Japan
Hong Kong
1.475
5.00
1.475
5.00 ¥ NipponStl&SmtmoMtl 5401 2053.00 2.98 -15.02
£
€
Diageo
ENI
DGE
ENI 12.74 2.25 -7.68 $
$ IBM
JPMorganChase
IBM
JPM
127.59
58.39
2.30
1.71
-7.29
-11.57
Dow Jones Industrial Average P/E: 17
¥ NipponTeleg 9432 5198.00 -2.77 7.49 £ GlaxoSmithKline GSK 1412.50 -1.29 2.88 $ JohnsJohns JNJ 103.96 -0.17 1.21 Last: 16416.58 s 79.92, or 0.49% YTD t 5.8%
Policy rates
ECB 0.05% 0.05%
¥ NissanMotor 7201 1110.00 -1.25 -13.25 £ HSBC Hldgs HSBA 459.50 2.24 -14.30 $ McDonalds MCD 120.61 -0.71 2.09
Britain 0.50 0.50
¥ NomuraHldgs 8604 592.10 -1.32 -12.81 € INGGroep INGA 10.53 8.88 -15.42 $ Merck MRK 48.58 -2.95 -8.04 17750
Switzerland 0.50 0.50
¥ Panasonic 6752 967.20 -8.71 -22.03 £ ImpTobaccoGrp IMT 3598.50 -2.20 0.33 $ Microsoft MSFT 52.00 -0.31 -6.27 17250
Australia 2.00 2.25
HK$ PetroChina 0857 4.61 5.25 -9.43 € IntesaSanpaolo ISP 2.48 5.80 -19.69 $ NikeClB NKE 60.16 -3.73 -3.74
HK$ PingAnInsofChina 2318 33.30 1.06 -22.38 € L'AirLiquide AI 95.34 0.81 -8.02 $ 16750
U.S. discount 1.00 0.75 Pfizer PFE 29.05 -2.11 -10.02
Fed-funds target 0.25 0.00
$ RelianceIndsGDR RIGD 29.05 1.93 -5.07 € LVMHMoetHennessy MC 152.80 0.69 5.45 $ Procter&Gamble PG 80.65 -0.55 1.56 16250
Call money 2.25 2.00
AU$ RioTinto RIO 40.33 8.91 -9.80 £ LloydsBankingGroup LLOY 62.77 3.43 -14.10 $ 3M MMM 153.45 0.61 1.87 15750
KRW SamsungElectronics 005930 1156000 0.87 -8.25 £ NationalGrid NG. 976.60 0.18 4.17 $ TravelersCos TRV 107.48 0.55 -4.77
Overnight repurchase rates 15250
U.S. 0.44% 0.23%
¥ Seven&I Hldgs 3382 5262.00 -3.02 -5.19 CHF Nestle NESN 74.40 -1.06 -0.20 $ UnitedTech UTX 88.10 2.49 -8.30
Euro zone n.a. n.a.
¥ SoftBankGroup 9984 5080.00 1.68 -17.25 CHF Novartis NOVN 74.50 -2.49 -14.17 $ UnitedHealthGroup UNH 114.22 1.30 -2.91 6 13 20 27 4 11 18 24 31 8 15 22 29
¥ Sumitomo Mitsui 8316 3547.00 -0.03 -22.99 DKK NovoNordiskB NOVO-B 332.40 -4.76 -16.88 $ VISAClA V 73.67 -0.95 -5.00 Nov. Dec. Jan.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 82.15 1.55 -12.37 £ Prudential PRU 1262.50 2.19 -17.54 $ Verizon VZ 50.43 -0.38 9.11 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 146.00 2.46 2.10 £ ReckittBenckiser RB. 6136.00 -1.98 -2.31 $ WalMart WMT 66.43 0.24 8.37 Sources: WSJ Market Data Group; Birinyi Associates
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
U.S. Stocks Eke Out Gains Countries to Cut
European shares falter
as Credit Suisse
slumps and the euro
strengthens again
BY CORRIE DRIEBUSCH
U.S. stocks eked out small
gains Thursday, as weak data
from the Labor Department
put an increased focus on Fri-
day’s jobs report, some trad-
ers said.
Initial jobless claims, a
proxy for layoffs across the
U.S., rose for the week ended
Jan. 30,
THURSDAY’S climbing
MARKETS above what
economists
surveyed by
The Wall Street Journal had
forecast, the Labor Depart-
ment said. Claims have risen
for three of the past four
weeks, suggesting the labor
market may be cooling after
strong hiring in December.
The surprising weakness
comes at a time when inves-
tors have been questioning the
uneven growth in the U.S.
economy. While manufacturing
has been weak and corporate
executives are signaling that
2016 sales may continue to be
soft, one bright spot had been
strong jobs growth.
If that turns around, it may
spark more worries among in-
vestors.
On Friday, the Labor De-
partment will report how
NFL
Continued from page B5
pension among the four major
sports leagues, with just 49%
of assets required, according
to an analysis of government
filings by the Society of Actu-
aries.
The National Hockey
League’s pension, just several
years old with no retirees, had
more assets than liabilities.
The Major League Baseball
pension had about three-quar-
ters of assets needed, while
the National Basketball Asso-
ciation had 53% of the money
required.
Corporate pension plans are
required to file annual updates
to the Labor Department. The
most-recent filings available
are for 2014. The NFL and NFL
Players Association provided
funding levels for 2015 in re-
sponse to inquiries from The
FED
Continued from page B5
challenged Ms. Yellen’s asser-
tion that U.S. inflation would
rise as unemployment de-
clines. The challenge undercut
Ms. Yellen’s argument for why
it made sense to start raising
interest rates for the first time
in nearly a decade.
Since then, however, the
two have been largely in sync.
Ms. Brainard provides an im-
portant window into the Fed’s
thinking on the outlook for
rates and the economy.
She voted in December to
raise interest rates. But she
also serves as a counterweight
at the Fed to policy “hawks”
who want to move rates up
quickly.
“She certainly is somebody
I have come to pay a lot of at-
tention to,” said Lewis Alexan-
der, chief U.S. economist for
Nomura Securities. “It feels a
bit to me like she is expressing
ideas that perhaps other peo-
ple on the board including po-
tentially Yellen believe but
don’t feel quite able or willing
to express quite so clearly.”
Mr. Alexander worked with
Ms. Brainard at the Treasury
Department from 2009 to
2011. She became Treasury un-
dersecretary for international
affairs.
Some Obama administra-
tion insiders see her as a can-
didate for higher office if a
Democrat wins the White
House this year. She declined
to comment on her ambitions.
She is the newest member
of the Fed’s board of gover-
nors, having joined in
mid-2014. She kept a low pro-
file during her first 12 months
on the job, giving just four
speeches in a period when
Vice Chairman Stanley Fischer,
who joined the board within
weeks of her, gave 10 and Ms.
Yellen gave 11.
Ms. Brainard grabbed atten-
Financial stocks rose. Morgan Stanley climbed 2.8%.
many jobs U.S. employers
added in January, as well as
the unemployment rate and a
measure of wage inflation.
The Dow Jones Industrial
Average gained 79.92 points,
or 0.5%, to 16416.58. The S&P
500 rose 0.15% to 1915.45 and
the Nasdaq Composite added
0.1% to 4509.56.
In Europe, stocks turned
lower as the strengthening
euro again hit German shares
and a disappointing update
from Credit Suisse Group
weighed on sentiment.
The Stoxx Europe 600
slipped 0.2% to 328.76 as
Credit Suisse fell 11%.
Germany’s DAX fell 0.4% to
9393.36. Daimler dropped
3.2%, BMW fell 1.7% and soft-
ware maker SAP lost 1.3%.
France’s CAC 40 ended
slightly higher at 4228.53, as
Wall Street Journal.
Because of its relatively
deep pockets, the NFL has
been able to start to fill a
funding hole that many other
employers are struggling to
crawl out.
As part of the most-recent
collective-bargaining agree-
ment between the NFL and
NFLPA, the pension has to be
fully funded by 2021. That re-
quired team owners to triple
their total contribution in
2013 to $300 million, followed
by $305 million in 2014 and
$266 million in 2015. The lat-
est contribution brought the
plan’s funding up to its cur-
rent level of 72%.
The NFL’s pension dates
back to 1959. The plan, with
$1.8 billion in assets, handles
the retirement benefits for
4,200 retirees and 2,100 active
players.
Players need three years of
service, defined as being on
the roster for three games or
Lael Brainard argues the case for ‘watchful waiting.’
tion in October by suddenly
appearing to position herself
against Ms. Yellen. At issue
was a theory known as the
Phillips curve, which underlies
the models and thinking of
many Fed officials, including
Ms. Yellen, who placed heavy
emphasis on the idea in a
speech in September.
“The traditional link be-
tween employment gains and
stronger inflation is very weak
in today’s economy,” Ms. Brai-
nard said in response to the
Journal’s questions.
“I don’t think it served
Janet Yellen well,” former Dal-
las Fed President Richard
Fisher said in an interview of
Ms. Brainard’s critique. “It’s
the only time I’ve known her
when she didn’t appear to be a
team player,” he said of Ms.
Brainard, with whom he
worked in the Clinton admin-
istration.
Washington-based Fed gov-
ernors rarely speak out
against the central bank’s
leader, even though regional
Fed bank presidents often do.
Over the following four
months it became clearer that
their views nevertheless over-
lap in important respects.
When the Fed raised rates
from nearly zero in December,
its policy statement sounded a
lot like the message Ms. Brain-
MONEY & INVESTING
and the maker of wearable
cameras reduced its financial
forecast.
Shares of large banks, ma-
terials and industrials compa-
nies, which are down sharply
this year, were among the big-
gest gainers, as investors ex-
ited bets against some of the
year’s most beaten-down sec-
tors.
The KBW Nasdaq Bank in-
dex of U.S. banks was up 1.2%
MIKE SEGAR/REUTERS
in late trading, though it re-
mained down 15% this year.
Materials companies in the
S&P 500 climbed 2.1%, putting
their weekly gains at more
than 5%.
Some traders said the dol-
ArcelorMittal jumped 11%. lar’s tumble on Wednesday
The U.K.’s FTSE 100 jumped spooked some market partici-
1.1% to 5898.76 on the back of pants. “Such a sharp change in
a surge in miners and other one day means there’s more
commodity-related shares. risk to being in high-consen-
Royal Dutch Shell climbed sus trades than you thought,”
6% despite announcing a steep said Justin Wiggs, managing
slump in fourth-quarter profit. director in equity trading at
Analysts said the U.S. trad- Stifel Nicolaus.
ing was a reminder that the Dollar weakness continued
broader markets remain under Thursday as the euro rose to
pressure. Since the start of the $1.1213 late in New York, up
year, about half of the U.S. from $1.1104 late Wednesday.
stock-trading sessions have The dollar fell to ¥116.81 from
ended higher, however stocks ¥117.89 but gained against the
remain more than 6% lower in pound after the Bank of Eng-
that period. land cut its growth forecasts
Retailer Kohl’s tumbled 19% for the U.K. economy. Sterling
after posting lower-than-ex- was at $1.4580 from $1.4603.
pected overall sales for the In commodity markets, U.S.
fourth quarter and cutting its crude futures fell 56 cents, or
full-year earnings guidance. 1.7%, to $31.72 a barrel.
GoPro shares fell 8.8% after Gold futures gained $16.30,
the company’s fourth-quarter or 1.4%, to $1,157.60 a troy
earnings missed expectations ounce.
more in a single year, to be-
come fully eligible for the NFL
pension plan. Unlike the com-
plex formulas used to calculate
cording to a Society of
Actuaries estimate of NFL con-
tractual data. That compares
with the pension check of a
the checks for most pension- three-year player of $21,360.
ers, players get the same “It’s a very, very generous
bump each year for their pen- plan,” said Dennis Curran, a
sions. senior vice president of labor
For instance, players eligi- benefits for the NFL.
ble for retirement benefits in The NFL pension also is
2015 will see their future pen- considered a multiemployer
sion checks increase by about plan because the league com-
$7,900, regardless of salary. prises 32 individual teams.
Retired players start collecting NFL owners in the most-re-
benefits at age 55. cent collective-bargaining
The average annual pension talks pushed to terminate the
benefit in 2014 was about traditional pension benefit,
$43,000, according to the So- though the players’ union pre-
ciety of Actuaries analysis of
NFL filings submitted to the
Labor Department. The NFL
paid out $181 million in retiree
vailed in keeping it.
“Most corporations have
been able to do away with
them, but thanks to collective
payments for the year ended bargaining, and the fact that a
March 31, 2015. veteran player explains to a
Denver Broncos quarter- younger player the value of
back Peyton Manning, based this plan, the pension has re-
on his current 18 years of ex- mained,” said Miki Yaras-Da-
perience, would receive an an- vis, a senior director of bene-
nual pension of $107,040, ac- fits for the NFLPA.
back more than two decades.
Both women held economic
positions in the Clinton ad-
ministration and were nomi-
nated to the Fed board by
President Barack Obama.
Before joining the Fed, Ms.
Brainard was a chief economic
negotiator for the U.S. Trea-
ANDREW HARRER/BLOOMBERG NEWS
sury in the Obama administra-
tion during Europe’s sover-
eign-debt crisis and traveled
at times with Ms. Yellen to in-
ternational meetings. Ms. Brai-
nard’s role included pressing
eurozone leaders to take more
rapid action to stem their eco-
nomic crises, at a moment
when the currency bloc faced
potential collapse.
ard had been delivering in the Former Treasury Secretary
weeks leading up to the ac- Timothy Geithner, her boss at
tion: that increases in the cen- the department, described her
tral bank’s benchmark rate as “very tough, in the best
should be “gradual” and “ac- way.”
tual and expected” progress in Those on the other side of
raising inflation toward the the negotiating table during
Fed’s 2% target should be the eurozone crisis described
carefully monitored. her as candid, self-assured and
The wording suggested Ms. often demanding in advancing
Yellen and Ms. Brainard agree the U.S. agenda.
more than their earlier public She has described monetary
comments might have sug- policy as “a powerful tool with
gested, and that Ms. Brainard’s broad reach, but also rela-
views influence Ms. Yellen’s tively blunt.”
thinking. People familiar with her
Behind the scenes, she and work say she can be blunt, too.
Ms. Yellen are temperamen- “She has the capacity for inde-
tally and in many respects pendent conviction, and the
philosophically close. courage of her convictions,”
Ms. Brainard’s office at the Mr. Geithner said, adding Ms.
Fed—decorated with a purple Brainard “can be forceful when
crayon stick-figure drawing by she needs to be.”
one of her three daughters—is Like Mr. Geithner, Ms. Brai-
just down the hall from Ms. nard spent much of her child-
Yellen’s. hood abroad. The daughter of
The two often meet at the a U.S. foreign-service officer,
elevator and chat, according to she grew up in Cold War Ger-
people who know them. Both many and Poland.
are described by colleagues as One of only nine women to
disciplined and prepared, with serve on the Fed’s board in the
a history of reading from de- central bank’s history, she is
tailed, prewritten notes at Fed married to another high-pro-
policy meetings. Both see file Washington figure, consul-
monetary policy as a powerful tant and former Assistant Sec-
tool that can help the econ- retary of State Kurt Campbell.
omy heal after recession, a The family splits time between
view rejected by critics of cen- the capital and a Civil War-era
tral-bank activism. farm in the Blue Ridge Moun-
Their relationship dates tains.
Friday - Sunday, February 5 - 7, 2016 | B7
Rubber Exports
The world’s top three rub-
ber producers have agreed to
cut exports collectively by
nearly 20% beginning next
month in an effort to stem the
steep decline in prices of the
commodity.
By Lucy Craymer in
Hong Kong and
Nopparat
Chaichalearmmongkol
in Bangkok
Indonesia, Malaysia and
Thailand, which together pro-
duce around 70% of the
world’s rubber, said they
would reduce exports by
615,000 metric tons over the
six-month period starting
March 1.
The three countries, which
together form the International
Tripartite Rubber Council—a
body that has been likened to
the Organization of the Petro-
leum Exporting Countries,
given its potential control over
supply—are battling to combat
the near-70% fall in the price
of natural rubber over the past
five years. In the member
countries, the price slump has
hurt the incomes of farmers,
mostly holders of just a few
acres of rubber trees each.
The ITRC said it was opti-
mistic that the export cuts
would allow rubber prices to
recover. The Tokyo Commodity
Exchange’s benchmark six-
month rubber contract rose
Thursday after the council’s
decision, gaining 2.3% to ¥157
($1.33) a kilogram.
However, analysts, traders
and industry groups said they
were skeptical that the export
squeeze would help support
prices in the long term, given
weak global demand and abun-
dant supply. They said previ-
ous attempts by the council to
raise prices by intervening in
the market had met with
mixed success.
Rubber-trading companies
that buy the commodity from
farmers might use the export
RAID
Continued from page B5
The saga surrounding Mr.
Burns, the subject of a page-
one article in The Wall Street
Journal in March, raised ques-
tions about how regulators in
several states allowed a young
investor with no industry
track record and few apparent
resources to gain control of in-
surers with hundreds of mil-
lions of dollars in assets.
Mr. Burns, now 29 years
old, declined to comment, as
did his attorney, William Kerr,
who noted that his client had
left Southport Lane two years
ago. A Justice Department
spokesman said the agency as
a matter of policy doesn’t con-
firm or deny the existence of
investigations.
Delaware regulators have
alleged that once Mr. Burns
gained control of one insurer
in that state his firm sold mil-
lions of dollars of mainstream
insurance holdings, replacing
them with illiquid, worthless
or nonexistent assets, includ-
ing rights to a purported Cara-
vaggio painting.
Those allegations were
made in the course of civil-
court filings.
The empire collapsed soon
after Mr. Burns checked him-
self into the mental-health
ward of New York’s Bellevue
Hospital in early 2014, leaving
behind a signed affidavit de-
scribing an unusual series of
asset transfers. He resigned
from the company shortly
thereafter.
Investigators are looking
into whether Mr. Burns or oth-
ers may have committed fraud
in gaining control of the insur-
ers or in replacing the insur-
ers’ assets with unusual hold-
ings, according to a person
familiar with the matter.
Mr. Burns, through his at-
torney, previously has said
that he complied with all ap-
plicable laws and blamed
“highly unexpected” events
that forced a restructuring of
his insurance holdings. He has
said the insolvency of the Del-
aware insurer, Freestone In-
surance Co., was due to losses
that took place before he
bought it but that were dis-
covered later.
As for the unusual asset
transfers, Mr. Burns has said
that he received no personal
reductions as an excuse to pay
farmers less, said Uthai Son-
luksub, chairman of the Feder-
ation of Rubber Farmers Asso-
ciation of Thailand. He said
exporters would likely seek to
ship more rubber to buyers
ahead of the cuts.
Others said they doubted
the council’s three members
would stick to their plan. “I
don’t think this will work be-
cause all three countries won’t
commit to the promise,” said
Perk Lertwangpong, an adviser
at the Rubber Holder Coopera-
tives Federation of Thailand.
The 2% decline in rubber
prices this year has coincided
with drops in a number of
commodities, including oil,
that have come under pressure
because of concerns about
slowing demand from China
and oversupply. China is the
world’s leading rubber con-
sumer, accounting for around
40% of demand.
For Southeast Asian govern-
ments, which often rely on ru-
ral voters to stay in power,
weakness in the rubber market
has become a thorny political
issue. In Thailand, where
around 10% of the population
works in the rubber industry,
farmers threatened protests
and even hunger strikes as
they demanded more support
from their government at the
end of last year.
The Thai government said
last month it would buy
around 100,000 metric tons of
rubber at a premium, a move
that caused prices to rally off a
nearly seven-year low.
Stockpiles of natural rubber
are on course to surpass the
record levels hit in 2014 by the
end of next year, potentially
reaching 3.7 million tons, a re-
port from the Rubber Econo-
mist, a London-based firm spe-
cializing in rubber, showed.
“The further cooling of eco-
nomic activity in China still
promises little momentum for
the demand side,” analysts at
Commerzbank said in a note.
BILLY FARRELL AGENCY
Alexander Chatfield Burns at a
gala in New York in 2013.
financial benefit from any
Southport transactions, aside
from his regular compensa-
tion.
Today, Mr. Burns is living in
Charleston, S.C., and has
started a craft distillery, Ra-
tional Spirits LLC, making
“Santeria Rum.” His former
company, Southport Lane,
largely has been wound down.
Regulators in 2014 seized
as insolvent the Delaware in-
surer and one in Louisiana
also controlled by Mr. Burns,
and other insurers doing busi-
ness with Mr. Burns’s firms
were left nursing tens of mil-
lions of dollars in losses. As of
last year, total losses at insur-
ance companies were more
than $250 million, based on
write-downs taken.
Mr. Burns and his associ-
ates purchased the purported
Caravaggio, titled “David in
the Act of Picking Up Goliath’s
Severed Head,” from a Florida
trust for a price variously re-
ported in court documents to
be between $16 million and
$40 million, but with an initial
$1.5 million down payment.
According to a Duff &
Phelps report filed in Dela-
ware Chancery Court, after
Mr. Burns gained control of
Freestone Insurance, the com-
pany sold about $128 million
of conventional stocks and
bonds and replaced them with
investments in entities that
owned rights to the giant oil
painting.
Three auction houses have
said they believe the painting
is a copy with little value, ac-
cording to court filings, al-
though a now-deceased Italian
expert believed it could be a
genuine work by the master.
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
B8 | Friday - Sunday, February 5 - 7, 2016
Email: heard@wsj.com
Credit Suisse Returns to Earth
Even to the believers, the
profit targets Credit Suisse
Group set last October
looked ambitious. Poor re-
sults for 2015 on Thurs-
day knocked any faith that
the Swiss bank could hit
them and its shares tumbled.
But the bigger disappoint-
ment was the capital ratio,
which came in significantly
below expectations, even af-
ter the group raised 6.4 bil-
lion Swiss francs ($6.37 bil-
lion) in equity late last year.
The bank does, however,
have a fallback in the par-
tial initial public offering of
its Swiss local bank planned
for this year, which could
raise more than the 2 billion
to 4 billion francs, expected
in October.
There were brighter spots
in 2015: Activity held up in
Asia better than for Swiss ri-
val UBS in both private and
investment banking. But like
other European rivals, Credit
Suisse was hit hard by a
rough final quarter in trad-
ing and investment banking,
which led to underlying
losses even before a raft of
hefty restructuring charges.
For Vodafone, Liberating Broadband Business Is Critical
After years of price wars,
European telecom investors
are more interested in deals
than sales numbers.
The muted market reac-
tion to mobile giant Voda-
fone’s third-quarter results—
the shares sank about 1%—
may have more to do with
what Chief Executive Vitto-
rio Colao didn’t say about
his talks with cable group
Liberty Global than what he
did say about business in Eu-
rope (weak but strengthen-
ing) or emerging markets
(strong but weakening.)
Vodafone confirmed Tues-
day that it was discussing a
joint venture with Liberty in
the Netherlands. The deal
Hedge Fund Advocates Dollar Could Be Nearing a Top
Sale of Bank of East Asia
BY MIA LAMAR
HONG KONG—Hedge fund
Elliott Management Corp.
stoked the coals in a long-run-
ning squabble with Bank of
East Asia Ltd. on Thursday,
urging the Hong Kong bank to
explore selling itself.
Paul Singer’s $26 billion ac-
tivist hedge fund, which has a
7% stake in the bank, said it
thinks Bank of East Asia could
fetch around 60 Hong Kong
dollars a share, or about
US$7.70, nearly three times
Wednesday’s closing price.
Shares closed up 4.1% at
HK$21.80 on Thursday after
rising as much as 5.3%. It was
the third-biggest gainer on the
city’s blue-chip Hang Seng In-
dex.
“Despite poor performance
and poor corporate gover-
nance, the scale and profile of
BEA’S banking platform is at-
tractive to any potential ac-
quirer which wants to expand
its banking operations in
greater China,” Elliott said.
A representative of the
bank dismissed Elliott’s call as
“very short-term focused.”
“This action is further to a
previous failed attempt to re-
Finance
Watch
ICE
Busy Energy Market
Aids Exchange Firm
Intercontinental Exchange
Inc.’s fourth-quarter earnings ex-
ceeded expectations as the ex-
change operator saw data-ser-
vice revenue jump and benefited
from busier energy markets.
The Atlanta-based owner of
the New York Stock Exchange has
recently announced a string of ac-
quisitions, including its $5.2 billion
purchase of Interactive Data Corp.
HEARD ON THE STREET
Credit Suisse CEO
Tidjane Thiam
The bank took a huge
charge of 3.8 billion francs
to write off the goodwill re-
lated to the takeover of Don-
aldson, Lufkin & Jenrette 16
years ago. This was the big-
gest element in its full-year
net loss of 2.9 billion francs,
although as an intangible as-
set it didn’t affect capital.
What did affect the capital
ratio, which came in at 11.4%
versus expectations of 12.4%,
were the final quarter’s
losses before charges in trad-
Margin Call
Vodafone Group Ebitda* margin
40%
35
30
25
’10 ’11 ’12 ’13 ’14
*Earnings before interest, taxes,
depreciation and amortization, year to March.
Source: the company
THE WALL STREET JOURNAL.
would combine the two com-
panies’ local assets, creating
a so-called converged opera-
tor with both fixed and mo-
bile-telecom infrastructure.
The announcement—Voda-
Paul Singer, head of hedge
fund Elliott Management Corp.
alize short-term gains in the
Hong Kong banking sector,”
the representative said. “The
market has seen these tactics
by Elliott before, and we be-
lieve their actions towards
BEA demonstrate self-interest
rather than the best interests
of all shareholders.”
Elliott has for more than a
year pushed for change at
Bank of East Asia, one of the
city’s few remaining family-
run banks. It appears embold-
ened now by a recent change
in the terms of a 17% stake in
Bank of East Asia held by
and a $650 million tie-up with
London-based energy-trading
venue Trayport. Through the IDC
deal, ICE acquired hard-to-get pric-
ing data on corporate bonds.
The Trayport tie-up comes as
energy markets remain volatile
and attract increasing attention.
ICE reported a 26% jump in
fees from the data services it
provides, to $871 million, nearly
a fifth of overall revenue. At the
same time, listing fees rose 10%
and transaction and clearing
fees edged 2.7% higher.
The firm’s performance was
“driven by strong demand for
risk management, trading, data
and listings,” Jeffrey Sprecher,
chairman and chief executive of-
ficer of ICE, said in a statement.
ICE reported a profit of $370
million, or $3.29 a share, up from
$288 million, or $2.54 a share, a
FINANCIAL ANALYSIS & COMMENTARY
Strategic Stumble
Credit Suisse's profits before taxes
by division, billion Swiss francs
2013 ’14 ’15
Global markets
Swiss universal bank
Int’l Wealth
Management
Asia-Pacific
BLOOMBERG NEWS
Investment bank
Resolution unit
–4 –2 0 2
Source: the company
THE WALL STREET JOURNAL.
ing and investment banking.
These were mostly driven by
U.S. high-yield bonds and
distressed loans where prices
collapsed and Credit Suisse
sold unwanted positions ag-
gressively. The trading side,
known as global markets,
lost 664 million francs before
goodwill write-downs, re-
structuring charges and
taxes, while the investment-
banking side lost 97 million
francs before those items.
Credit Suisse surprised
fone’s first on the subject
since September, when it
said its asset-swap talks with
Liberty had ended—raised an
obvious question: Why is
Vodafone considering a
transaction in the Nether-
lands, which accounts for 3%
of its sales, and not in the
’15 U.K. or Germany, which to-
gether represent one-third of
sales and where the same
strategic logic applies? Mr.
Colao refused to elabo-
rate on Thursday, presum-
ably for fear of affecting his
negotiating position.
The numbers show why
Vodafone is again talking. In
Europe, third-quarter reve-
nues from fixed-line services
MONEY & INVESTING
Spain’s CaixaBank SA, which
Elliott said frees CaixaBank
from its previous agreement
to vote with Bank of East
Asia’s board on any outside of-
fer to purchase the bank.
CaixaBank and its parent
CHRIS RATCLIFFE/BLOOMBERG NEWS
company “are now free to
agree to an alternative sale of
the BEA stake at a significantly
higher price into a takeover of-
fer, creating a win-win outcome
not only for BEA’S sharehold-
ers but also for CaixaBank’s
shareholders,” Elliott said.
The hedge fund took action
in court last year seeking to
unravel what it had argued
was the Bank of East Asia’s
unnecessary sale of nearly $1
billion worth of shares to
Japan’s Sumitomo Mitsui
Banking Corp.
Known for taking active
stands with boardrooms
around the world, Elliott has a
mixed record in Hong Kong. In
2014, it built up a stake in
Wing Hang Bank Ltd. as Sing-
apore’s Oversea-Chinese
Banking Corp was gathering
shares to complete a US$5 bil-
lion acquisition of the Hong
Kong bank. It walked away
from the maneuver at the last
minute.
year earlier. Excluding certain
items, per-share profit rose to
$3.27 from $2.59.
—Lisa Beilfuss
CHINA
Foreign Investment
Rules Are Eased
China’s foreign-exchange reg-
ulators eased rules for foreign
institutional investors in the lat-
est bid to attract more foreign
funds as capital flows out of the
country.
China’s State Administration
of Foreign Exchange said it would
no longer impose a uniform cap
on investments by all foreign in-
vestors, but will set the limit
based on the size of the funds
managed by the institution as
well as the size of the institution.
—Pei Li
THE WALL STREET JOURNAL.
WSJ.com/Heard
OVERHEARD BOE Bows to
Markets on
some in the market in Octo- Oil-and-gas companies are
ber by being less aggressive
than rivals in plans to pull
out of trading businesses, es-
getting used to negative
numbers. Royal Dutch Shell
provided a new one Thursday.
Rate Plans
pecially in areas like securi- Companies are struggling And then there were none.
tized products that don’t tie- to replace their production Bank of England policy
in with its other businesses. with new reserves, measured makers voted unanimously
Its focus won’t change, al- by the so-called reserves-re- to hold rates at 0.5% in Feb-
though the bank conceded its placement ratio. BP this week ruary. Ian McCafferty, who
planned growth in some ar- reported a ratio of 61% for had previously voted for an
eas of global markets was last year. A figure under increase for six months run-
now on hold. It had set a tar- 100% means companies are ning, abandoned his call.
get to grow risk-weighted as- adding to their reserves more Rates will remain low for a
sets in that trading business slowly than they are pumping good while longer yet.
by about $10 billion, or about from them. Other central banks have
13%, over the next two to But for Shell, last year’s had to reverse rate in-
three years, that now almost ratio was minus-20%. So be- creases; the Bank of England
certainly won’t happen. sides not replacing its produc- has never even got that far.
Profits were higher in Asia tion with new reserves, it BOE Gov. Mark Carney
before its share of all the shrank beyond that. Shell’s noted Thursday that based
charges and this was the production was 1.1 billion bar- on the path of interest rates
only region that didn’t fail to rels of oil equivalent. Its re- priced into markets, inflation
hit analyst forecasts—every- serves shrank by 1.4 billion. would overshoot the BOE’s
where else did. At low oil prices, projects 2% target. The market, in
Tidjane Thiam, chief exec- may be expected to stop other words, is too relaxed
utive, has Asia at the heart pumping sooner, or not start about how long rates will re-
of his long-term plans for the pumping at all. For Shell, the main low. Markets, however,
group and though his plans negative figure stems from are proving skeptical of cen-
there still look ambitious its unusual decision to halt tral bankers’ attempts to
they haven’t been derailed. development at a Canadian steer them.
But even if Asia does meet oil-sands project. One reason, External risks loom large,
its goals, the targets for the then, to be glad Shell will be including rising volatility in
rest of the bank look less re- topping up its portfolio with global financial markets and
alistic than ever. its acquisition of BG Group. the threat of turmoil in
—Paul J. Davies emerging nations’ econo-
mies. Mr. Carney was eager
to emphasize Thursday that
domestic demand still was
propelling the U.K. economy
forward; unemployment has
were 3.7% higher than the for a deal with Liberty. Fail- fallen sharply. But the BOE
previous year, excluding cur- ure to strike a deal would still cut its growth forecast
rency and deal effects. Voda- leave Vodafone at the mercy for 2016 to 2.2% from 2.5%.
fone, the upstart in the fixed of incumbent network own- Central banks increasingly
business, is competing to ers in Northern European appear hostage to fortune
take market share. markets where it has no and to each others’ policy
The situation is reversed fixed infrastructure. The risk decisions. In the BOE’s case,
in mobile, where Vodafone’s is perhaps less that network the clearest near-term prob-
dominant position remains owners shut Vodafone out of lem is the looming referen-
under attack. On the same the convergence party by fa- dum on U.K. membership of
basis, mobile revenues were voring their own retail chan- the European Union; interna-
2% lower. nels than that funneling ever tionally, policy decisions in
That was despite a 60% more fixed traffic through the U.S., China, Japan and
surge in the volume of data wholesalers depresses Voda- the eurozone will change the
downloaded on the carrier’s fone’s margins. picture.
network. In common with its Mr. Colao has pledged to The BOE no doubt will
European peers, Vodafone reverse the slide in Voda- continue to walk a narrow
has seen more costs than fone’s margins next year and tightrope on rates, but mar-
benefits in consumers’ ob- beyond. Without Liberty’s kets should be looking more
session with the smartphone. cable assets, he faces a widely for guidance.
Hence investors’ appetite struggle. —Stephen Wilmot —Richard Barley
BY KRISTEN SCHOLER
mentum in a trade is slow- have recently contained the
ing. dollar, which usually rises
Signs are emerging that While the dollar reached a amid signs of a strong or
upward momentum in the peak in early December, its strengthening U.S. economy
dollar is fading, which would relative-strength index was and increasing rates.
be good for U.S. stocks. far from its March 2015 high, On Wednesday, investors
The WSJ Dollar Index fell indicating that momentum in and traders placing bets on
1.6% Wednesday as the the currency has waned, ac- the path of rates in the fu-
greenback cording to Michael Purves, tures market dialed down
MONEYBEAT posted its chief global strategist at their expectations, with the
biggest de- Weeden & Co. He said that is odds of the next rate in-
clines in “potentially hugely signifi- crease not exceeding 50% in
months against the euro and cant” and a “big warning this calendar year, according
yen. The cause? The increas- sign that the bears need to to CME Group data.
ing belief among investors be mindful of.” Mr. Purves anticipates
that the Federal Reserve is A weakening dollar should choppy, range-bound trading
unlikely to raise rates in help lift U.S. stocks and oil, in the next few weeks, but
March and possibly not even as it did Wednesday. he thinks there’s a bullish
for the rest of the year. A stronger dollar eats into bias. “We are…watching for a
There is evidence that the profits of U.S. exporters. U.S. potential beginning of a bot-
dollar’s upward momentum corporate earnings are on toming process in crude and
has been losing steam for pace to contract for a third a topping in the U.S. dollar,
months. Weekly readings of straight quarter. It also which could facilitate a
the greenback’s relative- makes oil, which is priced in stronger midterm outlook
strength index have trended dollars, more expensive in for equities,” he said.
lower since March 2015. other currencies. With oil
Relative strength mea- and equities moving in tan- MONEYBEAT
sures the acceleration or de- dem lately, any gains in
celeration of movement in a crude prices would likely be Read the
security. When traders are
increasingly betting that a
security will rise, relative
an added benefit to stocks.
Disappointing U.S. eco-
nomic data and expectations
WSJ
.COM
continuously
updated look
inside the
strength increases. The op- that the next rate increase markets, free
posite happens when mo- will be delayed even more online at wsj.com/moneybeat
ING’s Profit Tops Expectations
BY MAARTEN VAN TARTWIJK items and divestments, was below expectations.
€1.2 billion ($1.33 billion) in ING’s dividend was in focus
Dutch bank ING Groep NV the last three months of 2015, as it faces new capital require-
Thursday posted a higher-
than-expected rise in fourth-
a 54% rise compared with the
same period last year.
ments from the Dutch banking
regulator. The Dutch central
quarter earnings, but hinted at
a more cautious dividend pol-
The bank said it would pro-
pose a final dividend of €0.41
bank requires large lenders to
build up a so-called systemic
icy in light of new capital re- a share. risk buffer in the coming years
quirements. Shares in ING jumped 8.9% as a potential safeguard
ING said underlying pretax in Amsterdam trading, even as against future taxpayer bail-
profit, which excludes special the dividend came in slightly outs.
INTERNATIONAL INVESTMENT FUNDS
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A San Francisco Couple

MANSION
INSIDE:

Lets the Sun Shine In

Why being Dan Neil
terrified by weighs the
orangutans is value of the
more fun than Audi Q7
it sounds SUV
W4 W8

EATING | DRINKING | STYLE | FASHION | DESIGN | DECORATING | ADVENTURE | TRAVEL | GEAR | GADGETS
© 2016 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. ** Friday - Sunday, February 5 - 7, 2016 | W1

POT LUCK
Jogaetang (spicy
SAM HORINE

clam soup) at
Dancen in Chicago.

Korea by the Bowlful

There’s so much more to this cuisine than barbecue and bibimbap. Across the U.S.,
diners are diving deeper into the hearty soups and stews at the heart of the Korean table

Parachute, a restaurant serving Korean more ambitious eaters have started restaurants like State Bird Provisions
BY MATT RODBARD
and Korean-influenced dishes in the to seek out Korea’s deep bench of in San Francisco and Le Bernardin in

B
EVERLY KIM GREW UP
outside Chicago eating in
the traditional Korean
way—a far cry from the
towering platters of grilled
beef and rice bowls that have come to
define Korean food in the U.S. “We had
at least two pots of soup firing on
the stove at all times,” said the James
Beard Award-nominated chef-owner of
city’s Avondale neighborhood. “Broth is
the foundation for everything I know.”
Americans’ relationship with Korean
food has hit an exciting fork in the road,
which I write about in my new book,
“Koreatown: A Cookbook.” Many flock
to Koreatowns across the country
in search of the ever-popular Korean
barbecue—hunks of tender short rib
sizzled on tabletop grills and wrapped in
lettuce leaves—and rightly so. Yet other,
delicious soups and stews packed with
unexpected flavors and textures that
extend well beyond the sourness
and funk of kimchi, the fermented
vegetables that are another signature
of this cuisine.
I’ve found Korean cooking in expected
places—the big Koreatowns in L.A.
and New York—but also in Duluth, Ga.,
Western Michigan and the kitchens
of celebrated (and not explicitly Asian)
Manhattan. The common starting point?
More often than not, a simmering stock.
“You can taste the history,” said
Deuki Hong one day while minding
a hulking stockpot of mellow ox bone
broth called seolleongtang in his
midtown Manhattan apartment. Mr.
Hong, the chef of New York’s Kang Ho
Dong Baekjeong, is my “Koreatown”
co-author, and he wasn’t just talking
Please turn to page W2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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W2 | Friday - Sunday, February 5 - 7, 2016 THE WALL STREET JOURNAL.

OFF DUTY

WHAT’S HOT: KOREAN SOUPS AND STEWS

Continued from page W1
about how the bones in the pot were
releasing their creamy marrow through
hours and hours of bubbling and boiling.
There’s a context to consider: Korea
is a very cold place. Think Minneapolis
or Helsinki cold. The winters are long and
cruel. The mountainous terrain provides
limited space for cattle grazing and hog
raising; Korea’s meat prices are among the
world’s highest. Add to that a long history
of war, occupation and impoverishment,
but also an abundance of fresh, clean
water. Bodies needed warmth, meat had
to stretch. You might say Koreans had no
choice but to become the soup and stew
masters of Asia.
Yes, I’m ranking Korea’s soups higher
than Vietnam’s pho and Japan’s ramen.
Through deep assessment and countless
evenings spent hunched over a roaring pot
of jjigae—a spicy stew loaded with meat,
seafood, vegetables or all three—I’ve come
to the conclusion that Korean soups can
be broken roughly into two categories:
graceful broths and intense, umami-rich
flavor bombs.
In the more delicate category,
kongnamul guk is a soup of soybean
sprouts boiled quickly in a light beef or
anchovy broth. Another example: miyeok
guk, a briny, nutrient-rich soup of seaweed
and beef brisket sometimes called
Koreans had no choice
but to become
Asia’s soup masters.
“happy birthday soup” because it’s eaten
by nursing mothers and by Koreans
celebrating their birth.
One of my favorites, jogaetang, a bowl
of clear anchovy broth gets a little heat
from jalapeños and substance from clams.
This light and highly satisfying soup
often appears at pojangmachas, late-night
Korean taverns, where it’s served on
a portable butane burner and washed
down with beer and soju, the ubiquitous
Korean firewater.
The more muscular side of Korea’s
soup and stew canon plays its own
cultural role. While many Americans go
for a dollar pizza slice or a heap of greasy
diner bacon to quell a hangover, Koreans
turn to soup. In fact, haejangguk—a
bracing bowl of tender ox-spine meat,
coagulated blood cubes and beef broth—
bears the name “hangover soup.”
This latter category does contain
some acquired tastes. Ms. Kim recalls her
mother’s beloved cheonggukjang jjigae,
made with ripe fermented soybeans and
sometimes called “dead body soup.”
“My mom was really self-conscious about
how our house smelled, and she would
boil [the soup] on the grill outside,” she
said. “But it’s really quite incredible and
reminds me of a nutty cheese.”
This group includes plenty of highly
accessible crowd-pleasers, too. Kimchi
jjigae, the great utility dish of Korean
cooking—a piquant stew full of Napa-
cabbage kimchi, the fermented soybean
and red-pepper paste gochujang and rich
pork belly—often arrives at the table
boiling. (If you’re going to eat a lot of
Korean soup, you must perfect a blowing-
on-the-spoon technique.) My favorite
kimchi jjigae contains the fizzy and deeply
funky kimchi called mukeunji, aged for
well over a year. Seek it out.
Another hearty bowl I’ll travel a long
way for is gamjatang, which literally
means “potato soup.” It’s so much more
than that. While chunks of potato play
their part, meaty pork necks, cooked to
the point of falling off the bone, provide
further ballast, and floral wild sesame
seeds add their perfume. “It reminds me
of a Oaxacan mole,” said Los Angeles
Times restaurant critic Jonathan Gold
when we shared a large bowl at Ham Ji
Park, a restaurant specializing in pork in
L.A.’s sprawling Koreatown.
I think gamjatang has great crossover
appeal for Korean food fans looking
outside the lettuce wrap. As does another
favorite: kalbijjim, beef short ribs stewed
low and slow in a balanced blend of light
soy sauce, sake, mirin, apple-and-Asian-
pear purée and garlic. “This is one of the
dishes that every Korean mom has a
recipe for,” said Mr. Hong, calling it the
“Korean coq au vin.” His uses a slow
cooker, a fully Americanized approach to
preparing a traditional Korean dish. “It’s
one of those special-occasion stews, like
if you were accepted to college or family
Jjampong (Spicy Seafood Noodle Soup)
This noodle soup combines pork fat, lots of briny seafood and a nice Using a decent amount of fatty pork belly gives the dish a distinct
handful of gochugaru (red pepper powder). You’ll be shocked by how porkiness, but you can cut back if you like. Any of the seafood
easy it is to make a large pot of the broth, which keeps well in the components can be substituted for one another. If the baby octopus
refrigerator. Korean udon noodles are typically bought fresh and found in isn’t as fresh as you want, skip it and add more head-on shrimp (the
the cooler at any Asian market; they can be boiled directly in the soup. head is where all the flavor is). TOTAL TIME: 30 minutes SERVES: 2
For the anchovy stock:
1 quart water
25 dried anchovies
¼ cup roughly chopped daikon
radish
1 bunch scallions, trimmed and
cut into thirds
2 (2-by-2-inch) squares of
dashima, aka kombu
(dried kelp)
2 jalapeño peppers or Anaheim
chilies, halved lengthwise
For the soup:
1 cup water
½ pound fatty pork belly,
roughly chopped
2 garlic cloves, minced
¼ cup gochugaru (red pepper
powder)
1 tablespoon kosher salt
1 teaspoon freshly ground black
pepper
¼ cup thinly sliced zucchini
¼ cup thinly sliced carrots
1 small onion, cut into medium
dice
¼ pound mussels in shell,
scrubbed
¼ pound head-on shrimp
¼ pound baby octopus or squid
¼ pound scallops
1 package (2 servings) fresh
udon noodles
Light soy sauce
1. Make anchovy stock: In a medium
saucepan over medium-high heat,
combine all ingredients, then bring
to a gentle simmer. Decrease heat
to low to maintain a simmer. Cook
until broth is cloudy and light vigorous simmer in a small garlic-pork broth mixture, anchovy opened, noodles and seafood are
caramel in color with a deep-sea saucepan over medium-low heat. stock, zucchini, carrots, onions, cooked, and stew has turned a deep
taste and a slight kick from the Continue to simmer to let flavors mussels, shrimp, octopus, scallops red and acquired a rich seafood
chilies, 15 minutes. Use a mesh mingle, 5 minutes. Use a mesh and udon noodles. Bring to a boil flavor, 5 minutes. Discard any
strainer to strain stock into a strainer to strain liquid; remove over high heat, then decrease heat mussels that haven’t opened.
medium container; discard solids. meat and discard or reserve for to low. Simmer until mussels have Season to taste with soy sauce.
(To reserve for later use, let stock another use. Set liquid aside.
cool and refrigerate for a couple 3. In a bowl, combine garlic, The Korean ingredients in all of these recipes
days or freeze for up to 2 months.) gochugaru, salt, pepper and can be purchased at Asian markets or online at
2. Make pork broth: Bring 1 cup reserved pork broth. Set aside. crazykoreanshopping.com.
water, along with pork belly, to a 4. In a medium stock pot, combine
Doenjang Jjigae (Bean Paste Stew)
Fermented bean paste, doenjang, a fundamental ingredient in
Korean cooking, is used in what is arguably Korea’s most-popular
stew, doenjang jjigae. It’s served at all hours of the day, from
breakfast to late-night. TOTAL TIME: 30 minutes SERVES 2-4
¼ cup doenjang (fermented (optional), scrubbed
bean paste) and soaked in water
2 garlic cloves, minced 30 minutes
1 teaspoon gochugaru 3 cups beef stock
(red pepper powder) Cooked short-grain rice,
¼ pound flavorful cut of for serving
beef, such as short ribs,
chuck or skirt steak, 1. In a lidded medium
cubed saucepan, stir doenjang, garlic
¼ cup half-moon slices and gochugaru together to
Korean squash or zucchini form a paste. Add beef,
¼ cup diced onions squash, onions, scallions, tofu,
1 scallion, cut into 1-inch chilies and clams, if using.
lengths 2. Add beef stock to
8 ounces soft tofu, cut saucepan, then bring liquid to
into small cubes a boil over high heat. Decrease
½ Korean or Anaheim chili, heat to medium, cover and
thinly sliced, with seeds simmer until flavors marry,
¼ pound littleneck clams 20 minutes. Serve with rice.
Crock-Pot Kalbijjim (Beef Short Rib Stew)
For many Koreans, kalbijjim is a special-occasion dish, the one Mom makes
to celebrate life’s big achievements. This wintry version uses traditional Korean
flavors but with a preparation that is wholly American. Cooking low and slow
in a slow cooker for six hours, the beef ribs become fall-off-the-bone tender
while the vegetables glaze themselves in a robust, umami-rich sauce. If you can
plan ahead, make this the day before serving. Refrigeration will allow the fat
to solidify at the top and then be spooned out easily. Reheat gently to serve.
TOTAL TIME: 2-6 hours (depending on preparation method) SERVES: 4-6
1 cup light soy sauce apples and garlic until smooth.
¼ cup mirin rice wine 2. Rub short ribs with vegetable oil
¼ cup sake and season with ample kosher salt
Freshly ground black pepper and pepper. Set a large cast-iron
½ cup peeled and chopped skillet over high heat. Once very
daikon radish hot, sear ribs until golden-brown
1 Asian pear, peeled, cored and on all sides, 3-5 minutes per side.
sliced (Only sear as many ribs as will fit
1 red apple, peeled, cored and comfortably in the pan; work in
sliced batches if necessary.) Resist the
4 garlic cloves urge to turn meat before every
4 pounds bone-in short ribs surface has formed a crust. Drain
1 teaspoon vegetable oil seared ribs of their fat.
Kosher salt 3. Place seared ribs at bottom of
SAM HORINE; ILLUSTRATION BY ARTHUR SHLAIN/NOUN PROJECT

was visiting from far away,” he added.
In Korean culture, soups and stews
not only cure sickness and recalibrate
the body after a long night of bar
hopping; they’re the stuff of celebrations.
At every meal and any time of day,
they command the center of the table.
The next time you look at a Korean
menu, read on past the barbecue section
and survey the vast spread of soups
and stews—those mentioned here and
many others—that lie beyond. Or prepare
one of the recipes on this page, while
the weather outside is as cold as Korea
in February.
4 large Yukon Gold potatoes,
peeled and roughly chopped
1 medium onion, quartered
1 medium carrot, cut into
large dice
6 dried shiitake mushrooms,
chopped
1 cup ddeok (disk-shaped rice
cakes used for soup)
1 cup beef stock
Cooked short-grain rice,
for serving
1. In a food processor or blender,
purée soy sauce, mirin, sake,
1 tablespoon pepper, radishes, pears,
an electric slow cooker. Add
potatoes, onions, carrots and
mushrooms on top. Cover with a
layer of rice cakes and then pour in
soy sauce mixture and beef stock.
(If soy sauce mixture has settled,
give it a good stir before pouring.)
Cook on low setting until meat is
fork tender and falls off the bone,
about 6 hours.
4. Alternatively, if you don’t use a
slow cooker: Sear ribs in a large
lidded Dutch oven on the stovetop, beef stock in pan. Bring to a boil stirring occasionally, until meat is
then drain fat from pot. Layer over medium-high heat. Reduce fork tender, about 2 hours.
vegetables, rice cakes, sauce and heat to low and simmer gently, 5. Serve with rice.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Friday - Sunday, February 5 - 7, 2016 | W3

OFF DUTY
MESSAGE IN A BOTTLE: BLAKE BAILEY ON CLEAR CREEK DISTILLERY BLUE PLUM BRANDY

Slivovitz: Water of Life, Solace to Oklahomans

AMONG THE PLEASANT and not-
so-pleasant things Ernest Heming-
way remembers in “A Moveable
Feast”—about his youth in Paris
during the 1920s—were his visits
to 27 rue de Fleurus, where Ger-
trude Stein and her companion,
Alice B. Toklas, would give him
cakes and eaux de vie. I can’t hope
to improve on his evocation of the
latter, which, he writes, “tasted
like the fruits they came from,
converted into a controlled fire on
your tongue that warmed you and
loosened it.” How fitting, how ex-
actly right, that the civilized
French should call these elixirs
“water of life.”
Eastern Europeans are especially
fond of slivovitz, an eau de vie
made from damson plums, so deli-
cious and heady that even the tem-
perate Ashkenazim quaff it at wed-
dings and the Passover Seder (when
grain liquors are forbidden and a
fine kosher sliv is often, for the sec-
ular-minded, the high point of a
long-winded evening). In Serbia the
stuff is so popular that people are
advised to build houses near the
best places to grow plum trees.
Slivovitz is versatile: Some drink
it warm, others cold; still others use
it to make a sorbet or a potent ver-
sion of a Jewish cold remedy, the
guggle-muggle. The main question,
to my mind, is whether to drink it
as an apéritif or digestif. As a prac-
tical matter I prefer waiting until
after I’ve eaten, lest I’m rendered
incapable of reaching the table.
I credit my sainted German
mother, Marlies, for whatever cul-
ture I possess in matters of the pal-
ate. Among the many amenities of
her home—a charming cottage in
the sticks of rural Norman, Okla.—is
the bottle of slivovitz in the freezer
that unfailingly awaits my every
visit. At one time she favored the
powerful (100 proof) Serbian Navip,
in its comely round bottle, but as
a cranky Serb website informs me,
the liquor has been discontinued.
(Navip, it says, “egsists [sic] no lon-
ger…swallowed by bad privatiza-
tion.”) At any rate Mom likes her
slivovitz powerful and round-bot-
tled. The beauty part, chez Marlies,
are the particular pewter shot
glasses she breaks out for this holy
post-prandial ritual. Pour in the icy
fluid, and the pewter becomes like
a frozen flagpole one shouldn’t
touch with the tongue. The libation
itself remains cold and fiery both,
while we sip and reminisce.
At first blush I imagine my
mother would take a dim view of
the Clear Creek Distillery slivovitz
(aka Blue Plum Brandy) that my ed-
itor at The Wall Street Journal sent
my way. It’s only 80 proof, for one
thing, and the elongated if elegant
bottle would fit awkwardly in her
freezer. But the real deal breaker
for a thrifty German would be the
fancy price, about $50 on average
for the 750-ml bottle.
Steve McCarthy, owner of this
artisan distillery in Portland, Ore.,
offers no apologies. As he explains,
their product is made only from
whole fresh fruit, locally grown, and
distilled in small pot stills: “The re-
sult is very good, and very costly.”
Indeed, the reputation of their
slivovitz—never mind their even
more vaunted poire, made from
pears grown on the family orchard
in nearby Parkdale—almost oppres-
sively precedes itself. Since 2004
it’s won the gold medal almost ev-
ery year at the U.S. Slivovitz Com-
petition, where a glass of Clear
Creek is kept at hand for every
judge by way of a “reference stan-
dard” while they attempt to com-
pare the 40 or so lesser entries.
So, yes, it’s delicious. When
I stuff my nose into a chilly shot
glass and huff that lovely crystalline
liqueur, I’m reminded of a scene in
Somerset Maugham’s “The Razor’s
Edge,” where the dandyish Elliott
Templeton allows himself (despite
frail health) to swoon over a glass
of Zubrovka: “Like listening to mu-
sic by moonlight,” he rhapsodizes.
I feel the same way about this
Oregonian nectar, though I must say
I don’t find it quite as mellow as it’s
cracked up to be, despite the rela-
tively mild alcohol content. Not that
I mind these faint notes of turpen-
tine and diesel fuel—rather like the
insinuation of a minor chord in an
otherwise sprightly Wagner motif.
Thus I reflect that all great plea-
sure comes with a price, and I’m
probably better off just having the
one glass. Let us remember, after
all, the sequel to that scene in “The
Razor’s Edge”: Tempted by Elliott’s
effusions, poor Sophie MacDonald
absconds with a bottle of Zubrovka
and is last seen—I’m thinking now
of the 1946 movie adaptation—trag-
ically plastered in the Rue de Lappe.
“Like lishning to mushig by moon-
lie,” she leers, or so Anne Baxter
delivers the line. From there it’s
only a matter of time before she’s
found with her throat cut.
But let’s end on a more cheerful
note. Often when I think of the
pleasures of drink, and eau de vie
in particular, I think of my old
theology teacher Mr. Osborn (let’s
call him). Picture a slightly less
louche Gaston Godin from “Lolita”:
“a flabby, dough-faced, melancholy
bachelor” with “phenomenally stout
legs.” At our Catholic school in
Oklahoma City, the portly Osborn
cut an oddly cosmopolitan figure.
At school his uniform of navy blazer
and gray flannel trousers rarely
changed, though he had an impres-
sive collection of printed silk bow
ties and affected horn-rims and a
pipe that was rarely lit.
He used to give me whiskey out
of a porcelain tea pot when I’d
come after school for my biweekly
“independent study” class. Insofar
as he was sexual, he was probably
gay. Once, when we were discussing
Aquinas, he vouchsafed that he was,
yes, a 40-year-old virgin. “But
why?” I asked. He cupped his pudgy
hands and held them up to my face:
“It’s a little something I can offer
Our Blessed Lord,” he said.
A figure of some pathos, then, or
so it seemed, but later I saw a jaun-
tier side—that is, after I graduated
and would occasionally visit him at
the big old house where he lived
with his mother (whom I never
saw). After a lunch or dinner of
many courses, Mr. Osborn would
remove the plates and somberly
choose a few bottles of eau de vie
from the cupboard. I got my first
taste of slivovitz in his company,
but I was especially enchanted by
the poire with its enormous pear
right there in the bottle. LETTERING BY ANGELA SOUTHERN; F. MARTIN RAMIN/THE WALL STREET JOURNAL (BOTTLE)
Every month or two, he ex-
plained, he made a special trip to
Dallas to procure his more exotic li-
quors and other delectables—“the
only things that make this be-
nighted place” (Oklahoma) “bear-
able.” This, I gathered, was simply
the truth in Mr. Osborn’s case, but
at least the eau de vie and whatnot
did, in fact, seem to do the trick.
Once, after lunch, we walked tipsily
in the afternoon sunlight to a cigar
store in Shepherd Mall. Waddling
along in his Panama hat, beaming
dreamily in the heat, Mr. Osborn
seemed at peace with this little
world he’d made for himself.
Blake Bailey is the author, most re-
cently, of “The Splendid Things We
Planned.” He is working on a biog-
raphy of Philip Roth.

SLOW FOOD FAST: SATISFYING AND SEASONAL FOOD IN ABOUT 30 MINUTES

Family-Meal Chicken With Sautéed Spinach

JAMES RANSOM FOR THE WALL STREET JOURNAL, FOOD STYLING BY JAMIE KIMM, PROP STYLING BY STEPHANIE HANES; ILLUSTRATION BY MICHAEL HOEWELER

AT FIRST BITE, you might not guess this incredibly important,” said Mr. Bottura.
disarmingly simple chicken with a soy- “That’s when you see a mix of tech-
ginger marinade and a side of sautéed nique, culture, memory and feelings
spinach came from a three-Michelin- from the guys.”
starred kitchen in Modena, Italy. In that spirit of cross-pollination, and
While it is indeed a far cry from the drawing on the influence of Francescana’s
finely wrought Italian fare Massimo Bot- Japanese chefs in particular, Mr. Bottura
tura serves to diners at Osteria Frances- created this recipe. His final Slow Food
cana, it’s just the sort of delicious hy- Fast contribution, it features ingredients
brid his young chefs, who hail from all from his own region, too, such as Parme-
The Chef: over the world, might prepare for the san and balsamic vinegar. “With all these
Massimo Bottura “family meal” the staff sits down to flavors,” he said, “it’s like being between
each night before service. “Staff meal is Modena and Japan.” —Kitty Greenwald
His Restaurants:
Osteria Francescana TOTAL TIME: 30 minutes SERVES: 4
and Franceschetta
58, both in 1 tablespoon mirin rice wine 1 tablespoon water cup Parmigiano-Reggiano
1/
2

Modena, Italy 2 tablespoons honey 2 skinless chicken breasts shavings

2 tablespoons soy sauce (about 1 pound) 8 cups fresh spinach
What He Is Known 2-inch piece of fresh 1/
2 cup all-purpose flour Salt
For: Casting ginger, peeled and 2 cloves garlic, skin on Aged balsamic vinegar
a critical eye on minced 5 tablespoons olive oil Lemon wedges (optional)
Italy’s culinary
history and daring 1. Preheat oven to 450 degrees. In a small flip chicken. Fry reverse side until golden,
to propel it forward. pot over high heat, bring mirin, honey, soy about 2 minutes more.
Conceptual dishes sauce, ginger and water to a boil and sim- 4. Transfer chicken to a baking dish and
that satisfy on mer 15 seconds. Set marinade aside to cool. brush generously all over with marinade.
a visceral level. 2. Meanwhile, halve chicken breasts. Use Cover with Parmigiano and bake on top rack
a mallet or rolling pin to pound cutlets until cheese melts and browns in spots,
to about 1/4 -inch thick. Add flour to a about 7 minutes.
shallow bowl. Dip cutlets into flour and 5. Wipe out skillet and set over high heat.
shake off excess. Add remaining oil and garlic. Once hot, add
3. Heat ¼ cup olive oil in a large skillet over spinach and sauté until just wilted, 1-2 min-
medium-high heat. Working in batches if utes. Season with salt to taste.
necessary to avoid crowding pan, add 6. Serve chicken with sautéed spinach and
chicken and fry until just golden, about drizzle everything with aged balsamic. RULE OF THUMP Pounding the chicken breasts into thin cutlets tenderizes
3 minutes. Add 1 garlic clove to pan and Garnish with lemon wedges, if you like. the meat and makes for even cooking.
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
W4 | Friday - Sunday, February 5 - 7, 2016
SWINGING SET Orangutans at Camp Leakey, a preserve and scientific research station in Indonesia’s Tanjung Puting National Park on the island of Borneo.
A river trip through Borneo leads to endearing, if frightening, encounters with the island’s rapidly disappearing primates
BY SARAH ROSE
T
HE MOTHER
orangutan hung
from a tree
branch and pried
her baby’s fin-
gers off her chest. Her infant
was just five months old, as
big as a human baby of the
same age, with wild tufts of
red hair and a pursed bottom
lip. I stood a few feet below
while the mom moved her
baby’s hand to a vine and
supported his bottom as he
stretched a leg toward the
creeper and wrapped his toes
around it.
The 29-year-old orangutan
mother, named Uning by the
researchers at Borneo’s Camp
Leakey refuge, looked at me
with her coffee-bean eyes,
then turned back to her baby
and let him go. I held my
breath as the little one caught
himself and hung tightly to
the swinging vine.
“This is how orangutans
learn to climb,” explained
our park guide, Rini Mariani,
a local who lives in the small
Indonesian port town of
Kumai. (Borneo, Asia’s larg-
est island, is divided among
three countries: Indonesia,
Malaysia and Brunei.)
Camp Leakey is an
orangutan-research station in
Indonesia’s Tanjung Puting
National Park, on the south-
ern coast of Borneo. I had
joined my friend Diane and
her 13-year-old daughter,
Maia, on a three-day river-
boat trip through the
Indonesian part of the island
to Camp Leakey and a few
other preserves where orang-
Orangutan Crush
utans can be seen in the wild.
“They’re like our red-
headed relatives,” Diane said
to ginger-haired Maia.
It’s easy to feel a connec-
tion with orangutans. Shar-
ing 96% of our DNA, they
are our cousins from just
the other side of Uncanny
Valley. And they are in dan-
ger. Ms. Mariani said that
Borneo’s jungles, their pri-
mary habitat, are being
cleared at a reckless pace to
accommodate mining and
logging and to meet global
demand for palm oil.
According to the World
Wildlife Fund, the animals’
habitat has shrunk by 50%
in the past two decades.
“Sometimes you can hear
chain saws from inside the
park,” Ms. Mariani said.
Two days before meeting
Uning, we had boarded
a riverboat in Kumai and mo-
tored up the Sekonyer River,
which forms the boundary of
Tanjung Puting National Park.
Our boat looked like a bright
green-and-yellow version of
the African Queen, with no-
frills living quarters on the
upper deck, equipped with
a dining table, lounge chairs
and mattresses.
During the day, we’d
watch the pale-pink water
hyacinths float by and sur-
vey the jungle tree canopy,
filled with macaques,
gibbons and the rare, long-
nosed proboscis monkey.
At night, our crew would
string mosquito nets to form
veiled bedrooms on deck, and
we would fall asleep to a
symphony of cicada and bull-
frogs and awaken to the so-
prano call of gibbons.
OFF DUTY
CURRENT EVENT Boats on the Sekonyer River en route to Camp Leakey in Borneo’s Tanjung Puting National Park.
We were chugging our way
to Camp Leakey, a refuge cre-
ated by Dr. Biruté Galdikas,
a protégé of paleoanthropolo-
gist Louis Leakey, who also
mentored Dian Fossey and
Jane Goodall. Dr. Galdikas’s
research laid the groundwork
for understanding the life-cy-
cle and behavior of these gen-
tle, tree-dwelling animals.
(Fun fact: The mothers have
only one baby at a time and
nurse their offspring for six
to seven years.) Forty years
later, her rescued orangutans
are introduced to tourists by
name and happily shake
hands with their fans like
well-mannered children.
At Camp Leakey, the jungle
air was swampy and so humid
that I feared it could start to
CURRENT EVENT
River boats on the way
to Camp Leakey.
THE WALL STREET JOURNAL.
GETTY IMAGES/NATIONAL GEOGRAPHIC (ORANGUTANS); ORANGUTAN ODYSSEYS (BOAT); MAP BY JASON LEE
rain any moment. Just as We’d been warned that rapid-fire photos of the
I leaned lazily against a tree, Tom was unpredictable and climbing lessons Uning was
I felt the rain begin to fall. An as strong as eight men com- giving her son. Uning grew
attentive guide immediately bined. A sign nearby read, agitated, baring her teeth in
lofted his umbrella over my “Don’t stand between a male a show of maternal aggres-
camera and me. As it turned and female orangutan.” But sion. A guide gently asked
out, it wasn’t a cloudburst at the female orangutans and the man to stop, but he con-
all, but a steady stream of their babies sat before us tinued to fire an artillery
monkey urine. “I consider it on the platform as Tom ap- barrage of flashes.
an honor,” I told Maia, who proached from behind us. We Maia stepped up to him.
was doubled over in laughter. were all standing smack be- “Why don’t you respect the
Just then, Tom, the domi- tween Tom and the females. creatures we have all come
nant male ape, ignored the I was as thrilled as I was to see, as well as the people
roped-off boundaries that terrified, but on that day at who are here to protect
separated spectators from least, Tom showed more in- them?” she demanded. The
the orangutans and lum- terest in the food than the flashes from his camera
bered toward us. He carried ladies. He ignored us en- abruptly ceased.
himself with regal bearing, tirely, like a celebrity who “That orangutan mama
as if convinced he was king pays no notice to the swarm- went totally ape,” Diane said,
of this jungle. He had the ing paparazzi. laughing, as we hiked back to
wide cheek pads of an alpha We walked back over to our floating home in the fad-
male, which made him look Uning’s jungle gym, where ing daylight.
bigger than his 250 pounds. a tourist was shooting “So did Maia,” I said.
THE LOWDOWN // ORANGUTAN WATCHING IN BORNEO
Getting There: Trig- Mariani, can be booked tic ecolodge near TANJUNG
ana Air (trigana- independently through the park, and one night PUTING
NAT’L PARK
air.com) and Kalstar Orangutantour.id aboard a river boat.
Aviation (kalstar.com) (orangutantour.id). The fee also includes BORNEO
offer daily flights from Orangutan Odysseys, the guide, cooks, food,
Jakarta, Indonesia’s an international outfit- crew, park fees and all JAKARTA
capital, to the city of ter based in Australia, transfers (orangutanod-
200 KM
Pangkalan Bun. Flights offers a three-day, two- ysseys.com). 200 MI
cost about $45 each night itinerary similar
way and can be to the one we took What to bring: Bor- I found a 95% DEET-
booked online. Taxis (which was arranged neo is considered a based mosquito repel-
from Pangkalan Bun on the fly through a malaria zone, so be lent very effective
to the port town of local tour operator) for sure to consult with against bites, saving
Kumai run about $20. $400 per person for your doctor or a travel- me from a lot of itch-
four passengers. The medicine specialist re- ing, but it is not
Staying There: Our price includes one night garding effective anti- a substitute for an
excellent guide, Rini at Rimba Lodge, a rus- malarial medications. antimalarial.
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. Friday - Sunday, February 5 - 7, 2016 | W5

OFF DUTY

20 ODD QUESTIONS

Kate & Andy

Spade
The creative duo on their teenage style,
app addictions and sneaky pearl purchases

I
T’S A BIT TRITE, and usually untrue, when executives say they
are departing a position to spend more time with their families.
But that’s exactly what Kate Spade, the person, did in 2007, after
she and her husband, Andy, both 53, sold her 14-year-old namesake
brand, along with the men’s counterpart, Jack Spade. “I’ve been
class mom,” she said of her sabbatical from the fashion industry. Ms.
Spade—whose daughter, Bea, turns 11 this month—focused on school pick-

JULIANA SOHN FOR THE WALL STREET JOURNAL (PORTRAIT); F. MARTIN RAMIN/THE WALL STREET JOURNAL, STYLING BY ANNE CARDENAS (SANDAL, EARRINGS, RAZOR, BOOT, STATIONERY); GETTY IMAGES (HEPBURN, KENNEDY); ROSEWOOD HOTELS & RESORTS (BAR)
ups and drop-offs, ignoring the zeitgeist entirely. “ ‘Mad Men’?” she
quipped. “Never saw it.”
Mr. Spade, meanwhile, immersed himself in several projects, including
his creative consultancy Partners & Spade and a line of loungewear
called Sleepy Jones. Yet the idea of a new venture with his wife was
never far from his mind. “We have this need to make things,” he said.
“I thought we had a new chapter in us.”
Enter Frances Valentine, the new, mostly Italian-made accessories line
that the New York-based Spades are starting with Elyce Arons, an erstwhile
partner at Kate Spade, and Paola Venturi, their former design director,
who’s been working at Prada. (The new label’s moniker is a combination
of family names.) Launching this month, the new line is more sophisti-
cated—and expensive—than the collaborators’ previous effort but preserves
the Spades’ love of feminine charm and quirk: low sandals with sculptural
faceted heels and oversize rhinestones, sleek snakeskin mules with fur
pompoms. “I’m adding a bit of nuance,” said Ms. Spade. PAIR FORCE Clockwise
from top left: Kate and
Andy Spade; Frances
My style as a teenager was… des Garçons. I think everything she Valentine sandal; Ted
Kate: Preppy-slash-vintage. My mom touches is almost like gold. And she Muehling earrings;
took me to all the vintage stores. does it so quietly. No branding. Harry’s razor and shave
My sisters would laugh and say, “Who Andy: I completely agree. It’s very ce- cream; Serge Lutens
wants that old thing?” I was like, “I rebral, but still I can wear it and not perfume; Clarks desert
do!” Old green gloves, a leopard coat. feel uncomfortable. It’s just the boot; Bemelmans bar at
Andy: Skateboard clothes. Vans, thought behind it. the Carlyle Hotel; Parker
Levi’s, corduroys and skateboard Thatch stationery. Inset:
shirts. My favorite place to shop is… Katharine Hepburn;
Kate: Paris [flea market] Clignan- Robert Kennedy.
My design pet peeve is… court.
Kate: Trends. I don’t think I can fol- Andy: I really like going to plant My stationery of choice is… because I adore it. friend and we talked for two hours.
low them. We’ve been welcomed be- shops, like cactus shops. I love the Kate: Parker Thatch. I like my statio- Andy: The Met, I would say, from the I immediately wanted to collaborate
cause we didn’t, but also criticized. shape of the plants. nery to be funnier, like, “Here’s my exterior to the inside. with her.
Andy: Ill-fitting suits drive me crazy. note, and it’s an elephant with a lady
I would trade closets with… smoking a cigarette on top.” For breakfast I eat… My most-used app is…
The one thing I wear every Kate: Katharine Hepburn Andy: They can customize it. Our Kate: Smoothies. I do kale, all that Kate: Uber.
day is… Andy: It would have to be J.F.K. daughter can scribble our name and silly stuff. I have the NutriBullet. Andy: Instagram. There are people
Kate: Ted Muehling jewelry. No mat- But that’s too obvious. Bobby. then we can get that monogrammed I make [my daughter’s] first so she on Instagram who have no profes-
ter what it is. Big, tiny. He’s an artist. on our stationery. doesn’t taste all of the greens. I make sional education in photography and
Andy: Desert boots. I started wearing I like to collect… hers with bananas, strawberries, just have beautiful eyes. I love seeing
them in high school because my dad Kate: Costume jewelry. I buy so much A good bag should be… I throw yogurt in for the protein. amateurs shoot what they see.
wore them. He thought he was an fake jewelry, it’s funny. It’s not real. Kate: Practical but have a reason to Andy: I have the leftover of the
existentialist, in the 1960s, working in I don’t wear real diamonds or anything. be. It should be interesting, too. smoothie she makes. And some The one beauty or grooming
advertising. Andy: Kodachrome photographs Andy: Something durable that gets coffee. And maybe an apple. product I can’t live without is…
from the ’50s. I collect a lot of old better with age, with no real branding. Kate: A very strong blow dryer.
My signature scent is… photographs and photography My favorite way to thank I have very frizzy hair.
Kate: Jasmine or honeysuckle. Lately albums. They tell stories, and some- The best gift I ever received is… someone is… Andy: A razor and shaving cream.
I’ve been wearing Serge Lutens. times they are just accidents that are Kate: My Mikimoto pearls. I told Kate: In person. Getting a letter is Right now I’m using Harry’s. I think
Andy: Speed Stick. beautiful photographs. Andy, “Don’t buy me expensive beautiful but I think in person to say, it’s kind of nice to use old-fashioned
pearls. I’m just a normal pearl girl. “Oh my god, thank you so much.” shaving cream.
I am always trying to find the Do not go to Mikimoto.” Because Andy: With a gift, something that
perfect version of… I said don’t, he went right there. they would think was very personal The best piece of advice I’ve
Kate: Jewelry. A perfect some- Andy: I can’t say my daughter and special to them. Earrings. A book. ever received is…
thing that nobody else has. because that’s not really a gift Kate: Michael Kors said, “Why are
Andy: A nice fitting jacket. For I received. But it really is. Kate The person, living or dead, whose you putting your hand back in the
someone my size [Mr. Spade is made a photo album of our family, style I admire is… blender?” Why did I start a new
5-foot-7], it’s hard to find. I have pictures from my mother, and all Kate: It seems very cliché but I tend company? I was like, shoot. That
to get one made sometimes. A lot of us growing up. to go with the cliché. I love Kate might’ve been good advice but a bit
of times that feels pretentious. Moss, how informal [she is]. It seems too late!
I just like the idea of finding some- My favorite place in New very natural. Andy: My mom always said, “Don’t
thing off the rack; that feels nicer. York is… Andy: [Author and artist] Beatrix be a showoff. You don’t have to put
Kate: Bemelmans [bar] at the Ost. She’s a super elegant older anything on that’s superfluous.”
My design hero is… Carlyle. It’s probably really woman. She wears turbans and is not —Edited from an interview by
Kate: Rei Kawakubo. I love Comme cliché. But I’m OK with that afraid. I met her through a good Elizabeth Holmes

HOUSEWARES OF THE RISING SUN

The design studio of fashion innovator Issey Miyake turns to home décor

DURING NUMEROUS 10-hour flights between from February 9 to May 30, remains the gar-
MARKO METZINGER FOR THE WALL STREET JOURNAL, STYLING BY ANNE CARDENAS

Helsinki and Tokyo, designers from Finnish com-
pany Iittala and Japan’s Miyake Design Studio
had plenty of time to observe both countries’
terrains. With the release of the collaboration’s
first housewares collection—30 pieces,
including pillows, place mats, napkins and asym-
metrical pentagonal ceramic cups and plates—
those landscapes are showing up as tablescapes.
“The colors and shapes we’ve used are reflec-
tions of nature,” said Jeremiah Tesolin, Iittala’s
creative director. Rich greens recall Scandina-
via’s forests, while the shades of pale pink and
gray reference the Sakura, the blossoming of
Japanese cherry trees.
“The napkins,” he added, “carry a lovely de-
tail from Japan: When folded, each is the shape
of Mount Fuji.”
But the most notable Japanese contribution
to the collection, sold exclusively at New York’s
Museum of Modern Art (MoMA) Design Store
ment-pleating process conceived by Issey
Miyake’s design studio in the 1980s for women’s
fashion. The technique, which pleats fabric after
it is cut and sewn rather than before, has been
applied to polyester place mats and table run-
ners that roll up like yoga mats without curling
at the corners and napkins that snap back to
their original geometry even after laundering.
Though they store well, items like the vases
and “table flowers” (a sort of origami doily)
merit daily display. “They work as functional ta-
bleware or decorative objects,” Mr. Tesolin said.
Keep them where you’ll see them. —Tim Gavan
TABLE TOPPERS Clockwise from top left: Iittala
X Issey Miyake Vase, $95, Cup, $30, Pink Plate,
$30, Small Platter, $60, Large Platter, $90,
Napkin, $50, and Place Mat, $65, all available
February 9, momastore.org; after May 30, call
609-853-0075 for retailers.

FOLD STANDARD // THE NAPKIN THAT’S ALWAYS AT YOUR SERVICE

Table linens from

a collection by Iittala
and Issey Miyake
Studio (pieces range
from $30 to $225)
snap back into folded
form after you launder
them, as shown.
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
W6 | Friday - Sunday, February 5 - 7, 2016 * THE WALL STREET JOURNAL.

OFF DUTY
FRESH PICKS PIECE OFFERING Pierre Charpin’s 1998 cult

Paris Batch
hit, newly reissued by Ligne Roset, can be
configured as a simple club chair (shown in
green-yellow-and-red) or, with the additions
of a few ottomans, a room-filling Slinky.
Pierre Charpin Slice Chair by Ligne Roset,
from $2,670, and Ottoman, from $840 each,
preorder at Ligne Roset, 212-375-1036
Nine standout pieces from the trendsetting
French design show Maison & Objet

THE PHRASE “MAISON ET OBJET” doesn’t translate gracefully into

English (“House and Thing”? “Home and Object”?). But the sprawling
French trade fair touting the latest in interior and product design has
become a fluent signifier of global savoir faire—and an increasingly
citywide event. Last week, buyers and the press descended on Paris
to scope out major trends (back-to-nature primitivism), big-name pre-
views (designer Patricia Urquiola’s Deco-inspired desk ac-
cessories for Georg Jensen), techy novelties (Lumio’s
diary-shaped lamp/phone charger) and covetable new
essentials (Hermès’s jungle-themed porcelain). Here,
our picks for the best in show. —Sarah Medford

SLOPE FOR THE BEST Radiating BI-LEVEL BEAUTY For this desk inspired
Nordic cool, Ercol’s petite sofa in solid by the sculptures of Alexander Calder, Jaime
steam-bent ash has ski-jump arms Hayon has set two tiers—one a stained-ash
and a graceful spindle back that makes bean shape, the other a disk of either marble
it a looker from behind. Marino Two- or brass—atop powder-coated steel legs.
Seater Sofa, from $3,320, preorder at An artful station for workaday chores. Jaime
A+R, 800-913-0071 Hayon The Palette Desk JH9 by &tradition,
$3,750, preorder at Suite NY, 877-278-4836

A ROCKING GOOD TIME

The focus stays squarely on the
present in Nika Zupanc’s stop- DISHY SPOONS Welsh ceramist
light-red ceramic clock, which Justine Allison makes wafer-thin
will rock on its arced supports porcelain implements, pinstriped
if you tap it gently. Nika Zupanc with a fine glaze, that straddle
Infinity Clock by Bosa, about the line between decorative and
17 inches tall, from $543, preor- functional. Justine Allison Spoons,
der at Duplex, 917-803-9103 10 inches long, about $87 per pair,
madebyhandonline.com

GET TWIGGY WITH IT The quirks are baked right SHAPE SHIFTER Like choose-your-
into these ceramic dishes, which Paris-born Brook- own-adventure stained glass, Roche
lynite Caroline Petit Mason makes and decorates Bobois’s table lamp projects LED light
by hand. Available in 7- and 8.5-inch sizes. Branch through jewel-colored scrims—reconfigu-
Plates, from $50 each, threesevenus.com rable acetate panels—on a compact metal
rack. Arturo Erbsman
Chroma Table
Lamp, $1,420,
for locations
and to preorder,
go to roche-
bobois.com

SOUND AND VISION

Whether you stream
your music or spin it,
La Boite Concept’s high-
fidelity speaker console
will package it with TRAVELING SHOW This slim, multi-
style: a leather top, black-lacquer finish purpose walnut cabinet rests on a
and raked legs give the eight-speaker trolley for easy wheeling. Includes
plug-and-play system (with space for a turn- metal-mesh sides and sliding glass
table) the profile of a handsome writing doors in front and back. Neri&Hu
desk. La Boite Concept LP 160, $4,150, Cabinet of Curiosity by Stellar Works,
preorder at A+R, 800-913-0071 $3,980, DWR, 800-591-6965

FLOWER SCHOOL

NOT JUST A PRETTY VASE

After a white ceramic vessel reminded floral designer
Lindsey Taylor of the face in a Picasso painting, she decided
to complete the picture with blooms

FEBRUARY ON the East They should give you as

Coast can be gloomy. During
these hibernating days,
the frozen garden offers lit-
tle color to cut and bring
indoors. So when the time
came to choose a piece of
art to serve as this month’s
inspiration, I sought out
something vivid, playful
and mood-elevating.
A number of factors con-
spired to lead me to “The
Red Armchair” (1931), a
painting by Pablo Picasso
(1881-1973). I had recently
seen an exhibit of his sculp-
tures at New York’s Museum
of Modern Art, so he was
on my mind. I’d also come
across a white earthenware
vessel, known as the Medusa
vase, by ceramist Frances
Palmer. The wriggly stripes
she’d pinched into the clay
and the looping handles re-
called Picasso’s work in gen-
eral and specifically the face
in this painting, a canvas
that met my criteria for Feb-
ruary-doldrums-banishing.
THE ARRANGEMENT Vessels are important.
STEPHEN KENT JOHNSON FOR THE WALL STREET JOURNAL, FLORAL STYLING BY LINDSEY TAYLOR (ARRANGEMENT); © 2016 ESTATE OF PABLO PICASSO/ARTISTS RIGHTS SOCIETY, NEW YORK (INSPIRATION)
much joy empty as full, and
different styles serve differ-
ent functions: Straight-sided
shapes give flowers a verti-
cal modern rigor; a form
that nips and flares, like
an ironstone pitcher, lets
blooms fall horizontally for
a looser, romantic look.
From the flower market
and a local deli I sourced
a bold mix of purple anemo-
nes, yellow roses, red parrot
tulips, orange kumquat cut-
tings with green leaves, deep THE INSPIRATION
plum ninebark and nandina ”The Red Armchair” (1931),
foliage. I then grouped hues above, by Pablo Picasso,
to reference the canvas’s suggested a tableau of
color blocking. The yellows anemones, roses, tulips,
and oranges on the painting’s kumquats and plum ninebark,
left were supplied by roses left. White earthenware
and kumquats. Anemones Medusa Vase, $450, and Por-
and ninebark evoke the up- celain Oxblood Vase, $450,
per right quadrant, and red francespalmerpottery.com
tulips mimic the stripes.
To give depth to the floral This spirited, intense
tableau, I tucked another of mix of colors—some from
Ms. Palmer’s vases, porcelain blooms, some from citrus—
in sang de boeuf glaze, to the successfully dispelled even
left and let a single red tulip the most ferocious February
drape over the rim. cabin fever.
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. Friday - Sunday, February 5 - 7, 2016 | W7

OFF DUTY

Valentine’s
Shopping,
Rekindled
Laptops ready, couples? Let’s replace
agonized V-Day consumerism
with a collaborative-shopping duet

admitted that we secretly

BY KEITH BLANCHARD
NO HOLIDAY is hated quite
as much as Valentine’s Day,
and it isn’t just because we
don’t get the day off. Sure,
if you’re single, it’s a stark
red reminder of your shame.
But it’s no bowl of candy
hearts for couples, either.
You need to meet a whole set
of stressy objectives: Find
the perfect card then lyrically
personalize it; score a covet-
able dinner reservation on the
biggest date night of the year;
pick a gift that isn’t too cheap
or too expensive, too casual
or too familiar, too cliché or
too out there in that “you-
don’t-know-me-at-all!” way.
But no pressure!
hate shopping for each other.
My proposal: Let’s launch
a Valentine’s Day reboot that,
yes, celebrates love but
dispenses with the solitary
confinement of conceiving,
buying and wrapping alone.
Let’s replace the secrets and
awkward surprises with
togetherness and certainty.
The day and the gifts will
be just right because you’ll
each pick out your own.
Start at Barneys
even if the trail will
end at Bonobos.

For a holiday that’s sup-
posed to be all about inti-
macy and love and together-
ness, we sure spend a lot of
it in frustrated solitude:
anxiously guessing at sizes,
flipping through cloying
greeting-card sentiments and
shopping all by ourselves at
opposite ends of the mall.
But what if we could es-
cape this nightmare? We’ve
all heard of couples going
rogue: Skipping the Valen-
tine’s madness and dining out
on a different night. Gifting
one another meaningful expe-
riences instead of Bed Bath &
Beyond sleep masks. Even
taking the scandalous step
of…not buying presents at all.
It took 10 years of mar-
riage for my wife to dissuade
me from buying flowers on
their most expensive calen-
dar day, another 10 before we
The revolution begins by
grabbing a bottle of wine and
finding a free night when you
and your significant other can
spend a few hours together.
It needn’t be February 14;
choose any date that’s conve-
nient for bosses and baby sit-
ters. Besides wine glasses and
hors d’oeuvres, you’ll need a
sofa and a laptop or two with
robust Internet access.
Let the shopping begin!
The idea is to set a budget
then work together to find
the ideal presents for each
other and buy them together.
Going from “What would
he/she want?” to “What do
I want?” is a paradigm shift.
Unless you founded Face-
book, you may not be used
to asking yourself idly, “What
would I like to impulsively
buy for myself today?” But
indulge your imagination.
Figuring this out collabor-
atively can be surprisingly
fun. You can coach each
other, and add gentle sugges-
tions (“Should we just check
our lease first, and make
absolutely sure our landlord
allows potbellied pigs?”)
and polite reminders (“These
artisanal scarves are gor-
geous, but wool makes your
neck itch, remember?”).
You’ll have aha moments and
you’ll hit dead ends; you’ll
learn a little something you
didn’t already know about
each other. (See sidebar.)
Over one laptop (intimate)
or two (practical), you and
your partner can kick back
and take time to pinpoint the
perfect presents. You might
start by e-leafing through in-
spirational blogs and best-of
articles for ideas. Then send
each other on solo research
paths. (“Oh! See if LG makes
a wine cellar.”) Dream big for
the fun of it, and dial it back
when you have to. Start at
Barneys even if you know the
trail will end at Bonobos.
As you find likely candi-
dates, check out what the
buying community has to say.
(Reading Amazon book re-
views together, for example,
is weirdly satisfying. You
learn about the book and just
how disturbed your fellow
readers can be.) Vet any
questionable ideas—like
a bulky sweater that could
be mistaken for a subtle dig
at Bill Cosby—through neu-
tral pals on Facebook.
(“OK, friends, we need a
vote here, and you can’t say
‘neither’....”)
The core of the day is
the collaborative shopping
experience, but feel free
to pack in activities around
it. A meal beforehand, for
example, or some drinking/
dancing/other nocturnal
activities later to celebrate
your successful raid.
The results will speak
for themselves. You’ll spend
GRAHAM ROUMIEU
the same amount of money
you normally would but
end up with a gift you truly
welcome, instead of your
partner’s best, most agonized
guess. And you’ll be sure
your partner is happy and
satisfied too, instead of
never quite knowing whether
he or she was secretly
indulging in an eyeroll.
It’s a win-win, and the two
of you can share an inti-
mately smug laugh at all
the stressed-out, unenlight-
ened Valentine’s Day tradi-
tionalists grumbling in line
as they return their artisanal
pencils and Game of Thrones-
themed fondue pots.

TO LOVE, LOVE, LOVE YOU IS TO…NOT REALLY KNOW YOU AT ALL

How well can a married couple of 20-plus years intuit each other’s Valentine’s-gift desires? The writer and his wife
chose two presents for each other—and themselves. Then they compared notes.

FOR HER FOR HIM

He would have gifted:
The HomeDesigner Suite
His reason: She’s long talked about starting
up an interior design business—this 3-D
home-design software seemed perfect.
Her thoughts: This is kind of like buying me a
blender. When I’m ready, I would have bought
this for myself, as a business expense.
The DeLonghi EC 702
Espresso/Cappuccino Machine
His reason: She drinks the good stuff when
we’re out but only joe at home.
Her thoughts: It’s a nice idea, but I wouldn’t
splurge all the time, so I’m not sure I’d get
enough use out of it to justify the cost.
But she really wanted:
Marc Jacob Rimless Aviator Sunglasses
Her reason: My friend got a really nice pair
of sunglasses for her birthday and I was a
little jealous.
His thoughts: I can’t pick out sunglasses for
myself, let alone for anybody else.
Michael Kors Hamilton Soffiano Leather
East West Satchel
Her reason: If I’m going to spend this much
money on myself I want it to be something
I’ll get a lot of use out of for a long time.
His thoughts: The intricate calculus of what
bags are needed for what events/seasons/
moods is beyond my understanding.
She would have gifted:
Exotic Meats Crate from Mancrates
Her reason: When we eat out, you go
exotic whenever possible, and not just to
horrify the kids.
His thoughts: Mantastic. Ostrich, kangaroo
and buffalo jerky are hard to resist, and
I would never splurge on this for myself.
Deluxe Mini-Kegerator and Conversion Kit
Her reason: If you could drink nothing but
beer, you would die happy.
His thoughts: Mixed. What I love is
sampling the beers of the world, and I’m
not sure I want to be locked to just one
flavor for a whole keg…even a mini one.
But he really wanted:
Brookstone Neck & Shoulder Sport
Massager with Heat
His reason: I write and type all day; this
could be a nice, passive way to relieve the
pain/pressure.
Her thoughts: I think you’d buy that and
it’d sit in a closet after a week. If you want
a massage, just go get a massage.
Smokey Mountain Cooker
His reason: I’ve always wanted to get into
barbecue and develop my skills.
Her thoughts: I did not think you wanted
anything like that. You don’t really love being
in the kitchen.

THE FIXER: MICHAEL HSU

Pack a Smarter
Lunchbox
Q I’m trying to eat healthier and so have started taking my lunch to
work. Can you suggest an attractive, practical container?

A I’ve come across two innovative lunch containers lately. The first is a
slim 9-by-9-inch divided plate (similar to a TV dinner tray) called the
Munch Box Sleek Edition ($13). You can find it on Amazon, along with
nearly identical products by Better Bento, PackTOGO and Nucucina.
It’s more attractive to eat from than a typical plastic container, and
the lid snaps down securely to create a watertight seal—even among the
different sections of the plate (so your fruit salad won’t taste like the
Italian dressing you put on your salad). The container can be a bit
stubborn to open, but the process becomes easier after you run the lid
through the dishwasher a few times.
The San Yoshi Bento Bowl with Easy-Clean Finish (about $18) is another
nice option. This 5.4-inch diameter bowl from Japan has a snap-on lid and
an interior tray to keep foods separate. The seal isn’t leakproof, but the
bowl’s interior is treated with a slick coating that makes it a cinch to clean:
Simply wipe with a damp paper towel. Like the Munch Box, this bowl is
microwave- and dishwasher-safe.
KIERSTEN ESSENPREIS

While many online retailers sell a version of this product without the
easy-clean finish, the model with the special coating is rolling out to Whisk
(whisknyc.com) and other online retailers soon.

Have a lifestyle problem that a gadget might fix? E-mail us: thefixer@wsj.com
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
W8 | Friday - Sunday, February 5 - 7, 2016
RUMBLE SEAT: DAN NEIL
Audi’s Q7 SUV: A Weighty Analysis of Design
MAY I JUST GEEK OUT A BIT?
The 2017 Audi Q7 3.0T SUV
weighs, officially, 474 pounds less
than the outgoing model. As these
things go, that’s some diet. Part
of the weight loss is due to the fact
that the former Q7 was overbuilt,
obliged to share major bits with
ruddy-cheeked off-roaders Porsche
Cayenne and VW Touareg sport-
utilities, its cousins in the VW
Group. Car designers call this un-
wanted legacy of platform sharing
“scar tissue,” by the way.
For the new Q7, Audi pumped
up the lightness, using extravagant
amounts of aluminum in chassis,
even aluminum castings, as well
as aluminum in all the doors and
body panels (aluminum is about
30% lighter than steel). According
to the literature, the Q7 is no more
than 12% high-strength steel.
Why is that interesting, you ask?
I contrast it with another big SUV
project, another lushly sprung luxe-
truck for about the same price and
size, whose designers went another
way. When the clean screen pre-
sented itself to Volvo’s XC90 team,
they chose to build in steel. Alumi-
num vs. steel. Which one is best?
I’m warming up to steel.
What cars are made of is of sur-
passing interest right now, beyond
Geekdom. Global vehicle emission
standards are rising and crash-test
standards only get stricter. The
common enemy, in crash or fuel
economy tests, is mass.
I had expected that, in automak-
ers’ relentless search for efficiency,
aluminum alloys would inevitably
supplant steel, except in a few
crash-critical areas such as side
beam and B-pillar. But steel has
added recent advantages: cost is
the big one, but formability, fasten-
ing, tailoring and pinpoint strength
are also important. Steel rocks.
I’m struck by what you might
call steel’s space efficiency. Put
Thanks to an ingenious lens design, these truly watertight goggles give frustrated swimmers a wider range of vision
simply, a steel box can be made of
thinner walls than an aluminum
box to do the same job. Aluminum
takes up space in packaging.
Let’s compare these two, one
majority high-strength steel, the
XC90, and aluminum-flavored Q7.
In this Q7, when you lower the
two rows of rear seats, the unob-
structed cargo hold yawns before
you: 71.6 cubic feet behind the front
seats. The Audi’s five seats (not
over generously padded) in the rear
two rows fold and disappear, form-
ing a flat load floor 79.5 inches
long. The molded door trim is
closely profiled and the interior in-
trusion of the B-pillars minimal.
Put simply, a steel
box can be made of
thinner walls than
an aluminum box to
do the same job.
The door openings themselves and
door swing angles are generous.
Step back from the opened power
lift gate. Pretty great.
But the steel-ribbed XC90 is like
a shuttlecraft bay back there: 85.7
cubic feet in a three-row SUV that
is, nose-to-tail, about five-inches
shorter than the German.
And, in this case steel’s coup
de grâce, the XC90 is lighter than
the Q7 by about 300 pounds.
So, while other picayune ped-
dlers of automotive opinion dwell
on the Audi’s thinking headlamps
and four-wheel steering, I am like
a small child at Christmas, fasci-
nated by the box.
Speaking of toys, the Q7 has
them, a raft of amenities like the
optional full-color high-def 12.3-
inch TFT “Virtual Cockpit.” In one
A SIGHT FOR SOGGY EYES
OFF DUTY
format, a Googlized map of the
world unfurls as if in itty-bitty Pa-
navision. OK, that’s cool.
Another big hunk of silicon runs
the infotainment and telematics
package, with 4G LTE data, smart-
phone connectivity, and blazing
Wi-Fi to service two (optional) en-
tertainment tablets for the rear
cabin. The central viewer is a land-
scape-oriented pop-up TFT screen,
which is nicely civilized atop the
dash. But the cabin’s technical
grace note is the sleek vanes in the
across-the-dash air register.
For those who are hearing-im-
paired, or those who would like to
be, I recommend the optional Bang
& Olufsen sound system with 23
speakers and 1,920 Watts. We can
agree 23 speakers is a cry for help.
Distracted? The Q7 offers a suite
of driver’s assistance/bonehead
mitigation technologies. One sys-
tem, the Vehicle Exit Assist, warns
occupants if a bicycle is approach-
ing before they open the doors
(somebody in R&D rides a bike in
Manhattan, I’m guessing). Another
bank of code is called “collision
avoidance system,” which will ac-
tively engage steering assist to
help maneuver around an obstacle.
Other dope digital includes
full-color head’s up display, with
graphics for navi and status,
including vehicle speed, which
I ignored on my way to a very un-
happy meeting with a California
Highway patrolman, alas. I blame
the polarized sunglasses.
Aesthetically, the new Q7 ad-
heres to a proven formula: When
in doubt, add metal trim. But it
absolutely works, inside and out.
The Audi’s archly technocratic
grille gets the gourmet range treat-
ment, and the lower air intakes
and lower doors are kissed with
chrome-like bling. The signature
move here, the flying suplex of
the brand, are the arrow-themed
GOGGLES ARE the bane of pretty
much every swimmer’s existence.
The straps slip. The seals leak.
The view—tunnel vision, at best—
stinks. Michael Phelps’s goggles
famously failed him during his
world-record-setting 200-meter
butterfly swim at the Beijing
Olympics. “From the 150-meter
wall to the finish, I couldn’t
see the wall. I was just hoping
I was winning,” he said after the
2008 race.
To be fair, goggle designers
face an engineering conundrum.
They have to craft a watertight
product that precisely grips one of
the most topographically uneven
parts of the body—and do so with-
LED running lights and taillamps.
If you like shiny objects, you
will appreciate the Q7’s interior, as
well, with lustrous wood or metal-
lic surfaces. Audi cabins succeed
because of their richness of mate-
rials and elegant lines, not because
they resemble the cockpit of some
criminal mastermind’s speedboat.
At the moment, the Q7 comes
with the one engine, a splendid
firebot, the 3.0-liter supercharged
V6 good for 333 hp and 325 pound
feet of torque.
Compute that power to weight
through an eight-speed transmis-
sion and traction optimized all-
wheel grip and you get acceleration
in the mid-5 second range. That’s
a fine pace for a 2.5-ton wagon
2017 AUDI Q7 SUV 3.0T
Base price: $54,800
Price, as tested: $72,875
Powertrain: Supercharged and in-
tercooled direct-injection 3.0-liter
DOHC V6 with variable valve
timing; eight-speed automatic
transmission; full-time all-
wheel drive.
Horsepower/torque: 333 hp at
out hampering visibility or creat-
ing too much drag.
ROKA’s sleek and slim R1 gog-
gles, available February 16, attack
those challenges head-on. The R1
manages to form a tight seal that
stays in place thanks to a just-firm-
enough bridge (the piece that runs
across the nose), yet the goggles
feel very soft around the eye sock-
ets. In our tests, the R1 didn’t leak,
even through multiple flip turns.
The R1 really innovates, however,
by improving peripheral vision.
While most goggles feature lenses
that are essentially flat, the R1’s
angle back toward the outer edges.
Result: a less obstructed view that
allows you to steal glimpses of
THE WALL STREET JOURNAL.
STREET SMART If you have
obsolescence anxiety, be
assured, the Q7 has some of
the freshest IT on the lot.
AUDI
with a 3.0 liters of engine displace-
ment. The refinement coaxed from
this hardworking powertrain is
trademark Audi.
The vehicle I spent the most
time in was the Prestige trim,
a lot of horsy hardware, including
adaptive air suspension, torque-
vectoring, and four-wheel steering,
wiggling some very sporty 20-inch
rubber. It was awesome. It drove
like a high-price sport wagon,
which it sort of is, albeit with a fat
man’s coffin tied to the roof.
And I was having a lovely time
in this traction-jugging showboat
until I saw the blue lights, which
seriously curtailed my mood. I’ll
circle back to Audi’s steel magnolia
when I’m in a better mood.
5,500-6,500 rpm/325 lb-ft. at
2,900-5,300 rpm
Length/weight: 199.6 inches/
4,938 pounds
Wheelbase: 117.9 inches
EPA fuel economy: 19/25/21 mpg,
city/highway/combined (est)
Cargo capacity: 37.5/71.6 cubic
feet, behind second row/first row
your lane mates (or rambunctious
F. MARTIN RAMIN/THE WALL STREET JOURNAL, STYLING BY ANNE CARDENAS
tweens) out of the corner of your
eye. With your head facedown in
the water, you can still see along
the surface. And when you lift your
head to breathe, it’s the sky and
horizon that come into focus rather
than a narrow view of waves.
One warning: The angling of the
R1’s lenses might make you dizzy
if you have a sensitive inner ear.
If that’s the case, these goggles
probably aren’t for you. But if not,
the R1 could relieve your most per-
sistent goggle-woes: feeling lost in
a sea of blurry bodies—or worse,
having your goggles fill with water.
$35, rokasports.com
—Matthew Futterman
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.

MANSION
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com

‘In football, everything is complicated

by the presence of the opposite team.’
—Jean-Paul Sartre

HOMES | MARKETS | PEOPLE | UPKEEP | VALUES | NEIGHBORHOODS | REDOS | SALES | FIXTURES | BROKERS

© 2016 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Friday - Sunday, February 5 - 7, 2016 | W9

NFL STARS
TACKLE THE
MARKET
The biggest, the fastest and the
priciest: an off-the-field analysis
ALEX
SMITH
DARREN
SPROLES
CHRISTIAN
PONDER
of real-estate deals by football MARCUS
MARIOTA
NDAMUKONG
SUH
ASANTE
SAMUEL
pros in the past year.
Top selling price Slowest Fastest Smallest Most expensive Most expensive/
by a quarterback transaction transaction property home purchased largest home sold

CLOCKWISE FROM TOP LEFT: ZUMA PRESS (2); GETTY IMAGES; ASSOCIATED PRESS (2); ZUMA PRESS; LUXURY LIVING FORT LAUDERDALE

MOST EXPENSIVE PURCHASE Miami Dolphins defensive tackle Ndamukong Suh purchased this home in Fort Lauderdale, Fla., for $7 million last summer. The 11,142-square-foot home has six bed-
rooms, seven bathrooms and two half-baths. Amenities include an 11-seat home theater, maid’s quarters, a game room and a fitness center that overlooks the pool.

BY BETH DECARBO
WHEN NDAMUKONG SUH signed a six-year,
$114 million contract with the Miami Dolphins in
March, he became the highest-paid defensive
tackle in NFL history.
Mr. Suh set another record in 2015: He spent
$7 million in August on a home in Fort Lauder-
dale, Fla., the most expensive real-estate pur-
chase by an NFL player last year.
In the spirit of Super Bowl 50, Mansion exam-
ined the stats behind 66 NFL-related home list-
ings in 2015. One finding: If real estate were a
predictor of gridiron wins (it’s not), the AFC
would win the championship. Of the 25 homes
that were either bought or sold, 15 of them in-
volved players, active or retired, who most re-
cently played in the American Football Confer-
ence.
We also looked at the year’s priciest sales,
fastest deals, largest homes and other off-the-
field player stats, compiled with the help of Real-
tor.com. (News Corp, which owns The Wall Street
Journal, also owns Realtor.com, the listing web-
site of the National Association of Realtors.)
According to real-estate agents involved in
these deals, the top features requested by pro
athletes are privacy and security. The players
Please turn to page W10

PRIVATE PROPERTIES | CANDACE TAYLOR HOUSE

OF THE DAY

LUCIANO PAVAROTTI’S HOME RETURNS

wsj.com/houseoftheday

The late opera star’s Manhattan apartment is back on the market for $10.5 million.

The longtime Manhattan

home of late opera singer
Luciano Pavarotti can be
KNIGHT FRANK

had for a song, returning to

market at the discounted
price of $10.5 million, ac-
cording to Deborah Grub- Italy
man of the Corcoran Group. A farmhouse under
The Central Park South the Umbrian sun
co-op first went on the mar-
ket with Douglas Elliman
Real Estate for $13.7 million
in 2014, then had its price
cut to $11.5 million. After
failing to sell, it came off
HALSTEAD PROPERTY LLC

the market in November.

Located in Hampshire
House, the 23rd-floor unit
has views of Central Park,
said Ms. Grubman, who is
listing the property with
colleague David Dubin. Mea- United States
suring about 2,100 square A 12-room penthouse
feet, it has two bedrooms in New York
and two bathrooms. In the
great room there is a grand
piano that the tenor used
for rehearsing and enter-
CORCORAN

taining. Ms. Grubman said

the piano isn’t included in
the asking price; anyone in-
terested in buying it would widow, Nicoletta Mantovani, one-bedroom units on the been “beautifully main- lieve it will sell.”
IMAGE FACTORY

need to negotiate with Pa-
varotti’s estate.
Pavarotti was born in Mo-
dena, Italy, but purchased
the Manhattan apartment
about 30 years ago. He died
in 2007 at age 71. His
decided to sell because “it’s
not really being used,” Ms.
Grubman said. A portion of
the proceeds from the sale
will go to the Luciano Pa-
varotti Foundation.
Pavarotti also owned two
same floor, which he used
for staff and guests, but
those have been sold: one in
2012 for $999,999, and the
other in 2013 for $999,990.
Ms. Grubman said the
two-bedroom apartment has
tained” but the bathrooms
and kitchen “need freshen-
ing up.” As for why it hasn’t
yet sold, “I think it was not
priced appropriately,” she
said, adding: “It’s priced
now at a point where I be-
She said that the neigh-
borhood has become in-
creasingly desirable, with
high-end buildings like
One57 popping up nearby. Australia
Ms. Mantovani didn’t re- A tranquil country
spond to requests for comment. house in rural Victoria
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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W10 | Friday - Sunday, February 5 - 7, 2016 THE WALL STREET JOURNAL.

MANSION

NFL STARS TACKLE REAL-ESTATE MARKET

Continued from page W9
in these real-estate transactions
did not respond to requests for
comment.
Real-estate agents say that the
pedigree of an athlete-owned home
can be a selling point for buyers.
Here are the NFL home deals that
set the year’s biggest records.

MOST EXPENSIVE HOME

PURCHASED: $7 MILLION
Buyer: Ndamukong Suh, defensive
tackle with the Miami Dolphins
In moving from Detroit to South
Florida, Mr. Suh purchased a par-
tially furnished home in Fort Lau-
derdale for $7 million that has six
bedrooms, seven bathrooms and
two half-baths in 11,142 square
feet, according to public records.
Chad Gray represented the
home’s seller in the Coral Ridge
neighborhood, a community on the
Intracoastal Waterway with a golf
course and a yacht club. “The
home was built in 2013 and has
very modern architecture, soaring
ceilings and walls of glass,” says
Mr. Gray, a broker associate of the
Luxury Living Fort Lauderdale
Group at Coldwell Banker.
Amenities include an 11-seat
home theater, maid’s quarters, a
game room and a fitness center that
overlooks the pool. A rooftop enter-

LUXURY LIVING FORT LAUDERDALE

taining space, accessible by elevator,
is decked out with artificial grass,
patio furniture and a flat-screen TV.
Mr. Suh also sold a home in 2015,
getting $3.1 million for a Colonial-
style home in Birmingham, Mich.,
about 20 miles north of Detroit. This
home has five bedrooms, four bath-
rooms and three half-baths in 7,394
square feet. Amenities include a MOST EXPENSIVE BOUGHT Mr. Suh, formerly with the Detroit Lions, purchased the home last year after signing a $114 million contract with the Miami Dol-
massage room, fitness room, indoor phins. The home has a contemporary design with ‘soaring ceilings and walls of glass,’ says listing agent Chad Gray.
sports court, according to the listing.

MOST EXPENSIVE HOME SOLD:

$7.5 MILLION/ LARGEST HOME

FROM LEFT: JAMES IRWIN/PLANOMATIC; PREVIEWFIRST

SOLD: 16,717 SQUARE FEET
Seller: Asante Samuel, former
cornerback with the Atlanta Fal-
cons who last played in 2013
The home is located in the Land-
mark Ranch Estates development
in Southwest Ranches, Fla., about
15 miles southwest of Fort Lauder-
dale. “In this particular neighbor-
hood, there are a lot of pro ath-
letes,” says Ben Moss, managing
director of the sports and enter-
tainment division of One Sotheby’s
International Realty.
The home underwent several MOST EXPENSIVE SOLD Asante Samuel, former cornerback with the Atlanta SECOND-LARGEST SOLD Free-agent nose tackle Ryan Pickett sold this
price reductions before selling in Falcons, sold this home in Southwest Ranches, Fla., for $7.5 million. 14,902-square-foot home in Poway, Calif., for $3.02 million.
October for $5.4 million below its
original asking price. Mr. Moss was tured the property, which has a Samuel] realize that it was a good lic records. It is just a 15-minute “It’s a very conservative home in
the second listing agent brought in large pool with a 25-person grotto, a time to sell, while the market was drive from Philadelphia, where a great, great neighborhood,” she
to market the property, which has theater room, game room, music good,” says Mr. Moss. Mr. Maclin once played for the adds. The median listing price of
nine bedrooms, 11 bathrooms and studio and 10-car garage, among Eagles. The home, modest by NFL a home in West Deptford is
two half-baths on 4.9 acres. other things. “For him, I think there LEAST EXPENSIVE HOME SOLD: standards, is located in the town- $130,000, according to Real-
Mr. Samuel, who had the home was some cachet with an NFL $325,000 ship with the RiverWinds Com- tor.com. “The bang for your buck
built in 2013, was comfortable with player,” Mr. Moss said. Seller: Jeremy Maclin, wide re- munity Center, which offers resi- is here, and that’s why we get a
his agent revealing his identity to The home’s size and upkeep ceiver for the Kansas City Chiefs dents “acres and acres” of sports- lot of professionals moving to the
house hunters, Mr. Moss said. The played a role in Mr. Samuel’s deci- The four-bedroom, 2½-bath- related activities, says Kimberly area.” Public records indicate
buyer, whom Mr. Moss declined to sion to sell, his agent says. “The room home measures 2,506 Mehaffey, an agent with Century that the Maclins purchased prop-
name, wasn’t looking to move—until large square footage and the fact square feet and is located in West 21 Hughes Riggs Realty who rep- erty in Lee’s Summit, Mo., a Kan-
he saw a marketing video that fea- that he’s not playing made [Mr. Deptford, N.J., according to pub- resented Mr. Maclin in the sale. sas City suburb.

WHERE IN THE WORLD?

NAME THAT ISLAND

Match these private islands for sale with their locations: Belize, Fiji and Norwalk, Conn. Answers below.
HIGGINS GROUP/CHRISTIE’S INTERNATIONAL REAL ESTATE (2)
ESOTERIC VISION PHOTOGRAPHY (2)

ZOOM FIJI (2)

$6 million $10.96 million $12 million

8 acres 31/2 acres 600 acres

This island features two luxury villas and two guest cottages.
Residences are fully equipped with water and electricity for off-
the-grid living. Equipment for diving, fishing and water sports is
included in the sale. A deep, natural lagoon can harbor multiple
large boats. Agent: Sotheby’s International
The main residence is an English-style manor that was built in The open-plan main residence has three bedrooms and three
1900 and has been fully renovated. A guest cottage, tea house guest villas. Established tracks lead to the five beaches. Staff
and large boat house can accommodate additional lodgers. This quarters, horse and sheep paddocks (and livestock), boats and ve-
island has a protected harbor with stone sea wall. hicles are included in the sale. A deep-water jetty provides access
Agent: Higgins Group, Christie’s International to the island. Agent: Knight Frank — Aili McConnan

ANSWERS, FROM TOP: NORTH SADDLE CAYE ISLAND IN BELIZE; TAVERN ISLAND IN NORWALK, CONN.; AND NANANU-I-CAKE ISLAND IN FIJI
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
SMALLEST PROPERTY Nashville condo bought
by Tennessee Titans quarterback Marcus Mariota.
CLOCKWISE FROM TOP: JOE BUGLEWICZ FOR THE WALL STREET JOURNAL; RYAN COLLERD FOR THE WALL STREET JOURNAL; PICTOMETRY; SERENO GROUP REAL ESTATE
TOP SALE BY A QUARTERBACK Alex Smith, quarterback for the Kansas City Chiefs, sold this home in Monte Sereno, Calif., for $3.999 million. The 4,650-
square-foot home features French accents, with 100-year-old reclaimed wood beams and antique limestone floors imported from France.
SCOTT TROYANOS/HI LINE IMAGING
FASTEST TRANSACTION Free-agent quarterback Christian Ponder bought this 8,048-square-foot, ranch-style home in Phoenix, which had been on the market
for three days. Mr. Ponder and his wife, ESPN reporter Samantha Ponder, bought the house, which sits on 1½ acres, for $2.2 million.
SECOND-LARGEST HOME SOLD:
14,902 SQUARE FEET
Seller: Ryan Pickett, free-agent
nose tackle, most recently with
the Houston Texans
Mr. Pickett sold his home in Po-
way, Calif., for $3.02 million, far
below the initial asking price of
$7.499 million. The eight-bedroom,
10½-bath home on 3½ acres had
been previously owned by retired
Major League Baseball player Je-
LEAST EXPENSIVE Kansas City’s Jeremy Maclin
sold this West Deptford, N.J., home for $325,000.
romy Burnitz.
The home is a veritable sports
complex that includes a tennis
court, half-basketball court, put-
ting green, sunken trampoline and
large playground area.
In addition to the resort-style
pool, it has a waterfall, grottoes and
two Jacuzzis—“one Jacuzzi at the
top of the water slide, one at the
bottom,” says Nina Wells of Keller
Williams-Carmel Valley (and wife of
Friday - Sunday, February 5 - 7, 2016 | W11
MANSION
SLOWEST TRANSACTION Philadelphia Eagle
Darren Sproles bought this Poway, Calif., home.
former MLB pitcher David Wells). private terrace.
Listing agent Chad Wohlers, of
SMALLEST PROPERTY: 1,890 Parks Real Estate, says Mr. Mariota
SQUARE FEET was “drawn to the privacy of the
Buyer: Marcus Mariota, Tennes- penthouse because there is con-
see Titans quarterback trolled access to the penthouse
Mr. Mariota paid $1.05 million floor.”
for a penthouse condo at the Three-bedroom penthouse
Icon, a luxury building in down- apartments are unusual in Nash-
town Nashville. The three-bed- ville, Mr. Wohlers adds. “I believe
room, 2½-bath unit has 15-foot he wanted the space because he is
ceilings and a 200-square-foot so close with his family.”
FASTEST TRANSACTION: 3 DAYS
Buyer: Christian Ponder, free-
agent quarterback, most recently
with the Denver Broncos
Bobby Lieb, associate broker with
HomeSmart Realty in Phoenix
showed Mr. Ponder and his wife,
ESPN reporter Samantha Ponder,
several homes before an 8,048-
square-foot, ranch-style home came
on the market. Three days after the
home was listed, the couple pur-
chased it for $2.2 million. The prop-
erty, located in north-central Phoe-
nix, was chosen because Ms. Ponder’s
family lives nearby, Mr. Lieb says.
The home sits on 1½ acres and
abuts a 3-mile nature path where
they can walk and take their kids
in the strollers, adds Mr. Lieb, who
says he has sold homes to about
two dozen athletes over the years.
“Most established players in the
Phoenix area go to Paradise Valley
or Scottsdale,” he says. “In the
area [the Ponders] bought in, the
homes are more typical ranch. It’s
not ostentatious—they don’t
scream, ‘Look at me.’”
SLOWEST TRANSACTION: 401 DAYS
Buyer: Darren Sproles, Philadel-
phia Eagles running back
When the six-bedroom, seven-
bathroom house in Poway, Calif.,
was first listed in October 2013,
the seller asked $4.395 million,
says Daniel Beer, a Windemere
Homes & Estates agent who repre-
sented Mr. Sproles. After sitting on
the market, the home was relisted
for $4.2 million and later reduced
again to $3.595 million.
All that time on the market
paid off for Mr. Sproles, who with
his agent negotiated a purchase
price of $2.81 million, more than
$1.5 million below the initial list-
ing price. The deal closed in De-
cember 2014 and was recorded in
January 2015.
“Darren’s a conservative guy,”
says Mr. Beer. “He made a great in-
vestment.”
The Mediterranean-style home
measures 8,844 square feet and sits
on 4.44 acres in a gated community.
A courtyard leads to a “man cave,”
and the property also has a tennis
court and resort-style pool. “The
view is extraordinary,” Mr. Beer
says, with “great sunsets out into
the mountains and rolling hills.”
TOP SELLING PRICE BY A
QUARTERBACK: $3.999 MILLION
Seller: Alex Smith, Kansas City
Chiefs quarterback
Mr. Smith, who was traded to
K.C. from the San Francisco 49ers in
2013, listed his 4,650-square-foot,
four-bedroom home in Monte
Sereno, Calif., in August. The home
has a decidedly French flair. Inside
are 100-year-old reclaimed wood
beams, antique limestone floors im-
ported from France and arched
French doors and windows, accord-
ing to listing agent Cherish Atkin-
son-Zubillaga of the Sereno Group.
Located southwest of San Jose, the
property also has a bocce ball court.
—Aili McConnon
contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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W12 | Friday - Sunday, February 5 - 7, 2016 THE WALL STREET JOURNAL.

PA R A DI SE I SL A N D, BA HA M AS PA R A DI SE VA L L E Y, A R I Z ONA S C OT T SDA L E , A R I Z ONA

This 12,058 sf home features 6 BR, formal living and dining rooms, gourmet kitchen, granite
counter-tops, outdoor kitchen, Jacuzzi and an infinity pool. Views of the golf course and
turquoise sea. WEB: 828JDK. $8,900,000 US. Craig.Pinder@SothebysRealty.com
Damianos Sotheby’s International Realty
+1 242.457.2282 | SIRbahamas.com
Regal mountainside residence with city light views, offering refined elegance and masterful
craftsmanship on over one and a half privately gated acres. 4 BR, 6 baths, guest house, study,
billiards, private elevator, 6 car garage. $6,500,000. Cheryl Anderson.
cheryl.anderson@russlyon.com
Rss Lyon Sotheby’s International Realty
+1 602.312.6038 | rsslyon.com
Car collector’s dream with 11 vehicle capacity, including 2 climate controlled carriage houses
all on an elevated lot with 360° panoramic views of sunsets, mountains and city lights.
Multiple outdoor living and covered patios, separate 1,378 sf casita with living room and
full kitchen. $5,300,000. Frank Aazami.
Rss Lyon Sotheby’s International Realty
+1 480.266.0240 | CarCollectorsResidence.com

B E LV E DE R E , C A L I F OR N IA L O S A LTO S H I L L S , C A L I F OR N IA S A N DI E G O, C A L I F OR N IA
Striking 4 BR, 3.5 bath contemporary offers beautiful views of San Francisco Bay and the Private, resort-like estate in one of Silicon Valley’s exclusive residential communities. Del Mar coastal contemporary masterpiece redefines style, luxury and indoor/outdoor
Belvedere Lagoon, great room, lagoon-side decks with cascading water feature and lavish The 20,000 sf home on 8+ acres is designed for entertaining. Indoor pool and vineyard. living. Private with panoramic ocean and lagoon views. Extraordinary architecture, design
master suite. $5,800,000. Bill Bullock and Lydia Sarkissian. b.bullock@deckerbullocksir.com Easy access to airports make the home a perfect West Coast hub. $88,000,000. and high quality materials matched with the finest technology.
Michael Dreyfus. $24,995,000. Eric Iantorno.
Decker Bllock Sotheby’s International Realty Dreyfs Sotheby’s International Realty Pacific Sotheby’s International Realty
+1 415.517.7720 | globalestates.com +1 650.485.3476 | dreyfssir.com +1 858.256.7005 | DelMarCoastalContemporary.com

S A N DI E G O C Ou N T Y, C A L I F OR N IA S A N F R A NC I S C O, C A L I F OR N IA ST. H E L E NA , C A L I F OR N IA
Enriched with a view-oriented home site, this custom Provençal Farmhouse in Rancho This recently completed contemporary Russian Hill masterpiece is the ultimate pied-à-terre. This 7 BR, 9 full and 3 half bath estate occupies a 21+ acre hilltop with unsurpassed views of
Santa Fe presents a single-level floor plan that showcases imported beams, 18th Century Breathtaking, unobstructed views, sophisticated design and technology in a premier full service the wine-producing region of the Napa Valley. Pool, spa and quintessential resort living.
fireplaces, antique pavers and much more, including grounds suitable for a vineyard. condominium building. WEB: 0087687. $3,500,000. Betty Brachman. $25,000,000. Bill Bullock and Lydia Sarkissian. b.bullock@deckerbullocksir.com
$5,900,000. K. Ann Brizolis.
Pacific Sotheby’s International Realty Sotheby’s International Realty San Francisco Brokerage Decker Bllock Sotheby’s International Realty
+1 858.756.4328 | pacificsothebysrealty.com +1 415.296.2215 | SpectaclarAtTheSmmit.com +1 415.517.7720 | 101RtherfordHill.com

G O SH E N , C ON N E C T IC u T G R E E N W I C H , C ON N E C T IC u T G R E E N W I C H , C ON N E C T IC u T
Custom designed 6,500 sf home located on pristine Woodridge Lake. Large patio with “Oldfield farm” is an equestrian estate without peer. Encompassing approx 18.39 carefully This recently built 6 BR Colonial is distinctive with fabulous decorating and beautiful
outdoor kitchen. 400 bottle wine cellar. Elevator. Panoramic lake views. $2,450,000. groomed acres, it hosts a classical villa on lush grounds, superior horse facilities and landscaping. Great interior flow extends in warm weather to a large outdoor terrace
Stephen Drezenn. sdrezen@williampitt.com a polo stick and ball field. $21,500,000. Joseph Barbieri. overlooking a secluded 1.9 level mid-country acres. $5,900,000. Heather Platt.
Karen Newton. knewton@williampitt.com
William Pitt Sotheby’s International Realty Sotheby’s International Realty Greenwich Brokerage Sotheby’s International Realty Greenwich Brokerage
+1 860.491.2000 | ParkAveOnTheLake.com +1 203.618.3112 | sothebyshomes.com/greenwich +1 203.983.3802 | sothebyshomes.com/greenwich

E NG L E WO OD, F L OR I DA I SL A M OR A DA , F L OR I DA I SL A M OR A DA , F L OR I DA
The ultimate in country club living surrounded by gracious style and craftsmanship! One-of-a-kind private bay front estate on 6+ acres, offering a main residence, 2 guest Oceanfront estate on coveted Millionaires Row situated on 1.5 acres with privacy. Boasting
Overlooking a tranquil lake with golf course beyond, this Italian-inspired, 5,000 sf home sits cottages, pool, spa, cabana, tennis/volleyball courts, boat house, staff offices and a rare deep 4 BR, 3 baths, sandy backyard, concrete seawall, sparkling swimming pool and a 400’ pier
behind the gates of Boca Royale. $1,299,900. Bob Linthicum and Melissa Caldwell. water boat basin with jetty for large boats. $14,500,000. Cheri.Tindall@SothebysRealty.com which has been recently re-decked. $4,000,000. Sabrina.Sarah@oceansir.com

Premier Sotheby’s International Realty Ocean Sotheby’s International Realty Ocean Sotheby’s International Realty
+1 941.228.9206 | premiersothebysrealty.com +1 305.712.8888 | OceanSIR.com +1 305.712.8888 | OceanSIR.com

K E Y L A RG O, F L OR I DA K E Y L A RG O, F L OR I DA NA P L E S , M A RC O I SL A N D, F L OR I DA
Spectacular manor home in Ocean Reef offering beautiful bay views and magnificent Majestic home in the prestigious community of Ocean Reef boasting custom features throughout Truly impressive beachfront home offers spectacular sunsets, amazing water views and
courtyard pool. Boasting 8 BR, 7.5 baths, media room, office, chef’s kitchen, and family and fabulous sunset views overlooking the canal. The main house connects to the master privacy. Beautiful home in gated neighborhood with restaurants, fitness, tennis, golf, croquet,
room. Complete with 70’ of dockage. $10,000,000. Helena.Morton@sothebysrealty.com BR suite and guest suites via a bridge. Central courtyard features a swimming pool and spa. bocce and kayaking. $5,350,000. Michelle Thomas. michelle.thomas@sothebysrealty.com
$8,800,000. Russell.Post@sothebysrealty.com
Rssell Post Sotheby’s International Realty Rssell Post Sotheby’s International Realty Premier Sotheby’s International Realty
+1 305.367.2027 | RssellPostSIR.com +1 305.367.2027 | RssellPostSIR.com +1 239.860.7176 | premiersothebysrealty.com
© MMXVI Sotheby’s International Realty Affiliates LLC. a Realogy Company. All Rights Reserved. Vetheuil, used with permission. Sotheby’s International Realty® is a registered trademark
licensed to Sotheby’s International Realty Affiliates LLC. An Equal Opportunity Company. Equal Housing Opportunity. Each Office is Independently Owned and Operated.
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. Friday - Sunday, February 5 - 7, 2016 | W13

PA L M B E AC H , F L OR I DA ST. P E T E R SBu RG , F L OR I DA HA L E I WA , HAWA I I

Ocean and tennis. Award winning restoration of Georgian Colonial estate. 7 BR main house,
plus beach cabana on 1.4 acres. Pool. Elevator. Wine cellar. Staff rooms. Generator. 3 garages.
Stunning perfection. Price upon request. Wally Turner.
Sotheby’s International Realty Palm Beach Brokerage
+1 561.301.2060 | sothebyshomes.com/palmbeach
Stunning deep waterfront home with pool, dock and wraparound terraces, has unobstructed
bay front views. Prime location, the light filled 4 BR, 6.5 bath home has vaulted ceilings,
floating staircase and large entertaining rooms. $2,300,000. Alona Dishy.
Alona.Dishy@sothebysrealty.com
Premier Sotheby’s International Realty
+1 727.458.8037 | premiersothebysrealty.com
In a secluded beachfront location, surrounded by a tropical landscape, this beautifully
crafted home epitomizes island elegance. Ideal for intimate gatherings, the expansive living
area opens to a broad deck which captures views of the azure Pacific. $4,180,000.
Alden K. Yamane.
LIST Sotheby’s International Realty
+1 808.223.7537 | listsothebysrealty.com

Su N VA L L E Y, I DA HO C A R M E L , I N DIA NA C A P E C OD, M AS S AC H u SE T T S
Beautiful, modern estate built to the highest standards with entertainment in mind. Features Brick paver drive and meticulous landscaping leads to the charming exterior of this exclusive Exquisite beachfront property located in the premier Wellfleet location, offering breathtaking
mountain views, 7 BR, state-of-the-art theater, spa and guest house. Fenced, gated and sold Laurelwood home. The unassuming front gives way to spacious 2 story home with large views of the harbor, Great Island and beyond. Watch the tide roll in as you gaze over
furnished. $9,950,000. Eeva Turzian. eeva@eevaturzian.com lower level with pool and lovely 2.5 acre parcel. $2,100,000. Jay O’Neil. Cape Cod Bay from just about every room. 4 BR, plus separate living quarters. $4,200,000.
Eva Scott.
Sn Valley Sotheby’s International Realty Encore Sotheby’s International Realty oldcape Sotheby’s International Realty
+1 208.720.6906 | snvalleysir.com +1 317.848.0008 | encoresothebysrealty.com +1 508.776.9231 | oldcape.com

C A P E C OD, M AS S AC H u SE T T S B IG SK Y, M ON TA NA B I T T E R RO OT VA L L E Y, M ON TA NA
Brewster. Panoramic views of Cape Cod Bay from this water-front Cobbs Pond townhouse. Few homes are described in terms of IQ. But if there’s one thing about New Moose Creek Within the exclusive Stock Farm club you will find 700 Pallo Trail. This custom 3 BR, 3 bath
Premier architecture with wood floors, built-ins, sliding glass and picture windows to that cannot be denied, it’s this: it is an incredibly clever space designed to delight, surprise 3,064 sf log cabin with an oversized great room, 2 master suites and .88 acres offering views
enhance the view and natural light. Price upon request. Ken Hager. and engage inhabitants. NewMooseCreek.com. $2,499,000. Tallie Lancey. in every direction. Price upon request. Dawn Maddux.

oldCape Sotheby’s International Realty Big Sky Sotheby’s International Realty Glacier Sotheby’s International Realty
+1 508.896.5000 | oldcape.com +1 406.995.2211 | bigskysir.com +1 406.550.4131 | glaciersir.com

M I S S O u L A , M ON TA NA M ON TAu K , N E W YOR K N E W YOR K , N E W YOR K

Beautifully detailed 4 BR, 4 bath 7,574 sf home. Custom finishes include limestone tile, Oceanfront. 5,000 sf retreat commanding some of the most exquisite ocean frontage above the Immense triplex offers the rare opportunity to purchase one of the largest and most unique loft
wool carpeting, granite countertops and an indoor pool and spa. Sitting on an immaculately scenic bluffs of Montauk with views from every room. Wine cellar, home theater, recreation spaces in the West Village, distinguished by double height great room. 17’5” ceilings and wall of
maintained 3.8 acres. $2,500,000. Dawn Maddux. room, 20x40 gunite pool, spa and 2 car garage. WEB: 0046937. $29,500,000. Rylan Jacka. south facing windows. WEB: 00110359. $11,950,000. Jeremy Stein and Serena Boardman.

Glacier Sotheby’s International Realty Sotheby’s International Realty East Hampton Brokerage Sotheby’s International Realty Downtown Manhattan Brokerage
+1 406.550.4131 | glaciersir.com +1 631.907.8475 | sothebyshomes.com/hamptons +1 212.431.2427 | sothebyshomes.com/nyc

N E W YOR K , N E W YOR K S C A R SDA L E , N E W YOR K G R A N DV I E W, N E W YOR K

1,661± sf loft in Soho (1 BR + study + office). Bright interior with extra-large living room open
to chef’s kitchen. Architecturally distinctive, spacious and modern interior/exterior by
Winka Dubbeldam. WEB: 0138238. $2,989,000. Tom Doyle and Robert Meeker.
Sotheby’s International RealtyDowntown Manhattan Brokerage
+1 212.431.2474 | sothebyshomes.com/nyc
The Heathcote, Scarsdale’s newest and most luxurious 24 hour on-site concierge residence
offers a lifestyle of comfort and elegance. With only 14 units, this residence will feature open
floor plans, high ceilings, fireplaces, terraces, gourmet kitchens and more. WEB: 4600849.
$2,291,935. dawn.knief@juliabfee.com
Jlia B Fee Sotheby’s International Realty
+1 914.393.1159 | jliabfee.com
Sophisticated 19th Century Greek revival, fully restored with stately details, luxurious baths,
chef’s kitchen with Aga stove, Sub-Zero and soapstone counters and 6 working fireplaces.
Spectacular water views. 4 car garage with heat and air. Pool. Direct access to river.
1.4 acres. 5 BR and 3.1 baths. $2,250,000. Richard Ellis.
Ellis Sotheby’s International Realty
+1 914.393.0438 | ellissothebysrealty.com

S O u T H N YAC K , N E W YOR K L I T T L E C OM P TON , R HODE I SL A N D WA RW IC K , R HODE I SL A N D

“Berachah Hall” large 1890s stone home with extraordinary Hudson River views and only Sited on 5+ acres just steps from the shores of Narragansett Bay, this 4,600 sf home offers Situated on 4.76 acres of riverfront property, this luxury estate was built to the highest
40 mins to New York City. Luxurious gut renovation 12 years ago and interior completely 2 sun-filled living rooms and 6 BR, including master suite. The property is adorned by standards with every amenity. Offers media room, gym and wine cellar, guest house, gunite
rebuilt. Top-of-the-line kitchen and baths. 6,333 sf, 6 BR, 5.1 baths, fireplace and guest colorful gardens, an in-ground pool, a tranquil pond and an apple orchard. $2,995,000. pool with outdoor kitchen and spa, tennis court and mini-golf course. $1,999,500.
apartment. $1,399,000. Richard Ellis.
Ellis Sotheby’s International Realty Mott & Chace Sotheby’s International Realty Mott & Chace Sotheby’s International Realty
+1 914.393.0438 | ellissothebysrealty.com +1 401.314.3000 | mottandchace.com +1 401.314.3000 | mottandchace.com
© MMXVI Sotheby’s International Realty Affiliates LLC. a Realogy Company. All Rights Reserved. Vetheuil, used with permission. Sotheby’s International Realty® is a registered trademark
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W16 | Friday - Sunday, February 5 - 7, 2016 THE WALL STREET JOURNAL.

MANSION
BALANCE SHEET

A San Francisco Couple Lets the Sun Shine In

A retired CEO and his artist wife overhaul a museumlike residence to create a bright, sunny home

BY NANCY KEATES
MAJOR
RICHARD EVANS and his wife,
Gretchen, bought a four-story COSTS:
home in the Cow Hollow neighbor-
hood of San Francisco for $7.5 mil- Interior-design
lion in 2010, lured, in part, by its elements
striking views. The trouble was,
much of the home had no windows $1.25
to take in the sight of the bay.
The 6,800-square-foot, four- million
bedroom, seven-bathroom contem-
porary house was built in the late Architect/Engineer
1950s for an owner with a vast art fees
collection. When it was remodeled
in the 1990s, it served the needs of $402,000
a reclusive book collector. In both
cases, the design maximized wall Contractor fee
space for displays. Instead of win-
dows overlooking the street, the $475,000
living room had a solid wall. ART HOUSE The home of Richard
Mr. Evans, 68 years old, a for- and Gretchen Evans has a long ramp, Concrete
mer CEO of aluminum giant Alcan, left, to show their own art works. One
and Mrs. Evans, 69, an artist, value side of the house, above, now has $187,000
their art collection as well. But windows where there was once a
they also value light and openness. solid wall for an owner’s collection. Masonry
So before they moved in, the cou-
ple embarked on an 16-month, $6.3 $320,000
million renovation that added
enormous mahogany windows Metals
looking out to the Golden Gate
Bridge, the Palace of Fine Arts, An- $147,000
gel Island and Alcatraz.
The couple chose Lewis Butler, Wood/Plastics
of Butler Armsden, for their proj-
ect—the same architect who had $743,000
designed the 1990s remodel.
Mr. Butler had convinced the Thermal system
previous owner to put in a
Guggenheim-like ramp that starts $137,000
at the front door. That was a hard
sell for someone not in a wheel- Doors/Windows
chair, says Mr. Butler, and he ad-
mits, “It’s the first and last house $391,000
we ever put a ramp in.”
LORI EANES FOR THE WALL STREET JOURNAL (8)

But Mr. and Mrs. Evans liked Finishes

the ramp and decided it would
stay. “It makes people stop and
look at the art more carefully than
a staircase,” says Mr. Evans.
Modeled after one at Swiss ar-
chitect Le Corbusier’s famous Villa
Savoye on the outskirts of Paris,
the ramp curves up to the second
and third floors and is topped by a
35-foot-high skylight.
The couple did, however, change
every part of the surface of the BAY SIDE A tractable skylight in the master
ramp, replacing the gray stone and newly created bedroom so they can sleep under
wood floor with limestone and glass view of Golden the moon and in the fresh air; sen-
to allow light to come through. Gate Bridge, sors close the window automati-
One of the most expensive parts clockwise from cally when it rains.
of the renovation involved pushing upper left; living Upstairs, on the fourth floor, is
out the walls on the street side of room; a modern an office with custom-made desks
the house by 4 feet, then adding fireplace and and floor-to-ceiling glass doors
two-story, double-pane bay win- TV-mirror; that lead to a two-story deck with
dows. The windows alone cost master bed- stone and tile, an awning and heat
more than $80,000 and arrived in room; Richard lamps, and expansive views.
10 pieces from Massachusetts. An- and Gretchen To reduce noise throughout the
other large expense involved turn- Evans. Below, house, the couple insulated the
ing a walled-off oval reading room master bath. floors and walls with foam
into a raised dining room open to ($20,000) and put in water heat
the kitchen and family room be- ($30,000) instead of forced air to
low. They had to take down an ex- avoid having fans go on and off.
isting wall and put in a circular The design of the house was in-
staircase (a process that cost fluenced by the couple’s previous
$20,000), cutting out cardboard homes. After meeting at Oregon
steps and moving them around un- State University and marrying in
til they got the curve just right. 1969, they spent four decades liv-
On the third floor, they put a re- ing in such diverse places as Ev-
ans, W.Va.; Spokane, Cleveland,
and around the Bay Area; as well
as in Switzerland, Ghana and Can-
ada, while Mr. Evans built a career
in the aluminum industry.
Sometimes they rented, some-
times they bought and sometimes
they built or extensively reno-
vated. But they always came to the
same conclusion: They liked a mix
of contemporary and traditional,
with lots of big windows, light and
color. Mrs. Evans, who became an
interior designer, prefers specific
tones of reds, blues and greens.
There are two guest bedrooms
on the first floor of their new
home, each with its own bathroom
and balcony overlooking the Japa-
nese-inspired garden out back.
The couple likes to use the
home to hold events for the
groups they support: the Northern
$462,000
Appliances/
Equipment
$210,000
Solar system
$50,000
Plumbing/HVAC
$320,000
Electrical/Lighting
$301,000
Landscaping
Light School in Oakland, where
Mrs. Evans is a visiting artist, and $190,000
Oregon State, where they endowed
a professorship in humanitarian Site construction
engineering. More often, it is a
place where they entertain friends. $407,000
The home no longer has a mu-
seum feel, but the two have taken
advantage of all the remaining dis-
play space. The walls along the
ramp are filled with photos Mr.
Evans has taken during his travels
and with paintings by Mrs. Evans.

IN THE TRENCHES

My Therapist Says
I Can’t Close Escrow
Two real-estate agents remember the most
difficult, last-minute problems that emerged
just before closing a sale: the seller who
declared a medical emergency, and the
JOSH MCKENNA

house with the pregnant ceiling.

Q: What was
your worst disas-
ter right before
closing?
Pegi DiRienzo, agent,
Pegi’s Home Group, Teles
Properties, Newport Beach,
Calif.
This was a $1.5 million
house in a gated neighborhood
in a top area of Irvine, Calif. I
had it in escrow, representing
both sides as well as the
house the buyer was selling. and she couldn’t move and needed to move in because the seller. I get there first, After about 20 minutes of
We were supposed to close that I could call her therapist there were people moving walk in…and I smell [some- hyperventilating, I call the
right around Christmas. for confirmation. She said she into their house. I had to thing] damp. buyer and say, “Let me tell
The seller had hired me be- wanted to delay the closing make so many calls and talk A pipe in the master bath- you what’s happening. It’s not
cause she wanted to move to or get out of it entirely—it the seller into moving. Es- room upstairs had broken great. But you’ll be happy it’s
L.A. I thought there was wasn’t clear. Ordinarily, she crow was delayed for around and there is about a foot of happening this week instead
something off about her be- would not have been able to five weeks but we did close. water in the bathroom and of next week because it’s not
cause she would scream at me get out of the deal without the bedroom carpet is all your house yet.”
if I touched her bathroom penalty at that point, but she Joan Levinson, luxury wet. Downstairs in the laun- It took me at least a month
towels. But she was a very ac- was brilliant: I looked into home agent with epony- dry room, part of the ceiling to fix the house with a resto-
complished woman with sev- what the law said and I don’t mous firm, Paradise Valley, looks like it’s pregnant: The ration company, but it closed
eral degrees and a respected remember exactly, but it Arizona plaster is hanging down and the buyer got some
career. showed that she would not be I go to close on a $3.25 about 18 inches. I’m ready to money to redecorate. I can’t
A week before closing, the penalized by delaying escrow million house in Paradise have a heart attack. The believe I got that closed.
seller called me and said she because of her condition. Valley and I am about to do buyer is on the way to the —Edited from interviews
had become mentally disabled It was a mess. The buyers the last walk-through with house, in his own car. with Katy McLaughlin