L.
Gordon Crovitz
Time to Improve
College Savings Plans
JOURNAL REPORT | R1
Last week: DJIA 17807.06 g 66.16 0.4%
What’s
News
Business & Finance
U .S. officials appear
poised to make history by
approving the first private
space mission to go beyond
Earth’s orbit, a move that may
set important precedents. A1
 The Fed’s plans for
raising rates went on hold
after a dismal jobs report,
with officials wanting to
wait and see whether the
economy stays on track. A3
 GM plans to convert
some Cadillac stores into
virtual dealerships that
will have low overhead but
sophisticated technology. B1
 Investors are buying
municipal debt at a record
clip, enduring low returns
in exchange for stability. C1
 Republican victory in
November elections would
herald a scaling back of fi-
nancial regulations, accord-
ing to a policy blueprint. C1
 The Pentagon has decided
to rely on an Abu Dhabi-
owned company to supply
the most advanced micro-
chips used in the military. B3
 Low interest rates are
hurting investment by en-
couraging stock buybacks
and dividends instead, a Car-
lyle Group economist says. C1
 The spread of combination
cancer treatments threatens
to heighten tensions over
soaring drug prices. B1
 “Teenage Mutant Ninja
Turtles: Out of the Shadows”
was the latest sequel to under-
perform its predecessor. B5
World-Wide
 A split is emerging inside
Sanders’s campaign over
whether he should stand down
after Tuesday’s primaries and
unite behind Clinton. A1
 Damage caused by a
band of saboteurs in Nige-
ria has reduced oil output
and helped tip the country
toward recession. A1
 Some large public U.S.
universities recorded
higher rates of cheating
among international students
than domestic students. A1
 China pushed back
strongly against U.S. criticism
of its stance on maritime dis-
putes as the two sides be-
gan high-level talks. A10
 Trump is giving a na-
tional platform to parents of
victims of crimes by illegal
immigrants to boost support
for hard-line policies. A4
 India’s Modi will seek to
cement progress made with
the U.S. on economic and
security issues on a visit
to the nation this week. A10
 A Buddhist temple in
Thailand is at the center of
a wildlife-trafficking probe
after scores of dead tiger
cubs were found. A10
 Kansas, Illinois and other
Midwestern states are scram-
bling to firm up financial
packages to ensure classes
open again in the fall. A7
 Novak Djokovic won his
first French Open title,
beating Andy Murray. B7
CONTENTS
Business News... B2-6
Crossword................. B6
Europe File............ A12
Election 2016...... A4-6
Heard on Street......C6
Journal Report R1-10
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Company. All Rights Reserved
* * * * *
NASDAQ 4942.52 À 0.2%
At the Boyhood Home of Muhammad Ali, Fans Pay Tribute
DAVID GOLDMAN/ASSOCIATED PRESS
IN MEMORY: Aprilla Howard was among those Sunday who visited the former boxer’s childhood home in Louisville, Ky. Thousands of
fans left flowers, notes and gifts at a local museum dedicated to Ali’s life. A funeral and city procession is planned for Friday. A3, B7
Saboteurs Hit Nigerian Oil
Attacks by the Niger
Delta Avengers have
cut output, helping to
push up crude prices
A band of saboteurs that calls
itself the Niger Delta Avengers
has been prowling the swamps
of Nigeria’s petroleum-rich
south for four months, bombing
pipelines and diving underwater
to destroy equipment.
The damage has helped tip
FOREIGN STUDENTS
MORE LIKELY TO CHEAT
U.S. schools show higher rates of academic fraud among overseas enrollees
BY MIRIAM JORDAN
AND DOUGLAS BELKIN
At Ohio State University, a
Chinese student took tests for
Chinese classmates for cash
last year, guaranteeing an A.
At the University of Cali-
fornia, Irvine, some interna-
tional students used a lost-ID-
card ruse to let impersonators
take exams in place of others.
At the University of Ari-
zona, a professor told of Chi-
nese students handing in mul-
tiple copies of the same
incorrect test answers.
A flood of foreign under-
graduates on America’s cam-
puses is improving the finan-
cial health of universities. It
also sometimes clashes with a
fundamental value of U.S.
scholarship: academic integrity.
A Wall Street Journal analysis of data from
more than a dozen large U.S. public universities
Diving NBA Players Create ‘First-Row Problems’
Should fans in pricey seats lend a hand, or duck and cover?
BY BEN COHEN
OAKLAND, Calif.—A ticket
Markets Digest..... C4 for a floor seat to an NBA Fi-
Opinion.............. A15-17
Outlook....................... A2 nals game between the star-
Sports.......................... B7 studded Cleveland Cavaliers
U.S. News......... A2-3,7 and Golden State Warriors is a
Weather..................... B6
World News... A10-13
rare and increasingly expen-
sive commodity. But that priv-
ilege also presents the lucky
> fans in these courtside seats
with a peculiar dilemma.
It isn’t the possibility of
spilling beer on the court or
being caught on television star-
ing into your phone. It’s what
you choose to do when a hu-
MONDAY, JUNE 6, 2016 ~ VOL. CCLXVII NO. 131
STOXX 600 341.29 g 2.4% 10-YR. TREASURY À 1 10/32 , yield 1.707%
By Drew Hinshaw
Shell PLC and the other owned
by Italy’s Eni SpA, according to
in Abuja, Nigeria, and Nigeria’s navy. Shell confirmed
Sarah Kent in London
signs of a spill from one of its
pipelines and said it is still eval-
Africa’s biggest economy toward uating potential damage. Eni
recession, and has cost Nigeria confirmed the attack but said it
its position as the continent’s didn’t contribute to any new
top oil producer—a distinction supply disruption.
inherited by Angola. On the group’s purported
The Avengers struck again Twitter account, it called the Eni
before dawn on Friday. A group attack part of its promise “that
of militants sneaked through Nigeria Oil production will be
marshland to bomb two pipe- Zero.”
lines, one owned by Royal Dutch The brazen strikes were the
found that in the 2014-15
Changing Campus school year, the schools re-
Number of international corded 5.1 reports of alleged
undergraduate students in the U.S. cheating for every 100 interna-
tional students. They recorded
Chinese Others
one such report per 100 do-
600 thousand
mestic students.
Students from China were
singled out by many faculty
400 members interviewed. “Cheat-
ing among Chinese students,
especially those with poor lan-
guage skills, is a huge prob-
200 lem,” said Beth Mitchneck, a
University of Arizona profes-
sor of geography and develop-
0 ment.
2012 ’13 ’14 ’15 ’16
Note: Figures are for school years ending
in the year shown
In the academic year just
ending, 586,208 international
undergraduate students at-
Source: Student and Exchange Visitor
Program, Department of Homeland Security
tended U.S. colleges and uni-
versities, according to the De-
partment of Homeland
Security. More than 165,000 were from China.
South Korea and Saudi Arabia were the source
Please see CHEAT page A14
i i
mongous, sweaty speed. “I would
NBA player in get away,” Mr.
sneakers comes Mozgov said.
barreling in your If only it were
direction while that simple. There
chasing a loose is no statistician
ball—and then who tracks player
dives on top of leaps per game,
you. but it is likely to
Cleveland cen- happen a lot more
ter Timofey in the playoffs,
LeBron James
Mozgov, who when possessions
stands 7-foot-1 and weighs 275 come at a premium. In this
pounds, already knows what he year’s NBA Finals, though, the
would do if he were in the fuss isn’t over how many play-
bleachers and someone of his ers have flung themselves into
size came flying at him at full Please see DIVE page A14
Peter Thiel’s
Legal Smackdown
OPINION | A15
WSJ.com
OIL $48.62 g $0.71
latest demonstration of destruc-
tive proficiency by the Avengers,
which has considerably cut the
amount of oil in global markets.
The strikes have led Nigeria to
shift some of the forces who
have been fighting an Islamist
insurgency.
On and off for years, criminal
groups in the Niger Delta have
extorted and bombed oil compa-
Please see OIL page A13
 Saudis cut prices of oil
exports to Europe................... C3
Washington, Beijing Open Talks
SHARP SHOOTER: Secretary of State John Kerry taking part in a
ceremony in Mongolia on Sunday. Mr. Kerry is part of the U.S.
delegation meeting in Beijing this week for economic and security
talks with Chinese officials. A10
U.S. Poised to Clear
Private Moon Mission
BY ANDY PASZTOR
U.S. officials appear poised
to make history by approving
the first private space mission
to go beyond Earth’s orbit, ac-
cording to people familiar
with the details.
The government’s endorse-
ment would eliminate the larg-
est regulatory hurdle to plans
by Moon Express, a relatively
obscure space startup, to land
a roughly 20-pound package of
scientific hardware on the
Moon sometime next year.
It also would provide the
biggest federal boost yet for
unmanned commercial space
exploration and, potentially,
the first in an array of for-
profit ventures throughout the
solar system.
The expected decision, said
the people familiar with the
details, is expected to set im-
portant legal and diplomatic
precedents for how Washing-
ton will ensure such nongov-
HHHH $3.00
EURO $1.1364 YEN 106.53
Sanders
CampIs
SplitOver
NextStep
BY PETER NICHOLAS
A split is emerging inside
the Bernie Sanders campaign
over whether the senator
should stand down af-
ter Tuesday’s election con-
tests and unite behind Demo-
cratic front-runner Hillary
Clinton, or take the fight all
the way to the July party
convention and try to pry the
nomination from her.
One camp might be dubbed
the Sandersistas, the loyalists
who helped guide Mr. Sand-
ers’s political ascent in Ver-
mont and the U.S. Congress
and are loath to give up a
fight that has far surpassed
expectations. Another has
ties not only to Mr. Sanders
but to the broader interests
of a Democratic Party pining
to beat back the challenge
from Republican Donald
Trump and make gains in
congressional elections.
Mr. Sanders in recent
weeks has made clear he
aims to take his candidacy
past the elections on Tues-
day, when California, New
Jersey and four other states
vote. But the debate within
the campaign indicates that
Mr. Sanders’s next move isn’t
Please see RACE page A6
 Trump brings new voices
to bitter crime debate.... A4
 Republican elders criticize
attacks on judge................ A4
SAUL LOEB/PRESS POOL
ernmental projects comply
with longstanding interna-
tional space treaties. The prin-
ciples are likely to apply to fu-
ture spacecraft whose
potential purposes range from
mining asteroids to tracking
space debris.
Approval of a formal launch
license for the second half of
2017 is still months away, and
the proposed mission poses
huge technical obstacles for
Moon Express, including the
fact that the rocket it wants to
use hasn’t yet flown.
But the project’s propo-
nents have considered federal
clearance of the suitcase-size
MX-1 lander and its payload as
well as approval of a planned
two-week operation on the
Moon itself to pose the most
significant legal challenges to
the mission.
After months of lobbying by
Moon Express officials and
high-level deliberations among
Please see SPACE page A7
A2 | Monday, June 6, 2016 * **** THE WALL STREET JOURNAL.

U.S. NEWS
VALUE PROPOSITION
Best value in a large-cabin aircraft:
three flexible living areas, unmatched payload,
College Loan Glut Turns Sour
T
choice of a forward or aft galley. he U.S. government
over the last 15 years Debt, but No Degree
GULFSTREAM.COM made a trillion-dollar Student debt defaults have soared in recent years, particularly among students who borrowed but then
investment to improve the dropped out. Dropouts earn only marginally more than high-school graduates, and far less than college grads.
nation’s workforce, produc-
tivity and economy. A big Share of loans, by type, that are delinquent 90 days or more Median weekly earnings
portion of that investment
15% $1,500
has now turned toxic, with
echoes of the housing crisis. Education
The investment was in attainment
“human capital,” or, more 12
specifically, 1,200 Bachelor’s
THE higher educa- Student degree or
loan higher
OUTLOOK tion. The gov-
JOSH ernment 9
MITCHELL helped finance 900
tens of mil- Credit Some
lions of tu- college/
6 card
itions as enrollment in U.S. associate
degree
colleges and graduate 600
schools soared 24% from Auto loan High
2002 to 2012, rivaling the 3 school
Home
higher-education boom of equity line
the 1970s. Millions of others of credit Less
attended trade schools that Mortgage than high
0 quarterly data 300
award career certificates. school
The government fi- 2003 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 2000 ’10 ’14
nanced a large share of these Source: Federal Reserve Bank of New York (delinquencies); Labor Dept. (earnings) THE WALL STREET JOURNAL.
educations through grants,
low-interest loans and loan Treasury Deputy Secre- they entered. Almost all of high-school graduate. Other
SCOTT NEAL +1 912 965 6023 guarantees. Total outstand- tary Sarah Bloom Raskin them left with student research shows similar
scott.neal@gulfstream.com ing student debt—almost all compares the seven million debt—an average $8,000 for dropout rates at public col-
guaranteed or made directly student-loan borrowers in associate’s candidates and leges and universities.
by the federal government— default—and millions of oth- $13,000 for bachelor’s candi-

has quadrupled since 2000 ers who appear on the same
to $1.2 trillion today. The path—to homeowners who
government also spent tens found themselves underwa-
of billions of dollars in ter and headed toward fore-
grants and tax credits for closure after the housing
students. crash.
“We needed individual
A
dates. long with weak job
Those in for-profit certifi- prospects, most of
cate programs earned an av- these students are
erage $920 less. The Na- now severely behind on pay-
tional Bureau of Economic ments, damaging their credit
Research working paper and limiting their ability to
used federal tax records and borrow for homes and cars.

N
ew research shows a
significant chunk of
that investment back-
fired, with millions of stu-
dents worse off for having
gone to school. Many never
learned new skills because
they dropped out—and
now carry debt they are un-
willing or unable to repay. Pol-
icy makers worry that without
a bigger intervention, those
borrowers will become
trapped for years and will ul-
timately hurt, rather than
help, the nation’s economy.
THE WALL STREET JOURNAL
(USPS 664-880)
(Eastern Edition ISSN 0099-9660)
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households to stabilize prop-
erty values and help revive
communities,” she said. “We
want to stabilize this genera-
tion of student borrowers
and revive their prospects for
the future. I think students
are essential to our future
economic growth and contri-
butions to productivity.”
In a working paper re-
leased last week, economists
at George Washington Uni-
versity and the Treasury De-
partment tracked the earn-
ings of some 1.4 million
students who left a for-profit
college in the two years
through September 2008.
Seventy percent of them
dropped out. Those who en-
rolled in associate’s and
bachelor’s programs earned
an average of $600 to $700 a
year less in the six years af-
ter leaving school compared
with the six years before
CORRECTIONS  AMPLIFICATIONS
The Centers for Disease
Control and Prevention shared
the results of an assessment of
counties vulnerable to HIV and
hepatitis C outbreaks with the
26 affected states in which
those counties are located. A
U.S. News article Friday about
the agency’s mapping of out-
break risks incorrectly gave
Readers can alert The Wall Street Journal to any errors in news articles by
emailing wsjcontact@wsj.com or by calling 888-410-2667.
Education Department data.
Student debt
threatens to widen
the gap between the
haves and have-nots.
There are similar prob-
lems in nonprofit colleges,
which enroll about 2.7 mil-
lion students a year. A re-
port released in May by
Third Way, a nonpartisan
think tank, showed that
among students who en-
rolled in 2005, on average
only half graduated from
such institutions within six
years. On average, nearly
four in 10 undergraduates
at those schools who took
on student debt earned no
more than $25,000 in 2011,
the same as the typical
the number of affected states
as 25.
The Nasdaq KBW Bank In-
dex includes 24 large commer-
cial lenders. In some editions
Saturday, a Business & Finance
article about bank stocks in-
correctly said the index has 25
constituents.
More than a fifth of all stu-
dent debt is at least 90 days
delinquent, according to the
New York Federal Reserve,
and federal data show drop-
outs are three times more
likely to default than degree
earners.
No group saw its net
worth decline more be-
tween 2010 and 2013 than
college dropouts. The me-
dian value of their assets
minus debts fell 14% over
that period, according to
the Federal Reserve’s Sur-
vey of Consumer Finances.
By comparison, the typical
college graduate saw her
wealth increase 5%.
In that sense, student debt
threatens to widen the gap
between society’s haves and
have-nots. A disproportionate
share of for-profit college
students is poor, black and
Hispanic. The NBER study
showed that half of the 1.4
million for-profit school bor-
rowers were parents.
Ms. Raskin worries these
borrowers are at risk of hav-
ing their financial positions
spiral downward due to debt.
During the housing crisis,
plummeting home values left
millions of Americans under-
water on their mortgages,
preventing them from selling
their homes and moving to
better jobs. The lack of mo-
bility in turn hurts produc-
tivity, since it limits the pool
of workers that employers
can choose from.

Following in Dad’s footsteps requires a great pair of shoes.

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THE WALL STREET JOURNAL. * * * * Monday, June 6, 2016 | A3

U.S. NEWS

Fed Back in Wait-See Mode
Bank officials want Before Friday, when the La-
bor Department reported that
economy to stay on hiring slowed sharply in May,
track before raising Fed officials were considering
lifting rates this month or
interest rates again next.
©T&CO. 2016
that it was about time to raise
short-term rates by another
quarter percentage point. The
main question was whether to
move this month or wait until
their July meeting, after the

MANUEL BALCE CENETA/ASSOCIATED PRESS

“Today’s labor market re- June 23 U.K. vote on whether
BY JON HILSENRATH port is sobering, and suggests to stay in the European Union.
AND KATE DAVIDSON that the labor market has “The economy is continuing
slowed,” Ms. Brainard to improve,” Ms. Yellen said in
The Federal Reserve’s plans said Friday. late May. “We saw weak
for boosting short-term inter- Cleveland Fed President Lo- growth in the first quarter of
est rates went on hold after retta Mester, speaking Satur- the year and relatively weak
Friday’s dismal jobs report, day in Stockholm, said the jobs growth at the end of last year.
with central bank officials now gain reported Friday was a Growth looks to be picking up
wanting to see whether the “disappointing number,” add- from the various data that we
economy remains on track be- ing it “has not changed funda- monitor.” A rate increase, she
fore they make a move. Fed Chairwoman Janet Yellen mentally my economic outlook, said, was probable “in the
A rate increase at the Fed’s but we will be assessing the coming months.”
June 14-15 meeting is almost ience of our recovery for data as it comes in.” Now officials need to piece
surely off the table. A move at granted,” Fed governor Lael Employers added just together whether the hiring
their July meeting six weeks Brainard said in a speech Fri- 38,000 jobs to their payrolls in slowdown was temporary or JUST THE THING
later is still possible though day after the employment re- May, and the pace of hiring more lasting. If the slump was
less likely, because officials port, possibly foreshadowing slowed to an average 116,000 a temporary, they can proceed TO CELEBRATE GRADS
won’t have that much more Ms. Yellen’s approach. Though month over the past three toward rate increases once they
Return to Tiffany®
economic data to reassure the two women don’t always months, the Labor Department get the data to prove it. On six
themselves about the course of see eye-to-eye, they are both said. occasions since 2010, monthly
the economy’s expansion, ac- cautious about raising interest Ahead of the report, many hiring gains have dipped below
cording to their remarks. rates. Fed officials believed economic 100,000 and bounced back.
Some officials could prefer “In this environment, pru- growth was accelerating mod- One important factor is
to wait until their September dent risk management implies estly after a first-quarter slow- business investment, which
meeting to consider lifting there is a benefit to waiting down. Consumer spending softened in the first quarter. A
rates, provided the economy for additional data to provide picked up in the spring after gauge of such investment rose
picks up during the summer. confidence that domestic ac- softening in the first quarter. in April, but government mea-
The Fed’s next signal could tivity has rebounded strongly Exports were firming, and fi- sures can be volatile.
come Monday from Chair- and reassurance that near- nancial markets stabilized af- Fed officials won’t get a
woman Janet Yellen, who is term international events will ter turbulence early in the reading on second-quarter 800 843 3269 | TIFFANY.COM
scheduled to speak in Philadel- not derail progress toward our year. gross domestic product, a
phia on the economic outlook goals,” Ms. Brainard said at With hiring steady and in- broad measure of economic
and monetary policy. the Council on Foreign Rela- flation showing signs of rising, output, until after their July
“We cannot take the resil- tions. they thought before Friday meeting.

Global Tributes Follow Ali’s Death

BY JON KAMP

James Dixon, a boxing

coach in Louisville, Ky.,
planned to head over to the
Muhammad Ali Center on Sun- LONGINES
day to leave a T-shirt from his
gym with some handwritten
words: “Rest in peace champ.”
Flowers, notes and boxing
paraphernalia from scores of
well-wishers piled up on the
plaza outside the museum and
cultural institution dedicated
to Ali’s life, as his hometown
prepared to say goodbye to
him with a procession and fu-
neral Friday, a week after his
death at age 74. A makeshift
DAVID GOLDMAN/ASSOCIATED PRESS

memorial also took shape out-

side his boyhood home.
“We lost our son,” said Mr.
Dixon, a 42-year-old who
founded the Louisville TKO gym.
The funeral will take place
Friday afternoon at Louisville’s
KFC YUM! Center arena, the
city said, after a morning pro-
cession winds slowly through Rahaman Ali, right, the boxer’s brother, cried at a service in a Louisville church his family attended.
the city, down a boulevard
named after the boxing legend. again, she said, when she chief executive, said he has long battle with Parkinson’s
Confirmed speakers at the failed attemping to row a spoken with media from at disease, a degenerative neuro-
funeral include former Presi- hand-built boat across the At- least seven foreign countries logical disease. The Muham-
dent Bill Clinton, comedian lantic Ocean in 1996. She com- since the boxing great died. mad Ali Parkinson Center in
Billy Crystal and sportscaster pleted the quest three years He was remembered in Ma- Phoenix posted a video online
Bryant Gumbel. later. nila, the Philippine capital with patients paying tribute to
“I was honored to award Other Ali fans also revered where he beat Joe Frazier in the fighter known as The
him the Presidential Citizens him for his words and actions 1975, by local boxing legend Greatest. FATHER’S DAY
JUNE 19
Medal at the White House, to outside the ring. Mr. Dixon, Manny Pacquiao.
The Longines Master Collection. $3325.
watch him light the Olympic the local boxing coach, said he Later in life, Ali was re-  Jason Gay: Another Muhammad
Fifth Avenue and 50th Street. 212.753.4000
flame, and to forge a friend- was impressed with Ali’s will- nowned for his three-decade- Ali? Probably never........................ B7 FREE GROUND SHIPPING ONLINE AND IN STORES. EVERY DAY. EVERY ORDER.
ship with a man who, through ingness to take a stand against
triumph and trials, became the Vietnam War in the late
even greater than his legend,” 1960s, even though it cost him
©D.YURMAN 2016

Mr. Clinton said in a statement. more than three years of sus-

At Louisville’s Spalding Uni- pension during his athletic
versity, where the athletic cen- prime.
ter includes the gym where Ali “He stood up to adversity
first trained when he was and discrimination and racism
known as Cassius Clay, univer- like no other athlete,” Mr.
sity President Tori Murden Dixon said.
McClure spoke about her But Ali’s exploits in the ring
friend during Saturday’s com- also helped seal his iconic,
mencement ceremony. He per- global status. Donald Lassere,
sonally encouraged her to try the Muhammad Ali Center’s

Soldiers Killed in Texas

Flooding Identified
BY JON KAMP Mitchell Alexander Winey, a
21-year-old from Valparaiso,
U.S. Army officials released Ind., on Thursday, said Maj.
the names over the weekend of John Miller, a spokesman for
the nine soldiers from Fort the 1st Cavalry Division. A me-
Hood in Texas killed last week morial service for the eight
when a flash flood swept away other soldiers is tentatively
their truck during a training planned for June 16, he said.
exercise. The memorials would allow
Eight of the deceased sol- soldiers at Fort Hood who
diers were members of the 1st can’t attend private family fu-
Cavalry Division, and one was nerals off base a chance to
a cadet from West Point. They grieve, he said.
ranged in age from 19 to 38, “As the extended Cav Fam-
according to Fort Hood. They ily grieves together, we wrap
came from around the U.S., in- our arms around the loved
cluding two soldiers from both ones and teammates impacted
California and Florida. by this tragedy,” Maj. Gen. J.T.
A team from the Army Com- Thomson said on the 1st Cav-
bat Readiness Center at Fort alry Division’s Facebook page.
Rucker, Ala., will investigate Three other soldiers from
the training accident, accord- the accident were rescued and
ing to Fort Hood. The team released from the hospital,
was dispatched to Fort Hood Fort Hood officials said. The belmont ® curb link collection
on Friday, a day after the acci- accident occurred in a central
dent, the Associated Press re- Texas area hit hard by floods
ported. that started after heavy rain DAV I DY U RM A N .C O M 8 8 8 - DY U RM A N
Fort Hood is planning a me- began pounding Texas on Me-
morial service for Cadet morial Day weekend.
A4 | Monday, June 6, 2016
Trump Brings New Voices to Bitter Debate
The Republican cites
support from families
of victims of crime by
illegal immigrants
BY BETH REINHARD
Republican presumptive
presidential nominee Donald
Trump is giving a national plat-
form to parents of victims of
crimes by illegal immigrants,
inviting them to rallies and tell-
ing their tragic stories to boost
support for hard-line immigra-
tion policies.
Mr. Trump is drawing in-
tense media attention to what
he says is a public-safety issue
caused by illegal immigration.
But the families also help put a
sympathetic face on Mr.
Trump’s attacks on some Mexi-
can immigrants as criminals
and his plans to build a wall
along the southern border and
deport millions of people who
are in the U.S. illegally.
Two weeks ago, Sabine Dur-
den told thousands of people at
a Trump rally in Anaheim, Ca-
lif., about her 30-year-old son,
Dominic, a sheriff’s dispatcher
who was killed in a 2012 motor-
cycle accident by an illegal im-
migrant truck driver convicted
twice of driving under the influ-
ence.
Choking back tears, she re-
called: “I heard Donald Trump
on the television as I walked by
talking about illegal immigra-
tion and about the cost of
American lives and I screamed.
Donald Trump became my life
savior that day, my hero.”
In an interview, Mr. Trump
said meeting the parents of
children killed by illegal immi-
grants “reinforced even more”
his support for stringent immi-
gration laws.
“Even I didn’t realize how
bad it was,” he said. “The only
way people can understand how
Republican Elders Knock Attacks on Hispanic Judge
BY THOMAS M. BURTON
Two Republican Party el-
ders on Sunday denounced
Donald Trump’s attacks on a
Hispanic federal judge, adding
to a wave of criticism from
party figures of their presump-
tive presidential nominee.
Over the past week, Mr.
Trump has repeatedly said
that U.S. District Judge Gon-
zalo Curiel, the Indiana-born
jurist presiding over civil fraud
litigation in California involv-
ing Trump University, is unfit
to hear the case because he is
of Mexican ancestry and Mr.
Trump has vowed to build a
wall along the U.S.-Mexico
border.
“I couldn’t disagree more
with what he had to say,” Sen-
ate Majority Leader Mitch
McConnell said in an interview
Experience vibrant museums and galleries in a city where creativity has no limits.
L to R: Houston artists Patrick Renner, GONZO247, Theresa Escobedo, JooYoung Choi, Nathaniel Donnett, Trenton Doyle Hancock, Susannah Mira
Women representing families of people killed in incidents linked to undocumented immigrants at a May Trump rally in Anaheim, Calif.
severe this crisis is is to see the
families, and then they see the
horror of it.”
Mr. Trump’s kinship with
these grieving parents parallels
Hillary Clinton’s ties to several
mothers of African-Americans
killed in gun violence or in con-
frontations with police, includ-
ing Trayvon Martin, Eric Garner
and Michael Brown. The “moth-
ers of the movement” have
campaigned with Mrs. Clinton
to push tougher gun-control
laws and raise awareness about
racial profiling.
Two weeks after he flagged
crime by illegal immigrants in
his June 16, 2015, campaign an-
nouncement, 32-year-old Kath-
ryn Steinle was slain in San
Francisco, allegedly by a felon
who had been deported five
broadcast Sunday.
Former House Speaker
Newt Gingrich, an outspoken
Trump supporter who has sug-
gested he would serve as Mr.
Trump’s running mate, called
the presumptive nominee’s re-
marks “one of the worst mis-
takes Trump has made,” and
said, “I think it’s inexcusable.”
In an interview broadcast
Sunday on CNN, Mr. Trump
complained that Judge Curiel
had issued “horrible rulings”
against him in the Trump Uni-
versity litigation and had
treated him “very unfairly.” He
cited the judge’s “Mexican her-
itage” and noted “I’m building
a wall” between the U.S. and
Mexico. Judge Curiel, he said,
“should recuse himself.”
Asked whether it was racist
to say the judge can’t do his
job effectively because of his
P W L C 10 11 12
times. Mr. Trump seized on the
murder as proof his focus on
border security was on track.
Ms. Steinle’s brother, Brad,
told CNN in July that Mr.
Trump was “sensationalizing”
her death. The Steinle family
last week declined a request for
comment on Mr. Trump
through an attorney.
Mr. Trump did find an ally in
Jamiel Shaw, whose 17-year-old
son was gunned down in 2008
by a gang member living ille-
gally in the U.S. “Donald Trump
was right on,” Mr. Shaw told
Fox News last July. “Donald
Trump is like speaking for us,
speaking for our dead.”
Mr. Trump saw the Fox in-
terview and called him. Days
later, he met Mr. Shaw and
other parents of children killed
ethnicity, Mr. Trump an-
swered, “I don’t think so at all.
He’s proud of his heritage….
He’s a Mexican. We’re building
a wall between here and Mex-
ico.”
Judge Curiel is presiding
over a pair of cases in which
the plaintiffs allege Trump
University duped them into
paying tens of thousands of
dollars on the belief they
would be trained to learn Mr.
Trump’s real estate strategies.
Mr. Trump denies the allega-
tions, saying the students got
their money’s worth, with
many offering positive evalua-
tions of the program.
Appearing on NBC, Mr.
McConnell said that “all of us
came here from somewhere
else.”
Almost all Americans, the
Kentucky Republican added,
H T G K B F A M 1 2 3 4 5 6
by illegal immigrants at a Bev-
erly Hills, Calif., hotel.
“He told me my son’s death
would not be in vain,” said Mr.
Shaw, a Democrat-turned-inde-
pendent voter who owns a gym-
equipment repair firm.
Among the parents Mr.
Trump is giving voice to are
blacks and Hispanics, who bring
a diverse face to a candidate
facing allegations of racial and
ethnic prejudice, most recently
for accusing a Mexican-Ameri-
can judge of being biased
against him. Mr. Shaw is Afri-
can-American.
Last year’s Beverly Hills
gathering was organized by Ma-
ria Espinoza, founder of the Re-
membrance Project, which ad-
vocates on behalf of such
families. The Anti-Defamation
U.S. Judge Gonzalo Curiel
are either recent immigrants
or have ancestors who “were
risk takers and who got up
from wherever they were and
came here.”
The denunciations come as
7 8 9 O I X X THE WALL STREET JOURNAL.
‘We’re going to build a wall and
Mexico will pay for it. And
Kate,’” said Mr. Rosenberg, re-
ferring to Ms. Steinle in San
Francisco.
In the Journal interview, Mr.
Trump attributed a “stagger-
ing” amount of crime to illegal
immigration. But data is scarce.
The federal government reports
the ethnicity and race of offend-
ers but not their legal status or
country of origin.
“On the question of whether
illegal immigrants commit
crimes out of proportion to
their share of the population,
it’s very hard to say,” said Ste-
ven Camarota, director of re-
search at the Center for Immi-
gration Studies, which favors
curbs on legal immigration and
stricter border enforcement.
Mr. Camarota and other pro-
ponents of reduced immigration
JONATHAN ERNST/REUTERS
often point to a Government
Accountability Office report in
2011 that found an estimated
296,000 immigrants here ille-
gally or with unknown legal sta-
tus in state and local jails. That
count, which includes multiple
incarcerations of the same per-
son in different jurisdictions,
League, which opposes discrim- covers violent and nonviolent
ination, said in a 2014 report offenses. There are estimated to
that the Remembrance Project be 11 million illegal immigrants
“demonizes immigrants.” Ms. in the U.S.
Espinoza didn’t respond to in- Deportations remain at re-
terview requests. cord-setting numbers under
Another parent who met Mr. President Barack Obama, and
Trump in Beverly Hills was Don more Mexicans are leaving the
Rosenberg, whose 25-year-old U.S. than entering it, according
son was riding his motorcycle to the Pew Research Center. Mr.
in San Francisco when he was Trump’s critics say his empha-
struck and killed by an illegal sis on crime tied to immigra-
immigrant driver in 2010. tion is misguided.
Mr. Rosenberg is grateful Mr. “Trump’s attacks on immi-
Trump is drawing attention to grants and immigration are di-
illegal immigration but said his visive, racist, and quite frankly,
inflammatory references to hearken back to some of the
Mexicans as “rapists” muddles darkest periods in our nation’s
his message. The self-described history,” said Ali Noorani, exec-
liberal Democrat has pressed utive director of the National
campaign advisers to offer Immigration Forum Action
more detailed policy plans. Fund, which backs citizenship
“Every speech can’t be, for illegal immigrants.
the Republican Party establish- Speaker Paul Ryan (R., Wis)
ment has been fitfully coming told a local radio station, “The
around to support Mr. Trump. comment about the judge the
Mr. Gingrich, appearing on other day just was out of left
Fox News, called on Mr. Trump field. It’s reasoning I don’t re-
to “move to a new level.” late to. I completely disagree
“This is no longer the pri- with the thinking behind that.”
maries,” the former House Also on Sunday, Democratic
speaker said. “He’s no longer front-runner Hillary Clinton
an interesting contender. He is said Mr. Trump’s remarks
now the potential leader of the about Judge Curiel were “vi-
U.S. and he’s got to move his cious” and “typical” of Mr.
INDIANA UNIVERSITY
game up to the level of being a Trump’s “ethnic slurs and
potential leader.” rants against everyone.”
Republican Sen. Rob Port- The former secretary of
man of Ohio, who is facing a state, appearing on ABC, said
difficult re-election race in a her opponent is “trying to di-
battleground state, told the vert attention from the very
Washington Post in an inter- serious fraud charges” against
view printed Sunday, “The fact the for-profit school.
that the judge has a Mexican- Mr. Trump, she said, “does
American heritage has nothing have that thin skin and, you
to do with how you should de- know, Judge Curiel is as Amer-
scribe his judicial ability.” ican as I am and certainly as
And last week, House American as Donald Trump.”
Location: 2017 Preston St. (Formerly Cheek-Neal Coffee Building)
#HoustonIsInspired
THE WALL STREET JOURNAL. Monday, June 6, 2016 | A5
A6 | Monday, June 6, 2016
RACE
Continued from Page One
settled.
For now, Democratic offi-
cials, fund-raisers and opera-
tives are getting impatient,
calling on Mr. Sanders to quit
the race and begin the work of
unifying the party for the
showdown with the Republi-
can presumptive nominee.
Orin Kramer, a New York
hedge-fund manager who has
raised campaign funds for
both President Barack Obama
and Mrs. Clinton, said with re-
spect to Mr. Sanders’s future
plans: “I would hope people
would understand what a
Trump presidency would mean
and act accordingly—and ‘ac-
cordingly’ means quickly.”
A strong showing in New
Jersey on Tuesday, before Cal-
ifornia results even come in,
could help Mrs. Clinton reach
the 2,383 delegates needed to
clinch the nomination. Her to-
tal includes hundreds of su-
perdelegates—party leaders
and elected officials who can
back either candidate. Mr.
Sanders is hoping that defeat-
ing Mrs. Clinton in the most
populous state later Tuesday
might give superdelegates rea-
son to drop her and get be-
hind his candidacy. Those su-
perdelegates have given no
indication they will shift alle-
giances.
Even so, Mr. Sanders isn’t
backing off. In an interview
that aired Sunday on CNN, he
stepped up an attack on Mrs.
Clinton involving the Clinton
Foundation. Echoing a critique
made by Republicans, Mr.
Sanders said he has “a prob-
lem” with the foundation ac-
cepting money from foreign
sources during her service as
secretary of state.
In a news conference Satur-
day in California, Mr. Sanders
indicated he would battle for
superdelegates all the way to
the convention.
“The Democratic National
Convention will be a contested
convention,” he said.
Mrs. Clinton, who won
Puerto Rico’s Democratic pri-
mary on Sunday, seems to be
running out of patience with
Mr. Sanders. Having shifted
* **** THE WALL STREET JOURNAL.
mid-1980s, takes a more ag-
gressive approach.
A victory in California and
elsewhere on Tuesday would
HHHHH
CAMPAIGN
“strengthen” the argument for
the nomination, Mr. Weaver WIRE
said, but it isn’t necessary to HHHHH
keep the candidacy alive
through the convention.
“The plan is as the senator DEMOCRATIC RESULTS
has described it: to go forward
after Tuesday and keep the
Clinton Winner in
campaign going to the conven- Puerto Rico Primary
tion and make the case to su- Hillary Clinton overwhelmed
MARIEL CALLOWAY/ZUMA PRESS
perdelegates that Sen. Sanders Bernie Sanders in Puerto Rico's
is the best chance that Demo- Democratic presidential primary
crats have to beat Trump,” Mr. on Sunday, putting her within
Weaver said. striking distance of capturing her
That is what worries Demo- party's nomination.
cratic leaders. Pointing to After a victory Saturday in the
polls indicating a tightening U.S. Virgin Islands and a win in the
race in November, they say U.S. territory, Mrs. Clinton was less
Sen. Bernie Sanders shook hands while campaigning in Los Angeles on Saturday. Mr. Sanders, if he is sincere than 30 delegates short of the
about beating back Mr. Trump, 2,383 needed to win the nomina-
must quickly join forces with tion, according to an Associated
POLITICS COUNTS the party front-runner. Press count.
“Democrats will need as While Puerto Rican residents
Tuesday’s Terrain much unity as early as we can
get it as possible,” said Tom
Daschle, a former Senate Dem-
ocratic leader. “It would be a
cannot vote in the general election,
the island's politics could reverber-
ate into the fall campaign. Tens of
thousands of Puerto Ricans have
The six states holding Democratic contests Tuesday offer different huge mistake to underestimate left the island to escape a dismal
challenges for Hillary Clinton and Sen. Bernie Sanders. Mr. Sanders [Mr. Trump]. We’ve done that economy, with many resettling in
has won no state that is more racially diverse than the U.S. on the entire election season.” the key battleground of Florida.
Democratic Senate leader —Associated Press
average, so rural Montana and South Dakota, which are largely non- Harry Reid has concluded Mr.
Hispanic white, are likely a good fit for him. Diverse and densely Sanders has no path to the CAMPAIGN VIOLENCE
nomination, an aide said, and
populated New Jersey will probably favor Mrs. Clinton. that he should shift focus to
Trump: Protesters
helping Democrats pick up Sent by Democrats
People per square mile Percent white, non-Hispanic Pledged delegates at stake Senate seats. Doing so would Presumptive Republican presi-
help Mr. Sanders return to the dential nominee Donald Trump
U.S. 90 63
chamber with more power on Sunday suggested protesters
California 251 39 475 than he wielded before the who attacked his supporters af-
New Jersey 1,208 58 126 presidential race began a year ter a rally in San Jose, Calif.,
New Mexico 17 40 34 ago, the aide said. Thursday were “paid agitators”
Montana 7 87 21
William Daley, who chaired deployed by the Democrats.
Mr. Gore’s presidential cam- Appearing on CNN, Mr. Trump
South Dakota 11 84 20 paign and served as a White blamed for the mayhem “thugs”
North Dakota 11 88 18 House chief of staff for Mr. who attend “every rally.”
Obama, said in an interview “They’re bad people, and I
Source: U.S. Census Bureau (demographics); Democratic National Committee (delegates) THE WALL STREET JOURNAL. the “damage” Mr. Sanders think they’re sent by the Demo-
could do is “overwhelming if crats,” he said.
he doesn’t give [Mrs. Clinton] He offered no evidence for
her focus to Mr. Trump, she year—four days after the pri- two campaigns might set aside the breather she needs in the the claim, but said some of the
told CNN that after Tuesday, mary season ended—she gave differences that have grown run-up to the convention to protesters were holding cam-
“I’m going to do everything I a speech bowing out and im- more pronounced in the heat take on Trump.” paign signs for Democratic candi-
can to reach out to try to mediately threw her support of the year-long campaign. At a minimum, some of date Bernie Sanders.
unify the Democratic Party, to Mr. Obama. “What will happen hope- Mrs. Clinton’s supporters In separate appearances on
and I expect Sen. Sanders to Tad Devine, a senior Sand- fully when the voting is done, would like to see Mr. Sanders CNN, Mr. Sanders and Democratic
do the same.” ers strategist who advised our two campaigns will begin lay off the attacks. Alan Kes- front-runner Hillary Clinton con-
When she ran against Mr. Democratic nominees Al Gore to talk once more to one an- sler, a longtime Democratic demned violence at political gath-
Obama in 2008, Mrs. Clinton in 2000 and John Kerry in other and figure out where the fundraiser, said Mr. Sanders’s erings. “I condemn it absolutely,”
stayed in the race until the 2004, among others, sug- common ground is,” he said. tone is “a little disappointing.” Mr. Sanders said. “I want to make
end. As late as the final week gested the “path forward” is Campaign manager Jeff “There’s no reason why he it clear that any person who is a
of voting, she was talking uncertain, hinging on the out- Weaver, who has worked in shouldn’t fight for the things Bernie Sanders supporter, please,
hopefully of wooing super-del- come in California and other Mr. Sanders’s congressional that he’s talking about, but do not in any way, shape or form
egates and capturing the nom- states. He voiced a concilia- offices and Vermont-based there’s no need to continually engage in violence.”
ination. But on June 7 of that tory note, describing how the campaigns dating to the make it personal,” he added. —Kate Davidson
THE WALL STREET JOURNAL. * * * * Monday, June 6, 2016 | A7

U.S. NEWS

Funding Fights Vex Schools Risk Algorithms

Officials in Kansas,
Illinois and Michigan
Face Court Test
work to try to keep BY JOE PALAZZOLO do are boring or dull?” Scores
are generated by comparing an
classrooms open Algorithms used by authori- offender’s characteristics to a
ties to predict the likelihood of representative criminal popula-
Lawmakers in some states criminal conduct are facing a tion of the same sex.
have a daunting homework as- major legal test in Wisconsin. Prosecutors said Mr. Loomis
signment over their summer The state’s highest court is was the driver of a car involved
break: to find hundreds of mil- set to rule on whether such al- in a drive-by shooting in La
lions of dollars to make sure gorithms, known as risk assess- Crosse, Wis., on Feb. 11, 2013.
the next school year can start ments, violate due process and Mr. Loomis denied any involve-
on time. discriminate against men when ment in the shooting, saying he
judges rely on them in sentenc- drove the car only after it had
By Melissa Korn, ing. The ruling would be among occurred. He pleaded guilty in
SETH PERLMAN/ASSOCIATED PRESS

Douglas Belkin the first to speak to the legality 2013 to attempting to flee po-
and Kris Maher of risk assessments as an aid in lice in a car and operating a ve-
meting out punishments. hicle without the owner’s con-
Stung by lower tax revenue Criminal-justice experts sent and was sentenced to six
and nearing the end of the reg- skeptical of such tools say they years in prison and five years
ular legislative sessions, politi- are inherently biased, treating of supervision.
cians and school administra- poor people as riskier than “The risk assessment tools
tors in Kansas, Illinois and those who are well off. Propo- that have been utilized suggest
some other Midwestern states nents of risk assessments say that you’re extremely high risk
are scrambling to firm up fi- Illinois Gov. Bruce Rauner tells students in Auburn, Ill., in April about budget talks with lawmakers. they have elevated sentencing to reoffend,” Judge Scott Horne
nancial packages that would to something closer to a sci-
keep some educational pro- our children’s education,” he highest unemployment rate. jected to run out of cash. ence.
grams running through the said. “We’re like a banana repub- On Thursday, the state “Evidence has a better track
Tools used to
summer, and ensure that class- State Rep. Jim Ward, a lic. We can’t manage our House of Representatives record for assessing risks and evaluate offenders
rooms open again in the fall. Democrat, said his colleagues money,” Gov. Bruce Rauner passed a set of six bills that needs than intuition alone,”
The Kansas Supreme Court in the statehouse are the ones told reporters last week when would provide $617 million to wrote Christine Remington, an
for sentencing raise
ruled last month that legisla- playing politics. “They’re going the two sides again failed to the district, including $467 assistant attorney general in controversy.
tive efforts to make funding to play chicken for a while. reach a deal. million to pay off its operating Wisconsin, in a legal brief filed
for poorer school districts That never works out well,” he Illinois passed supplemental debt and $150 million to start in January defending the state’s
more equitable didn’t go far said, predicting a special ses- bills to release funds for spe- up a new, debt-free district. use of the evaluations. in La Crosse County said at Mr.
enough to meet a standing sion would be called toward cific purposes, like education, Democrats overwhelmingly Risk-evaluation tools have Loomis’s sentencing.
court order; judges said Fri- month’s end. last year; a first attempt to do opposed the funding plan, call- gained in popularity amid ef- Mr. Loomis said in his ap-
day that the state had un- “We must plan for the the same for the coming cycle ing for more money for the forts around the country to peal that Judge Horne’s reli-
til June 30 to bring funding worst and hope for the best,” failed last week. district and a new commission curb the number of repeat of- ance on COMPAS violated his
formulas in line with constitu- John Allison, superintendent Chicago’s schools won’t to oversee school openings. fenders. They help authorities right to due process, because
tional requirements or the of the 51,000-student Wichita open in the fall unless the gov- The measures passed Thurs- sort prisoners, set bail and the company that makes the
court would shut schools. School District, wrote on the ernor and Legislature pass a day would create an advisory weigh parole decisions. But test, Northpointe, doesn’t re-
The Kansas fight is the lat- district’s website Thursday. budget or supplemental educa- council that would make no their use in sentencing is more veal how it weighs the answers
est fallout from a move by the He said that while regular tion appropriation, said Chi- binding recommendations. controversial. to arrive at a risk score.
state’s Republican governor summer school is completed cago Public Schools Chief Ex- “This plan saves Detroit’s Before the sentencing of 34- Northpointe General Man-
and Legislature to cut taxes by July 1 and won’t be affected ecutive Forrest Claypool. That school system and returns lo- year-old Eric Loomis, whose ager Jeffrey Harmon declined
dramatically in an effort to by any shutdown, extended could compound the problems cal control to the city, prevent- case is before the state’s high to comment on Mr. Loomis’s
spur economic growth. summer sessions and a sum- facing many of the city’s ing a disastrous bankruptcy court, Wisconsin authorities case but said algorithms that
The state’s regular legisla- mertime meal program used neighborhoods already suffer- that would have affected every evaluated his criminal risk with perform the risk assessments
tive session ended last by low-income students could ing from a surge in deadly community in the state,” said a widely used tool called COM- are proprietary. The outcome,
Wednesday and was adjourned be suspended, and monthly shootings this year. Republican House Speaker PAS, or Correctional Offender he said, is all that is needed to
until January. Gov. Sam payroll and nonbond vendor “Any time your school sys- Kevin Cotter. Management Profiling for Al- validate the tools.
Brownback hasn’t yet said payments of more than $50 tem shuts down it has an in- The measures now head to ternative Sanctions, a 137-ques- Northpointe says its studies
whether he would call for a million would be affected. credible impact on families,” the state Senate, which passed tion test that covers criminal have shown COMPAS’s recidi-
special session to address Illinois closed out its spring said Mr. Claypool, whose dis- a different version of the pack- and parole history, age, em- vism risk score to have an accu-
school funding, but he reiter- legislative session last Tues- trict has more than 392,000 age. Michigan’s Legislature ployment status, social life, ed- racy rate of 68% to 70%. Inde-
ated Friday that he would day without a budget for the students. “But I don’t believe it typically breaks for the sum- ucation level, community ties, pendent evaluations have
work with the attorney general second year in a row. The will come to that.” mer in mid-June, and the Sen- drug use and beliefs. produced mixed findings.
and legislative leadership “to state, with a Republican gover- Meanwhile, Michigan law- ate could squeeze in the new The assessment includes Michael Rosenberg, a lawyer
respond aggressively and ap- nor and Democratic-led Legis- makers are trying to finalize a proposals this week, said Am- queries like, “Did a parent fig- for Mr. Loomis, and a spokes-
propriately” to the court’s clo- lature, now has $7 billion in financial rescue package less ber McCann, spokeswoman for ure who raised you ever have a woman for the Wisconsin Attor-
sure threat. “The court should unpaid bills, as well as the na- than a month before the De- Senate Majority Leader Arlan drug or alcohol problem?” and ney General Brad Schimel de-
not be playing politics with tion’s lowest credit rating and troit Public Schools are pro- Meekhof. “Do you feel that the things you clined to comment on the case.

SPACE
Continued from Page One
various federal agencies led by
the White House science of-
fice, the people familiar with
the matter said, the company
appears close to obtaining
what it has called “mission ap-
Support
proval.” Until recently, Moon
Express faced a regulatory
Special
MOON EXPRESS

Catch-22 because there was no

template for getting Washing-
ton’s blessing for what it pro-
posed.
Official action coordinated
through the Federal Aviation
Rendering of Moon Express’s suitcase-size MX-1 spacecraft. Olympics
Administration, which regu- transmit photos and videos. of its payload” to determine if
lates U.S. rocket launches and
is responsible for traditional
payload reviews, could come
Moon Express’s lander is
slated to be blasted into orbit
from a remote New Zealand
it poses “any significant public
safety, national security, or
foreign policy concerns.”
athletes.
as soon as the next few weeks, site by a 52-foot Electron “With the emergence of
these people said.
An FAA spokesman said the
agency “is currently working
rocket manufactured
Rocket Lab Ltd. Onboard
thrusters are supposed to pro-
by new private players, it’s im-
portant to show some regula-
tory predictability,” according
Make a
through the interagency pro- pel the spacecraft, carrying a to Scott Pace, a former senior
cess to ensure a mechanism is
in place that permits emerging
space telescope and equip-
ment for other experiments,
NASA official who teaches at
George Washington University.
donation
commercial space operations” further from the Earth and Moon Express illustrates
such as Moon Express. But the
agency declined to elaborate.
down to the Moon’s surface in
a matter of days or weeks.
how dramatically costs to
build and launch small space-
today!
Bob Richards, chief execu- Though the plan has drawn craft are falling. When the
tive and a founder of Moon little attention outside the company was formed around Join us in raising $1,000,000 to
Express, said over the week- commercial space industry, it the beginning of the decade, it
end that “we’ve become a reg- is being closely monitored by projected a moon mission support Special Olympics athletes.
ulatory pathfinder out of ne- aerospace companies and en- would cost roughly $50 mil- Now through June 24, 2016, you
cessity,” because in the past trepreneurs mulling invest- lion. Today, company officials
“only governments have un- ments in the nascent industry. project a price tag of around can make a donation at your local
dertaken space missions be- Under decades-old treaties, half that amount.
TD Bank.*
yond Earth orbit.” He added the U.S. and other countries The government is ex-
that the company “is eagerly are responsible for “continu- pected to use the same pro-
awaiting a determination” on ing supervision” of both gov- cess to vet private attempts to To learn more about how you
its mission-approval request. ernment and commercial pay- fly deeper into space, includ-
Based in Cape Canaveral, loads. Such responsibilities are ing billionaire Elon Musk’s can make a difference, visit
Fla., Moon Express, which has largely formalities when they plan to send an unmanned tdbank.com/specialolympics
40 employees, was co-founded focus on satellites headed for craft to Mars in 2018. Officials
by Naveen Jain, a Silicon Val- typical orbits around the of SpaceX, as Mr. Musk’s com- or call 1-888-751-9000.
ley entrepreneur and philan- Earth, or spacecraft controlled pany is called, are engaged in
thropist, and Mr. Richards, by the Pentagon, the National similar governmentwide dis-
along with another longtime Aeronautics and Space Admin- cussions in advance of seek-
space expert, Barney Pell, a istration or other federal enti- ing a launch license.
former NASA scientist. Mr. ties. So far, the government A SpaceX spokesman on
Richards also is a founder of has sent probes to the Moon, Sunday said, “we take plane-
International Space University, Mars and other planets. tary protection very seri-
a private institution that But the proposed Moon Ex- ously,” adding the company is
trains space scientists and press mission is more com- working with federal officials
which has a central campus in plex, raising new questions to ensure compliance with
Strasbourg, France. about international treaty ob- space treaty obligations.
From the beginning, Moon ligations and protection of Eventually, space scientists
Express’s goal was to conduct heavenly bodies. and aerospace-industry lead-
robotic missions able to carry The new procedure features ers expect congressional ac-
scientific payloads and scale a more detailed, govern- tion will be required to spell
up to commercial operations. mentwide review of what such out new review procedures re-
The company is among payloads include, and whether ducing industry uncertainty.
those competing for the their contents or expected tra- But until that occurs, Moon *92% of all donations benefit Special Olympics; remaining 8%
Google Lunar X Prize, which jectories pose contamination Express is expected to set the used for promotional materials.
offers a first prize of $20 mil- or other threats prohibited by standard for how the FAA,
lion for the first privately treaty provisions. According to State Department and other TD Bank, N.A. | Equal Housing Lender
funded team that develops a the FAA, a company such as federal agencies review pri-
spacecraft to land on the Moon Express “may volun- vate launches aiming to escape
Moon, traverse its surface and tarily request an FAA review the Earth’s gravitational pull.
A8 | Monday, June 6, 2016 THE WALL STREET JOURNAL. THE WALL STREET JOURNAL. Monday, June 6, 2016 | A9

PAID ADVERTISEMENT PAID ADVERTISEMENT

U.S., EUROPEAN MAYORS UNITE TO FIGHT ANTI-SEMITISM

As U.S. and European leaders have acknowledged, EUROPEAN MAYORS AND MUNICIPAL LEADERS
anti-Semitism is on the rise. In response, AJC reached
ALBANIA
out to mayors across Europe and the U.S., urging Berat – Petrit Sinaj
Korçë - Sotiraq Filo
them to publicly condemn and take concrete actions Lushnjë – Fatos Tushe
Patos – Rajmonda Balilaj
against this pathology. These 188 European mayors Roskovec – Majlinda Bufi
from 31 countries, representing over 67 million people, Tirana – Erion Veliaj
AUSTRIA
and 319 U.S. mayors and municipal leaders from 50 Salzburg – Heinz Schaden
states and the District of Columbia, representing over Vienna – Michael Häupl
Villach – Günther Albel
82 million people, have signed the Mayors United BELGIUM
Lampertheim – Gottfried Störmer
Landau – Thomas Hirsch
Landsberg am Lech – Mathias Neuner
Leipzig – Burkhard Jung
Leverkusen – Uwe Richrath
Lingen/Ems – Dieter Krone
Ludwigshafen – Eva Lohse
Maintal – Monika Böttcher
Mainz – Michael Ebling
Mannheim – Peter Kurz
Marzahn Hellersdorf – Stefan Komoß
Meppen – Helmut Knurbein
Mitte – Christian Hanke
ROMANIA
Alba Iulia – Mircea Hava
Iasi – Mihai Chirica
SLOVAKIA
Bratislava – Ivo Nesrovnal
SLOVENIA
Ljubljana – Zoran Janković
SPAIN
Madrid – Manuela Carmena
SWEDEN
Stockholm – Karin Wanngard
SWITZERLAND
Biel – Erich Fehr
Lausanne – Daniel Brelaz
UKRAINE
Chernivtsi – Oleskii Kaspruk
Kiev – Vitaly Klichko
Lviv – Andriy Sadovyy
Odessa – Gennadiy Trukhanov
UNITED KINGDOM
Bristol – Marvin Rees
London – Sadiq Khan
– Boris Johnson (2008-16)
Salford – Ian Stewart
St. Albans – Salih Gaygusuz
Lawrence – Daniel Rivera
Leominster – Dean J. Mazzarella
Lowell – Rodney M. Elliott
Malden – Gary Christenson
Mendon – Mark Reil
Methuen – Steve Zanni
Monterey – Scott J. Jenssen
Needham – Maurice P. Handel
Newburyport – Donna D. Holaday
Newton – Setti Warren
Northampton – David Narkewicz
Norwood – Paul A. Bishop
Plympton – Mark E. Russo
Quincy – Thomas P. Koch
Revere – Daniel Rizzo
Salem – Kimberley Driscoll
Rye Brook – Paul S. Rosenberg
Southold – Scott A. Russell
Suffolk County – Steven Bellone
Syracuse – Stephanie Miner
Wesley Hills – Marshall Katz
Westchester County – Robert P.
Astorino
White Plains – Tom Roach
Williston Park – Paul M. Ehrbar
Yonkers – Mike Spano
NORTH CAROLINA
Asheville – Esther E. Manheimer
Charlotte – Daniel G. Clodfelter
NORTH DAKOTA
Grand Forks – Michael Brown

Against Anti-Semitism statement. Antwerp – Bart de Wever Monheim am Rhein – Daniel

Zimmermann
Sandisfield – Alice B. Boyd OHIO
Boortmeerbeek – Michel Baert Sandwich – Frank Pannorfi Akron – Jeff Fusco

U.S. MAYORS AND MUNICIPAL LEADERS

Knokke-Heist – Graaf Leopold Mühlheim an der Ruhr – Ulrich
Sharon – William A. Heitin
“Anti-Semitism is not compatible with fundamental democratic values,” Lippens Scholten Amberley Village – Thomas C.
Somerville – Joseph Curtatone Muething
asserts the Mayors United Against Anti-Semitism statement. Turnhout – Eric Vos Munich – Dieter Reiter
Springfield – Domenic J. Sarno Beachwood – Merle S. Gorden
Neuburg an der Donau – Bernhard
ALABAMA Johns Creek – Michael E. Bodker Stoughton – Joseph M. Mokrisky
“As Mayors and municipal leaders, we have a special responsibility to BOSNIA AND HERZEGOVINA Gmehling Blue Ash – Lee Czerwonka
Nuremberg – Ulrich Maly Birmingham – William A. Bell Macon-Bibb County – Robert A. B. Taunton – Thomas Hoye, Jr. Cincinnati – John Cranley
speak out against the growing menace of anti-Semitism.” The statement Sarajevo – Ivo Komšić
Mobile – William S. Stimpson Reichert Waltham – Jeannette A. McCarthy
Offenbach – Horst Schneider Cleveland Heights – Dennis R.
affirms that: BULGARIA Roswell – Jere Wood Worcester – Joseph Petty Wilcox
Offenburg – Edith Schreiner ALASKA
Sofia – Yordanka Fandakova Sandy Springs – Russell K. Paul Columbus – Michael B. Coleman
Oranienburg – Hans-Joachim Anchorage – Ethan Berkowitz MICHIGAN
Laesicke Savannah – Edna Branch Jackson Cuyahoga County – Armond Budish
“We, the undersigned, CROATIA Ann Arbor – Christopher Taylor
Osnabrück – Wolfgang Griesert ARIZONA HAWAII Dayton – Nan Whaley
Zagreb – Milan Bandic Farmington Hills – Barry L. Brickner
n Condemn anti-Jewish hatred, in all its forms; Pankow – Matthias Köhne Phoenix – Greg Stanton Hilo – William P. Kenoi Harrison – Bill Neyer
CYPRUS Muskegon – Stephen J. Gawron Lima – David J. Berger
Passau – Jürgen Dupper Tempe – Mark W. Mitchell
n Reject the notion that anti-Semitic acts, while sometimes Honolulu – Kirk Caldwell Oak Park – Marian McClellan
Akanthou – Savvas Savvides Pforzheim – Gert Hager Tucson – Jonathan Rothschild Loveland – Linda Cox
carried out in the name of a political cause, may ever be Athienou – Dimitris Papapetrou Schwäbisch Gmünd – Richard
IDAHO Southfield – Donald F. Fracassi Lyndhurst – Joseph M. Cicero, Jr.
ARKANSAS
justified or excused by one’s opinions about the actions or Ayia Napa – Yiannis Karousos Arnold Boise – David H. Bieter MINNESOTA Parma – Tim DeGeeter
Little Rock – Mark Stodola
existence of the State of Israel; Ayios Dhometios – Kostas Petrou Springe – Christian Springfeld ILLINOIS Golden Valley – Shep Harris Pepper Pike – Richard Bain
Dali – Leontios Kallenos Stuttgart – Fritz Kuhn CALIFORNIA Berwyn – Robert J. Lovero Reading – Robert P. Bemmes
n Declare that prejudices against Jews or others due to Engomi – Zacharias Kyriacou Trier – Wolfram Leibe Agoura Hills – Illece Buckley Weber
MISSISSIPPI
Shaker Heights – Earl M. Leiken
Bloomington – Tari Renner Gulfport – Billy Hewes
differences in religious faith are inconsistent with our core Famagusta – Alexis Galanos Tübingen – Boris Palmer Albany – Peter Maass Bolingbrook – Roger C. Claar South Euclid – Georgine Welo
Ulm – Ivo Gönner Jackson – Tony T. Yarber
values; Geri – Argyris Argyrou Anaheim – Tom Tait Chicago – Rahm Emanuel Toledo – Paula Hicks-Hudson
Karavas – Ioannis Papaioannov Villingen-Schwenningen – Rupert Bakersfield – Harvey L. Hall Elgin – David Kaptain MISSOURI Youngstown – John A. McNally
n Support government efforts directed at eradicating anti- Kyrenia – Glafkos A. Cariolou
Kubon Beverly Hills – Julian A. Gold Clayton – Harold J. Sanger
Evanston – Elizabeth Tisdahl OKLAHOMA
Semitism and preventing extremist indoctrination and Wedemark – Helge Zychlinski Calabasas – Lucy M. Martin
Kythrea – Petros Kareklas Glencoe – Lawrence R. Levin Creve Coeur – Barry L. Glantz
Weiden – Kurt Seggewiß Tulsa – Dewey F. Bartlett, Jr.
recruitment; and support expanded education programs, Larnaca – Andreas Louroudjiatis Dublin – David Haubert Highland Park – Nancy Rotering Kansas City – Sylvester “Sly” James, Jr.
Werl – Michael Grossmann Emeryville – Ruth Atkin OREGON
including Holocaust programs, that increase awareness and Latsia - Panayiotis Kyprianou Homewood – Richard A. Hofeld St. Louis – Francis G. Slay
Wernigerode – Peter Gaffert Irvine – Steven S. Choi Beaverton – Denny Doyle
Lefkara – Savvas Xenofontos Joliet – Robert O’Dekirk University City – Shelley Welsch
counter intolerance and discrimination; Wittenberg – Torsten Zugehör Long Beach – Robert Garcia Portland – Charlie Hales
Limassol – Andreas Christou Morton Grove – Daniel P. DiMaria
Wolfenbüttel – Thomas Pink MONTANA
n Recognize the ever-present need to be vigilant about efforts to Morphou – Charalambos Pittas Los Altos – Jan Pepper Northfield – Fred Gougler Great Falls – Bob Kelly PENNSYLVANIA
Worms - Michael Kissel Los Angeles – Eric Garcetti
prevent and report acts of anti-Semitism, and other hate crimes; Nicosia – Constantinos Yiorkadjis Orland Park – Daniel J. McLaughlin Allentown – Ed Pawlowski
Zwickau – Pia Findeiß Sacramento – Kevin Johnson NEBRASKA
Paphos – Phedonas Phedonas Peoria – James Ardis Easton – Salvatore J. Panto, Jr.
and Paralimni – Theodoros Pyrillis San Diego – Kevin Faulconer Lincoln – Chris Beutler
GREECE Schaumberg – Al Larson Montgomery County – Josh Shapiro
n Believe that communities that promote a climate of mutual Strovolos – Lazaros Savvides Athens – Giorgos Kaminis San Francisco – Edwin M. Lee Skokie – George Van Dusen NEVADA Philadelphia – James F. Kenney
Yermasoyia – Andreas Gavrielides Thessaloniki – Yiannis Boutaris San Jose – Sam Liccardo
understanding and respect among all citizens are essential to Wheeling – Dean S. Argiris Henderson – Andy A. Hafen Pittsburgh – William Peduto
San Leandro – Pauline Cutter
good governance and democratic life.” CZECH REPUBLIC HUNGARY Santa Barbara – Helene Schneider INDIANA Las Vegas – Carolyn G. Goodman
RHODE ISLAND
Brno - Petr Vokřál Budapest – István Tarlós Santa Monica – Kevin McKeown Indianapolis – Gregory A. Ballard NEW HAMPSHIRE Central Falls – James A. Diossa
Prague – Adriana Krnáčová Debrecen – Papp László Cranston – Allan Fung
If your mayor is listed, please take a moment to thank him or her for West Hollywood – Lindsey P. Horvath IOWA Portsmouth – Robert J. Lister
Eger – László Habis Providence – Jorge Elorza
standing up against anti-Semitism. Otherwise, mayors can join this DENMARK COLORADO Des Moines – T.M. Franklin Cownie NEW JERSEY
Győr-Moson-Sopron County – Warwick – Scott Avedisian
Copenhagen – Frank Jensen
global effort by contacting mayorsunited@ajc.org. If not now, when? Zoltán Németh Aurora – Stephen D. Hogan KANSAS Atlantic City – Donald A. Guardian
ESTONIA Kaposvár – Szita Károly Denver – Michael B. Hancock Kansas City – Mark R. Holland Avalon – Martin L. Pagliughi SOUTH CAROLINA
Tallinn – Taavi Aas Pécs – Zsolt Pava Leawood – Peggy J. Dunn Camden County – Jeffrey L. Nash Charleston – Joseph P. Riley, Jr.
CONNECTICUT
Somogy County – Gergely Jako Overland Park – Carl R. Gerlach Cape May – Edward J. Mahaney, Jr. Columbia – Stephen K. Benjamin
FRANCE East Hartford – Marcia A. Leclerc
Szabolcs-Szatmár-Bereg County – Wichita – Jeff Longwell Cherry Hill – Chuck Cahn
Bordeaux – Alain Juppé Greenwich – Peter J. Tesei SOUTH DAKOTA
Oskár Sesztár Closter – John C. Glidden, Jr.
Montpellier – Philippe Saurel Hartford – Pedro E. Segarra KENTUCKY Rapid City – Steve Allender
East Hanover – Joseph Pannullo
Nancy – Laurent Hénart IRELAND Middletown – Daniel Drew Lexington – Jim Gray
THIS AD WAS MADE POSSIBLE BY THE GENEROSITY OF: East Windsor – Janice F. Mironov TENNESSEE
Nice – Christian Estrosi Dublin – Críona Ní Dhálaigh New Britain – Erin E. Stewart Louisville – Greg Fischer Elizabeth – J. Christian Bollwage Chattanooga – Andy Berke
Arthur & Willi Aeder Lawrence D. Ginsburg Aldo & Sandra Papone Paris – Anne Hidalgo Stamford – David R. Martin
ITALY LOUISIANA Englewood – Frank Huttle Memphis – AC Wharton, Jr.
New York, NY Dallas, TX New York, NY
Sarcelles – François Pupponi Westport – James S. Marpe
Ancona – Valeria Mancinelli Bossier City – Lorenz J. Walker Fort Lee – Mark J. Sokolich Nashville – Karl Dean
Len Berenfield Dr. Rosemary Gluck Norman & Myrna Ricken
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Strasbourg – Roland Ries Bologna – Virginio Merola DELAWARE Harrison – James Fife Shelby County – Mark H. Luttrell, Jr.
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Toulouse – Jean Luc Moudenc Briga Novarese – Chiara Barbieri Wilmington – Dennis P. Williams MAINE Highland Park – Gayle Brill Mittler
Stanley & Marion Bergman Barnard & Rachel Gottstein Judith & David Rivkin
Augusta – David M. Rollins TEXAS
New York, NY Gottstein Family Foundation Rumson, NJ Campobasso – Antonio Battista Hope Township – Timothy C.
Anchorage, AK GERMANY DISTRICT OF COLUMBIA Austin – Steve Adler
Richard L. Berkman & Toni Seidl Dr. Alain Roizen Ferrara – Tiziano Tagliani Bangor – Nelson E. Durgin McDonough
Philadelphia, PA Fleur & Leonard Harlan New York, NY Aachen – Marcel Philipp Muriel Bowser Corpus Christi – Nelda Martinez
Florence – Dario Nardella Lewiston – Robert E. Macdonald Jersey City – Steven M. Fulop
Rena & Martin Blackman New York, NY Daryl & Steven Roth Augsburg – Kurt Gribl Dallas – Mike Rawlings
Genova – Marco Doria FLORIDA Portland – Michael F. Brennan Livingston – Michael M. Silverman
New York, NY Alan & Barbara S. Jacobs New York, NY Bayreuth – Brigitte Merk-Erbe Fort Worth – Betsy Price
New York, NY L’Aquila – Massimo Cialente Apopka - Joe Kilsheimer Margate – Michael S. Becker
Adele G. Block Jan & Lawrence Ruben Bergheim – Maria Pfordt MARYLAND Galveston – James D. Yarbrough
New York, NY David & Terry Kahan New York, NY Milan – Giuliano Pisapia Aventura – Enid Weisman Marlboro – Jonathan L. Hornik
Troy, MI
Bochum - Thomas Eiskirch Anne Arundel County – Steve Schuh Garland – Douglas Athas
Lee Bohm Bonnie & Mitchell Rudin Novara – Andrea Ballarè Bal Harbour – Martin Packer Morristown – Timothy P. Dougherty
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Bonn – Ashok Sridharan Baltimore – Stephanie Rawlings- Houston – Sylvester Turner
Palermo – Leoluca Orlando Bay Harbor Islands – Jordan W. Blake Newark – Ras Baraka
Giulietta Boukhobza & David Harris New York, NY Joan & Jack Saltz Bramsche – Heiner Pahlmann Plano – Harry LaRosiliere
Potenza – Dario De Luca Leonard Baltimore County – Kevin Kamenetz Parsipanny-Troy Hills – James R.
New York, NY Mr. and Mrs. Harris L. Kempner, Jr. New York, NY Braunschweig – Ulrich Markurth Richardson – Paul Voelker
Trento – Alessandro Andreatta Boca Raton – Susan Haynie Barberio
Lotte & Ludwig Bravmann Galveston, TX Arthur & Rebecca Samberg Charlottenburg – Reinhard Brunswick – Karin Tome
Plainsboro – Peter Cantu San Antonio – Ivy R. Taylor
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Naumann Waco – Malcolm Duncan, Jr.
Leo Bretter Short Hills, NJ The Schleifer Family Foundation Turin – Piero Fassino Broward County – Tim Ryan Princeton – Liz Lempert
Cologne – Henriette Reker Gaithersburg – Jud Ashman
New York, NY Sandra Krause Chappaqua, NY
Venice – Luigi Brugnaro Cooper City – Greg Ross Randolph – Joanne Veech UTAH
In Memory of Maurice L. Strauss Dachau – Florian Hartmann Hagerstown – David S. Gysberts
Simone & Jerome Chazen Seigle Family Foundation Coral Springs – Walter “Skip” Ridgewood – Paul Aronsohn Holladay – Robert M. Dahle
The Chazen Foundation Los Angeles, CA Chicago, IL Datteln – André Dora Verona – Flavio Tosi Harford County – Barry Glassman
Campbell Roxbury Township – Jim Rilee Midvale City – JoAnn B. Seghini
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Harrison, NY LATVIA Deerfield Beach – Jean M. Robb Summit – Ellen Dickson
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LITHUANIA Prince George’s County – Rushern L. Salt Lake County – Ben McAdams
Susan & Bill Levine Erfurt - Andreas Bausewein
Shirley & Milton Cooper Mira J. Spektor Hallandale Beach – Joy Cooper Baker III West Windsor – Shing-Fu Hsueh
Phoenix, AZ Essen – Thomas Kufen Vilnius – Remigijus Šimašius
New Hyde Park, NY In Memory of Eryk Spektor Juno Beach – Mort Levine Queen Anne – Randy Esty Woodcliff Lake – Jeffrey R. Goldsmith VERMONT
The Litwin Foundation New York, NY Esslingen am Neckar – Jürgen
Richard & Rosalee Davison MALTA Lauderhill – Richard J. Kaplan Rockville – Bridget Donnell Newton Burlington – Miro Weinberger
New York, NY Zieger
Baltimore, MD Chris Spyropoulos
Valletta – Alexiei Dingli NEW MEXICO Montpelier – John Hollar
The Honorable & Mrs. Earl Mack Old Brookville, NY Miami – Tomas Pedro Regalado Somerset – Jeffrey Z. Slavin
Martin Elias Frankfurt – Peter Feldmann Santa Fe – Javier Gonzales
Muttontown, NY Palm Beach, FL Barry Sternlicht MOLDOVA Miami Beach – Philip Levine Washington Grove – Joli A.
Fürth – Thomas Jung VIRGINIA
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Chisinau – Dorin Chirtoaca Miami Dade County – Carlos A. McCathran NEW YORK
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In Honor of Michael Gould Nicki & Harold Tanner Gimenez Buffalo – Byron W. Brown
Miami, FL Barbara Mines New York, NY Göttingen – Rolf-Georg Köhler NETHERLANDS MASSACHUSETTS Chesapeake – Alan P. Krasnoff
North Bay Village – Connie Leon-Kreps Farmingdale – Ralph Ekstrand
Philip M. & Regan Friedmann Jupiter, FL John & Barbara Vogelstein Greven – Peter Vennemeyer Amsterdam – E.E. van der Laan Agawam – Richard A. Cohen Fairfax County – Sharon Bulova
North Miami Beach – George Vallejo Greenburgh – Paul Feiner
Chicago, IL M.K. – Link Foundation Foundation Halberstadt – Andreas Henke The Hague - Jozias van Aartsen Attleboro – Kevin J. Dumas Norfolk – Paul D. Fraim
Las Vegas, NV New York, NY Ocala – Kent Guinn Hastings-on-Hudson – Peter
Alice & Nathan Gantcher Haltern am See – Bodo Klimpel Beverly – Michael P. Cahill Richmond – Dwight Clinton Jones
Palm Beach, FL Sara Moss & Michael Gould Barry & Teri Volpert Rotterdam - Ahmed Aboutaleb Orlando – Buddy Dyer Swiderski
New York, NY New York, NY Hamburg – Olaf Scholz Boston – Martin J. Walsh Suffolk – Linda T. Johnson
Morad Ghadamian POLAND Palm Beach County – Shelley Vana Hempstead – Kate Murray
New York, NY Gilbert S. Omenn, M.D. Hameln – Claudio Griese Brookline – Neil Wishinsky Virginia Beach – William D. Sessoms
Herbert D. Weitzman Palm Beach Gardens – Eric Jablin Huntington – Frank P. Petrone
Ann Arbor, MI Dallas, TX Hannover – Stefan Schostock Bydgoszcz – Rafał Bruski Cambridge – David P. Maher
Parkland – Michael Udine Mamaroneck – Norman S. Rosenblum WASHINGTON
Hansestadt Rostock – Roland Gdańsk – Paweł Adamowicz Charlton – Rick Swensen
Pembroke Pines – Frank C. Ortis Montebello – Jeffrey Oppenheim Mercer Island – Bruce Bassett
Methling Kielce - Wojciech Lubawski Chelmsford – Matt Hanson
Pinecrest – Cindy Lerner Nassau County – Edward P. Mangano Seattle – Ed Murray
Heidelberg – Eckart Würzner Lublin - Krzysztof Żuk Conway – John O’Rourke
Port St. Lucie – Gregory J. Oravec New Rochelle – Noam Bramson
Stanley M. Bergman David Harris Michael Gould Heilbronn – Harry Mergel Poznan – Jacek Jaskowiak Dedham – Jim MacDonald WEST VIRGINIA
St. Petersburg – Rick Kriseman New York – Bill De Blasio
PRESIDENT CHIEF EXECUTIVE OFFICER CHAIR, MEDIA CAMPAIGN Hildesheim – Ingo Meyer Rzeszow – Tadeusz Ferenc Easthampton – Karen L. Cadieux Huntington – Stephen T. Williams
Sunrise – Michael J. Ryan Ossining – Victoria Gearity
Hofheim am Taunus – Gisela Stang Warsaw - Hanna Gronkiewicz-Waltz Egremont – Bruce Turner Wheeling – Andy McKenzie
Tamarac – Harry Dressler Oyster Bay – John Venditto
Hürth – Dirk Breuer Wrocław – Rafał Dutkiewicz Fitchburg – Lisa A. Wong
Weston – Daniel J. Stermer Peekskill – Frank Catalina WISCONSIN
Kamen – Hermann Hupe Gloucester – Sefatia Romeo Theken
PORTUGAL West Palm Beach – Geraldine ‘Jeri’ Port Washington North – Robert Madison – Paul Soglin
ajc.org /ajcglobal @ajcglobal Karlsruhe - Frank Mentrup Greenfield – William F. Martin
Lisbon – Fernando Medina Muoio Weitzner
Kiel - Ulf Kämpfer Haverhill – James J. Fiorentini WYOMING
Porto – Rui Moreira Rochester – Lovely A. Warren
Kleve – Sonja Northing GEORGIA Holyoke – Alex B. Morse Gillette – Louise Carter-King
Rockland County – Edwin J. Day
Atlanta – Kasim Reed Hull – John Brannan
Augusta – Hardie Davis, Jr.
A10 | Monday, June 6, 2016
Maritime Spat Brews as U.S., China Talk
Beijing rejects warning
that it risks isolating
itself due to its stance
in territorial dispute
China and the U.S. sparred
over maritime disputes at a
weekend summit before sitting
down for economic and secu-
rity talks expected to be domi-
nated by tensions over the
South China Sea.
The dialogue, which began
By Chun Han Wong in
Singapore and Felicia
Schwartz in Beijing
on Monday in Beijing, takes
place with China bracing
against growing international
pressure over its territorial
claims and asserting its intent
to exercise greater clout as a
major power. Economic strains
between Beijing and Washing-
ton, meanwhile, have flared
over currency and trade prac-
tices.
The intent of the high-level
talks, which President Barack
Obama launched in 2009, is to
try to find common ground.
U.S. officials, for instance,
have said they would seek Bei-
jing’s help in pressuring North
Korea over its nuclear pro-
gram. Last week, though,
Washington took additional
steps to cut off Pyongyang
from the global financial sys-
tem—a move that could ex-
pose China, North Korea’s
largest trading partner, to
negative economic effects.
The annual Strategic and
Economic Dialogue is a two-
day affair that draws hundreds
of U.S. and Chinese officials.
They are led on the U.S. side by
Secretary of State John Kerry
India’s Modi Looks to Fortify Ties With Washington
Indian Prime Minister Nar-
endra Modi, who has worked to
forge closer strategic ties with
the U.S. as China’s rise changes
Asia’s power balance, will seek
By Niharika Mandhana
in New Delhi
and Carol E. Lee
in Washington
to cement progress the two
have made on economic and se-
curity fronts when he arrives in
Washington on Monday.
Mr. Modi will address Con-
gress during the three-day
visit, which comes months be-
fore President Barack Obama
leaves office. India’s Foreign
Ministry described Mr. Modi’s
White House meeting, sched-
uled for Tuesday, as a “consoli-
dation visit,” after two years of
brisk diplomacy and deepening
relations between the leaders.
The trip furthers one of Mr.
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Chinese Adm. Sun Jianguo, left, on Sunday dismissed what he called U.S. interference in Asian security issues. At right, the USS Blue Ridge arrived in Shanghai in May.
and Treasury Secretary Jack
Lew, and on the Chinese side
by State Councilor Yang Jiechi
and Vice Premier Wang Yang.
At the opening of the
talks, Mr. Lew chided China
for a recently passed law
granting police broad author-
ity to supervise foreign non-
profit groups.
“We are very concerned
that China’s recently passed
Foreign NGO Management Law
will weaken that foundation
by creating an unwelcome en-
vironment for foreign NGOs,”
Mr. Lew said, adding that “ad-
dressing it will be important
for our bilateral relationship.”
Mr. Kerry appeared to ref-
erence the NGO law as well—
saying “nothing does more to
assist our official deliberations
than the involvement of indi-
viduals and grass-roots organ-
Obama’s foreign-policy efforts:
cultivating New Delhi as part of
his Asian pivot. The focus on
India under Mr. Obama hasn’t
drawn as much attention as
many other initiatives abroad,
but the president sees a change
in India’s role as one of his ma-
jor achievements, a senior ad-
ministration official said.
“India made a big shift un-
der Prime Minister Modi,” the
official said. “I think it’s really
hard to overestimate the rapid
pace of progress in our defense
relationship.”
The two countries agreed in
April to facilitate their armed
forces’ use of each other’s
bases for replenishment and re-
pair. They are in talks to co-
produce advanced military
hardware in India. In a message
to Beijing, they released a
“joint strategic vision” last year
agreeing to ensure freedom of
navigation, “especially in the
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WORLD NEWS
izations in both the United
States and China”—and said
he would raise concerns about
human rights and transpar-
ency in the meetings.
Disagreements were evident
on Sunday. At Asia’s largest se-
curity conference in Singapore,
Beijing’s highest-ranking dele-
gate spoke forcefully against
U.S.-led criticism of China’s ac-
tivities in the South China Sea,
particularly its refusal to ac-
cept a coming tribunal ruling at
The Hague that could contra-
dict its maritime claims in the
world’s busiest shipping lanes.
Adm. Sun Jianguo, deputy
chief of the Chinese military’s
Joint Staff Department, dis-
missed what he characterized
as U.S. interference in Asian
security issues and rebuffed
accusations that Beijing risked
isolating itself through its as-
South China Sea,” where China
is locked in a standoff with the
U.S. and others over its mari-
time claims.
New Delhi remains wary of
an outright alliance with the
U.S. In a recent interview with
the Journal, Mr. Modi said he
wouldn’t deviate from the
“nonalignment” doctrine that
has defined India’s interna-
tional relations for decades.
Still, India’s current stance is a
significant shift from Cold War
days, when New Delhi tilted
clearly toward Moscow.
Mr. Modi—who is seeking
American investment to fuel In-
dia’s growth and technology to
modernize its defense sector—
has been eager to work closely
with the U.S. Among the factors
propelling the relationship is
China’s growing footprint in In-
dia’s traditional sphere of influ-
ence.
The U.S. has supported India
Tiger Temple Is Focus of Trafficking Probe
BY JAMES HOOKWAY
BANGKOK—A Buddhist
temple west of Bangkok, once
a staple on Thailand’s tourist
trail, is at the center of one of
the country’s biggest-ever
wildlife-trafficking investiga-
tions after scores of dead tiger
cubs were found piled in a
freezer and stuffed into bot-
tles and jars.
Until recently, the Tiger
Temple drew visitors with the
opportunity to pose for photo-
graphs with big cats or bottle-
feed tiger cubs. Wat Pha Lu-
ang Ta Bua, as the temple is
formally known, was an easy
day trip from the capital. Bud-
dhist monks would charge 600
baht—about $17—per person
as an entry fee, with addi-
tional payments for photos or
interacting with cubs.
But now, Thai investigators
say they are trying to confirm
activists’ suspicions that the
temple was breeding tigers to
feed the market for wild-ani-
mal parts in China and else-
where.
After removing 137 tigers
and shutting the attraction in
recent days, police and wildlife
officials found 40 tiger-cub
corpses in a freezer and the
remains of another 20 stuffed
into bottles and jars. This
raised questions about
whether endangered animals
were being trafficked.
Wildlife-protection officials
have filed criminal complaints
against several suspects for il-
* *** THE WALL STREET JOURNAL.
sertive behavior and expansive Carter on Saturday told the
claims in the South China Sea. conference in Singapore that
“We were not isolated in China risked erecting a “Great
the past, we are not isolated Wall of self-isolation.” He
now, and we will not be iso- urged Beijing to abide by in-
lated in the future,” Adm. Sun ternational law and respect
said at the Shangri-La Dia- the outcome of The Hague ar-
logue, an annual gathering of bitration case, which was filed
Asian and Western defense of- by the Philippines in 2013 in a
ficials. Instead, he criticized bid to curtail China’s territo-
other countries for retaining a rial assertions in the South
“Cold War mentality” when China Sea. The ruling is ex-
dealing with China, saying pected within weeks.
they may only “end up isolat- China’s denunciations of
ing themselves.” the tribunal and its legal au-
On Monday, at the start of thority dominated discussions
the talks in Beijing, Chinese at the Shangri-La Dialogue.
President Xi Jinping said Several Asian and Western de-
China is committed to “ad- fense chiefs—including those
vancing peace, stability and from Japan, Malaysia, Britain
development in the Asia Pa- and France—urged compliance
cific.” “The vast Pacific should with the United Nations Con-
be a stage for…cooperation, vention on the Law of the Sea,
not an arena for competition.” or Unclos, under which the tri-
U.S. Defense Secretary Ash bunal was established, though
val Pakistan, hasn’t backed In-
dia’s membership on the
grounds that India, which also
has nuclear arms, hasn’t signed
AREF KARIMI/AGENCE FRANCE-PRESSE/GETTY IMAGES
the nonproliferation treaty.
Mr. Modi is also making
stops in Switzerland and Mex-
ico this week in a bid to win
support for India’s application.
The issue is expected to come
up in his meeting with Mr.
Obama. Making India’s case on
Friday, Foreign Secretary S.
Jaishankar invoked a subject
central to Mr. Obama’s legacy:
the climate-change agreement
signed in Paris last year.
Mr. Jaishankar pointed to
Prime Minister Narendra Modi, India’s pledge to increase the
who visits the U.S. this week share of its electricity-genera-
tion capacity from sources
on issues including New Delhi’s other than fossil fuels to 40%
bid to join the Nuclear Suppli- by 2030. To make that happen,
ers Group, which would help it India will have “a very large
access nuclear fuel and technol- number" of nuclear reactors in
ogy more easily. China, a close the next 15 years, he said.
ally of India’s nuclear-armed ri- “If there is uncertainty
A tranquilized tiger was removed from the Tiger Temple, west of Bangkok, on Friday.
legally possessing endangered and were stored there on the
animals or animal parts, in- recommendation of a veteri-
cluding temple abbot Phra narian. It said it had no knowl-
Sutthi Sarathera and other edge of tiger pelts and tiger
monks, none of whom could be parts found at the temple.
reached for comment. Some Authorities say it is too
were arrested while attempt- soon to conclude that the Ti-
ing to move tiger pelts and ger Temple was breeding cubs
other body parts away from for the trade in endangered
the temple. animals. “We need to talk to
Officials said they also the suspects and expand our
found tiger carcasses in the investigation,” said Adisorn
living quarters of Phra Sutthi. Nuchdamrong, deputy direc-
Temple staff said he left for tor-general of Thailand’s De-
Bangkok in May and his partment of National Parks.
whereabouts were unknown. Thailand has long been a
On its Facebook page, the hub for wildlife trafficking,
temple said the cubs in the and the business appears to be
freezer died of natural causes growing despite efforts to
RAJ WONG/EUROPEAN PRESSPHOTO AGENCY; WALLACE WOON/EUROPEAN PRESSPHOTO AGENCY (LEFT)
only a few of them referred di-
rectly to China.
“The timing of this confer-
ence was very sensitive for
China,” coming just ahead of
the tribunal ruling, said Bonnie
Glaser, senior adviser for Asia
at the Washington-based Center
for Strategic and International
Studies. “The Chinese were
very much on the defensive.”
A senior Chinese delegate
admitted as much, saying they
face an uphill task in overcom-
ing foreign “propaganda”
against Beijing. “International
public opinion is still being
controlled by the Western
world,” said Maj. Gen. Jin Yi-
nan, a professor at China’s Na-
tional Defense University. “In
such unfavorable circum-
stances, we must still do our
best to use public forums to
explain China’s position.”
about trading rules, if there is
uncertainty about technology
access, you will really not get
that kind of investment and
players stepping forward,” he
said. “Getting us into the NSG
would help facilitate nuclear
trade with us.”
Until three years ago, Mr.
Modi was barred from the U.S.
after religious riots broke out
in 2002 in a state he governed
as chief minister, leaving 1,000
people dead, most of them
Muslims. The U.S. revoked his
tourist visa and denied him a
diplomatic visa following alle-
gations Mr. Modi didn’t do
enough to restrain Hindu mobs
from attacking Muslims.
Mr. Modi has denied the ac-
cusations and an Indian court
has said there isn’t enough evi-
dence to prosecute him.
—William Mauldin
in Washington
contributed to this article.
CHAIWAT SUBPRASOM/REUTERS
crack down on the trade. Ani-
mal-welfare and antitraffick-
ing groups, which researched
a 2014 report for the Conven-
tion on International Trade in
Endangered Species of Wild
Fauna and Flora, wrote that
“an increasing number of live
animals and frozen bodies are
being detected, with more
than 50% of seizures over the
past 14 years occurring since
2010.” Tigers and tiger parts
are still used in traditional
medicine in China, and are of-
ten sold as a way to boost sex-
ual potency in men.
—Wilawan Watcharasakwet
contributed to this article.
THE WALL STREET JOURNAL. Monday, June 6, 2016 | A11

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A12 | Monday, June 6, 2016 * **** THE WALL STREET JOURNAL.

WORLD NEWS
Peruvian Presidential Runoff Goes Down to the Wire After Economist Surges in Polls
LIMA, Peru—Voters went to
the polls to pick a new presi-
dent, in a contentious runoff
election that saw 77-year-old
economist Pedro Pablo Kuczyn-
ski surge in the final days of
the campaign.
About 22 million Peruvians
went to the polls on Sunday to
choose between Mr. Kuczynski,
known here as PPK, and Keiko
Fujimori, the 41-year-old
daughter of imprisoned former
President Alberto Fujimori. At
left, a woman voted in Lima on
Sunday.
Peru’s election agency said
late Sunday that with 51.7% of
the votes counted, Mr. Kuczyn-
ski had 50.59% support and
Ms. Fujimori had 49.41%. A
quick count by pollsters Ipsos
and GfK, which is based on a
sampling of ballots at polling
stations, showed that Mr. Kuc-
neighborhood.
He told supporters that he
would await the full count but
added that he was confident
he won. “We are going to gov-
ern Peru towards a bright fu-
ture,” he yelled to supporters
outside his campaign office. “I
love you Peru.”
Ms. Fujimori, who narrowly
lost the 2011 election, said she
was optimistic but looked som-
ber when addressing support-
ers. “We are going to wait with
prudence because during the
entire night the votes from re-
gions, from abroad and the ru-
ral vote from deep Peru are go-
ing to arrive,” she said.
The winner will take over
Peru’s government on July 28
from President Ollanta Humala,
who is constitutionally barred
from seeking a second consec-
utive term.

MARTIN MEJIA/ASSOCIATED PRESS

zynski would win with a simi-
lar spread.
Mr. Kuczynski, who would
become one of the oldest poli-
ticians to win an election in
Latin America’s history, cele-
brated the early results by
dancing on the balcony of his
mansion in an affluent Lima
Both candidates have prom-
ised to maintain Peru’s free-
market policies while running
slight fiscal deficits to boost
infrastructure spending and
support economic growth. They
have pledged to reduce poverty
by expanding basic services.
—Ryan Dube

Cameron Struggles to Win Hearts on ‘Brexit’ Taliban

month that showed that a shields it from Brussels’ ex-
Assault
net 333,000 people came to
live in the U.K. in the past
year. That is far above the
cesses.
True, the current eco-
nomic and political backdrop
Afghan
government’s longstanding in Europe hardly makes it
Court
CHRIS LOBINA/AGENCE FRANCE-PRESSE/GETTY IMAGES

target of fewer than 100,000 easy to counter this narra-

and has reinforced anxieties tive. But a self-confident
EUROPE FILE about EU rules that give ev- pro-EU campaign could tell a BY EHSANULLAH AMIRI
SIMON NIXON ery citizen in the bloc the strong story about the EU’s AND JESSICA DONATI
right to live and work in the vital role as a mechanism by
U.K. The Leave campaign’s which 28 sovereign countries KABUL—Taliban militants
This wasn’t what was claim that a British exit from can try to find common solu- stormed a court in eastern Af-
supposed to happen. With the EU, or Brexit, would al- tions to common problems ghanistan on Sunday, killing
just over two weeks to go low the U.K. to “take back facing a historically unstable seven people, including the
until the British referendum control” of its borders and continent. Mr. Cameron’s re- top provincial prosecutor, offi-
on European Union member- drastically cut migration has luctance to point to the EU’s cials said—the latest in a se-
ship, Prime Minister David clear appeal for many voters role in responding to cross- ries of attacks targeting the
Cameron might have ex- who fear that excessive mi- border challenges ranging judiciary.
pected his “Remain” cam- gration is putting an intoler- from terrorist threats to ille- In a separate incident, an
paign to be able strain on the U.K.’s eco- Mr. Cameron made the ‘Remain’ case on television last week. gal migration to climate Afghan lawmaker was killed
well ahead. nomic and social fabric. change is puzzling. So, too, by a bomb placed outside his
Weeks of Whether Brexit would re- migration as part of his pre- clear majority of businesses is his reluctance to talk home in Kabul later on Sun-
warnings ally lead to a substantial fall referendum negotiations of all shapes and sizes back about his own journey from day, the interior ministry said.
from inde- in migration is open to ques- with the EU. Remain, not least the over- Brussels-basher to champion The Taliban also claimed re-
pendent au- tion: More than half of re- whelming majority of tech of U.K. membership and sponsibility for the attack,

thorities in
Britain, Europe and the
world were supposed to have
convinced voters that the
A
cent migrants came from nother reason for the
outside the EU, and the evi- Leave campaign’s
dence suggests that EU mi- strength is that it has
grants contribute positively tapped into the global tide of
companies. what he learned about the which wounded another 11
But perhaps the Remain realities of international di- people in the vicinity.
campaign’s biggest problem plomacy on the way. Also on Sunday, David
has been its inability to Gilkey, a photojournalist with

risks of leaving were too
high in terms of lost trade,
investment and jobs. Remain
campaigners say they are
confident this message has
cut through with enough
voters to win the day. Yet
the polls still show the con-
test neck-and-neck. Mr. Cam-
eron is fighting for his politi-
cal life.
P
to the economy and tax sys- anti-establishment senti- come up with a convincing erhaps that is because National Public Radio, and his
tem. Meanwhile, U.K. unem- ment. Unable to cite a narrative of why the EU ex- the prime minister be- Afghan translator were killed
ployment is just 5%, and friendly foreign government ists, what it does and where lieves that a few weeks when their vehicle was struck
there is scant evidence that that supports Brexit or a it is going. The Leave cam- of campaigning is insuffi- by shellfire while traveling in
EU migrants have depressed credible international organi- paign has resonated in large cient to counter 30 years of an army convoy in southern
wages. The Leave campaign’s zation that backs the cam- part because it has con- political and media hostility Afghanistan, the news organi-
pledge to restrict total immi- paign’s claim that the U.K. vinced many voters that the toward the EU. Or perhaps zation said.
gration to below 100,000 would be economically bet- EU is a distant, undemo- he is wary of appearing too Three assailants entered
could only be met by taking ter off outside the EU, it has cratic overbearing superstate pro-European while he has the appeals court building in
the U.K. out of the EU single instead presented supporters or a soon-to-be failed state hopes of reuniting his Logar province during a cere-
market. of the U.K.’s continued mem- that presents a clear danger party after the June 23rd mony to introduce the newly
Nonetheless, Mr. Cameron bership as members of a to British identity and insti- referendum. Either way, he appointed chief prosecutor

H
ow did it come to
this? One reason is
that the spotlight has
swung firmly onto the touch-
stone issue of immigration
following data published this
is vulnerable over migration self-interested global tutions. Rather than counter finds himself trying to fight and shot at people in the hall,
in part because he previ- elite. Leave campaigners ar- this caricature, Mr. Cam- an emotionally charged, said Saleem Saleh, the gover-
ously promised and failed to gue they in contrast are eron’s approach has been identity-based Brexit cam- nor’s spokesman. Ten people,
cut immigration below backed by risk-takers and broadly to agree, while paign armed largely with including the three attackers,
100,000, then promised and entrepreneurs, though there stressing the ways in which economic statistics. It isn’t were killed and 23 were
failed to introduce curbs on is scant evidence for this: A the U.K.’s special status clear that will be enough. wounded in the hourlong siege
that followed, he said.
Afghan security forces who

Pope Names Populist Party Takes Lead in Rome Vote were deployed to rescue
trapped workers and flush out
the attackers eventually
Two New BY GIADA ZAMPANO
gunned down the militants be-
fore they could detonate explo-

Saints in ROME—An antiestablish-

Special Mass
Associated Press
VATICAN CITY—Pope Fran-
cis proclaimed two new saints:
a Lutheran convert who hid
ment movement’s candidate
sive vests, local officials said.
The Taliban claimed re-
sponsibility and said the at-
won the largest share of votes
in the first round of Rome’s
tack was launched to avenge
the deaths of six Taliban pris-
mayoral election, adding to oners in May.
the advances of populist par- The Taliban have long tar-
ties across Europe and posing geted lawyers and judges who
a fresh test to Prime Minister are seen to be responsible for
Matteo Renzi’s ruling center- imprisoning their fighters. But
ALESSANDRO DI MEO/EUROPEAN PRESSPHOTO AGENCY

Jews during World War II and
the Polish founder of the first
men’s religious order dedi-
cated to the immaculate con-
ception.
The pope called Swedish-
born Elizabeth Hesselblad and
Stanislaus Papczynski “exem-
plary witnesses to this mys-
tery of resurrection” during
the canonization Mass in St.
Peter’s Square.
Polish President Andrzej
Duda and first lady Agata
Kornhauser-Duda attended the
ceremony.
Ms. Hesselblad saved the
lives of 12 Jewish members of
the Piperno-Sed families by
hiding them in the convent in
Rome where she was superior
from December 1943 until the
capital’s liberation from Nazi
forces on June 4, 1944.
Stanislaus of Jesus and
Mary, as he is known, sup-
ported hospitals and shelters
for the poor and cared for the
sick in 17th-century Poland.
“Papczynski preached mercy
and encouraged people to do
acts of mercy,” the Polish
Episcopate said on its website.
His crowning achievement
was founding the order of
Marian Fathers.
left party. in recent weeks, they have es-
The candidate for the up- calated attacks against court
start, euroskeptic 5 Star workers to avenge the hanging
Movement, 37-year-old lawyer of the Taliban prisoners.
Virginia Raggi, won between The six prisoners, who had
34% and 38% of the vote cast been on death row for years,
Sunday in Rome, according to were executed after a truck-
exit polls. Roberto Giachetti, bomb attack in Kabul killed
the candidate for Mr. Renzi’s more than 60 people and
Democratic Party, received be- wounded hundreds in April.
tween 22% and 26%. If final The prisoners themselves
data confirm the exit polls, the hadn’t been involved in the in-
two will face a runoff on June cident, and human-rights
19. groups criticized the hangings.
Millions of Italians went to Rome mayoral candidate Virginia Raggi cast her ballot at a polling station in the capital on Sunday. Since then, the Taliban have
the polls on Sunday to cast made the Afghan judiciary of-
their votes in local elections are seeking new leadership ca- politician Beppe Grillo. ern. Final results of the elec- fices one of their main targets.
for new mayors and town pable of pulling the Italian Mr. Renzi has distanced tions across the country, In late May, a suicide bomber
councilors in more than 1,300 capital out of a morass of cor- himself from a race that has including in Naples and Turin, killed 10 people in an attack
cities. The elections—held in ruption allegations, disastrous risked being a debacle for his are expected to emerge early on a minibus carrying workers
some of Italy’s biggest cities— management and political up- party. Monday. to a court in Wardak province,
came at a delicate time for Mr. heaval. The city has been un- In Rome, the Democratic A poor showing by the west of Kabul. A week later,
Renzi, whose popularity has der special administration Party has been weakened by a Democratic Party would cast a Taliban insurgents wearing
sagged amid a timid economic since former Mayor Ignazio string of political scandals and shadow over a constitutional suicide vests attacked a pro-
recovery, a simmering banking Marino, a fellow member of by a major criminal investiga- referendum that Mr. Renzi has vincial court in Ghazni prov-
crisis and an uptick in migra- Mr. Renzi’s Democratic Party, tion that uncovered ties be- called for October. ince, killing six people and
tion flows. resigned in October last year tween organized crime and That vote is on whether to wounding more than a dozen.
In Milan, exit polls showed over accusations of expenses City Hall officials. approve a plan to simplify It- Fears of an escalation in
the center-left candidate irregularities. If Ms. Raggi wins the sec- aly’s tortuous legislative pro- Taliban attacks on government
Giuseppe Sala leading with be- Widespread disaffection for ond round, her victory would cess, reduce the Senate’s pow- targets have risen since the in-
tween 39% and 43% of the traditional parties and the deal a major blow to the prime ers and ensure more stable surgent group’s leader, Mullah
vote cast, followed by his cen- Italian capital’s seemingly in- minister, giving the 5 Star governments. The prime min- Akhtar Mansour, was killed by a
ter-right rival Stefano Parisi at tractable problems have fueled Movement, which has closed ister has staked his govern- U.S. drone strike in southwest
between 34% and 38%. support for the antiestablish- in on the Democratic Party in ment on a positive outcome to Pakistan in May. Maulavi Hai-
But the main battleground ment 5 Star Movement, recent polls, a major opportu- the referendum, promising to batullah, a religious leader, was
has been Rome, where locals founded by comedian-turned- nity to prove its ability to gov- resign if it fails. named to succeed him.
THE WALL STREET JOURNAL.
Militants Find Common Ground in Sinai
Islamic State affiliate
in Egypt has forged
ties with Hamas,
according to officials
The rise of an Islamic State
affiliate in Egypt is altering
the security landscape in a
critical corner of the Middle
East, according to Israeli and
Western officials.
By Rory Jones in
Rafah, Gaza Strip, and
Tamer El-Ghobashy
in Cairo
Militants with Sinai Prov-
ince, which has pledged alle-
giance to the extremist group,
have developed ties with the
Palestinian movement Hamas
that rules the neighboring
Gaza Strip, the officials said—
despite deep ideological differ-
ences between the two Isla-
mist groups.
The ties include help with
smuggling and medical care,
they said. Officials in Israel,
which has likened Hamas to
Islamic State, said the cooper-
ation has also extended to mil-
itary training. Hamas officials
denied any involvement with
Sinai Province.
Egypt’s and Israel’s shared
concern about Sinai Province’s
growing threat is spurring
deeper security cooperation,
according to the officials. Israel,
for example, has let Egypt bring
more sophisticated weapons
into its restive Sinai Peninsula
than allowed under their 1979
peace treaty, in a bid to help
counter the group, they said.
“The relationship has prob-
ably never been stronger in
terms of assistance in military
operations to attack ISIS in Si-
Canada Debates Right-to-Die Limits
BY PAUL VIEIRA
OTTAWA—A political stale-
mate over right-to-die legisla-
tion is stirring legal questions
about who can seek a doctor’s
help to die and under what
conditions doctor-assisted sui-
cide is lawful in Canada.
A 2015 Supreme Court of
Canada ruling decriminalizing
doctor-assisted suicide will
take effect Tuesday, giving Ca-
nadians who have “grievous
and irremediable” conditions
the constitutional right to seek
a physician’s help to die. The
ruling had been suspended to
give lawmakers time to craft
legislation defining who fits
the court’s criteria.
But while Prime Minister
Justin Trudeau’s government
introduced legislation in April,
its bill has yet to be approved.
The proposed law would
narrow the criteria to restrict
physician-assisted suicide to
those with a terminal disease
or to when death is “reason-
ably foreseeable.”
OIL
Continued from Page One
nies for profit. Pipelines have
also been sawed open by oil
thieves, seeking to siphon off
their valuable content.
The Avengers seem to be
more interested in undermin-
ing the administration of Pres-
ident Muhammadu Buhari, se-
curity consultants and
government officials say. They
say they are frustrated by the
lack of information about who
the Avengers are.
Mr. Buhari, a former military
dictator from Nigeria’s north
who was elected last year, is
unpopular in much of the coun-
try’s south: He received just 13%
of the vote in the Niger Delta.
“It is different this time,”
said Dolapo Oni, oil and gas an-
alyst for Togo-based Ecobank
Transnational Inc. “These guys
are not stealing crude. They
just bomb the pipelines and
they run away. They just want
to destroy.”
With near-weekly attacks
that began in February, the mil-
itants have taken about one
million barrels of oil a day out
of production, according to Ni-
gerian oil officials. The attacks
have intensified in recent
weeks.
The lost production helped
push crude prices above $50 a
barrel recently for the first time
since November. Roughly 96
million barrels of crude are pro-
duced globally every day, but
supply exceeded demand by
* * * *
Hamas forces in the Gaza Strip, near the Egypt border in April. Hamas officials deny involvement with the local Islamic State affiliate.
nai,” Rep. Michael McCaul,
chairman of the House Com-
mittee on Homeland Security,
said after meetings with Egyp-
tian President Abdel Fattah Al
Sisi and other officials in
Cairo recently. ISIS is another
name for Islamic State.
The developments show
that Islamic State is able to
build relationships and shape
events far afield, just as the
attacks in Brussels and Paris
linked to the group demon-
strated its lethal reach.
Sinai Province was created
by up to 1,000 jihadists with a
group previously known as An-
sar Beit al-Maqdis that pledged
allegiance to Islamic State in
November 2014. The group,
Since the Supreme Court
ruling is taking effect before
the legislation, medical profes-
sionals and legal experts say
health-care providers and pa-
tients are entering an unusual
gray zone.
“Canada will become the
most liberal country in the
world with respect to death-
hastening policies” in the ab-
sence of legislation, said Har-
vey Chochinov, a palliative-
care expert at the University
of Manitoba in Winnipeg. Dr.
Chochinov, a critic of having
no law in place to govern doc-
tor-assisted death, last year
led a government panel on ad-
dressing right-to-die policy.
The proposed legislation,
which has been passed by Par-
liament’s lower house and is
now being debated in the Sen-
ate, is similar to laws in some
U.S. states with right-to-die
regimes, such as Oregon and
California.
To avoid so-called suicide
tourism, it limits doctor-as-
sisted suicide to people who
around 1.4 million barrels a day
in the first quarter, according to
the International Energy
Agency, which monitors energy
trends for industrialized coun-
tries, so the lost Nigerian pro-
duction is almost as large as
the excess daily output that has
weighed down prices.
“It is clearly having a mate-
rial impact,” said James Davis,
head of oil supply at consul-
tancy Facts Global Energy.
A few months ago, oil prices
lingered at a 13-year-low. Gold-
man Sachs Group Inc. analysts
predicted late last year that oil
could fall as low as $20 a bar-
rel. Instead, a series of disrup-
tions—including a worker’s
strike in Kuwait, a blockade in
Libya, and wildfires in Can-
ada—have pushed prices up.
Nigeria’s government has
publicly asked the Avengers to
negotiate: “This government is
a listening government,” said
Lai Mohammed, Nigeria’s infor-
mation minister.
The Avengers have re-
sponded with a mix of threats,
steep demands—such as redis-
tribution of oil rights to local
residents—and more attacks.
The group has sabotaged at
least 10 oil installations in the
past month. It didn’t respond to
several emailed requests for an
interview.
“To the International Oil
Companies and Indigenous Oil
Companies, it’s going to be
bloody,” the Avengers said in an
online statement. “Your facili-
ties and personnel will bear the
brunt of our fury.”
Since the 1990s, Nigeria’s
WORLD NEWS
based in Sinai, has launched
deadly attacks in Egypt.
The group is in contact with
Islamic State’s leadership,
which helps fund the affiliate
and promote it through Islamic
State’s social-media network,
according to Israeli officials,
Egyptian security officials and
independent researchers.
Sinai Province and Hamas
are both Sunni Muslim-led
groups, but Hamas doesn’t
share the same strict interpre-
tation of Islam.
Sinai Province operates in
territory where the entrances
of smuggling tunnels that lead
to Gaza are located, according
to smugglers and diggers who
work on tunnels. That has led
are eligible for government-
funded health services in Can-
ada.
Some senators oppose lim-
iting doctor-assisted suicide to
those with terminal illnesses
and say that limit contravenes
the Supreme Court ruling.
That debate is part of what is
holding up passage of the law.
Citizens with
‘grievous’ conditions
can seek a doctor’s
help as of Tuesday.
Justice Minister Jody Wil-
son-Raybould told senators in
testimony last week that with-
out legislation, there would be
a legal vacuum that would act
as a barrier to right-to-die ser-
vices, since some doctors
might shy away from acting.
A national physicians’
group echoed that concern.
“Physicians across the country
remain uncertain, and in that
A fish farmer in January stands in mud polluted by oil in his fish ponds in Nigeria.
government has been at odds
with the residents of the Niger
Delta, the Portugal-sized
swamp where almost all of the
country’s oil lies. Decades of oil
spills and a prevailing senti-
ment that the country’s vast
petroleum wealth has enriched
only a few have pushed locals
to bomb pipelines, kidnap oil
workers, and steal oil.
But until recently, Nigeria
has been able to exercise some
basic level of control. Since
2009, the government has paid
militants to stay out of trouble.
It has also hired thousands of
militants to protect the pipe-
lines they used to bomb and
hacksaw open.
to a pragmatic arrangement
between Sinai Province and
Hamas, according to Israeli
and Western officials. Egypt’s
defense and interior ministries
have said the ties between the
two groups have included co-
ordination on attacks in north
Sinai. Spokesmen for the min-
istries didn’t comment.
Egypt shared intelligence
with Israel last year about co-
operation between Sinai Prov-
ince and members of Hamas’s
armed wing, the Izz al-Din al-
Qassam Brigades, according to
a Western official. Israel was
surprised to learn of the ties
given clashes in Gaza between
Hamas and Islamic State sym-
pathizers, the official said.
climate of uncertainty Canadi-
ans will be left to languish—
exactly what the Supreme
Court of Canada ruling sought
to avoid,” said Cindy Forbes,
president of the Canadian
Medical Association.
It is unclear when both
chambers of Parliament will
agree on legislation. The Sen-
ate is expected to hold a final
vote this week. Should the up-
per chamber make amend-
ments, the legislation would
head back to the lower house
for a new round of debate.
Anticipating the risk that
legislation wouldn’t be ready,
regional medical authorities
have issued guidelines to doc-
tors that they say are in ac-
cord with the Supreme Court’s
ruling. But Ms. Wilson-Ray-
bould, along with some medi-
cal experts, warn that this
won’t be enough because the
protocols fail to impose limits
on who can seek a doctor’s
help to die.
—Kim Mackrael
contributed to this article.
The attacks come at a peril-
ous moment for the nation of
187 million. Even before the
Avengers arrived on the scene,
Nigeria’s government was run-
ning low on money. The coun-
try’s reserves have plummeted
so precipitously that the central
bank has rationed access to for-
eign currency since last year,
forcing businesses to shut down
because they can’t get the dol-
lars they need to import spare
parts or repay foreign lenders.
The economy contracted by
0.36% in the first three months
of this year. It is now headed
into an “imminent” recession,
Godwin Emefiele, governor of
the central bank, said in May.
Monday, June 6, 2016 | A13
open the border crossing from
Egypt in Gaza. Earlier this
year, Hamas stepped up pa-
trols along Gaza’s border with
Egypt, a move it said was
meant to assure its powerful
neighbor it isn’t working with
militants in Sinai.
“We have nothing to do with
Egypt,” Ghazi Hamad, a senior
Hamas leader, said recently, re-
ferring to Sinai Province and
Egypt’s claims that Hamas has
planned attacks there.
Attacks by Sinai Province
have led Egypt to retaliate. In
March, Egyptian authorities
said a mortar attack on a
checkpoint near the city of el-
Arish in Sinai had killed 13 po-
licemen. Sinai Province claimed
KHALIL HAMRA/ASSOCIATED PRESS
responsibility.
In subsequent days, Egyp-
tian jets, helicopters and artil-
lery attacked targets near the
border with Gaza, according to
the Levantine Group, a consul-
tancy on regional security af-
fairs, a sign of the weaponry Is-
rael is allowing Egyptians to
use in Sinai.
Israeli Prime Minister Benja-
Israeli officials said they min Netanyahu has said that
learned in April of 2015 that both Hamas and Islamic State
Hamas was allowing Sinai are driven by extremism and a
Province fighters to be treated desire to expand beyond the
in Gaza’s Al Shifa hospital. The territory they control.
hospital declined to comment. But Sinai Province and
Later last year, Hamas op- Hamas don’t share political or
eratives spent a month in the military goals, according to of-
Sinai region teaching the mili- ficials and independent re-
tants how to fire antitank mis- searchers.
siles, Israeli officials said. The People familiar with the
officials declined to provide smuggling operations say the
more details. Hamas subse- links are important to Hamas.
quently received Russian-made “Hamas needs this relation-
antitank missiles via the ship with [Islamic State] for
smuggling network Sinai Prov- sure,” said a cigarette smuggler
ince controls, an Israeli de- who goes by the nom de guerre
fense official said. of Abu Abd. “If the Egyptian
Hamas officials have been army won’t allow you to get
meeting with Egyptian officials things in, it makes sense to
to improve ties and attempt to have a relationship with ISIS.”
POLAND
World Party Chief Rejects
Watch Criticism Amid Crisis
The leader of Poland’s govern-
ing party, Jaroslaw Kaczynski, said
he would resist pressure from for-
eign governments and interna-
tional organizations to end the
FRANCE country’s constitutional crisis on
the opposition’s terms, as pro-
Falling Water Levels tests were held against his gov-
Raise Hopes in Paris ernment.
Water levels on the Seine Mr. Kaczynski blamed his op-
River fell significantly after sev- ponents for a crisis over judicial
eral days without rain in the appointments and rules governing
French capital region, lifting the constitutional court. His so-
hopes that the risk of major cially conservative Law and Jus-
flooding within Paris had passed. tice party’s government has been
French officials were still in conflict with the court since it
grappling with the consequences canceled predecessors’ nomina-
of severe flooding in the region tions of judges and rewrote rules
around Paris, including weakened governing the court’s work last
dikes and pollution dislodged by year. The court’s chairman re-
the overflowing Seine. jected most of those changes.
The river fell to 18.5 feet by Each side has accused the other
Sunday evening in Paris, French of overreaching.
officials said. It had peaked early The spat has led to tensions
Saturday morning at more than with the European Commission,
20 feet. which last week said the govern-
A government spokesman ment’s agenda for the court poses
said the death toll over the a systemic threat to the rule of
weekend from the flooding had law, and triggered a legal process
risen to four. that could end in sanctions.
—Matthew Dalton —Martin M. Sobczyk
Falling Output
Nigerian oil production, in barrels
per day, monthly average.
Officials say it fell sharply in May.
2.0 million barrels April
1.6M
1.5
1.0
0.5
GEORGE OSODI/BLOOMBERG NEWS
0
2015 ’16
Source: International Energy Agency
THE WALL STREET JOURNAL.
the thick mangrove forests and
find the Avengers’ camps.
“The military will continue
to do its best,” said Rabe
Abubakar, spokesman for Nige-
Nigeria’s government says it ria’s Defense Ministry.
is working as quickly as it can In May, the military posted
to repair the damage the troops around one of Chevron
Avengers have done. To win Corp.’s oil storage depots. For
support, Mr. Buhari has ordered three days, the Avengers had
a clean up operation there. De- been vowing to attack it. But in-
cades of oil spills have left the stead of storming the depot,
water so polluted that a United the militants bombed a nearby
Nations report estimated a full gas pipeline. Hours later, the
cleanup would take 30 years. militants bombed a pair of
The military is also sending crude pipelines supplying
more troops into the swamps, nearby refineries.
even as it battles the insur- “They knew exactly where to
gency Boko Haram in the north. attack and the time to attack,”
To secure oil infrastructure, said Mr. Oni, the oil analyst.
the army recently moved a “There was literally nothing
group of U.S.-trained troops you could do.”
from the front against Boko —Gbenga Akingbule
Haram. It has also used surveil- in Abuja, Nigeria,
lance planes to try to peer into contributed to this article.
A14 | Monday, June 6, 2016
CHEAT
Continued from Page One
of nearly 50,000 each and India
of about 23,500.
Faculty and domestic stu-
dents interviewed said it ap-
pears that substantial numbers
of international students either
don’t comprehend or don’t ac-
cept U.S. standards of academic
integrity.
At the University of Arizona,
the staff works hard to explain
academic integrity to those from
abroad, but “our students don’t
always understand what plagia-
rism is,” said Chrissy Lieberman,
associate dean of students.
Citing the Freedom of Infor-
mation Act, the Journal asked
50 public universities with large
foreign enrollments how many
reports of alleged academic-in-
tegrity violations they recorded
for international undergraduates
and how many involving U.S. un-
dergraduates.
Many of the schools said they
didn’t have such information or
it would be too onerous to track
down. Fourteen provided the
full records sought, for the
2014-15 academic year.
At nearly all that provided
data, the rate of such cheating
reports was at least twice as
high for foreign as for domestic
students, ranging up to over
eight times as high.
Universities don’t all define
and track cheating reports ex-
actly the same way. Most record
the number of incidents, but
some record the number of stu-
dents involved. The Journal’s
analysis tabulated cheating re-
ports as the universities defined
them. It didn’t delve into how
the cases were resolved.
Lanqing Wang, a Georgia In-
stitute of Technology electrical-
engineering student from
Shanghai, who is distressed by
the cheating he sees, said, “In
China, it’s OK to cheat as long as
you’re not caught.”
Paidi Shi, vice president of
the Chinese Students and Schol-
ars Association at the University
of California, San Diego, dis-
agreed that it was all right to
cheat in her home country but
said, “In China, our culture puts
a lot of pressure on students.
We are more likely to find a
shortcut to get a good grade.”
Qingwen Fan, president of
the Chinese Students and Schol-
ars Association at the University
of California, Davis, said some
students in China get burned
out by cramming in high school,
and when they get to college
“they want to enjoy life. They
are busy with social stuff and
everything they missed before.
They start to cheat. They didn’t
put in the time but they want to
Foreign Shores
Country of citizenship for
the 586,208 international
undergraduate students in
the U.S., 2015-16 school year
Saudi Arabia 8% South Korea 9%
Vietnam
4% China
28%
India
4%
Canada All others
3%
44%
Source: Student and Exchange Visitor
Program, Department of Homeland Security
THE WALL STREET JOURNAL.
DIVE
Continued from Page One
the front row. It’s who those
players were.
In a Warriors playoff game
last month, Golden State’s Ste-
phen Curry, one of the NBA’s
biggest stars, launched himself
at and then over the fans be-
tween the visiting team’s bench
and the scorer’s table.
Even though Mr. Curry is a
somewhat manageable 6-foot-3
and 185 pounds, which is small
by NBA standards, no one tried
to catch him or help cushion his
fall. Mr. Curry crashed into a
metal island between the pad-
ded courtside seats and the
arena’s lower bowl. He laid
groaning on the floor for sev-
eral anxious seconds before
peeling himself up with an el-
bow that suddenly looked like a
misshapen potato.
Mr. Curry’s hustle play was
immediately passed along on
social media, and there was
soon a storm of criticism di-
rected at the fans in the front
rows who had parted like the
Red Sea.
There was even more out-
rage when the television replay
showed a Warriors fan named
Georgia Tech students Armaan Mehta, in blue shirt, and Lanqing Wang, in tank top, criticized the cheating they see by international students.
pass the test. That is kind of a
cultural thing.”
Ms. Shi said her association
plans to launch a social-media
campaign to tackle the problem
next fall.
Foreign surge
Both private and public U.S.
universities have welcomed a
surge in foreign students, who
often pay two to three times the
tuition and fees of others, partly
because of special programs for
them. At many public universi-
ties, their payments help com-
pensate for shrinking state sub-
sidies.
Sanctions for cheating can
range from an F on an assign-
ment to suspension or expul-
sion. At the University of Ari-
zona, which recorded over 11
reports of alleged cheating for
each 100 foreign undergraduate
students in the 2014-15 school
year (and 1.8 per 100 domestic
undergrads), no student was ex-
pelled that year and just two
suspended, according to the uni-
versity.
“I can assure you that some-
where someone at the university
is doing a calculus about how
much tuition they would lose if
they start coming down hard on
students who cheat,” said Ms.
Mitchneck, the geography pro-
fessor.
Asked about that, Lynn Nadel
a leader of the faculty senate,
said it is true the university’s
business model “is somewhat
dependent on out-of-state stu-
dents, and it’s an acknowledged
fact that we depend on them to
cover our costs. But the next
step, that therefore we should
treat them with kid gloves, has
never come before me or even
been uttered in my presence.”
Academic dishonesty is an is-
sue on campus without regard
to students’ origins. About 60%
of all students on U.S. campuses
admit they cheated at least once
in the last year, according to
Teddi Fishman, director of the
International Center for Aca-
demic Integrity, a nonprofit
with offices at Clemson Univer-
sity. She said that level has re-
mained steady for 23 years.
Most of this cheating never
leads to a formal complaint, the
Journal’s analysis shows.
The especially high rate of
cheating reported for interna-
tional students fuels faculty con-
cerns about a cheapening of
schools’ diplomas. “If the integ-
rity of the degrees they are
earning is undermined, that
Danny Katz reaching for his
camera and snapping a picture
of the NBA’s Most Valuable
Player in distress. Mr. Katz, a
former hedge-fund manager,
has been attending Golden State
games for more than 20 years,
but he’s also a sports blogger
and photo journalist, he said, so
his first instinct was to grab the
camera to record the scene.
“Twitter was all over me,” he
said. “It’s not something I’d
wish on anybody.”
Mr. Katz said he reached out
with an apology. “The last thing
I’d want to do is disrespect you
and the Warriors in any way,”
he wrote to Mr. Curry.
Sitting nearby that night was
Dave Scially, who had a special
incentive to secure Mr. Curry:
He’s a partial owner of the War-
riors. Mr. Scially bumped into
Mr. Curry at a team dinner after
the incident and told him that
when Mr. Curry hit the wall of
fans, he had actually planted his
foot on Mr. Scially’s wife, Kathy,
and used her as a vault to pro-
pel himself over the first row
and into the void on the floor.
Mr. Scially said Mr. Curry
sought her out before one of the
Warriors’ next games, said he
was sorry for scaring her and
gave her a hug. “You’re so
sweet,” she told him.
FROM PAGE ONE
market could also be under-
mined,” said Ms. Fishman.
Some universities work
harder than others to monitor
cheating, which could affect
where they stood in the Jour-
nal’s analysis. UC San Diego,
which had one of the higher
cheating-allegation rates for in-
ternational students, also has an
especially robust effort to track
infractions, led by Tricia Ber-
tram Gallant, its academic-integ-
rity director.
“We decided to admit more
international students in re-
sponse to a decrease in public
funding without consideration
of extra socialization they might
need to adapt to the new aca-
demic culture,” Ms. Bertram
Gallant said. Schools are still
“playing catch-up.”
At Purdue University, David
Sanders, a leader of the univer-
sity senate, recently had the
task of reading 4,000 essays
from applicants and said he
found the obvious copying
among Chinese students, in par-
ticular, mind-numbing.
“I can’t tell you how many
times I read an essay that
started, ‘The 20th century was
the century of physics and the
21st century will be the century
of life sciences.’ I read that same
phrase over and over and over
again,” he said.
Ms. Fan of the Chinese stu-
dents association at UC Davis
said there was a “concept differ-
ence” in how Americans and
Chinese “define cheating.” She
said it is common for Chinese
students to collaborate on as-
signments.
A spokesman for Purdue,
Brian Zink, said the school
stresses academic integrity at
freshman orientation, “and we
don’t accept ‘cultural confusion’
as an excuse for dishonesty.”
It is possible that cheating is
more likely to be caught when a
student is foreign, said Ms. Fish-
man of the academic integrity
center. A student who can barely
speak English but hands in a
skillfully written English-lan-
guage paper would draw atten-
tion, she noted. And instructors,
once having perceived a cheat-
ing issue among foreign stu-
dents, might scrutinize their
work more closely.
Still, Ms. Fishman said, there
is a profile of a certain kind of
student more likely to cheat: a
youth who faces a high-stakes
test, feels unprepared for it, and
believes that others are cheating
anyway. A relatively high per-
centage of foreign students, es-
Golden State Warriors’ Stephen Curry in Oakland, Calif., last month.
Mr. Curry’s wreck turned
into a referendum on fan behav-
ior, said Brian Murphy, co-host
of a sports show on KNBR, a
San Francisco radio station.
There was even some class war-
fare in blaming Mr. Curry’s spill
on the people who paid small
fortunes for courtside spots.
“It was an easy way to go
Bernie Sanders on the 1-per-
centers,” Mr. Murphy said.
The consensus among his
show’s listeners was over-
whelming: They said fans in
those seats have a responsibility
to break a player’s fall—espe-
cially if that player is Mr. Curry.
“There was much scolding
Gaming the System
Reports of cheating were more frequent for international students
than for domestic students at 14 large public universities that
provided The Wall Street Journal with data.
Reports of cheating per 100 students
Domestic students International students
0 per 100 students 5
Univ. Calif., Davis
Univ. of Arizona 1.8
Georgia Tech 1.5
UC, San Diego 1.8
UC, Irvine 1.1
Univ. of Minnesota 0.7
Cal State-Fullerton 0.5
Purdue 1.0 3.9
UCLA 1.3
Iowa State 0.5
North Carolina State 0.9
Univ. of Washington 0.4
Univ. of Houston 0.8 1.6
Florida International 0.4 0.5
Total
1.0
Source: WSJ analysis of schools’ records
pecially those with poor lan-
guage skills, fit this description,
she said.
They often are targeted by
entrepreneurs offering to sell
custom-written research papers.
Other opportunists offer the
services of professional test tak-
ers.
Guaranteed ‘A’
Last year, Ohio State learned
that a Chinese student had been
advertising on a Chinese mes-
sage board that he could guar-
antee an A on a test by taking it
in someone’s place. His price
was around $500 per test, said
Kim Arcoleo, associate dean for
transdisciplinary scholarship.
Ohio State has so far
found more than 30 Chinese
students who made use of the
scheme, she said, with the inves-
tigation still under way.
“The cheating isn’t limited to
Chinese students, but we see a
disproportionate amount com-
ing from international stu-
dents,” Ms. Arcoleo said.
The University of Iowa is in-
vestigating at least 30 students
suspected of paying professional
test takers to take online exams
in their place, the school says.
Some of the suspected imper-
sonators took the online tests in
China, said one person familiar
with the matter. Some of the
and tsk-tsking from those of us
not in those seats,” Mr. Murphy
said. “Everybody’s a hero until
they’re in the fox hole.”
Basketball is the only major
sport with an imaginary bound-
ary between the court and the
crowd. In baseball, there is a
wall. In basketball, there is
paint. Ticket-holders assume
the risk of personal injury when
they attend NBA games.
In another incident, the
other megastar of the Finals,
Cleveland’s LeBron James,
showed why such warnings are
necessary. In December, Mr.
James had his own crash when
he failed to hurdle the front row
* *
10
2.6 11.8
11.2
11.2
8.5
6.0
5.8
4.0
3.1
2.8
2.3
2.0
5.1
THE WALL STREET JOURNAL.
students have been sent letters
explaining what offenses can re-
sult in expulsion.
One method used by stand-in
test-takers was uncovered at UC
Irvine. Imposters would report
losing their university ID cards.
The bookstore would issue new
ones bearing the impostor’s pic-
ture, but carrying the name of
the student for whom a test was
to be taken. The system was
used mainly by Chinese stu-
dents, faculty members said.
A spokeswoman for UC Irvine
said it didn’t know how many
students were involved in the
scheme and declined to say how
they were disciplined. She said
campus police have helped de-
velop a system to thwart the ID-
card trick.
Adele Barker, a professor in
the Department of Russian and
Slavic Studies at the University
of Arizona, said frequently a
cluster of four or five Chinese
students sitting near one an-
other during a test all provide
the same version of a wrong an-
swer.
The influx of Chinese stu-
dents with weak English-lan-
guage skills has grown “expo-
nentially,” she said. “Their
comprehension is so bad the
cheating is a nonevent. And I
can tell you everyone is dealing
with this, across disciplines,
across universities.”
and rammed directly into Ellie
Day, who is the wife of profes-
sional golfer Jason Day.
Ms. Day was taken from her
seat in a stretcher and briefly
hospitalized. She later said on
Twitter that being tackled by
Mr. James was the equivalent of
a minor automobile accident.
“Much like attending a golf
JEFF CHIU/ASSOCIATED PRESS
event and risking getting hit
with a ball,” she said, “sitting
courtside you risk getting run
into.”
Mr. James apologized and
said he hoped Ms. Day would
come to another game soon.
“It’s unfortunate it happened
tonight,” he said that night,
“but that doesn’t happen
much.”
To be fair to the fans, there
isn’t much time for etiquette
when an NBA player is bum-
rushing you. “I don’t blame
them,” Mr. Curry said after the
incident. “I wanted to do a
crowd-surfing kind of deal, like
at a concert, but they weren’t
ready.”
Warriors and Cavaliers play-
ers say that if a teammate came
roaring toward them on the
bench, they would try to break
his fall. The calculus is trickier
for players on the other team.
“If it’s somebody I like,” said
Warriors forward Marreese
THE WALL STREET JOURNAL.
Stacey Hancock, a statistics
professor at UC Irvine, said a
large portion of faculty time is
spent trying to ensure academic
honesty. She uses randomized
seating and four different ver-
sions of a test in an effort to de-
ter copying from someone sit-
ting nearby.
Many professors spell out in
a course syllabus what consti-
tutes cheating, lest there be any
doubt. Ms. Arcoleo of Ohio State
devotes three pages of the sylla-
bus to this.
At Georgia Tech, the honor
KEVIN D. LILES FOR THE WALL STREET JOURNAL
code is emblazoned on plaques
outside classrooms. Armaan
Mehta, an American student
there majoring in computer en-
gineering, showed a note on one
assignment stating that “you
should design, implement and
test your own code,” and that
not doing so “constitutes aca-
demic misconduct.”
Despite the warning, he saw
“ridiculous amounts of cheat-
ing” among Indian and Chinese
students, Mr. Mehta said, sitting
in Georgia Tech’s futuristic
Clough Commons building.
A spokesman for Georgia
Tech said it works diligently to
make sure students know its
policies and the consequences of
a violation.
Suspension or expulsion for
cheating is a risk for those from
abroad. Their student visas can
be revoked if they aren’t regis-
tered at a U.S. college.
“I have had students sobbing
in my office, saying their family
has done everything to get them
here and pleading for mercy,”
said Melissa Famulari, vice chair
for undergraduate education in
UC San Diego’s economics de-
partment.
Mr. Sanders of Purdue said
confronting a cheater is “incred-
ibly unpleasant for everyone
concerned. All of the institu-
tional incentives, at multiple
levels, are against catching and
prosecuting cheaters.”
Expulsion can be a business
opportunity for Andrew Hang
Chen, a Pittsburgh-based con-
sultant who places Chinese stu-
dents in U.S. colleges. If a for-
eign student is in danger of
losing a visa, he can assist.
His company, WholeRen Edu-
cation, charges $4,000 to help a
student transfer to another U.S.
school. The stakes are high be-
cause experience shows if a stu-
dent has to return to China, he
or she likely won’t ever go back
to college.
“We have to act very, very
quickly” to transfer the student
to another U.S. college, Mr. Chen
said. “When we get a call, we
are counting by the hour.”
Last year, he said, a Chinese
student at a large public univer-
sity in New York sold test an-
swers to a classmate for $2,000.
Both had to leave the school. Mr.
Chen said he got both into a U.S.
community college, which they
attended for a year and half be-
fore being allowed to return to
the large university.
Though many colleges in-
clude explanations of academic
integrity in orientation for inter-
national students, the lessons
often don’t sink in, said Wenhua
Wu, a 21-year-old Chinese eco-
nomics major at the University
of Pittsburgh.
Over time, Chinese students
come to understand what con-
stitutes cheating, Mr. Wu said,
but many do it anyway.
“They do it for better
grades,” he said. “Most of them
don’t get caught.”
—Andrea Fuller
contributed to this article.
Speights, “I probably would.”
Nevertheless, there are times
when sacrificing your body to
save a teammate’s doesn’t make
sense. Warriors radio analyst
Tom Tolbert once played in the
NBA with the 7-foot-1, 325-
pound Shaquille O’Neal. When
Mr. O’Neal came rumbling to-
ward the team bench, Mr. Tol-
bert remembered, he wouldn’t
even consider slowing him
down.
“There was no way in hell,”
Mr. Tolbert said on his radio
show. “I would’ve been a grease
spot on the ground.”
Mr. O’Neal, a four-time NBA
champion who was one of the
largest players in NBA history,
said courtside collisions were
never far from his mind. He es-
timated he laid out for loose
balls more than 20 times in his
career, beginning in college,
when his coach threatened to
punish him if he didn’t.
Over time, Mr. O’Neal
learned how to aim himself
while in the air. “If it was ladies
and babies,” he said, “I had to
angle so I wouldn’t hurt any-
body.”
In his entire career, he said,
there was only one crash with a
woman, which he immediately
attempted to remedy. “I gave
her a kiss,” Mr. O’Neal said.
THE WALL STREET JOURNAL. * * * * Monday, June 6, 2016 | A15

OPINION
Peter Thiel’s Legal Smackdown BOOKSHELF | By Stefan Beck

A Silicon
Valley
billion-
will be used not just against
the originally contemplated
targets, such as large business
The Elements
aire’s de-
c a d e -
l o n g
or government defendants,
but against a wide range of
others—journalistic defen-
Of Style
INFORMATION m i s s i o n dants included.”
AGE to drive a
snarky
The effect is compounded
by American juries’ tendency
How to Write Like Tolstoy
By L. Gordon
website to award huge sums in dam- By Richard Cohen
Crovitz
out of ages—$140 million in Mr. Ho- (Random House, 323 pages, $28)

business
has the media up in arms:
What happens to freedom of
the press if wealthy people
can fund lawsuits to bankrupt
media outlets they don’t like?
Good question. Here’s a
better one: Why did it take so
long for journalists to discover
abuses of the legal system
that torment every other in-
dustry?
Media commentators have
almost universally condemned
Peter Thiel, a PayPal co-
founder and early investor in
Facebook, for how he went af-
ter Gawker, which outed him
With Gawker under
attack, the press wakes
up to a justice system
that invites abuses.
as gay in 2007. Mr. Thiel de-
fends his actions as “less
about revenge and more about
specific deterrence.” Gawker,
he argues, plays a “uniquely
degrading role in our culture.”
Mr. Thiel, himself a Stan-
ford-trained lawyer, was smart
enough to take advantage of a
radical change in the U.S. legal
system. He paid the lawyers
representing professional
wrestler Hulk Hogan, who
sued for invasion of privacy
after Gawker disseminated an
explicit video of the plaintiff
and another man’s wife.
Until recently Mr. Thiel’s
The Silicon Valley investor in San Francisco in April.
backing would have been a
crime, known as “mainte-
nance” and dating from 13th-
century English statutes
aimed at preventing feudal
lords from interfering with
the legal process. English ju-
rist William Blackstone de-
fined maintenance as “offi-
cious intermeddling in a suit
that no way belongs to one”
and characterized it an “of-
fense against public justice, as
it keeps alive strife and con-
tention and perverts the re-
medial process of the law into
an engine of oppression.” But
laws against maintenance, as
well as the related offenses of
“champerty” and “barratry,”
were repealed in most U.S.
states in the 1960s, when law-
yers persuaded policy makers
that funding to encourage
more litigation was good for
society.
It was long understood why
only parties to a lawsuit
should have an interest in it:
The wealthy could influence
others’ cases, outside funding
would encourage “vexatious”
litigation, and conflicts in in-
terest between funders and
litigants would corrupt the le-
gal process. Example: Mr. Ho-
gan’s lawyers excluded a claim
that would have activated
Gawker’s insurance to pay its
BLOOMBERG NEWS
fees and damages, and they
rejected settlement offers. It
looks as if the lawyers’ pri-
mary loyalty was to Mr. Thiel,
who signed their checks, not
to their client.
Litigation finance quickly
became a huge business, fund-
ing everything from mass tort
claims by plaintiff lawyers to
endless lawsuits by patent
trolls against technology com-
panies. Outside investors
bankrolled the multibillion-
dollar case brought by Ecua-
dorians against Chevron that
resulted in the plaintiff lawyer
being convicted of fraud and
racketeering.
Walter Olson, author of
“The Litigation Explosion”
(1991), explained in his Over-
lawyered.com blog that Mr.
Thiel’s approach was predict-
able after maintenance “meta-
morphosed around the 1960s
into what we now know as the
public interest litigation
model: foundation or wealthy
individual A pays B to sue C.
Since litigation during this pe-
riod was being re-conceived as
something socially productive
and beneficial, what could be
more philanthropic and pub-
lic-spirited than to pay for
there to be more of it?”
With maintenance decrimi-
nalized, Mr. Olson warns, “It
gan’s case. Contrast that with
the £60,000 ($80,000) Eng-
land’s High Court in 2008
awarded Max Mosley, the 76-
year-old son of British Fascist
Oswald Mosley, when a British
tabloid published video and
photos of what it called “a
sick Nazi orgy” he had orga-
nized. Mr. Mosley, who had
run the Formula One car-rac-
ing organization, won a pri-
vacy judgment when the judge
ruled there was no Nazi
theme, only “bondage, beating
and domination,” which was
not a matter of public interest.
Even without the enormous
award—even if all the plain-
tiffs he solicited and funded
lost every case—Mr. Thiel
could have sued Gawker out of
business. In almost all other
countries, losing litigants
cover the winning party’s le-
gal bills, but in the U.S., suc-
cessful defendants must pay
their own lawyers. The costs
to Gawker of a few lawsuits
would eventually have de-
pleted the online publisher’s
modest assets.
The Constitution usually
shields journalists from litiga-
tion, but that immunity too
often blinds the news industry
to abuses in the legal system.
The Gawker case’s lesson for
journalists isn’t that they de-
serve protections beyond the
First Amendment, but that
they should do a better job re-
porting the abuses committed
through a legal system that
makes it so easy to achieve in-
justice.
O
ne is bound to feel duped if, having bought a book
called “How to Write Like Tolstoy,” one encounters
within the first six pages the question “Can one, in
fact, teach people to write?” This dodge is a common rhe-
torical gambit of people being paid to teach people to
write—the implication being, “Don’t expect a miracle.”
Richard Cohen, an author, professor and veteran editor of
such luminaries as Kingsley Amis and John le Carré, cites
Kurt Vonnegut as having been skeptical of writing instruc-
tion. Vonnegut, on the faculty of the Iowa Writers’ Work-
shop, “held that one could not make writers, and likened
himself to a golf pro who could, at best, take a few shots
off someone’s game.” So one can teach people to write—
just not like Count Lev.
Notwithstanding its ti-
tle, which is clearly tongue-
in-cheek, Mr. Cohen’s book
has admirably modest aims.
It seeks to provide sound
advice to aspiring writers
and to illuminate the ways in
which the finest novelists
have addressed fiction’s cre-
ative and technical challenges.
It begins with “Grab, Invite,
Beguile: Beginnings,” ends
with “The Sense of an Ending,”
and, in between, discourses
upon character, point of view, dia-
logue, plot and rhythm. There are also, less
predictably, chapters on plagiarism and the difficulties and
rewards of writing about sex. All of this amounts to some-
thing more substantial than a mere handbook. It is a paean
to the creative process.
The book’s weakness, that it is at times accessible to a
fault, can also be counted among its strengths. Serious
readers may chafe at how often Mr. Cohen illustrates his
points with all-too-familiar works and passages. In his
“Beginnings” chapter, for instance, he quotes the opening
paragraphs of “The Old Man and the Sea” and “The
Catcher in the Rye”; Salinger reappears later, in a two-
page section on “A Perfect Day for Bananafish.” Mr. Co-
hen includes such inescapable matter as the concluding
lines of “The Great Gatsby,” the apocryphal tale of Jack
Kerouac’s “On the Road” “scroll,” and an explanation of
Gordon Lish’s role in creating Raymond Carver’s work as
we know it.

A Close Race in Pro-Growth Peru
Banker-busi- upgrading the quality of the
nessman and judiciary and police diverged
former Fi- significantly from Ms. Fuji-
nance Minister mori’s right-wing national
Pedro Pablo populism, which included a
Kuczynski was call to expand the role of the
AMERICAS leading Keiko state-owned oil company.
Fujimori, Peru stands out for its ad-
By Mary
daughter of herence over the past 15 years
Anastasia
former Peru- to democratic capitalism, dur-
O’Grady
vian President ing a time when the authori-
Alberto Fuji- tarianism of chavismo ema-
mori, in Peru’s runoff presi- nating from Venezuela gained
dential election on Sunday as ground in neighboring coun-
we went to press. But his lead tries. Even the 2011 election
was within the 2% margin of of Ollanta Humala—an ally of
error, making the race too Venezuelan President Hugo
close to call. Chávez who died in 2013—
Even before polls opened, didn’t derail Peru’s capitalist
the election was already nota- revolution.
ble for April’s first-round re- The economy grew at a
sults. In that balloting, voters compounded annual rate of
rejected Verónika Mendoza, 5% from 1999 through 2008.
the candidate for the left- Over the same period exports
wing Broad Front party who went up by a factor of seven.
promised hard-core socialism Strong commodity prices
as a cure for poverty. Both helped. But Peru also did its
runoff candidates were cen- structural homework.
ter-right advocates of the A vibrant mining sector, fi-
country’s market-friendly, nanced by foreign investors,
pro-development path of the was allowed to flourish along-
past two decades. side the trade liberalization
Yet there also were real begun in the 1990s, which
differences between the two ended protectionism for do-
candidates and, amid the ris- mestic producers. Access to
ing expectations of the bur- foreign exchange and imports
geoning middle-class, a Kuc- gave Peruvian entrepreneurs
zynski victory could have the tools they needed to com-
important implications for pete globally. In the years
stability and growth. since the global financial
Plenty of festering sores in crisis and the slowdown of the
Peru’s political economy need Chinese economy Peru has
attention if popular support been among the region’s best
for liberal economics is to be performers with a com-
maintained. The state is noto- pounded annual rate of growth
riously corrupt. Too much of 4.7% from 2009 through
government has pushed most 2015.
economic activity under- Another Peruvian achieve-
ground, limiting access to ment since Mr. Fujimori left
credit, and violent crime is in- office in 2000—after he tried
creasing. Mr. Kuczynski’s pre- to run for a constitutionally
scriptions for reducing the forbidden additional term and
large informal economy and was blocked—is that no presi-
dent has tried to stick around
beyond his term limit. Mr. Fu-
jimori was popular because he
stabilized a country brought
to the brink by hyperinflation
and terrorism. But with the
backing of the left—which
never forgave his victory over
the bloodthirsty Maoist terror
group Shining Path—Peru’s
democrats stopped the presi-
dent’s power grab. He’s now
in prison for convictions on
charges of human-rights vio-
lations and bribery.
Two center-right
candidates, but one
has a more promising
economic agenda.
If the Latin American left,
which feigned a love of de-
mocracy, had used even a
fraction of the energy it put
into ending Mr. Fujimori’s
political career on opposing
Hugo Chávez as he shaped a
military dictatorship, Venezu-
elans might not be starving
now. By denying Mr. Fujimori
another term, Peruvians set a
precedent for the peaceful,
predictable transfer of power
and political competition.
Ms. Fujimori—who was
Peru’s “first lady” after her
father and mother separated
in 1994 and later divorced—
distanced herself from her
father’s government and
pledged to respect democ-
racy. She is a disciplined poli-
tician and prosecuted a fabu-
lous campaign ground game,
effectively mobilizing her
grass-roots Popular Force
party which she had built
over years.
Yet many Peruvians associ-
ate the Fujimori name with
authoritarianism, and there
was concern that her party’s
majority in Congress would
rubber stamp Ms. Fujimori’s
agenda. She was further
weakened by the revelation
last month that the secretary-
general of her party is being
investigated by the U.S. Drug
Enforcement Agency.
Ms. Fujimori’s economic
nationalism is strange in a
country that has been climb-
ing out of poverty through
engagement with the world.
During the campaign she
frequently demagogued Mr.
Kuczynski as a rich guy who
wants to help corporations
and foreigners by allowing
the export of natural gas re-
serves.
That seemed insincere on
multiple levels. As the daugh-
ter of the president she didn’t
exactly grow up in the barrio.
And surely the Columbia Uni-
versity M.B.A. understands
that the gas has no value if it
sits in the ground.
Mr. Kuczynski didn’t have
the benefit of a party ma-
chine. But he benefited from a
strong anti-Fujimori senti-
ment among Ms. Mendoza’s
supporters. And his platform
promising to upgrade law en-
forcement and intelligence,
enhance transparency, lower
and simplify taxes, and bring
potable water to Peruvian
homes resonated in an aspir-
ing nation.
If Ms. Fujimori wins, she’ll
need Mr. Kuczynski’s ideas to
move the country ahead. If
PPK maintains his early lead,
his challenge will be getting a
fujimorista Congress to work
with him.
Write to O’Grady@wsj.com.
Serious readers are aware of this stuff. So are many less-
than-serious ones. Yet it helps make “How to Write Like
Tolstoy” feel like a book for everyone, not just MFA stu-
dents with a draft or two under their belts. It belongs in
every high-school classroom. Not only does it cover the ba-
sic mechanics of storytelling in a genial, conversational
way, but it also makes the literary sphere and literary life
seem wilder and more enticing than any high-school Eng-
lish curriculum is allowed to do. The by turns amusing,
groan-making and meditative chapter on writing about
sex—which provides a survey of literary erotica from “The
Song of Songs” and “Fanny Hill” to Philip Roth, John Up-
dike and Tom Wolfe—goes a long way in that direction, too.
In any case, the sort of quotations one might find on a
bookstore tote bag sit amid a greater quantity of more so-
Part of the value of a college education is that
it alerts the autodidact to his embarrassing
blind spots. This book is a decent substitute.
phisticated or esoteric material, culled from literary biog-
raphies, writers’ and editors’ correspondence, and Mr. Co-
hen’s own editorial career. An inquiry into the nature of
plot takes as its jumping-off point his work on editing
Christopher Booker’s “The Seven Basic Plots” (2004), a
two-decade-plus project that Mr. Cohen describes, in an al-
lusion to “Middlemarch,” as a “modern equivalent of Casa-
ubon’s Key to All Mythologies.” This section is a reminder
of how deeply the author and his lodestars have engaged
with the issues under discussion.
Those lodestars are far too numerous to list, but as a
consequence “How to Write Like Tolstoy” is worth pur-
chasing for its implied Suggested Further Reading alone.
Part of the value of a college education is that it alerts the
autodidact to his embarrassing blind spots. Mr. Cohen’s
book could serve as a decent substitute. It names dozens if
not hundreds of works, as old as the Gilgamesh epic and as
of the moment as the levee-breaking tides of Karl Ove
Knausgaard’s prose. It also draws on significant works of
literary criticism and instruction, ranging from the popular
(Stephen King’s “On Writing,” James Wood’s “How Fiction
Works”) to the classic (E.M. Forster’s “Aspects of the
Novel,” F.L. Lucas’s “Style,” Henry James’s “The Art of Fic-
tion”) to the lesser-known (Georges Polti’s “Les Trente-Six
Situations Dramatiques”).
Mr. Cohen’s chapter on plagiarism is, sadly, an espe-
cially welcome one, given how common literary theft has
become in high schools and on college campuses. Yet one
wonders whether it might be misinterpreted by unsubtle
or unscrupulous minds as a warrant to steal. He quotes
Bill Bryson: “Shakespeare was a wonderful teller of sto-
ries so long as someone else had told them first.” He tells
us that Laurence Sterne plagiarized Robert Burton, Fran-
cis Bacon and Rabelais when writing “Tristram Shandy.”
While this discussion is fascinating, there is a bit too

Notable & Quotable: Minimum Wage at the Car Wash

From “Minimum Wage vs.
the Carwasheros: New York’s
new $15 wage floor pits man
against machine” by writer
Jim Epstein for the July issue
of Reason magazine:
When the minimum wage
goes to $15 an hour, automat-
ing will be a no-brainer. “Since
I have 15 guys on the property,
I wouldn’t be able to charge
less than $30,” [New York City
car-wash owner Martin Taub]
says. “Who’s going to pay $30
for a car wash?”
Amir Malki, a leading car
wash equipment installer in
the region, says over a dozen
car wash operators in New
York City have inquired about
putting in the necessary ma-
chinery to cut their labor
costs.
One owner, who talked to
Reason under the condition of
anonymity because he’s wor-
ried about the political reper-
cussions of speaking out
about the minimum wage,
says he’s considering purchas-
ing $300,000 in equipment,
which would allow him to
eliminate 15 of the 22 men
who currently staff his full-
service hand wash.
When the minimum wage
goes from $9 to $15, he esti-
mates that his expenses per
wash will rise about $7 to
$22, meaning he’ll have to
charge at least $25 to make a
profit. “Now put yourself in
the shoes of the customer,” he
says. “The first thing they’ll
do is wash their cars at home.
Or they’ll drop from washing
their cars three times a
month to once a month.” If he
automates, he figures he could
lower his price to about $8.
“That’s the only way I can
think of to survive.”
“I can’t think of any indus-
try where the service that’s
provided is so expendable,”
says economist [Donald] Bou-
dreaux. “In economic terms,
you’d say that the demand for
car washes is highly elastic.”
In other words, the industry
faces strong pressures to keep
prices down, because car
washes aren’t a necessary ser-
vice, so an increase will lead
to a quick fall-off in customer
traffic. That’s why most can’t
afford to pay their workers
$15 per hour and stay in busi-
ness. Car wash operators have
no choice but to automate,”
says Boudreaux.
much of this “good writers borrow, great writers steal”
(T.S. Eliot) sort of thing, and it is hardly relevant to the
type of plagiarism that tends to occur in the age of
Google and Wikipedia.
The highest compliment one can pay “How to Write Like
Tolstoy” is that it provokes an overwhelming urge to read
and write, to be in dialogue or even doomed competition
with the greatest creative minds. Encouraging this impulse
is a teacher’s real job. The Irish writer Brendan Behan, Mr.
Cohen tells us, once disappointed a standing-room-only
crowd by thundering, “Go on back home and frickin’ write”
and then making his exit. This is a cop-out. One cannot im-
prove as a writer without practice, but seldom does one
submit to that discipline without first having been taught
to love it. That Mr. Cohen is an editor, that his love of lit-
erature comes in large part from awe in the presence of
better writers than he, is no small matter. His love is infec-
tious, and regardless of how well he ends up teaching us to
write, that is miracle enough.
Mr. Beck is a writer living in Hudson, N.Y.
A16 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK LETTERS TO THE EDITOR

Trump and the ‘Mexican’ Judge For Many College Often Isn’t the Best Choice

D
onald Trump keeps giving his political more obnoxious, though we doubt he could do Jeffery J. Selingo makes an often Can’t we learn something about fam-
opponents ammunition, most recently much about it in office. The political blowback overlooked point that while the vast ily from “King Lear”? It’s time to free
majority of today’s good jobs require a college education or lifelong learn-
with his continuing attacks on Judge would rightly be enormous.
education and training beyond high ing from the employment statistics.
Gonzalo Curiel, who is presid- What elevates Mr. Trump’s school, that doesn’t mean everyone There is more to life than that.
ing over lawsuits against Why equating remarks to the reprehensible needs a bachelor’s degree (“College SOL GITTLEMAN
Trump University. But it’s im- ethnicity with judicial is his equation of ethnicity Isn’t Always the Answer,” op-ed, May Winchester, Mass.
portant to distinguish be- with bias. That truly is an at- 27). The programs he mentions,
tween what is merely obnox- bias is so offensive. tack on the independence of started by community colleges and Young people entering college are
ious and the truly odious in the judiciary because it means businesses, provide important alter- in dire need of effective career coun-
his remarks. that a judge can be disquali- natives. But states also have a role. seling. Determining whether or not to
Mr. Trump has repeatedly attacked the fied from a case merely for his personal back- We need to ensure that our chil- attend college and what to major in
judge as “unfair” and “a hater.” He has also ground, rather than for any material conflict dren’s curriculum includes built-in requires a great deal of thought. As
threatened a civil case against the judge if he of interest. options that prepare them for suc- Mr. Selingo suggests, in many cases a
cess in fields offering great career student may be better served by
becomes President, adding that because Judge The suit against Trump University is a clas-
opportunities in our states. The Path- choosing to pursue a trade such as
Curiel is “of Mexican heritage” he has “an in- sic civil fraud case that has nothing to do with ways to Prosperity initiative, cur- plumbing, carpentry, welding, electri-
herent conflict of interest.” The media have of- ethnicity. Judge Curiel happens to be an rently implemented in 12 states, is an cal or others, instead of attending col-
fered Mr. Trump opportunities to retreat, but American born in Indiana to immigrant par- ideal model. In Delaware, we have lege because the demand may be
he keeps insisting that ethnicity disqualifies ents, but that is of no legal import. He nearly a dozen pathways in areas greater and the pay more rewarding.
the judge from ruling fairly because the Re- shouldn’t be judged by the ancestry of his par- ranging from IT and engineering to Our leaders in government should
publican favors building a wall at the U.S.- ents any more than Chief Justice Roberts culinary arts and bioscience—all cho- also do everything possible to dis-
Mexican border. should be barred from ruling on religious lib- sen because those industries have abuse people of the idea that there is
Democrats and their media allies are trying erty cases like the Little Sisters of the Poor be- good jobs available in Delaware. Par- a stigma associated with jobs that
to portray this as an attack on “judicial inde- cause he is a Roman Catholic. ticipants take hundreds of hours of don’t require a college degree. Politi-
pendence,” but criticizing the judiciary is nei- coursework and have access to paid cians always speak of the need for a
As a legal matter this is well established, no-
internships, all developed with en- college education and promise stu-
ther new nor beyond the pale. Perhaps they’ve tably in a 1998 case (MacDraw v. CIT) in the gaged business partners. Students dent loans and even free college for
forgotten that President Obama slammed the Second Circuit Court of Appeals. A litigant chal- graduate high school with workplace everyone but seldom speak about
Supreme Court for its Citizens United ruling in lenged the fairness of Judge Denny Chin due to experience as well as some college other options.
2010 while the Justices were a captive audience his ethnicity. Judge Chin responded by slapping credits. We just recognized the first RALPH TIBILETTI
during the State of the Union address. down the complaint and sanctioning the law- graduates of our initial pathway— Spring, Texas
Mr. Obama also contributed to the Demo- yers, and he was backed by the appellate judges. started two years ago in manufactur-
cratic intimidation campaign against Chief Jus- “Courts have repeatedly held that matters such ing. All received industry-recognized An untold aspect of co-op educa-
tice John Roberts ahead of the 2012 ObamaCare as race or ethnicity are improper bases for chal- certificates and decided for them- tion is that of influencing students to-
ruling. “I’m confident that the Supreme Court lenging a judge’s impartiality,” wrote Judge selves whether to choose a job, con- ward careers with industries they
will not take what would be an unprecedented, Ralph Winter, a highly regarded conservative tinued education or both. might otherwise never have consid-
GOV. JACK MARKELL ered. In my case, it was love at first
extraordinary step of overturning a law that was appointed by Ronald Reagan.
Dover, Del.encounter in January 1956 when I, a
passed by a strong majority of a democratically Apart from his racist implications, Mr. mechanical-engineering student
elected Congress,” the President said at an April Trump is also indulging in the left’s habit of at- Mr. Selingo seems to think that the showed up for a Northeastern Univer-
2012 press conference. The Chief Justice ruled tributing the motivations of everyone and ev- only reason to attend a college is to sity co-op job interview at the Salem
as the President recommended. erything to race, class, gender and sexual orien- make a living. Isn’t it worth some- (Mass.) Harbor Station, then New
We and others criticized those attacks on tation. Claiming that a person’s judgment is thing to know the difference between England Power Company’s new flag-
the judiciary at the time. If our great progres- determined by his objective circumstances is a a Sunni and a Shiite, or that Chris- ship station. I was seduced. That
sive moralists were outraged, we must have Marxist trope. Isn’t Mr. Trump supposed to be tians once killed Christians in un- charismatic experience engendered a
missed it. However, the left has long wanted running against such thinking? heard of numbers during the Thirty passion that stayed with me through-
to make progressive judges off-limits to politi- The hopeful news is that Mr. Trump’s attack Years War (1618-1648)? Does the out my 35-year career.
cal criticism, which explains the attempts to on Judge Curiel’s ethnicity has been widely de- study of history or, God forbid, Shake- PETER KUSHKOWSKI
speare belong in economic statistics? Portland, Conn.
conflate Mr. Trump’s comments with criticiz- nounced, notably by senior Republicans includ-
ing any judge ever. ing House Speaker Paul Ryan and Majority
Mr. Trump is attacking Judge Curiel in a per- Leader Mitch McConnell. Unlike many of our
sonal business case, not a political one, and as outraged progressives, they are politically con- Risk Corridors Are Essential in Health Care
a candidate for President we think he should be sistent. As for Mr. Trump, he should let his law- Over the past several years, much cans were developed based on the
above this kind of pettiness. His implied threat yers argue his civil case, apologize to the judge, has been said about the politics of rules that were in place. Unfortu-
against the judge if he becomes President is and start talking about the economy. health-care reform. However, Sen. nately, as a result of the shortfall in
Marco Rubio’s criticism of risk corri- the risk corridors funding, more
dors associated with the Affordable than 800,000 Americans across the
Bringing Justice to Justice Care Act (“ObamaCare: A Crony Cap-
italist’s Best Friend,” op-ed, May 25).
country have faced disruptions in
coverage, health plans have had to

R
and other criticism on these pages reduce benefits and options, and
emember the federal judge who or- outside the grand jury without their counsel of the private health insurance in- several had to close their operations
dered Justice Department lawyers to present, and threatened perjury charges dustry are misguided. entirely.
take ethics classes after he learned against witnesses whose testimony didn’t fit When Congress passed the health No matter the party, everyone
they’d deliberately lied about the DOJ narrative. reform law, it included a temporary shares the goal of ensuring afford-
President Obama’s executive Sen. Chuck Grassley In their letter to Ms. Yates, three-year transition program to able access to health care. We be-
order on immigration? He’s wants answers from DOJ the Senators want to know mitigate disruption to consumers in lieve the private insurance market
not the only official asking whether this behavior is “ac- the early years of the new insurance is the best way to deliver choice
hard questions about inde- on prosecutorial abuse. cepted practice or policy,” market. This risk corridors program and quality for consumers. That
fensible behavior by federal and, if not, “what disciplinary is a time-tested policy that has been will require Congress to move for-
prosecutors. steps have been taken.” They used on a bipartisan basis as part of ward with bipartisan solutions that
many insurance initiatives, including protect consumers and promote a
On May 19 Senators Chuck Grassley and also want to know whether the Office of Pro-
Medicare’s highly successful pre- stable, affordable market for all
Mike Lee sent a letter to Deputy Attorney Gen- fessional Responsibility is investigating the al- scription drug program. Americans.
eral Sally Quillian Yates asking about the leged misconduct. Health plans responded to the law MATTHEW EYLES
“questionable actions of federal prosecutors” They should also ask Ms. Yates about the and the subsequent federal and Executive Vice President
regarding the criminal case against medical- memo she issued in September offering new state regulations as required. Cover- America’s Health Insurance Plans
device maker Vascular Solutions. Mr. Grassley guidance on prosecuting corporate officers. age options for millions of Ameri- Washington
chairs the Judiciary Committee. Justice has ample statutes to hold businesses
In February a federal jury acquitted Vascu- accountable for genuine abuses. The question
lar Solutions and its CEO Howard Root on all is whether President Obama’s antibusiness at-
criminal charges related to the promotion of titudes have created a climate in which DOJ It’s Time to Consider the Libertarian Ticket
one of its varicose-vein kits. The company prosecutors are willing to cut ethical corners
Your editorial calls the Libertarian demonstrated that on too many major
wasn’t accused of spreading false informa- to win convictions for which there isn’t enough
Party’s Gary Johnson-William Weld issues, the GOP no longer offers a co-
tion—merely of marketing the kits for off-label evidence. U.S. Attorney Preet Bharara’s failed ticket an “honorable alternative” to herent message to counter Democratic
uses that the Food and Drug Administration insider-trading cases are one example. the presumptive Democratic and Re- dogma. Republicans pay lip service to
hadn’t approved. The company’s attorneys Maybe Justice needs a new Yates memo publican nominees, and indeed it is the goal of smaller government, but
found evidence that prosecutors had shared that focuses on the consequences for DOJ law- (“The Libertarian Alternative,” May no progress has been made on that
grand jury testimony from some witnesses yers who bring cases that never should be 31). If Messrs. Johnson and Weld were front since the 1980s.
with other witnesses, interviewed witnesses brought—with sanctions for legal abuses. the Republican standard bearers On the most important issues of the
rather than the Libertarian ones, they day—how to fix America’s ailing econ-
would enjoy the full-throated support omy, America’s role in foreign affairs
Squeezing Kim Jong Un’s Bankers of conservatives and classical liberals
who cherish the GOP’s legacy of free
and the extent to which government
should be allowed to curtail liberties

T
markets and limited government. They to ameliorate perceived social prob-
he Obama Administration put signifi- pher Hill, lifting the Banco Delta Asia sanctions are two successful former governors lems—Libertarians, not Republicans,
cant new pressure on North Korea in 2007 in exchange for denuclearization prom- with unimpeachable conservative cre- offer the starkest and most principled
last week by designating the entire ises that Pyongyang predictably broke. But the dentials on economic matters, tolerant alternative to the Democratic Party.
country a “primary money- episode showed the Kim re- views on social issues and bipartisan JAMES LIDDELL
laundering concern.” This is The U.S. puts pressure gime’s sensitivity to losing appeal to boot. In this election cycle, Washington
the biggest gun in the arse- on the North’s finances. foreign bank access. where the major parties offer voters a
nal of financial sanctions. If Which is why Wednesday’s poor choice, the Johnson-Weld ticket I couldn’t agree more that the ac-
enforced, it will make banks What will China do? move is potentially conse- is a no-brainer—or it would be if so complished Libertarian ticket is an ex-
world-wide choose between quential: If any foreign bank many Americans weren’t conditioned cellent alternative to Donald Trump
doing business with North doing business with any to dismiss the idea of a third-party and Hillary Clinton, but more impor-
candidate out of hand. tant, it would punish the two estab-
Korea and maintaining access to U.S. dollars. North Korean entity will be subject to a U.S.
Donald Trump’s ascendancy has lished parties for breaking faith with
For Kim Jong Un and the Chinese banks that dollar ban, Pyongyang could face financing America for giving us unacceptable
sustain his regime, life is suddenly more problems that dwarf its former Banco Delta candidates. We know they are unac-
complicated. Asia woes. Writing Off Student Loans ceptable because each party has based
It’s about time. Despite blacklisting the fi- It’s true that past performance doesn’t guar- its message on how bad the other can-
nancial systems of Burma and Iran in this antee future results. As powerful as the U.S. Is an Idea With Great Legs didate would be rather than any ac-
wholesale fashion years ago, the U.S. has hit designation may be, Pyongyang’s patrons in How wonderful that the Obama ad- tual policy or character consider-
North Korea only with sanctions on certain in- Beijing can still undermine it by equipping se- ministration is forgiving student ations. This is insulting.
dividuals and entities. This allowed Pyongyang lect Chinese banks to operate independent of loans of those attending schools said At 10% now in the latest Fox poll,
to keep working with foreign banks and using the U.S. dollar system, or by resupplying Kim to have used deceptive advertising the Libertarians would need to take
nominally legal channels to move dirty money as his coffers dry up. Beijing criticized the U.S. and recruiting (“Applications to Can- just 12% from each of the established
cel Student Loans Surge,” U.S. News, parties to be positioned to win. A Lib-
from its rackets in drugs, counterfeiting, slave move as “unilateral,” reiterating its line that
May 27). Perhaps now American tax- ertarian presidency might just be
labor and weapons. President Obama was sanctions must not “harm the legitimate rights payers can have their past income what the country needs. Everybody
wrong last year to call North Korea the “most and interests of China.” taxes forgiven (and returned) when would have to work together because
sanctioned” country on earth, but perhaps now So the fate of these sanctions, like those that it’s shown that politicians have used they’d have no choice. With a Libertar-
he is committed to making it so. came before, lie in the U.S. ability to persuade deceptive advertising. ian president standing between them,
The model is the Bush Administration’s 2005 China to get on board. In this regard the timing ED WRIGHT the usual Republican-Democratic ran-
blacklisting of Banco Delta Asia, a small Macau of the designation may offer some reason for San Jose, Calif. cor just wouldn’t play.
bank, for allegedly helping North Korea launder hope: It came as tensions are already high over DAVE DAVIS
money. That froze $25 million in Kim family as- the South China Sea, on the eve of this week’s If the government pays off the stu- Phoenix
sets and, more important, caused other banks annual U.S.-China summit in Beijing, and as Chi- dent loans that graduates claim are
worthless, then the graduates should
to drop their Pyongyang business for fear of be- nese leader Xi Jinping met a personal envoy of Letters intended for publication should
lose their diplomas, which they claim be addressed to: The Editor, 1211 Avenue
ing similarly barred from the U.S. financial sys- Kim Jong Un. don’t have value. Graduates who have of the Americas, New York, NY 10036,
tem. Pyongyang soon had trouble buying mis- Rather than shrinking from such calendar a valued diploma wouldn’t ask for- or emailed to wsj.ltrs@wsj.com. Please
sile parts and paying its cronies, so it begged pressure, as it often has in the past, the Obama giveness. This would separate the bo- include your city and state. All letters
for a reprieve. Administration made its move. Here’s hoping gus claims from real ones. are subject to editing, and unpublished
The Bush Administration obliged, at the urg- this presages tough enforcement in the months TED HAMMOND letters can be neither acknowledged nor
returned.
ing of diplomats Condoleezza Rice and Christo- to come. Greensboro, Ga.
THE WALL STREET JOURNAL.
Ending the Corporate-Welfare Circus
By Brent Gardner
C
ompetition is at the
heart of America’s eco-
nomic success, but not
every type of contest
benefits society. Con-
sider the growing trend of busi-
nesses cajoling states and politi-
cians to compete for who can dole
out the most corporate welfare.
It’s especially frustrating because
there are already plenty of ways
to promote job growth without
robbing taxpayers.
General Electric is one of the
latest companies to shamelessly
demand taxpayer-funded goodies
from government. The company’s
senior tax counsel Bobby Burgner
spoke freely about the firm’s strat-
egy earlier this month at a panel
hosted by the National Bureau of
Economic Research. Mr. Burgner
declared that GE would generally
avoid states with congressional
State gifts to the likes of
Boeing, Ford, Google and
Apple are unnecessary and
unfair. Better to cut the tax
rate and reduce regulation.
delegations opposed to federal-sub-
sidy programs like the Export-Im-
port Bank, which hands out tax-
payer-backed loans and guarantees
to businesses like GE. This followed
the company’s refusal last summer
to relocate its headquarters to Dal-
las, because some prominent Texas
lawmakers opposed reauthorizing
the bank.
Increasingly, major companies
determine where to maintain, ex-
pand or relocate facilities based on
how much money they can take
from taxpayers’ pockets in the pro-
cess. They sometimes hold jobs and
entire communities hostage until
they get their way.
The most frequent tactic is to
demand tax credits or direct subsi-
Muhammad Ali and the Pinnacle of Confidence
By Bob Greene
‘W
hat do you think of
that?” Muhammad Ali
asked. We were in adja-
cent seats on an American Airlines
flight from Chicago to Washington,
D.C., as the plane made its landing
approach.
Ali was gesturing out the win-
dow. I thought he was referring to
the nighttime sight of the illumi-
nated monuments. I said I thought
they looked very pretty.
But that is not what he was talk-
ing about. He was looking at the
houses in suburban Virginia and
Maryland:
“Look at all those lights on all
those houses. . . . Do you know I
could walk up to any one of those
houses, and knock on the door, and
they would know me? It’s a funny
feeling to look down on the world
and know that every person knows
me. Sometimes I think about hitch-
hiking around the world, with no
money, and just knocking on a
different door every time I needed
a meal or a place to sleep. I could
do it.”
Probably so. We first met and
had our first conversations when he
was 26 and I was 21. This flight was
a decade and a half later: In 1983
Esquire magazine, to commemorate
its 50th anniversary, was devoting
an issue to the 50 men and women
judged to have most influenced the
world in the previous half-century.
I’d been asked by the magazine to
travel with Ali on this three-day trip
to Washington.
For a man so often seen, on fren-
zied fight nights, surrounded by
handlers and trainers and hangers-
on, he always seemed exceedingly
comfortable being alone. He had
told me to meet his plane from Los
Angeles at O’Hare International Air-
port in Chicago so we could get on
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dies from state governments. In
2010 John Deere secured $15 mil-
lion from Iowa to maintain roughly
300 jobs at a Waterloo plant. A
year later in neighboring Illinois,
Sears and the Chicago Mercantile
Exchange Group threatened to relo-
cate their headquarters unless the
state forked over about $100 mil-
lion in tax breaks. General Electric
was in on the game as early as
2010 when it sought $25 million in
tax credits from Massachusetts to
maintain 150 local jobs.
States also use tax giveaways to
lure businesses to relocate or ex-
pand. North Carolina gave presents
of $320 million to Apple and $250
million to Google so they would
build data servers in the Tar Heel
State. Kentucky has doled out
more than $500 million in tax
breaks and subsidies for Toyota
and Ford auto plants. Medical
companies have milked Florida for
well over $1 billion in various
handouts. Nevada threw $1.3 bil-
lion at Tesla Motors to build an
electric-car-battery plant.
And then there’s Boeing. In
2013, the company, which assem-
bles jetliners in the world’s largest
building in Everett, Wash., an-
the connecting flight; he arrived by
himself, with no entourage at all. I
would have been surprised, except
that this was the same as it had
been the first time I ever encoun-
tered him.
Still in school, I had been work-
ing as a summer reporter at the
Columbus Citizen-Journal in Ohio
when I was told to cover a visit to
town by Ali. I was intimidated by
the assignment, but the number of
people initially accompanying him
and running interference turned out
to be zero.
I’d see it again over the years: In
the early 1970s, in Chicago, he was
preparing for a fight against a boxer
named Jimmy Ellis. There was a
weathered little gym called the
Johnny Coulon Physical Training
Club, underneath the elevated-train
tracks on 63rd Street on the South
Side. Ali came to the place alone,
climbed the three shadowy flights of
stairs and, in solitude except for a
person timing him, punched away at
the heavy bags, his grunts of exer-
tion and the slapping of his fists
against the leather the only sounds
in the room. In the 1990s, outside a
hotel in downtown Chicago, I no-
ticed him standing by himself, trying
to hail a cab; when I asked him what
he was doing there, he softly said, “I
have to get to the airport.”
Unremarkable for anyone else,
but not what you would necessarily
expect for a man of his renown. The
pinnacle of confidence is being just
fine keeping your own company.
And, for all the tales of Ali’s vaunted
ego, he courageously put self-con-
sciousness aside when his health
began to fail. He could have hidden,
hoping to preserve the world’s
image of him in his prime; instead
he looked the public right in the eye.
By the time of that trip to Washing-
ton, his voice had already become
shaky and slurred. Everyone he
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OPINION
GETTY IMAGES
nounced that it was looking for a
location to build its new 777X.
This spurred a furious scramble by
multiple states to win the com-
pany’s favor. Although most kept
their bids under wraps, Missouri
tried to tip the scales by passing a
bill containing $1.7 billion in tax
incentives.
That still wasn’t enough, and
Boeing decided to stay in Washing-
ton. The price? An $8.7 billion
package, the largest such giveaway
in American history, that included
tax breaks on airplane production,
a sales-and-use tax exemption for
new buildings and taxpayer-funded
training for employees.
Some states now devote part of
their annual budget to doling out
taxpayer-funded goodies to busi-
nesses, and many have established
government agencies to grease
company wheels. New York has its
Empire State Development Corpora-
tion. California’s is known as the
California Infrastructure and Eco-
nomic Development Bank. And, as
usual, everything is bigger in Texas:
The state annually hands out more
than $19 billion in corporate wel-
fare through the Texas Enterprise
Fund and other programs, accord-
encountered knew it, and so did he,
and he couldn’t do a thing about it.
He didn’t let it stop him for a mo-
ment. He spoke to every person who
approached him.
The last time I saw him was at
dinner a few years back at a
Chicago steakhouse. There were
family members and friends at the
table. Ali said not a word the entire
evening; he drew a picture of a
There he was, as I saw him
several times: the world’s
most famous person,
by himself, comfortable
keeping his own company.
mountain on a piece of paper in
front of him. Because of his tremors
he needed help eating his meal, but
he graciously nodded hello to each
stranger who walked by. When he
rose to leave, the other diners in the
restaurant, some with tears stream-
ing down their cheeks, spontane-
Aloha, Puerto Rico
By Keli’i Akina
And Andy Blom
C
ongress is wrestling with
legislation to put Puerto Rico
back on its feet while avoiding
a taxpayer bailout or chapter 9
bankruptcy. Legislation empowering
a strict fiscal-control board is an
important first step. But lawmakers
also need to implement policies that
enable the Puerto Rican economy to
grow. Exempting the territory from
the Jones Act would be a good start.
The Merchant Marine Act of
1920, better known as the Jones Act,
specifies that ships carrying cargo
between two American ports must
be built in the U.S. and be 75%
owned by American citizens. Fur-
ther, at least 75% of a barge’s crew
must be U.S. citizens, and it has to
fly the American flag.
In practice, the law has been in-
credibly damaging—to Puerto Rico
as well as Hawaii, which has its own
economic worries. One study esti-
mated that the Jones Act has cost
Puerto Rican residents $29 billion in
the past 40 years. The cost of ship-
ping a 20-foot container from any
U.S. port to Puerto Rico is twice as
expensive as shipping to the virtu-
ally equidistant Dominican Republic,
a 2012 Federal Reserve Bank of New
York study showed.
This makes most aspects of
everyday life more pricey. A vehicle
costs $6,000 more in Puerto Rico
than on the mainland, and food is
twice as expensive as in Florida.
Energy can cost two or three times
ing to the New York Times.
It’s not all bad news for taxpay-
ers. Wisconsin lawmakers last year
rejected Gov. Scott Walker’s plan to
inject $55 million into the Wiscon-
sin Economic Development Corpo-
ration. In February Florida lawmak-
ers rejected Gov. Rick Scott’s
proposal to give $250 million to
Enterprise Florida. The state
agency will now be shrunk by
roughly two-thirds—a big win for
anyone paying taxes in the Sun-
shine State.
Yet these are only exceptions
that prove the rule in this special-
interest race to the bottom. If state
and local lawmakers are truly inter-
ested in spurring job creation and
economic growth, they have better
options than handing out taxpayer
money to a lucky few.
States could start with eliminat-
ing tax carve outs and replacing
them with lower-overall tax rates
and lighter regulatory burdens. Fed-
eral lawmakers could also do their
part by lowering America’s highest-
in-the-developed-world corporate
tax rate. These already proven ideas
would help states create a healthy
economic climate to attract busi-
nesses and investment.
Embracing these policies would
protect taxpayers, who should
never be forced to fork over their
money to companies that include
multinational firms with multimil-
lion-dollar profit margins. Con-
sumers and taxpayers will also
benefit once a level economic play-
ing field forces businesses to com-
pete with each other based solely
on the quality of their products
and services.
That might seem like a novel
concept to many of today’s lawmak-
ers and business leaders. But it’s
the kind of competition that has
spurred the innovation and ad-
vances that made America the eco-
nomic envy of the world—not a
corporate welfare free-for-all.
Mr. Gardner is vice president of
government affairs at Americans
for Prosperity.
ously burst into applause.
He seemed to understand, espe-
cially near the end, that, heavy-
weight championships aside, the
greatest victory in this life is
simply being able to wake up each
morning to a new sunrise. Shortly
before that trip to Washington all
those years ago, I had phoned him
at his home in California to arrange
the logistics. Partly kidding but
mostly serious, he had said: “You
just want to put me on the cover.
I’m the most famous man in the
world.”
I said that there would be no pho-
tographs on the cover of the maga-
zine: just type. And that there would
be people in the issue as famous as
he was. He scoffed at the idea, and
asked who. Oh, I said, John F. Ken-
nedy. Franklin Delano Ro-osevelt. Dr.
Martin Luther King Jr.
“They’re all dead,” Ali said, teas-
ing a bit. And reveling, as ever, in
the sheer, joyous fact of being alive.
Mr. Greene’s books include
“Chevrolet Summers, Dairy Queen
Nights” (Harper Perennial, 2001).
more per kilowatt-hour than on the
mainland, according to the U.S.
Energy Information Administration.
Because of the Jones Act, liquefied
natural gas cannot economically be
imported to the island.
The fleet of U.S. vessels that
comply with the Jones Act has
dwindled to fewer than 100 today,
from 2,300 in 1946. Many of those
ships are antiquated and expensive
to maintain. Allowing “international
relay”—that is, a non-Jones Act ship
on a single voyage transferring
goods between two U.S. ports—
would bring significant relief to
Puerto Rico.
The Jones Act also damages Ha-
waii, which is the next-highest state
or territory in debt service. Puerto
Rico needs Jones Act relief to sur-
vive, and Hawaii needs it to avoid
becoming Puerto Rico.
The congressional Republican
Study Committee in February re-
leased a statement explaining that it
didn’t support a bailout for Puerto
Rico but instead wanted “pro-
growth reforms that would alleviate
the burden that current federal poli-
cies place on the territory.” Why not
Jones Act reform for Puerto Rico?
An exemption was made for the U.S.
Virgin Islands in 1922. Congress
could alleviate Hawaii’s burden at
the same time by reforming this
anachronistic, anti-growth law.
Mr. Akina is the president and
CEO of the Grassroot Institute of
Hawaii. Mr. Blom is the executive
director of Grassroot Hawaii Action.
Monday, June 6, 2016 | A17
Waiting
For Obama
On Religious
Liberty
By Frank Pavone
T
he ball is now in the Obama
administration’s court. For more
than four years, religious non-
profit groups like mine have defended
ourselves against the ObamaCare
Health and Human Services mandate,
which makes religious nonprofit
groups complicit in the distribution of
abortion-causing drugs to their
employees. We are now waiting to see
what the president and his appointees
will do in light of the Supreme Court’s
recent action in Priests for Life v. HHS
and the other six cases that make up
Zubik v. Burwell.
The Supreme Court could have
settled the question of whether fed-
eral bureaucrats may issue punishing,
perhaps incapacitating, fines to faith-
based organizations that refuse to
participate in what we believe to be
evil. Instead, the justices sent all of
the cases in Zubik back to the four
federal circuit courts that heard them
first. The high court also asked those
appeals courts to step away momen-
tarily and give the two sides time to
resolve the case on their own.
Priests for Life is ready
to reach a solution, as the
Supreme Court directed.
What will the administration do
now? The White House’s latest “ac-
commodation” proposal for religious
nonprofit charities, schools and other
organizations did not satisfy the Reli-
gious Freedom Restoration Act. The
proposal and each of its previous ver-
sions required faith-based groups
seeking an exemption from the man-
date to submit a form to an authority.
Without this initiating action, abor-
tion-causing drugs would not be
made available to our employees. The
basic requirement that we be com-
plicit in the provision of abortifa-
cients and other life-denying drugs,
devices and procedures was a part of
every government proposal. When we
responded that we are forbidden by
our faith to take part in this
scheme—the government effectively
retorted, “So what?
But both sides in Zubik have told
the Supreme Court that a solution is
theoretically possible.
For instance, the administration
could, for once, actually listen to the
Zubik petitioners—and to the scores of
other faith-based groups that have
lawsuits pending in lower courts—and
propose a solution that does not hijack
our health-insurance plans. The
administration could, for example,
make abortifacient/contraceptive cov-
erage available to religious nonprofit
employees through the ObamaCare
exchanges, Title X (the federal pro-
gram devoted to family-planning ser-
vices), or separate arrangements with
our own or another insurance com-
pany. In other words, don’t involve us,
or the health-insurance plan we offer
our employees, in the effort to expand
coverage of abortion-inducing drugs.
The administration might be
tempted to come up with a proposal
that satisfies only those groups that
have third-party insurance coverage—
and not those that self-insure. This
wouldn’t be acceptable, because self-
insurers underwrite their own health-
insurance plans and are, practically
speaking, their own insurance compa-
nies. A government “accommodation”
that offered as its only option a re-
quirement that insurers of religious
nonprofit groups offer the employees
of those groups separate plans for
abortifacients and contraceptives
would still force self-insured religious
groups to violate their faith.
Then again, the administration
might completely ignore the Supreme
Court and come up with yet another
regulation that satisfies no one ex-
cept the bureaucrats who insist that
the religious must bow to the state.
If all the parties resolve the mat-
ter, the case would probably be
closed. But if the two sides can’t
agree, four federal appeals courts will
eventually have to rule on the seven
Zubik cases. Almost all of the judges
from these courts who heard these
lawsuits the first time are Democratic
appointees who sided with the ad-
ministration. It isn’t likely that they
would issue decisions favorable to re-
ligious liberty. The four courts may
also end up issuing conflicting rul-
ings. Either scenario would bring us
back to the Supreme Court.
No timetable has been set for an
end to the HHS mandate controversy.
Given that both sides have indicated
to the Supreme Court that there is a
way to satisfy all parties, the govern-
ment’s unwillingness so far to make
the changes in the mandate necessary
to accomplish that is inexplicable.
Fr. Pavone is the national director
of Priests for Life.
A18 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

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 URBAN GARDNER A20 | CITY NEWS A20, A21 | PROPERTY A22 | ARTS A23 | SPORTS A24

Lineup Goes Lame Going Backstage

At Governors Ball
GETTY IMAGES

Injury-riddled Mets make do SPORTS | A24 ARTS | A23

WSJ.com/NY * * * * THE WALL STREET JOURNAL. Monday, June 6, 2016 | A19

PATH Enters Tunnel of Woe

Housing growth near
Passengers try to board at
train lines exacerbates the Grove Street station.
crowding, vexes riders;
no relief in near term
JOHN TAGGART FOR THE WALL STREET JOURNAL

BY ANDREW TANGEL

The PATH train, already

bursting at the seams, stands
to get more crowded amid a
building boom in northern
New Jersey, in another sign
the transit network is strain-
ing under the region’s popula-

JOHN TAGGART FOR THE WALL STREET JOURNAL

tion growth.
Apartment buildings
John Anderson III, Alexander Cole, Brennan Gilbane Koch, and springing up in Jersey City
William Gilbane III, below, work for the family firm, Gilbane Building. and communities nearby are
funneling new riders onto the

Builder Riles Up
PATH, whose lines run to the
World Trade Center and Her-
ald Square in Manhattan.
Many passengers complain

Labor Amid Push

Into NYC Market
company’s founder and head of
the New York office, said the
of crammed commutes, or
having to wait for trains to
pass before boarding one that
isn’t packed—an experience
Here They Come
familiar to many New York
City subway riders.
“It’s just miserable,” said A surge in development in Jersey City is helping fuel growing ridership
Elliot Kelly, 24 years old, who on the PATH train between northern New Jersey and Manhattan.
rides the PATH from Jersey
City each weekday morning to Proposed development
ve .

company adheres to the highest work at a law firm in Manhat- NJ Tr

in A

Approved development ansit

.
Ave
ldw
PETER GRANT/THE WALL STREET JOURNAL

safety standards in the indus- tan. “It’s never nice to make a Under construction 4
ade
Ba

Light Rail
try. He pointed out that the commute when you’re 3 centi-
is

16th St.
Pal

Completed development
n Blvd.
company has never had a fatal- meters from someone else’s
ity in New York at one of its body.” Recreation/park 14th St. PATH
JERSEY CITY to
Washing
sites. As the PATH’s operator, the Historic district
Union leaders say Gilbane is Port Authority of New York 9
being singled out partly be- and New Jersey, considers im- Holland Tunnel
Some projects completed 9th St.
Brunswick St.

cause the company has been
pushing the bounds of the size
of projects being built with a
mix of union and nonunion la-
provements to expand the sys- over the past two years:
tem’s capacity, questions lin-
1 70 Columbus: 545 units 7th St.
ger over when they will be
completed and who should pay 2 350 Warren (Modera Lofts): 377
Ne

78 5th St.
wa

Manila Ave.

bor. The protests are also a for them.

Marin Blvd.
rk

3 50 Regent Street
Av

3rd St. Future

Hudson River

BY PETER GRANT PAT

e

sign of the intense behind-the- Port Authority Chairman Liberty Harbor North: 167
.

H Marina
Chris
e

scenes maneuvering going on John Degnan said Jersey City

ik

4 Cast Iron Lofts 2: 232 to ph

Turnp

er C
A Providence, R.I.-based in the clash between labor and shouldn’t approve new devel- olum
Warren St.

5 Majestic 2: 99 bus
builder run by the same family management in the city’s con- opments along the PATH’s Dr. 6
ersey

2 8
Mer 1
for five generations has been struction business. route without making sure the cer S
New J

making a big push into the
New York City market, increas-
ing its share of business from
developers of residential, com-
On the surface, construction
unions are attacking Gilbane
for hiring nonunion contractors
that they say aren’t fair to
t.
system can handle the ex- Some projects expected to open York
within the next two years: S t.
pected growth in riders. 5 Montgomer
y St.
“It’s irresponsible for a city 6 200 Greene: 766 PATH
3 Grand St.
to allow indiscriminate growth
.

7 155 Marin,
Hudson St

mercial and institutional con-
structions projects.
But Gilbane Building Co.
hasn’t made many friends
among the city’s labor unions.
Rather, the company has be-
come a lightning rod for con-
struction work-
DYNASTIES ers battling to
workers, pay lower wages and
don’t adhere to top quality
safety standards. Mr. LaBarbera
said the company’s nonunion
subcontractors pay as little as
$15 per hour.
“It’s putting profits before
people,” says Mr. LaBarbera.
Mr. Gilbane said the com-
that’s going to tax public in- Liberty Harbor North: 448
frastructure beyond its capa- 7
8 65 Bay Street: 447
bility,” Mr. Degnan said.
Jersey City Mayor Steven 9 Embankment Newport: 163 T id e w
a te r B
Fulop faulted the Port Author- a s in
ity, which is jointly controlled Source: Jersey City City Planning Division 1/4 mile
Liberty State Park
Please see PATH page A20 THE WALL STREET JOURNAL.

Housing for City’s Senior Moment

maintain New
York’s status as
one of the last union bastions
in the country.
Unions have sponsored about
a half-dozen anti-Gilbane rallies
in recent months, including one
in May that began at a Gilbane
construction site at 1 Wall
Street and ended at the com-
pany’s downtown offices where
more than 250 protesters were
joined by two large inflatable
rats. Other rallies have included
as many as five of the rats.
“They pride themselves at
having an over-100-year history
with the highest ethical stan-
dards,” said Gary LaBarbera,
president of the Building and
Construction Trades Council,
who has spoken at many of the
rallies. “Then they go out and
do the exact opposite.”
William Gilbane III, a fifth-
generation descendant of the
pany uses a mix of union and
nonunion contractors on its
jobs based on numerous crite-
ria including cost. He also de-
nied that any of the company’s
subcontractors pay as low as
$15 per hour.
Mr. Gilbane said the main fi-
nancial difference between
union and nonunion contrac-
tors is that nonunion shops
don’t have many of the onerous
work rules that drive up costs,
like requiring expensive labor-
ers to push buttons on auto-
matic elevators.
“We’re not doing union
busting,” he said. “We are very
focused on putting the most
qualified, responsible compa-
nies and people on our proj-
ects.”
Tension between labor and
management has been part of
New York’s construction busi-
Please see CLASH page A22
BY KEIKO MORRIS particularly in Manhattan.
The joint venture plans a
When executives from real- 15-story building at the north-
estate investment trust Well- east corner of East 56th
tower Inc. and developer Street and Lexington Avenue.
Hines began discussing a proj- The develop-
ect to build a senior-housing PROPERTY ers, who didn’t
development, they didn’t disclose total
imagine the traditional leafy costs for the
location outside the city. They project, paid $115 million for
wanted to build in Manhattan. the parcels that make up the
Welltower and Hines are site.
targeting an affluent sector of The building will have pri-
a growing urban aging popu- vate apartments, landscaped
lation, as have other players terraces and an overall design
in the niche development sec- inspired by classic Park Ave-
tor. They said they are aiming nue apartment houses. It will
to fill the gap between the be targeted at those with pri-
strong demand and limited vate means to pay.
supply of facilities that offer “This is a place where
assisted-living services and these people can be reminded
care for memory-impaired, of things in their past, poten-
tially by the design of the rely on residents who can pay
building and by the location for services rather than on re-
of the building and have a sig- imbursement from govern-
nificantly better quality of ment programs, such as Med-
life,” said Thomas DeRosa, icaid, which are susceptible to
chief executive of Welltower, cuts.
which has 72 senior housing There are about a dozen li-
properties in the tri-state censed assisted-living resi-
area. dences in New York City, in-
Investor interest in senior cluding one in Manhattan,
housing that offers assisted- according to the New York
living services and care for State Department of Health
dementia-related conditions website. Of those, nine—in-
has grown in and around cit- cluding the Manhattan facil-
ies such as New York, where ity—are also licensed as spe-
aging residents are increasing cial-needs assisted-living
in number, industry brokers, residences, providing special-
analysts, developers and in- ized care for conditions that
vestors said. can include dementia.
These residential facilities, “People are living longer,
which typically offer less care and as people live longer they
than a nursing home, largely Please see SENIOR page A22

Teachout, Who Tested Cuomo, Faces Her Own Populist Rival 84° TODAY’S
Weather
Real Feel
BY MIKE VILENSKY political corruption. ing out and raising people’s 9 a.m. 72°
HIGH
In her run for Congress, she voices and standing up to 5 p.m. 82°
In her losing 2014 primary has won the endorsement of power,” she said, “and I’ll keep
Record High
against New York Gov. Andrew U.S. Sen. Kirsten Gillibrand, a doing what I’ve done.”
98° (1925)
Cuomo, Zephyr Teachout, then fellow New York Democrat, and By contrast, Mr. Yandik, a
RICHARD BEAVEN FOR THE WALL STREET JOURNAL

a little-known law professor,
ran as a populist Democrat to
the left of Mr. Cuomo.
Two years later, Ms. Tea-
chout, 44 years old, is the
front-runner in the Democratic
primary for the state’s 19th
Congressional District. But now
she is the one facing an insur-
gent rival: Will Yandik, a
fourth-generation farmer who
hails from the region.
“Zephyr is a star, she’s a big
hero,” said Melinda Hardin, a
political activist in the district,
which includes the Catskills
and Hudson Valley, who voted
for Ms. Teachout in 2014.
However Ms. Hardin said
she is now backing Mr. Yandik.
“He’s more grass-roots than she
raised more than $500,000.
Aides to Mr. Cuomo didn’t re-
spond to a question about who
he endorses.
Ms. Teachout has been a vo-
cal advocate of a public cam-
paign-finance system, but she
has proved skilled at private
fundraising in this race. Her do-
nors include movie star Mark
Ruffalo, former Kickstarter ex-
ecutive Fred Benenson and Ben
& Jerry’s co-founder Ben Co-
Zephyr Teachout, running for Congress, lost to Gov. Cuomo in 2014. hen. Much of her funding has
also come from small donors
is, really.” deep-pocketed donors when through ActBlue, a political-ac-
Such shifting sentiments il- she ran for governor, she sur- tion committee supporting
lustrate the challenge for Ms. prised some of them when she Democrats.
Teachout as her profile has garnered more than a third of Ms. Teachout said she is
risen. Largely ignored or dis- the primary vote. She subse- campaigning as hard as ever. “I
missed by elected officials and quently published a book on have spent my entire life speak-
Princeton University graduate, SUNNY, Sunrise/Sunset
has stressed his working-class WARMER 5:25 a.m./8:25 p.m.
Hudson Valley roots. “I’m
someone who grew up here and Tuesday’s High
got a good education, and in-
stead of moving to some other
81°
city, I’ve come back,” he said.
Mr. Yandik, 38, in addition to
farming, works in local politics N.Y. Sports Lineup
and helps run a family bakery.
He called Ms. Teachout a new- 7:05 p.m. Monday
comer to the area and said of Angels @ Yankees
her celebrity backers: “Endorse-
ments don’t win elections.”
The district is currently rep-
resented by Chris Gibson, a Re- 7:05 p.m. Monday
publican who held the seat for Mets @ Pirates
three terms but said last year
that he wouldn’t seek re-elec-
tion in 2016. In the Republican
Please see RACE page A20 For N.Y. sports coverage, see A24
 A20 | Monday, June 6, 2016 * *** THE WALL STREET JOURNAL.

CITY NEWS

Raising the Beds, With Assistance From a Professional

W
hile I didn’t flunk provement projects are those
shop, I didn’t excel you hire others to perform.
at it either. “When I was 17, I got a
In fact, I still marvel that I finish nail in my right eye,”
had any desire to become a he explained. “It bounced off
writer after the 500-word concrete. I never do this
punishment essays my shop work without some form of
teacher handed out as casu- eye protection.”
ally as he did hammer and The accident caused no
nails. If anything can turn a permanent damage. Mr. Ber-
person off the essay form, it’s endsohn blinked reflexively at
repeatedly having to come up the incoming projectile and
with variations on the theme trapped it with his eyelid.
of “Why I Fortunately, there were
Shouldn’t no mishaps as he sawed the
Talk in 10-foot planks I’d purchased
Class.” into 6-foot and 4-foot sec-
My skill tions to make the sides for
with carpen- the raised beds.
DEBORAH GARDNER

try tools was I took command of the cir-

URBAN
hardly better cular saw only briefly, mostly
GARDNER
than it was Roy Berendsohn teaches Ralph Gardner Jr. how to use a circular to say I had. I also solicited
RALPH
with a Dixon saw, left. Above, Mr. Berendsohn shows the columnist how to tips about some of the gen-
GARDNER JR.
Ticonderoga shovel, above, and stands with the finished beds, below. teel chores I find myself oc-
#2 pencil. So casionally tempted to accom-
when my plish: such as how to hammer
family recently began to con- a nail into a wall or piece of
sider a raised-bed garden, I wood without bending it.
took the liberty of enlisting “You put your shoulder
the help of Roy Berendsohn, over the nail,” he explained
“Popular Mechanics” maga- as he did just that, nailing
zine’s “Ask Roy” columnist. two sections of the board to-
Why raised beds instead gether. “Start with a couple
of a conventional garden? I’m of taps and drive it in.”
not sure except that our Hud- Mr. Berendsohn also
son Valley property is terri- coached me on proper wheel-
ble for growing anything but barrow shoveling technique:
poison ivy. There’s approxi- “Get as close to it as possi-
mately 2 inches of topsoil. ble. Align the long access
And from there to the center with the direction you’re
of the earth it’s solid rock. shoveling. You want to avoid
Per Mr. Berendsohn’s in- shoveling from the side.”
structions, I purchased He’d already lost me.
wood, nails and a truckload But it turns out I’m

T-B: RALPH GARDNER JR./THE WALL STREET JOURNAL (2)

of topsoil before his arrival pretty good at pushing a
at our home. All he had to wheelbarrow downhill, if not
do was show me how to the advanced math Mr. Ber-
measure, saw and nail to- endsohn employed to mark
gether a few boards. off the wood.
Or preferably do so him- However, the most com-
self why I feigned taking plicated chore yet awaits—
notes. figuring how to mount fence
But first I was curious to posts in solid rock. Whatever
learn a bit of Mr. Berend- we grow in the beds will
sohn’s biography; he’s been have to be protected from
at “Popular Mechanics” for the woodchucks, which are
27 years. Specifically, did he approximately the size and
excel in shop class as a kid? ravenousness of black bears.
Impressively modest, Mr. Mr. Berendsohn’s initial
Berendsohn, 56 years old, people if I can do this, you both Mr. Berendsohn and his spy satellites. His workbench, “It’s the hammer that put suggestions included setting
denied any special talent can do this.” 91-year-old father, Oscar, are shown in the story, is a thing me through college,” he said. fence posts inside concrete
recognized at an early age That was before he met interviewed. of organizational beauty. I couldn’t help asking blocks and stapling chicken
for hammering a nail me. Oscar, who fled the Nazis, Roy also learned a trick about mishaps, as Mr. Ber- wire to the wood, or jack-
straight. He also had excellent role got an engineering degree or two working construction endsohn pulled sawhorses hammering.
“I did not have a mechan- models. There’s a touching from the Polytechnic Institute in western Connecticut as a and a circular saw from the He’s working on addi-
ical gift,” he insisted. “I’ve interview in June’s “Things of Brooklyn (now the NYU teenager. He still uses the back seat of his 2001 Chevy tional solutions.
learned the hard way with My Father Taught Me” issue Tandon School of Engineer- solid steel Estwing hammer Malibu. My attitude being
anything I’ve done. I tell of Popular Mechanics where ing) and started working on a boss gave him back then. that the safest home im- ralph.gardner@wsj.com

PATH
Continued from page A19
by New Jersey and New York
governors, for failing to prop-
RICHARD BEAVEN FOR THE WALL STREET JOURNAL

erly plan.
“At the end of the day it’s
Port Authority’s responsibil-
ity,” Mr. Fulop said. “They
should stop putting blame
elsewhere. Every surrounding
municipality has grown.”
Apartments under con-
struction or approved in Jer-
JOHN TAGGART FOR THE WALL STREET JOURNAL

sey City alone could usher in

an estimated 64,250 new resi-
dents, increasing the city’s
current population of about
Will Yandik, a Democrat, is running for Congress in a New York 264,000 by some 25%.
state district that includes the Catskills and Hudson Valley. “We’ve got a brewing cri-
sis,” said Dawn Zimmer,

RACE worked with communities in

Continued from page A19
primary, John Faso, former mi-
nority leader of the state As-
sembly, is battling businessman
Andrew Heaney.
The district is split about
evenly between Democrats and
Republicans, but politicians’
roots in the area have been a
heated subject in the past. In
2014, Democratic activist Sean
Eldridge ran against Mr. Gib-
son but was criticized for buy-
ing a multimillion-dollar home
in the area and moving there
shortly before announcing his
candidacy.
“He was right about many
things, but he didn’t under-
stand what we’re all about,”
said Pamela Pine, a 69-year-old
retired designer and Columbia
County Democrat, of Mr. El-
dridge. She is supporting Mr.
Yandik because she said he is
looking out “for the people who
live here.”
Mr. Eldridge, who lost to
Mr. Gibson by double digits,
donated to Ms. Teachout but
declined to comment for this
article.
Ms. Teachout, who grew up
in Vermont, lived in Brooklyn
during the 2014 primary but
moved north after that race.
She continues to teach law at
Fordham University but lives in
a Dutchess County home and
said she grew up in a similar
area. She move to Dutchess
County in 2015.
Ms. Teachout said she
the district during the gover-
nor’s race and while advocat-
ing for public education issues
and developed deep relation-
ships there.
Since announcing her candi-
dacy, Ms. Teachout has ap-
peared to some observers to
veer to the center. She called
for an economic study of the
Constitution Pipeline, a pro-
posed natural-gas project that
has riled upstate New York. But
both candidates said they
agreed with a state decision to
reject it. Both candidates have
criticized New York’s strict
gun-control laws, saying the
process by which they were im-
plemented was flawed.
Ms. Teachout said she is a “a
bit of a Teddy Roosevelt Re-
publican,” adding “I like break-
ing up big banks, and I want to
take on big cable.” She has pre-
viously called herself a “Rocke-
feller Republican.”
Support for Mr. Yandik,
meanwhile, comes almost ex-
clusively from within the dis-
trict. Ms. Teachout has drawn
national attention.
Marvin Ammori, a Washing-
ton, D.C., attorney, donated to
Ms. Teachout, he said, because
they are friends and he believes
she will advocate for net neu-
trality, a broadband policy that
is important to him.
Ms. Teachout’s political
clout hasn’t gone to her head,
he added. “To see her now, do-
ing this political thing and get-
ting endorsements and dancing
at shindigs, she is still pretty
much just Zephyr.”
mayor of neighboring Hobo-
ken, whose constituents fre-
quently complain of PATH
overcrowding.
The Port Authority fore-
casts the PATH will carry 88.4
million passengers in 2020, a
15% surge from 2015 levels.
The PATH’s experience
highlights a recurring plan-
ning disconnect between mu-
nicipalities and regional tran-
sit systems. A building boom
in the trendy Brooklyn area of
Williamsburg in part forced
the New York’s Metropolitan
Transportation Authority to
spend hundreds of millions of
dollars to increase capacity on
the New York City’s L subway
line.
Much of the Port Author-
ity’s attention over the past
year has focused on improving
other means for crossing the
Hudson River, including a re-
placement for Manhattan’s ag-
ing Port Authority Bus Termi-
nal. Last year, the bus
terminal served 66.7 million
passengers, about 10 million
fewer than the PATH.
“Crowding will get worse
before it gets better,” said
Rich Barone, transportation
expert at the Regional Plan
Association, a civic group fo-
cused on urban planning in
the region. “This is the univer-
sal trans-Hudson story. Our
delay in implementing years
of planning to add new capac-
ity will have consequences.”
Upgrades to PATH that
would allow run trains to run
more frequently—and help re-
duce crowding—aren’t ex-
Commuters pass a construction site for new condo buildings near the Grove Street PATH station.
Grab a Seat
PATH ridership
90 million
80
70
60
50
40
30
20
10
Projected
0 ark Penn Station to Newark
2010 ’12 ’14 ’16
Source: Port Authority of New York
and New Jersey
THE WALL STREET JOURNAL.
pected to arrive until the end
of 2018 at the earliest. A new
advanced signal system, which
is part of a crash-avoidance
system required by federal
law, would let PATH trains run
closer together, increasing ca-
pacity up to about 20%, Port
Authority officials said. Trains
could then run about every
two minutes during peak
times—as some of the busier
New York City subway lines do
during rush hours—instead of
every four to six minutes as is
the case now. Mr. Degnan said the Port
Until such upgrades are in Authority couldn’t afford to
place, PATH’s plans to ease fund the PATH system’s oper-
crowding involve the expan- ating deficits while also foot-
sion of rush-hour service, run- ing the entire bill for its fu-
ning trains more frequently ture needs.
for longer periods. “We’re not a piggy bank,”
Port Authority officials de- Mr. Degnan said. “We can’t
clined to specify plans for stand by and simply dole out
other service improvements, money because the mayor of a
such as when the system town tells us that the develop-
would begin running 10-car ment they’re planning in the
trains on its Newark-to-World future requires it. It’s time for
Trade Center line, up from the them to step up to the plate.”
current limit of eight. Unlike other transportation
It remains to be seen agencies, the Port Authority is
whether the Port Authority largely funded by tolls it col-
will move forward with plans lects on Hudson River bridges
to extend the PATH from New- and tunnels and revenue from
the New York City area air-
’18 ’20 Liberty International Airport. ports it operates. The MTA, by
Mr. Degnan said the Port contrast, derives a significant
Authority planned to seek amount of its operating and
capital contributions from cit- capital budgets from state and
ies and developers that bene- local funding sources.
fit from projects that increase
the PATH’s capacity and ex-
pand the system. That would We Want to Hear
mark a shift in how the Port From You
Authority pays for PATH im- Have something to say about
provements. an article in Greater New
Such a financial arrange- York? Email us, along with
ment has recent precedent: your contact information, at
New York City effectively paid gnyltrs@wsj.com. Your letter
for a new subway station at could be published in our
the Hudson Yards develop- weekly Feedback column on
ment in Manhattan by issuing Friday. Letters will be edited
bonds backed by expected in- for brevity and clarity. Please
creases in property-tax reve- include your city and state.
nue.
 THE WALL STREET JOURNAL. * * Monday, June 6, 2016 | A21

CITY NEWS

Police Hunt Man Support for Israel on the Upper East Side
Wielding Knife
In Robbery Spree
night.
Mr. Malave said he and an-
other co-worker were inside
the store about 9:30 p.m. mak-
ing preparations to close when
a man walked quickly inside.
NEW YORK CITY POLICE DEPARTMENT

He wore sunglasses and

flashed a knife, Mr. Malave
said. Images captured on a
surveillance camera show the

PETER J. SMITH FOR THE WALL STREET JOURNAL

An image of the suspect from
a May 11 robbery in Queens.
BY MARK MORALES
Police say the robberies
play out briskly and in roughly
the same fashion: A stocky,
young man enters a fast-food
restaurant, brandishes a big
knife and demands cash.
man holding out the knife be-
fore making his way to an area
designated for employees only.
Officials said the man said,
“ ‘Give me the money,’ ” be-
fore grabbing a tray of cash
from the register and making
off with as much as $300.
“It was a very quick pro-
cess. He made it clear what he
wanted,” said Mr. Malave. “We
were alone, so there’s nothing
much we could do.” RAIN OR SHINE: Seth Kofina of Rockland County blows a shofar in the Celebrate Israel Parade that traveled up Fifth Avenue on Sunday.
Before the Subway restau-
rant robbery in Forest Hills,
the robber took $400 on June

Cuomo Counters Boycotts of Israel

He usually leaves with sev-
eral hundred dollars, and, au-
thorities say, the man has car-
ried out 22 similar holdups on
Long Island and in New York
City since March 1.
About a dozen of the heists
have taken place in Nassau
County.
“The arrest of this individ-
ual is our number one prior-
ity,” said Nassau County Police
Department Detective Lieuten-
ant Richard LeBrun, in a state-
ment released Sunday.
The robber apparently
started his spree March 1 at a
Dunkin’ Donuts on Lakeville
Avenue in New Hyde Park, po-
lice said.
He most recently is sus-
pected to have been involved
in a robbery Friday at a Sub-
way restaurant on 108th
Street in the Forest Hills sec-
tion of Queens, officials said.
“He caught us. We’re glad
no one got hurt,” sad Anthony
Malave, 22, a Subway restau-
rant employee who was inside
during the robbery on Friday
1 from a Subway restaurant on
Northern Boulevard, police
said.
Before that, on May 25, the
thief targeted a Dunkin’ Do-
nuts on Cross Bay Boulevard
in Queens and made off with
$776 in cash, police said.
New York Police Depart-
ment Chief of Detectives Rob-
ert Boyce said the suspect se-
lects fast-food restaurants
located close to highways.
Detectives are combing
through surveillance footage.
They think he parks several
blocks away from the store he
chooses to rob, Chief Boyce
said.
“He walks in and produces
a large butcher’s knife that he
uses for each one and puts it
back into his pant leg when he
leaves,” Chief Boyce said.
Police say the man appears
to be in his 20s.
He stands about 5 feet 9
inches tall and was last seen
wearing a gray hooded shirt,
black jeans and black boots,
police said.
BY ZOLAN KANNO-YOUNGS
New York Gov. Andrew
Cuomo signed an executive or-
der Sunday to divest state
funds from businesses support-
ing a boycott against Israel.
Mr. Cuomo said the boycott,
divestment and sanctions
movement “is in many ways
more frightening” than tunnels
Hamas constructed to infiltrate
Israel.
“We are against the BDS
movement and it’s very sim-
ple,” Mr. Cuomo said in re-
marks at the Harvard club in
Midtown before marching in
the Celebrate Israel Parade on
the Upper East Side. “If you
boycott against Israel, New
York will boycott you.”
The order would prevent
state agencies and depart-
ments from investing in com-
panies boycotting Israel. The
state Office of General Services
will develop a list of those in-
stitutions and companies and
post it online within 180 days.
The office will notify the busi-
nesses before adding them to
the list and give them 90 days
to show proof they aren’t sup-
porting the boycott.
The Palestinian BDS Na-
tional Committee, which coor-
dinates the initiative, didn’t re-
turn a request for comment.
The committee’s website de-
scribes the movement as “a
strategy that allows people of
conscience to play an effective
role in the Palestinian struggle
for justice.”
Mr. Cuomo said New York
was the first state to issue
such an such an order.
A Republican-sponsored bill
with similar aims as Mr.
Cuomo’s order passed the state
Senate in January. Senate ma-
jority leader John J. Flanagan,
a Long Island Republican, ap-
plauded the order.
In a statement provided
through a spokesman, Donna
Lieberman, executive director
for the New York Civil Liber-
ties Union, said the group
would be looking “very closely
at this executive order.”
“Whenever the government
creates a blacklist based on
political views it raises serious
First Amendment concerns and
this is no exception,” Ms. Lie-
berman said.
On Sunday, Mr. Cuomo, a
Democrat, also expressed dis-
approval of some Democrats
who have criticized Israel for
its response to Hamas in the
2014 Gaza war. “How can you
have a disproportionate re-
sponse when you are dealing
with an enemy who is ob-
sessed and single minded?” he
said.
Vermont Sen. Bernie Sand-
ers, running against Hillary
Clinton for the Democratic
presidential nomination, has
said he thought Israel’s re-
sponse in the seven- week
Gaza conflict was dispropor-
tionate. Mr. Sanders’s cam-
paign didn’t return a request
for comment.
Mr. Cuomo, who has en-
dorsed Mrs. Clinton, didn’t
mention Mr. Sanders’s name.
Mrs. Clinton, during a de-
bate in April with Mr. Sanders
in Brooklyn, expressed sympa-
thy for Israelis who she said
are constantly under terrorist
attack.
After Mr. Cuomo’s speech,
Rep. Jerry Nadler, a Democrat
whose district covers portions
of Manhattan and Brooklyn,
criticized Mr. Sanders. “A re-
sponse is disproportionate if it
is more destructive of life or
property that is necessary to
accomplish its military objec-
tive,” he said.

Polynesian Tradition Sails Into the City

SETH WENIG/ASSOCIATED PRESS

ALOHA, NEW YORK: Crew members of the Hokule’a sing Sunday from aboard the vessel in
Manhattan. The Hawaiian voyaging canoe is sailing around the world and to promote conservation.

day he was in the surgical inten- a Bronx roadway.

Greater
New York
Watch
QUEENS
BROOKLYN
Group Says Attack
May Be a Hate Crime Four Men Shot Near
A leading Muslim civil-rights Amusement Park
organization Sunday called on
the New York Police Department
to investigate the possibility of a
hate crime in Queens.
The NYPD Hate Crimes Task
Force was notified of last week’s
incident, officials said, and the
investigation is continuing.
Mohamid Rasheed Khan, 59
years old, was near the Center
for Islamic Studies on Jamaica
Avenue on Wednesday, when he
was attacked, said Afaf Nasher,
the executive director for the
New York Chapter of the Council
on American-Islamic Relations.
Mr. Khan was riding his bicy-
cle when he was hit in the face
and knocked over, causing his
head to slam on the ground, a
law-enforcement official said. He
was taken to Jamaica Hospital
Medical Center, where on Sun-
sive care unit.
Mr. Khan, a U.S. citizen of
Guyanese heritage, was wearing
traditional Islamic attire when he
was attacked, according to Ms.
Nasher, who visited Mr. Khan in
the hospital Sunday.
She said nothing was stolen
in the attack.
—Zolan Kanno-Youngs
Police said four men were
shot and wounded Sunday on a
Coney Island street, near the
famed amusement park.
Authorities didn’t immediately
know the circumstances of the
shootings on Neptune Avenue
just before 3 p.m.
Two of the men were admit-
ted to Coney Island Hospital, and
two others to Lutheran Medical
Center. Each was in stable condi-
tion. Their names weren’t imme-
diately released.
—Associated Press
THE BRONX
Unconscious Woman
Found on Roadway
Authorities are trying to iden-
tify a woman who was found
unconscious and badly injured on
Believed to be in her 30s, the
woman was in critical condition
at Jacobi Medical Center. Her
left arm is tattooed with a
flower, rosary beads and a Bibli-
cal quote that starts with the
words “I will fear no evil…”
She was discovered late Fri-
day on an entrance ramp to Pel-
ham Parkway, with trauma to
her head and her arm cut. Inves-
tigators are trying to determine
the cause of her injuries.
—Associated Press
NEW YORK STATE
Public Defense Funds
Change Is Proposed
New York’s Assembly has
passed legislation to gradually
transfer responsibility to fund
public defenders from the coun-
ties to the state.
Assembly member Patricia
Fahy, an Albany Democrat, said
the bill would relieve the burden
from counties, where services
and funding are uneven.
Under current law, New York
City and the 57 counties outside
it are required to fund attorneys
for criminal defendants unable
to afford one.
A companion bill with 20 co-
sponsors has been introduced in
the Senate.
—Associated Press
A22 | Monday, June 6, 2016 * *** THE WALL STREET JOURNAL.

PROPERTY MONDAY
Developers Bank on New York City’s Aging Population
Continued from page A19
have health and memory is-
sues,” said Chris Merrill, chief
executive of Harrison Street
Real Estate Capital LLC, a pri-
vate-equity firm. The firm and
its partner, the Engel Burman
Group, own 13 senior commu-
nities offering assisted living
and memory care services in
the surrounding New York
City area. He noted, “there is
a real need for quality as-
sisted living and memory
care.”
By 2040, the city’s popula-
tion of residents ages 60 and
older is expected to reach 1.86
million—up 22% from 2013—
and make up more than 20%
of the population, according
to projections from the New A rendering of Welltower Inc. and Hines’ 15-story senior living
York City Department for the community, left, and a current view of the block at the northeast
Aging. corner of East 56th Street and Lexington Avenue, above. Below, a
CLOCKWISE FROM LEFT: SLCE ARCHITECTS; PETER J. SMITH FOR THE WALL STREET JOURNAL; HANDEL ARCHITECTS

“For Hines, what we liked rendering of an assisted living residence planned by Maplewood
about this as an economic Senior Living and Omega Healthcare Investors for Second Avenue
matter [is] it’s on a demo- between East 93rd and East 94th streets.
graphic curve and not an eco-
nomic cycle,” said Tommy
Craig, senior managing direc-
tor at Hines, which will make
its first foray into senior
housing with this Midtown
development.
Home prices also make the
New York City region attrac-
tive, because many potential
residents will use the equity
in their homes to pay for se-
nior housing, said Beth Mace,
chief economist of the Na-
tional Investment Center for
Seniors Housing & Care, or
NIC, an educational and re-
search nonprofit that tracks
the market. The median home
value in the New York metro-
politan area is $404,000,
while the U.S. average is
about $207,000, according to
NIC.
The large presence of adult
children of the elderly living
in the New York area is also a
strong driver in the senior necessarily a sure bet. The vice in terms of maintenance Still, some see opportunity. to secure the assemblage of ized services, including care
housing industry, she said. business is labor intensive, and doorman and porters and Maplewood Senior Living and five buildings for their site on for those with varying levels
“You see a lot of marketing heavily regulated and requires everything delivered to your its partner Omega Healthcare Second Avenue between East of dementia. The project will
efforts not just to residents, experienced operators, indus- door,” said John Moore, chief Investors Inc., a real-estate in- 93rd and East 94th streets, also have an indoor pool,
but to their children as well,” try experts said. executive of Atria Senior Liv- vestment trust focused on the said the company’s chief exec- beauty salon and terrace.
said Ms. Mace. “Adult children “The challenge is operating ing Inc., a national operator long-term care industry, were utive Gregory Smith. “Even knowing there were
decide where the adult parent something in New York that is which manages four New York determined to establish a Maplewood and Omega are high barriers to entry, we
is going to go.” compelling for people to move City senior housing communi- presence in the Manhattan planning a $246 million se- stood our ground and decided
The project may be ad- into when you can stay in ties, including one on Manhat- market. The companies had to nior-housing high rise there that was a market we wanted
dressing a demand, but it isn’t your co-op and have full ser- tan’s Upper West Side. negotiate with several parties with apartments and special- to be in,” Mr. Smith said.

revealed the average asking rent May surveyed 2,000 investors

What’s the for this market niche was
$99.94 a square foot in the first
Deal quarter, up 0.5% from $99.43 in
September 2015—when the in-
dex was updated previously.
Landlords are maintaining
pricing levels but likely will con-
tinue to offer robust tenant con-
QUEENS cession packages with free rent
and allowances for tenants to
Forest Hills Tower build out their offices, said Cyn-
Signs New Tenants thia Wasserberger a JLL manag-
The owner of an office build- ing director.
ing in the Forest Hills section of In previous economic cycles,
Queens is replacing a departing asking rents in trophy buildings
government tenant with local showed sharp increases, rising
ALAN SCHINDLER PHOTOGRAPHY
and startup firms, mostly in the
U.S., aiming to get a sense of
key players’ views on where the
sector is headed in 2016.
About half of the investors
said they expect to see more ac-
quisitions in 2016 than 2015, and
87% said they anticipate making
the same number or more in-
vestments in real estate technol-
ogy, according to the Global Real
Estate Tech Confidence Index.
None of the investors said they
expect to see fewer real estate
tech deals this year.
Meanwhile, about 44% of

organizations seeking headquar- 127% between 1997 and 2000 startup founders expect raising
ters space in the neighborhood. and 82% between 2003 and venture capital in 2016 will be
Muss Development has 2007, the report noted. Since harder than in 2015, with 39%
signed 43,000 square feet of 2009, average asking rents have saying it will remain the same as
new leases at 118-35 Queens steadily increased by 36%. The last year and about 17% expecting
Blvd., known as Forest Hills first quarter’s average asking fundraising to be easier this year.
Tower. The building, which Muss rent was 17% below the 2007 Startups also are pessimistic
constructed in 1981, is undergo- peak of $120.22. about exit opportunities, with
ing a multimillion-dollar renova- Forest Hills Tower at 118-35 Queens Blvd., where Child Center of New York has signed a lease. “We are sort of chugging 44% reporting it is unlikely or very
tion, said principal Jason Muss. along,” Ms. Wasserberger said. unlikely their firm will be acquired,
In 2012, Muss arranged a a current tenant, signed a 15- a more central location, putting MIDTOWN “Rents aren’t too out of whack the go public or have a major liquidity
hasty, 200,000-square-foot year lease for 21,107 square feet us nearer to our wellness cen- way they were in 2000 and ‘07.” event in the next two years. Only
lease with the Federal Emer- on the third floor. After the ex- ters and partner schools in Ja-
Office Asking Rents —Keiko Morris 17.4% said such transactions were
gency Management Agency to pansion, Plaza College will oc- maica and South Queens.” Are Ticking Higher likely or very likely.
set up its New York City head- cupy 61,107 square feet there. Brittany Travis, a spokes- Average asking rents at Mid- NEW YORK Startups, however, aren’t en-
quarters after Hurricane Sandy. The Child Center of New York, woman with Plaza College, said town Manhattan trophy towers tirely skeptical about the year
The government agency is giv- founded in 1953, offers program- its expansion will be used for increased slightly from the fall,
Investors Are Bullish ahead, saying they plan to hire
ing back space and will fully de- ming, education and counseling classrooms and administration indicating landlords are holding On Real Estate Tech aggressively, with 39% planning
part the building by the end of to children in Queens. Its current “to accommodate the new and firm on rental pricing, according Investors are more bullish to hire six to 20 employees this
the summer, Mr. Muss said. headquarters in Woodside has exciting programs we are plan- to a JLL report. about the real estate tech sector year and 12% indicating they
With the available space, become overcrowded, said ning to offer in the near future.” The Hedge Fund Index, which this year than startup companies would hire up to 50 workers.
Muss signed a 12-year lease spokeswoman Eugenie Bisulco. Asking rents at the building tracks 24 high-end buildings are, according to a new survey. The Real Estate Board of New
with the Child Center of New “The new space is better- range from mid- to- high $30s a with a high concentration of MetaProp NYC, a real estate York reviewed the survey’s
York to take 21,808 square feet suited to accommodating our square foot. boutique hedge funds and in- technology accelerator, seed in- methodology and analysis.
on the sixth floor. Plaza College, growth,” she said. “Forest Hills is —Emily Nonko vestment management tenants, vestment and advisory firm, in —Keiko Morris

CLASH sents infrastructure contractors

that exclusively use union
workers.
Gilbane stepped into the pic-
Continued from page A19 ture as this sea change was tak-
ness for decades. But it has ing place. Founded in 1873 by
been intensifying lately partly an Irish immigrant, the com-
because nonunion contractors pany has built several billion
have been making major in- square feet of space over the
roads in what used to be an all- decades and today has more
union town. As recently as the than 50 offices world-wide.
1980s, all residential projects in The company, which is 100%
the city used union labor exclu- family owned, did its first
sively. Today it is about half building project in New York in
that much. 1940, but its work here has
Unions still dominate com- been limited until recently. The
to about 350, including three
other family members, Alexan-
der Cole, John Anderson III and
Brennan Gilbane Koch.
Gilbane’s newcomer status
helps explain why it is a leader
in pushing the use of a mixture
of nonunion and union contrac-
tors. Homegrown construction
companies have been more
steeped in the city’s union-
dominant culture.
Union leaders say they be-
gan perceiving Gilbane as a
threat recently as it took on big
jobs that traditionally would
projects that historically have
been all union jobs.”
Gilbane also is in unions’
crosshairs because other big
construction companies have
started to balk at renewing col-
lective-bargaining agreements.
The big firms “feel as though
economically they’ve been
forced into this position,” Ms.
Richardson said. “They’re going
to do exactly what Gilbane has
done: open their subcontractor
packages up to union as well as
nonunion firms.”
Mr. Gilbane said the com-
PETER GRANT/THE WALL STREET JOURNAL

mercial and institutional con- company began flexing its mus- have been exclusively union, pany doesn’t like being subject
struction. But that too is show- cles in the city after the 2008 like 1 Wall Street. That 1-mil- to such attacks, but it has no
ing signs of slipping. financial crisis as part of a lion-square-foot office building plans to change its method for
“The nonunion contractors strategy to focus more on urban is being converted by developer choosing contractors. He ex-
became steadily more skilled areas throughout the country. Harry Macklowe into residen- pressed hope that his company
and able to take on bigger Mr. Gilbane said that the tial and retail space. Gilbane is and unions will be able to find
pieces of work, and the unions company currently is working using both union and nonunion common ground.
didn’t see it in time,” said De- on about $1.1 billion worth of contractors on that job. “There will be a meeting in
nise Richardson, executive di- New York projects, up from “We’re not talking about 20- the middle here that will be
rector of the General Contrac- $250 million four years ago. story residential buildings,” healthy for everybody,” he said.
tors Association of New York, The firm has grown from 80 said Mr. LaBarbera. “We’re —Laura Kusisto
an industry group that repre- employees in the city in 2008 talking about very complicated contributed to this article. A union protest outside Gilbane’s downtown offices in May.
THE WALL STREET JOURNAL. * * Monday, June 6, 2016 | A23

ARTS & ENTERTAINMENT

Going Behind the Scenes at Governors Ball Festival

BY LEAH LATELLA
The sixth annual Gover-
nors Ball Music Festival
kicked off this past Friday on
Randall’s Island Park before
closing down early Sunday
due to inclement weather.
The three-day, New York City
based festival hosted 66
bands and 55 food trucks,
many by New York restau-
rants. Around 45,000 daily
fans flocked to the grounds
by both bridge and ferry and
55% were local from the sur-
rounding boroughs.
In true New York style,
every inch of green space
was occupied to its maxi-
mum capacity while the
crowds enjoyed this sold out
event. Behind the scenes,
4,500 staff members and
600 volunteers helped keep
things running smoothly.
We got an inside look at
some of the artists and what
they can’t live without at
this homegrown festival.

Albert Hammond Jr.:

American songwriter and guitarist Albert Hammond Jr. of the Strokes has played the same
Fender Stratocaster since 1998. ‘Oh, it’s priceless. I’ve had it since the beginning,’ he said. Behind the
Big Apple stage, Mr. Hammond tells the story of how a quest to find a guitar repairman in
Manhattan started a chain of events that led him to the guitar and introduced him to J.P. Bowersock,
his guitar teacher and guitar guru for the Strokes’ first album. ‘Meeting this guy on the street kind of
has this whole thing that connects with my entire history of music, which is pretty crazy,’ he said. ‘It
was that year where stuff happened to me where I was like, that’s impossible.’ He continued, ‘It was
amazing. It was like, oh New York was the right move for me.’

Holly Miranda: Meg Mac:

American singer-songwriter While on tour with D’Angelo, Australian singer-songwriter Meg
Holly Miranda brings on stage Mac noticed he always wore a hat. So she tried it out as well.
with her a special rock that ‘Once I started wearing it, I couldn’t perform without it. It feels
she picked up during a powerful when you wear a hat,’ she said.
meditative music event near
Joshua Tree National Park in
southern California. ‘So now I
carry it around and I feel like I
am carrying a little bit of that
energy or that power with
me,’ she said.

ALEX SCOTT FOR THE WALL STREET JOURNAL (5)

Bloc Party:
Kele Okereke, frontman for the English indie rock band Bloc Party, center, uses an iPod for his routine
vocal warm up before every performance, which gets him in the mood for singing. ‘When I pull it out,
people look at me a bit funny because not many people have iPods anymore,’ he said. ‘I still keep it real
with a BlackBerry, so it’s very useful to me to have my entire music library in one place.' Their lineup
also includes from left, Justin Harris (bass), Louise Bartle (drums) and Russell Lissack (guitar).
A24 | Monday, June 6, 2016 * * THE WALL STREET JOURNAL.

SPORTS
Injuries Take Toll on Mets
BY ANDREW BEATON
The Garden Staged
MIAMI—Please excuse Terry Col-
lins for needing to make a joke.
Ali’s Biggest Fight
“We may only have seven guys to- From “The Rumble in the Jun- months later, the pair continued
morrow,” he cracked before Sunday’s gle” to “The Thrilla in Manila,” Mu- their epic rivalry with 1975’s “Thrilla
1-0 loss to the Marlins. hammad Ali’s title fights spanned in Manila,” in which Ali prevailed
The Mets entered this series the globe. But the biggest battle of again by TKO after Round 14.
against the Marlins missing most of his career was reserved for New That ensured their epic rivalry
their starting infield—Travis d’Ar- York City. ended with Ali holding a 2-1 edge
naud, Lucas Duda and David Wright. in the ring, although that may be
Then when Yoenis Cespedes and
Juan Lagares went down with inju-
Take a Number underselling his record. The day be-
fore their second fight in New York,
ries on Saturday, Collins had all sorts Ali also prevailed over Frazier in the
of issues. On March 8, 1971, Madison marbles ring—on the city’s Sunday

LYNNE SLADKY/ASSOCIATED PRESS

He pulled Lagares from the game
to get his thumb examined by a doc-
tor, but couldn’t find one. “There was
no doctor to see Juan, I know that. If
anybody’s qualified, please step for-
ward now,” Collins said.
After Saturday’s game, Collins
tried calling Mets executives in New
York to inquire about roster moves.
He couldn’t connect with them.
So there’s definitely something
comical about all of this, making Col-
lins’s inclination to crack jokes un-
derstandable. Although there’s noth-
ing funny about the injuries
themselves or the threats they pose
to the season, they did survive the
weekend rather well. After all, they
took two of three games from Miami,
only losing against the utterly domi-
nant Jose Fernandez, who struck out
14 and kept the Mets scoreless on
Sunday.
The other reason to be cheery:
The Mets’ patchwork lineup showed
surprising promise. The Mets scored
six runs in each of Friday and Satur-
day’s back-to-back wins after a frigid
May during which the team averaged
only three runs per game.
They got key contributions from
catcher Rene Rivera, first baseman
James Loney and third baseman
Wilmer Flores, all of whom came
through with big hits. Backups Matt
Reynolds and Alejandro De Aza made
key contributions, while outfielder
Michael Conforto broke out of an 0-
for-20 slump at a time when his bat
is vital.
In Sunday’s loss, Matt Harvey had
his second consecutive stellar outing,
allowing just one run on four hits in
seven innings. This came after his
struggles had become so severe
there were talks of removing him
from the starting rotation, a question
Neil Walker was one of the few healthy starters in the lineup on Sunday.
The Injured List
A look at injuries to Mets’ position players.
PLAYER INJURY
Travis d’Arnaud C Rotator cuff strain
Lucas Duda 1B Back (stress fracture)
David Wright 3B Neck (Herniated disc)
Yoenis Cespedes OF Hip
Juan Lagares OF Thumb (sprained)
he defiantly rejected his last time out
with a seven-inning, two-hit shutout
against the White Sox. “Today was, I
guess you could say, a second step
from last start,” Harvey said.
As for the injuries, Cespedes is
day-to-day with a sore hip, an injury
that has flared up in the past but
isn’t considered serious. He was
taken out of the starting lineup Sat-
urday and pinch-hit on Sunday, with
the team hoping to have him back for
the upcoming series in Pittsburgh.
Lagares’s status is less clear. Dur-
ing Saturday’s game, he made a div-
ing catch to rob Ichiro Suzuki of an
RBI-hit but in the process injured his
thumb and later had to be removed
from the game. It has been diag-
nosed as a sprain before he visits
with doctors in New York, and he
said he hopes to be back in Pitts-
burgh for game time on Monday.
It’s also unclear how the Mets will
Square Garden was the site of his morning kids’ TV show, “Won-
“Fight of the Century” with Joe Fra- derama.” —Michael Salfino
zier. The showdown, in which Ali
was trying to reclaim the belt that
had been stripped from him for re-
fusing to be drafted, brought to-
gether two undefeated heavy-
weight champions, drew a
worldwide audience of 300 million
and was broadcast in 12 languages.
Ringside seats were scalped for
$1,000 (nearly $6,000 in today’s
money.) Each fighter earned the
equivalent of about $15 million to-
day, or about 17 times the salary of
STATUS the highest-paid baseball player of
DL; Began rehab assignment playing DH on Sunday the time, Carl Yastrzemski.
Fight of the Century
DL; Likely out until at least late June or July After a three-and-a-half-year ex- Some noteworthy facts from the
DL; Out a minimum of six to eight weeks ile from boxing, Ali returned a first bout between Muhammad Ali
Day-to-day; has flared up previously much different, less evasive fighter, and Joe Frazier.
Seeing doctor in New York on Monday content to battle the southpaw-
slugging Frazier toe-to-toe. After Date March 8, 1971
dominating the early going, Ali lost Madison Square
Venue
proceed: Can they weather the storm the vast majority of the remaining Garden
with a lineup filled with players who rounds according to the official Joe Frazier’s 26-0, 23 KOs
began the year in Triple-A, or will scorecards, with Frazier winning a record
they need to look for outside help? unanimous decision. But, unoffi- Muhammad 31-0, 25 KOs
The good news is that the her- cially, the United Press International Ali’s record
alded starting rotation is finally scored the fight a 7-7-1 draw. Ali Ringside seat $150 ($886)
clicking on all cylinders with Harvey suffered the only knockdown after (2016 dollars)
finally looking like his old self. Mets being hit flush with a Frazier left Scalper ringside $1,000 ($5,908)
starters have a 3.17 ERA on the sea- hook in the 15th round. But Frazier, (2016 dollars)
son, the second lowest rotation ERA his face badly swollen and mis- Crowd 20,455
in baseball, and that figure may even shapen, was in and out of hospital Guaranteed
drop with Harvey’s improved form. for two weeks following the fight. $2.5 million ($14.8
purse (2016 million)
Now the pressure is on for Harvey Ali’s rivalry with Frazier would dollars)
and the other Mets aces to dominate. continue after the latter lost his ti- Worldwide 300 million
“No matter what our lineup may tle to George Foreman. Their re- viewership
look like or injuries we have, you match at the Garden on Jan. 28, AP scorecard 9-5-1 Frazier
have to stay focused and do every- 1974 saw Ali take a narrow win by UPI scorecard 7-7-1 Draw
thing you can to put up zeroes,” Har- decision thanks to his tactic of Knockdowns Ali in Round 15
vey said. “We could have the best clinching Frazier by the back of the Frazier by
lineup in the world, we could have neck every time he tried to move in Result unanimous decision
the worst lineup in the world. Obvi- to attack. After Ali’s shocking upset
ously, our job is to go out and go as of Foreman in Zaire just nine WSJ
deep into the game as we can and UPI/PICTURE-ALLIANCE/DPA/AP
fight for zeroes.”

OLD-TIMERS’ DAY
MORE THAN A GAME

sunday, june 12
Arrive early!
ceremonies promptly begin at 11:30 a.m.

2:05 p.m.
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OOF
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even
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 MEDIA B5 | WEATHER B6 | CROSSWORD B6
BUSINESS & TECH.
Pentagon Hires
Foreign Supplier
TECHNOLOGY | B3
© 2016 Dow Jones & Company. All Rights Reserved.
GM Bets on Virtual Stores
Cadillac plans to turn is being hatched to convert a
portion of Cadillac’s 925 stores
some of its dealerships into virtual dealerships that
into VR showrooms; will be low on overhead and big
on sophisticated technology.
headsets, but no cars In a somewhat unprece-
dented way of moving metal,
Buyers walking into a Cadil- Cadillac President Johan de
lac dealer in the near future Nysschen will this month be-
could find an interesting thing gin looking for commitments
on the car lot: nothing. from some store owners will-
ing to set up showrooms
By Christina Rogers, where buyers can get a car
John D. Stoll and serviced or learn about prod-
Gautham Nagesh ucts via virtual reality head-
sets without getting behind
General Motors Co.’s luxury the wheel. Driving off immedi-
division has about three times ately with a new vehicle will
as many U.S. stores as German be impossible because these
luxury auto makers or Toyota stores won’t have inventory.
Motor Co.’s Lexus, but sells Virtual stores are a part of
only about half the volume. “Project Pinnacle,” an exten-
Short of steering around rigid sive retail-strategy overhaul by
state franchise laws and ham- Mr. de Nysschen first intro-
mering out financial settle- duced to dealers a few months
ments to shutter stores, a plan ago in closed-door meetings,
Oil Drillers Have a Few Sweet Spots Left
ANN SAPHIR/REUTERS
A drilling rig in the Permian Basin, a region that still yields solid returns for American oil producers.
Google’s Chrome OS Steals a March on Rivals
F
or most of my working and power, I increasingly
life, I have used Macs think it is the future of com-
at home and Windows puting.
PCs at work. But a couple of That view is gaining ad-
years ago, intrigued by a herents. In the first quarter,
change in the winds of com- Chrome OS devices outsold
puting— products using Apple Inc.’s
from the Mac OS for the first time.
desktop to Chrome OS devices still
the cloud— account for only 10% of per-
I decided to sonal-computer sales in the
give U.S. and 2.5% of PC sales
Google’s world-wide, according to
KEYWORDS Chrome- Linn Huang, a director of re-
CHRISTOPHER books a search at IDC. But IDC ex-
MIMS chance. pects sales of Chrome OS de-
Now, to vices to increase nearly 30%
my sur- this year, far outstripping
prise, I use the Chrome oper- the PC market’s overall
ating system for all my non- growth.
mobile computing. Here’s why I agree: For
Thanks to continuous im- most of what people need to
provements in its usefulness accomplish on a computer,
Alcohol Price
Ruling on Tap
BUSINESS NEWS | B6
* * THE WALL STREET JOURNAL.
dealers said. Hired by Chief
Executive Mary Barra in 2014
to turn the struggling luxury
maker around, Mr. de Nyss-
chen is revamping the way the
company compensates its deal-
ers by rewarding them less on
the basis of vehicles sold and
more on the way those dealers
mimic better performing lux-
ury brands with perks such as
free roadside assistance.
Company executives will
solicit commitments during a
roadshow that starts in June,
traveling to about a half-dozen
cities to win over dealers con-
fused or even angered by a
plan that could be seen as a
way to force the smallest of
dealers out of business, ac-
cording to GM and several
dealers. Mr. de Nysschen
wants to know which of five
tiers of dealers those store
owners want to fit in, includ-
Chromebooks have had notable success in the education market.
Chrome is just better.
Chrome was designed to
be an operating system that
relies on the cloud—basically
a machine that primarily
Large Dealer Footprint
Cadillac sells fewer vehicles in the U.S. than many luxury-car
rivals but has far more dealers.
ing whether some of the deal- 2,500
erships with the lowest vol-
umes would be willing to go to
tier 5, which is virtual.
Regarding virtual dealer-
ships, a GM spokesman said Ca-
2,000
dillac is working on the concept
and researching technologies.
Mr. de Nysschen came to Ca-
dillac amid GM’s ignition-switch 1,500
crisis and his aggressive stance BMW
to clean up a luxury brand in
346,023
disarray has been the subject of
VEHICLE SALES PER DEALER
some complaints within the 1,000
dealer body, according to deal- Infiniti
ers and executives familiar with 133,498
the matter.
Many dealers view Mr. de 500
Nysschen’s ability to push
through Project Pinnacle as a
test of his staying power at a
company that has in the past
0
squeezed out managers who 200
ruffled too many feathers. Mr. APPROXIMATE NUMBER OF DEALERS
de Nysschen wasn’t available Sources: the companies; McKinsey; Automotive News
Please see DEALER page B2 THE WALL STREET JOURNAL.
BY ERIN AILWORTH based on oil priced at $45 a
barrel, operators say; premium
America’s oil and gas pro-
ducers are still finding places
where they can prosper even
wells are generating greater
profit.
In part, returns benefit
at today’s lower prices.
Companies are refocusing
their drilling efforts on the
from access to established
pipeline, storage and other in-
frastructure. Drillers in both
Permian Basin in Texas and areas have been able to find
New Mexico and rushing into energy stacked in layers un-
a part of Oklahoma known as derground. Some producers
the Stack where they can also are tapping holdings that
claim solid returns. were acquired long ago, when
While small in terms of acquisition costs were lower.
overall production, the move Continental Resources
is gathering steam, even as Inc., which helped spark the
drilling in places like North North Dakota boom, says its
Dakota and Pennsylvania re- best wells today are in the
mains sluggish. Stack—a well-trod part of
Wells in the Permian and Oklahoma near Cushing, Okla.,
the Stack—which stands for a major oil storage and trad-
Sooner Trend, Anadarko basin, ing hub. The company says its
and Canadian and Kingfisher drilling there can yield a 75%
counties—are racking up be- return with oil at $45 a barrel.
tween 10% and 30% returns Please see OIL page B2
KANSAS
Cushing
Stack Oklahoma City
TEXAS
Cana d ian
OKLAHOMA
100 miles
Source: RS Energy Group THE WALL STREET JOURNAL.
mobile operating systems.
Chrome is fast, even on
relatively weak hardware,
which is why a decent
LARAINE WESCHLER/REPUBLICAN-AMERICAN/AP
Chromebook can be had for
less than $300. Like a mobile
OS, it updates automatically.
But unlike every other OS
I’ve ever used, these updates
are invisible, unavoidable,
occur only in the back-
ground, and never seem to
slow down the machine.
All of this is deliberate,
says Rajen Sheth, a director
of product-management for
Chrome. “What resonates
with users is simplicity, secu-
runs a web browser. As a re- rity, shareability and speed,”
sult, it does things that no he says.
other desktop operating sys- Chromebooks have seen
tem does, but that we have tremendous success in the
come to take for granted in Please see MIMS page B4
Djokovic Makes
History in France
SPORTS | B7
Monday, June 6, 2016 | B1
Lexus
344,601 vehicles
sold in 2015
Mercedes
372,977
Acura Cadillac
177,165 188,794
Volvo
70,046
400 600 800 1,000
Combining
Medicines
For Cancer
Gets Costly
BY PETER LOFTUS
CHICAGO—Cancer research-
ers see promise in giving pa-
tients combinations of multiple
drugs that are proving more ef-
fective than one or two. But the
strategy poses a dilemma for
health insurers and patients:
even higher prices.
Researchers said at a medi-
cal meeting here Sunday that
adding a third drug, Johnson &
Johnson’s Darzalex, to an older
two-drug combination for pa-
tients with multiple myeloma
significantly slowed the blood
cancer’s growth compared with
the older two-drug combination
alone in a clinical trial.
But the combined cost of the
Tulsa drugs—based on current list
prices and the dosing schedule
used in the study—would be at
R.
least $180,000 for the first full
year of treatment for the aver-
age patient. Darzalex, which
was introduced last year, costs
about $134,550 for the first
year and $76,050 each year
thereafter, a J&J spokesman
said.
High prices for new cancer
drugs and repeated increases
for some older ones have
sparked criticism from doctors,
patients and insurers, who say
the costs are straining budgets
and often seem unrelated to
how well the drugs work. The
spread of combination treat-
ments threatens to heighten
this tension.
“We have to think about if
the benefit from combination
therapies is worth the cost,”
Daniel Goldstein, a medical on-
cologist at Rabin Medical Center
in Israel, said in an interview
Friday at the annual meeting of
the American Society of Clinical
Oncology in Chicago.
Steve Pearson, president of
the Institute for Clinical and
Economic Review, a nonprofit
that assesses the cost-effective-
ness of drugs, suggested drug
companies work together to of-
fer “group discounts” on all
drugs in a combination regimen.
This would allow combination
Please see DRUGS page B2
 B2 | Monday, June 6, 2016 * * THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS NEWS

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-B Glencore ...................... R7 Resources..................B2

Acer.............................B4
Alcoa............................R7
Alibaba........................B4
American International
Group.........................C1
AMG Advanced
Metallurgical.............R7
Anheuser-Busch InBev.B5
Apple...........................B1
BNSF Railway.............B3
BP ................................ C1
C-D
Calamos Asset
Management.............R9
Carlyle Group .............. C1
Chevron.....................A13
Comcast.................B5,R5
Globalfoundries...........B3
Greylock Partners.......C3
GungHo Online
Entertainment..........B4
Halliburton................R10
Home Depot................R5
I-J
International Business
Machines...................B3
Johnson & Johnson....B1
J.P. Morgan Chase......C6
L-M
LendingClub.................C3
Lockheed Martin.........B3
Macquarie Group.........C1
Marketo.......................C6
McDonald's..................C1
Procter & Gamble.......R5
Qlik Technologies........C6
R-S
Retrophin .................... B6
Rio Tinto ..................... R7
Rocket Lab..................A7
Royal Dutch Shell..A1,C1
SABMiller...............B5,B6
Salesforce....................C6
Saudi Aramco..............C3
Signet Jewelers..........B5
SoftBank Group..........B4
Supercell......................B4
T-U
Tencent........................B4
Tesco............................B6
Tesla Motors...............R5

SCOTT OLSON/GETTY IMAGES

Continental Resources. B1
Credit Suisse...............C6
Cypress Semiconductor B3
Dell..............................B4
Demandware...............C6
Diageo ......................... B6
E-F
Eli Lilly.........................C1
ENI...............................A1
First Round Capital.....C3
Microsoft ............... B4,R5
Monsanto..................R10
Moon Express.............A1
Morgan Stanley .......... C6
N-O
NantHealth..................C6
NantKwest .................. C6
Newfield Exploration..B2
Occidental Petroleum.B2
Opower........................C6
Textura ........................ C6
Thoma Bravo...............C6
Thomson Reuters.......R2
Toyota Motor..............B1
Turing PharmaceuticalsB6
UBS..............................C6
V-W
Valeant Pharmaceuticals
International.............C1 GM has spent 15 years investing heavily in the Cadillac brand—but it still falls far behind foreign rivals in terms of profit and volume.
Verizon CommunicationsC1

G-H
Gannett.....................R10
GEA Group .................. R7
General Motors...........B1
Oracle...........................C6
P-Q
Pernod Ricard..............B6
Pioneer Natural
DEALER
Vista Equity Partners.C6
Vouch Financial...........C3 Closing dealerships or dis- virtual model will have tester that is costly and threatens to
WeWork ...................... B4 continuing brands is costly cars on site, which can be erode the brand’s luxury ca-
WholeRen EducationA14 due to franchise laws that loaned to people getting their chet. Cadillac has an 88 days’
have long protected individu- car serviced or used in test supply of sedans sitting on

INDEX TO PEOPLE Continued from the prior page

A-B
Anderson, Jamie.........R6
Arora, Nikesh..............B4
Bernhardt, Keith.........R2
Boswell, Brian.............R2
Brafman, Benjamin.....B6
Brodsky, Reed.............B6
Browne, Jeremy..........B6
C-D
Calamos, John P.........R9
Cameron, David...........B6
Canup, James..............R2
Chappell, Bill...............B3
Colligan, Megan..........B5
Cooperman, Leon......R10
Diaz, Francisco............C2
F-G
Fabian, Matt................C2
Farmer, Nancy.............R2
Feirstein, Andrea........R2
Ferraro, Dominick.......R2
Freeman, John............B2
Frost, David.................B6
Ghizzoni, Federico .... R10
Glasser, Scott ............. R5
Glownia, Rob...............R9
Greebel, Evan..............B6
Gross, Michael............B4
Gudger, Andre.............B3
H-J
Hamm, Harold.............B2
Hanke, Steve...............R7
Hartwig, Robert..........C1
Hensarling, Jeb...........C1
Hirsch, Susan..............R6
Hollub, Vicki................B2
Huang, Linn.................B1
Jarrett, William..........R4
Joy, Tom......................R6
K-L
Kagan, Michael...........R5
Kantrowitz, Mark ....... R2
Kitces, Michael...........R4
Kochan, James............C1
Koudounis, John ......... R9
Laird, Adam.................R6
Landy, Douglas............C6
Lee, Yee.......................C3
M-N
Miller, John.................C2
Newsome, James........C3
O-P
O'Connor, Emily .......... C3
O'Flynn, Denis.............B6
Pace, Scott..................A7
Papa, Joseph...............C1
Pearson, Michael ........ C1
Piper, Mike..................R4
R-S
Ranson, David.............R9
Redstone, Sumner......B5
Renzi, Matteo...........A12
Richards, Bob..............A7
Rodriguez, Manuel......C1
Ryan, Paul ................... C6
Salmond, Alex.............B6
Schimmelbusch, Heinz.R7
Schwartz, Norty..........B3
Sheth, Rajen...............B1
Shkreli, Martin............B6
Smith, Andreas
Whittam ................... R6
Soon-Shiong, Patrick..C6
Spiegel, Michael..........C3
Stockwell, Tim............B6
T-W
Taormina, Rick ............ C2
Tarullo, Daniel.............C3
Thill, Brent..................C6
Thomas, Jason............C1
Wagner, Che................C6
Waters, Maxine .......... C6
Wright, Robert............R9
Wynne, Geoffrey L ..... C3
to comment for this article.
One long-held belief among
dealers he has come to em-
brace is that Cadillac’s dealer
count has been considered a
valuable asset because many
of these franchises are at-
tached to larger-volume Chev-
rolet stores that are closer to
much of the population than
other luxury stores. Even if a
Cadillac store sells only a few
cars a month, that is a few
cars more than the brand oth-
erwise would have sold.
Mr. de Nysschen’s support-
ers say keep their franchise,
lose the inventory.
“They can still sell the same
volume,” said Will Churchill,
owner of Frank Kent Cadillac
in Fort Worth, Texas, and head
of Cadillac’s dealer council.
“They don’t have to stock the
15 cars and hope that they
have the right one…the data
shows they probably don’t.”
als from widespread consoli-
dation by the manufacturer.
GM and Fiat Chrysler Automo-
drives, Mr. Churchill said. Pro-
spective buyers can learn a lot
about a Caddy by putting on
dealer lots, according to Ward-
sAuto.com, a number that ex-
ceeds levels at Germany’s
biles spent billions in 2009 to the virtual-reality goggles, he three luxury makers.
cancel agreements with thou- said. Because Cadillacs are In a round table interview
sands of dealers. made in the U.S., orders with reporters earlier this
Some dealers in lower-vol- should be quickly filled. year, Mr. de Nysschen said GM
ume locations will stop short Mr. de Nysschen’s virtual knows the mass market ex-
of going virtual. Brian Hamil- concept is new, and strategies tremely well, ranking as the
ton, principal at Midway Auto that eliminate inventory have No. 1 U.S. player and No. 3 in
Dealerships in Kearney, Neb., been rarely employed in the U.S. the world in terms of sales.
said even a limited amount of While some dealers have Auto makers have long
inventory is necessary and voiced concern about Project flooded dealer lots for two rea-
doubts many dealers will want Pinnacle’s potential to squeeze sons: car companies book reve-
to entirely ditch the tradi- out small-volume stores, most nue on production volumes, not
tional selling model. say Cadillac needs to change. retail sales. An overabundance
Mr. Hamilton’s state is an Once the benchmark for pre- of output can boost revenue,
interesting test case for Cadil- mium automobiles, GM has and the problem can be taken
lac. Once home to 22 stores, spent 15 years investing heavily care of later via discounts or
the count has shrunk to eight in the brand—but it still falls far production cuts. Car buyers
after GM’s 2009 bankruptcy behind foreign rivals in terms of also are used to having ample
and Cadillac’s volume declines. profit, reputation and volume. selection to choose from.
Still, that is quadruple what Having so many outlets has Mr. De Nysschen said this
BMW, Lexus or other key lux- helped the domestic brand isn’t the case with luxury car
ury competitors have in the lure people who otherwise buyers. “I don’t think Hermès
state. “Hopefully we can use wouldn’t consider a Caddy, but or Rolex are famous because
that to our advantage.” it also requires GM to produce they have a sale every month.
Those who do adopt the a glut of inventory—a practice They have brand cachet.”

DRUGS vival or shrank tumors in a sig-

nificant percentage of patients.
But many patients haven’t
benefited from the drugs,
given the cost of these drugs?”
Last year, the U.S. Food and
Drug Administration approved
the first immunotherapy com-
eloma had worsened despite
at least one prior treatment
with other drugs. About half
were given the drugs Velcade
Continued from the prior page prompting researchers to test bination, Bristol-Myers’ Opdivo and dexamethasone. The other
treatments to meet cost-effec- them in combination with other and Yervoy, to treat melanoma. half were given Darzalex in
tive targets without requiring medications, including different It costs more than $250,000 a combination with those drugs.
only the newest addition to of- immunotherapies, chemother- patient for the first full year of The addition of Darzalex re-
fer a big discount, he said. apy or drugs that target genetic treatment. duced the risk of disease pro-
Some drugmakers, including mutations. AbbVie Inc. and its partner gression or death by about
Roche Holding AG, say they Keytruda is being tested in companies are testing a combi- 61% versus the older treat-
ALISON YIN FOR THE WALL STREET JOURNAL

would consider discounts on various combinations with nation of the drugs Imbruvica ment, at a median follow-up
combinations, but note there more than 50 other drugs, and Venclexta to treat a form period of about 7½ months af-
are challenges in the U.S. be- while Opdivo is being tested of leukemia. For their currently ter the start of treatment. Side
cause the health-insurance sys- with about 40 other drugs, ac- approved uses, Imbruvica costs effects associated with the
tem is fragmented. J&J said it cording to Evaluate Ltd., a at least $116,000 a year and Darzalex-containing regimen
couldn’t project pricing for the drug-industry research firm. Venclexta costs $109,500 for included blood-platelet defi-
Darzalex-containing combina- Roche Holding’s Genentech the first year of treatment. ciency and anemia.
tion, which hasn’t been ap- unit, which recently began sell- In an interview, AbbVie Velcade is co-marketed by
proved by U.S. regulators. ing the immunotherapy Tecen- Chief Executive Richard Gon- Takeda Pharmaceuticals Inter-
Much of the push for com- triq, is running about 50 clini- zalez acknowledged the high national Co. and J&J, and dex-
binations centers on a new cal trials of combinations of cost of multidrug combina- amethasone is a generic drug
wave of drugs that harness the two or more cancer drugs, A scientist worked on a new anticancer drug called Imbruvica in tions. “In the grand scheme of available from multiple com-
body’s immune system to fight Chief Medical Officer Sandra a Pharmacyclics Inc. lab in Sunnyvale, Calif., in 2014. things, it’s worth it” if they panies. In the study, patients
cancer, including Merck & Co.’s Horning said in an interview. lead to cures or long remis- stopped taking Velcade after
Keytruda and Bristol-Myers Daniel O’Day, CEO of Roche’s breast-cancer drug Perjeta month. sions, he said. An AbbVie six months of treatment. A six-
Squibb Co.’s Opdivo, each of pharmaceuticals unit, said the lower than many other new Robert Vonderheide, a can- spokesman said the Imbru- month supply costs about
which costs more than $12,500 company has had discussions cancer drugs because the com- cer researcher at the University vica-Venclexta combination is $45,000, a Takeda spokes-
a month. with health insurers “to move pany knew it would be used in of Pennsylvania, said in an in early clinical studies, and woman said. Patients took
Initially, these drugs were to a system where we can get combination with its older ASCO presentation that the that no cost has been set. Darzalex until they no longer
approved for use as single combination-based pricing in breast-cancer drug Herceptin. choices of drugs to test in com- The new study of J&J’s benefited from the drug.
agents, based on clinical trials the U.S.” A Roche spokeswoman Perjeta costs $6,300 a month bination were “dizzying.” But Darzalex included nearly 500 —Ron Winslow
showing they prolonged sur- said the company priced its and Herceptin costs $5,500 a he added, “Can we afford it, patients whose multiple my- contributed to this article.

OIL cline elsewhere.

“Now we’re talking about
plays that can break even or
do better at $45 oil,” said
told investors that the
area would be the company’s
highest priority.
“We feel like that is where
streaming into North Dakota,
pushing rental prices sky high
and spawning hotel construc-
tion as they looked for work
Continued from the prior page John Freeman, an energy ana- we get the most value for the on or around one of the more
The company recently an- lyst at Raymond James & As- dollars we invest,” she said. than 200 rigs drilling in the Custom Interior Protection For Whatever You Drive
nounced a gusher of a well in sociates. Pioneer Natural Resources Bakken Shale formation. 630-769-1500 • 800-441-6287
the field. Another area where produc- Co., currently the most active Today, energy is still draw-
“These wells are among the tion is still rising is the Perm- driller in the Permian, said it ing workers to places like El www.WeatherTech.com
best-performing wells I’ve ian Basin, which spans parts of is planning to add more rigs to Reno, a city of roughly 20,000
been involved with in my en- West Texas and New Mexico. its operations—one or two at about 30 miles west of Okla-
tire career,” Harold Hamm, The Permian, a major oil-pro- a time—when oil prices hit homa City, where Hallibur-
Continental’s chief executive, ducing area for decades, has $50 a barrel. ton Co. has an office and re-
told investors last month. Of been reborn as the combination Chevron Corp. said it has pair facility.
the 57 rigs currently drilling in of horizontal drilling and hy- identified some 4,000 wells in “Our motels are still pretty
Oklahoma, about half are in draulic fracturing have helped the Permian that can generate much full,” said El Reno Mayor
the Stack, and 11 of those are companies tap oil trapped in a 10% return at that price, as Matt White. “We really are ex-
Continental’s, the company dense rock formations. well costs in the area have cited about the energy play
said. Operators there now pump fallen even as output in- out here. It’s a big deal for us.”
As U.S. oil futures, which more than 2 million barrels creases. PayRock Energy LLC, a pri-
closed on Friday at $48.62 a of oil a day, more than in any “We see our activity in the vate-equity-backed outfit that
barrel, rebounded and recently other U.S. drilling region, ac- Permian as being very, very, buys acreage to drill and flip,
approached $50 a barrel, some cording to estimates from the strong,” Joseph Geagea, Chev- said there has been so much
large and midsize energy com- U.S. Energy Information Ad- ron’s executive vice president interest in its Stack property
panies have said they are ministration. of technology, projects and that the company has put all
planning to step up production The Permian’s low produc- services, told investors in its 58,000 acres on the mar-
in lower-cost areas. The gains tion costs are luring compa- April. ket.
aren’t likely to tip the scales nies such as Occidental Petro- The fortunes of these areas “Little guys, private guys, Laser Measured
toward greater production or leum Corp. away from other could change as quickly the public guys, in-basin guys, out-
hiring nationwide, but they fields. Vicki Hollub, Occiden- old ones. Just a few years of-basin guys—you name it,” FloorLiner™
are tempering some of the de- tal’s chief executive, recently ago, energy workers were said John Zimmerman, Pay-
Rock’s vice president of fi-
nance. “Everybody who is in
the Stack wants more of it.”
Case in point: Newfield Ex- “Factory Direct” Thousands of American made,
ploration Co. recently paid custom applications in stock!
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 THE WALL STREET JOURNAL. Monday, June 6, 2016 | B3

BUSINESS NEWS

Pentagon Hires Foreign Chips Supplier

Globalfoundries, owned
by Abu Dhabi, reaches
deal for microchips
used in jets, satellites
BY DOUG CAMERON

The Pentagon has decided

to rely on an Abu Dhabi-owned
company to supply the most
advanced microchips used in
U.S. spy satellites, missiles and
combat jets.
A senior U.S. Defense De-
partment official said in an in-
terview that the Pentagon has
reached a seven-year agree-
ment with Globalfoundries
Inc. to supply the microchips.
Terms weren’t disclosed.
The agreement ends months
of uncertainty over supplies of

such chips but is just the first
step in a broader effort to pro-
tect sensitive military systems
from cyberattacks and other
tampering.
Globalfoundries last year
acquired from International
Business Machines Corp. the
two plants—in Burlington, Vt.,
and East Fishkill, N.Y.—that
make the chips. IBM had been
the near-monopoly supplier of
the chips to the Pentagon for
more than a decade and paid
Globalfoundries $1.5 billion to
take the unprofitable business
off its hands.
Lawmakers and watchdogs
such as the Government Ac-
countability Office had ex-
pressed concern about the
Pentagon’s reliance on a single
source for some of its state-of-
the-art chips. “Due to market
trends, supply chain globaliza-
tion and manufacturing costs,
the [Defense Department’s] fu-
ture access to U.S.-based mi-
croelectronics sources is un-
certain,” the House Armed
Services Committee said in a
recent report.
The new Globalfoundries
agreement, which was previ-
ously undisclosed, runs until
2023. Meanwhile, the Pentagon
will seek to identify more sup-
pliers and expand protections
needed to prevent chips from
being tampered with or falling
Globalfoundries will supply advanced microchips for U.S. military equipment, including the F-35 combat jet, under a seven-year pact with the Defense Department.
into the wrong hands.
The Pentagon also is moving
away from a reliance on purely
U.S.-made chips, widening its
net of vendors to keep up with
changes in commercial tech-
nology that are outpacing the
defense world. “Our goal is to
look globally,” said Andre
Gudger, the Pentagon’s deputy
assistant secretary for manu-
facturing and industrial base
policy. “We want access to the
latest and the greatest.”
The plants where chips are
assembled have long been
viewed by the Pentagon as a
vulnerable part of the military
supply chain. The biggest con-
cerns were over technology
theft and any insertion of ele-
ments that could be remotely
triggered to access equipment,
or so-called kill switches that
render equipment useless.
In 2004 the Pentagon
launched a vetting system of
what are now more than 70
companies, including about 20
so-called trusted foundries.
But the two heavily guarded
former IBM factories in Ver-
mont and upstate New York
produced almost all of the cus-
tom-made chips used in the
most sensitive weapons sys-
tems, effectively leaving the
government reliant on a single
supplier in the U.S.
With the semiconductor in-
dustry’s center of gravity shift-
ing to facilities in Asia that
churn out hundreds of millions
of chips for consumer-elec-
tronics devices, the Pentagon
has much less influence on an
industry it helped fund and de-
velop in the 1960s and 1970s.
While military users ac-
counted for as much as one-
quarter of global chip demand
in the early 1980s, that had
fallen to less than 0.1% by the
turn of this decade, according
to the Trusted Access Program
Office, which coordinates buy-
ing for the Pentagon and intel-
ligence agencies.
The military relies on cus-
tomized chips rather than the
mass-produced ones used in
cellphones. For instance, while
the new F-35 combat jet con-
tains several hundred ad-
vanced chips—manufacturer
Lockheed Martin Corp. won’t
disclose the exact number—
production runs for the most
sensitive military-grade pro-
cessors range from a few
dozen to 1,000. That compares
with tens or even hundreds of
millions for consumer-elec-
tronics devices.
The military relies
on customized chips
rather than mass-
produced ones.
Chip makers have shifted
their focus to the larger con-
sumer market, where competi-
tion led to technology being
refreshed in months or weeks,
while military chips ordered in
small numbers might be up-
graded once or twice a year,
industry officials said.
“We have fallen behind in
what our typical electronics
have in them,” said Bill Chap-
pell, a program director at the
Pentagon’s Defense Advanced
Research Projects Agency,
known as Darpa.
Opening the military market
to more producers of the most
advanced commercial chips
would allow the Pentagon to
keep pace with technology de-
velopments, officials said. But
that will require new ways to
monitor chips to ensure they
haven’t been tampered with,
whether made in the U.S. or
overseas. For example, Darpa
is developing a tiny tagging
device for chips that can be
embedded in processors from
any manufacturer and used to
detect malicious content.
“There’s a lot of wariness
and concern, but it’s a great
opportunity to open the door
to a much greater supply
chain,” Mr. Chappell said.
Mr. Gudger, the Pentagon
official, said the Darpa technol-
ogy is only one avenue being
explored. While others are
largely classified, options in-
clude “blind” manufacturing
where chip makers produce in-
dividual parts that are later as-
GARY CAMERON/REUTERS
sembled in a secure facility.
The work on vetting and
tagging chips has also at-
tracted interest from other in-
dustries, including utilities,
looking to counter the rising
threat of cyberattacks.
Globalfoundries—which has
significant operations in Ger-
many, Singapore and upstate
New York—provides the Penta-
gon’s immediate needs. But a
coalition of U.S. chip makers
including Cypress Semicon-
ductor Corp. has been pressing
the Pentagon to help fund up-
grades to fabrication plants
owned by U.S. companies to al-
low them to take on the most
sensitive work.
For some, the main safe-
guard remains keeping the
trusted-foundry program fo-
cused on domestic manufac-
turing. “That [chip] foundry
needs to be in the U.S.,” said
Norton Schwartz, Air Force
chief of staff from 2008 to
2012 and now president of
Business Executives for Na-
tional Security, an industry
trade group.

The most expensive Mercedes-Benz® ever made.

RICHARD VOGEL/ASSOCIATED PRESS

Rarer than a Stradivarius violin.

Union Pacific is one of the two major railroads serving Southern California ports, along with BNSF.

Rail Projects Stir Tension Not actual size.

BY LAURA STEVENS CALIF.
double that of a smaller ship. Shown is model in Pearl White finish.
Also available in Ruby Red finish.
AND ERICA E. PHILLIPS L.A. From the docks, much of that

How to Park $11.7 Million

Los Angeles
cargo is trucked to a rail ter-
The fate of BNSF Railway minal.
Co.’s new terminal near the Current As larger loads arrive,

Port of Los Angeles is now in
jeopardy even though it has
been in development for 10
years at a cost of more than
$50 million and would provide
badly needed rail capacity.
In March, a judge halted the
railroad’s plans, ruling its en-
vironmental review wasn’t
properly done. Opponents of
the project, which include
nearby businesses, neighbors,
air-quality regulators and the
City of Long Beach, had dug in
their heels over the expected
increase in truck traffic, pollu-
tion and noise.
BNSF is now deciding
whether to appeal, negotiate,
or abandon the effort.
The project was already
costly, and “it now appears as
though it has become even
more expensive,” said Stevan
Bobb, the railroad’s chief mar-
keting officer. With a price tag
of $500 million, “the real
spending was yet to come.”
Railroad expansion plans
nationwide are running afoul
of communities and environ-
mental activists with increas-
ing frequency. Permitting dis-
putes are becoming prevalent,
given the high stakes at some
of the nation’s biggest ports
where changes within the past
couple of years in industries
such as crude-by-rail and
world-wide shipping are in-
creasing the need for rail ca-
pacity.
Federal regulators have
flagged one potential route for
an 11-mile rail extension at
Port Canaveral, Fla., as poten-
tially “not reasonable or feasi-
ble.” In Maryland, officials last
year put on hold an air-permit
application for a crude-by-rail
BNSF
terminal
110
South Gate 710
105
Downey
Compton
Paramount
Lakewood
405 Union Pacific
terminal
Proposed
BNSF Long Beach
terminal
Port of
Port of Long Beach
Los Angeles
P a c i fi c O ce a n
THE WALL STREET JOURNAL.
terminal in Baltimore pending
more information from the de-
veloper. In Oakland, a new
coal-shipping facility under
development is now facing op-
position after nearby residents
balked at its use for transport-
ing the commodity to Asia.
Within the next five years,
U.S. seaports and their pri-
vate-sector partners estimate
spending $155 billion on ex-
pansions and improvements—
including on-dock rail infra-
structure—to accommodate
large ships.
In the last three years, as
the world’s biggest ocean-
shipping companies formed al-
liances to operate more effi-
ciently they also began
pooling their container cargo,
sending it on bigger Post-Pan-
amax ships, which will fit
through the newly expanded
Panama Canal.
Now when a ship arrives in
Los Angeles, for instance, it is
carrying larger loads, often
on Your Desktop
many in the industry say rail
3 miles
capacity needs to be in-
creased to keep up with the
inflow of containers. A lack The 500K Special Roadster is one of the rarest and
5 of capacity can grind port
operations to a halt as con- most-sought after automobiles ever built.
tainers stack up and are un-
able to leave. Rail capacity is
already tight at the Ports of
I t's hard to deny that one of the signature models of Mercedes-Benz® is the 500 series.
So many striking and elegant bodies would grace the stalwart
chassis. The 500K's of the 1930s were beautiful, elegant,
605 Los Angeles and Long Beach,
with container volumes and exclusive models often outfitted with voluptuous
projected to grow 25% by coachwork and sold to the wealthiest of clientele.
2020, and more than double The most ravishing model of this species was the two-
by 2035. Railroads say they seater 500K Special Roadster launched in 1936. It was
must get ahead of the
a limited production cabriolet, in total less than 30
growth.
were made, adding to its near-mythical qualities. In its
BNSF and Union Pacific
Corp. are the only two major day it went for top dollar—over $106,000. Today, these
railroads serving the South- ultra rare masterpieces are going for millions. In 2012,
ern California ports. But a Special Roadster fetched more than $11.7 million
both have run into trouble at auction at the Pebble Beach Concours d'Elegance. Die-cast metal body features doors, hood
and trunk that open, steerable wheels
with their expansion plans. The masters at Maisto® produced this die-cast metal that roll, and four wheel suspension.
Currently, the closest BNSF
terminal to the ports of Los
replica capturing the sexy curves and sumptuous coach- Available in Ruby Red finish.
Angeles and Long Beach is work of the full-size model in striking detail. Just shy
roughly 25 miles away. Its of a foot long, and available in pearl white or ruby red. You don’t need to spend millions to
new terminal would be 4 showcase your impeccable taste. Sold! To the discerning reader for $99!
miles away from the ports. Your satisfaction is 100% guaranteed. Test drive the Special Roadster for 30 days. If for any
Meanwhile, Union Pacific has reason you are not completely satisfied, simply return it to us for a full refund of your purchase
been locked in what it calls
“environmental review pur-
price. But we’re sure that once you park this beauty in your house you’ll be sold.
gatory” at the ports for Comes factory sealed in its original packaging in order to retain its status as a highly collectable item.
nearly a decade as it tries to
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 B4 | Monday, June 6, 2016
SoftBank to Unload GungHo Stake
HITOSHI YAMADA/NURPHOTO/ZUMA PRESS
SoftBank Group Corp. is
set to sell most of its stake in
GungHo Online Entertainment
in a deal valued at about ¥73
billion, or roughly $685 million.
GungHo, whose mobile on-
line game “Puzzle and Drag-
ons” is shown above, said it
plans to buy back the stake
through a tender offer starting
within 20 days from June 3 for
MIMS
Continued from page B1
U.S. education market. In
schools they now outsell all
other devices combined,
thwarting Apple’s push into
education with the iPad.
The next challenge is to
leap from schools and hobby-
ists like me to the business
world, long dominated by
Microsoft Corp.’s Windows
operating system.
2 Million
Number of Android apps—
almost all of them—that
Chromebooks will be able to
run by October, Google said.
Mr. Sheth says that
Chromebooks will succeed in
part because of how easy
they are to administer.
Google seems to have
learned a great deal since it
launched Chrome OS in 2011,
when Google claimed that
75% of business users on
Windows could switch.
One key lesson: to crack
the business market, tech
companies have to satisfy
corporate information-tech-
¥294 a share. Shares of
GungHo closed at ¥302 Friday.
The move comes a week
after the telecom giant said it
was selling its shares in Ali-
baba Group Holding Ltd. in
which SoftBank could raise
about $10 billion in total.
Softbank’s portfolio of video-
game companies is an area that
is under scrutiny from company
nology professionals, who
choose, or help choose, sup-
pliers.
Starting in late 2014,
Google introduced Chrome-
books for Work, offering fea-
tures important to IT admin-
istrators, like security
measures including VPNs,
single sign on and digital
certificates. The package
comes with a new revenue
stream for the Alphabet Inc.
unit, in the form of $50 an-
nual per-seat fees for
Chromebooks for Work.
At the same time, the
companies that make
Chromebooks, including Dell,
HP and Acer, are rolling out
more powerful—and more
expensive—devices aimed at
businesses.
The new laptops include
bigger and better screens,
keyboards and trackpads;
faster processors for users
who keep dozens of tabs
open; and cases made of car-
bon fiber and aluminum.
Finally, Google recently
announced that by October,
Chromebooks will be able to
run nearly all the two million
Android apps. That will make
Chromebooks, long thought
of as having limited function-
ality without an internet con-
nection, dramatically more
useful. Existing Chromebooks
President Nikesh Arora, who in
March was put in charge of its
international investments and
operations, a person familiar
with the matter said.
SoftBank is also in talks
with internet company Ten-
cent Holdings Ltd. of China to
sell its majority stake in Su-
percell Oy, the Finland-based
“Clash of Clans” maker, accord-
Booking Up
U.S. Chromebook shipments
10 million
8 even thousands, of old appli-
6 Google’s solution is to run
4
2
0
2013 ’14
Source: IDC
THE WALL STREET JOURNAL.
can work fine offline, but
only with Google’s apps. Be-
ing able to use things like
Microsoft’s Office suite for
Android tablets offline will
be big for users who depend
on such software.
“We’re seeing that there’s
a good amount of interest for
Chrome in large U.S. enter-
prises,” says Mr. Huang. By
2018, IDC projects that 25%
of Fortune 500 companies
will be issuing Chromebooks
to their employees.
Even so, the challenges
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BUSINESS NEWS
ing to people familiar with the
matter.
Any sale of such assets
would help shore up Soft-
Bank’s balance sheet, which is
saddled with more than $80
billion in net interest-bearing
debt, about one-third of which
is tied to its struggling U.S.
mobile-carrier unit Sprint Corp.
—Atsuko Fukase
facing Chrome in the busi-
ness world are substantial,
says Mr. Huang. One of the
biggest is simply inertia. The
decadeslong dominance of
9M projected
Windows means many busi-
nesses have hundreds, or
cations that run only on
Windows. Right now,
these applications on Win-
dows servers and allow
Chromebooks to connect to
them remotely—essentially,
to put these legacy applica-
tions in the cloud.
In the long run, Chrome-
’15 ’16
books could prove to be a
temporary blip in the history
of computing or the thing
that finally ends the domi-
nance of Windows in the en-
terprise. My bet is that
Chrome will land somewhere
in between—part of the ever-
growing menagerie of tech-
nology we all use, including
mobile and desktop operat-
ing systems.
But I am also willing to bet
that Chrome will be a bigger
business for Google than any-
one has anticipated, and that
Apple and Microsoft, which
have been, by turns, either
dismissive of or defensive
about Google’s move into
their traditional strongholds,
should take notice.
C U S T O M E R R AT E D
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THE WALL STREET JOURNAL.
U.K. Tries Using
Humor to Boost
Voter Turnout
Election regulator enlists shiny penguin as a
mascot for its ads about the EU referendum
BY STU WOO
LONDON—The U.K.’s elec-
tion regulator wants people to
register by Tuesday for this
month’s vote on whether Brit-
ain should leave the European
Union. That is why its TV and
internet ads talk about a shiny
penguin.
“This type of humor is
quirky and random, which
could be described as a type
of British humor,” said Emma
Hartley, head of campaigns at
the Electoral Commission, in a
statement.
The Electoral Commission,
an independent body set up by
the U.K. Parliament, is follow-
ing a classic corporate mar-
keting strategy: trying to be
funny. Its goal isn’t to sell
candy or cars, but rather to
maximize voter registration
and participation for the June
23 referendum.
The Commission found in a
2014 study that 7.5 million
people weren’t correctly reg-
istered to vote. In addition,
election analysts and betting
websites predict a voter turn-
out for the EU referendum to
be between 50% and 59%,
said Matthew Goodwin, a
University of Kent political
scientist. That would be
slightly lower than the 66%
turnout for the 2015 general
election but higher than that
of recent referendums in the
U.K., he said.
“Europe has not dominated
the minds of the mass public,”
Mr. Goodwin said. “It has not
been a highly salient issue.”
He added that interest could
rise as campaigning intensifies
in coming weeks.
To do its job of publicizing
the voter-registration deadline
and the date of the actual
vote, the Electoral Commis-
sion is going for laughs, join-
ing other organizations that
have long tried to make voting
cool. The celebrity-powered
and MTV-supported Rock the
Vote campaign, for example,
has encouraged young Ameri-
cans to vote since 1990.
But studies suggest that
Rock the Vote and other voter-
mobilization drives have no
effect in the U.S., said Michael
McDonald, a University of
Florida political scientist who
studies voter turnout. “People
vote when they’re interested,
so the election has to be inter-
esting to the person,” Mr.
McDonald said.
U.S. elections are generally
run by individual states or mu-
nicipalities, and political experts
say few election regulators have
attempted lighthearted voter-
The TV campaign shows neon signs advertising the coming vote
in odd places, such as a forest, a soccer field and a coin laundry.
WeWork Outlines Plan
To Make It Work in Asia
BY SEAN MCLAIN
HONG KONG—WeWork Co.
the office-sharing startup val-
ued at $16 billion by investors,
is setting up shop in Shanghai,
part of an aggressive expansion
into Asia, said Michael Gross,
the company’s vice chairman.
The first of the company’s
three open-plan offices in
Shanghai is set to open next
month, Mr. Gross said Friday
at the Converge technology
conference hosted by The Wall
Street Journal and f.ounders.
The six-year-old startup also
plans to launch spaces in Hong
Kong, Seoul and Sydney this
year. Moreover, the company
has outlined plans to open of-
mobilization drives.
One recent example is Cul-
ver City, a California city of
40,000 residents that hired a
nonprofit called SeePolitical
to create a cartoon bird mas-
cot named Birdie for its April
2016 local elections. Culver
City Deputy City Clerk Jer-
emy Green said voter turnout
for the 2016 election was
22%, up from 14% for the
Birdie-less 2014 election,
though that increase may
have been due to the overall
effect of the $21,000 public-
awareness campaign and not
only Birdie.
Ms. Hartley said the Elec-
toral Commission has tried to
be funny since at least the
September 2014 election on
Scottish independence. Among
other things, it aired a TV ad
that showed a man being vio-
lently yanked out of a polling
station on a bungee cord after
finding out he wasn’t regis-
tered to vote.
The goal of the ads
is to maximize
participation in the
June 23 vote.
The Commission said that
by polling day, 84% of people
surveyed said they recognized
the Commission’s ad campaign
for the Scottish vote.
Ahead of the 2015 general
election, the Electoral Com-
mission ran a droll TV ad
with the stars of “Goggle-
box,” a reality show that
showed people watching TV
and talking about what they
were watching on TV. Its ad
ahead of the May 2016 local
elections featured the stars
of the soap opera “Holly-
oaks” talking about how to
“do it” for “a couple of min-
utes.” They were referring to
voter registration.
After seeing the Hollyoaks
ad, some people on Twitter
jokingly asked whether they
could un-register to vote.
The current television
campaign for the EU referen-
dum shows neon signs adver-
tising the coming vote in odd
places, such as a forest, a
soccer field and a coin laun-
dry. Says the man in the
voice-over: “We wanted to
make sure you couldn’t miss
it, ever. Like a bolt of light-
ning. Or a really, really shiny
penguin.”
The neon signs also were
used in the impartial voting
guide mailed to U.K. house-
holds.
MULLENLOWE LONDON
fices in India. “We’re looking
at dense cities, with young
populations,” Mr. Gross said.
The new locations are a
beachhead in Asia for a
startup that has had success in
the U.S., but has watched thou-
sands of copycats pop up in
Asian markets, such as China.
WeWork isn’t concerned
about the competition, saying
that it has a playbook that has
worked in previous overseas
expansions.
Earlier this year, WeWork
announced that it raised $430
million to finance its push into
Asia, as part of a goal to in-
crease the number of people
using its offices to one million
from about 50,000 today.
 THE WALL STREET JOURNAL. NY / NE Monday, June 6, 2016 | B5

BUSINESS NEWS
SIGNET
Business Reports Question
Watch Credit; Shares Slide
Shares of Signet Jewelers
Ltd. fell on Friday, pushing their
decline last week to 12%, amid
reports that questioned the
LULA CARVALHO/PARAMOUNT PICTURES/EVERETT COLLECTION

credit quality of the company’s

AB INBEV
New Union Opposition
To SABMiller Takeover
Anheuser-Busch InBev NV
faces a new challenge from a
key South African union as it
seeks approval for the acquisition
of rival brewer SABMiller PLC.
South Africa’s Food and Al-
lied Workers Union plans to ob-
ject to the merger at a hearing
before the country’s Competition
Tribunal, said Katishi Masemola,
the union’s general secretary.
‘Teenage Mutant Ninja Turtles: Out of the Shadows’ opened to $35.3 million, barely half as much as the first ‘Ninja Turtles’ film. The union opposes AB InBev’s
customers and alleged that
some Signet employees had re-
placed premium diamonds with
cheaper, man-made substitutes.
In a statement Friday, the com-
pany said: “We strongly object to
recent allegations…that our team
members systematically mishan-
dle customers’ jewelry repairs or
engage in ‘diamond swapping.’ ”
Signet owns some of the most
prominent jewelry-store brands in
the U.S., including Jared, Kay Jew-
elers and Zales.
Like other sellers of big-ticket
items, Signet often provides fi-

‘Ninja Turtles’ Disappoints

‘Out of the Shadows’
continues string of
sequels that fail to
deliver at box office
BY BEN FRITZ
Hollywood is betting big on
sequels this summer, but so far
moviegoing audiences are
proving more discriminating
about which ones they see.
“Teenage Mutant Ninja Tur-
tles: Out of the Shadows” this
weekend continued a string of
recent sequels that signifi-
cantly underperformed their
predecessors, including “Alice
Through the Looking Glass,”
“X-Men: Apocalypse” and
“Neighbors 2.” The only sequel
to buck that trend in Holly-
wood’s summer season, which
starts the first weekend of
May, has been “Captain Amer-
ica: Civil War.”
plan for handling a shareholder nancing for purchases its custom-
program that SABMiller estab- ers make.
lished for employees, retailers and After the stock market closed
others in South Africa, he said. Wednesday, “Grant’s Interest
The union wants those share- Rate Observer,” an investment
holders to be able to cash out newsletter, issued a negative re-
Viacom’s controlling share- their stake in the company when port on Signet, saying its credit
holder, Sumner Redstone, is the deal closes rather than wait portfolio could be in worse
Estimated Box-Office Figures, Through Sunday feuding with the conglomer- until 2020 when their shares ma- shape than thought because of
SALES, IN MILLIONS
ate’s management and seeking ture under terms of the SAB- the way the company accounts
FILM DISTRIBUTOR WEEKEND* CUMULATIVE % CHANGE to halt their plans to sell a mi- Miller shareholder program. for loan delinquencies and losses.
nority stake in the studio. The union’s objection creates Shares of Signet declined
1. Teenage Mutant Ninja Paramount $35.3 $35.3 --
Paramount’s other big bets a new obstacle to AB InBev’s ef- 6.6% the day following the re-
Turtles: Out of the
for the summer are sequel fort to win over regulators in port.
Shadows
“Star Trek Beyond” and a re- South Africa, one of four mar- Signet Chief Executive Mark
2. X-Men: Apocalypse 20th Century $22.3 $116.5 -66% make of “Ben-Hur.” kets where regulatory approval Light on the company’s recent
Fox Also new in theaters this is a precondition to closing the earnings call said, “our credit
3. Me Before You Warner Bros. $18.3 $18.3 -- weekend was the teen tear- roughly $108 billion deal. AB In- metrics and our credit portfolio
jerker “Me Before You,” based Bev appeared on track for South are strong.”
4. Alice Through the Disney $10.7 $50.8 -60%
on the best-selling novel. Re- African approval when the coun- Shares of Signet closed down
Looking Glass
leased by the New Line Cinema try’s Competition Commission about 4.4% at $88.19 in New
5. The Angry Birds Movie Sony $9.8 $86.7 -48% unit of Time Warner Inc.’s recently signed off on the deal. York on Friday.
*Friday, Saturday and Sunday Source: comScore Warner Bros. and co-produced —Tripp Mickle —Austen Hufford
by Metro-Goldwn-Mayer Inc.,
the film opened to a decent
about $135 million to produce, said Ms. Colligan. Its average $18.3 million.
did sell more tickets on Satur- grade of A-, according to mar- A third new movie, the com-
day in comparison to Friday ket-research firm CinemaScore, edy “Popstar: Never Stop Pop-
than the 2014 release, indicat- is also a good sign for box-of- ping,” from Comcast Corp.’s
ing it appealed to more of a fice longevity. Universal Pictures, barely reg-
family audience. “Out of the The new film performed istered, opening to a dismal
Shadows” drew more children better overseas. Its $34 million $4.6 million. Universal used a
than the last movie but not as start was only 8% behind the mostly digital ad campaign for
many young adults who were original, a surprise hit that ul- the movie, and executives

JUSTIN SULLIVAN/GETTY IMAGES

“Out of the Shadows,” from
Viacom Inc.’s Paramount Pic-
tures, opened to an estimated
$35.3 million in the U.S. and
Canada, barely half as much as
the studio’s first “Ninja Tur-
tles” film, which made its de-
but with $65.6 million two
years ago.
The sequel, which cost
fans of the 1990s “Ninja Tur-
tles” cartoon, said Megan Colli-
gan, Paramount’s president of
marketing and distribution.
Family movies tend to per-
form better after their open-
ings than ones that appeal to
young adults, giving Para-
mount some hope the movie
will recover from its soft start,
timately grossed $493 million there hope it will find more life
world-wide. in its home-entertainment re-
A flop would add to troubles lease later this year.
for Paramount, which has al- The superhero sequel “X-
ready had a weak year at the Men: Apocalypse,” from 21st
box office, with disappoint- Century Fox Inc.’s 20th Cen-
ments including “Zoolander 2” tury Fox, which opened in the
and “Whiskey Tango Foxtrot” U.S. on May 27, had a strong
outweighing the solid per- start in China over the week- Signet owns some of the most prominent jewelry-store brands in
former “10 Cloverfield Lane.” end, collecting $59 million. the U.S., including Zales, Jared and Kay Jewelers.

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B6 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

BUSINESS NEWS

AlcoholFirmsAwaitScottishRuling

EDUARDO MUNOZ ALVAREZ/GETTY IMAGES

A court will decide this tanks questioning the efficacy of
minimum-unit pricing and high-
summer if Scotland’s lighting the importance of par-
government can set a ents’ roles in whether children
grow up to drink responsibly.
floor on alcohol prices The Wine and Spirits Trade
Association led a campaign
BY SAABIRA CHAUDHURI called “Why Should Responsible
Drinkers Pay More” and ar-
The global alcohol industry is ranged industry meetings with
bracing for a potentially prece- the Home Secretary Jeremy Martin Shkreli has pleaded not
dent-setting court decision in Browne. The trade body also ig- guilty to seven counts.
Scotland this summer on nored the official scope of the
whether the government can set
a floor on alcohol prices.
The semiautonomous Scot-
consultation and said minimum-
unit pricing was ineffective, un-
fair and likely illegal under EU
Shkreli
tish government in 2012
passed legislation that sets a
minimum price for all alcoholic
law, according to a person fa-
miliar with the moves.
Mr. Browne in July 2013 an-
Faces New
beverages of 50 pence (about
72 cents) a unit, which is equal
to 10 milliliters of pure alcohol.
nounced the government was
shelving plans for minimum-
unit pricing, citing insufficient
Conspiracy
So-called minimum-unit pric-
ing, or MUP, is meant to curb
heavy drinking by sharply
evidence that it works.
Several alcohol executives
credit the Scotch Whisky Asso-
Charge
boosting the price of the ciation’s European Commission BY NICOLE HONG
cheapest booze on the market. complaint that summer with
A 20-pack of Foster’s 440- helping to put England’s policy Federal prosecutors in the
milliliter (15-ounce) beer cans, on ice. U.S. on Friday unsealed a new
for instance, currently sells for If Scotland implements mini- conspiracy charge against

JEFF J MITCHELL/GETTY IMAGES

£11 ($16) at Tesco PLC and J mum-unit pricing, it could reig- pharmaceutical executive Mar-
Sainsbury PLC stores in Scot- nite calls for the measure to be tin Shkreli and his former law-
land. The legislation would passed in England. “We all rec- yer, Evan Greebel.
boost the price to at least ognize it could come back,” said Both men were arrested last
£22.44. a London-based senior alcohol December and accused of
While parts of Canada have executive. scheming to steal money from
some form of minimum-unit “Minimum-unit pricing re- pharmaceutical company Ret-
pricing, if Scotland succeeds in mains under review pending the rophin Inc., where Mr. Shkreli
court it will become the first full The alcohol industry says minimum unit pricing in Scotland would set an international precedent. outcome of the legal case be- had been the chief executive, to
country to implement a floor tween the Scottish Government cover up losses suffered by in-
price per unit of alcohol. minimum-unit pricing. and the Scotch Whisky Associa- vestors in Mr. Shkreli’s hedge
The alcohol industry says Scotland’s Parliament in May Price Boost tion and any implementation in funds. Retrophin’s board
minimum-unit pricing in Scot- 2012 passed the law establish- Under the Scottish government’s minimum-unit-pricing proposal, prices Scotland,” said a spokeswoman ousted Mr. Shkreli as chief ex-
land would set an international ing a 50-pence floor on per-unit of the country’s least expensive alcoholic beverages would rise sharply. for the U.K. Home Office. ecutive in 2014.
precedent that could unleash a alcohol prices, with 86 members Variants of pricing based on Mr. Shkreli had pleaded not
wave of regulation and crimp voting in favor of the measure. Here’s a sampling of potential price hikes alcohol strength have been ef- guilty to seven counts of secu-
profits. The single member who voted fective where they have been rities fraud and conspiracy. Mr.
Crofter’s Foster’s Beer Hardys Legacy Famous Grouse
against the measure later said implemented, health research- Greebel had pleaded not guilty
hard cider 20 pack Shiraz Cabernet Scotch whisky
she did so by mistake. ers say. to one count of wire-fraud con-
Minimum-unit The alcohol industry attacked The Canadian province of spiracy.
pricing is aimed at the law as illegal and ineffective, Saskatchewan has five price On Friday, Brooklyn federal
saying it wouldn’t stem heavy bands per beverage based on al- prosecutors added a new secu-
curbing heavy drinking but instead force re- cohol strength. A 10% increase rities-fraud conspiracy charge
booze consumption. sponsible drinkers to pay more. in the minimum price of alco- against both men related to Mr.
The Scotch Whisky Associa- holic beverages in Saskatchewan Shkreli’s alleged failure to dis-
tion in July 2012 filed a com- was associated with an 8.43% close to the U.S. Securities and
“If we lose it, I would expect plaint with the European Com- reduction in total alcohol con- Exchange Commission his con-
that we will see MUP and simi- mission, saying a pricing floor sumption, according to a 2012 trol over certain shares of Ret-
lar health-justified schemes in- would “artificially distort trade analysis by Tim Stockwell, direc- rophin. Mr. Greebel had served
troduced not just in Scotland in the alcoholic drinks market, tor of the Centre for Addictions as outside counsel to Retrophin.
but eventually and gradually in contrary to EU law.” It also op- Research of British Columbia. Benjamin Brafman, a lawyer
many places around the world,” posed the legislation in Scot- 2 liters 440 ml cans 750 mll 1 lit
liter Alcohol is a particularly hot- for Mr. Shkreli, said in a writ-
said David Frost, chief executive land’s highest civil court, Edin- 5% ABV* 5.1% ABV 13% ABV 40% ABV button issue in Scotland, where ten statement: “There is noth-
of the Scotch Whisky Associa- burgh’s Court of Session, New price: £5 £22.44 £4.88 £20 sales were 20% higher than in ing in the new indictment that
tion, an industry trade group contending it breached the England and Wales last year, ac- impacts in any way on the
whose members include Diageo U.K.’s EU treaty obligations. cording to data released last flawed theory of the case as
PLC and Pernod Ricard SA. After years of the case 151% 104% 8.4% 5.3% week by Scotland’s National applied to Mr. Shkreli.”
Wales—like Scotland a part bouncing between courts in from current Health Service. Reed Brodsky, a lawyer for
of the U.K. but with the ability Scotland and Europe, the Court *Alcohol by volume, £1 = $1.45 Drinking kills six Scots a day, Mr. Greebel, declined to com-
to write many of its own of Session will hold a hearing on Source: Tesco PLC (prices) THE WALL STREET JOURNAL. and Scottish drinkers are twice ment.
laws—last year began consult- minimum-unit pricing Tuesday as likely to die of alcohol-related Mr. Shkreli gained notoriety
ing on setting a floor price on and is expected to make a deci- said Pernod Ricard’s U.K. man- ple to get drunk on cheap alco- health problems as those in the during his time as CEO of Tu-
alcohol. Ireland has a mini- sion by August. aging director, Denis O’Flynn. hol at home before they even rest of the U.K., according to ring Pharmaceuticals AG, when
mum-unit-pricing law making “We don’t believe in penaliz- “We think personal responsibil- set foot in the pub,” Mr. Cam- data from the Scottish Health he raised by more than 50-fold
its way through the legislative ing the majority of people who ity and education is how you ad- eron said. He opened a consul- Action on Alcohol Problems, a the price of a drug that treats a
process. Estonia is considering drink responsibly,” said a dress the whole issue of respon- tation into the level at which a government-funded group. potentially deadly parasitic in-
implementing a similar plan. spokeswoman for Diageo, the sible drinking.” minimum price should be set, “I’m not a teetotaler, but fection. He resigned as CEO of
Alcohol-industry executives world’s largest drinks maker Industry moves successfully but said a floor of 40 pence a I’m concerned that cheap alco- Turing shortly after his arrest.
worry that countries strug- and the biggest distiller of derailed minimum-unit pricing unit could mean 50,000 fewer hol is ruining and costing the The criminal charges against
gling to contain the social and Scotch whisky. She added that in England, where British Prime crimes a year and 900 fewer al- lives of many of my fellow Mr. Shkreli have nothing to do
fiscal costs of heavy drink- the company believes in an ap- Minister David Cameron cohol-related deaths a year by countrymen,” said Alex Sal- with his time at Turing, al-
ing—such as South Korea and proach focused on “the minority pledged in March 2012 to intro- the end of the decade. mond, who led the Scottish though Mr. Shkreli has said that
Thailand—could justify of irresponsible drinkers.” duce it. The alcohol industry reacted National Party when it pushed he believed he had been tar-
tougher measures if Scotland Establishing a pricing floor “When beer is cheaper than swiftly. SABMiller PLC commis- through minimum-unit pricing geted by authorities partly be-
successfully waves through “is a very crude implement,” water, it’s just too easy for peo- sioned three reports from think in 2012. cause of the drug-price increase.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
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Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Oklahoma City 87 62 s 87 66 s Edinburgh 68 49 pc 72 52 t Zurich 75 56 t 75 57 t words of which are the ingredients of a BLT.
 THE WALL STREET JOURNAL.
Muhammad Ali, pictured in training in 1966. In the decades since Ali dominated the conversation, sports have moved to a safer, shinier, less confrontational space.
Another Muhammad Ali? Probably Never
Will sports ever see another
Muhammad Ali?
Let’s be real: probably not.
That’s been obvious for decades,
but it’s become very clear from the
obits and encomiums
since Ali’s death Fri-
day evening: Muham-
mad Ali was absolute
sui generis, an un-
precedented combi-
JASON nation of athleticism,
GAY intelligence, bravado
and social conscious-
ness during one of
the most turbulent chapters in
American history. He was contro-
versial, to say the least, but he was
an epic figure that sports will al-
most surely never witness again.
The man seems unrepeatable.
A critical reason, of course, is
timing. The ascension of the for-
mer Cassius Clay paralleled a pe-
riod in which his country was
gripped by the interwoven strife
over civil rights and the war in
Vietnam. Ali’s decision to refuse
induction into the military was
deeply polarizing—and still so,
judging from the comments sec-
tions of virtually everything writ-
ten about the man in the past 36
hours—and not without cost. And
yet Ali willfully became a spokes-
person for his choice, his race, and
his religion, embracing the oppor-
tunity to show how all these mat-
Heard On
The Field
EZRA SHAW/GETTY IMAGES
Warriors Take 2-0
Series Lead Over Cavs
LeBron James’s last four NBA Fi-
nals appearances before this year
started the same way: with a Game
1 loss. But what happened next
was also the same. As the rest of
the basketball universe panicked,
James was the eye in a storm of
second-guessing. He went out and
won Game 2 every single time.
This year’s Finals, though, are
slightly different from every series
that James has ever played in.
That’s because he happens to be
playing the Golden State Warriors.
And they might be the best NBA
team of all time.
That incredible streak of James’s
was snapped Sunday by something
more remarkable, the Warriors, who
routed the Cavaliers, 77-110, to take
a 2-0 series lead in the Finals.
It was Golden State’s seventh
consecutive win over Cleveland, and
to bring a title to Cleveland, James
now has to beat Stephen Curry
four times in the next five games.
The only problem: The Warriors lost
a total of nine times in 82 games
this season.
—Ben Cohen
* * * *
ters were intertwined. It isn’t hard
to find clips of an exiled Ali dis-
cussing his refusal with inquisitors
baffled that he would stick to the
position and not, say, flee to Can-
ada so he could box again. Here’s
Ali seated across from William F.
Buckley on Firing Line: “What I am
doing is for myself, and for justice
for black people. Running will kill
it all. So I’d rather go to jail.”
Those who lived through that
period know how raw and conten-
tious it was. Consider this excerpt
from the boxing columnist and Ali
confidante Jerry Izenberg, writing
Saturday in the Star-Ledger, about
the public reaction to his support
of Ali at the time:
Some papers that carried my
column regularly dropped it. Bomb
threats emptied our office, making
the staff stand out in the snow. My
car windshield was smashed with a
sledgehammer. Among the thou-
sand of pieces of hate mail I re-
ceived, two required the attention
of postal inspectors. One turned
out to be nothing but a ticking
alarm clock, and the second con-
tained what I hoped was dog fe-
ces—as opposed to the alternative.
These were ugly times.
Unbelievable. When a sports
columnist touts him or herself as
“brave” for pecking out an edgy
tweet, remember Jerry Izenberg.
In the decades since Ali domi-
Djokovic Slams His Way Into History
BY TOM PERROTTA
Paris
Four Grand Slam tournaments!
Back-to-back-to-back-to-back! Wim-
bledon. The U.S. Open. The Austra-
lian Open. And now, the French
Open—all the major tennis trophies
belong to Novak Djokovic, who won
his first title at Roland Garros on
Sunday, 3-6, 6-1, 6-2, 6-4 against
Andy Murray. Bjorn Borg and John
McEnroe never won all four majors.
Neither did Pete Sampras, Jimmy
Connors, Ivan Lendl or Boris Becker.
Andre Agassi, Roger Federer and Ra-
fael Nadal did, but not in a row. For
the first time, Djokovic can look
around at his peers and heroes and
say, How about that?
Eight men have won each Grand
Slam title at least once, a list that
includes Federer, Nadal, Agassi and
now, Djokovic. But no man since Rod
Laver, in 1969, has held all four ti-
tles. Laver did it twice, the first time
in 1962. The only other man in their
class is Don Budge, who won six
straight from 1937 to 1938. Asked
earlier this year about Djokovic’s
dominance, Laver was unequivocal.
“I would say there isn’t any way
you could play better,” he said.
The 29-year-old Djokovic’s climb
has been long and slow. He used to
be the odd man out in this all-time
great tennis generation, the kid with
a lot a game but not as much nerve
or moxie as Federer or Nadal. After
trailing those two titans for years,
Djokovic eventually passed them, but
couldn’t solve Roland Garros.
Federer beat him here in 2011, and
ended a 43-match winning streak.
Nadal beat him in two finals. Stan
Wawrinka beat him in another, and
that one hurt the most—and
changed everything for Djokovic.
During the trophy ceremony last
year, fans inside Philippe Chatrier
SPORTS
nated the conversation, sports
have moved to a safer, shinier, less
confrontational space. The biggest
ones are billion-dollar businesses,
corporate in nature, carefully
avoidant of controversy. Athletes,
too, are cautious, and deviations
from the branded script are un-
usual. The smell of money over-
whelms everything. Ali may have
redefined what was possible from
an athlete as a generational voice,
but the conversation has been
neatly put back in a box, with ath-
letes considered entertainers who
are better viewed than heard from.
This isn’t to say there haven’t
been moments in which athletes
have stepped forward: recently,
there was LeBron James’s and
other NBA players’ public solidar-
ity with the family of a young man
killed in a police confrontation; the
University of Missouri football
team’s protest against the school
president over the handling of ra-
cial issues on campus; the U.S.
Women’s National Soccer Team’s
action against its governing body
over pay equality. But most of
what is deemed to be “controver-
sial” in sports today—a bat flip!—
is a joke compared with the island
Ali put himself on. In fact, many of
the “controversies” in sports are
phony media creations cooked up
for attention, undeserving of your
time and about as socially con-
Novak Djokovic celebrates after beating Andy Murray in four sets to win the French Open on Sunday.
Court stood and applauded Djokovic
as if he had won. The love brought
him to tears, and this year, he said,
he felt like the people’s choice. Ball
kids stood with him after every
match and helped him salute the
crowd. He spoke the best French of
his life. On Sunday, the stadium was
wild with chants of “Nole!” as Djok-
ovic, stressed and tentative in the
first set, stopped missing and built
an insurmountable lead. His nerves
returned at the finish, but this time,
he survived. He doesn’t quite re-
member how.
“It’s like my spirit [had] left my
body and I was just observing my
body,” Djokovic said, “hoping that
Andy will make a mistake.”
Murray did, and Djokovic fell on
his back. He later drew a heart in the
clay with his racket, just as Gustavo
Kuerten, the winner of three French
Open titles, used to do. Djokovic said
scious as a bag of marbles.
Still, it would be foolish to de-
pict Ali as merely a byproduct of
his times.
He was an all-timer as a boxer,
and an all-timer as a performer,
and I suspect he would have been a
giant in any era. One of the joys of
watching sports is when you see
someone who appears absolutely
born to do it: the athlete who pos-
sesses that combination of skill
and work ethic that makes them
appear preternaturally built for
their chosen craft. Ali had that as a
boxer—I’ll cede here to the Jour-
nal’s great boxing writer, Gordon
Marino, who praised, among other
things, Ali’s grace and “ability to
detect a punch even as his oppo-
nent was just thinking about the
blow.” But Ali may have been even
more preternatural as a personal-
ity. He was a talker unlike any
talker before—spend 20 minutes
on YouTube watching Ali videos
and you have to thoroughly recali-
brate your idea of what makes a
compelling athlete interview. And
Ali seemed to always be compel-
ling—whether in the aftermath of a
prizefight; defending himself on
the steps of a public building; be-
ing awkwardly picked apart by
suits on a public affairs show; or
relaxing on the loungey West Coast
couch of Johnny Carson.
Ali was at home anywhere on
he had asked Kuerten’s permission
earlier in the tournament.
“He’s a super-human being,” Kue-
rten said.
Murray, who has lost to Djokovic
in five major finals, agreed.
“Something you probably won’t
see for a long, long time,” Murray
said.
All tennis victories bring elation.
This one also brought relief. Djokovic
had won more matches at the French
Open than any man who had not won
the title. The pressure was immense.
After he won, his family and friends
gathered in the players’ lounge and
popped open bottles of champagne.
They sang Serbian songs. When Djok-
ovic and his trophy arrived, his father,
Srdjan, lifted it over his head. Then he
passed it around so everyone could
sip champagne from it.
“Everything went well, finally,”
said Marian Vajda, who coaches
Monday, June 6, 2016 | B7
R. MCPHEDRAN/HULTON ARCHIVE/GETTY IMAGES
the planet. And whether people
loved or loathed him, they couldn’t
take their eyes off him. Even at his
brashest and loudest, there was al-
most always a twinkle of self-
awareness, a signal that he got it,
that this was all part of a larger
circus. He could be mean—he was
indeed sometimes to Smokin’ Joe
Frazier—but his wit was usually
sharp and precise. “Howard, every
time you open your mouth, you
should be arrested for air pollu-
tion,” Ali once teased to his friend
and play-nemesis, Howard Cosell.
It’s been tremendous to watch
Ali’s legacy getting a full airing, to
see the person who battled Parkin-
son’s for decades reanimated to his
vital, incandescent prime. Athletes
have always had way of perverting
our judgment and accentuating our
hypocrisies; awestruck by their
feats, we lift them up to unsustain-
able heights, and then tear them
apart for the most human of mis-
takes. We regularly make idols out
of winners who don’t deserve the
mantle, and run hard over the de-
feated, when they deserve our em-
pathy and respect. We nostalgically
pine for “heroes” who never were.
Seldom does anyone in sports ap-
proach the legend of what we want
him or her to be.
Muhammad Ali, an imperfect
but seismic man, did.
And he may be the last.
CLIVE BRUNSKILL/GETTY IMAGES
Djokovic along with Becker, a former
No. 1 player.
In his major title sweep, Djokovic
has won two finals against Federer,
who played superb tennis in 2015, and
two against Murray. So much could
have gone wrong. Djokovic could have
tripped. He could have caught a cold
or accidentally broken his strict diet
by slurping down some gluten-filled
linguine. (Djokovic is allergic to glu-
ten.) At a Grand Slam tournament,
anything can happen. Djokovic has
plenty of proof. He’s won 12 Grand
Slam singles titles, but lost in eight fi-
nals. After this one, though, he might
never feel stressed again on a tennis
court, and that could be scary for ev-
eryone else.
“I don’t want to sound arrogant,
but I really think everything is
achievable in life,” he said. “Winning
this trophy today gave me so much
happiness and fulfillment.”
B8 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

Yep,
I switched
to Sprint.
Hey, I’m Paul, the guy who
used to ask if you could hear
me now on Verizon...

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majority of KB. Prohibited network use rules apply—see sprint.com/termsandconditions. Competitor Plans: As of 6/1/16. T-Mobile: tablet and MBB rate plans excluded; data is not shared; after 3G/4G high-speed data allotment, speeds reduced to 2G
speeds until the end of your bill cycle.; add’l on-network data at $15/GB. Verizon: after data allotment, pay 1.5 cents/MB overage. AT&T: after data allotment, pay 1.5 cents/MB overage. 1% Claim: based on Sprint’s analysis of Nielsen drive test data (Aug.
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All rights reserved. Other marks are the property of their respective owners.

© 2016 Dow Jones & Company. All Rights Reserved.
Last Week: DJIA 17807.06 g 66.16 0.37%
Latest Hot Buy: Municipal Bonds
Investors scurry for
safety as slow global
growth, low interest
rates cast a shadow
BY HEATHER GILLERS
AND AARON KURILOFF
Investors are buying munic-
ipal debt at a record clip, en-
during low returns in ex-
change for the relative
stability of bonds sold by U.S.
state and local governments.
Municipal-bond funds had
more than $632 billion in as-
sets as of June 1, a record, ac-
Dividends,
Buybacks
Dull Effect
Of Rates
BY GREG IP
One of the great mysteries of
the recovery is why low interest
rates have done so little to lift
business investment.
After all, that is supposed to
be one of the ways monetary
policy works: A lower cost of
capital makes any project more
viable. But what if lower interest
rates are hurting investment by
encouraging companies to pay
dividends or buy
ANALYSIS back stock in-
stead?
That is the
theory advanced by economist
Jason Thomas of private-equity
giant Carlyle Group. It is at
odds with conventional econom-
ics but has some intuitively ap-
pealing logic and supportive
data.
He calculates that since 2009,
just after the Federal Reserve
took interest rates to near zero,
U.S. companies have boosted
stock buybacks by 194% and div-
idends by 66.5%, but investment
by 43%. Big energy companies
have been slashing capital ex-
penditures while boosting pay-
outs. Even companies without
the headwind of lower commod-
ity prices are holding the line:
McDonald’s Corp. and Eli Lilly
& Co. are maintaining flat capi-
tal expenditures while raising
dividends; Verizon Communica-
tions Inc. said it plans to trim its
capital budget and has raised its
dividend.
Many critics have stated
that Fed policy has hurt the
economy, but they make a
fuzzy argument that exotic
monetary policy such as zero
interest rates and bond buying
foments uncertainty and thus
Please see RATES page C2
Another Test for Valeant Pharmaceuticals 62 Years at Same Firm:
BY CHARLEY GRANT
Shall we try this again?
Investors hope the sequel is
better than the original
when Valeant Pharmaceuti-
cals International Inc. posts
first-quarter re-
AHEAD OF sults this week.
THE TAPE The earnings
report, ex-
pected Tuesday,
will be the second since a
scandal last fall around the
drugmaker’s relationship
with a mail-order pharmacy
triggered a free fall in its
stock. It also will be the first
since new Chief Executive
Joseph Papa took over last
month. Analysts expect
Valeant to report revenue of
$2.4 billion and adjusted
earnings per share of $1.36.
The good news for inves-
tors: There should be much
less drama than the last time
INDEX
Borrowing Benchmarks............... C5 Commodities............................................... C4
MOVING THE MARKET C2 | MARKETS DIGEST C4 | BORROWING BENCHMARKS C5
Cheaper Oil to Europe
Saudi Arabia reduces its prices
S&P 2099.13 À 0.003%
cording to Lipper data going
back to 1992. Investors have
poured a net $22.5 billion into
such mutual funds in 2016
through Wednesday, the best
start to a year since 2009.
They have pulled
ABREAST $39.97 billion
OF THE from equity
MARKET funds in the
same time.
The buying is being spurred
by continuing concerns about
the slow pace of global growth
and the prospect of interest
rates staying lower for longer,
concerns boosted by Friday’s
weak jobs report.
In addition, low—or nega-
Macquarie Group has been ramping up its presence in U.S. commodities. Above, its banking unit’s offices in Sydney.
Macquarie Fills Commodities Gap
BY CHRISTIAN BERTHELSEN
After the Federal Reserve
pledged to crack down on
banks engaged in the lucrative
business of commodities trad-
ing, most big Wall Street firms
got out.
Macquarie Group Ltd. took
the opposite approach.
Australia’s largest invest-
ment bank has been buying
and selling increasing amounts
of oil, natural gas and fuel in
the U.S., taking advantage of
the opening as its competitors
backed away.
It now is North America’s
third-largest trader of physical
gas, trailing only industry gi-
ants BP PLC and Royal Dutch
Valeant reported quarterly
earnings in March. Valeant’s
stock price was sawed in half
that day after the company
warned of a possible default
on its debt should it fail to
file audited financials on
time, among a series of
After the Fall
Valeant Pharmaceuticals
International share price
$100
75
50
25
0
J F
Source: WSJ Market Data Group
THE WALL STREET JOURNAL.
Closed-End Funds.................................... C5 Consumer Rates....................................... C4 Financial Flashback................................ C4
Currencies...................................................... C2 Global Finance............................................ C3
M A
* *
M J
Cloud Deals
Aren’t Finished
HEARD ON
GLOBAL FINANCE | C3 THE STREET | C6
THE WALL STREET JOURNAL. Monday, June 6, 2016 | C1
NASDAQ 4942.52 À 0.18% 10–YR. TREAS. À 1 10/32, yield 1.707% OIL $48.62 g $0.71 EURO $1.1364 YEN 106.53
tive—yields on government driven prices in the roughly that are typically free from
bonds world-wide have made $3.7 trillion market so high federal taxes. In the years
munis increasingly appealing that yields have fallen to near- since the financial crisis, the
relative to other fixed-income record lows. The enthusiasm highest-rated municipal bonds
assets. The amount of munici- comes even as Puerto Rico is have often yielded more than
JACQUELYN MARTIN/ASSOCIATED PRESS
pal debt held by foreign inves- defaulting and concerns per- Treasury debt. But that trend
tors increased 44% to $85 bil- sist about the financial health has begun to reverse in recent
lion from 2009 through 2015, of some cities and states. In months, intensifying some an-
according to Federal Reserve addition, U.S. interest rates alysts’ concerns about the
data. are still expected to rise this risks of purchases at current
Munis also provided a ha- year, which can hurt the value prices.
ven for investors during sharp of outstanding bonds. Yields “aren’t all that at-
swings this winter in the eq- Investors prize munis in tractive anymore, yet we con-
uity and high-yield corporate- general because they are con- tinue to see inflows into the
bond markets. And years of sidered nearly as safe as Trea- funds,” said James Kochan,
price appreciation in munis surys, backed by tax revenue chief fixed-income strategist Rep. Jeb Hensarling (R., Texas)
have left investors hungry to or fees on critical public ser- at Wells Fargo Funds Manage-
snap up new issues. vices, such as water. The debt ment. “It doesn’t take much to
Please see BONDS page C2
Enthusiasm for the debt has also offers interest payments
‘Volcker’
Rollback
On GOP
Agenda
BY DONNA BORAK
AND ANDREW ACKERMAN
WASHINGTON—Republi-
can victory in November elec-
tions would herald a signifi-
cant scaling back of financial
regulations enacted since the
2008 crisis, according to a pol-
icy blueprint to be unveiled by
a top GOP lawmaker on Tues-
day.
The government would no
longer have the power to ex-
tend federal oversight and
constraints to big nonbanks
IAN WALDIE/BLOOMBERG NEWS
branded “systemically impor-
tant,” according to a written
summary of the plan provided
to The Wall Street Journal.
Megabanks would be freed
from the Volcker rule that at-
tempts to bar them from bet-
ting with taxpayer-insured de-
posits. The new consumer
watchdog would face new lim-
its on its efforts to bring
lightly regulated corners of fi-
nance—such as payday lending
or debt collection—under
Shell PLC, according to indus- stricter federal control.
try publications Platts and Trading Places “We are not becoming more
Natural Gas Intelligence. While big Wall Street banks have pulled back from commodities stable. And, regrettably, we are
Macquarie owns electric trading, Macquarie has increased its commodities business. also less free,” Texas GOP Rep.
utilities in Seattle and Pitts- Jeb Hensarling, the author of
burgh, a gas distributor in Ha- Major banks* Macquarie the blueprint, said in a video
waii, a merchant power-gener- $15 billion $900 million posted Friday attacking the
ation company in Rhode Island sweeping 2010 Dodd-Frank fi-
and petroleum storage tanks 12 750 nancial-overhaul law he seeks
along the U.S. Gulf Coast. It 600 to replace. “It’s time to move
imports Canadian oil into the 9 on to a 21st century model of
U.S. by pipeline and in January 450 banking, of security, of finan-
imported 200,000 barrels of 6 cial opportunity for all,” added
300
crude by tanker from the Re- Mr. Hensarling, who chairs the
public of Congo, U.S. records 3 150 House Financial Services Com-
show. mittee.
It all has been possible be- 0 0 Mr. Hensarling plans to un-
cause the Fed doesn’t consider 2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 2010 ’11 ’12 ’13 ’14 ’15 veil his Dodd-Frank replace-
Macquarie’s U.S. unit a bank. *10 largest global investment banks Note: May 27 exchange rate for Macquarie figures ment plan Tuesday morning in
By avoiding certain activities Sources: London research consultancy Coalition (major banks); the company (Macquarie) a speech at the Economic Club
Please see GAP page C3 THE WALL STREET JOURNAL. Please see GOP page C6
other missteps.
The stock is down 12%
company.
Valeant didn’t reiterate its
How One Man Did It
since then, but there have full-year forecast, which for- BY LESLIE SCISM others who know the prop-
been flickers of positive mer CEO Michael Pearson erty-casualty insurance indus-
news. For instance, Valeant gave in March. There is a When Maurice “Hank” try see Mr. Rodriguez’s feat as
has mostly put fears of an risk Mr. Papa could decide Greenberg resigned as chief unlikely to be repeated, high-
imminent default to rest. old targets—just over $11 bil- executive from American In- lighting a changed competi-
And this time, there lion in sales and about $10 a ternational Group Inc. in tive environment and demo-
shouldn’t be a surprise in share in adjusted earnings— 2005, his career there was in- graphics.
the headline numbers: were too ambitious. variably referred to as long. It Mr. Rodriguez, 79 years
Valeant reaffirmed first- Valeant’s plan for reduc- stretched about 45 years. old, started employment at
quarter guidance on May 9, ing its $30 billion of long- AIG in 1954 as an 18-year-old
after the quarter ended. term debt will be another is- messenger in Cuba and rose
Yet big questions remain. sue. Investors will want Manuel to head its Puerto Rico of-
Investors still don’t have more detail on what assets ‘Manolo’ fices.
much of a feel for what kind Valeant considers nonessen- Rodriguez “I did get offers from other
of profitability Valeant can tial to its core business and, retired from companies, but I was happy,”
expect now that it has sworn therefore, ripe for divesti- AIG after a Mr. Rodriguez said in an in-
off its old strategy of splashy ture. 62-year tenure. terview.
acquisitions and hefty drug- An absence of further ca- Robert Hartwig, president
price increases. Sales of lamity should stanch the of trade group Insurance In-
most of Valeant’s top 30 stock-price wound. But nurs- formation Institute, doesn’t
products fell sequentially in ing this patient back to full But Mr. Greenberg doesn’t see Mr. Rodriguez’s accom-
the fourth quarter as insur- health will take far more have a thing on Manuel plishment being topped.
ance companies and phar- time. “Manolo” Rodriguez, who re- While longer lives will
macy-benefits managers tired a few weeks ago with make for longer careers,
pushed back against the Email: tape@wsj.com what AIG said is the longest- workers are now more likely
ever tenure at the global in- to move among companies, he
surer: 62 years. AIG was said.
Heard on the Street............................... C6 IPO Scorecard............................................. C4 New to the Market.......................... C4
International Stock Indexes............. C4 Money Rates............................................... C5 Ticker.......................................................... C2 founded in 1919. New types of insurance
Executives, consultants and Please see AIG page C2
 C2 | Monday, June 6, 2016
THE TICKER | Market events coming this week
Monday
No major events are
scheduled
Tuesday
Productivity
1st qtr. first est.
down 1.0%
1st qtr. rev. est.
down 0.6%
Unit labor costs
1st qtr. first est.
up 4.1%
1st qtr. rev. est.
up 4.1%
Consumer Credit
March, previous
up $29.7 billion
April, expected
up $20.5 billion
Earnings expected*
Estimate/Year Ago($)
HD Supply 0.47/0.33
Michaels 0.35/0.32
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY
ITEMS (LOSSES IN PARENTHESES)  ADJUSTED FOR STOCK SPLITNOTE: FORECASTS ARE FROM
DOW JONES WEEKLY SURVEY OF ECONOMISTS
JUSTIN SULLIVAN/GETTY IMAGES
J.M. Smucker is scheduled to report quarterly results Thursday.
As measured by the
S&P 500 index,
dividends included,
the market was
up by 1.4% in 2015
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MOVING THE MARKET
BONDS
Wednesday EIA report: natural Continued from the prior page
gas produce negative returns from
Mort. bankers indexes Previous change in stocks in these levels.”
Purchase, prev.
down 5%
Refinan., prev.
billions of cubic feet
up 82
Yields on the Barclays Mu-
nicipal Bond Index fell to a re-
Wholesale cord 1.75% in mid-May and
down 4%
inventories were at 1.83% on Friday.
EIA status report March, previous Municipal bonds have re-
Previous change in stocks in
up 0.1% turned 2.89% so far this year,
millions of barrels
April, expected counting price appreciation
Crude oil down 1.4 and interest payments, accord-
up 0.1%
Gasoline down 1.5 ing to Barclays PLC as of Fri-
Distillates down 1.3 Earnings expected* day. That compares with 3.88%
Estimate/Year Ago($) for Treasurys, 6.14% for highly
Earnings expected* rated corporate debt and
J.M. Smucker
Estimate/Year Ago($)
1.19/0.98 8.09% for junk bonds.
Brown-Forman
0.72/0.66
Lululemon 0.31/0.34 Friday Muni Mania
U.Mich. consumer Strong investor interest in debt sold by state and local governments in the U.S. is helping to push down yields.
Thursday index
May, final 94.7 U.S. municipal-bond fund flows
Short-selling reports
Ratio, days of trading volume June, prelim. 93.9 $10 billion
of current position, at May 13
NYSE 4.4 Treasury budget
April, previous 5 3.5
Nasdaq 4.7
$82 billion deficit
Initial jobless claims May, expected n.a. 0 3.0
Previous 267,000
Expected 270,000
–5
–10
–15
–20
2013 ’14
Sources: Lipper (flows); Barclays Municipal Bond Index (yields)
RATES
Continued from the prior page
undermines investment.
Mr. Thomas’s argument re-
lies instead on basic corporate
finance. Companies can choose
to distribute cash to share-
holders as dividends or share
repurchases or invest it in the
business. In theory, an invest-
ment that raises future cash
flow also raises future divi-
dends and should be just as
appealing as a higher dividend
today, irrespective of interest
rates. But Mr. Thomas says
this assumes investors don’t
care whether they get their
dividends today or tomorrow.
In fact, he says, investors such
as retirees have a strong need
for current yield and will pay a
premium, in terms of the
price/earnings ratio, for a com-
pany that distributes more of
its income today.
Since 1976, higher-yielding
stocks systematically outperform
the overall market by 0.76 per-
centage point when inflation-ad-
justed interest rates fall 1 per-
centage point, Mr. Thomas finds.
Moreover, the relationship be-
comes more extreme the lower
rates go and the longer they stay
low.
“John Bull can stand many
things but he cannot stand two
per cent,” Walter Bagehot, a
19th century editor of The Econ-
omist, once said, describing in-
vestors’ need for some minimum
level of income.
When real five-year bond
yields dropped 0.5 percentage
AIG
Continued from the prior page
jobs and new categories of
risk are proliferating amid
fast-changing technology, “al-
lowing for rapid advancement
for those seizing opportunity”
wherever it exists. In addi-
tion, the latest generation is
less likely to stay “tied down
to a single geographic region.”
Among industries, prop-
erty-casualty insurance is one
of the most likely, however,
for a longer career with one
firm.
“It is an industry that val-
ues experience and relation-
ships, and both of those in-
crease with time spent on the
job,” said Mr. Hartwig, who
has known a number of peo-
ple who have worked at a sin-
gle insurer for a half century
or so.
The average employee ten-
ure was 8.1 years as of 2014,
the latest figure available, ac-
cording to the Society for Hu-
man Resource Management, a
membership group. The aver-
age tenure in the insurance
industry specifically stood at
8.9 years.
Mr. Rodriguez came to AIG
by chance, and his career was
nearly cut short twice, first by
Fidel Castro’s rise to power,
and then by a car accident in
the late 1980s that nearly cost
him his life.
The job stemmed from a
03-IB16-965CH963
beach outing.
Rick Taormina, head of mu-
nicipal strategies at JPM Asset
Management, said some inves-
tors have been experiencing
“rate shock,” surprised by the
low yields even on longer-
dated or less-creditworthy
debt.
Despite such low yields, the
hazards of municipal bonds—
including hundreds of millions
in defaults from Puerto Rico—
seem mild compared with the
year’s swings in stocks and
other riskier assets.
The supply of new bonds
has fallen, helping to drive up
prices. Government borrowers
have issued $170 billion of
bonds from the beginning of
Average yield on municipal debt
4.0%
May $3.96B
2.5
2.0
1.5
1.0
’15 ’16
point between February and
May, the Standard & Poor’s Divi-
dend Aristocrats Index—made
up of companies that increased
their payout every year for at
least 25 years—outperformed
the S&P 500 by 4.8%. This
means that the lower rates go,
the higher a hurdle a new in-
vestment must meet to boost
the stock price more than a
higher dividend.
Not all companies would re-
spond the same way. Young
companies with no internal cash
flow and tech companies that
are valued more for their
growth have little option or in-
centive not to invest in their
businesses. They would be less
affected than large, mature com-
panies with higher depreciation
expenses and cash flow.
Why Aren’t Low Rates Working? Blame Dividends
Falling interest rates earlier this year drove up stocks with high dividends, a consistent pattern in recent
years which may be one reason companies have favored dividends and stock buybacks over capital spending.
Five-year real bond yield
0.4%
0.2
0 2
May 17 –0.27%
–0.2
–0.4
F 2016 M A M
Source: The Carlyle Group
While on a bus, his father
pointed to AIG’s office build-
ing, where people were com-
ing and going. “This looks like
a good place to work,” the son
recalls his father, who was a
baker, saying.
Mr. Rodriguez was among
employees relocated by AIG to
the U.S. during the communist
takeover of the country. At
first, the idea of leaving fam-
ily in Cuba “was shocking”
and he hesitated.
But in 1961, he and his wife
moved to New York.
‘I did get offers from
other companies, but
I was happy,’ Manolo
Rodriguez says.
In 1963, he transferred to
AIG’s fledgling Puerto Rico of-
fice. He earned a college de-
gree and for many years as-
sessed property and liability
risks, such as exposure of con-
dominiums to hurricanes. He
worked with brokers to find
ways to provide coverage
meeting the needs of their
business clients.
In an interview, Mr. Green-
berg, 91, who now runs an-
other insurance conglomerate,
recalled Mr. Rodriguez as be-
ing “very diligent. He had
very good relationships with
brokers. He was extremely
knowledgeable about our
business.” Mr. Greenberg
joined AIG in late 1960 from
THE WALL STREET JOURNAL.
2016 through June 1, down
4.2% from the same period of
2015, according to Thomson
Reuters data.
over how tight their finances
were just a few years ago.”
For cities and states that do
borrow, costs have fallen. Con-
“When there’s less volume, necticut, which was recently
downgraded to double-A-mi-
nus by two ratings firms amid
2.89% concerns about the state’s
budgetary flexibility, last
Municipal bonds’ return this month sold 10-year bonds
year, according to Barclays PLC yielding 2.33%, down from a
as of Friday yield of 2.75% on 10-year debt
the state sold a year ago,
notes Matt Fabian, partner at
there’s more money chasing af- the research firm Municipal
ter fewer and fewer bonds,” said Market Analytics.
Howard Cure, director of munic- Despite the threat of higher
ipal research at Evercore Wealth interest rates, few are predict-
Management. “I think a lot of ing a major pullback in munis
governments are still getting this year. Analysts said that
Puerto Rico’s defaults have
had little impact on the
broader market. And the tax
break provided by municipal
bonds helps offset the low
yields the debt currently of-
fers.
John Miller, co-head of
fixed income at Nuveen Asset
Management, which manages
about $113 billion in state and
local debt, said the imbalance
between demand for the debt
Friday 1.83% and the supply of new bonds
is likely to keep prices high in
the short term, even if the Fed
raised rates.
“There’s a bit less fear
Record low
around the implications of
that,” he said. “Even though
munis are at low yields rela-
2013 2014 2015 2016 tive to history, they’re at high
yields relative to the rest of
THE WALL STREET JOURNAL. the world.”
Mr. Thomas may have
solved part of the puzzle of
low investment, but not the
entire puzzle. He has found
low—too much cash chasing
too few profitable investments.
Countless other factors affect
the decision to invest, the most
that low interest rates boost important being the outlook for
the performance of stocks that sales, which tends to benefit
pay high dividends but hasn’t from low rates which boost con-
shown that dynamic influences sumer spending. Higher interest
companies’ investment deci- rates would damp consumer
sions. While dividend consid- spending and push up the dollar,
erations might give companies both of which would hurt sales
one reason not to invest more and thus investment. Moreover,
when interest rates are low, it for companies that don’t have
isn’t clear how important that publicly traded shares or pay
effect is in the scheme of high dividends, the traditional
things. A company may see benefit of low rates on invest-
few promising capital projects ment is probably still more im-
and thus conclude it would portant than the effect on the
rather return the cash to share price.
shareholders. This wouldn’t be Nonetheless, when interest
because interest rates are low. rates have been so low for so
It would be reflecting the same long, it is worth re-examining
forces that are keeping rates old relationships.
S&P Dividend Aristocrat Growth in uses of cash by
relative to the S&P 500
6%
U.S. nonfinancial companies
200% 194%
Share Repurchases
Dividends
Business Investment
4 150
100
May 17 4.8% 67%
0 50
43%
–0.2 0
F 2016 M A M 2009 ’10 ’11 ’12 ’13 ’14 ’15
THE WALL STREET JOURNAL.
another insurance company.
Francisco Diaz, an AIG se-
nior executive in Puerto Rico,
said colleagues considered Mr.
his family said.
Still, “he was not a big
email guy,” said his son,
Manny Rodriguez. “It’s the
Rodriguez “like an encyclope- personal touch with him: ‘Hey,
dia” on questions about insur- can I have five minutes of your
ance, able to “give you the time to hash things out?’ ”
right answer.” “My dad is a seriously loyal
He was a late adopter to man” who was always appre-
using a personal computer but ciative that AIG “had invested
ultimately checked his Black- in him, believed in him,” from
Berry frequently enough to be Cuba onwards, the younger
teased by his grandchildren, Mr. Rodriguez said.
Currencies
U.S.-dollar foreign-exchange rates in late New York trading
US$vs, US$vs,
Fri YTDchg Fri YTDchg
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%)
Vietnam dong .00004461 22415 1.2
Americas
Argentina peso .0719 13.9080 7.5 Europe
Brazil real .2835 3.5277 –10.9 Czech Rep. koruna .04206 23.774 –4.5
Canada dollar .7728 1.2941 –6.5 Denmark krone .1527 6.5479 –4.7
Chile peso .001466 682.30 –3.7 Euro area euro 1.1364 .8800 –4.4
Colombia peso .0003318 3014.25 –5.1 Hungary forint .003636 275.06 –5.3
1 unch
Ecuador US dollar 1 Iceland krona .008094 123.55 –5.1
Mexico peso .0538 18.5935 8.1 Norway krone .1223 8.1784 –7.5
Peru new sol .2980 3.356 –1.7 Poland zloty .2588 3.8637 –1.5
Uruguay peso .03222 31.0400 3.8 Russia ruble .01534 65.184 –9.3
Venezuela b. fuerte .100150 9.9851 58.4 Sweden krona
Switzerland franc
.1228 8.1404
1.0243 .9763
–3.6
–2.6
Asia-Pacific
Turkey lira .3446 2.9015 –0.6
Australian dollar .7363 1.3581 –1.0
Ukraine hryvnia .0398 25.1360 4.8
China yuan .1526 6.5518 0.9
UK pound 1.4519 .6888 1.5
Hong Kong dollar .1287 7.7682 0.2
Middle East/Africa
India rupee .01498 66.771 0.8
Indonesia rupiah .0000745 13431 –2.9 Bahrain dinar 2.6522 .3770 unch
Japan yen .009387 106.53 –11.4
Kazakhstan tenge .002961 337.71 –0.3
.1249 8.0033 unch
Egypt pound
Israel shekel
.1125 8.8850
.2599 3.8469
13.5
–1.2
–0.5
Macau pataca Kuwait dinar 3.3101 .3021
Malaysia ringgit .2450 4.0823 –5.1 Oman sul rial 2.5976 .3850 unch
New Zealand dollar .6954 1.4380 –1.7 Qatar rial .2748 3.639 –0.1
Pakistan rupee .00955 104.750 –0.1 Saudi Arabia riyal .2666 3.7503 –0.1
Philippines peso .0216 46.232 –1.3 South Africa rand .0659 15.1789 –1.9
Singapore dollar .7368 1.3572 –4.3
South Korea won .0008595 1163.48 –1.1 Close Net Chg % Chg YTD%Chg
Sri Lanka rupee .0068074 146.90 1.9 WSJ Dollar Index 86.15 –1.46–1.67 –4.46
Taiwan dollar .03099 32.267 –2.0 Sources: Tullett Prebon, WSJ Market Data Group
Thailand baht .02827 35.370 –1.8
THE WALL STREET JOURNAL.
EU Bank Rule Could Upend Trade Finance
Short-term Instruments
including letters of
credit could be written
down if lender fails
BY JON SINDREU
From the Chinese Tang Dy-
nasty in the eighth century to
Lombard Street in Victorian
London, trade finance has al-
ways greased the wheels of
global commerce. But this leg-
acy is under threat in Europe
from new regulation aimed at
preventing another bank bail-
out.
Banks and commerce bodies
are increasingly jittery about
the potential effects of Euro-
pean Union regulation on the
short-term financial instru-
ments that connect buyers and
sellers of goods across coun-
tries.
EU authorities have included
trade-finance instruments, such
as letters of credit, in the list of
bank liabilities that could be
written down if a bank goes un-
der. This decision, the banks say,
creates an enormous compli-
ance headache and a competi-
tive disadvantage and could
leave unsuspecting parties hold-
ing the bag if foreign buyers fail
to pay their bills.
The spat comes amid a chal-
lenging backdrop. The World
Trade Organization warned in a
report this month that a “trade
Online
Lender
Vouch Is
Closing
BY TELIS DEMOS
AND ROLFE WINKLER
Online marketplace lender
Vouch Financial is shutting
down, according to people fa-
miliar with the matter.
Vouch was among a wave
of online lenders that raised
venture-capital funding in re-
cent years, hoping to capital-
ize on the huge growth en-
joyed by firms such as
LendingClub Corp. and Pros-
per Marketplace Inc., which
filled a gap in personal lend-
ing left by retreating banks.
However, a sharp decline in
investor appetite for online
lenders’ loans in recent
months, plus a Silicon Valley
pullback in willingness to
commit more funding, has
curtailed the growth of some
platforms, leading some of the
smallest to pursue sales or, in
the case of Vouch, to begin
the process of winding down.
The company’s decision to
shut its doors is a further in-
dication of pressure affecting
online lenders. It also sug-
gests that more activity may
begin to gravitate toward
larger players and even poten-
tially banks that are increas-
ingly offering online loans of
their own.
Vouch had struggled to
compete with its bigger online
rivals, and its investors de-
cided not to continue backing
it with more funds, a person
familiar with the company’s
thinking said.
Yee Lee, the company’s co-
founder and a board member,
declined to comment.
The San Francisco firm,
started in 2013, makes per-
sonal loans. Vouch borrowers
must ask a friend or family
member to sponsor them and
put up a slice of money that
will be lost if the borrower
doesn’t pay back, on the
theory that would improve
borrowers’ likelihood to repay
the loan.
Vouch had raised $11 mil-
lion in venture funding from
investors including Greylock
Partners, First Round Capi-
tal and Data Collective, ac-
cording to Dow Jones Ven-
tureSource.
Loan volume by Vouch
never took off like larger
peers. Through last August,
Vouch said it had made $1
million in loans. By contrast,
Prosper and LendingClub each
lent several billion last year.
It wasn’t immediately clear
how many people worked at
Vouch, or their current status.
The company’s LinkedIn pro-
file said it had fewer than 50
employees, and 28 people
were listed on the website.
GLOBAL FINANCE
finance gap” is hurting global
commerce, especially for
smaller companies. The Bank for
International Settlements esti-
mated that “reduced trade fi-
nance could have accounted for
as much as two-fifths of the fall
in export volumes” between the
2008 financial crash and 2014.
“Every bank is squirming,
thinking about how they can
avoid” the regulation, said Geof-
frey L. Wynne, a London-based
partner at American law firm
Sullivan & Worcester. But banks
and trade associations don’t
have high hopes of getting a
last-minute opt-out.
Data for trade finance are
scarce, but the BIS says banks
serve as intermediaries for be-
tween $6.5 trillion and $8 tril-
lion of it a year. It makes up
roughly 4% of the revenue of the
world’s 12 largest banks, accord-
ing to figures by analytics firm
Coalition Development Ltd.
A spokeswoman for the Euro-
pean Commission said members
would be “considering these
concerns,” among other issues,
when the results of a consulta-
tion on the new financial regula-
tion are published at a date yet
to be confirmed.
The rules are designed to
shield taxpayers from bailing
out distressed financial institu-
tions again, shifting the brunt to
a “bail-in” by investors instead.
All EU bank contracts that
fall outside the bloc’s jurisdic-
tion are mandated to include a
A Saudi Aramco facility. OPEC last Thursday failed to agree to a ceiling on production of crude.
Saudi Arabia Cuts Prices
Of Oil Exports to Europe
BY BENOIT FAUCON
Saudi Arabia on Sunday cut
its oil prices to Europe, signal-
ing mounting competition af-
ter OPEC failed to cap its out-
put as Iran’s exports ramp up.
In an email sent to custom-
ers, state oil company Saudi
Aramco said it had cut its
light crude prices by 35 cents
a barrel to northwest Europe
and by 10 cents a barrel to the
Mediterranean for July deliv-
eries.
The price reduction is sur-
prising, as demand typically
grows in the second half of the
year as refineries return from
maintenance. In addition, mar-
kets have recently been
buoyed by outages in coun-
tries like Nigeria.
But Saudi Arabia’s move
comes after the Organization
of the Petroleum Exporting
Countries last Thursday failed
to agree on a production ceil-
ing.
The absence of output lim-
its effectively gives a blank
check for the group’s two most
influential members and ri-
vals, Saudi Arabia and Iran, to
pump at will.
Geopolitical tensions helped
scotch a deal on capping pro-
duction, with Iran taking a
A new regulation threatens European trade finance. Shipping containers in Hamburg, Germany.
clause obliging liability holders
to accept the possibility of a
bail-in. This regulation, intro-
duced in January, was intended
to stop creditors seeking the
protection of foreign courts.
Trade credit is usually pro-
vided by a long chain of finan-
cial institutions across different
countries, meaning each of
those banks needs to hold an-
other’s liability. EU banks worry
that a “bail-in stamp” would put
them at a disadvantage relative
to U.S. banks.
U.S. trade credit faced its
own uncertainty last year, when
the U.S. Export-Import Bank’s
firm stand late last Wednes-
day against any move that
would limit its own production
as it aims for an economic
comeback following the end of
Western sanctions in January.
The two Persian Gulf na-
tions are jockeying for politi-
cal influence in hot spots such
as Yemen and Syria.
Iran resumed its crude ex-
The lack of output
limits allows Saudi
Arabia and Iran to
pump oil at will.
ports to the European Union
in February after an EU em-
bargo on its oil was lifted and
is now heavily competing
there with Saudi Arabia, which
had partly replaced Iran as a
source of European supply
during the sanctions.
Shipments from Iran to the
EU have now reached 400,000
barrels a day. They are set to
increase to 700,000 barrels a
day in the coming months af-
ter Iran clinched deals with
Greek, French and Italian re-
finers, according to Iranian of-
ficials.
By contrast, Saudi Arabia
Monday, June 6, 2016 | C3
cess to trade credit.
“It’s a poorly thought-out
regulation that will hurt EU
businesses,” said Emily O’Con-
nor, senior policy manager at
the Paris-based International
Chamber of Commerce.
Letters of credit guarantee a
seller will get paid even if the
buyer fails to make good, which
enables unknown parties in dif-
ferent countries to trade by put-
ting their faith in banks rather
than one another.
A bank issues the letter of
credit against a promise by the
SEAN GALLUP/GETTY IMAGES
importer that it will pay up and
then sends it to a confirming
bank, which is the one the ex-
porter uses. A specified time after
proof the product was shipped is
presented, the confirming bank
will pay the exporter.
While sellers are promised
payment by both buyer and con-
charter was allowed to expire of them won’t understand firming bank, the latter—more
for five months before finally them.” often a chain of them—is di-
being renewed in December. A Banks also argue that logisti- rectly exposed to the risk of the
lobbying effort by business cal complications are insur- issuing bank going under. Al-
groups, and the vocal com- mountable, as these decades-old though this risk was there be-
plaints of large exporters includ- contracts don’t operate under fore, traditional bankruptcy pro-
ing General Electric Co. and any specific law. Furthermore, cedures used to be protective of
Boeing Co., eventually overcame they are usually transmitted trade finance, whereas the new
opposition to Ex-Im Bank from over the Society for Worldwide regulation pinpoints it as liable
congressional Republicans who Interbank Financial Telecommu- to be written off.
insisted that its existence un- nication network, which banks People familiar with the mat-
fairly put taxpayers at risk. use to send information to one ter said banks across different
Deutsche Bank AG’s global another in a standardized way, EU countries are testing the wa-
head of trade finance, Michael making them hard to amend. ters and slowly starting to
Spiegel, warned “there’s a possi- Commerce bodies are highly phase in these rules in some
bility that non-EU counterpar- critical of the regulation as well, trade-finance instruments, while
ties would be reluctant to ac- saying it could especially hurt still intensively lobbying Euro-
cept such clauses, because many smaller companies with less ac- pean regulators.
GAP U.S. Senate committee, Fed
governor Daniel Tarullo said
the central bank planned to
Continued from page C1
like taking customer deposits,
unveil strict new limits on
bank activity in commodity
markets in early 2015.
the Sydney-based firm, with
more than half of its $350 bil-
lion in assets in the Americas,
While that hasn’t happened,
the Fed still is considering
what rules to introduce, peo-
is instead classified as a repre-
sentative office of a foreign
company.
ple familiar with the matter
say.
The threat of new regula-
“There’s no question Mac- tion was enough to deter most
quarie has taken advantage banks. Deutsche Bank AG,
of” that classification, said Credit Suisse Group AG, Mor-
James Newsome, a former gan Stanley and J.P. Morgan
chairman of the U.S. Commod- all closed or curtailed com-
ity Futures Trading Commis- modity operations. Commodity
sion whose firm, Delta Strat- revenue at the top 12 global
egy Group, represents banks in investment banks has declined
dealings with regulators. “The by two-thirds since 2008, ac-
fact they’re not registered as a cording to London research-
bank-holding company in the consultancy Coalition.
U.S. gives them the ability to Macquarie’s expanding
stay active in these markets.” presence in raw-materials
Macquarie officials say the markets also has helped it
firm doesn’t have to be boost business in parts of the
treated as a bank in the U.S.
because it doesn’t have a
$3 billion
IAN TIMBERLAKE/AGENCE FRANCE-PRESSE/GETTY IMAGES
banking license, has no access
to Fed funding and doesn’t
take deposits. Leveraged loans Macquarie
Big banks jumped into com- extended to the U.S. energy
modities trading in the 1980s, industry in the past five years
buying up pipelines, metals
warehouses and power plants
to trade barrels of oil, mega- company that handle more
watts of electricity and ingots traditional banking activities,
of aluminum. Morgan Stanley, particularly for U.S. companies
Goldman Sachs Group Inc. and in the oil, gas and energy in-
J.P. Morgan Chase & Co. be- dustries.
came the heavyweights of a The firm’s ranking in U.S.
group known as the Wall energy-stock underwriting
Street refiners. jumped to 12th in 2015 from
The banks presided over an 29th in 2009, managing six
unprecedented commodity deals with a value of $471 mil-
boom during the 2000s. But lion, according to Dealogic.
the business slumped in recent And though representative of-
years after a steep and broad- fices are prohibited from mak-
based commodities-market de- ing loans, Macquarie has be-
cline and waning investor in- come one of the largest
terest. lenders to the U.S. energy in-
Regulators and Congress dustry of a particular kind of
began examining bank activi- high-risk credit, extending $3
exported 800,000 barrels a ties in the commodity markets billion in leveraged loans in
day on average to Europe last in 2013. They feared damage the past five years. It has done
year, according to the Interna- to the financial system if a ca- so by building relationships
tional Energy Agency. lamity occurred, and worried with U.S. companies and hav-
As a result, Saudi Arabia that the trading information ing foreign offices handle the
and Iran have been matching gave the firms unfair advan- closing on the loan agree-
each other’s price cuts, though tages. ments, which is allowed under
they deny offering special, pri- In 2014 testimony before a U.S. law.
vate discounts to individual
buyers.
Iran believes it will ulti-
mately have the upper hand,
as its finances are less depen-
dent on oil. “Saudi Arabia will
be big loser in the price war,”
Akbar Nematollahi, the head
of public relations at Iran’s oil
ministry, wrote last month in
the ministry’s in-house maga-
zine.
Some European oil produc-
ers could be collateral victims
of the rivalry. Northern Euro-
pean oil producers, mostly in
the U.K. and Norway, have
struggled to attract new in-
vestments amid depressed oil
prices.
Competition for market
share has been less intense in
Asia, where Iran was always
allowed to sell. On Sunday,
Saudi Arabia increased its
light-crude prices to the Far
East by 35 cents a barrel. It
also raised prices by 10 cents a
barrel in the U.S., where Iran
is still banned from selling.
C4 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST
Dow Jones Industrial Average S&P 500 Index New to the Market
Last Year ago Last Year ago
17807.06 t 66.16, or 0.37% last week Trailing P/E ratio * 19.00 16.22 2099.13 s 0.07, or 0.003% last week Trailing P/E ratio * 24.22 21.23 Public Offerings of Stock
High, low, open and close for each of P/E estimate * 16.99 16.00 High, low, open and close for each of P/E estimate * 17.81 17.89 IPOs in the U.S. Market
the past 52 weeks Dividend yield 2.58 2.33 the past 52 weeks Dividend yield 2.18 2.00
Initial public offerings of stock expected this week; might include some
All-time high 18312.39, 05/19/15 All-time high: 2130.82, 05/21/15
offerings, U.S. and foreign, open to institutional investors only via the
Week's high Rule 144a market; deal amounts are for the U.S. market only
Current divisor 0.14602128057775 Symbol/ Pricing
DOWN UP 19200 2150
Expected primary Shares Range($)
t

Monday's open Friday's close 200-day moving average pricing date Filed Issuer/business exchange (mil.) Low/High Bookrunner(s)

Friday's close Monday's open 18600 2100 6/9 3/4 Atkore International Group ATKR 12.0 20.00/ Credit Suisse, DB,
t

Sells electrical circuitry N 22.00 JPM, UBS, Citi,

raceways and metal RBC Cptl Mkts,
200-day moving average Week's low frames used in commercial WFS
18000 2050 construction.
6/9 5/12 China Online Education Group COE 36.0 18.00/ MS, Credit Suisse
Software education N 20.00
17400 2000 platform in China.

16800 1950
Lockup Expirations
65-day moving None expected this week
average
16200 1900 IPO Scorecard
65-day moving average Performance of IPOs, most-recent listed first
15600 1850 % Chg From % Chg From
Company SYMBOL Friday3s Offer 1st-day Company SYMBOL Friday3s Offer 1st-day
IPO date/Offer price close ($) price close IPO date/Offer price close ($) price close
Bars measure the point change from Monday's open
15000 1800 Sensus Healthcare 6.45 17.3 ... Reata Pharmaceuticals 18.71 70.1 43.2
SRTSU June 3/$5.50 RETA May 26/$11.00
J J A S O N D J F M A M J J J A S O N D J F M A M J
Clearside Biomedical 7.06 0.9 –2.6 US Foods 25.29 10.0 1.5
Primary CLSD June 2/$7.00 USFD May 26/$23.00
NYSE weekly volume, in billions of shares market Composite
t
t

Financial Flashback NantHealth

NH June 2/$14.00
18.54 32.4 –0.3 Midland States Bancorp 22.56
MSBI May 24/$22.00
2.5 3.0
30
20 The Wall Street Journal, June 6, 2005 Cotiviti Hldgs 19.65 3.4 14.8 Grupo Supervielle 11.71 6.5 1.8
COTV May 26/$19.00 SUPV May 18/$11.00
10 ProLogis is buying fellow real-estate investment trust GMS 22.75 8.3 3.8 Merus 8.51 –14.9 –15.2
0 Catellus Development Corp., in a $3.6 billion cash-and- GMS May 26/$21.00 MRUS May 18/$10.00
J J A S O N D J F M A M J stock deal.
Sources: WSJ Market Data Group; FactSet Research Systems
* P/E data based on as-reported earnings from Birinyi Associates Inc.
Other Stock Offerings
Major U.S. Stock-Market Indexes Nasdaq Composite
Secondaries and follow-ons expected this week in the U.S. market
Latest Week 52-Week % chg s 9.01, or 0.18% None expected this week
High Low Close Net chg % chg Low Close (l) High % chg YTD 3-yr. ann.
Dow Jones
last week
Off the Shelf
Industrial Average 17899.24 17664.79 17807.06 -66.16 -0.37 15660.18 l
18144.07 -0.2 2.2 5.3
“Shelf registrations” allow a company to prepare a stock or bond for
Transportation Avg 7829.69 7640.19 7730.13 -42.15 -0.54 6625.53 l 8509.64 -9.2 2.9 7.1
4965 sale, without selling the whole issue at once. Corporations sell as
Utility Average 675.46 654.41 672.35 16.07 2.45 541.97 l 672.35 19.4 16.4 11.7 conditions become favorable. Here are the shelf sales, or takedowns,
Total Stock Market 21738.64 21495.06 21665.91 41.25 0.19 18663.11 l 22287.78 -1.3 2.7 8.2 over the last week:
Barron's 400 532.26 524.30 528.66 1.55 0.29 446.15 l 586.75 -8.1 2.4 7.2 4940
Takedown date/ Deal value Registration
Issuer/Industry Registration date ($ mil.) (mil.) Bookrunner(s)
Nasdaq Stock Market
4915 China Biologic Products June 3 $316.4 ... MS
Nasdaq Composite 4971.36 4909.21 4942.52 9.01 0.18 4266.84 l 5218.86 -2.5 -1.3 12.6
Healthcare June 5,315
Nasdaq 100 4531.35 4480.80 4509.79 -2.75 -0.06 3947.80 l 4719.05 0.7 -1.8 14.7 Adeptus Health June 2 $151.9 ... GS
4890 Healthcare July 20,315
Standard & Poor's 27 30 31 1 2 3
500 Index 2105.26 2085.10 2099.13 0.07 0.003 1829.08 l 2128.28 0.3 2.7 8.6 May Easterly Government PropertiesJune 2 $126.8 $500.0 Citi, Jefferies, Raymond James,
Real Estate March 9,316 RBC Cptl Mkts
MidCap 400 1507.10 1483.14 1500.90 8.83 0.59 1238.82 l 1549.44 -1.7 7.3 8.3 DJ US TSM
Weatherford Intl. (Switzerland)June 1 $1,100.0 ... RBC Cptl Mkts, Citi, DB,
SmallCap 600 713.22 701.22 709.55 6.70 0.95 588.26 l 742.13 -1.7 5.6 8.4 s 41.25, or 0.19% Oil & Gas March 7,314 JPM, MS, Mitsubishi UFJ,
last week WFS
Other Indexes
Russell 2000 1170.77 1148.60 1164.13 13.68 1.19 953.72 l 1295.8 -7.7 2.5 5.5
NYSE Composite 10504.46 10369.50 10487.94 18.43 0.18 9029.88 l 11149.36 -4.5 3.4 3.9 Public and Private Borrowing
Value Line 465.82 458.08 464.42 3.78 0.82 383.82 l 517.73 -9.1 4.2 2.9 21690 Treasurys
NYSE Arca Biotech 3328.87 3194.81 3262.68 86.25 2.72 2642.53 l 4431.87 -21.1 -14.5 18.6 Monday, June 6 Tuesday, June 7
NYSE Arca Pharma 527.80 516.91 526.11 6.81 1.31 477.25 l 605.94 -9.8 -2.8 7.4 21610 Auction of 13-week bills; Auction of three-year notes;
KBW Bank 71.46 68.55 69.79 -1.24 -1.75 56.51 l 80.41 -10.1 -4.5 4.3 announced on June 2; settles on June 9 announced on June 2; settles on June 15
PHLX§ Gold/Silver 89.23 78.62 89.06 9.65 12.16 38.84 l 92.85 31.5 96.6 -6.9
21530 Auction of 26-week bills; Auction of four-week bills;
PHLX§ Oil Service 168.02 159.01 162.09 -3.05 -1.85 128.61 l 214.12 -23.3 2.8 -14.0 announced on June 2; settles on June 9 announced on June 6; settles on June 9
PHLX§ Semiconductor 709.59 694.81 705.60 9.90 1.42 559.18 l 728.22 -2.8 6.3 14.4 Wednesday, June 8 Thursday, June 9
CBOE Volatility 15.25 12.90 13.47 0.35 2.67 11.95 l 40.74 -5.2 -26.0 -6.1 21450
27 30 31 1 2 3 Auction of 10-year notes; Auction of 30-year bonds;

Philadelphia Stock Exchange Sources: SIX Financial Information; WSJ Market Data Group May announced on June 2; settles on June 15 announced on June 2; settles on June 15

Public and Municipal Finance

Deals of $ 150 million or more expected this week
International Stock Indexes Commodities and Sale
Final
maturity Issuer
Total
($mil.)
Rating Bookrunner/
Fitch Moody’s S&P Bond Counsel(s)
Latest Week 52-Week Range YTD Currencies June 7 prelim. Georgia 270.0 N.R. N.R. N.R. Preliminary/
Region/Country Index Close % chg Low Close High % chg Last Week YTD
Close Net chg %Chg % chg
Gray &
World The Global Dow 2346.68 0.10 2047.44 • 2604.27 0.4 Pannell LLP
533.74 1.83 17.61
DJ Global Index 312.21 0.34 272.15 • 337.78 1.4 DJ Commodity 9.57
June 7 prelim. Georgia 1,080.0 N.R. N.R. N.R. Preliminary/
DJ Global ex U.S. 210.15 0.55 184.52 • 240.41 ... Reuters-Jefferies CRB 188.67 2.53 1.36 7.03 Gray &
Global Dow Euro 1949.82 –1.68 1699.54 • 2223.60 –3.7 Crude oil, $ per barrel 48.62 -0.71 -1.44 31.26 Pannell LLP
DJ TSM Global 3211.74 0.38 2795.15 • 3475.18 1.4 Natural gas, $/MMBtu 2.398 0.229 10.56 2.61
June 7 prelim. Prince 177.4 AAA Aaa AAA Preliminary/
Global ex U.S. 2124.29 0.58 1863.63 • 2421.86 0.1 Gold, $ per troy oz. 1240.10 26.30 2.17 16.96 Georges Co-
Maryland
Graves &
Horton LLC
Developed ex U.S. 2097.17 0.49 1843.94 • 2361.07 –0.5
U.S. Dollar Index 93.87 -1.83 -1.91 -4.88
Global Small-Cap 4372.95 1.27 3665.30 • 4702.42 3.8
WSJ Dollar Index 86.15 -1.66 -1.89 -4.46 June 8 prelim. Maryland 1,036.0 AAA Aaa AAA Preliminary/—
Global Large-Cap 3047.48 0.25 2667.12 • 3299.27 1.1
Euro, per dollar 0.8800 -0.0197 -2.19 -4.43
Americas DJ Americas 505.39 0.27 433.35 • 522.13 3.7
Yen, per dollar 106.53 -3.74 -3.39 -11.44
June 8 prelim. Miami-Dade
Co-Florida
339.3 N.R. N.R. N.R. RBC Cptl
Mkt/—
Brazil Sao Paulo Bovespa 50619.50 3.20 37497.48 • 54477.78 16.8
U.K. pound, in dollars 1.45 -0.01 -0.70 -1.47
Canada S&P/TSX Comp 14226.78 0.86 11843.11 • 14957.16 9.4 June 8 April 1, 2046 Seattle City- 164.5 N.R. Aa1 AA+ Preliminary/
Mexico IPC All-Share 45928.23 –0.42 40265.37 • 46191.51 6.9 52-Week
Low Close(l) High % Chg
Washington Stradling
Yocca Carlson
Chile Santiago IPSA 3083.35 0.22 2759.77 • 3198.07 4.7
571.61 -3.74
Europe Stoxx Europe 600 341.29 –2.39 303.58 • 406.80 –6.7 DJ Commodity 420.23 l June 9 prelim. Massachusetts 450.5 N.R. N.R. N.R. Preliminary/
Mintz Levin
Stoxx Europe 50 2850.77 –2.81 2566.26 • 3520.48 –8.0 Reuters-Jefferies CRB 155.01 l 228.18 -15.22
Cohn Ferris
Eurozone Euro Stoxx 321.74 –2.00 284.92 • 380.54 –6.8 Crude oil, $ per barrel 26.21 l 61.43 -17.77
Euro Stoxx 50 2997.55 –2.63 2680.35 • 3686.58 –8.3 Natural gas, $/MMBtu 1.64 l 2.93 -7.41 June 9 May 1, 2037 South Broward 168.0 N.R. Aa3 AA Preliminary/
Belgium Bel-20 3490.55 –0.93 3130.76 • 3849.12 –5.7
Gold, $ per troy oz. 1050.80 l 1294.70 6.19
Hospital Dt Greenberg
Traurig PA
France CAC 40 4421.78 –2.06 3896.71 • 5196.73 –4.6
Germany DAX 10103.26 –1.78 8752.87 • 11735.72 –6.0 U.S. Dollar Index 92.57 l 100.20 -2.57 June 9 prelim. Ventura Co- 176.7 N.R. N.R. N.R. Preliminary/
Israel Tel Aviv 1444.86 1.00 1383.34 • 1723.56 –5.5 WSJ Dollar Index 84.64 l 91.66 -1.55
California Norton Rose
Fulbright
Italy FTSE MIB 17495.09 –3.80 15773 • 24031 –18.3
Euro, per dollar 0.86 l 0.95 -2.18
Netherlands AEX 445.31 –1.25 382.61 • 503.48 0.8
125.62 -15.19
June 10 prelim. District of 421.8 N.R. N.R. N.R. J P Morgan
Spain IBEX 35 8801.60 –3.36 7746.3 • 11556.1 –7.8 Yen, per dollar 106.41 l Columbia Securities
LLC/—
Sweden SX All Share 480.68 –1.74 435.21 • 541.60 –4.8 U.K. pound, in dollars 1.39 l 1.59 -4.91
Switzerland Swiss Market 8148.40 –1.74 7496.62 • 9526.79 –7.6 June 10 prelim. Los Angeles 800.0 N.R. N.R. N.R. Wells Fargo
U.K. FTSE 100 6209.63 –0.98 5536.97 • 6846.74 –0.5 Real-time U.S. stock Co-California & Co/—
Asia-Pacific
Australia
DJ Asia-Pacific TSM 1374.26
S&P/ASX 200 5318.90 –1.61
1.36 1190.45
4765.3
•
•
1557.73 –1.1
5706.7 0.4
WSJ
.COM
quotes are available on
WSJ.com. Track most-
active stocks, new
Corporate Debt
Source:Thomson Reuters/Ipreo

China Shanghai Composite 2938.68 4.17 2655.66 • 5166.35 –17.0

highs/lows, mutual None scheduled this week
Hong Kong Hang Seng 20947.24 1.80 18319.58 • 27404.97 –4.4
funds and ETFs.
India S&P BSE Sensex 26843.03 0.71 22951.83 • 28504.93 2.8
Japan Nikkei Stock Avg 16642.23 –1.14 14952.61 • 20868.03 –12.6 Plus, get deeper money-flows data and A Week in the Life of the DJIA
Singapore Straits Times 2809.23 0.24 2532.70 • 3373.48 –2.5 email delivery of key stock-market A look at how the Dow Jones Industrial Average component stocks did in
South Korea Kospi 1985.84 0.85 1829.81 • 2107.33 1.3 data. the past week and how much each moved the index. The DJIA lost 66.16
Taiwan Weighted 8587.36 1.46 7410.34 • 9476.34 3.0 All are available free at
points, or 0.37%, on the week. A $1 change in the price of any DJIA stock =
6.85-point change in the average. To date, a $1,000 investment on Dec. 31
Source: SIX Financial Information;WSJ Market Data Group WSJMarkets.com in each current DJIA stock component would have returned $31,188, or a
gain of 4.00%, on the $30,000 investment, including reinvested dividends.
The Week’s Action
Consumer Rates and Returns to Investor Benchmark Yields and Rates Pct Stock price Point chg $1,000 Invested(year-end '15)
chg (%) change in average Company Symbol Close $1,000
U.S. consumer rates Selected rates Treasury yield curve Forex Race 4.28 3.08 21.09 Caterpillar CAT $75.04 $1,130
A consumer rate against its Home Equity Yield to maturity of current bills, Yen, euro vs. dollar; dollar vs. 2.40 1.61 11.03 DuPont DD 68.78 1,045
benchmark over the past year notes and bonds major U.S. trading partners 2.12 2.84 19.45 UnitedHealth Group UNH 136.84 1,168
Bankrate.com avg†: 4.67% 1.50 1.70 11.64 Johnson & Johnson JNJ 114.76 1,134
16%
United Community Bank 1.75% 5.00% 14 Yen 1.28 1.04 7.12 Procter & Gamble PG 82.47 1,056
s

Home equity loan

5.00% Blairsville, GA 912-280-9115 12 0.73 0.21 1.44 Cisco Systems CSCO 29.13 1,092
t 10 WSJ Dollar
4.00 0.59 0.30 2.05 Verizon VZ 50.92 1,129
Salem Five 3.00% 8 index
4.00 s 0.58 0.26 1.78 Coca-Cola KO 45.04 1,057
Salem, MA 978-745-5555 3.00 6
4 Euro
s 0.39 0.44 3.01 Travelers TRV 114.62 1,021
t 3.00 Savings Bank of Danbury 3.00% 2 0.35 0.28 1.92 Visa V 79.94 1,035
One year ago 2.00
t

Prime rate Danbury, CT 203-743-3849 t 0

–2 0.28 0.16 1.10 Merck MRK 56.64 1,082
2.00 The Torrington Savings Bank 3.00% Friday 1.00 –4 0.23 0.08 0.55 Pfizer PFE 34.69 1,095
Torrington, CT 860-496-2152 –6 0.17 0.12 0.82 Wal-Mart Stores WMT 70.87 1,175
1.00 0.00 –8
Brookline Bank 3.24% 0.16 0.05 0.34 Intel INTC 31.62 932
J J A S O N D J F M A MJ 1 3 6 1 2 3 5 710 30
Brookline, MA 877-668-2265
2015 2016 0.03 0.05 0.34 IBM IBM 152.89 1,133
2015 2016 month(s) years
–0.05 –0.03 –0.21 American Express AXP 65.49 950
3-yr chg maturity
Yield/Rate (%) 52-Week Range (%) –0.30 –0.51 –3.49 3M MMM 168.38 1,134
Interest rate Last (l)Week ago Low 0 2 4 6 8 High (pct pts) Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group
–0.33 –0.33 –2.26 United Technologies UTX 100.43 1,060
Federal-funds rate target 0.25-0.5 0.25-0.5 0.00 l 0.50 0.25 –0.60 –0.18 –1.23 General Electric GE 29.94 968
Prime rate* 3.50 3.50 3.25 l 3.50 0.25
Corporate Borrowing Rates and Yields –1.01 –0.53 –3.63 Microsoft MSFT 51.79 946
Libor, 3-month 0.68 0.67 0.28 l 0.69 0.41 Spread +/- Treasurys, –1.21 –0.79 –5.41 J.P. Morgan Chase JPM 64.64 992
Yield (%) in basis pts, 52-wk Range Total Return
Money market, annual yield 0.25 0.25 0.22 l 0.36 -0.21 Bond total return index Last Wk ago Last Low High 52-wk 3-yr
–1.33 –1.36 –9.31 Chevron CVX 100.66 1,146
Five-year CD, annual yield 1.24 1.24 1.24 l 1.53 0.01 –1.42 –1.84 –12.60 Boeing BA 127.38 894
10-yr Treasury, Ryan ALM 1.707 1.851 8.31 3.88 –1.54 –1.54 –10.55 Walt Disney DIS 98.75 940
30-year mortgage, fixed† 3.62 3.68 3.56 l 4.22 -0.59
DJ Corporate 2.796 2.901 7.73 4.48 –1.54 –1.90 –13.01 McDonald’s MCD 121.35 1,043
15-year mortgage, fixed† 2.87 2.88 2.79 l 3.42 -0.51
Aggregate, Barclays Capital 2.080 2.210 51 46 70 4.89 3.11 –1.64 –2.20 –15.07 Home Depot HD 131.74 1,007
Jumbo mortgages, $417,000-plus† 4.40 4.46 4.14 l 4.97 0.10
High Yield 100, Merrill Lynch 6.532 6.410 524 424 741 -2.544 2.013 –1.82 –1.64 –11.23 Exxon Mobil XOM 88.37 1,156
Five-year adj mortgage (ARM)† 3.22 3.24 3.05 l 3.86 0.25
Fixed-Rate MBS, Barclays 2.180 2.380 15 15 36 3.93 3.28 –2.42 –2.43 –16.64 Apple AAPL 97.92 940
New-car loan, 48-month 3.16 3.20 2.96 l 3.38 0.52 –2.42 –3.86 –26.43 Goldman Sachs GS 155.67 870
Muni Master, Merrill 1.519 1.555 -3 -9 7 6.135 3.597
HELOC, $30,000 4.67 4.58 4.29 l 5.01 -0.56 –4.88 –2.74 –18.76 Nike NKE 53.45 860
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest EMBI Global, J.P. Morgan 5.938 6.058 419 375 538 7.206 3.875
banks.† Excludes closing costs. Sources: WSJ Market Data Group; S&P Dow Jones Indices. For more information on the Dow Jones
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch Industrial Average and the 30 industrials, please visit www.djindexes.com
THE WALL STREET JOURNAL. Monday, June 6, 2016 | C5

CLOSED-END FUNDS
wsj.com/funds
Listed are the 300 largest closed-end funds as 52 wk Prem12 Mo Prem12 Mo Prem12 Mo Prem12 Mo
measured by assets. Prem Ttl Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld
Closed-end funds sell a limited number of shares and Fund (SYM) NAV Close /Disc Ret
invest the proceeds in securities. Unlike open-end NuvFloatRteInco Fd JFR 11.21 10.48 -6.5 6.8 Invesco Mun Incm Opps Tr OIA 7.82 7.89 +0.9 5.0 Loan Participation Funds High Yield Bond Funds
funds, closed-ends generally do not buy their shares NeubergerBermanMLPIncm NML 9.07 8.02 -11.6 -47.9 Nuv Float Rte Opp Fd JRO 11.15 10.58 -5.1 7.2 Invesco Mun Opportunity VMO 14.42 14.36 -0.4 6.1 504 Fund 10.08 NA NA 3.4 Nuveen HI Dec 2019 Tgt 9.84 10.20 +3.7 NS
back from investors who wish to cash in their holdings. Neubrgr Brm Rl Est Sec Fd NRO 6.06 5.32 -12.2 17.0
Instead, fund shares trade on a stock exchange. Nuveen Senior Income Fund NSL 6.69 6.07 -9.3 6.9 Invesco Municipal Trust VKQ 14.36 13.72 -4.5 6.0 Invesco Sr Loan A 6.22 NA NA 6.0 WA Middle Mkt Inc WMF NA NA NA 12.4
a-The NAV and market price are ex dividend. b-The Nuveen Dow 30 Dynamic DIAX 15.78 14.37 -8.9 2.2 Pioneer Floating Rate Tr PHD 12.35 11.30 -8.5 6.4 Invesco Qlty Mun Inco IQI 14.37 13.63 -5.1 5.6 Invesco Sr Loan B 6.22 NA NA 6.0 Other Domestic Taxable Bond Funds
NAV is fully diluted. c-NAV is as of Thursday’s close. d- NuvDivInco JDD 12.84 11.31 -11.9 2.7 Voya Prime Rate Trust PPR 5.67 5.15 -9.2 6.4 Invesco Inv Grade Muni VGM 14.87 14.51 -2.4 6.1 Invesco Sr Loan C 6.23 NA NA 5.2 Capstone Church Capital 17.12 NA NA 1.3
NAV is as of Wednesday’s close. e-NAV assumes rights Nuveen Engy MLP Fd JMF 13.08 12.21 -6.7 -22.5 GL Beyond Income 4.89 NA NA NE
offering is fully subscribed. f-Rights offering in process. High Yield Bond Funds Invesco Value Mun Incm Tr IIM 17.10 17.44 +2.0 4.8 Invesco Sr Loan IB 6.22 NA NA 6.2
g-Rights offering announced. h-Lipper data has been NuvNASDAQ100DynOver QQQX 19.30 18.17 -5.9 3.0 AllianceBernstein Glbl AWF 12.91 12.07 -6.5 9.1 MainStay DefinedTerm MMD NA 20.15 NA 5.9 Palmer Square Opp Income 16.74 NA NA 6.1
Invesco Sr Loan IC 6.22 NA NA 6.1
adjusted for rights offering. j-Rights offering has Nuveen Real Estate Fd JRS 12.05 11.10 -7.9 11.5 Babson Gl Sh Dur Hi Yd BGH 19.33 17.92 -7.3 10.9 MFS Munl Inco MFM 7.60 7.50 -1.3 5.3 Resource Credit Inc:A 9.91 NA NA 0.0
expired, but Lipper data not yet adjusted. l-NAV as of NuveenS&P500Buy-Write BXMX 13.34 12.82 -3.9 7.7
Invesco Sr Loan Y 6.22 NA NA 6.2 Resource Credit Inc:C 10.00 NA NA 0.0
previous day. o-Tender offer in process. v-NAV is BlackRock Corp Hi Yd Fd HYT 11.30 10.27 -9.1 9.6 NuvAMTFreeMuniIncm NEA 15.66 14.70 -6.1 5.1 Voya Senior Income:A 12.51 NA NA 5.6
converted at the commercial Rand rate. w-Convertible Reaves Utility Fund UTG 30.80 NA 10.7 BlkRk Debt Strat Fd DSU 3.98 3.56 -10.6 7.2 NuveenAMT-FreeMunValue NUW 17.54 18.40 +4.9 4.3 Resource Credit Inc:D 9.89 NA NA 0.0
Tekla Hlthcr Investors HQH 25.45 25.92 +1.8 -17.6 Voya Senior Income:B 12.45 NA NA 5.1 Resource Credit Inc:I 9.93 NA NA 0.0
Note-NAV (not market) conversion value. y-NAV and BlackRockDurInco Tr BLW 16.55 15.20 -8.2 7.5 Nuveen Div Fnd NAD 16.15 15.42 -4.5 5.5
market price are in Canadian dollars. NA signifies that Tekla Healthcare Opps Fd THQ 18.84 16.68 -11.5 -8.4 Voya Senior Income:C 12.48 NA NA 5.1 Resource Credit Inc:T 9.87 NA NA 0.0
the information is not available or not applicable. NS DoubleLine Incm Solutions DSL NA 18.41 NA 10.4 Nuveen Enh AMT-Fr Muni NVG 17.00 15.87 -6.6 4.9
Tekla Life Sciences HQL 19.83 19.29 -2.7 -22.4 Nuveen Enh Muni Credit NZF 16.74 15.65 -6.5 5.3 Voya Senior Income:I 12.47 NA NA 5.9 Resource Credit Inc:U 9.92 NA NA 0.0
signifies fund not in existence of entire period. Dreyfus Hi Yld Fd DHF 3.35 3.25 -3.0 10.7
12 month yield is computed by dividing income Tekla World Hlthcr Fd THW 16.30 14.40 -11.7 NS Fst Tr Hi Inc Lg/Shrt Fd FSD 16.89 14.78 -12.5 7.9 Nuveen Enhncd Mun Val Fd NEV 15.93 16.11 +1.1 5.9 Voya Senior Income:W 12.51 NA NA 5.9 Resource Credit Inc:W 9.89 NA NA 0.0
dividends paid (during the previous twelve months for Tortoise Energy TYG 29.44 30.13 +2.3 -19.9 Guggenheim Strat Opps Fd GOF 17.55 18.03 +2.7 12.4 Nuveen Intermed Dur Mun NID 14.22 13.91 -2.2 5.0
periods ending at month-end or during the previous
fifty-two weeks for periods ending at any time other Tortoise MLP Fund NTG 19.48 18.74 -3.8 -11.4 NexPoint Credit Strat Fd NHF 23.84 21.45 -10.0 13.8 Nuveen Invest Qual Muni NQM 16.63 16.35 -1.7 5.8
than month-end) by the latest month-end market price
adjusted for capital gains distributions.
Voya Gl Equity Div IGD 7.79 6.96 -10.7 -5.3
Income Preferred Stock Funds
Nuveen Gl Hi Incm Fd JGH 16.46 14.26 -13.4 11.2 NuveenMuniIncoOpp Fd NMZ 13.97 14.22 +1.8 6.4
Nuveen Muni Mkt Opp NMO 15.94 14.84 -6.9 5.1
Borrowing Benchmarks | WSJ.com/bonds
Source: Lipper Nuveen High Incm Dec18 JHA 9.97 10.23 +2.6 NS
Calamos Strat Fd CSQ 11.10 10.03 -9.6 -2.5 Pioneer High Income Trust PHT 9.78 9.91 +1.3 13.1 Nuveen Muni Value Fund NUV 10.55 10.47 -0.8 3.7
Friday, June 3, 2016
52 wk
Cohen & Steers Dur Pfd LDP 25.26 24.39 -3.4 10.4
Cohen & Strs Sel Prf Inco PSF 26.74 26.94 +0.7 18.5
Prud Gl Shrt Dur Hi Yd GHY 16.49 14.90 -9.6 9.1 Nuveen Performance Plus NPP 16.96 16.29 -4.0 5.4
Nuveen Premium Inco Muni NPI 16.18 15.19 -6.1 5.5
Money Rates June 3, 2016
Prem Ttl Prudentl Sh Dur Hi Yd Fd ISD 16.81 15.63 -7.0 8.7
FT Interm Duration Pfd FPF 23.09 23.03 -0.3 13.1 Wells Fargo Incm Opps Fd EAD 8.67 7.91 -8.8 9.8 Nuveen Prem Inco Muni 2 NPM 16.18 15.09 -6.7 5.7
Fund (SYM) NAV Close /Disc Ret Flaherty & Crumrine Dyn DFP 24.58 24.10 -2.0 15.1
Key annual interest rates paid to borrow or lend money in U.S. and
Wstrn Asset Glbl Hi Inco EHI 10.58 9.57 -9.5 12.1 Nuveen Premier Muni Inc NPF 15.87 14.84 -6.5 5.4
General Equity Funds Flaherty & Crumrine Pfd FFC 19.08 20.85 +9.3 11.8 Wstrn Asset High Inco II HIX 7.17 6.84 -4.6 12.0 Nuveen Select Quality NQS 16.39 15.35 -6.3 5.1 international markets. Rates below are a guide to general levels but
Adams Divers Equity Fd ADX 15.28 12.81 -16.2 -2.8 John Hancock Pfd Income HPI 22.62 22.71 +0.4 22.2 Nuveen Sel Tax Free NXP 15.70 15.37 -2.1 3.6 don’t always represent actual transactions.
Wstrn Asset Opp Fd HIO 5.32 4.85 -8.8 8.7
Boulder Grwth & Inco BIF 10.23 8.05 -21.3 -3.0 John Hancock Pfd II HPF 22.37 22.44 +0.3 20.0 Nuveen Sel TF NXQ 15.09 14.84 -1.7 3.6
West Asst HY Def Opp Fd HYI 15.86 14.75 -7.0 8.9
Central Securities CET 24.98 20.24 -19.0 3.1 John Hancock Pfd Inc III HPS 19.85 19.47 -1.9 20.7 PIMCO MuniFd PMF 13.67 16.72 +22.3 5.9 Inflation Other short-term rates
Other Domestic Taxable Bond Funds
CohSteer Opprtnty Fd FOF 13.08 11.55 -11.7 -1.6 JHancock Pr Div PDT 16.61 16.25 -2.2 29.7 Pimco Muni Inc II PML 12.81 13.53 +5.6 5.9
Ares Dynamic Credit Alloc ARDC NA 13.97 NA 9.8 April index Chg From (%) Week 52-Week
Cornerstone Strategic CLM 14.20 16.64 +17.2 -4.7 LMP Cap & Inco Fd SCD 12.90 NA -12.5 PIMCO Muni Inc III PMX 11.60 12.66 +9.1 6.0
EtnVnc TaxAdvDiv EVT 21.22 20.42 -3.8 9.4 Babson Cap Corp Inv MCI NA 17.52 NA 6.7 level March '16 April '15 Latest ago high low
Nuveen Preferred & Incm JPI 24.20 23.90 -1.2 14.0 Pioneer Mun Hi Inc Adv Tr MAV 12.71 13.87 +9.1 6.6
Gabelli Dividend & Incm GDV 21.67 19.16 -11.6 -2.9 BlackRock Multi-Sector IT BIT 18.30 16.68 -8.9 9.0
Nuveen Preferred Inc Opp JPC 10.29 10.10 -1.8 16.1 Pioneer Mun Hi Incm Tr MHI 13.56 14.20 +4.7 6.0 Call money
Gabelli Equity Trust GAB 5.97 5.67 -5.0 -2.3 BlackRock Taxable Mun Bd BBN 24.00 23.45 -2.3 6.8 U.S. consumer price index
Nuveen Preferred Incm Fd JPS 9.48 9.25 -2.4 14.4 Putnam Tr PMM 8.20 7.95 -3.0 5.6
Genl American Investors GAM 38.28 31.42 -17.9 -7.5 Doubleline Oppor Credit DBL NA 25.76 NA 10.1 All items 239.261 0.47 1.1 2.25 2.25 2.25 2.00
TCW Strategic Income Fund TSI 5.31 NA 2.6 PutnamMuniOpportunities PMO 13.81 13.36 -3.3 5.4
HnckJohn TxAdv HTD 26.20 24.65 -5.9 29.2 Duff & Phelps Utl & Cp Bd DUC 10.27 9.72 -5.4 6.2 Core 246.992 0.26 2.1
Zweig Total Return ZTR 13.31 11.84 -11.0 -3.4 Wstrn Asset Mngd Muni MMU 14.63 14.98 +2.4 5.2 Commercial paper
Liberty All-Star Equity USA 6.01 5.07 -15.6 -4.0 Convertible Sec's. Funds
EtnVncLtdFd EVV NA 13.32 NA 9.2
Franklin Ltd Duration IT FTF NA 11.71 NA 6.4 WesternAssetMunTrFund MTT 22.60 25.19 +11.5 4.2 30 to 270 days n.q. ... ... ...
Royce Micro-Cap RMT 8.86 7.53 -15.0 -9.3 AdvntClymrFd AVK 16.17 14.23 -12.0 -9.6
GuggenhBondMnegDurTr GBAB 23.46 22.83 -2.7 7.9 Single State Muni Bond International rates
Royce Value Trust RVT 14.46 12.13 -16.1 -5.9 AllianzGI Conv & Incm NCV 6.27 6.07 -3.2 -19.8 BlackRock CA Municipal Tr BFZ 16.21 16.54 +2.0 5.3 Commercial paper (AA financial)
Source Capital SOR 39.21 36.80 -6.1 3.5 AllianzGI Conv & Incm II NCZ 5.59 5.30 -5.2 -21.7 MFS Charter MCR 9.24 8.47 -8.3 8.9 Week 52-Week
MFS Multimkt MMT 6.63 5.98 -9.8 9.1 BlkRk MuniHldgs CA Qlty MUC 16.34 16.09 -1.5 5.1 90 days 0.56 0.59 0.68 0.12
Tri-Continental TY 24.26 20.60 -15.1 -1.1 AllianzGI Equity & Conv NIE 21.03 18.37 -12.6 -1.1 Latest ago High Low
Nuveen Build Am Bd Fd NBB 22.80 22.50 -1.3 6.0 Blkrck MunHl NJ Qlty MUJ 16.30 15.86 -2.7 5.4
Zweig Fund ZF 14.17 12.57 -11.3 -9.7 Calamos Conv Hi Inco Fd CHY 11.35 10.39 -8.5 -19.9 Euro commercial paper
PIMCO Corporate & Incm PTY NA 14.52 NA 11.1 BlRk MuHldg NY Qlty MHN 15.48 15.13 -2.3 5.3
Specialized Equity Funds Calamos CHI 10.72 9.72 -9.3 -16.4 BlkRk MuniYld CA Fd MYC 16.85 17.04 +1.1 5.2
Prime rates 30 day n.q. n.q. -0.02 -0.14
Adams Natural Rscs Fd PEO 22.47 19.84 -11.7 -10.3 World Equity Funds PIMCO Corporate & Incm PCN NA 15.00 NA 9.2
BlkRk MuniYld CA Quality MCA 16.60 16.30 -1.8 5.4 U.S. 3.50 3.50 3.50 3.25 Two month n.q. n.q. -0.01 -0.09
AllnzGI NFJ Div Interest NFJ 14.49 12.66 -12.6 -11.0 Alpine Tot Dyn Div AOD 8.99 7.58 -15.7 -7.5 PIMCO HiInco PHK NA 9.54 NA 13.6
BlkRk MuniYld MI Qlty MIY 16.11 15.52 -3.7 5.5 Canada 2.70 2.70 2.85 2.70 Three month n.q. n.q. -0.01 -0.08
AlpnGlblPrProp AWP 6.77 5.59 -17.4 -7.4 Calamos Glbl Dyn Inc CHW 8.25 7.14 -13.5 -8.9 PIMCO Inco Str Fd PFL NA 10.15 NA 10.6
PIMCO Incm Strategy Fd II PFN NA 9.11 NA 11.3 BlRk Muyld NY Qlty MYN 14.86 14.30 -3.8 5.3 Japan 1.475 1.475 1.475 1.475 Four month n.q. n.q. 0.00 0.00
BlkRk Enh Cap Inco CII 14.50 13.63 -6.0 -2.8 Cdn Genl Inv CGI 25.27 18.05 -28.6 -9.4 Eaton Vance CA Mun Bd EVM 13.14 13.07 -0.5 5.3 Five month n.q. n.q. 0.01 0.01
BlkRk Engy Res Tr BGR 15.07 14.06 -6.7 -20.3 China Fund CHN 16.61 14.32 -13.8 -26.2 Putnam Mas Inco PIM 4.77 4.39 -8.0 7.1 Policy Rates
Putnam Premier Income Tr PPT 5.25 4.72 -10.1 6.5 Invesco CA Value Mun Incm VCV 14.22 14.02 -1.4 5.6 Six month n.q. n.q. 0.02 0.02
BlackRock Enh Eq Div Tr BDJ 8.73 7.84 -10.2 4.4 Clough Global Opp Fd GLO 11.50 9.48 -17.6 -14.6 Invesco PA Value Mun Incm VPV 14.77 14.27 -3.4 5.6 Euro zone 0.00 0.00 0.05 0.00
Blackrock Global Trust BOE 13.68 12.19 -10.9 -4.2 EtnVncTxAdvGblDiv ETG 16.46 14.79 -10.1 -8.9 Wells Fargo Multi-Sector ERC 13.77 12.50 -9.2 8.9 Libor
World Income Funds Invesco Inv Grade NY Muni VTN 15.52 15.55 +0.2 5.4 Switzerland 0.50 0.50 0.50 0.50
BlkRk Health Sci BME 34.38 36.48 +6.1 3.7 EatonVance TxAdv Opport ETO 22.77 21.58 -5.2 -2.9 Nuveen California AMT NKX 16.61 16.34 -1.6 5.4 One month 0.46480 0.45445 0.46955 0.18300
Abeerden Asia-Pacific FAX 5.59 4.99 -10.7 5.6 Britain 0.50 0.50 0.50 0.50
BlkRk Intl Grwth&Inco BGY 6.66 5.98 -10.2 -12.8 First Trust Dynamic Eur FDEU 18.47 16.00 -13.4 NS Nuveen CA Div Fnd NAC 16.47 16.32 -0.9 5.6 Three month 0.68215 0.67405 0.68580 0.28075
12.01 10.00 -16.7 2.6 Etn Vnc Short Dur Fd EVG NA 13.53 NA 5.5 Australia 1.75 1.75 2.00 1.75
BlackRck Rscs Comm Str Tr BCX 9.17 7.59 -17.2 -12.8 GDL Fund GDL Nuveen CA Div 2 NVX 16.49 16.05 -2.7 5.1 Six month 0.98570 0.97710 0.99310 0.42390
BlackRock Science & Tech BST 19.07 16.38 -14.1 -4.6 India Fund IFN 27.38 24.45 -10.7 0.4 Legg Mason BW Glbl Incm BWG 14.57 12.47 -14.4 15.1
MS EmMktDomDebt EDD 8.79 7.73 -12.1 11.2 NuveenCA 3 NZH 15.35 15.39 +0.3 5.3 Overnight repurchase One year 1.33140 1.32070 1.33740 0.74920
BlackRock Utility & Infr BUI 20.74 19.79 -4.6 12.9 Japan Sml Cap JOF 11.61 9.84 -15.2 3.5 Nuveen CA Muni Value NCA 10.76 10.98 +2.0 4.3
CBREClarionGlblRlEstIncm IGR 9.30 7.83 -15.8 3.1 Korea Fund KF 35.62 32.10 -9.9 -10.1 PIMCO Dynamic Credit Incm PCI NA 18.68 NA 11.7 U.S. 0.44 0.32 0.54 0.08 Euro Libor
PIMCODynamicIncomeFund PDI NA 27.35 NA 15.3 NuveenMDPremiumIncome NMY 15.12 13.83 -8.5 4.8
Central Fund of Canada CEF 13.12 12.75 -2.8 8.5 Mexico Fund MXF 18.54 16.49 -11.1 -16.3 Nuveen MI Quality Income NUM 16.18 14.86 -8.2 5.1 One month -0.351 -0.353 -0.069 -0.355
ClearBridge Amer Engy CBA 9.59 8.67 -9.6 -35.6 MS China a Shr Fd CAF 21.26 17.38 -18.3 -17.4 PIMCO Income Opportunity PKO NA 22.97 NA 10.0
NuveenNCPremiumIncome NNC 15.63 14.51 -7.2 4.1
U.S. government rates Three month -0.278 -0.279 -0.009 -0.282
ClearBridge Engy MLP Fd CEM 16.34 16.50 +1.0 -26.5 MS India Invest IIF 30.45 26.84 -11.9 0.6 PIMCO Strat Income Fund RCS NA 9.65 NA 10.6
Nuveen NJ Div NXJ 16.32 14.75 -9.6 5.4 Discount Six month -0.163 -0.160 0.059 -0.163
Clearbridge Engy MLP Opp EMO 12.94 NA -29.6 New Germany Fund GF 15.55 13.87 -10.8 -3.2 Templeton Emerging TEI 11.76 10.54 -10.4 7.6
Templeton Global GIM 6.98 6.45 -7.6 4.6 NuvAMTFreeMuniIncm NRK 15.01 13.95 -7.1 5.1 1.00 1.00 1.00 0.75 One year -0.028 -0.032 0.175 -0.035
Clearbridge Engy MLP TR CTR 13.82 12.64 -8.5 -28.1 Swiss Helvetia Fund SWZ 12.23 10.49 -14.2 -8.5
Wstrn Asset Emerg Mkts ESD NA 15.10 NA 8.5 Nuveen NY Div Fnd NAN 15.79 15.27 -3.3 5.3
Cohen & Steers Infra UTF 24.00 20.48 -14.7 1.6 Templeton Dragon TDF 19.97 17.19 -13.9 -21.4 Euro interbank offered rate (Euribor)
Wstrn Asset Emerg Mkt II EMD 12.41 10.62 -14.4 8.0 Nuveen Ohio Qual Income NUO 17.53 16.38 -6.6 5.0 Federal funds
Cohen & Steers Qual Inc RQI 14.04 12.68 -9.7 22.2 Voya Infr Indls & Matls IDE 14.34 12.32 -14.1 -8.2
Wstrn Asset Gl Def Opp Fd GDO 18.55 17.28 -6.8 7.9 Nuveen Pa Investment Qual NQP 16.23 15.16 -6.6 5.4 Effective rate 0.4000 0.4000 0.4100 0.0600 One month -0.351 -0.349 -0.062 -0.351
CohnStrsPfdInco RNP 22.53 19.29 -14.4 16.0 Wells Fargo Gl Div Opp EOD 7.06 6.12 -13.3 -6.8
NuveenVAPremiumIncome NPV 15.04 14.55 -3.3 4.7 Three month -0.261 -0.260 -0.013 -0.262
Cohen & Steers TR RFI 14.02 13.08 -6.7 15.5 Prem12 Mo National Muni Bond Funds High 0.5625 0.5625 0.5900 0.3100
AllianceBrnstn NtlMun AFB 15.58 14.78 -5.1 5.2 PIMCO California Muni PCQ 15.00 16.73 +11.5 5.5 Six month -0.154 -0.149 0.051 -0.154
CLSeligmn Prem Tech Gr Fd STK 16.72 16.97 +1.5 2.6 Fund (SYM) NAV Close /Disc Yld Low 0.3000 0.3000 0.3600 0.0200
PIMCO California Mun II PCK 9.26 10.80 +16.6 6.0 -0.016 -0.015 0.171 -0.028
Divers Real Asset Incm Fd DRA 18.97 16.41 -13.5 1.9 Blackrock Invest BKN 16.95 17.52 +3.4 5.2 Bid 0.3700 0.3700 0.5500 0.0400 One year
U.S. Mortgage Bond Funds 52 wk
Duff & Phelps DNP 9.64 10.27 +6.5 4.7 BlackRock Income Trust BKT 6.97 6.58 -5.6 5.5 BlackRockMun2030Target BTT 24.78 23.73 -4.2 4.1 Offer 0.4000 0.5000 0.5600 0.0800
Prem Ttl Value 52-Week
Duff&PhelpsGblUtilIncFd DPG 19.58 17.06 -12.9 0.4 Brkfld Mortgage Opp Incm BOI 16.37 14.75 -9.9 10.4 BlackRock Municipal Trust BFK 15.28 15.71 +2.8 5.7 Latest Traded High Low
Fund (SYM) NAV Close /Disc Ret
Eaton Vance Eqty Inco Fd EOI 13.52 13.17 -2.6 5.3 Brookfield TR Fund HTR 24.10 22.73 -5.7 10.1 BlackRockMuni BLE 15.88 16.27 +2.5 5.8 Treasury bill auction
Eaton Vance Eqty Inco II EOS 13.96 13.12 -6.0 1.0 BlackRockMuni Tr BYM 15.97 15.45 -3.3 5.5 General Equity Funds DTCC GCF Repo Index
Nuveen Mtg Oppy Term Fd JLS 24.60 23.25 -5.5 6.6 Specialized Equity Funds
4 weeks 0.265 0.265 0.295 0.000
EtnVncRskMngd ETJ 10.40 9.83 -5.5 0.5 BlkRk MuniAssets Fd MUA 14.54 15.16 +4.3 4.9 0.340 0.350 0.350 0.000
Investment Grade Bond Funds Corsair Opportunity:A 9.49 NA NA NS 13 weeks Treasury 0.434 98.050 0.639 0.075
Etn Vnc Tax Mgd Buy-Write ETB 15.25 15.91 +4.3 10.7 Blackrock Core Bond Tr BHK 14.54 13.70 -5.8 6.4 BlkRk Munienhanced MEN 12.59 12.65 +0.5 5.8
Corsair Opportunity:I 9.51 NA NA -8.1 26 weeks 0.475 0.480 0.585 0.065 MBS 0.430 99.970 0.705 0.087
Eaton Vance BuyWrite Opp ETV 13.99 14.82 +5.9 6.8 BlkRk Credit Alloc Incm BTZ 14.21 12.79 -10.0 7.4 BlkRk MuniHldgs Inv MFL 15.74 15.56 -1.1 5.5
Eaton Vance Tax-Mng Div ETY 11.32 10.61 -6.3 0.6 BlkRk MuniHldgs Qlty II MUE 14.95 14.41 -3.6 5.6 Griffin Inst Access RE:A 26.74 NA NA 8.7 Open Implied
John Hancock Income Secs JHS 15.32 14.60 -4.7 5.9 Griffin Inst Access RE:C 26.59 NA NA NS Secondary market
EatonVanceTax-MngdOpp ETW 11.06 10.65 -3.7 -0.9 MFS Inc Tr MIN 4.93 4.58 -7.1 9.3 BlkRk MuniHldgs MHD 18.06 18.55 +2.7 5.7 Settle Change Interest Rate
EtnVncTxMngGlDvEqInc EXG 9.39 8.94 -4.8 0.2 BlkRk MuniVest MVF 10.30 10.85 +5.3 6.0 Griffin Inst Access RE:I 26.79 NA NA NS
WstAstClymr InfLnkd Fd WIW 12.57 11.05 -12.1 3.6 SharesPost 100 25.50 NA NA -2.3 Fannie Mae DTCC GCF Repo Index Futures
Fiduciary/Clymr Opp Fd FMO 14.73 13.42 -8.9 -36.5 WstAssetClymr InflLnk Sec WIA 12.84 11.41 -11.1 3.4 BlkRk MuniVest II MVT 16.22 17.39 +7.2 5.8
BlkRk MuniYield MYD 15.71 15.75 +0.3 6.0 Versus Cap MMgr RE Inc:F 27.29 NA NA 9.1 30-year mortgage yields Treasury Jun 99.565 0.020 3203 0.435
FT Energy Inc & Growth Fd FEN 25.21 24.81 -1.6 -18.5 Loan Participation Funds
BlkRk MuniYld Quality MQY 16.58 16.54 -0.2 5.8 Versus Cap MMgr RE Inc:I 27.35 NA NA 9.4 30 days 3.146 3.173 3.750 2.979 Treasury Jly 99.530 0.040 1727 0.470
FstTrEnhEqtIncFd FFA 14.96 13.21 -11.7 -5.4 Apollo Sr Fltg Rate Fd AFT 17.68 16.21 -8.3 7.0
BlkRk MuniYld Qlty II MQT 14.56 14.37 -1.3 5.7 Wildermuth Endwmnt Str 11.19 NA NA -1.0 60 days 3.181 3.209 3.788 2.998 99.455 0.080 1167 0.545
First Tr Engy Infr Fd FIF 19.04 16.79 -11.8 -11.4 BlackRock FR Incm Strat FRA 14.65 13.38 -8.7 5.7 Treasury Aug
BlRkMunyldQltyIII MYI 15.32 15.54 +1.4 5.8 Wildermuth Endwmnt S:C 11.17 NA NA NS
First Tr MLP & Engy Incm FEI 15.41 15.39 -0.1 -14.0 Blkrk FltRt InTr BGT 14.21 13.20 -7.1 5.5 Income Preferred Stock Funds
Gabelli Hlthcr & Well GRX 12.21 10.63 -12.9 0.4 BlackstoneGSO Strat Cred BGB 16.13 14.48 -10.2 8.7 Deutsche Mun Income Tr KTF 13.63 14.13 +3.7 6.0
Convertible Sec's. Funds Notes on data:
Gabelli Utility Tr GUT 5.69 6.59 +15.8 5.3 Blackstone GSO Sr Float BSL NA 16.09 NA 6.4 Dreyfus Mun Bd Infr Fd DMB 14.53 13.90 -4.3 5.4
Calmos Dyn Conv and Inc CCD 19.74 17.98 -8.9 -10.3 U.S. prime rate is effective December 17, 2015. Discount rate is effective December 17, 2015. U.S.
GAMCOGlblGoldNatRscs&Inc GGN 6.26 6.40 +2.2 5.5 Eaton Vance FR Incm Tr EFT 14.69 13.81 -6.0 6.6 Dreyfus Municipal Income DMF 9.86 9.75 -1.1 6.0
World Equity Funds prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks;
GoldmanSachsMLPIncOpp GMZ 9.59 NA -34.5 EatonVnc SrFltRate EFR 14.29 13.35 -6.6 7.1 Dreyfus Strat Muni Bond DSM 8.86 8.76 -1.1 5.7 BMO LGM Front ME 8.78 NA NA -3.5 Other prime rates aren’t directly comparable; lending practices vary widely by location; DTCC GCF
Goldman Sachs MLP Energy GER 6.98 NA -44.5 Eaton Vance Sr EVF 6.70 6.01 -10.3 6.9 Dreyfus Strategic Munis LEO 9.14 9.34 +2.2 5.6 Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable
John Hancock Finl Opps Fd BTO 26.23 27.44 +4.6 12.2 1st Tr Sr Fltg Rt Fd II FCT 14.00 13.02 -7.0 6.7 Eaton Vance Mun Bd Fd EIM 14.51 13.80 -4.9 5.5 Prem12 Mo
Fund (SYM) NAV Close /Disc Yld CUSIPs. Value traded is in billions of U.S. dollars. Futures on the DTCC GCF Repo Index are traded on
KayneAndersonEngyTRFd KYE 10.94 10.18 -6.9 -49.8 Invesco Credit Opps Fund VTA 12.49 11.06 -11.4 8.1 Eaton Vance Mun Income EVN 14.05 14.47 +3.0 5.9 NYSE Liffe US.
Kayne Anderson MLP Invt KYN 18.59 20.13 +8.3 -32.4 Invesco Senior Income Tr VVR 4.62 4.16 -10.0 7.5 EV National Municipal Opp EOT 23.11 22.95 -0.7 4.5 U.S. Mortgage Bond Funds Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information;
Macquarie Glbl Infrstrctr MGU 25.46 21.59 -15.2 -5.4 Nuveen Credit Strt Inc Fd JQC 9.13 8.17 -10.5 7.4 Invesco Adv Mun Incm II VKI 12.92 12.95 +0.2 6.1 Vertical Capital Income 12.20 NA NA 3.1 General Electric Capital Corp.; Tullett Prebon Information, Ltd.

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C6 | Monday, June 6, 2016
Email: heard@wsj.com
Unhealthy
Incentive for
NantHealth
One reason a company
might launch an initial pub-
lic offering in rough waters?
Because it beats the alterna-
tive. That is a possible expla-
nation for the recent floating
of NantHealth, the latest of-
fering from entrepreneur
Patrick Soon-Shiong, which
develops software and medi-
cal-records systems.
Last Thursday’s strong
trading aside, there are rea-
sons for investors to be
wary. Health-care stocks
have lost their magic in
2016. And while Dr. Soon-
Shiong has had major suc-
cesses in his career, shares
in his last IPO, biotech com-
pany NantKwest, flopped af-
ter going public last summer.
Also, minority sharehold-
ers won’t have much say in
NantHealth’s decision mak-
ing: Dr. Soon-Shiong has re-
tained a majority voting in-
terest in NantHealth. And
while plenty of startups lose
money, NantHealth has lost
more than $300 million
since its founding in 2010.
Perhaps the biggest red
flag is why NantHealth may
have gone public in the first
place. A major shareholder,
the Kuwait Investment Au-
thority, owns a $150 million
equity stake, which it pur-
chased in 2014. But it also
had a contractual right to
sell its shares back to
NantHealth, at its initial cost
plus interest, if the company
doesn’t complete a public of-
fering by June 20.
According to its registra-
tion statement, NantHealth
had just under $25 million in
cash and equivalents at the
end of March.
Given that looming dead-
line, going public made lots
of sense for Dr. Soon-Shiong.
The same can’t be said for
shareholders thinking of
buying into the venture.
—Charley Grant
Switzerland Votes to Reject Basic Income Initiative
BY BRIAN BLACKSTONE
ZURICH—Swiss voters on
Sunday overwhelmingly re-
jected an initiative that would
have guaranteed all Swiss resi-
dents a minimum income on
which to live.
The Basic Income Initiative
received just 23.1% of the vote
in Sunday’s referendum, com-
pared with 76.9% against. The
outcome was never in doubt,
with the government, busi-
nesses and many trade unions
lining up in opposition and re-
cent polls suggesting the pub-
lic was firmly against the idea.
Rather, the significance of
Sunday’s vote was that it gave
a high-profile airing to an idea
that has gained traction
among economists in Europe
and the U.S. in recent years.
Though the monthly
amount wasn’t spelled out, it
was expected to have been
around 2,500 Swiss francs
($2,560) per adult, with a
smaller subsidy for children,
without regard to employment,
disability, age or even wealth.
Supporters said the policy
GOP
Continued from page C1
of New York. The proposal is
one of many to be announced
by House Republicans in com-
ing months on a variety of is-
sues, like health care, as part
of House Speaker Paul Ryan’s
pledge to offer voters a de-
tailed Republican agenda dur-
ing the 2016 campaign.
Mr. Hensarling’s proposal
has no chance of becoming law
this year, with Democrats in
the Senate likely to block it,
and President Barack Obama
certain to veto it if it comes to
his desk. But the details are
significant for defining the Re-
publican financial agenda
should the party win the White
House and keep control of
Congress in November.
Donald Trump, the pre-
sumptive GOP nominee, has
said he would try to repeal
Dodd-Frank but hasn’t elabo-
rated on his alternative. Mr.
HEARD ON THE STREET
Cloud Deal Wave Hasn’t Crested
Cloud software’s deal
makers had a busy spring.
They may not be getting
much of a summer break.
Three big cloud-related
acquisitions were announced
last week. Salesforce.com
agreed to buy Demandware
for $2.8 billion net of cash.
Private-equity firm Thoma
Bravo is paying $3 billion
for Qlik Technologies while
another, Vista Equity Part-
ners, is picking up Marketo
for $1.8 billion. This just a
month after Oracle spent
about $1.2 billion on a pair
of deals, buying up Textura
and Opower.
Those are just some of the
more notable moves of late.
According to Dealogic, 739
M&A deals targeting U.S.
software firms have been an-
nounced so far this year. If
activity keeps up that pace,
this year will exceed last
year’s record of 1,526 soft-
ware deals. Deal value so far
this year has totaled about
$52 billion.
Why Wall Street Needs to Hire Younger Staff
Investment banks are
competing fiercely for young
talent. Of course, they al-
ways did, but in the past the
lure was mostly financial.
Now, banks are loudly prom-
ising a modicum of quality of
life, too.
Just last week, UBS told
bankers they can take two
hours of personal time each
week. Credit Suisse has in-
sisted bankers ought to
take Friday evenings off un-
less something important is
happening. Morgan Stanley
is offering paid sabbaticals.
And J.P. Morgan Chase has
loosened its dress code to al-
low employees to wear busi-
ness-casual attire.
For bank investors, it
might seem all this misses
the most urgent task facing
banks: to cut costs. But that
would be shortsighted.
would provide security at a
time of rapid technological
change. Backers also said it
would simplify the patchwork
of agencies charged with over-
seeing pensions, welfare and
other support, saving the gov-
ernment money while freeing
people from the bureaucracies
of means-tested programs.
Opponents, meanwhile,
latched on to two critiques:
cost and fairness. The 200 bil-
lion franc price tag would have
required large tax increases,
even if money was saved
through reductions in social
spending in other areas.
Che Wagner, a co-initiator
of the basic income proposal,
vowed after Sunday’s results
to press on. “It is a very satis-
fying result for us,” he said in
an email, adding that his own
prediction was the initiative
would only get around 15%
support. Nearly 70% of respon-
dents in a survey released Sun-
day said they expect to be vot-
ing on basic income again in
the future.
“The debate just started,”
Mr. Wagner said.
Hensarling’s bill is the first de-
tailed proposal for how a Re-
publican-led government
would likely proceed.
The Hensarling bill ad-
dresses many of the com-
plaints lodged by the financial
industry over the past six
years of increased federal con-
trol of the sector. Still, the pro-
posal is likely to be treated
warily by firms that have in-
vested heavily to adjust to
comply with the new system.
“As much as banks hate all
of the stuff they’ve been
forced to do, they’ve done it
now,” said Douglas Landy, a
partner at Milbank Tweed
Hadley & McCloy, who repre-
sents large financial institu-
tions. “A lot of them have
spent money, sunk the costs.
Replacing it for something
else, they’re not sure exactly
what it means.”
There are also provisions of
the GOP plan that would likely
irk Wall Street—and seem de-
signed to do so in part to give
Republicans political cover at
FINANCIAL ANALYSIS & COMMENTARY
Bought Up
Number of acquisitions of
U.S.-based software companies
1,500
1,000
500
0
2005 ’08 ’12
*Year to date Source: Dealogic
THE WALL STREET JOURNAL.
M&A waves can dissipate
quickly, so there is no guar-
antee the current rush will
continue. But it is no coinci-
dence the spike in activity
follows the broad market
collapse from earlier this
year. It hammered the tech-
nology sector and was par-
ticularly damaging to richly
valued stocks in the cloud
Forever Young
Change in annual pay and staff
numbers between 2009 and 2015
Compensation costs Head count
Credit Suisse
Goldman Sachs
UBS
Average*
Barclays
Deutsche Bank
Morgan Stanley
–40 –20
*Average of these six banks
Source: J.P. Morgan
The common view is that
banks need to soften their
workaholic cultures because
young people could have a
nicer life working in technol-
ogy or other areas of fi-
nance. But there is a more
commercial reason, too.
Banks desperately need
young people because they
MONEY & INVESTING
Backers of Switzerland’s basic-income plan present the 23% yes vote they received. Swiss voters overwhemingly rejected the plan.
a time public opinion remains
hostile to the financial sector.
The bill includes a section of
proposals to “demand account-
ability from Wall Street
through enhanced penalties
for fraud and deception,” the
summary says.
Democrats, meanwhile, are
preparing to attack the Repub-
lican plan as a reckless roll-
back of protections intended to
prevent the next crisis. Mr.
Obama last week blasted as
“crazy” Mr. Trump’s pledge to
repeal Dodd-Frank. California
Rep. Maxine Waters, the top
Democrat on the financial ser-
vices committee, called the
Hensarling bill a “grab bag of
special-interest gifts.”
The main thrust of the Hen-
sarling bill is to scale back the
growing regulatory involve-
ment in large American finan-
cial institutions. It would re-
move the powers of the newly
created Financial Stability
Oversight Committee to label
firms as systemically impor-
tant financial institutions and
ROBERT GALBRAITH/REUTERS
’16*
and internet categories.
From the start of the year
to mid-February, the Nasdaq
Composite lost 15% of its
value. The BVP Cloud In-
dex—a compilation of cloud
software companies tracked
by Bessemer Venture Part-
ners—plunged by 36% during
that time. Values have re-
bounded since, but not fully.
are cheaper. The profile of
the workforce is changing as
investment banks have real-
ized fewer of their highest-
paid bankers and traders are
crucial for bringing in reve-
nue. The rest of the teams
can be made up of more peo-
ple in their 20s with less ex-
perience—and far smaller
pay packages.
The industry even has a
word for this: “juniorization.”
0 20%
It helps explain how invest-
ment banks have cut compen-
sation costs on average by
21% since 2009 while cutting
staff numbers by just 3%, ac-
cording to J.P. Morgan ana-
lysts. This is especially true
in Europe, where regulations
have forced banks to pay
higher fixed salaries and less
in bonuses. That makes it
much harder to cut the cost
of higher-paid bankers in
impose new oversight over
those firms. Such powers are
already facing legal challenges,
and insurer MetLife Inc. suc-
cessfully sued to overturn such
a label earlier this year.
The plan would also stream-
line the complexity of postcri-
‘It’s time to move on
to a 21st century
model of banking,’
Mr. Hensarling said.
sis regulation for banks. It
would offer an “off-ramp”
from Dodd-Frank and global
rules promulgated by the Basel
Committee on Banking Super-
vision—for any banks that
hold “high levels of capital and
maintain a fortress balance
sheet.” While Basel sets guide-
lines for global banking regula-
tion, it is up to individual
countries to determine how, if
at all, to implement their pro-
posals. It is unclear whether
THE WALL STREET JOURNAL.
The BVP index is still down
7% this year.
That has provided an
opening, and more may take
it. Demand for cloud soft-
ware is growing steeply, and
big companies trying to ser-
vice that demand have both
the means and motivation to
chase the right deals.
But prices still aren’t
cheap. For Demandware,
Salesforce paid an enterprise
value of about 8.3 times for-
ward sale—more than triple
the Nasdaq average. Brent
Thill of UBS estimates that
strategic M&A deals in soft-
ware have typically fallen be-
tween 5 to 9 times forward
revenue. Note that the cur-
rent median enterprise value
on the BVP Cloud Index is
about 5.3 times, which does
not include deal markups.
So those shopping in the
cloud should be ready for a
case of sticker shock. But in-
vestors in potential targets
should enjoy the rainfall.
—Dan Gallagher
their 30s, 40s and 50s when
they aren’t making it rain.
There is longer-term
thinking at work, as well.
Banks want younger, more
tech-savvy people to usher in
a more automated age. But
those same young people
also realize that future fi-
nancial rewards in banking
are less likely to match those
widely enjoyed in the past
given the industry’s reduced
profitability. So they will
need other carrots as well.
A younger workforce will
be as important as automa-
tion and digitization in
banks’ plans for the future:
Each is a route to structur-
ally cutting costs. With reve-
nues likely to stagnate, turn-
ing to the younger
generation is a step toward
better shareholder returns.
—Paul J. Davies
the Republican plan would ask
banks to hold more, or less,
capital than is currently re-
quired, a level many bankers
say is onerous and impedes
their ability to do business.
Mr. Hensarling also wants
to repeal a Dodd-Frank provi-
sion that gives regulators a
role in helping steer financial
institutions through bank-
ruptcy if they run into severe
distress and replace it with a
new portion of the bankruptcy
code that would leave firms to
do so on their own.
While many parts of the
plan echo longstanding Repub-
lican promises, the bill’s sec-
tion boosting fines for alleged
financial wrongdoing seems to
run counter to widely main-
tained GOP views that stiffer
bank fines may do more harm
than good, effectively punish-
ing shareholders who already
have been victimized by a
company’s fraud and further
damaging the value of corpo-
rate shares.
Mr. Hensarling plans to re-
WSJ.com/Heard
OVERHEARD
The European Central
Bank is a long way from get-
ting inflation back to its de-
sired level, which is below,
but close to, 2%. But it has
achieved another aim set a
long time ago: to balloon the
size of its balance sheet.
Back at the end of 2014,
the debate around ECB policy
was seen through the lens of
its balance sheet. This had
contracted to just over €2
trillion ($2.3 trillion) from a
mid-2012 peak of €3.1 trillion.
A series of semantic games
played out around the issue.
First, the ECB said it “ex-
pected” the balance sheet to
expand to its levels of the
beginning of 2012. It then fol-
lowed this by saying that it
“intended” that this would
happen. Of course, the ECB
had to resort to bigger tools
than it had announced at the
time to make that actually
take place. Sovereign-bond
purchases started in March
2015 and have boosted the
ECB’s balance sheet now to
just under €3.1 trillion.
But part of the reason
that the ECB ended up loos-
ening policy so much was
that monetary policy else-
where—especially in the
U.S.—wasn’t tightened as
early or as much as expected.
The balance sheets of
both the Bank of England, at
just over £400 billion ($581
billion), and the U.S. Federal
Reserve, at $4.5 trillion, re-
main bloated with bonds.
Even as the Fed has started
down the path to increasing
rates, it hasn’t stopped rein-
vesting the proceeds of ma-
turing bonds in new pur-
chases that keep its balance
sheet from shrinking. In fact,
divergence in central-bank
balance sheets is coming
through continued expansion:
The Bank of Japan’s balance
sheet is north of ¥425 trillion
($4 trillion) and still growing.
Rates have gone lower for
longer. But central banks have
gone bigger for longer, too.
ALEXANDRA WEY/EPA
quire the Securities and Ex-
change Commission to deter-
mine that a penalty against a
firm doesn’t harm the com-
pany’s shareholders, according
to a person familiar with the
plan.
The Hensarling bill would
boost fines for violating in-
sider-trading laws and the For-
eign Corrupt Practices Act.
The plan envisions doubling or
tripling some maximum penal-
ties used by the SEC.
A further change would al-
low the SEC to calculate penal-
ties based on the amount of in-
vestor losses incurred as a
result of misconduct. Cur-
rently, the SEC is constrained
by statute from seeking penal-
ties that match investor losses.
The heightened penalties
are similar to ones pushed by
the SEC four years ago that
failed to gain traction in Con-
gress. At the time, Republican
lawmakers expressed reluc-
tance about giving the SEC
more resources without struc-
tural changes at the agency.

© 2016 Dow Jones & Company. All Rights Reserved.
Six Ways
To Improve
‘529’ College Plans
Twenty years after their creation, how the savings funds can be made even better
BY CHANA R. SCHOENBERGER
IT WAS 20 YEARS AGO that Congress legis-
lated “529” plans, tax-advantaged programs to
encourage families to save for college. By most
measures, the plans have been a blockbuster
success, exploding to $250 billion in assets in
more than 12 million accounts and helping par-
ents mitigate the rise in tuition costs and fight
the student-debt tsunami.
But even blockbusters can be improved. As
529 plans graduate to adulthood, experts say
they would like to see several changes to make
them even better.
These state-sponsored plans—named for a
section of the tax code, and which typically in-
vest in mutual funds—allow college savings to
grow tax-free. There is no income limit on who
can contribute, and the account can be reas-
signed to direct relatives of the original benefi-
A. RICHARD ALLEN
High-Conviction Active
Equities
Invesco Comstock Fund (ACSTX)
Invesco Diversified Dividend Fund (LCEAX)
NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more
complete information about a fund, ETF or unit trust, investors should contact their advisors for a prospectus and/or summary prospectus or visit invesco.com/fundprospectus.
Investors considering high-conviction strategies should be aware of the unique characteristics and additional risks. This does not constitute a recommendation of the suitability of any investment strategy for
a particular investor.
ETF investing involves risks, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including short selling and margin maintenance requirements.
Ordinary brokerage commissions apply.
Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart beta represents an alternative and selection–index–based methodology that seeks to
outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
Past performance is not a guarantee of future performance. An investment cannot be made directly in an index.
JOURNAL REPORT | A MONTHLY ANALYSIS
THE WALL STREET JOURNAL.
Popular on Campus
Assets in '529' college-savings plans nationally
$250 billion
Popularity grows after
200 distributions become
tax-free; law is made
150 permanent in 2006.
100
50
0 use could be improved.
1996 ’98 ’00 ’02 ’04 ’06 ’08 ’20 ’12 ’14
Source: CSPN College Savings Plans Network
THE WALL STREET JOURNAL.
ciary—a child’s cousins or siblings, for in-
stance—if there is money left over or if the
beneficiary doesn’t go to college.
The Truth Behind the ‘Summer Rally’
BY MARK HULBERT
THE STOCK MARKET most likely will
rally at some point this summer. But that
doesn’t mean there will be a Summer
Rally.
The distinction is important because,
every year around Memorial Day and
early June, many advisers start referring
to a Summer Rally as something above
and beyond the garden-variety rallies
that occur at any time of the year. But
there is no evidence that the stock mar-
ket rallies more regularly or strongly
during the summer months than it does
in the spring, fall or winter.
The absence of a distinctive Summer
Rally means that the rallies you can legit-
imately expect this summer are no more
worth betting on than those that occur
any other time. To put this another way:
The stock market might rise powerfully
between now and Labor Day, but if so its
strength will have nothing to do with
Mr. Hulbert is editor of the Hulbert
Financial Digest and a senior columnist
for MarketWatch. He can be reached
at reports@wsj.com.
Fixed Income
Invesco Core Plus Bond Fund (ACPSX)
Invesco Strategic Income Fund (SIZAX)
Follo
The E w
xper
A ts
Convn Online
e
DETA rsation
I LS , R2
A. RICHARD ALLEN
Parents or other adults set up an account as
early as possible after a child is born, and con-
tributions up to $14,000 (or $28,000 a couple)
in after-tax money during the year are exempt
from gift-taxes reporting. The money grows
within the plan tax-free and, if it’s withdrawn
for qualified higher-education expenses like tu-
ition, room and board, or a computer, no tax is
due. The plans often also come with state tax
benefits for residents of specific states.
But the plans’ design can be clunky. Here is
how financial advisers and college-savings ex-
perts say that aspects of the accounts and their
1. Entice companies to do a ‘match’
One federal tax-code change that could juice
participation rates would be to make it advan-
Please turn to the next page
those three months being June, July and
August.
To be sure, I have never found a pre-
cise definition of what the Summer Rally
is supposed to entail. So it is always pos-
sible that a Summer Rally defined in
some arcane way does in fact exist. But if
we focus on any of the usual ways in
which most investors picture a rally, this
seasonal pattern turns out to be yet an-
other urban myth.
Overall lull
The first clue that a Summer Rally is
fictional comes from the stock market’s
weak performance overall during the
summer months. In fact, the months of
June, July and August are one of the
weakest three-month stretches of any in
the calendar. Over the past 60 years, the
Dow Jones Industrial Average has pro-
duced an average monthly return of just
0.1% during these three summer months,
compared with a 0.7% average for all
other months.
Let’s try a different approach: Even
though the summer months as a whole
are mediocre ones for equities, it’s still
possible that the stock market could
stage an especially powerful rally along
INVESTING ISN’T ABOUT MEETING BENCHMARKS. It’s
about achieving goals. And simply tracking the averages
may not do the trick. That’s why Invesco doesn’t settle for
average. Instead, we believe investors need to look beyond
the benchmarks to high-conviction active management and
factor-based investing. To see how Invesco can help you
bench the benchmarks, visit invesco.com/HighConviction.
Factor-Based
Smart Beta
PowerShares S&P 500 Quality Portfolio (SPHQ)
PowerShares S&P 500 Low Volatility Portfolio (SPLV)
Monday, June 6, 2016 | R1
INSIDE
SAVING FOR COLLEGE
Leftover 529 Money?
More answers to readers’
questions on college finance
R2
SAVING FOR RETIREMENT
Ask Encore:
An ‘Aging in Place’ Home
A reader wonders how to make
a house safer for retirement
R4
PORTFOLIO STRATEGY
The Problem With ‘Low Vol’
You still need bonds, not just
low-volatility stocks, if you want
to cut down on turbulence
R5
ENDOWMENT FUNDS
The Church of England’s
Blessed Investing
Its $10 billion fund succeeds, as
it pushes an ‘ethical’ agenda
R6
MONEY MANAGEMENT
A Pioneering Woman
TIAA’s Susan Hirsch on the
merits of female fund managers
R6
SECTOR STRATEGY
A Bold Commodities Move
Heinz Schimmelbusch figured
out China when others didn’t
R7
NEWS CHALLENGE
Test Your Smarts on...
...oil and rates. Monthly quiz.
R10
SCOREBOARD
May 2016 fund performance,
total return by fund type. More on R2.
U.S. Intl. Bonds
stocks* stocks* (intmd.)
1.6% –0.1% –0.01%
*Diversified funds only, excluding sector and
regional/country funds
Source: Lipper
the way. To test for this possibility, I cal-
culated the Dow’s return over the years
from its lowest close in June to its high-
est subsequent close through the end of
August.
Once again, I failed to find anything
special about the market’s rally potential
during the summer. Over the past six de-
cades, the Dow gained an average of 6.9%
from its lowest June close through its
highest subsequent close over the next
two calendar months. While you might
think that is worth betting on, it in fact
is nothing special: The comparable calcu-
lation for each of the other 11 months of
the year shows that their rally potentials
are stronger, averaging 8%.
Summer of ’32
Why, then, did investors ever come to
think a Summer Rally really exists? There
is no way of knowing for sure, of course.
But one possibility is that it traces to the
spectacular rally that occurred in the
summer of 1932, at the depths of the
Great Depression. The Dow gained 76.5%
from its closing low in June of that year
to its highest close in August. And if I ex-
tend my earlier historical analysis back
Please see SUMMER page R2
Invesco Distributors, Inc.
R2 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

Six Ways to Improve ‘529’ College Plans SAVING FOR COLLEGE | CHANA R. SCHOENBERGER

Continued from the prior page

tageous for employers to offer 529
matching for employees, similar to
eral tax incentive, like a credit or de-
duction, would help convince par-
ents, says Brian Boswell, vice
products at fund manager Fidelity
Investments. Leftover 529 Money
the way 401(k) plans operate for re- president of research and develop- A Q&A on college financing
tirement savings, says Andrea ment at SavingForCollege.com. 5. Change financial-aid
Feirstein, a 529 consultant to states “When TurboTax pops up and calculations to exclude 529s Saving for college is on readers’ minds as graduation season progresses. We
and managing director of AKF Con- asks you, ‘Have you taken advantage again asked college-finance experts to answer readers’ questions, most of
sulting Group in New York City. of this tax credit or deduction?’ Exceptions should be created so them centering on popular tax-advantaged savings accounts such as “529”
Currently, companies don’t re- that’s even better,” he says. that college applicants who plan to plans and Coverdells.
ceive any federal tax benefits related go on to graduate school can have
to 529s, although some do offer pay- their 529 accounts excluded from There is money left over in the tax reporting exemption for the year.
roll deductions to their employees. If 3. Allow more changes calculations about whether they 529 I funded for my nephew. Can I And beware: Tuition payments
employers match employee contribu- qualify for undergraduate aid, says change the beneficiary to myself that people other than the student’s
tions to 529s today, that money is Once parents or other adults have Dominick Ferraro, founder and CEO and use the money to study a for- parents make are factored into Fafsa
considered taxable income to the set up 529 accounts, they have to of College Select in Greenville, S.C. eign language at a university or financial-aid eligibility and count as
employee. work through the plans’ regulatory Aid isn’t as available for graduate language school? “cash support to the student” when
Three states do offer tax induce- restrictions, such as biannual trading students as it is for undergrads, Mr. colleges compute
ments for companies that contribute limits. Investors in the plans are al- Ferraro says. “Fellowships or assis- Yes, you can financial aid, Mr.
to home-state plans on behalf of lowed by law to make changes to tantships available to grad students change the bene- Kantrowitz says.
their workers. Utah has a $1,900 their investment holdings only twice are extremely limited to the type of ficiary to yourself
i i i
state tax deduction per beneficiary, a year (it used to be only once a year, degree and to a particular student,” or to any close
and Nevada and Illinois each offer a but in 2015 that Internal Revenue Ser- he says. Deferring use of a 529 plan relative of the Can 529
state tax credit up to $500 on 25% of vice restriction was expanded to until graduate school thus could be original benefi- funds be used
matched 529 contributions. twice a year—which is still a tough a good option for some. ciary, and you for any of the
A federal-tax-code change would restriction, in some experts’ view). can study lan- costs associated
cost the government in forgone tax “If there are sudden market guages at a with searching
revenue, but policy makers might movements and you’ve already made 6. Get the word out school that’s eli- for and applying
choose to make this switch anyway if your twice-per-year exchange, your gible to receive 529 money, says to college? How about travel costs
it inspired more parents to save for hands are tied,” Mr. Boswell says. For Nancy Farmer, president of James Canup, tax practice chairman to visit prospective colleges, testing
college instead of relying on loans, Groups providing information to Private College 529 Plan, the major at law firm Hirschler Fleischer in and application fees?
challenge facing 529s isn’t regula- Richmond, Va.
tory, but rather a lack of public “Many eligible colleges and uni- No, the IRS is clear on this: Pre-
What's In Your College Kitty? awareness. Three out of four Ameri- versities offer language classes college costs don’t qualify for 529
Average account size of '529' college-savings plans cans don’t know what a 529 is, an (some even offer academic majors funds, Mr. Kantrowitz says.
annual survey conducted by broker- in foreign languages), so look for
$20,000 i i i
age house Edward Jones found in opportunities at a local college or
May. And that number has increased university,” says Mark Kantrowitz, Salesmen often tell parents to
15,000
over time, starting at 63% in 2012. publisher and vice president of sell taxable assets and buy annui-
The result is that a helpful aid for strategy at college-scholarship ties to better qualify for financial
college savings, the 529 plans, might search site Cappex.com. If you’re at aid. Is this worth doing?
10,000 be benefiting only some sophisti- an eligible school, you can take as
cated Americans and bypassing few classes at a time as you like— Annuities usually aren’t a smart
many others who could use it. unless you want to use 529 money strategy for college savings, says
5,000 This also points out an overarch- for housing, in which case you’ll Mr. Canup. If you sell assets to buy
ing problem with college savings, have to attend at least half-time and an annuity, you’ll pay taxes on any
Ms. Farmer says: Most families don’t work toward a degree or certificate, gains, while if you take money out
0 understand what college will cost, he says. of a 529 plan for qualified educa-
2002 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 2015 and they don’t know how they will tional expenses, gains are tax-free,
i i i
Source: CSPN College Savings Plans Network THE WALL STREET JOURNAL. save the money. She suggests visit- he says.
ing the nonprofit College Board’s Big Can a Coverdell account be used With an annuity, you would typi-
she says. investors—such as the College Sav- Future website to run cost calcula- to pay for off-campus housing? cally borrow money from the policy
“There’s a point, from a policy ings Plans Network, affiliated with tors for various types of colleges. if you wanted to pay for college;
standpoint, where you make a judg- state treasurers—had campaigned The low awareness isn’t because Yes, with restrictions. Coverdell that amount is owed with interest
ment, like we did with retirement, for four permissible investment plan sponsors and state governments funds can be used to pay off-cam- and must be repaid. If instead you
that retirement security mattered,” changes a year, though the College aren’t trying to educate parents, Mr. pus housing expenses for a student take a payout from your policy,
Ms. Feirstein says. Savings Plans Network says it sup- Boswell says: “A lot of people tune it who is enrolled in a degree or certif- you’ll have to pay taxes on the dis-
ported the modest expansion that out because it’s complicated.” icate program and who attends tribution above the premiums you
was ultimately awarded last year. What are the chances of some of school at least half-time at a quali- paid, and you may also owe a sur-
2. Give poorer families a credit these changes getting through Con- fied college or university, says Mr. render charge, in addition to a 10%
gress? The momentum is usually for Kantrowitz. You can use the funds penalty for withdrawing before age
Another item on Ms. Feirstein’s 4. Provide a longer menu having more, not less, with 529s. only up to the college’s official al- 59½. And don’t forget, Mr. Canup
wish list is a federal tax credit to en- Early last year, President Barack lowance for room and board. A Cov- says, “the salesman will also earn a
courage low- and moderate-income The plans also don’t offer owners Obama proposed, and then quickly erdell—unlike a 529—can also be nice premium, which is reflected in
families to save money in 529s. as many investment options as they dropped, an idea to curtail the tax used for off-campus housing for el- the amount you pay for the annu-
These are the families that have would have with a brokerage ac- benefits for 529s. Instead, Congress ementary or secondary students, ity.”
trouble putting away money in 529s count, which makes some sophisti- made the popular plans even more but only if the school requires or This may all be for naught as far
because they are—wisely—saving for cated investors chafe. alluring, by allowing computers as a provides it, Mr. Kantrowitz says. as aid is concerned. “Generally, fam-
their own retirement, which, unlike Each plan has a menu of invest- qualified expense. ilies who have sufficient assets to
i i i
college, can’t be financed with bor- ment options, often target-date Rep. Lynn Jenkins (R., Kan.), a leg- lose eligibility for need-based aid
rowing. funds that start with a heavy islator behind the bipartisan com- I understand that if I pay a have sufficient income to lose aid
“If someone came to me and said, weighting of stocks and move to- puter-expense change, says, “These grandchild’s tuition directly to the eligibility even if they had no as-
‘I have X dollars to save, where ward bonds as the child’s projected college-savings plans are already institution, there is no tax conse- sets,” Mr. Kantrowitz says. He sug-
should I put it?’ I would always tell high-school graduation date ap- changing, and I believe we will con- quence for me or my grandchild. gests speaking with a fee-only in-
them to save for retirement first,” proaches. tinue to expand and enhance them.” Does this apply only to tuition or vestment adviser who doesn’t sell
she says. “Some people feel it just doesn’t does it include room and board? annuities or life insurance about the
The deferred tax benefits cur- give the right investment choices for Ms. Schoenberger is a writer in pros and cons of such an invest-
rently available through 529s are them,” says Keith Bernhardt, vice New York. She can be reached at You are right: if you pay your ment before you buy it. An annuity
helpful, but a more-immediate fed- president of retirement and college reports@wsj.com. grandchild’s tuition directly to the salesman doesn’t have a fiduciary
school, the money is exempt from responsibility to you, Mr. Kantrowitz
both gift taxes and generation-skip- notes.
ping taxes. But the tax code’s lan- Also, although annuities don’t
guage is specific to tuition, so it figure into the Fafsa, “most private
doesn’t apply to room and board or schools and private sources of fi-
MONTHLY MONITOR | WILLIAM POWER
Summer
to other qualified expenses such as nancial aid do factor in annuities
books, says Mr. Canup. Those ex- and other excluded assets when
penses, paid on behalf of your making financial-aid calculations,”
U.S.-Stock Funds Rose Continued from the prior page grandchild, would still incur taxes if Mr. Canup says. That means an an-
far enough to include the decade of you had used up your $14,000 indi- nuity won’t make those assets dis-
1.6% in May, Still Clinging the 1930s, the Summer Rally’s record vidual or $28,000 joint spousal gift- appear for aid purposes.
does improve. But not by enough to
To a Year-to-Date Gain convince a statistician that there is HAVE A COLLEGE-FINANCE QUESTION IN GENERAL? We’ll answer
anything special about the stock them in future Investing in Funds & ETFs reports. Email reports@wsj.com.
For mutual-fund investors, the market continues to perform just well market’s potential during the sum-
enough to calm the nerves. But most investors won’t be seeing blockbuster mer months.
gains in their 401(k)s if this slow pace continues. It is also possible that the origin
The average diversified U.S.-stock mutual fund rose 1.6% in May, accord- of the Summer Rally is more cyni- month stretch that historically has “Sell in May” pattern enjoys strong
ing to data from Thomson Reuters Corp.’s Lipper unit, and the funds have cally based in Wall Street’s need to been unfavorable for the stock mar- statistical support. The Summer
a modest 1.9% gain for the year so far. The good news is that the market generate commission income. After ket—a pattern that explains the say- Rally, then, could serve as a superfi-
has shaken off the poor start to the year, and is in positive territory, at all, the June-through-August period ing “Sell in May and go away.” In cially plausible rationale for why in-
least. In April, stock funds had finally moved into the black for 2016, and in comes right in the middle of a six- contrast to the Summer Rally, this vestors should instead stay and not
May they built slightly on those gains. go away.
A better outlook for the U.S. economy is helping the market. Although
the Federal Reserve says more interest-rate increases are likely if the econ- Summer Rally—or Summer Doldrums? Lesson learned
omy keeps gaining strength—with a move possible as soon as the Fed’s next Stock market's three-month rally potential* I suppose there is a roundabout
policy meeting on June 14-15—investors aren’t too spooked. Gradual rate in- way in which the Summer Rally can
creases are also a sign the economy is doing better, many investors figure. 4% help us to become better investors:
Three-month rally potential
Bond funds were virtually unchanged for the month but are up for the at beginning of June by teaching us the need to subject
year. Funds focused on intermediate-maturity, investment-grade debt, the 3 is one of the weakest our hunches to rigorous scrutiny.
most commonly held type of fixed-income fund, eased 0.01% in May, leav- of the calendar. The next time your broker or adviser
ing their year-to-date gain at 3.3%. 2 refers to some pattern or another as
International-stock funds are trailing their U.S. counterparts, on average. a reason to make changes to your
They eased 0.1% last month and are down for the year, by a scant 0.13%. 1 portfolio, ask him or her whether
Gold funds continue to draw attention. Gold-oriented funds again had a that pattern can be shown—at stan-
big move, this time on the downside. They fell 11% in May after soaring dard levels of statistical signifi-
0
nearly 29% in April. Gold, which pays no interest, tends to attract dollars cance—to be more than just random
when rates are low, since it has less competition from yield-bearing assets. noise.
The gold-oriented sector is still up 63% for the year (see table on page R8). –1 Most of what Wall Street talks
Jan. Feb. March April May June July Aug. Sept. Oct. Nov. Dec. about can’t pass this test, which is
Mr. Power is a Wall Street Journal news editor in South Brunswick, N.J. *Dow Jones industrials' average gain during month and two subsequent months; data since 1955 one reason why so few beat the mar-
Email him at william.power@wsj.com. Source: www.hulbertratings.com THE WALL STREET JOURNAL. ket over time.

The Journal Report welcomes REPRINTS AVAILABLE

Follow The Experts >> your comments—by mail, fax or
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THE WALL STREET JOURNAL. Monday, June 6, 2016 | R3

This is what beating 100%*

of your peers looks like.
The Fidelity® Capital & Fidelity® Capital & Income Fund (FAGIX) vs. High Yield Bond Peer Group
Income Fund has beaten Hypothetical growth of $10,000 during manager’s tenure $30,000

an impressive number of its (07/15/2003–03/31/2016)1

peers over the 10-year period, $25,000

ranking #1 out of 365 in the Fidelity® Capital & Income Fund ($27,348)
High Yield Bond Peer Group.* High Yield Bond Peer Group ($20,531)
$20,000
Portfolio Manager Mark Notkin
and the deep bench of Fidelity
analysts have the flexibility to $15,000

invest across the entire capital

structure, from bank loans $10,000
to common stocks, which
has created an attractive
$5,000
combination of income and
capital appreciation.
$0
Yet another example of the
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
power of active management.

Average Annual Total Returns Manager Tenure Expense Ratio 2

as of 03/31/2016 1 year 3 year 5 year 10 year 07/15/2003

Fidelity® Capital & Income Fund –4.16% 3.85% 4.75% 7.51% 8.21% 0.72%
High Yield Bond Peer Group3 –4.17% 1.06% 3.84% 5.55% –

Performance data shown represents past performance and is no guarantee of future results. Investment return and
principal value will fluctuate, so investors may have a gain or loss when shares are sold. Current performance may
be higher or lower than what is quoted, and investors should visit Fidelity.com/performance for most recent month-
end performance.

M O R N I N G S T A R® R A T I N G S
AS OF 03/31/2016, MORNINGSTAR CATEGORY: HIGH YIELD BOND

Mark Notkin OVERALL OUT OF 646 FUNDS

Portfolio Manager
Fidelity® Capital
& Income Fund 3 YEAR #5 OUT OF 646 FUNDS

5 YEAR #114 OUT OF 530 FUNDS

10 Y E A R #1 OUT OF 365 FUNDS*

Past performance is no guarantee of future results.

800.FIDELITY | Fidelity.com/CapIncome
Or call your Advisor.

Before investing in any mutual fund, consider the investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus
or, if available, a summary prospectus containing this information. Read it carefully.
Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Life of fund
figures are reported as of the commencement date to the period indicated.
Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the
loss of principal. The securities of smaller, less well-known companies can be more volatile than those of larger companies.
Lower-quality bonds can be more volatile and have greater risk of default than higher-quality bonds. Interest rate increases can cause the price of a debt security to decrease.
*Percent Rank in Category is the fund’s total-return percentile rank relative to all funds that have the same Morningstar Category. The highest (or most favorable) percentile rank is 1 and the lowest (or least favorable) percentile rank is 100. The top-performing fund in a category will
always receive a rank of 1. Percent Rank in Category is based on total returns, which include reinvested dividends and capital gains, if any, and exclude sales charges.
The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics.
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads and redemption fees),
placing more emphasis on downward variations and rewarding consistent performance. The top 10% of the funds in an investment category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive
1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)
© 2016 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar
nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you should check the fund’s current prospectus for the most up-to-date information
concerning applicable loads, fees and expenses.
1
The chart above illustrates the performance of a hypothetical $10,000 investment made in the fund and a benchmark since the inception date of the product. Benchmark returns include reinvestment of capital gains and dividends, if any, but do not reflect any fees or
expenses. It is not possible to invest in an index. This chart is not intended to imply any future performance of the investment product.
2
Expense Ratio is the total annual fund operating expense ratio from the fund’s most recent prospectus.
3
The Morningstar category average is the average return for the peer group based on the returns of each individual fund within the group, for the period shown. This average assumes reinvestment of dividends. Past performance is no guarantee of future results.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2016 FMR LLC. All rights reserved. 726062.7.0
R4 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

ASK ENCORE | GLENN RUFFENACH How the Largest Funds Fared Data provided by
Performance numbers are total returns (changes in net asset values with reinvested distributions) as of
May 31; assets are as of April 29. All data are final.
What Features a Home Needs The Largest Stock Mutual Funds
Total Return (%)

So You Can ‘Age in Place’ Fund

Vanguard TSM Idx;Adm
Ticker
VTSAX
Assets
($ billions)
423.36
May
1.8
1-year
0.2
3-year
10.5
Annualized
5-year
11.1
10-year
7.5

Also: How many financial advisers should you Vanguard 500 Index;Adm
Vanguard Tot I Stk;Inv
VFIAX
VGTSX
229.24
204.69
1.8
–1.0
1.7
–10.8
11.0
1.0
11.6
0.4
7.4
2.0

use, and second thoughts on Social Security Vanguard Instl Indx;Inst

SPDR S&P 500 ETF
VINIX
SPY
200.58
185.35
1.8
1.8
1.7
1.6
11.0
10.9
11.6
11.5
7.4
7.3
American Funds Gro;A AGTHX 140.62 2.1 0.1 11.1 10.9 7.1
American Funds EuPc;R-6 RERGX 123.02 0.4 –9.4 3.4 2.6 N.A.
We’re debating whether to tanking), your new adviser’s performance, es- Fidelity Contrafund FCNTX 106.52 1.7 1.3 11.5 11.4 8.4
move in retirement or remodel pecially in the short term, might simply be a American Funds CIB;A CAIBX 99.17 0.3 –1.0 5.4 6.1 5.3
our existing home. In either matter of good (or bad) timing, rather than a American Funds Inc;A AMECX 97.06 0.6 0.4 6.6 7.7 6.2
case, we’re trying to figure out reflection of his or her actual abilities. Fidelity Sp 500 Idx;Adv FUSVX 94.47 1.8 1.7 11.0 11.6 7.4
what features, at a minimum, And…do you plan to tell the new adviser American Funds Bal;A ABALX 90.40 0.5 3.0 7.9 9.3 7.0
we should look for in a new about all your assets? Investors who split their Vanguard Wellington;Adm VWENX 89.25 0.8 2.0 7.6 8.6 7.4
house—or add to our current holdings often are hesitant to give a new ad- American Funds CWGI;A CWGIX 82.19 0.2 –5.0 5.6 5.8 5.4
house—so that we can stay in our home as viser a full picture of their portfolio (wanting, American Funds Wash;A AWSHX 78.46 0.9 2.0 9.6 11.0 6.9
we get older. Does the housing industry have first, to see how well the new adviser performs Franklin Cust:Inc;A FKINX 77.69 0.5 –4.8 2.7 4.8 5.5
any guidelines or requirements for retirees? with a piece of that portfolio). Such an omis- American Funds ICA;A AIVSX 75.06 0.5 1.1 10.8 10.8 6.6
sion is asking for trouble, says Mike Piper, a American Funds FInv;A ANCFX 74.28 1.4 2.1 10.3 10.3 7.3
“Aging in place” is a hot topic. Three re- certified public accountant in Manitou Springs, iShares:Core S&P 500 IVV 71.28 1.8 1.7 11.0 11.6 7.4
sources can help a great deal. Colo., and author of the Oblivious Investor Vanguard Md-Cp Idx;Adm VIMAX 67.56 1.9 –2.6 10.4 10.0 7.8
Start with a report from the Joint Center blog.
iShares:MSCI EAFE ETF EFA 60.07 –0.9 –9.7 1.9 2.0 1.8
for Housing Studies at Harvard University: Take taxes. If the new adviser knows about
American Funds NPer;A ANWPX 58.68 0.9 –3.1 7.5 7.6 6.8
“Housing America’s Older Adults: Meeting the some, but not all, of the investor’s accounts
Vanguard FTSE Dev Mk ETF VEA 58.13 –0.5 –9.0 2.5 2.3 N.A.
Needs of an Aging Population.” (Go to and holdings, recommendations about which
Vanguard REIT Idx;ETF VNQ 56.49 2.4 10.6 10.2 10.2 7.4
jchs.harvard.edu and highlight: Research.) The type of account (Roth, tax-deferred or taxable)
Vanguard Sm-Cp Idx;Adm VSMAX 56.39 1.9 –4.0 8.5 9.4 7.7
study identifies five to spend from (or contribute to) will be “poorly
Dodge & Cox Intl Stock DODFX 55.23 –0.9 –18.2 0.5 1.4 2.6

57%
features, in particular, reasoned,” Mr. Piper says.
Dodge & Cox Stock DODGX 54.58 2.3 –3.9 9.3 10.5 5.4
that make for safe In short, splitting your holdings tends to be
Vanguard FTSE Em Mkt ETF VWO 52.42 –3.4 –18.4 –4.4 –4.8 3.0
and accessible problematic. “Keeping half your portfolio with
Vanguard Gro Idx;ETF VUG 49.66 2.5 0.5 12.0 12.0 8.7
Ratio of homes homes: no-step en- an adviser who is charging too much and not
First Eagle:Global;I SGIIX 48.08 –0.9 1.2 5.8 6.1 7.2
with at least two tries; single-floor liv- delivering value is still half too much,” Mr. Kit-
safety features ing; switches and ces says. One alternative: meeting with a fi- Vanguard Health Care;Adm VGHAX 47.88 2.7 –5.2 18.6 17.2 11.9
for older adults outlets reachable at nancial planner who charges by the hour. Such American Funds AMCP;A AMCPX 47.49 1.7 –1.5 11.5 11.6 7.9
any height; extra- a meeting would allow you to get a fully in- BlackRock:Gl Alloc;I MALOX 47.33 –0.5 –5.3 3.0 3.4 5.4
wide hallways and formed second opinion without having to move Vanguard Windsor II;Adm VWNAX 45.41 1.2 –2.1 8.1 10.1 6.2
doors; and lever-style door and faucet handles. any portion of your portfolio, Mr. Piper says. Vanguard PRIMECAP;Adm VPMAX 45.03 3.1 –0.2 12.8 12.5 9.3
(The good news: Almost 90% of existing It also would help minimize fees: Pay the Vanguard Wellesley;Adm VWIAX 44.94 0.6 5.0 6.3 7.5 7.5
homes have at least one of these features, the adviser as needed for guidance, then hire a Vanguard Ext Mk Id;Inst+ VEMPX 43.70 1.8 –5.9 8.2 9.0 N.A.
study notes. The bad news: Only 57% have low-cost portfolio management firm to imple- T Rowe Price Gro Stk PRGFX 43.50 2.1 –1.4 12.8 12.3 8.7
more than one.) ment the recommendations. Harbor:Internatl;Inst HAINX 40.76 –0.7 –11.7 0.5 1.1 3.9
Next, check out the National Association of Vanguard Value Idx;ETF VTV 40.28 1.2 1.3 9.9 10.8 6.4
i i i
Home Builders and its “Aging-in-Place Remod- Fidelity Low-Prcd Stk FLPSX 40.04 0.9 –3.8 8.2 9.6 7.8
eling Checklist.” (Go to nahb.org and search I understand that I can get Social Secu- Vanguard Ins T StMk;Ins+ VITPX 39.99 1.8 0.3 10.6 11.2 7.6
for: aging in place.) Here, you’ll find more than rity—but can change my mind in the first year Fidelity Gro Company FDGRX 37.06 3.5 –2.5 12.8 12.1 10.0
100 suggestions (including eight for entryways and return the money. Is that rule still valid? MFS Value;I MEIIX 36.77 1.7 3.1 10.6 11.4 7.6
alone) that can help homeowners age 50-plus If so, and if I decide to do that, what would American Funds Mut;A AMRMX 36.73 1.2 1.7 9.5 10.3 7.2
live “safely, independently and comfortably.” my monthly benefit be? Would it be the bene- PowerShares QQQ Trust 1 QQQ 36.25 4.4 1.5 16.2 15.0 11.9
Finally, there’s the “HomeFit Guide” from fit I received when I first applied for Social SPDR Gold GLD 33.23 –5.8 1.3 –5.0 –5.0 6.0
AARP, the Washington-based advocacy group. Security, or would the benefit be based on my Fidelity Sp Tot Mk;Adv FSTVX 32.02 1.8 0.1 10.4 11.1 7.5
(Go to aarp.org and search for: HomeFit.) This new application date? T Rowe Price BC Gro TRBCX 30.74 2.6 0.3 13.5 13.3 9.1
26-page report, filled with diagrams, explains Vanguard Tgt Ret2025;Inv VTTVX 30.33 0.5 –1.4 6.2 6.6 5.7
how to create a “lifelong home,” one that’s Yes. Still valid. But, as always, there are
“suitable for anyone, regardless of…age or wrinkles. The Largest Bond Mutual Funds
Total Return (%)
physical ability.” Well worth your time. If you begin collecting Social Security retire- Assets Annualized
ment benefits, and then have second thoughts Fund Ticker ($ Billions) May 1-year 3-year 5-year 10-year
i i i
about your decision, you can withdraw your Vanguard Tot Bd;Adm VBTLX 161.34 0.02 3.1 2.8 3.3 4.9
For almost two decades I’ve had my invest- Social Security claim and reapply at a future Vanguard Tot Bd II;Inv VTBIX 98.82 –0.1 2.9 2.7 3.1 N.A.
ments of over seven figures handled by the date, says William Jarrett, a public-affairs spe- PIMCO:Tot Rtn;Inst PTTRX 87.13 0.3 2.0 2.1 3.4 6.1
same adviser. I’m not too happy with the to- cialist with the Social Security Administration. Met West:Total Return;I MWTIX 75.63 –0.01 2.2 2.9 4.5 6.7
tal results or the fees. What is your opinion of The catch: This option is available only for the DoubleLine:Tot Rtn;I DBLTX 58.78 0.1 2.6 3.2 4.9 N.A.
splitting my holdings—say, 50/50 or one- first 12 months after PIMCO:Income;Inst PIMIX 57.86 0.7 2.8 4.5 7.8 N.A.

12
third/two-thirds—with another adviser? you become entitled Vanguard Tot Itl BI;Inv VTIBX 57.58 0.7 4.4 4.5 N.A. N.A.
to benefits. After Vanguard Sh-Tm Inv;Adm VFSUX 54.76 0.01 2.1 2.0 2.2 3.7
It’s wise, at the least, to consider a change. that, it’s off the ta- Templeton Gl Bond;Adv TGBAX 49.97 –1.0 –6.2 –0.7 1.4 6.6
(Many people, even in the face of excessive Months allowed ble. (And you can do Vanguard Int-Tm TxEx;Adm VWIUX 49.83 0.1 5.4 3.7 4.5 4.6
fees or poor results, are reluctant to fire an ad- to withdraw a this only once in your Dodge & Cox Income DODIX 44.85 –0.2 1.8 2.9 3.6 5.4
viser, typically because they have formed a requested start lifetime.) Vanguard Sh-Tm Bd;ETF BSV 44.74 –0.1 1.4 1.3 1.5 N.A.
personal connection.) But this particular solu- of Social Security If you decide to iShares:Core US Agg Bd AGG 35.76 0.02 2.9 2.9 3.3 4.8
tion—dividing your assets—isn’t the best of withdraw your appli- Lord Abbett Sh Dur;F LDLFX 34.97 0.1 1.3 1.8 2.8 N.A.
ideas. cation, you must re- JPMorgan:Core Bond;R6 JCBUX 30.55 0.1 3.1 2.8 3.5 5.4
To start, you could end up paying more in pay all the benefits you and your family re- American Funds Bond;A ABNDX 30.19 –0.3 2.4 2.5 3.2 3.6
fees than you are now, says Michael Kitces, di- ceived based on your retirement application, T Rowe Price New Inc PRCIX 29.05 0.1 2.5 2.5 3.2 5.1
rector of wealth management at Pinnacle Ad- Mr. Jarrett notes. That includes any benefits iShares:iBoxx $IG Corp LQD 28.68 –0.4 4.0 4.0 5.3 6.1
visory Group Inc. in Columbia, Md. Breaking your spouse or children received, as well as Fidelity Str Adv Cre Inc FPCIX 28.18 0.1 2.3 2.6 3.5 N.A.
your large nest egg into two (relatively) small money withheld from your checks, including Vanguard GNMA;Adm VFIJX 26.41 0.2 2.7 3.3 3.0 5.0
nest eggs means you might not benefit from Medicare premiums. What’s more, anyone who Vanguard Int-Tm Bd;Adm VBILX 25.44 –0.2 3.7 3.2 4.4 6.1
the discounted fees that some advisers offer received benefits based on your application Vanguard Int-Tm Inv;Adm VFIDX 25.38 –0.2 3.9 3.6 4.6 6.0
to clients with sizable holdings. must consent in writing to the withdrawal. Vanguard Infl-Prot;Adm VAIPX 23.88 –0.7 1.4 0.3 2.3 4.4
Perhaps more important: How much time After the withdrawal has been approved, Fidelity Total Bond FTBFX 23.41 –0.04 2.4 2.9 3.7 5.3
do you plan to give the new adviser? Six you must file a new application to receive re- Fidelity Srs Inv Gd Bd FSIGX 23.04 –0.1 2.8 2.8 3.5 N.A.
months? A year? More? If you split your hold- tirement benefits—and that payment amount Fidelity Sp US B Id;FA FSITX 22.32 –0.04 3.1 2.9 3.3 N.A.
ings just as markets are jumping higher (or will be based on the new application date. Vanguard Ltd-Tm TxEx;Adm VMLUX 22.30 –0.1 2.1 1.4 1.7 2.8
Vanguard HY Corp;Adm VWEAX 18.41 –0.04 0.3 3.4 5.6 6.5
Mr. Ruffenach is a retired Wall Street Journal reporter and editor living in Georgia. Email your iShares:iBoxx $HY Corp HYG 17.73 0.4 –2.5 1.7 4.4 N.A.
questions and comments to askencore@wsj.com. Note: For funds with multiple share classes, only the largest is shown. N.A.: Not applicable; fund is too new or data not available

Tracking Exchange-Traded Portfolios Mutual-Fund Yardsticks: How Fund Categories Stack Up

Performance figures are total returns for periods ended May 31; for largest exchange-traded funds and
other portfolios, ranked by asset size. All returns are for periods ended May 31. All data are final. Data provided by
Assets Volume Expense Launch Performance (%)
Fund Symbol ($ billions) (000s) ratio date May YTD 1-year Perfomance (%) Performance (%)
SPDR S&P 500 ETF SPY 184.05 108,927.3 0.09 01/22/93 1.8 3.5 1.6 Investment objective May YTD 1-yr 5-yr* Investment objective May YTD 1-yr 5-yr*
iShares Core S&P 500 ETF IVV 73.15 3,583.9 0.07 05/15/00 1.8 3.5 1.7 Diversified stock & stock/bond funds World stock funds
Vanguard Tot Stk Mkt Idx ETF VTI 60.74 2,570.8 0.05 05/24/01 1.8 3.4 0.1 Large-Cap Core 1.6 2.5 –0.9 9.9 Global 0.8 1.7 –4.9 5.2
iShares MSCI EAFE ETF EFA 59.54 25,404.3 0.33 08/14/01 –0.9 –1.0 –9.7 Large-Cap Growth 2.4 –0.9 –1.2 10.5 International (ex-U.S.) –0.1 –0.1 –9.4 1.5
Vanguard 500 Index ETF VOO 45.38 584.2 0.05 09/07/10 1.8 3.6 1.7 Large-Cap Value 1.3 3.4 –2.9 9.0 European Region 0.2 –0.8 –7.7 2.7
PowerShares QQQ Nasdaq 100 QQQ 36.97 24,005.4 0.20 03/10/99 4.4 –1.0 1.5 Midcap Core 1.7 4.3 –4.2 8.1 Emerging Markets –2.5 2.6 –15.3 –4.4
iShares Core US Aggregate Bond ETF AGG 36.72 3,368.9 0.07 09/22/03 0.02 3.4 2.9 Midcap Growth 2.4 0.9 –6.4 7.8 Latin American –7.8 13.7 –14.1 –12.6
Vanguard FTSE Emerging Markets ETF VWO 35.01 23,613.8 0.15 03/04/05 –3.4 2.6 –18.4 Midcap Value 1.5 6.1 –3.0 8.8 Pacific Region 0.1 –2.2 –15.4 1.0
SPDR Gold Shares GLD 33.84 8,179.1 0.40 11/18/04 –5.8 13.9 1.3 Small-Cap Core 1.7 3.5 –4.7 7.4 Gold Oriented –11.1 62.7 19.4 –15.9
Vanguard FTSE Developed Markets ETF VEA 32.49 14,875.8 0.09 07/20/07 –0.5 –0.1 –9.0 Small-Cap Growth 2.5 –1.1 –8.9 6.8 Global Equity Income 0.3 4.0 –3.6 4.7
Small-Cap Value 0.9 5.5 –3.4 7.4 International Equity Income –1.1 1.9 –9.1 0.3
Vanguard REIT ETF VNQ 31.40 4,810.7 0.12 09/23/04 2.4 6.2 10.6
Multicap Core 1.4 2.4 –3.5 9.1 Taxable-bond funds
Vanguard Total Bond Market ETF BND 30.40 1,361.4 0.06 04/03/07 –0.02 3.5 3.0
Multicap Growth 2.2 –0.9 –4.2 9.1 Short-Term 0.01 1.3 0.6 1.4
iShares Russell 1000 Growth ETF IWF 29.41 2,186.2 0.20 05/22/00 1.9 1.7 1.4
Multicap Value 0.9 4.2 –3.6 8.5 Long-Term –0.01 5.0 2.6 4.2
iShares iBoxx $ Inv Grade Cor B ETF LQD 28.33 3,170.6 0.15 07/22/02 –0.4 5.8 4.0 Equity Income 1.2 5.1 –0.8 8.7 Intermediate Bond –0.01 3.3 2.1 3.1
iShares Russell 1000 Value ETF IWD 27.73 2,570.9 0.20 05/22/00 1.5 5.3 –0.2 S&P 500 Funds 1.7 3.3 1.2 11.1 Intermediate U.S. –0.6 3.1 0.4 1.5
iShares Core S&P Mid-Cap ETF IJH 27.52 1,228.8 0.13 05/22/00 2.3 7.5 –0.5 Specialty Divers. Equity –0.1 –0.2 –3.6 –3.7 Short-Term U.S. –0.01 3.3 2.1 3.1
iShares Russell 2000 ETF IWM 26.38 32,742.1 0.20 05/22/00 2.3 2.3 –5.9 Balanced 0.6 2.5 –1.8 5.6 Long-Term U.S. unch. 3.4 2.8 3.3
iShares MSCI Emerging Markets Index Fund EEM 21.67 94,346.4 0.69 04/07/03 –3.8 2.0 –18.0 Stock/Bond Blend 0.5 2.3 –3.1 4.6 General U.S. Taxable –0.04 3.9 0.9 4.5
Vanguard Value ETF VTV 21.42 674.5 0.08 01/26/04 1.2 4.4 1.3 Avg. U.S. Stock Fund† 1.6 1.9 –3.8 7.8 High-Yield Taxable 0.5 5.8 –2.2 4.2
Vanguard Div Appreciation ETF VIG 20.92 596.0 0.09 04/21/06 1.0 5.7 3.2 Sector stock funds Mortgage 0.1 1.9 1.6 2.6
Vanguard Growth ETF VUG 20.75 510.3 0.08 01/26/04 2.5 2.0 0.5 Science & Technology 4.2 1.2 –1.9 8.6 World Bond –1.5 5.0 –0.3 0.5
Vanguard Short-Term Bd Idx ETF BSV 18.88 727.2 0.09 04/03/07 –0.1 1.6 1.4 Telecommunication 1.1 5.6 0.3 6.1 Avg. Taxable-Bond Fund** unch. 3.3 0.1 2.6
iShares Core S&P Small-Cap ETF IJR 18.00 1,084.5 0.13 05/22/00 1.7 5.6 0.4 Health/Biotechnology 3.3 –8.5 –14.6 16.0 Municipal-bond funds
iShares TIPS Bond ETF TIP 17.98 588.8 0.20 12/04/03 –0.7 4.0 1.2 Utility 1.3 12.8 4.2 8.6 Short-Term Muni -0.1 0.8 0.4 0.6
Financial Select Sector SPDR XLF 17.11 32,365.9 0.15 12/16/98 2.0 0.1 –1.4 Natural Resources –1.4 12.0 –18.5 –5.5 Intermediate Muni 0.01 2.0 4.4 3.6
SPDR S&P MidCap 400 ETF MDY 16.55 3,972.4 0.25 04/28/95 2.3 7.3 –0.7
Sector 1.4 2.7 3.6 7.3 General & Insured Muni 0.4 2.7 5.6 5.3
Real Estate 2.0 4.4 7.9 9.2 High-Yield Muni 0.8 3.9 7.2 7.3
iShares US Preferred Stock PFF 15.76 2,119.5 0.47 03/26/07 1.6 3.7 5.4
iShares MSCI Japan Index Fund EWJ 15.33 43,776.1 0.48 03/12/96 –1.0 –3.3 –8.6
iShares Russell 1000 ETF IWB 15.31 1,851.5 0.15 05/15/00 1.7 3.5 0.7 Stock & Bond Benchmark Indexes All total return unless noted
iShares iBoxx $ Hi Yld Corp Bd ETF HYG 15.06 11,986.8 0.50 04/04/07 0.4 6.5 –2.5 Perfomance (%) Performance (%)
Investment objective May YTD 1-yr 5-yr* Investment objective May YTD 1-yr 5-yr*
iShares Select Dividend ETF DVY 14.84 994.9 0.39 11/03/03 1.0 11.1 9.4
Energy Select Sector SPDR XLE 13.98 15,246.5 0.15 12/16/98 –0.8 11.7 –12.0 Large-cap stocks Stock indexes
Vanguard High Dividend Yield ETF VYM 13.84 712.1 0.09 11/10/06 1.5 6.4 4.6 DJIA 0.5 3.3 1.4 10.0 DJ U.S. TSM Growth 2.0 1.1 –2.3 11.5
S&P 500 1.8 3.6 1.7 11.7 DJ U.S. TSM Value 1.7 5.7 2.7 10.8
Vanguard Mid Cap ETF VO 13.82 323.3 0.08 01/26/04 1.9 3.6 –2.6
Vanguard FTSE Europe ETF VGK 13.68 4,189.7 0.12 03/04/05 –0.5 –0.1 –9.7 Midcap stocks Taxable bonds
iShares S&P 500 Growth Index Fund IVW 13.64 477.2 0.18 05/22/00 2.7 1.9 2.5 S&P MidCap 400 2.3 7.5 –0.4 10.0 Barclays Agg. Bond 0.03 3.5 3.0 3.3
SPDR S&P Dividend ETF SDY 13.30 558.5 0.35 11/08/05 1.4 11.9 11.0 Small-cap stocks Municipal bonds
iShares Edge MSCI Min Vol USA ETF USMV 13.24 3,541.7 0.15 10/18/11 1.6 6.8 9.5 Russell 2000 2.3 2.3 –6.0 7.9 Barclays Muni. Bond 0.3 2.7 5.9 5.1
Vanguard FTSE All-World ex-US ETF VEU 13.03 2,318.3 0.13 03/02/07 –1.0 0.8 –11.2 Broad stock market International stocks
WisdomTree Europe Hedged Equity HEDJ 12.78 905.0 0.59 12/31/09 2.7 –0.8 –9.4 DJ U.S. Total Stock Market 1.8 3.4 0.1 11.1 MSCI EAFE†† (price return) –1.5 –2.8 –12.2 –0.8
*Expense charge is a maximum of 8 cents a share †Assets are estimated N.A.= Not applicable, fund is too new. Russell 3000 1.8 3.4 0.2 11.1 Dow Jones World (ex.-U.S.) –1.5 0.8 –10.4 0.6
Note: Total returns are based on the change in the net asset values, not changes in market prices. Net asset values can vary from market prices, which
therefore can reflect a premium or discount to the net asset values. Source: Thomson Reuters *Annualized †Diversified funds only **Excludes money-market funds ††Europe, Australia, Far East
THE WALL STREET JOURNAL. Monday, June 6, 2016 | R5

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

PORTFOLIO STRATEGY

The Problem With ‘Low-Vol’ Stock Funds

Investors think they’re eliminating painful turbulence. They are wrong.
BY JOHN COUMARIANOS
LOW-VOLATILITY STOCK funds have
taken in gobs of money over the past
year. The iShares Edge MSCI Min
Vol USA fund (USMV), the biggest
low-volatility exchange-traded fund,
had about $8 billion in assets early
this year. Now it has more than $13
billion, while other stock funds bleed
assets.
Clearly, investors want stock expo-
sure without the gyrations that nor-
mally come with it. And they think
“low-vol” funds are how to get it.
That might be wishful thinking.
A low-vol strategy, like other
smart-beta strategies, tries to beat
the stock market by picking stocks
based on a factor that usually breaks
the link between a stock’s size and
its position in a plain market index.
In other words, the strategy under-
weights the most popular stocks.
But expecting a low-volatility
stock portfolio to eliminate most of
the painful turbulence that stocks
deliver isn’t realistic. If you want a
serious cushion for volatility in your
portfolio, you need some bonds.
‘Low-vol’ is still volatile
The low-volatility investment
strategy owes its existence to Robert
Haugen, a finance professor who
died in 2013. Prof. Haugen spent his
career arguing against the idea that
more volatility was necessary to
achieve greater reward.
According to the theory, Tesla
Motors may change the world with
new technology and is fun to talk
about at parties, but Procter &
Gamble will put cash in your pocket
more reliably by selling toothpaste
and laundry detergent. And Prof.
Haugen had backtests to prove it.
But he didn’t think low-volatility
stocks were substitutes for bonds.
He thought the stock market was in-
efficient, and, like Benjamin Graham,
the founder of value investing, sur-
mised that he could beat it over time
by avoiding the most volatile, glam-
orous stocks.
Low-volatility stocks are still
stocks, after all, and investors may
be forgetting how volatile even bor-
ing stocks can be. USMV’s top 25
holdings, representing 34% of its scale of one star, meaning a stock is star’s analysis indicates that low-vol- SPOTLIGHT
portfolio, fell on average by nearly expensive, through five, meaning a atility stocks are cheap.
17% in 2008 during the financial cri- stock is cheap. A three-star stock CLEARBRIDGE
sis. That’s better than the 37% swoon means it currently trades at a price Get stability from bonds, cash APPRECIATION
of the S&P 500, but still painful. close to an analyst’s fair-value esti- This means investors seeking to
Low-volatility stocks also might
be expensive now. The top 25 hold-
mate of its underlying business.
So an average rating of 2.7 stars
reduce a portfolio’s volatility, as al-
ways, must consider cash and bonds. THIS FUND IS AS
ings of USMV have an average star
rating of 2.7 from Morningstar.
means a group of stocks is a bit ex-
pensive. No firm’s analysis is perfect,
No doubt, this is harder than it
has been for much of history. The 10- FAR FROM VEGAS
Morningstar rates stocks on a but certainly nothing in Morning- year U.S. Treasury note is yielding
less than 2% and might not allow its
AS THEY COME
owner to keep up with inflation. Like the fabled tortoise, managers
No Respite Cash is yielding nothing, and, for of the $5.6 billion ClearBridge
Despite the ETF’s low-volatility mandate, the top 25 holdings of iShares Edge MSCI now, is trailing inflation and reduc- Appreciation Fund (SHAPX)
Min Vol USA fund declined nearly 17% during the 2008 financial crisis. ing an investor’s purchasing power. outperform with a steady hand.
Nevertheless, part of a portfolio “The managers are cautious
MORNINGSTAR in low-returning but stable bonds is and patient,” says Morningstar
STOCK 2008 RETURN RATING better than one fully invested in Inc. analyst Andrew Daniels. The
stocks that causes an investor to fund’s goal is to modestly beat
Newmont Mining -15.83% ##
panic and sell after a market decline. the S&P 500 index, but with sig-
AT&T -27.57 ## Investors should remember that nificantly less risk, “so you might
core bond portfolios have produced expect it to lag in strong bull
Johnson & Johnson -7.61 ##
standard deviations of returns of markets,” but it should continue
McDonald’s 8.33 ### around 4% for the past quarter-cen- to deliver during a full market cy-
tury. That means their returns have cle, he says.
Public Storage 12.11 ## mostly fallen in a range of 4% from ClearBridge Appreciation has
Verizon -17.74 ### their average return. gained 5.9% on average annually
By contrast, according to a 2013 over the 15 years through May 31,
Procter & Gamble -13.69 #### research paper from Newport Beach, outpacing the S&P 500, which
General Mills 9.47 ## Calif., asset manager Research Affili- has risen 5.6%, and its large-
ates, U.S. low-volatility stocks had a blend peers, which have gained
PepsiCo -25.67 ### standard deviation of around 11% for 5.1% on average annually, accord-
ExxonMobil -13.14 ## the 20-year period starting in 1993. ing to Morningstar.
That’s lower than the 15% standard This year through May, the
Paychex -24.08 ### deviation that large-cap U.S. stocks fund has gained 3.4%, while the
ADP -8.58 ### produced, but it is still gut-wrench- S&P 500 has risen 3.6% and its
ing compared with bonds. peers have gained 2.4% on aver-
Becton Dickinson -16.76 ### For more perspective, low-volatil- age.
## ity stocks have been even more vola- Co-managers Scott Glasser
Consolidated Edison -15.52
tile than junk bonds, according to and Michael Kagan have run the
Southern Co. -0.23 ### the Research Affiliates paper. fund together since 2010.
It’s true that investment-grade The two buy mostly high-qual-
AvalonBay -29.94 ###
bonds may be more volatile in the ity stocks of blue-chip companies
Duke Energy -21.12 #### future than they have been over the with dominant market positions,
past 30 years or so. After all, inter- healthy balance sheets and share-
Berkshire Hathaway -31.78 ####
est rates have mostly done nothing holder-oriented management
UPS -19.46 ### but decline since the early 1980s, teams, says Mr. Daniels.
giving bonds the most favorable en- The fund’s biggest holdings
Coca Cola -23.76 ### vironment possible, since prices rise tend to account for just 2% to
Henry Schein -40.24 # when rates fall and vice versa. 4% of assets, and its biggest sec-
But a portfolio of bonds whose tors bets tend to vary just 5 per-
Accenture -7.60 ## maturity is of moderate length and centage points in either direction
Facebook N.A ## whose credit quality is high should from the S&P 500 index, says
still have far greater stability than a Mr. Glasser.
Pfizer -16.45 #### low-volatility stock portfolio. As of April, its biggest hold-
UnitedHealth Group -54.24 ## ings were Microsoft Corp. at
Mr. Coumarianos, a former 3.4%, Comcast Class A at 3.5%
AVERAGE -16.71 2.68 stars Morningstar analyst, is a writer in and Home Depot Inc. at 3.4%.
Laguna Hills, Calif. He can be —Daisy Maxey
Source: Morningstar THE WALL STREET JOURNAL. reached at reports@wsj.com.

STRENGTH IN NUMBERS
51 FOUR AND FIVE
STAR FUNDS
Columbia Floating Rate Fund Columbia Strategic Income Fund
(CFRZX) #### (LSIZX) #####
Overall rating among 212 Bank Loan funds. The fund received a Morningstar Overall rating among 275 Nontraditional Bond funds. The fund received a
rating of 4 stars among 212 funds, 4 stars among 151 funds and 4 stars Morningstar rating of 5 stars among 275 funds, 5 stars among 182 funds
among 63 funds for the 3-, 5- and 10-year periods, respectively. and 5 stars among 50 funds for the 3-, 5- and 10-year periods, respectively.

Columbia Overseas Value Fund Columbia Tax-Exempt Fund

(COSZX) #### (CTEZX) #####
Overall rating among 289 Foreign Large Value funds. The fund received a Overall rating among 181 Muni National Long funds. The fund received a
Morningstar rating of 4 stars among 289 funds and 4 stars among 251 Morningstar rating of 5 stars among 181 funds, 4 stars among 175 funds
funds for the 3- and 5-year periods, respectively. and 5 stars among 143 funds for the 3-, 5- and 10-year periods, respectively.

Columbia Income Builder Fund Columbia Dividend Income Fund

(CBUZX) ####
Overall rating among 734 Conservative Allocation funds. The fund received
a Morningstar rating of 3 stars among 734 funds, 4 stars among 576 funds
and 5 stars among 358 funds for the 3-, 5- and 10-year periods, respectively.
(GSFTX) #####
Overall rating among 1,207 Large Value funds. The fund received a
Morningstar rating of 5 stars among 1,207 funds, 5 stars among 1,051
funds and 5 stars among 764 funds for the 3-, 5- and 10-year periods,
respectively.

Columbia High Yield Municipal Fund Columbia U.S. Government Mortgage Fund
(SRHMX) #### (CUGZX) #####
Overall rating among 167 High Yield Muni funds. The fund received a Overall rating among 297 Intermediate Government funds. The fund received
Morningstar rating of 4 stars among 167 funds, 4 stars among 149 a Morningstar rating of 5 stars among 297 funds, 5 stars among 284 funds
funds and 4 stars among 98 funds for the 3-, 5- and 10-year periods, and 5 stars among 215 funds for the 3-, 5- and 10-year periods, respectively.
respectively.

To find out more, call 800.426.3750 or visit columbiathreadneedle.com/us

Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. For a free prospectus or a summary prospectus, which contains
this and other important information about the funds, visit columbiathreadneedle.com/us. Read the prospectus carefully before investing.
All ratings are for Class Z shares as of 03/31/16. Class Z shares are sold at net asset value and have limited eligibility. Out of 101 Columbia funds rated by Morningstar, 18 funds received a 5-star
Overall Rating and 33 funds received a 4-star Overall Rating. The Overall Morningstar Rating™ for a fund is derived from a weighted average of the performance figures associated with its 3-, 5- and
10-year Morningstar Rating metrics.
Investments involve risk, including loss of principal. These funds may be subject to additional risks but not limited to the following; market, mortgage and asset-backed securities, issuer
default, non-investment-grade (high-yield or junk) securities, interest rates, floating rate loans, foreign and emerging market, derivative and liquidity risks.
For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s
monthly performance (including the effects of sales charges, loads and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of
funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as
a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) © 2016 Morningstar, Inc. All rights reserved. The Morningstar information
contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor
its content providers are responsible for any damages or losses arising from any use of this information.
Past performance does not guarantee future results.

Columbia Threadneedle Investments (Columbia Threadneedle) is the global brand name of the Columbia and Threadneedle group of companies.
Columbia funds are distributed by Columbia Management Investment Distributors, Inc., member FINRA, and managed by Columbia Management Investment Advisers, LLC.
Columbia Management Investment Distributors, Inc., 225 Franklin Street, Boston, MA 02110-2804
© 2016 Columbia Management Investment Advisers, LLC. All rights reserved. CT-MK (04/16) 22UB/1469267
R6 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

ENDOWMENT FUNDS

The Church of England’s Blessed Investing

Its $10 billion fund succeeds, as it and others push an ‘ethical’ agenda
BY GERRARD COWAN SPOTLIGHT | TIERRA
Spiritual Growth
THE CHURCH OF ENGLAND traces
Assets managed by the Church
Commissioners for England
A NEW ETF BETS
its history from the Roman Empire
to the Reformation and beyond. The
endowment have expanded over the ON BRAZIL’S
REAL ESTATE
past decade to £7 billion ($10 billion).
queen is its supreme governor, and
almost a million worshipers attend £7, in billions
its services every week. For those who think there is
It is also home to a market-beat- money to be made in Latin Amer-
ing investment fund. ican real estate, the early returns
The Church Commissioners for 6
of a new exchange-traded fund
England endowment manages about are promising.
£7 billion ($10 billion) of assets for Tierra Funds launched the
the church. The money helps cover Tierra XP Latin America Real
SUZANNE PLUNKETT/BLOOMBERG NEWS

the church’s annual costs, from sup- Estate ETF (LARE) in December.
porting dioceses to funding mission 5 It tracks the Solactive Latin
activities. Last year the endowment American Real Estate Index of 56
returned 8.2%, and it has grown by stocks listed in the region, pri-
an average of 9.7% annually for the marily in Brazil and Mexico.
past 30 years. It aims to exceed the 4 The fund is up almost 12%
annual inflation rate, which was 3.4% since the start of the year, and
2006 ’09 ’12 ’15
over the 30 years, by at least 5 per- has net assets of just under $2.9
centage points. Note: One pound = $1.45 million. About half its investments
Although most investors can’t af- Source: Church Commissioners for England are in real-estate investment
ford the patience that this endow- Westminster Abbey, one of the historic buildings of the Church of England. THE WALL STREET JOURNAL. trusts, which have holdings in in-
ment enjoys, its success may hold come-producing property like
lessons for some. served us well to keep on diversify- church in a trendy area for both reli- meaning they won’t immediately sell malls and industrial parks, and
ing.” gious and nonreligious funds that fo- off a holding if they disagree with a are required to pay out a periodic
Ultimate ‘long-term’ view While paring its exposure to cus on being “socially responsible.” company’s stance on something, but dividend. The rest is concentrated
Because the fund is a perpetual listed stocks, the endowment has in- Like religious endowments, indi- will try to change the firm’s direc- in real-estate operating compa-
endowment, it can take a very long- creased its investments with private- viduals can invest in funds that tion instead. nies, which are similar to REITs,
term view, says Andreas Whittam equity managers and acquired other abide by a particular faith, including Last year the commissioners ad- though they aren’t required to pay
Smith, the head of the fund. Some of illiquid holdings in areas such as for- Christianity and Islam. While ap- opted a climate-change policy, di- a dividend and can invest in a
its rural estates, for example, have estry. These were among its stron- proaches and performances have vesting from companies that derive broader range of companies. The
been in church hands for centuries. gest performers last year, with the varied, a recurring factor is a com- more than 10% of their revenue from fund also invests in an array of
“Some of the things we’re able to do, commissioners’ private-equity man- mitment to ethical or socially re- thermal coal or the production of oil other real-estate-focused compa-
other sorts of investors simply agers notching returns of 20.2%. sponsible investing. from tar sands. However, they chose nies, from construction firms and
wouldn’t be able to…. They have to Investors are often frightened of The Rev. Séamus Finn, chairman to engage with, rather than divest home builders to related services.
have a sort of steady return, they illiquidity, Mr. Whittam Smith says. of the New York-based Interfaith from, one mining company with coal The real-estate market in Bra-
can’t wait on things forever.” However, spreading holdings across Center on Corporate Responsibility, revenues close to the 10% threshold, zil has been under pressure due
That said, one lesson investors different investments can lower the says companies that obey the law, with a view to ascertaining the fu- to the recession there, says Jamie
may take away from the endow- risks. “The worst thing is to have il- are transparent, treat their employ- ture place of coal in the business. Anderson, managing principal of
ment’s performance is to look be- liquid investments…as an overlarge ees well and respect the environ- An ethical approach can make Tierra Funds. Still, he is optimis-
yond publicly traded shares when holding. But if these holdings are all ment and their communities are sense on a business level, says Adam tic, despite the country’s eco-
considering investments. individually only 2 or 3 percentage likely to be more sustainable in the Laird, passive-investment manager nomic travails and the political
Mr. Whittam Smith says the en- points or something, then it’s more long run. at Hargreaves Lansdown, a U.K. fi- turmoil surrounding the impeach-
dowment has long sought to reduce manageable.” “You can take into account social nancial firm that has worked with ment of President Dilma Rouss-
its exposure to exchange-listed Not everyone can make illiquid in- and environmental and governance charities in the past. Companies that eff. Mr. Anderson figures the
stocks, a process that has acceler- vestments on the same scale as a issues and still get a financial return are considered to be behaving ethi- economy could turn a corner this
ated in recent months with the sale large fund or charity. Mr. Whittam that would beat others if you’re pa- cally avoid the risk of fines, he says, year, particularly if the political
of £250 million from the global Smith says the main thing he would tient and you apply the right kind of and could build a good reputation situation stabilizes, and there
shares portfolio in March. Mr. Whit- emphasize to investors is the impor- scrutiny and examination,” says Fa- with their customers. could be a cut in interest rates,
tam Smith, whose formal title is tance of doing the deepest possible ther Finn, who is also chief of faith- But he says ethical criteria alone benefiting the property market.
First Church Estates Commissioner, research into any managers with consistent investing at OIP Invest- don’t translate into business success, The fund’s second major focus
is downbeat on the outlook for the whom they choose to invest. Tom ment Trust, which manages the and investors should be mindful of is Mexico, with a “very vibrant
world economy, saying it is inexora- Joy, the director of investments un- long-term assets of more than 200 the bottom line. “In many cases the commercial real-estate industry,”
bly losing steam and governments der Mr. Whittam Smith, “spends as Roman Catholic organizations. main objective is going to be the Mr. Anderson says. However, the
can’t do much about it. much time examining and research- profit at the end of it, and the ethi- market is similar to the U.S., he
“The point of our policy over a ing and checking the firms to whom The ethical approach cal [side], while it’s a strong consid- says: It’s much more stable than
long number of years is to slowly, we give mandates as those firms do Both OIP Investment Trust and eration, obviously has to sit within Brazil, but returns “are going to
cautiously reduce our dependence in checking into the individual the Church Commissioners for Eng- that framework,” Mr. Laird says. be lower.” Elsewhere, he sees op-
upon quoted markets. We can never shares which they buy for their port- land avoid investing in areas like ar- portunities in the Andean region,
reduce it too far, because they pro- folios,” Mr. Whittam Smith says. maments and pornography. But they Mr. Cowan is a writer in particularly Peru and Colombia.
vide a wonderful store of liquidity, Ethical investing also is a priority will at times take a more proactive London. He can be reached at —Gerrard Cowan
so there’s obviously a limit. But it’s for the endowment, putting the approach to ethical investing, too, reports@wsj.com.

MONEY MANAGEMENT Hirsch’s case, that dream came true.

Lehman Brothers liked her system of
selecting growth stocks enough to

Wall Street Pioneer give her a mutual fund to put it into

practice, she says. And even when
Lehman changed its strategy and de-

Hopes More Women cided to leave money management,

the firm helped Ms. Hirsch keep her
fund alive as an independent entity.

Will Emerge Road to TIAA

Running her own shop was no fun,
Susan Hirsch, the rare female fund however. Prudential Financial invited
Ms. Hirsch to manage a midcap
manager, beats the odds, bears the scars growth fund for them. After a decade
there, she has spent a decade at TIAA
Global Asset Management, founded to
one of only a handful of female ana- serve academics and others (and until
BY ROB CURRAN
lysts at the firm. With her lack of ex- recently known as TIAA-CREF).
perience, she didn’t get a coveted In that time, the 63-year-old Ms.
IF THE PAUCITY of women on Wall beat like chemicals or paper, but had Hirsch says, she has seen marked
TIM BOWER

Street in general is noteworthy, the to toil in a fringe sector known as growth in the number of women in
paltry number of female fund man- “computers and communications.” supporting roles. It is no longer as
agers is even more jarring. While she says she never felt ha- unusual to see a female tech analyst
Susan Hirsch, manager of the $3.6 rassed or discriminated against, Ms. as it was when she started at Drexel.
billion TIAA-CREF Large-Cap Hirsch often had the sense that “ev- business. When The Wall Street intern, worked as her assistant as She also cited the relatively large
Growth fund, is one of the pioneers. erybody’s looking at you,” simply be- Journal wrote about her downgrade she built a model for valuing growth number of senior female money
She says investors and the industry cause female analysts were unusual. and she began to get calls from irate stocks. “A very young guy, very im- managers at TIAA as a sign that the
will profit from more women follow- When she went out on a limb to shareholders, Ms. Hirsch says, she pressive. Inevitably, we would go money-management industry is
ing the trail she blazed. downgrade printer Moore Business felt like hiding under the table. into a room and people would ask slowly changing.
Industry research shows just how Forms, the glare became even more Asked whether she felt she was him questions about ‘his’ model. But
far there is still to go. In last year’s intense. The idea that a big printing taken seriously as a female analyst it wasn’t his, it was mine!” Mr. Curran, a writer in Denton,
study on manager gender from fund company could lose business to elec- in those days, Ms. Hirsch goes back Every sell-side (or brokerage) an- Texas, is a regular contributor to
researchers Morningstar, only 184 tronic competition was, to many in- to an example from her time as an alyst hopes that their model will be Dow Jones Newswires and The
funds, or 2% of the roughly 7,700 in vestors of the day, like saying Hyper- analyst at Lehman Brothers in the adopted by someone on the buy side Wall Street Journal. Email him at
the sample, had solo female manag- loop trains will put airports out of 1990s. An Ivy League graduate, an (such as a mutual fund). In Ms. rob.curran@dowjones.com.
ers. A further 1,450 funds were man-
aged by men and women. Overall,
only 9% of fund managers were
women.
This could be a case of what re-
In Her Own Words: Susan Hirsch on Men vs. Women as Money Managers
searchers at CFP Board, a trade Susan Hirsch, manager of MS. HIRSCH: They don’t want you to become a ing down, it means there’s something we missed.
group for financial advisers, recently TIAA-CREF Large-Cap portfolio manager and drive the returns unless It’s an indication of larger issues.
called a “feminine famine.” The Growth fund, discussed the you’ve proven you’ve done it before. So someone
other revelation in the Morningstar gender gap in money manage- has to give you a chance. WSJ: Is there any hope for significant growth in
study: The average female manager ment and other topics in an the number of female fund managers?
produced returns in line with the av- interview. Edited excerpts: WSJ: What can a woman bring to a portfolio-man- MS. HIRSCH: There has to be an educational com-
erage male, even though they were agement role that a man could not? ponent that allows women to be more comfort-
mostly managing niche funds that WSJ: Does it surprise you that MS. HIRSCH: Women do have a better tempera- able with these positions. I was lucky to have a
had higher-than-average expenses. Morningstar’s survey found ment for money management because they research background. I’d love to see that at
Ms. Hirsch, for her part, has Susan Hirsch such a low percentage of have an instinct for the recognition that perhaps school, financial research where logic is rewarded
beaten the S&P 500 for the past women money managers? you’re missing something. I think men tend to and investment sense is taught. I’ve seen it hap-
three, five and 10 years. MS. HIRSCH: It doesn’t surprise me that you have insist on the fact that they’re right. That’s the pening selectively. My niece called me while she
only 2% of mutual funds managed by solo female reason they don’t ask for directions…because was in school [about 10 years ago]. There was a
A start at Drexel managers. I think there are a lot more women I they’re right. That way, you end up being not stock-picking contest. She had chosen Taser. It
When Ms. Hirsch joined the bro- see in research as opposed to portfolio manage- just a bit wrong, but very, very wrong. was one of these moonshots, and she wanted to
kerage Drexel Burnham & Co. as a ment, though I think that’s beginning to change. I know: When do you sell it? “What should I do?”
secretary in 1975, she was attending think research was the first area to accept WSJ: A study in the journal Scientific Reports sug- she asked. I said: “What do you think?” She said:
Brooklyn College at night and ex- women, because many came from good schools, gested that male hormones can drive reckless trad- “I think, sell it.” “Bingo!” I said. “Anything that
pecting a child. To make sure she re- and they were very detail-driven and focused. ing decisions. Does that jibe with your experience? goes up like that, goes down like that.”
turned after her maternity leave, Ms. MS. HIRSCH: When I was at Lehman, I remember Portfolio management needs to be done in an
Hirsch’s boss, in the research depart- WSJ: Why do you think the number of female working with one of the traders who would dou- unbiased methodical way. Being aggressive is not
ment, said he would promote her money managers has remained low, even as the ble down whenever a stock broke down. As a going to help.
from secretary to an assistant ana- percentage of women grows in other financial roles? money manager and a female, if a stock is break- —Rob Curran
lyst upon her return. She was soon
THE WALL STREET JOURNAL.
SECTOR INVESTING
How a Bold Approach in Commodities Paid Off
One lesson: Not
always relying on
official statistics
BY SIMON CONSTABLE
THE CHIEF EXECUTIVE OFFICER
of Amsterdam materials company
AMG Advanced Metallurgical
Group NV, Heinz Schimmelbusch,
once at the center of a controver-
sial derivatives trade that cost a
staggering $1.3 billion (see article
below), is back and bucking com-
modities-market trends.
While other companies have
suffered stock drops and cut divi-
dends, AMG shares have soared
(up 33.5% in 2015) and the firm
paid its first dividend last year.
Shares of rivals such as Rio Tinto
PLC, Alcoa Inc. and Glencore PLC,
meanwhile, were hammered.
Dr. Schimmelbusch and his team
at AMG—which makes lithium for
car batteries and heat-resistant
coatings for jet engines, among
other things—foresaw the com-
modities slowdown in 2012 and
started an austerity program to re-
duce capital expenditure and
working capital, and retire debt.
Four years later, the firm is debt-
free and ready to expand.
In an interview, Dr. Schimmel-
busch explained how the move has
paid off. Edited excerpts follow:
Spotting a discrepancy
WSJ: What did you see in the met-
als markets that others didn’t?
DR. SCHIMMELBUSCH: In 2012 we
saw a discrepancy between what
our business partners were telling
us about conditions in China and
what the official statistics said.
When we asked Chinese-com-
pany leaders what was going on
they said that they felt the official
statistics didn’t necessarily reflect
what was happening on the
ground. They were also pessimistic
about the availability of bank
loans to private enterprises.
We then started to compare the
import-export statistics, which
didn’t seem to match with the
gross-domestic-product announce-
ments. There were so many uncer-
JOURNAL REPORT | INVESTING IN FUNDS & ETFS
Heinz Schimmelbusch saw something happening in China that others didn’t.
tainties about what was happening
and it didn’t fit with the optimism
that some of our colleagues in the
industry had.
We knew that Chinese long-
term growth was the reason for
the commodity boom. If that was
interrupted, the commodity boom
would be interrupted, and there-
fore we started the austerity drive
as a hedge against that.
The program reduced capital ex-
penditure, shrank working capital
and we paid down our debt. We
also reduced our risk positions by
entering into long-term contracts
with our customers.
WSJ: Economists—and you hold a
Ph.D. in economics—have a terrible
reputation for forecasting. How
did you make sure that your anec-
dotal evidence was correct?
DR. SCHIMMELBUSCH: Here on our
board we have economist Steve
Hanke, and he is informed and
knowledgeable about the global
currency markets and monetary
policy. We compared notes on my
observations about China, and our
views reinforced each other’s.
[Prof. Hanke saw a credit crunch
for China’s private sector develop-
ing, which augured a huge slow-
down in that country.]
As part of the process, he ran a
model on commodity markets and
market participants. We ended up
DAN HALL
pretty sure of ourselves.
WSJ: The markets for all commodi-
ties are volatile, but it’s also true
that for your products it’s more so.
Would you explain why that is?
DR. SCHIMMELBUSCH: The volatility
of the price of critical materials
follows a certain pattern. When
you have an increase in demand,
such as the demand for lithium for
use in batteries, then prices ex-
plode because the supply of the
materials cannot increase quickly
enough to keep up with demand.
Eventually there will be an in-
COMMODITY WHIZ WAS FIGURE IN 1993 SCANDAL
If there is one thing Heinz Schim-
melbusch has experience with, it’s
commodity hedging and risk manage-
ment. From 1989 to 1993, he was
chief executive of German-based in-
dustrial conglomerate Metallgesell-
schaft.
Ultimately, it was a commodity
hedge at that company that landed
him in the center of one of the great
trading controversies.
Dr. Schimmelbusch abruptly left
MG in 1993 after a derivatives trade
started to show losses. MG’s part-
owner, Deutsche Bank, ousted Dr.
Schimmelbusch and cut off the credit
crease in the supply, and an effort
by the end users to use less of the
materials. As that happens, the
price explosion comes to an end.
WSJ: Even if China’s consumption
of commodities doesn’t rebound,
you see a sustained long-term de-
mand for your products. Why?
DR. SCHIMMELBUSCH: Our success
will be a function of long-term
technology trends, because we
provide materials that enable
these technologies to work.
For instance, we produce graph-
ite and lithium for batteries, and
titanium alloys tailored to the
aerospace sector. When you are a
producer of titanium alloys you
don’t need China. You need the
aerospace industry, which is
global. When you produce tanta-
lum, you are depending on the
smartphone industry, which isn’t
regionally defined.
Austerity to expansion
WSJ: AMG introduced its first divi-
dend last year. Do you think com-
modities markets have hit bottom?
DR. SCHIMMELBUSCH: Our balance
sheet has improved enough to
have shareholders participate
without disturbing our ability to
finance our growth plans.
The dividend also allows those
asset managers who are restricted
to buying dividend-paying stocks
to invest in our shares.
The important thing now is that
line that backed the hedge. The result
was a loss of $1.3 billion, a staggering
amount at the time.
Lawsuits and countersuits followed
before the case was settled, helped
partly by the backing of academics,
some of whom saw the derivatives
trade as a sophisticated move rather
than a reckless endeavor by MG. One
of those supporters was economist
Steve Hanke, a professor of economics
at Johns Hopkins University.
“MG’s hedge was brilliant,” Prof.
Hanke says. “Deutsche Bank just
didn’t understand it.” (Deutsche Bank
declined to comment.)
Monday, June 6, 2016 | R7
we are changing from austerity
mode to an expansion strategy be-
cause we feel the opportunities are
pretty obvious. We are currently
deeply involved in an expansion of
our lithium resource in Brazil,
partly because the price for the
metal is spiking and growth in de-
mand is stable. The lithium we
own was a byproduct of tantalum
production, which is used in
smartphones. The huge benefit
here is that much of the extraction
costs for the lithium have been
covered by the tantalum mine.
WSJ: The mining and metals indus-
try has a reputation of being dirty;
you see it as green. Please explain.
DR. SCHIMMELBUSCH: Our products
enable the aerospace industry to
coat turbine blades with ceramics,
which provide a thermal barrier
coating. It means the nickel-al-
loyed engine blades can be used at
higher temperatures, raising the
fuel efficiency and reducing emis-
sion of carbon-dioxide.
Other materials we produce,
such as graphite and lithium, allow
for energy storage in batteries.
The same thing is true for tita-
nium alloys, which can replace
nickel alloys in the engines. They
are lighter-weight than nickel alloy
and very heat resistant.
Mr. Constable is a writer in
New York. He can be reached at
reports@wsj.com.
Over the next 20 years, the two
men stayed in contact as Dr. Schim-
melbusch put together Dutch-listed
metals and materials company AMG
Advanced Metallurgical Group NV.
It specializes in products used in new
technologies, such as lithium for Tesla
car batteries, tantalum for smart-
phones and heat-resistant coatings for
jet engines. Prof. Hanke is on the
AMG supervisory board, roughly
equivalent to a U.S. board of directors,
and helped the company avoid the
stresses of the recent bear market in
materials.
—Simon Constable
R8 | Monday, June 6, 2016 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

Leaders and Laggards Data provided by
Category Kings in 16 Realms Data provided by
Performance numbers are total returns (changes in net asset values with reinvested distributions) as of Top-performing funds in each category, ranked by year-to-date total returns (changes in net asset values
May 31; assets are as of April 29. All data are final. with reinvested distributions) as of May 31; assets are as of April 30. All data are final.
Best-Performing Stock Funds
Assets
Total Return (%)
Annualized
Large-Cap Core Small-Cap Core
Fund Ticker ($ millions) May YTD 1-year 3-year 5-year Assets Total return (%) Assets Total return (%)
($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
Direxion:Jr Mnr Bull 3X JNUG 344.6 –39.8 245.8 –5.6 N.A. N.A.
Direxion:Gold M Id Bl 3X NUGT 1,531.7 –38.8 199.6 –33.8 –59.8 –66.1
SPDR Russell 1000 YldFoc 355.6 –0.1 8.9 N.A. N.A. Highland:Sm-Cp Eqty;A 35.2 1.5 19.6 5.4 9.8
ProShares:S&P 500 Dv Art 1,766.7 0.8 8.3 7.6 N.A. RidgeWorth:SC VE;I 990.7 2.1 13.0 5.1 8.8
ProShares:Ult Jr Miners GDJJ 4.6 –25.7 165.1 28.9 N.A. N.A.
Bright Rock Qual LC;Inst 198.5 1.2 7.8 6.0 11.7 WellsFargo:S/MC Val;A 50.4 2.2 11.8 7.4 2.6
ProShares:Ult Gold Minrs GDXX 10.0 –25.8 136.2 0.5 N.A. N.A.
PIMCO:RAE LV+;Inst 273.6 1.4 7.7 5.0 N.A. Mairs & Power:Small Cap 209.1 3.6 11.7 5.1 N.A.
PureFds Jr Silver(SCM/E) SILJ 32.6 –14.1 130.7 57.0 –0.6 N.A.
PowerShares Rus 1000 EW 43.8 0.9 7.6 –1.4 N.A. ProShares:Russ 2000 DG 67.3 3.1 11.3 14.6 N.A.
ProFunds:Prec Metals;Inv PMPIX 40.6 –19.8 112.6 6.6 –17.4 –27.3
SPDR Russell 1000 LowVol 374.7 1.8 7.5 N.A. N.A. WellsFargo:SC Val;A 880.0 2.1 10.7 1.9 3.8
Glbl X Gold Explrs ETF GLDX 65.4 –14.7 88.5 58.2 1.9 –22.9
State Farm Growth 4,153.2 1.2 6.9 1.2 8.6 ASTON:RR SelectVal;I 45.7 2.3 10.6 2.6 8.7
iShares:MSCI Gl SMiners SLVP 43.2 –12.3 82.2 15.8 –8.0 N.A.
Blue Chip Investor Fund 29.1 –0.1 6.9 2.6 10.6 Virtus:Quality Sm-Cap;I 249.1 4.2 10.2 9.4 9.7
US Glbl:Wld Prec Min UNWPX 146.7 –1.0 82.1 53.3 –0.1 –16.3
iShares:Edge MSCI MV USA 12,378.5 1.6 6.8 9.5 N.A. AMG:SthSun SmCp;I 351.8 –0.9 9.5 –14.1 7.4
Glbl X Silver Miners ETF SIL 292.9 –9.3 78.9 23.5 –7.9 –15.2
Jensen Quality Gr;I 5,070.9 1.0 6.6 6.3 11.1 Frst Tr Srs:Cnfl SCV;C 5.5 3.0 9.1 4.0 7.3
iShares:MSCI Gl GMiners RING 133.1 –12.9 77.4 23.2 –7.2 N.A.
Category Average: 756.7 1.6 2.5 –0.9 9.9 Category Average: 256.9 1.7 3.5 –4.7 7.4
VnEck Vctrs:Jr Gld Mnrs GDXJ 2,659.4 –11.5 76.1 32.4 –10.9 –24.2
Rydex:Precious Metls;Inv RYPMX 90.4 –13.1 71.2 17.7 –7.7 –16.2 Fund Count 755 935 921 883 715 Fund Count 758 866 852 805 604
ALPS Sprott Junior Gold SGDJ 42.1 –14.4 69.1 20.9 N.A. N.A.
EuroPac Gold;A EPGFX 64.4 –7.4 66.4 22.4 N.A. N.A. Large-Cap Value Small-Cap Value
Amer Cent:Gl Gold;Inv BGEIX 460.5 –10.6 64.7 20.8 –5.8 –15.4
Assets Total return (%) Assets Total return (%)
VnEck Vctrs:Gold Miners GDX 7,325.2 –12.0 64.7 16.3 –7.8 –16.6 ($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
ALPS Sprott Gold SGDM 204.5 –12.8 64.0 20.7 N.A. N.A. Deutsche CROCI EqDv;A 1,017.3 2.5 9.6 –0.5 7.8 Aegis Value;I 141.5 –6.6 42.9 7.4 3.8
Midas Fund MIDSX 18.2 –12.1 63.4 16.0 –10.9 –24.7 Invesco Exchange 58.5 2.2 9.2 1.3 6.4 CM:Advisors SC Val;I 44.4 –2.8 21.6 –9.6 1.6
PowerShares Gl Gold Prec PSAU 51.4 –12.0 62.4 15.2 –6.6 –16.0 Transam:Large Cp Val;I2 1,929.9 2.7 8.8 6.7 12.3 Towle Deep Value 71.8 –0.3 17.3 –5.7 N.A.
Van Eck:Intl Gold;A INIVX 816.1 –10.7 62.4 18.0 –3.9 –15.2 Commerce:Value 209.4 1.6 8.0 6.0 11.9 SPDR S&P 400 Mid Cap Val 188.1 1.4 9.7 –1.1 10.1
Franklin Gld&Pr Mt;A FKRCX 1,100.6 –11.5 61.7 18.8 –2.3 –16.5 Delaware Value;Inst 11,234.7 2.8 7.9 3.4 12.9 iShares:S&P MC 400 Val 4,490.3 1.4 9.6 –1.1 10.1
US Glbl:Gold&PM USERX 114.9 –7.7 60.3 36.3 0.4 –12.2 Amer Cent:Value;Inv 2,935.7 2.1 7.9 1.9 10.6 Vanguard S&P MC400V;ETF 300.0 1.4 9.6 –1.1 10.1
USAA Prec Met&Min;Fund USAGX 762.4 –10.7 60.3 13.4 –5.4 –17.0 Delaware Pld:LgCp Va Eq 219.2 2.8 7.7 2.8 13.2 Orchard Sm Cp Val;I 0.4 –3.3 9.6 N.A. N.A.
OCM:Gold;Inv OCMGX 56.6 –11.7 60.3 19.3 –2.97 –13.6 Edgar Lomax Value Fund 69.4 0.6 7.1 1.2 10.4 Guggenheim:MC Val;A 533.2 1.3 9.5 1.1 6.6
Deutsche Gold&Prec;S SCGDX 133.7 –12.7 58.9 14.0 –8.3 –17.3 Payden:Eqty Inc;Inv 693.3 2.2 7.0 6.0 12.0 RBB:Schneider Sm Cap Val 26.9 –2.7 9.4 –10.6 1.0
WellsFargo:Prec Met;A EKWAX 474.5 –11.5 58.6 18.2 –5.1 –14.3 Champlain Foc LCV;Adv 8.0 0.7 6.8 –1.9 N.A. Frst Tr ADex:MidCap Val 51.5 0.9 9.3 –7.4 8.0
Gabelli Gold;AAA GOLDX 293.6 –10.9 58.3 22.4 –0.7 –12.1 Category Average: 624.7 1.3 3.4 –2.9 9.0 Category Average: 317.9 0.9 5.5 –3.4 7.4
Invesco Gold&Prec;A IGDAX 339.8 –11.7 56.5 12.1 –5.9 –14.1
Fund Count 479 542 535 493 401 Fund Count 298 344 338 311 240
Oppenheimer Gld & Sp;A OPGSX 1,251.8 –9.3 56.3 18.8 –5.6 –17.7

Best-Performing Bond Funds Large-Cap Growth Small-Cap Growth

Total Return (%)
Assets Annualized Assets Total return (%) Assets Total return (%)
Fund Ticker ($ millions) May YTD 1-year 3-year 5-year ($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*

Direxion:20+Y Trs Bl 3X TMF 87.5 2.0 25.1 19.7 15.9 20.1 VictoryII:CEMP US LC HD 36.6 1.3 8.9 N.A. N.A. Goodwood SMID Cap D;Inst 18.4 –4.4 9.2 –13.8 N.A.
UBS E-TRACS MP 2xL S&P D SDYL 24.1 2.8 24.2 20.7 23.8 N.A. VictoryII:CEMP US SC VW 10.2 2.0 5.6 N.A. N.A. VictoryII:CEMP US SC HD 14.0 1.6 8.9 N.A. N.A.
DB 3x Lng 25+ Yr Tr ETN LBND ... 2.5 23.3 20.4 15.8 20.4 MFS Mass Inv Gro;A 6,684.4 2.1 5.2 1.8 11.0 Davenport SmCp Focus 41.7 1.5 8.1 –5.3 N.A.
UBS E-TRACS MP 2xL DJ SD DVYL 49.6 2.0 22.5 17.9 24.3 N.A. iPath ETN LgEx Rus 1000 1.3 2.7 5.1 0.1 21.2 Virtus:Sm-Cap Sust Gro;I 216.9 –0.7 7.6 6.0 12.1
UBS E-TRACS MP 2xL D HI DVHL 24.1 2.2 22.1 –4.0 N.A. N.A. WisdomTree:SD US Eqty 1.3 1.2 5.0 N.A. N.A. Sit Small Cap Div Gro;I 7.6 1.5 7.5 0.3 N.A.
Catalyst/SMH High Inc;A HIIFX 28.0 2.4 18.8 –17.0 –11.1 –5.0 Commerce:Growth 72.6 2.5 4.9 6.4 11.8 Virtus:Small-Cap Core;I 299.8 2.2 7.2 6.5 9.3
ProShares:Ult 20+ Yr Tr UBT 51.2 1.5 17.2 13.8 12.9 16.1 Glenmede:Resp ESG US Eq 3.2 1.5 4.8 N.A. N.A. AMG:GW&K SCC;I 379.7 4.0 6.9 1.8 10.4
ProShs II:Ult Yen YCL 6.9 –7.9 16.1 21.9 –8.5 –13.6 Manning&Napier:Qual Eq;S 1.4 1.1 4.5 N.A. N.A. Eagle:Smaller Company;C 47.3 2.5 6.1 –2.1 5.8
WisdomTree:Brz Real Str BZF 21.2 –3.2 14.8 –0.4 –7.4 –7.9 ETFS Dvsfd-Fac US LC Idx 7.5 1.7 4.4 1.6 N.A. Meridian Growth;Leg 1,248.1 1.3 5.6 –2.8 8.1
VnEck Vctrs:FA Hi Yd Bd ANGL 145.2 –0.2 12.8 3.3 5.5 N.A. Glenmede:WL US Equity 2.8 1.3 4.2 N.A. N.A. Neuberger Genesis;Inst 10,092.0 3.2 5.4 1.7 8.6

Direxion:7-10Y Trs Bl 3X TYD 7.6 –0.5 12.5 11.3 7.8 12.1 Category Average: 806.4 2.4 –0.9 –1.2 10.5 Category Average: 190.7 2.5 –1.1 –8.9 6.8
PIMCO ETF:25+ Yr US Tres ZROZ 214.6 1.6 12.4 11.5 10.8 14.3 Fund Count 621 722 715 670 546 Fund Count 507 583 570 549 440
Vanguard Ext Dur T;ETF EDV 1,281.1 1.4 12.1 11.7 10.2 13.6
PIMCO:Extend Dur;Inst PEDIX 441.1 1.4 12.1 11.0 10.2 13.4
ProShares:Ult Inv Gr Crp IGU 3.2 –1.2 11.5 7.6 6.5 8.9 Midcap Core Multicap Core
ProShares:Ult Hi Yld UJB 1.4 0.2 11.1 –6.8 2.8 6.8 Assets Total return (%) Assets Total return (%)
Rydex:Gv LB 1.2x Str;Inv RYGBX 103.5 1.0 11.0 9.3 9.0 11.5 ($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
Morg Stan I:Corp Bd;I MPFDX 35.3 –0.2 10.8 7.7 5.5 6.1 Hodges Pure Contr;Rtl 6.8 –7.2 23.9 –16.3 1.0 VnEck Vctrs:MS Wide Moat 705.1 2.6 14.8 8.9 N.A.
Ashmore:EM Sht Dur;Inst ESFIX 72.3 1.9 10.8 10.5 N.A. N.A. ProShares:S&P MC400 D Ar 46.0 3.1 15.1 12.8 N.A. Clifford Cap Prtnr;Instl 3.7 1.8 12.2 4.0 N.A.
ProFunds:US Gov Pl;Inv GVPIX 30.2 0.8 10.6 7.8 7.4 10.0 Principal:EDGE MdCp;Inst 180.4 1.7 14.5 N.A. N.A. LM Low Vol Hi Div 18.8 1.0 10.4 N.A. N.A.
Fairholme:Focused Inc FOCIX 206.2 0.4 10.4 0.8 2.4 6.2 Ivy:Mid Cap Inc Opp;A 133.3 2.6 11.4 5.3 N.A. Mairs & Power Growth 4,105.4 1.3 10.3 6.2 12.5
BlackRock:CoRI 2023;Inst BCZIX 12.9 0.5 10.4 8.3 N.A. N.A. Longleaf Partners SC 4,142.2 –0.3 11.2 –3.1 10.8 Virtus:Contrarian Val;A 261.1 0.5 10.3 –8.3 5.9
USAA Flexible Inc;Fund USFIX 93.4 –0.7 10.1 –0.7 N.A. N.A. PowerShares S&P MidCp LV 368.0 3.4 11.0 14.1 N.A. Morg Stan I:Insight;I 4.2 –0.9 10.1 2.6 N.A.
Ryan Labs Long Credit RLLCX 53.5 –0.1 9.9 N.A. N.A. N.A. AMG:SthSun US Eqty;I 745.7 0.7 10.9 –7.4 N.A. Cloud Cap Strat AC;Inst 24.7 0.6 9.1 1.5 N.A.
BlackRock:CoRI 2021;Inst BCYIX 12.2 0.5 9.8 8.7 N.A. N.A.
Dean Mid Cap Value 17.9 2.0 10.3 5.6 9.8 MainStay:Epoch US EY;I 64.2 1.4 8.8 6.2 10.4
CRM:Mid Cap Val;Inv 588.1 3.2 9.2 0.5 8.1 NorthQuest Capital Fund ... 1.0 8.4 2.4 7.0
SPDR Barclays Lng Tm Crp LWC 150.1 -0.03 9.6 5.7 5.5 7.0
Parnassus:Mid Cap 678.2 4.3 8.6 6.9 10.4 Madison:Investors;Y 254.4 2.2 8.0 7.5 11.2
FlexShs:CS US Lng Crp Bd LKOR 10.6 –0.4 9.6 N.A. N.A. N.A.
PIMCO:Lng-Tm Credit;Inst PTCIX 3,135.6 0.5 9.6 4.4 5.9 8.6 Category Average: 378.8 1.7 4.3 –4.2 8.1 Category Average: 582.9 1.4 2.4 –3.5 9.1
DFA LTIP Portfolio;Inst DRXIX 41.2 –1.6 9.6 2.2 0.2 N.A. Fund Count 418 459 449 422 315 Fund Count 608 752 741 716 546
Vanguard LT Corp Bd;ETF VCLT 1,621.2 –0.2 9.5 5.9 5.5 7.3

Worst-Performing Stock Funds Midcap Value Multicap Value

Total Return (%)
Assets Annualized Assets Total return (%) Assets Total return (%)
Fund Ticker ($ millions) May YTD 1-year 3-year 5-year ($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
Direxion:Jr Mnr Bear 3X JDST 40.3 19.1 –92.8 –92.8 N.A. N.A. CM:Advisors Fund;I 68.8 –3.8 17.4 –7.5 0.8 Artisan:Value Fund;Adv 1,014.5 –0.7 13.9 –0.6 N.A.
Direxion:Gold M Id Br 3X DUST 263.1 29.7 –89.7 –87.9 –65.0 –38.5 Rnhrt MC PrivMkt Val;Adv 127.8 2.4 11.8 2.6 N.A. RBB:Schneider Value 21.6 –3.2 11.6 –5.3 4.1
Direxion:Ntrl Gs Rl Br3X GASX 10.2 –6.9 –80.5 N.A. N.A. N.A. GoodHaven Fund 277.3 –2.1 11.7 –7.5 3.3 Nuance Concen Val;Inst 469.5 0.5 11.4 3.5 11.8
ProShares:UlS Jr Miners GDJS 0.4 16.2 –79.7 –76.6 N.A. N.A. T Rowe Price MC Vl 11,827.6 1.4 11.5 2.6 10.6 Copley Fund 77.5 1.2 10.6 10.7 10.1
ProShares:UlS Gold Minrs GDXS 1.4 21.5 –74.9 –67.7 N.A. N.A. J Hancock II:Mid Val;NAV 921.0 1.4 11.3 2.4 10.4 Berwyn Cornerstone 18.3 0.1 10.6 –3.6 6.2
Direxion:S&P OG EP Br 3X DRIP 31.6 –3.3 –67.6 –32.5 N.A. N.A. PowerShares Russ MdCp PV 50.4 1.0 11.0 0.8 11.7 Frst Tr:Val Line Div Idx 1,698.0 1.4 10.4 11.2 12.7
VelShs 3x Inv Crude ETN DWTI 400.5 –17.7 –63.0 15.8 16.7 N.A. Artisan:Mid Cap V;Inv 4,766.0 0.8 10.4 –2.9 7.6 Amer Cent:NT MCV;Inst 921.5 2.5 10.0 5.7 12.5
ProShs II:UltVIX STF ETF UVXY 1,075.4 –36.4 –62.2 –73.6 –79.9 N.A. Touchstone:MC Value;Y 375.5 3.4 10.4 4.5 9.9 Amer Cent:MC Val;Inv 7,027.2 2.4 9.8 5.4 12.2
VelShs Dly 2x VIX ST ETN TVIX 611.7 –36.5 –62.1 –73.5 –79.7 –83.4 Nuance Mid Cap Val;Inst 96.5 0.8 10.2 7.5 N.A. Longleaf Partners Fund 3,604.1 0.04 9.2 –11.7 4.5
VelShs 3x Long Nat Gas UGAZ 291.3 –7.7 –58.9 –89.3 –80.3 N.A. WisdomTree:MdCp Div 1,666.0 1.8 10.1 6.6 12.7 Schwartz Inv:Val Focused 19.4 –1.3 9.1 –8.2 2.8
Direxion:S&P Btech Bl 3X LABU 233.8 20.4 –56.8 –77.6 N.A. N.A. Category Average: 299.7 1.5 6.1 –3.0 8.8 Category Average: 361.7 0.9 4.2 –3.6 8.5
Direxion:Russia Bear 3x RUSS 52.9 13.6 –55.7 –47.2 –42.3 –33.8 Fund Count 153 172 170 156 110 Fund Count 268 331 327 315 249
ProShares:UP Nasdaq Bio UBIO 37.7 11.0 –51.6 N.A. N.A. N.A.
ProShares:UlS MSCI Brz BZQ 36.2 29.9 –50.9 –13.0 2.8 6.0
ProFunds:Sh Pr Mtls;Inv SPPIX 6.9 11.9 –48.0 –33.1 –11.0 0.3 Midcap Growth Multicap Growth
ProShares:UlS O&G Ex&Pr SOP 0.9 –1.5 –47.8 N.A. N.A. N.A.
Assets Total return (%) Assets Total return (%)
VelShs 3x Invrs Silver DSLV 16.7 35.5 –45.5 –20.9 –11.1 N.A. ($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
Direxion:EnergyBear 3X ERY 94.3 1.1 –42.9 –11.7 –17.6 –27.7 Bright Rock MC Gro;Inst 49.6 2.1 8.5 4.5 5.8 Hodges Fund;Retail 231.0 –1.8 11.4 –3.9 9.6
iPath Bloomberg NatGas A GAZ 3.3 –5.6 –41.9 –72.3 –51.4 –47.4 Congress MC Gro;Inst 374.8 3.6 7.0 2.3 N.A. Ave Maria Growth 328.0 0.3 7.6 1.4 9.0
ProShs II:UlS Blm CrO SCO 226.8 –11.4 –38.9 46.6 26.6 13.9 TorRes SMGr;Inst 20.8 3.6 6.6 –6.2 N.A. Dreyfus US Equity;Y 508.2 1.5 6.7 3.5 N.A.
VelShs 3x Inverse Gold DGLD 20.1 18.5 –38.9 –19.4 –3.4 N.A. Commerce:MidCap Growth 85.2 1.8 6.3 3.8 8.9 Davis:Opportunity;A 505.1 1.1 6.6 4.0 11.4
ProShares:Ult Nasdaq Bio BIB 446.0 8.0 –35.2 –47.8 23.9 35.6 Fidelity Mid-Cap Stock 7,133.5 2.0 6.2 –2.3 9.5 Principal:MidCap;Inst 10,971.4 2.6 4.3 –0.8 12.5
ProShs II:Ult Blm Nat Gs BOIL 30.0 –4.1 –35.1 –70.7 –59.7 N.A. Janus Enterprise;T 7,677.6 2.8 6.0 1.8 11.3 Amana:Growth;Inv 1,709.7 3.1 4.1 1.1 8.5
ProFunds:UltSh Latin;Inv UFPIX 6.4 28.7 –34.4 15.3 15.5 8.2 Value Line MdCp Foc;Inv 124.7 2.5 5.6 6.1 10.2 Voya:MdCp Opps;Inst 1,292.4 2.3 4.0 –1.1 8.7
ProShs II:VIX ST Fut ETF VIXY 259.6 –19.2 –32.9 –29.5 –44.6 –47.8 Eagle:Mid Cap Stock;A 277.1 1.9 5.6 –3.2 6.5 Eaton Vance AC Sel Eq;I 202.7 1.2 4.0 4.6 N.A.
iPath ETN SP500 VIX ST A VXX 1,587.1 –19.3 –32.7 –29.1 –44.3 –47.6 Virtus:Mid-Cap Core;A 38.4 1.8 5.4 2.3 11.0 Hennessy:Focus;Inv 2,328.5 1.7 3.9 2.2 13.5
VelShs VIX ShTm ETN VIIX 9.5 –19.3 –32.7 –29.1 –44.3 –47.6 SPDR S&P 400 Mid Cap Gro 322.1 3.3 5.2 1.1 9.7 Value Line Prem Gr;Inv 316.4 1.8 3.8 1.5 9.2
Direxion:Nat Gas Bull 3X GASL 58.0 1.6 –32.4 –97.1 –84.6 –74.2 Category Average: 285.7 2.4 0.9 –6.4 7.8 Category Average: 317.0 2.2 –0.9 –4.2 9.1
ProShs II:UlS Silver ZSL 36.8 22.2 –31.6 –9.4 3.6 2.0
Fund Count 353 415 409 397 319 Fund Count 532 634 630 606 450
DB Crude Oil Db Sht ETN DTO ... –10.8 –30.2 76.8 35.7 19.9

Worst-Performing Bond Funds

Total Return (%) Gold Oriented High Yield Municipal
Assets Annualized
Fund Ticker ($ millions) May YTD 1-year 3-year 5-year Assets Total return (%) Assets Total return (%)
($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
Barclays Inv US TC ETN TAPR 15.2 -2.1 -29.5 -31.4 N.A. N.A.
ProShares:Ult Gold Minrs 10.0 –25.8 136.2 0.5 N.A. Dreyfus High Yld Muni;Z 158.6 1.2 5.6 9.9 7.2
iPath ETN Trs Lng Bear A DLBS 19.3 -3.7 -26.6 -28.8 -20.1 -20.0
PureFds Jr Silver(SCM/E) 32.6 –14.1 130.7 57.0 N.A. Oppenheimer Ro HY M;A 5,287.9 1.3 5.3 8.4 8.6
iPath ETN Trs 10Y Bear A DTYS 52.8 2.4 -26.2 -23.8 -18.5 -20.0
Glbl X Gold Explrs ETF 65.4 –14.7 88.5 58.2 –22.9 Nuveen HY Muni;I 12,958.6 1.0 5.3 9.6 10.5
Direxion:20+Y Trs Br 3X TMV 367.3 -3.0 -25.5 -32.7 -29.5 -35.2 iShares:MSCI Gl SMiners 43.2 –12.3 82.2 15.8 N.A. AMG:GW&K Mun EY;I 251.7 1.1 5.2 9.4 8.4
ProShares:UPSh 20+ Trs TTT 77.3 -3.2 -25.4 -31.5 -28.7 N.A. US Glbl:Wld Prec Min 146.7 –1.0 82.1 53.3 –16.3 MainStay:Hi Yld Muni;I 2,323.1 1.1 5.2 9.6 9.4
DB 3x Sht 25+ Yr Tr ETN SBND ... -2.8 -22.1 -23.5 -23.1 -29.9 Glbl X Silver Miners ETF 292.9 –9.3 78.9 23.5 –15.2 PIMCO:HY Muni Bd;Inst 817.2 0.9 5.1 10.3 7.7
ProShares:UlS 20+ Yr Trs TBT 2,129.8 -2.1 -17.3 -20.8 -19.0 -22.8 iShares:MSCI Gl GMiners 133.1 –12.9 77.4 23.2 N.A. AB Municipal Inc 1,112.6 0.9 5.0 10.0 9.6
ProShs II:UlS Yen YCS 163.1 8.2 -16.4 -22.6 3.5 9.5 VnEck Vctrs:Jr Gld Mnrs 2,659.4 –11.5 76.1 32.4 –24.2 Russell:TE Hi Yld Bd;S 283.0 0.9 4.9 N.A. N.A.
iPath ETN Trs 5Yr Bear DFVS 1.9 3.0 -14.9 -12.5 -11.7 N.A. Rydex:Precious Metls;Inv 90.4 –13.1 71.2 17.7 –16.2 Goldman:Hi Yld Mun;I 4,182.2 1.3 4.8 7.9 8.0
Direxion:7-10Y Trs Br 3X TYO 28.7 -0.1 -14.1 -17.9 -15.1 -18.5 ALPS Sprott Junior Gold 42.1 –14.4 69.1 20.9 N.A. VnEck Vctrs:HY Muni Indx 1,882.6 1.0 4.8 7.9 7.4
Direxion:M7-10Y B 2x;Inv DXKSX 8.5 0.03 -9.4 -11.2 -9.6 -12.9 Category Average: 276.8 –11.1 62.7 19.4 –15.9 Category Average: 497.5 0.8 3.9 7.2 7.3
ProShares:UlS 7-10Y Trs PST 160.0 0.1 -9.1 -10.5 -9.1 -11.3
Fund Count 63 74 74 74 64 Fund Count 131 160 160 144 110
Rydex:Inv Gv LB Str;Inv RYJUX 218.4 -0.9 -9.0 -10.2 -8.7 -11.1
ProShares:Sht 20+ Treas TBF 623.3 -1.0 -8.9 -10.5 -9.6 -11.6
iPath ETN Trs Steepenr A STPP 3.8 -2.4 -8.9 -11.9 -4.4 -9.1
Real Estate General & Insured Muni
Direxion:20+Y Trs Br 1X TYBS 13.5 -0.9 -8.8 -10.7 -9.5 -11.6
Assets Total return (%) Assets Total return (%)
ProShares:UlS TIPS TPS 1.3 1.4 -8.0 -3.6 -2.2 -6.0 ($ millions) May YTD 1-yr 5-yr* ($ millions) May YTD 1-yr 5-yr*
FX Strategy;I FXFIX 25.60 8.2 -7.6 -24.3 -1.7 -1.4
PowerShares KBW PYE REIT 120.3 2.5 12.3 8.3 9.9 Nuveen US Infra Bd;I 8.8 0.7 6.2 3.8 N.A.
iPath ETN Trs 2Y Bear A DTUS 9.8 3.7 -7.2 -2.7 -8.6 -7.2
VnEck Vctrs:Mtg REIT Inc 96.1 4.5 10.4 –2.7 N.A. BlackRock BATS:Srs E 116.4 1.3 5.2 11.2 N.A.
Access One:Fx Br HY;Inv AFBIX 1.3 -0.5 -6.9 -7.4 -9.0 -11.4
iShares:Mtge RE Cap ETF 772.1 4.2 10.2 –2.1 4.6 Nuveen Str Muni Opptys;I 59.5 0.8 4.7 8.6 N.A.
PowerShares Jp Curr HLV FXJP 1.2 2.1 -6.7 N.A. N.A. N.A. IndexIQ:US Rl Est Sm Cap 76.7 2.9 8.0 3.5 N.A. Eaton Vance TABS10-20M;I 6.7 0.6 4.6 10.6 N.A.
ProShares:Sht High Yield SJB 196.2 -0.4 -6.5 -0.3 -5.0 -7.2 Deutsche Rl Est SI;S 12.3 1.1 7.8 6.7 N.A. Deutsche Muni Inf Rev Bd 32.4 0.9 4.5 9.9 N.A.
ProShares:Sht Inv Gr Crp IGS 2.7 0.4 -6.3 -6.2 -6.1 -7.2 Davis:Real Estate;A 242.5 3.2 7.0 9.6 9.0 VnEck Vctrs:AMT-Fr LM Ix 156.3 0.9 4.4 9.3 6.9
Rydex:Stg Dlr 2x Str;H RYSBX 14.6 6.2 -6.2 -5.2 5.9 5.7 REMS RE Inc 50/50;Inst 107.8 1.7 6.4 9.3 9.3 SEI Tx Ex:Tax-Adv Inc;A 1,154.9 1.0 4.1 8.4 6.9
Rydex:Inv Hi Yld Str;A RYILX 7.4 unch. -6.0 -6.4 -8.8 -10.3 Vanguard REIT Idx;ETF 56,493.3 2.4 6.2 10.6 10.2 Frst Tr III:Managed Muni 71.6 0.5 3.9 6.8 N.A.
ProShares:UlS 3-7 Tr TBZ 2.7 0.3 -5.5 -6.5 -5.9 -6.6 ASTON:HarrisonStRE;N 10.2 2.3 6.1 11.4 8.4 Perf Tr Muni Bd;Inst 138.8 0.4 3.9 7.9 N.A.
iPath ETN Op Cur Carry A ICI 2.3 0.9 -5.4 -8.9 -5.7 -3.4 Rydex:Real Estate;H 42.5 2.2 6.0 4.7 6.4 Schroder:Br TA Vl Bd;Inv 129.3 0.4 3.6 6.5 N.A.
AmericaFirst Inc Trend;A AFPAX 18.1 -2.5 -5.4 -13.2 -4.0 -1.6 Category Average: 373.8 2.0 4.4 7.9 9.2 Category Average: 399.6 0.4 2.7 5.6 5.3
Angel Oak Flex Inc;Inst ANFIX 214.2 -0.02 -5.4 -6.9 N.A. N.A.
Fund Count 229 284 277 269 192 Fund Count 217 278 277 268 212
WisdomTree:Jpn IR Str JGBB 4.4 1.1 -5.3 -7.8 N.A. N.A.
Note: For funds with multiple share classes, only the largest is shown. N.A.: Not applicable; fund is too new or data not available N.A.: Not applicable; fund is too new * Annualized Note: For funds with multiple share classes, only the largest is shown.
THE WALL STREET JOURNAL.
JOURNAL REPORT | INVESTING IN FUNDS & ETFS
Q&A
After 40 Years, a Throwback Goes Back to Investing
John Calamos of Calamos Investments is no longer his firm’s CEO, and will stick to running money
BY CHUCK JAFFE
A MONEY MANAGER like John P.
Calamos Sr. may not come around
again soon.
The former Air Force combat pi-
lot was one of the last breed of
money managers who started
firms in their own image, turned
their name into a brand and con-
tinued managing money while run-
ning the public company created
to oversee it all. These days,
money managers who start firms
tend to pick one role or another
quickly.
This year, Mr. Calamos stepped
down as chief executive of Cala-
mos Investments, which he started
40 years ago outside of Chicago
and which went public in 2004
through family-controlled Calamos
Asset Management Inc.
In appointing John Koudounis
to succeed him, Mr. Calamos re-
tained his role as the firm’s chair-
man and global chief investment Volatility isn’t new, says John Calamos. After all, ‘I started in the 1970s.’
officer.
The April move—which came can’t just do the same thing over
amid criticism that the parent and over again.
company’s assets under manage-
ment, at almost $21 billion, are WSJ: What would you tell investors
about half of what they were be- to get them through a market like
fore the financial crisis—was we are seeing now?
partly about succession, but it also MR. CALAMOS: I think the markets
will allow the 76-year-old Mr. right now are a bit confused as to
Calamos to do what he enjoys the just what is happening. Obviously,
most and focus on running money. there’s a huge focus on what the
Here are edited excerpts from a Fed is going to do. I don’t think
recent interview: there’s been enough interest in fis-
cal policy, so I think what we have
Confused markets
WSJ: You’ve been doing this a long
time. Are things really different Uneasy Times
with the market today, or is it the Stock price of Calamos Asset Management (CLMS) on Nasdaq
same as when you started?
$30
MR. CALAMOS: I started in the
1970s, which was really a volatile Sept. 2008
25
period. That’s what people forget: Global financial crisis intensifies
We have always had uncertainty
20
out there and the potential for in-
creased volatility. The causes may
change and how you react may 15
change. It is unusual in that we
have never had a period with 10
zero interest rates and a lack of
inflation; in those terms it’s un- 5 that alibi.
usual.
What I learned over the years 0 Mr. Jaffe is a MarketWatch
is that you do have to adapt for 2008 2009 2010 2011
the environment you are in. You Source: FactSet
THE EXPERTS
Insights on Advisers, Retirement
You and Your Fund Manager
May Have Conflicting Goals
Investors looking for just the
right mutual fund may be sur-
prised to learn that, according to a
new research paper, there is an op-
timal size for funds. In “The Opti-
mal Size of Hedge Funds: Conflict
The Experts are an online between Investors and Fund Man-
group of industry and agers,” recently published in the
thought leaders who write Journal of Finance, Purdue Univer-
about leading topics of sity Prof. Chengdong Yin explores
interest in their fields. this issue and identifies a problem:
For more, go to Asset managers want to maximize
WSJ.com/experts. their personal profits, not their in-
vestors’ performance.
Those goals aren’t in conflict at
first. At first, bigger is better for
investors and managers. That’s be-
cause fund managers need some
scale to run their business. Why?
Small funds have many fixed costs,
such as portfolio managers, trading
software and equity research. If a
fund is small, it can’t generate
enough fees to cover costs, which
may cause it to underinvest in re-
sources, which might negatively af-
fect performance. But as a fund in-
creases assets, fees grow, the fund
manager can invest in more re-
sources, and the fund’s perfor-
mance can improve.
Eventually, though, too much
money causes problems. For in-
stance, if a large fund has to own a
large portion of an illiquid small-
cap stock, the resulting large pur-
chases may drive up prices. Also,
funds with too much capital are
forced out of niche opportunities
and into investments that can han-
dle large pools of capital.
Funds should want to get big to
cover costs and maximize returns,
but not so big that diseconomies of
scale erode returns. You might
think that fund managers would
want to hit this sweet spot of per-
formance to help their clients. But
you’d be wrong. After all, what is
the goal for a fund manager? Make
as much money as possible.
Above a certain fund size, addi-
tional fund assets: 1) erode perfor-
mance, but also 2) increase manager
fees. This creates a conflict of inter-
est between investors, who want to
maximize performance, and manag-
ers, who want more assets, even
when this hurts their performance.
Prof. Yin highlights that manager
compensation is indeed maximized
is a very confused market, and we
see that week to week and day to
day where it almost changes over-
night.
So I would tell investors to
think long-term and not get whip-
sawed in and out on some of these
headlines. We’re a bit more posi-
tive longer-term, but we do want
to cushion the downside, where we
damp volatility but stay invested
for the longer term, which we
think will be positive.
2012 2013 2014 2015
THE WALL STREET JOURNAL.
at a higher level of assets than
would maximize fund performance.
So what’s an investor to do?
First, understand that the interests
of a fund manager may not line up
with your interests. Next, watch
fund performance, avoid lockups
and beware of funds that grow
large. If a fund grows large, de-
mand lower fees, or dump it and
find a fund with fewer assets and,
thus, more runway to generate bet-
ter expected excess performance.
—Wesley R. Gray, CEO and CIO of
Alpha Architect
i i i
Most Retirement Planners
Ask the Wrong Question
Many people within striking dis-
tance of retirement are focused on
one question: “What’s my num-
ber?” It centers around the idea of
how much money you will need to
have squirreled away by the day
you stop working to continue to
provide you with enough income
for the rest of your life.
People should be focusing on a
different question: “What’s my
paycheck?” That is, they should be
looking at the income they’ll be
getting, rather than how they’ll be
drawing down the lump sum they’ll
be accumulating. By asking the
paycheck question, they’ll be bet-
ter off both emotionally and finan-
cially for several reasons.
When people spend their lives
building up a capital base, it makes
them sick to see the balances of
their investment accounts go
down. While intellectually they un-
derstand that this money was ac-
cumulated for this very purpose, it
is impossible for them watch the
erosion of the capital base that
they spent their whole lives build-
ing up.
The paycheck method solves
this problem because you don’t
think about the ups and downs of
your capital base when you frame
it as getting a regular monthly
“salary.”
Even if you hit your lump-sum
number, you still need to plan for
large one-time expenses such as a
new car, your child’s wedding, or
unexpected health expenses. When
you have hit this lump-sum “num-
ber” of cash, you will clutch even
tighter every time you have a ma-
WSJ: You have always been known
for your use of convertible securi-
ties, which amount to a stock-bond
hybrid. Given current market con-
ditions, are you raising or lowering
your expectations for convertibles?
MR. CALAMOS: It isn’t convertibles
in general that work or don’t
work, it’s really how you use them
to manage risk.
The convertible market in gen-
eral has a tendency to be more in
midcaps and small-caps, so it
doesn’t reflect the total market,
but it’s useful in managing risk.
For example, our Emerging Mar-
kets Evolving World Fund uses
PATRICK T. FALLON/BLOOMBERG NEWS
convertibles to damp some of the
volatility of the emerging markets.
Mutual goals
WSJ: You ran both mutual funds
and the publicly traded manage-
ment company that operates those
funds. Jack Bogle generally de-
scribes such a setup as a conflict
of interest, saying that it’s hard to
serve two masters. You see it dif-
ferently. Why?
MR. CALAMOS: We do want to per-
form well for our shareholders,
both on the public side and in the
funds that we manage. Our goals
are very much aligned. The better
we do for our shareholders on our
mutual-fund side, the better we’ll
do for our shareholders on the
public side, so I see no conflict of
interest there.
WSJ: By now, you’ve earned the
right to take it easy. Why keep
fighting the fight and battling with
the market?
MR. CALAMOS: Whatever is going
on in the world, the market is the
pulse, and that is what attracted
me to it a long time ago. I still feel
that way today. I don’t want to be
disconnected from that. I have al-
ways loved being right in the mid-
dle of it.
Besides, I’m healthy, I enjoy
what I’m doing, and if I was re-
tired, I would have no excuse
about why my golf game is so bad.
I need to keep going just to have
2016 columnist in Boston. He can be
reached at cjaffe@marketwatch.com.
jor expense at home. But with the
paycheck approach, you’ll plan
your budget based on the money
you will receive each month, and
not focus on what to take from
your lump sum each month.
—Ted Jenkin, blogger, co-CEO and
founder of oXYGen Financial
i i i
Financial Lessons of a
Depression-Era Baby
I was lucky to have been born in
the Great Depression with parents
who taught me many lessons about
saving and investing. I say lucky
because it was a time where we
learned to be frugal. I was also
lucky because my parents taught
good financial principles—both in
conversation and by example.
My father always reminded me
to save at least 10% of my income
for retirement, and in years when
we couldn’t, to save our next raise.
Dad recommended that we have
an emergency reserve for cash. He
said you can’t foresee everything.
He was right. We have had many
financial surprises over our life, in-
cluding things from very expensive
uninsured dental care to helping
distressed relatives at a time when
they had no income.
My family had a budget—and we
all knew about it. Mom had a cer-
tain number of dollars she could
spend for groceries. When we went
to the grocery store with her, she
would make comments that some-
thing we might have wanted would
make her run over the amount she
could spend. The same was true
for clothing and shoes.
My father also taught me some
things about investing. Some of
those lessons were good, like the
advice to diversify. Some advice
was not so good, as I subsequently
learned. Dad felt he could pick a
number of big companies, buy
their stock, and hold until needed
in retirement. I followed that ad-
vice but got bum steers from my
broker. It wasn’t until my 40s that
a professional planner told me to
get out of individual stocks and
into low-cost index funds. That
was fantastic advice, as I learned
over the next 40 years.
—Henry “Bud” Hebeler, blogger,
ex-president of the aerospace
division of Boeing
Monday, June 6, 2016 | R9
SPOTLIGHT
INTERMEDIATE BONDS
BOND-FUND
INVESTORS MEET
IN THE MIDDLE
The narrative appeared incongru-
ous. As interest-rate risk has
crept up during this quarter, ETF
investors have been rushing into
bonds. But this time they were
neither “searching for yield” nor
“seeking safety”—the story lines
that led to many a stampede into
fixed income in recent years.
No, these investors were
headed right for the mushy mid-
dle—intermediate-maturity fixed-
income funds, just close enough
in not to get whipsawed by a
sudden change in long-term infla-
tion expectations and just far
enough out not to get stung by
shifting Federal Reserve policy on
short-term interest rates.
While broad U.S.-bond funds
have a shorter duration (a measure
of sensitivity to interest-rate
changes) than intermediate funds,
so they’ll swing less in value with a
change in rates, they are also
heavy in low-yielding U.S. Treasury
securities as well as securities
backed by residential mortgages.
Intermediate-term, investment-
grade corporate debt, however, has
emerged as a sweet spot for risk
and return in the current rate envi-
ronment. For how long depends on
the economy and the Fed.
“Intermediate corporate spreads
over Treasury securities have defi-
nitely tightened over the last three
months, when we first bought
VCIT [Vanguard Intermediate-
Term Corporate Bond ETF],” says
Rob Glownia, a fixed-income ana-
lyst at RiverFront Investment
Group. Mid-duration corporates
currently yield about 1.5 percentage
points more than shorter-duration
corporates, he says. But if the
economy keeps strengthening, he
adds, a rate increase is more likely,
and “we’d have to start considering
the shorter end of the curve.”
—Ari I. Weinberg
IN TRANSLATION
CURRENCY WAR
When economies start to flag,
governments will occasionally
start what is known as a currency
war. It is important that investors
understand what the term means
and why it can be so destructive
to the countries involved.
Such conflicts start when one
country decides to lower the value
of its currency to increase its ex-
ports. Exports become cheaper
for foreign buyers whose currency
doesn’t deflate.
“It’s a beggar-thy-neighbor
policy,” says Robert Wright, pro-
fessor of political economy at Au-
gustana University, in Sioux Falls,
S.D. “In other words, ‘We aren’t
doing so well, so we’ll take it out
on our partners.’ ”
For example, if country A de-
values its currency by 10%
against country B, then the ex-
ports from country A likely will
surge because they are now
cheaper. The problem is, the
gains come at the expense of
country B, which will see its ex-
ports decline. Domestic sales by
companies in country B also may
be hurt, since imports from coun-
try A are now cheaper.
“The result is that countries
quickly retaliate,” says Prof.
Wright. Ultimately, the initial de-
valuer is no better off in terms of
currency advantage.
But it is actually worse for
both countries. Investment dollars
tend to flee from countries that
devalue their currencies. When
China devalued its currency in
2015, it saw massive outflows of
capital, as did many emerging
markets. Such capital is vital for
the long-term growth of an econ-
omy, so when it leaves, countries
tend to grow more slowly.
Overall, the capital will flow to
countries that maintain the value
of their currencies, says David
Ranson, director of research at
HCWE Worldwide Economics—
and trade between the devaluers
will languish, if not fall.
—Simon Constable
R10 | Monday, June 6, 2016
JOURNAL REPORT | INVESTING IN FUNDS & ETFS
Test Your Smarts on Oil, Hedge Funds, Rates
BY JOSEPH ADINOLFI
STOCK MARKETS ROSE for a fourth
straight month in May, even as the Fed-
eral Reserve warned that its next rate in-
crease could come as soon as this sum-
mer. The Fed’s hawkish tilt helped push
the dollar and short-term Treasury yields
higher, but stoked uneasiness about al-
ready high stock valuations, causing some
to question whether shares can keep ris-
ing in an era of higher interest rates.
Crude-oil prices continued to rise, but
it didn’t lead to sharp gains in energy
shares. The Dow Jones Industrial Average
eked out a monthly gain of 0.08%, its
smallest so far this year.
How much do you know about last
month’s news in fund investing and mar-
kets? Here’s a quiz to test your knowl-
edge.
1. A judge blocked a proposed merger
of these two office-supply companies
because of antitrust concerns.
A. Staples Inc. and Office Depot Inc.
B. Office Depot Inc. and OfficeMax Inc.
C. W.B. Mason Co. and Staples Inc.
D. Staples Inc. and OfficeMax Inc.
ANSWER: A. U.S. District Judge Emmet G.
Sullivan sided with the Federal Trade
Commission, which alleged that the
merger would lead to higher prices on of-
fice supplies for large corporations.
2. Oil prices broke above _________ a
barrel in May, helped by falling
U.S. supplies and production disruptions
in Canada, Nigeria and Libya.
A. $60 B. $65 C. $50 D. $30
ANSWER: C. Analysts said the move was an
important moment for the commodity
that could drive further gains. Oil hasn’t
traded above this level in seven months.
3. This longtime hedge-fund manager
said that the industry’s business
model was “under assault” during the
annual SkyBridge Alternatives Confer-
ence.
A. Bill Ackman
B. Jim Chanos
C. Paul Brewer
D. Leon Cooperman
ANSWER: D. During his talk, Mr. Cooper-
LEAVE WITH A PLAN.
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THE WALL STREET JOURNAL.
NEWS CHALLENGE: THE MONTH IN FUNDS AND INVESTING
company up nearly 15%.
8. This German pharmaceutical gi-
ant’s shares dropped more than
14% in May after it offered to buy Mon-
santo, a U.S. agrochemical company.
A. Roche
B. Merck
C. Bayer
D. Abbott
ANSWER: C. Some investors are saying
Bayer doesn’t have scope to raise its offer
for Monsanto in part because of the drop
in its share price.
9. Concerns about nonperforming
loans have pummeled shares of this
Italian bank, ultimately leading its CEO
to agree to resign.
BEN NELMS/BLOOMBERG NEWS
A. Banca d’Italia
B. Banca Monte dei Paschi di Siena
C. Intesa Sanpaolo
D. UniCredit
ANSWER: D. Federico Ghizzoni was criti-
cized for UniCredit’s decision to under-
Production disruptions sent oil prices higher. Above, pumping in Vancouver. See Question 2. write a €1.5 billion ($1.7 billion) capital in-
crease of troubled lender Banca Popolare
di Vicenza SpA.
man said he was contemplating whether it Vol USA exchange-traded fund took in
was worth it to stay in the hedge-fund in-
dustry.
$1.2 billion in April alone.
10. Which sector was the best per-
former in the S&P 500 index in
4. Halliburton Co. said it would pay a
____________ breakup fee to Baker
6. Plummeting interest rates overseas
are helping to distort this popular
gauge of the U.S. economy’s health.
May as investors snapped up shares at
low valuations after a selloff in April?
Hughes after the two companies called
off a planned merger. A. The yield curve
B. Fed-funds futures
A. Energy
B. Information technology
C. Consumer discretionary
A. $4 billion C. Five-year swap spreads D. Health care
B. $5 billion D. Consumer-price index
C. $500 million ANSWER: B. A series of weak earnings re-
D. $3.5 billion ANSWER: A. The gap between short-term ports caused technology shares to miss
and long-term U.S. Treasury yields re- out on a broader market rally in March
ANSWER: D. The merger, once valued at cently narrowed to its flattest point since and April. But they made up for lost time
nearly $35 billion, encountered opposition late 2007. in May, rising 4.5%.
from regulators on several continents.
5. Fill in the blank: Assets under man-
agement in so-called ____________
7. In an effort to beat back an un-
wanted takeover attempt by Gan-
nett, Tribune Publishing sold a 12.9%
Mr. Adinolfi is a markets reporter for
MarketWatch in New York. Email him at
joseph.adinolfi@dowjones.com.
funds have grown this year as investors stake to which investment firm?
sought protection during periods when
stocks were sinking. A. Nant Capital LLC
B. Advanced Technology Ventures FUND RESULTS
A. Smart beta C. Andreessen Horowitz
B. Low volatility D. Oaktree Capital Management Lipper’s A-to-Z monthly fund
C. Strategic beta
D. Volatility controlled ANSWER: A. Gannett would presumably
need to purchase these additional shares,
WSJ
.COM
listings and other performance
tables are available free at
WSJ.com/FundsAnalysis. And
ANSWER: B. The iShares Edge MSCI Min which could push the total cost of the daily data at WSJMarkets.com.
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