For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
FROM TURKEY TO MIAMI
IN PURSUIT OF LUXURY
DJIA 18597.70 À 0.13%
What’s
News
Business & Finance
I nvestors are demanding
more payouts from com-
panies, with the proportion
of S&P 500 firms’ net in-
come paid out in dividends
nearing a record. A1
 Uber plans to enable
customers in Pittsburgh to
summon rides from autono-
mous vehicles, a bid to be the
first in a race to make driver-
less cars widely available. B1
 Banca Monte dei Paschi’s
CEO and ex-chairman are
being probed by prosecutors
for possible false accounting
and market manipulation. B7
 Lawyers seeking com-
pensation for owners of
cars affected by Volkswagen’s
emissions scandal are getting
help from the car maker as
they turn up pressure on
supplier Robert Bosch. B4
 A rally that pushed in-
ternational oil prices
above $50 a barrel is a wel-
come sign for many energy
firms but not enough to
kick-start the industry. B1
 Wal-Mart is reaping the
benefits of improving stores
and drawing shoppers, a
sign that retailers need to
work to lure customers. B2
 Nestlé is raising its game
in high-end chocolate to chase
revenue growth as overall
chocolate volume falls. B4
 Harley-Davidson reached
a $15 million settlement to
resolve U.S. claims that it
violated air-pollution laws. B1
World-Wide
 Russia is bolstering its
military presence on its
western border, sending
soldiers to new installa-
tions within easy striking
distance of Ukraine. A1
 A Brazilian police official
rejected U.S. swimmer
Lochte’s allegation that he
and three teammates were
robbed at gunpoint in Rio
over the weekend. A1
 Syrian regime warplanes
launched airstrikes against
Kurdish forces in north-
eastern Syria in a major
escalation of violence be-
tween the two camps. A3
 Russia said it is ready
to observe a 48-hour
cease-fire to allow the de-
livery of humanitarian aid
into Aleppo next week. A3
 South Sudan’s ex-vice
president has fled the
country following what a
spokesman said was an as-
sassination attempt. A6
 A new study suggests
Zika may be able to harm
the brains of some adults. A7
 Aetna’s decision to scale
back participation in ACA
exchanges is putting pressure
on Clinton over health care,
a onetime signature issue. A7
 A Philippine senator
accused Duterte of abuse
of power for publicly at-
tacking her on the eve of
an inquiry into his violent
antidrug crackdown. A4
CONTENTS
Books.................. A11-13
Business & Fin.. B1-4
Crossword.............. A10
Heard on Street.... B8
Mansion............ W7-12
Markets Digest..... B6
€3.20; CHF5.50; £2.00;
U.S. Military (Eur.) $2.20
s Copyright 2016 Dow Jones &
Company. All Rights Reserved
BATHROOMS DON’T
HAVE TO BE BORING
OFF DUTY| W1
MANSION | W7
FRIDAY - SUNDAY, AUGUST 19 - 21, 2016 ~ VOL. XXXIV NO. 141 WSJ.com EUROPE EDITION
NASDAQ 5240.15 À 0.22% NIKKEI 16486.01 g 1.55% STOXX 600 342.91 À 0.72% BRENT 50.89 À 2.09% GOLD 1351.20 À 0.63% EURO 1.1336 À 0.41%
A Picture of Syria’s Pain Russia
Builds Up
Military
On Border
BY JAMES MARSON
AND THOMAS GROVE
MOSCOW—Russia is bol-
stering its military presence
on its western border, sending
ALEPPO MEDIA CENTRE/AGENCE FRANCE-PRESSE/GETTY IMAGES
tens of thousands of soldiers
to newly built installations
within easy striking distance
of Ukraine.
The moves, which come as
Moscow ratchets up confronta-
tion over the Black Sea penin-
sula of Crimea, are a center-
piece of a new military
strategy the Kremlin says is
meant to counter perceived
threats from the North Atlantic
Treaty Organization.
Military analysts say the de-
ployments appear to be an ef-
fort to build a more permanent
VIRAL IMAGE: A picture of 5-year-old Omran Daqneesh, who was injured in an Aleppo airstrike, has come to symbolize the war-torn Syrian and robust military posture
city’s plight. Syrian opposition activists released the image of the boy, who was rescued from a partially destroyed building Wednesday. A3 around Ukraine, where Russia
has carried out covert military
interventions aimed at main-
Investors Push for Payouts
taining influence in its West-
leaning neighbor.
“Russia’s plans around the
Ukrainian border show a real
intent to use force if needed,”
said Anton Lavrov, a defense
Companies hand over In the U.S, the S&P 500 pay- constantly over the last five Because investors are in- analyst at Moscow-based think
out ratio—the proportion of a years, a new record will be set creasingly unable to make tank CAST. “They would be
a near-record share of company’s net income paid out within the next few weeks. meaningful returns in large Russia’s first line of assistance
earnings as dividends to investors in dividends—is With expectations for fu- parts of the global bond mar- if the pro-Russian rebels in
now less than a quarter of a ture growth and interest rates ket, they are being pushed into east Ukraine needed help.”
BY MIKE BIRD percentage point away from its depressed, investors have worlds where they might not The Russian Defense Minis-
highest level on record. piled into government bonds, normally venture. try didn’t respond to emailed
The global hunt for yield is The ratio is 37.93% for the driving their reliable yield in- That generates demand for questions.
on, and stock markets around last 12 months, just marginally come to extremely low, or bond-like stocks. U.S. military officials, hav-
the world are below the 38.16% record set in even negative territory. Even Since March 2009, while ing closely monitored Russian
ANALYSIS feeling the February 2009, according to the best-rated corporate credit the S&P 500 has risen by movements of troops and
squeeze, as in- FactSet, which has data going offers meager returns. The 197%, the dividend aristocrats Please see RUSSIA page A3
vestors de- back to 2000. yield on Bank of America Mer- index—it includes 50 stocks
mand more in terms of pay- If payouts continue to grind rill Lynch’s global corporate that have paid dividends to  Russia to observe cease-fire
outs from companies. higher as they have nearly AAA index is barely over 2%. Please see PAYOUT page A2 to allow aid into Aleppo...... A3
Uber Hits Gas on Self-Driving Rides
WASHINGTON INSIDER
FACES A RECKONING
Ace predictor of health-policy news for investors is subject of federal probe
BY BRODY MULLINS ments, the government announced the cut,
AND ARUNA VISWANATHA driving down those stock prices and earning
Visium a $285,000 profit.
WASHINGTON—A few weeks before the In Washington’s political-intelligence in-
government announced a funding cut for dustry, which digs up tips about coming pol-
some home-health-care services in 2013, a icy changes that could affect stocks, little is
player in Washington’s political-intelligence more prized than information about the Cen-
business tipped off a hedge-fund manager, ters for Medicare and Medicaid Services, or
according to documents federal officials CMS, the federal agency that spends more
AETHER FILMS/OTTO
made public in June. than $1 trillion annually on health care for
The next day, the hedge fund signed a the poor, elderly and disabled.
$100,000 annual contract with the alleged tip- Few people are better at predicting that
ster, health-care-policy expert David Blaszc- agency’s decisions than a former employee,
zak, according to the documents and people Mr. Blaszczak (pronounced BLAY-zak).
familiar with them. The firm, Visium Asset Over the past decade, he has regularly been THE ROAD AHEAD: Uber this month will let customers in Pittsburgh
Management LP, doubled down on its bet that ahead in foretelling moves by CMS, the summon rides from autonomous vehicles. It also has agreed to
share prices of home-health-care companies world’s largest buyer of heart stents, hospital acquire Ottomotto, a startup working on self-driving tractor trailers. B1
would decline, the documents show. stays, arthritis pills, knee replacements and
The next month, according to the docu- Please see INSIDER page A8
Hate Government? Village Offers Organized Anarchy
i i i
Rio Says Swimmers
Russian radical’s disciples convene at his crumbling home Made Up Robbery
BY ALAN CULLISON chist trends. a livelier crowd over the next
Uniting anarchists is a tough decade that included punk ac- RIO DE JANEIRO—A top po- property at a gas station Sun-
PRYAMUKHINO, Russia—If challenge in Russia, where they tivists, some of whom squatted lice official here on Thursday day morning and were kept
there is a natural place to bring are facing headwinds. The in an abandoned log cabin, rejected U.S. swimming gold there by armed security
anarchists to order, it’s around Kremlin, with its well where they flew a medalist Ryan Lochte’s allega- guards until they paid $20 and
a crumbling mansion here, documented authori- black flag and scandal- tion that he and three team- 100 Brazilian reais ($31) to re-
which is where Sergei Kornilov tarian streak, has met ized locals by skinny- mates were robbed at gun- pair the damage.
Finance & Mkts. B5-8 tries to do it every summer. their cause with in- dipping in the river point in Rio over the weekend. Images from the Rio gas
Off Duty.............. W1-6
Opinion.............. A14-15
It is the historical family creasing hostility. Be- and dancing naked station broadcast by Brazilian
Rio 2016.................. A16 home of Mikhail Bakunin, the yond that, of course, around a bonfire. By Luciana news network Globo appeared
U.S. News.................. A7 father of modern anarchism, is their own penchant These days, originals Magalhaes, Patricia consistent with police ac-
Weather.................. A10
World News....... A2-6
who was born here in 1814 and for disorder and dis- mix with what tends Kowsmann counts that the swimmers
whom Mr. Kornilov describes as agreement. to be a more sedate and Paul Kiernan were detained early Sunday
“our inspiration, a candle for The Pryamukhino crowd. morning by gas-station em-
what could be a better life.” organizers print a The strength of Fernando Veloso, head of ployees after they allegedly
Each year, to keep Bakunin’s conference summary various anarchist Rio’s state investigative police, broke a fixture in the bath-
memory alive, 77-year-old Mr. each year. Their best Mikhail Bakunin groups has ebbed and said the incident remains un- room.
Kornilov organizes a convoca- seller, from five years flowed with global der investigation but is best Police removed Messrs.
tion, Pryamukhino Readings, ago: “Anarchists Against Anar- events—anarcho-syndicalists, described as “a confusion.” Bentz and Conger from a U.S.-
that typically draws 50 to 100 chy and Anarchism.” anarcho-environmentalists, an- Speaking at a press confer- bound plane Wednesday night
anarchists to the hamlet 150 The first huddle, 15 years archo-activists promoting set- ence, he said Mr. Lochte, along Please see RIO page A2
miles west of Moscow, where ago, was populated heavily by ting fire to luxury cars. with fellow gold medalists
they lecture one another and gray-bearded academics, Mr. Mr. Kornilov said he hasn’t James Feigen, Gunnar Bentz  Rio 2016: The Olympics’
argue about the latest anar- Kornilov said. That gave way to Please see RADICAL page A8 and Jack Conger, damaged grand finale............................... A16
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Friday - Sunday, August 19 - 21, 2016
Hezbollah Fights Other Jihadists, Not Israel
MIDDLE EAST CROSSROADS
YAROSLAV TROFIMOV
BINT JBEIL, Lebanon—
Hezbollah leader Hassan
Nasrallah last weekend ad-
dressed a rally to celebrate
the group’s 2006 “divine vic-
tory” against Israel, thunder-
ing for more than an hour
about the impending demise
of the Zionist enemy.
But it’s not against Israel
that young men in the audi-
ence here have been fighting
of late. The predicament for
Hezbollah,
the Iranian-
backed Shiite
militia that
used to com-
mand wide-
spread admi-
ration in the region for
confronting Israel, is that its
battle today is almost exclu-
sively against fellow jihad-
ists, albeit of a Sunni kind,
and increasingly further
away from home turf in
Syria’s foreign battlefields.
While the Israeli border
south of here has remained
quiet since the 2006 war,
more than 1,000 Hezbollah
fighters have died in Syria in
the past three years, and
many more have been in-
jured—a painful casualty rate
for a group with an estimated
between strength of between
15,000 and 30,000 men.
W
ith their morale
high and their supe-
rior training and
equipment, these Hezbollah
units have become indispens-
able for the survival of Syr-
PAYOUT
Continued from Page One
shareholders for 25 consecu-
tive years—has risen by 248%.
A low-growth world means
“an ongoing shortage of assets
with stable, secure running
yield,” according to research
by Peter Eadon Clarke, an
economist at the investment
bank Macquarie Group Ltd. He
suggested that global equities
with higher dividend yields
might make a partial replace-
ment for bonds.
Though U.S. companies his-
torically have favored share
buybacks as their method for
returning earnings to share-
holders, there are good rea-
sons for investors who want to
buy a bond-like product to fa-
vor dividends.
“During periods of low
growth and low interest
rates,” the Macquarie note ar-
gued, “firms with the highest
buybacks fail to provide inves-
tors with either the consistent
yield of bond-like assets or the
prospect of future growth.”
In the second quarter of the
year, 44 companies in the S&P
500 were paying a dividend of
more than 100% of their net
income, the highest proportion
in 10 years.
Some analysts believe the
distinction between buybacks
and dividends can be mislead-
ing, and that dividends can’t
act as a proxy for bonds.
“Investors are flocking to
anything with a yield that ap-
pears to be safe. But unless
they’re from rock-solid compa-
nies, utilities with pricing pro-
tection for example, they’re
simply not as secure as a bond
yield,” said Dhaval Joshi, chief
strategist at BCA Research.
“If you’re providing it at the
Pay Up
With little yield elsewhere, investors push for equities
with high dividends.
60% Record Stoxx 600 payout
Stoxx Europe 600 payout ratio*
50
Record S&P 500
40 payout
30
20
2008 ’09 ’10 ’11
*Dividends given to shareholders as a proportion of earnings
Source: FactSet
Supporters of Hezbollah leader Hassan Nasrallah wave Hezbollah and Lebanese flags during a rally Saturday in Bint Jbeil, Lebanon.
ian President Bashar al-
Assad’s regime—which also
means they have become
bogged down in battles all
over Syria, not just along
Lebanon’s borders but also in
remote Aleppo and Palmyra.
Hezbollah’s approach has
been to portray both wars as
part of the same conflict. Mr.
Nasrallah has repeatedly de-
scribed Islamic State and al
Qaeda’s Syrian offshoot as
creations of Israel and the
U.S., a conspiracy designed
to weaken Islamic unity.
In last weekend’s address,
Mr. Nasrallah triumphantly
cited a statement by the U.S.
Republican presidential nom-
inee, Donald Trump, who
had accused President Ba-
rack Obama and his Demo-
cratic rival Hillary Clinton of
founding Islamic State, as a
long-awaited confirmation of
this theory.
Among the Hezbollah cad-
res, that’s an article of faith.
expense of an extremely high
payout ratio – you’re giving
the appearance of security.
Companies don’t like cutting
dividends because there’s a
sort of stigma, but it isn’t nec-
essarily any safer than a buy-
back,” Mr. Joshi added.
In the U.K. and Europe, divi-
dends edge out share buybacks
as the preferred means for re-
turning cash to shareholders.
As a result, payout ratios there
are much higher. Dividends for
the Stoxx 600 are now at al-
most 59% of earnings, while
FTSE 100 dividends are equal
to more than 70%.
In 2008, the huge uptick in
payout ratios resulted from
the change in the denomina-
tor: Earnings collapsed. Even
so, many companies scrambled
to sustain their dividends to
keep investors from bolting for
the exits.
That is still the case for
some firms, especially in the
energy sector, where dividends
are far more than the net in-
come of the companies. Earn-
ings for those companies have
slumped because of the col-
lapse in oil prices.
But stocks in the consumer
staples, industrial and infor-
mation technology sectors of
the S&P 500 have all reached
their highest payout ratios in
at least five years during 2016.
And it isn’t just oil stocks
paying out more than their net
income in dividends.
The toy manufacturer Mat-
tel Inc. and software giant Sy-
mantec Corp. have payout ra-
tios over 100%.
Bond proxies, of course, are
threatened by the same factors
as the rally in bonds them-
selves. A rise in interest rates
by the Federal Reserve, driving
yields up across the board,
could make such investments
less attractive.
S&P 500 payout ratio*
’12 ’13 ’14 ’15 ’16
THE WALL STREET JOURNAL.
WORLD NEWS
“ISIS is the creation of Israel,
so we have to destroy the cre-
ation before we can destroy
the creator,” said Ali Khulali,
one of the participants in the
Bint Jbeil war anniversary
event. He had a two-pronged
sword of Zulfiqar—a symbol
often used by Shiites—tat-
tooed on his neck.
Hammad Mughniyeh, a
21-year-old at the rally, said
he hopes to soon be deployed
to Syria. “Before Syria, we
excelled in guerrilla war. In
Syria, we have learned a lot
of new and different tactics,
and these will lead us to vic-
tory over Israel,” he said.
M
any other Lebanese
and Arabs laugh at
such explanations.
They point out that Syria’s
biggest city of Aleppo in the
north, where Hezbollah is
now locked in bloody urban
battles, lies in the opposite
direction from Jerusalem,
American swimmers Gunnar Bentz, left, and Jack Conger leaving the police station at Rio’s airport early Thursday.
RIO
Continued from Page One
after a judge ordered their
passports confiscated while
authorities determine what
happened. Mr. Lochte returned
to the U.S. earlier this week,
before the court order, while
Mr. Feigen’s whereabouts are
unknown.
Reports that four U.S. gold
medalists were robbed at gun-
point—by men posing as po-
lice, no less, according to Mr.
Lochte’s initial statements—
made global headlines and
created a major embarrass-
ment for Brazil. Mr. Veloso
called on the swimmers to
apologize to Rio’s citizens for
misleading the public.
According to a clerk at the
gas station where the swim-
mers arrived in a taxi on their
way back from a party, the
swimmers appeared intoxicated
and urinated on the outside of
the building. He said they also
tore down a wall poster.
A security guard inter-
viewed by police said the
swimmers also broke a soap
dispenser and a towel dis-
penser in the restroom, Mr.
Veloso said, prompting the
which the militia has long
pledged to “liberate.”
“Hezbollah is now consid-
ered by the Syrian people as
a terrorist organization, as
an occupation force that
leads an almost colonial
war,” said Ahmad Fatfat, a
prominent Sunni Lebanese
lawmaker and a former cabi-
net minister. “For Hezbollah,
furthering Iran’s strategic in-
terest in the Middle East has
become more important than
Lebanese politics.”
Still, even foes of Hezbol-
lah such as Mr. Fatfat agree
that, despite the mounting
toll of the Syrian involve-
ment, Hezbollah has retained
its support within Lebanon’s
Shiite community. Many Leb-
anese agree that is in part
because, by attacking Sunni
jihadists in Syria, Hezbollah
has by and large prevented
the spillover of sectarian vi-
olence into Lebanon itself.
“We’re in a situation
guard to call the police.
The swimmers attempted to
leave the gas station and be-
came aggressive when employ-
ees tried to prevent them from
going. This prompted the
guard and a colleague to pull
their guns out and order the
swimmers to get on the
ground, according to their tes-
timony, which was made pub-
lic by the Globo news network.
Authorities in Brazil regarded the
swimmers’ claims with suspicion.
A bystander who spoke
English then approached the
group and offered to translate
for the swimmers, Mr. Veloso
said. After the gas station’s
manager accepted the money,
which was offered by Mr.
Bentz, the employees told the
swimmers they could go.
Messrs. Bentz and Conger’s
lawyer, Sérgio Riera, declined
to comment on reports of
events at the gas station, say-
ing that he hadn’t yet seen se-
curity footage or notes from
the investigation. The pair
gave statements to police
Thursday afternoon.
Mr. Feigen’s lawyer declined
to comment. Mr. Lochte’s law-
THE WALL STREET JOURNAL.
range missile batteries are
still aimed at Israel, and its
special forces and its border-
defense units remain intact.
“This can go on for a hun-
dred years. The central nu-
cleus has not been touched,
and the force around it is re-
newable,” Mr. Audi said.
“The cost doesn’t matter.
What matters is whether you
are able to destroy the con-
spiracy project and win.”
B
ut winning against
equally dedicated—and
more numerous—jihad-
ists in Syria isn’t an easy task.
Hezbollah and its Syrian allies
this month lost a critical bat-
tle in the southwestern part
of Aleppo, where the rebels
AZIZ TAHER/REUTERS
broke through the siege im-
posed weeks earlier on the
rebel-held half of the city.
Mr. Nasrallah this week-
end spoke of possible “rec-
onciliation” and “compro-
mises” with Syrian and Iraqi
where we don’t have the lux- Sunni jihadists. And among
ury to doubt. The war in Syria some Hezbollah fighters, the
has become a religious war,” talk is more of containment
said Riad al-Asaad, a Shiite than outright victory.
Lebanese politician, academic “As long as we are there,
and entrepreneur. “Had Hez- nobody will win,” Ahmad
bollah not been fighting them Smaidi, who said he recently
in Syria, it would have to be fought in Syria, answered
fighting them in Lebanon. when asked what would be
These guys will sooner or the consequences of a Sunni
later behead you, will burn jihadist takeover there.
you, will kill you. So you bet- Retired Lebanese Army
ter deal with it—and Hezbol- Maj. Gen. Hisham Jaber, who
lah is dealing with it.” comes from the Hezbollah
With the conflict viewed in stronghold of Nabatiyeh in
such existential terms for Leb- southern Lebanon, said he
anon’s Shiites, Hezbollah can increasingly hears concerns
easily sustain the current pace about the way the war is go-
of operations and casualties in ing when he attends fighters’
Syria without losing the com- funerals and other events in
munity’s support, its allies say. his hometown.
Younis Audi, a pro-Hezbol- “People so far are not pro-
lah TV personality whose two testing or asking the question,
cousins died fighting in Syria ‘Why are we in Syria?’ ” said
and a graduate of a Soviet Mr. Jaber, who runs a Beirut
guerrilla warfare academy, think tank. “But they talk
said the core of the group’s among themselves and won-
military strength hasn’t been der: What’s next? Until when
affected by the war. Its long- will we go and sacrifice?”
MAURO PIMENTEL/ASSOCIATED PRESS
yer didn’t respond to a request
for comment.
In an interview on NBC this
week, Mr. Lochte said he and
Wednesday night, NBC’s Matt
Lauer said Mr. Lochte told him
“we wouldn’t make this up.”
his teammates were returning THE WALL STREET JOURNAL.
from a party Saturday night Europe Edition ISSN 0921-99
when their taxi was pulled The News Building, 1 London Bridge Street,
London, SE1 9GF
over by men posing as police.
Mr. Lochte said the swimmers Thorold Barker, Editor, Europe
Bruce Orwall, Senior Editor, Europe
were then ordered at gunpoint Cicely K. Dyson, News Editor, Europe
to “get down on the ground,” Margaret de Streel, International Editions Editor
Darren Everson, Deputy International Editor
and Mr. Lochte said his money
Joseph C. Sternberg, Editorial Page Editor
Anna Foot, Advertising Sales
Jacky Lo, Circulation Sales
Andrew Robinson, Communications
Stuart Wood, Operations
Jonathan Wright, Commercial Partnerships
Katie Vanneck-Smith,
and wallet were taken. Global Managing Director & Publisher
Videos from Rio’s Athletes’
Advertising through Dow Jones Advertising
Village surfaced later in the Sales: Hong Kong: 852-2831 2504; Singapore:
week, however, showing the 65-6415 4300; Tokyo: 81-3 6269-2701;
Frankfurt: 49 69 29725390; London: 44 207
swimmers passing through se- 842 9600; Paris: 33 1 40 17 17 01;
curity in what appeared to be New York: 1-212-659-2176
a playful mood just three Printers: France: POP La Courneuve; Germany:
Dogan Media Group/Hürriyet A.S. Branch; Italy:
hours after the robbery alleg- Qualiprinters s.r.l.; United Kingdom: Newsprinters
edly occurred. (Broxbourne) Limited, Great Cambridge Road,
After Messrs. Bentz and
Waltham Cross, EN8 8DY
Registered as a newspaper at the Post Office.
Conger were detained Trademarks appearing herein are used under
license from Dow Jones & Co.
©2015 Dow Jones & Company. All rights reserved.
CORRECTIONS 
Editeur responsable: Thorold Barker M-17936-
2003. Registered address: Avenue de Cortenbergh
60/4F, 1040 Brussels, Belgium
AMPLIFICATIONS NEED ASSISTANCE WITH
YOUR SUBSCRIPTION?
Readers can alert The Wall Street
Journal to any errors in news By web: http://services.wsje.com
articles by emailing By email: subs.wsje@dowjones.com
wsjcontact@wsj.com. By phone: +44(0)20 3426 1313
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Syrian Regime Strikes Kurdish Fighters
Warplanes hit forces
battling Islamic State
in country’s northeast
as conflict escalates
BY RAJA ABDULRAHIM
AND NOAM RAYDAN
Syrian regime warplanes
launched airstrikes against
Kurdish forces in northeast-
ern Syria on Thursday, in a
major escalation of violence
between the two camps,offi-
cials and residents said.
The fighting, if it contin-
ues, threatens to open a new
front in Syria’s already com-
plicated battlefield crowded
with numerous warring sides
and their foreign backers.
Among those hit in the
northeastern city of Hasakah
by the strikes were members
of a U.S.-backed mixed Kurd-
ish and Arab force that has
been battling Islamic State.
The airstrikes came after
days of clashes in Hasakah
between the regime and Kurd-
ish police who are part of an
administration that has de-
clared a semiautonomous re-
gion in northern Syria.
Hasakah is divided between
the regime and the Kurdish
administration.
Clashes escalated a week
after the American-backed
Syrian Democratic Forces, a
primarily ethnic Kurdish force
with a small Arab contingent,
scored a major victory against
Islamic State by recapturing
the strategic city of Manbij
along the Turkish border.
The growing Kurdish
power poses a threat to the
Syrian regime, which had
mostly withdrawn from the
Kurdish areas early in the war
and hadn’t usually contested
their authority there.
But in recent months, the
two sides have clashed more
frequently, though Syrian air-
strikes against the Kurds are
almost unheard of.
Some in Kurdish areas said
it was the first time the re-
gime launched an airstrike
against Kurdish forces while
others said it has happened
once or twice before.
Moscow Says It Plans
To Heed Aleppo Truce
BY ANDREY OSTROUKH
MOSCOW—Russia is ready
to observe a 48-hour cease-
fire to allow the delivery of
humanitarian aid into the em-
battled Syrian city of Aleppo
next week, military spokesman
Maj. Gen. Igor Konashenkov
said on Thursday.
Maj. Gen. Konashenkov said
the Russian military was ready
to support the proposal for a
cease-fire by the U.N.’s special
envoy for Syria, Staffan de
Mistura, “to supply the popu-
lation of the city with food
and medical items and restore
life-support systems.”
Last week, Russia said it
would pause military operations
for three hours a day. Moscow
later dismissed Germany’s call
for a longer cease-fire.
RUSSIA
Continued from Page One
equipment in the two years
since Moscow’s seizure of Cri-
mea, said they haven’t de-
tected signs of an immediate
threat. Any shift in Russian
military posture reflects
broader plans, a senior mili-
tary official said Thursday.
“It’s a long-term trend;
there is nothing new,” the offi-
cial said.
Some U.S.-based analysts in
recent weeks have pointed to
Russian plans to reorient
forces to potential areas of
conflict, adding the shifts don’t
necessarily indicate imminent
military activity.
Tensions between Russia
and Ukraine have flared in re-
cent days after Russian Presi-
dent Vladimir Putin accused
Ukraine’s military of killing
two Russian service members
during incursions into Crimea,
which Russia annexed from
Ukraine in 2014. Mr. Putin said
Russia would respond to the
deaths. Ukrainian officials de-
nied the charges, saying Russia
was creating a pretext for fur-
ther intervention.
Syrian Kurdish civilians boarded a vehicle as they fled reported shelling in the northeastern governorate of Hasakah, toward the city of Qameshli, on Thursday.
The most recent fighting
began after the regime arbi-
trarily arrested Kurdish and
Arab civilians, leading the
Kurdish security forces to in-
tervene, said Lawrence Slei-
man al-Shaier, a former ad-
viser to the Kurdish police.
Nearly 20 soldiers and
Video Footage of Dazed Young Boy Reverberates Amid Horrors of Country’s Conflict
BEIRUT—Syrian opposition
activists released haunting
footage showing a young boy
rescued from a partially de-
stroyed building in the after-
math of a devastating airstrike
in Aleppo.
The image of the stunned
and weary-looking boy, sitting
in a chair inside an ambulance,
covered in dust and with blood
on his face, encapsulates the
horrors inflicted on the war-
ravaged northern city.
Photographs of the boy
were widely shared on social
media.
An hour after his rescue, the
“The specific time and data
will be defined after receiving
information from U.N. offi-
cials on the time when hu-
manitarian convoys will be
ready and a confirmation of
security guarantees on the
safety of the transit from
American partners,” Mr. Ko-
nashenkov said.
An offensive by forces
loyal to Syrian President
Bashar al-Assad, Russia and
their allies to push rebel
forces out of Aleppo ended in
deadlock after a counterof-
fensive led to both the rebel-
held neighborhoods and gov-
ernment areas of the city cut
off from their respective sup-
ply routes.
The city hasn’t had running
water for days and power is
intermittent.
Outside the region, Russia
has begun using Iran as a
launchpad for airstrikes in
Syria, further underscoring its
assertive military strategy.
The buildup on Ukraine’s
frontier represents a signifi-
cant shift. For years, the Rus-
sian-Ukrainian border was
viewed by Moscow as little
more than an administrative
boundary. As late as 2009, Rus-
sia didn’t have a single large
army unit along its 1,200-mile
border with Ukraine. That
changed with the 2014 revolu-
tion in Kiev and subsequent
conflict in eastern Ukraine.
As that conflict unfolded,
Russia stationed tens of thou-
sands of troops on the border
in makeshift camps and fo-
mented a pro-Russian rebellion
with deliveries of weapons and
volunteer soldiers.
At key points during fight-
ing, regular Russian military
units helped to prevent the
Ukrainian army from routing
the separatists, though Mos-
cow denies sending conven-
tional forces into Ukraine.
Violence in eastern Ukraine
continues, despite cease-fire
attempts brokered by Euro-
pean leaders. July and August
saw some of the worst flare-
WORLD NEWS
fighters were killed on both
sides in fighting on Wednes-
day and Thursday, he said.
On Wednesday night, the
regime launched mortar
shells followed by airstrikes
on Thursday, he said.
As fighting continued, ci-
vilians in Hasakah began
building the boy was in com-
pletely collapsed.
The fighting has frustrated
efforts by the United Nations
to fulfill its humanitarian man-
date, and the world body’s spe-
cial envoy to Syria on Thursday
cut short a meeting of the
committee—headed by Russia
and the U.S.—tasked with de-
escalating the violence so that
relief can reach civilians.
A doctor in Aleppo identified
the boy Thursday as 5-year-old
Omran Daqneesh. Osama Abu
al-Ezz confirmed the boy was
brought to the hospital known
as M10 on Wednesday night,
Men rode past the ruins of a rebel-held part of Aleppo on Thursday. The U.N. is urging a cease-fire to allow aid into the besieged city.
ups in months, with Ukraine
saying on Thursday that three
soldiers had been killed in the
previous 24 hours.
Now Russia is building new
army installations along the
border, creating some new
units and redeploying others
from further east, in line with
its telegraphed intentions to
step up its forces in the west.
In May, Russian Minister of
Defense Sergei Shoigu said the
army would create three new
divisions to counter NATO,
which in April announced it
would sent four battalions, or
A Russian infantry amphibious vehicle takes part in war games.
Friday - Sunday, August 19 - 21, 2016 | A3
fleeing their neighborhoods first time the relationship be-
to other cities, residents tween the two sides reaches
said. this level.”
“This is the first time the Both sides were using
regime uses warplanes to heavy weaponry, she said.
strike [Kurdish positions] in “We live in an area that is
Hasakah,” said Lina al-Najj- surrounded by the fighting,”
ari, a resident. “The bombing she said. “We have prepared
is very strong. This is the our suitcases to leave once
after an airstrike on the rebel- the ambulance, he said. A doc-
held neighborhood of Qaterji, tor at M10 later reported eight
with head wounds but no brain dead, including five children.
injury. The boy was later dis- The strike occurred during
charged. the sunset call to prayer
Rescue workers and journal- Wednesday evening, said Mr.
ists arrived at Qaterji shortly Raslan, a correspondent for Al
after the strike and began pull- Jazeera Mubashir.
ing victims from the rubble. Omran was rescued along
“We were passing them from with his three siblings, ages 1,
one balcony to the other,” said 6 and 11, and his mother and
photojournalist Mahmoud father from the rubble of their
Raslan, who took the memora- partially destroyed apartment
ble photo. He said he had building, Mr. Raslan said. None
passed along three lifeless sustained major injuries. A sec-
bodies before someone handed ond building, next to theirs,
him the wounded boy. was also heavily damaged.
Mr. Raslan rushed him to Rescuers worked until 5
about 4,000 troops, to Poland
and ex-Soviet Baltic countries.
“The political situation
along the western border of
more than 300 training exer-
cises and war games in the
Western Military District since
the winter.
the country remains unstable,” Several units are being relo-
Mr. Shoigu told officers at a cated to the region, including
televised meeting in June, not- those in the Western Military
ing that the U.S. and other District’s 20th Army, which
NATO members are boosting had been based until last year
their military potential in the in Nizhny Novgorod, east of
region. Moscow.
Military officials said two The 20th Army, which had
divisions would be created in seen lower levels of readiness
the Western Military District in previous years, is also get-
and one in the Southern Mili- ting a major overhaul with new
tary District, each with 10,000 combat units, including two or
troops. Russia has carried out three motorized rifle brigades
and a tank brigade.
A new regional headquar-
ters is now located in Voro-
nezh, some 100 miles from the
border with Ukraine. To make
way for its relocation, new
bases and at least 10 military
barracks are being constructed
in nearby towns for the incom-
ing soldiers. Construction of
SEREBRYAKOV DMITRY/ZUMA PRESS
some of the new installations
began in 2015.
Russia is preparing to hold
major annual military exer-
cises near the Ukrainian bor-
der in September, the first
aimed at integrating Crimea
and the peninsula’s defense
into Russian military plans.
A U.S. military official said
DELIL SOULEIMAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
we get the chance. But we
cannot leave our house at the
moment. We cannot step out-
side.”
She said the fighting be-
gan more than a week ago
when a Kurdish militia and a
pro-regime militia engaged in
tit-for-tat kidnappings.
a.m. to retrieve a final victim
from the rubble.
In the video posted late
Wednesday by the Aleppo Me-
dia Center, a man is seen
plucking the boy from a cha-
otic nighttime scene and carry-
ing him inside the ambulance,
looking dazed and flat-eyed.
The boy then runs his hand
over his blood-covered face,
looks at his hands and wipes
them on the ambulance chair.
Doctors in Aleppo use code
names for hospitals, which
they say have been targeted
by government airstrikes.
—Associated Press
ABDALRHMAN ISMAIL/REUTERS
Russian units are expected to
practice conducting amphibi-
ous landings and air-defense
exercises to reinforce Crimea.
Capt. Danny Hernandez, the
chief spokesman for U.S. Euro-
pean Command, said the U.S.
was monitoring the region and
the planned Russian military
exercises closely.
Ukrainian officials have be-
come increasingly nervous
about growing violence in the
eastern part of Ukraine.
Ukrainian President Petro
Poroshenko said on Thursday
that there had been record lev-
els of artillery shelling against
Ukrainian positions the previ-
ous night, adding that Ukraine
might announce mobilization
and martial law if the conflict
escalates in Crimea and the
country’s east.
U.S. and other allied offi-
cials believe Russia’s strategy
is to provoke an overreaction
by Kiev, one that could help
undermine the case in Europe
for sanctions.
“Russia wants to show it
can turn the heat up and down
and put pressure on Kiev to re-
act,” a Western official said.
—Julian E. Barnes
and Gordon Lubold
contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Friday - Sunday, August 19 - 21, 2016
Defection Offers Window Into Pyongyang
North Korean official
who deserted regime
gives Seoul rare level
of access to an insider
BY JONATHAN CHENG
AND EUN-YOUNG JEONG
SEOUL—The defection of a
top North Korean diplomat to
South Korea gives Seoul rare
access to one of Pyongyang’s
most well-connected men as it
seeks more clues about the in-
ner workings of its isolated
neighbor.
Thae Yong Ho, Pyongyang’s
deputy ambassador in London,
whose defection with his fam-
ily was announced by South
Korea’s government Wednes-
day, enjoyed a level of immu-
nity and privilege that few
others could in the North Ko-
rean system.
Not only was Mr. Thae one
of North Korea’s most senior
diplomats, he also reportedly
boasted some of the best con-
nections. Mr. Thae is the son
of a general who fought at
the side of Kim Il Sung, North
Korea’s founder and the
grandfather of ruler Kim Jong
Un, according to South Ko-
rea’s semiofficial Yonhap
News agency.
Yonhap reported Thursday
that the father of Mr. Thae’s
wife was also closely affili-
ated with the elder Mr. Kim,
who technically remains the
country’s “Eternal President”
more than two decades after
his death.
Philippine Senator Fires Back at President’s Claims
BY TREFOR MOSS
MANILA—A Philippine sen-
ator accused President Ro-
drigo Duterte on Thursday of
an “abuse of power” for pub-
licly attacking her on the eve
of a Senate inquiry into a vio-
lent antidrug crackdown that
has claimed over 600 lives.
In a televised press confer-
ence Wednesday, Mr. Duterte
called Sen. Leila De Lima an
“immoral woman” and ac-
cused her of having an affair
with her driver, who is mar-
ried, and of accepting money
from drug dealers to buy him
a house.
Ms. De Lima rejected the al-
legations, describing them as
“foul” and an attempted char-
acter assassination. Mr. Du-
terte has been widely criti-
cized for naming and shaming
people without producing evi-
dence for his allegations.
As chairwoman of the Sen-
ate committee on justice, Ms.
De Lima is leading a separate
inquiry, set to begin Monday,
World
Watch
FRANCE
Unemployment Rate
Drops Below 10%
Unemployment has dropped
below 10% for the first time in
almost four years, marking a
symbolic breakthrough for Presi-
dent François Hollande, who has
linked a turnaround in the job
market to whether he will run
for re-election in 2017.
France’s unemployment rate
dropped to 9.9% in the second
quarter from 10.2% in the first, na-
tional statistics agency Insee said.
That is the lowest rate since the
9.8% recorded in the third quarter
of 2012, shortly after Mr. Hollande
came to power. Excluding over-
seas territories, unemployment
stood at 9.6% in the quarter.
The figures are a source of
relief for Mr. Hollande as rising
unemployment has thwarted the
majority of his time in office.
The French president has re-
peatedly missed his goal to re-
verse the rise in unemployment,
despite throwing billions of eu-
ros into programs to fund jobs
and cut payroll taxes. In 2014,
unemployment reached 10.5%,
the highest level in 17 years.
—William Horobin
and Inti Landauro
UNITED KINGDOM
Retail Sales Rose
Strongly in July
Retail sales rose strongly in
July, as warm weather boosted
clothing sales and a weak pound
For South Korean intelli-
gence agents questioning Mr.
Thae, there is the tantalizing
possibility that he, having
grown up among North Ko-
rea’s upper crust, might be
able to shed more light on
what makes the nation’s top
leadership tick.
As a diplomat, Mr. Thae
wouldn’t have been responsi-
ble for setting policy, unlike
some previous high-profile de-
fectors such as Hwang Jang-
yop, who had often been seen
at Kim Il Sung’s side and was
the architect of the country’s
ruling ideology.
Mr. Thae, however, worked
with top officials in Pyong-
yang, including Ri Yong Ho,
the country’s foreign minister,
who previously served as the
North Korean ambassador to
the U.K. and later as chief ne-
gotiator for the six-party talks
on Pyongyang’s nuclear-weap-
ons program. Mr. Thae was
also seen on camera accompa-
nying Kim Jong Un’s older
brother, Kim Jong Chul, to an
Eric Clapton concert last year.
“He’s a diplomat, not a poli-
tician,” said John Nilsson-
Wright, a senior lecturer on
Asian studies at the University
of Cambridge, who knew Mr.
Thae for more than a decade
and met with him both in
North Korea and in the U.K.
“He wouldn’t have been in-
volved in decision-making, but
he will have information on
the working structure of the
government.”
But Mr. Thae might not
know much about North Ko-
into extrajudicial killings. She
is the latest opponent of Mr.
Duterte’s to have been at-
tacked by the president on live
television.
Earlier this month, Mr. Du-
terte read out a list of 158
public servants he accused of
aiding and abetting the illegal
drug trade, and described two
prominent businessmen as
“oligarchs” who were damag-
ing the country. Many of the
public servants publicly pro-
claimed their innocence, and
the two businessmen denied
any wrongdoing.
The president has also
openly insulted those who
have questioned his methods,
including the U.S. ambassador
to the Philippines and the
United Nations.
Speaking as Thursday’s Sen-
ate hearing into drug-related
killings was about to start, Ms.
De Lima said the president,
who is immune from prosecu-
tion, was trying to silence any
opposition and deter others
from criticizing him.
lured overseas visitors to snap
up watches and jewelry.
The figures, among the first
pieces of hard evidence on the
economy’s performance after the
U.K.’s decision to leave the Euro-
pean Union, suggest households
largely shrugged off the referen-
dum result and kept spending.
The pound rose on the news,
climbing 1% against the dollar to
$1.3169 after the data exceeded
expectations.
The Office for National Sta-
tistics said retail sales rose 1.4%
in July from June and were 5.9%
higher than a year earlier. The
official statistics agency said
sales increased in all categories
of stores it monitors, with sales
ON THE RED CARPET: Chinese Premier Li Keqiang welcomed Myanmar State Counselor Aung San Suu Kyi to a Beijing ceremony on Thursday.
HK JP KO ML SI IN UK
WORLD NEWS
A sales assistant watched a TV news report on Thae Yong Ho’s defection in Seoul on Thursday.
rea’s overseas moneymaking
operations, said Justin Has-
tings, a senior lecturer at the
University of Sydney and an
expert on the country’s trade
networks, who is publishing a
book later this year on North
Korea in the global economy.
“Weapons sales aren’t re-
ally feasible in the U.K.,” Mr.
Hastings said, contrasting Mr.
Thae’s London posting with
those in Africa and the Middle
East, where North Korean dip-
lomats are expected to gener-
ate money for Pyongyang.
Mr. Hastings added that
North Korea’s overseas out-
posts tend to keep their vari-
Sen. Leila De Lima described the president’s allegations as ‘foul.’
“No one has been attacked
in such a manner by no less
than the highest official in the
land—until now,” she said. “It
is already clear that what is
happening to me is what will
happen to anyone who does
not bow to the wishes of the
president.”
In his tirade, Mr. Duterte
at department stores and cloth-
ing outlets leading the gains.
The figures were much stron-
ger than economists polled by
The Wall Street Journal predicted.
—Jason Douglas
and Simon Zekaria
GERMANY
Freed Terror Plotter
Not a Threat: Lawyer
A man whose Islamist terror
cell had plotted attacks on U.S.
targets in Germany just under a
decade ago no longer poses a se-
curity risk after his release from
prison earlier this week, his law-
yer said, even as security ana-
lysts called the decision ill-timed.
FR MN PR
ous operations highly com- versity, while a younger son
partmentalized, to the point attended Acton High School in
where Mr. Thae may not even Ealing, West London.
have been aware of all that South Korea’s Ministry of
was happening in his own Unification didn’t comment on
embassy. whether all of Mr. Thae’s im-
“I’d be surprised if he knew mediate family defected with
what was going on in terms of him. A representative of the
earning money,” Mr. Hastings ministry declined to confirm
said. “I doubt he has a ledger the Yonhap report or provide
that he could pull out.” further details about Mr. Thae.
Since his early years, Mr. The South Korean govern-
Thae enjoyed rare luxuries in ment has declined to make
North Korea. He spent his high Mr. Thae available for com-
school years in China, where ment. North Korea has yet to
he learned Chinese and Eng- issue any official statement
lish, according to Yonhap. His about his defection. But on
oldest son holds a degree in Thursday, Yonhap reported
public health from a U.K. uni- that North Korea had exe-
taking office, primarily by kill-
ing drug dealers.
Since he became president
at the end of June, 646 sus-
pected drug dealers have
been killed either by the po-
lice or by suspected vigilan-
tes, according to the Philip-
pine Daily Inquirer, which
PRIB/EUROPEAN PRESSPHOTO AGENCY
has kept a tally of the mount-
ing death toll. That number
is far higher than in previous
years. The government has
acknowledged hundreds of
deaths but hasn’t given an
exact number.
While police officials say
officers have followed the
rules of engagement by shoot-
ing only suspects who resisted
arrest, Ms. De Lima and other
said Ms. De Lima was “poli- public figures have called for
ticking and posturing” by an investigation into the in-
seeking an investigation into creasingly bloody campaign.
extrajudicial killings despite The president’s allegations
having “a sordid private and were part of a campaign of
official life.” fear aimed at “stopping the
During the Philippines’ re- Senate probe on extrajudicial
cent election campaign, Mr. killings,” said Ms. De Lima, a
Duterte promised to suppress former justice secretary and
crime within six months of onetime head of the Philip-
Lawyer Dirk Uden said two SPAIN
regional court-appointed experts
had concluded that Fritz Gelow-
Acting Prime Minister
icz, who was sentenced in March
2010 to 12 years in prison for
To Court Centrists
Acting Prime Minister Mari-
plotting attacks against a U.S. ano Rajoy announced a thawing
Air Force base and the Frankfurt in the country’s eight-month po-
airport, wasn’t a threat. litical deadlock.
A court in Düsseldorf on He said his conservative Popu-
Monday released the German lar Party will launch negotiations
national early because of “good on Friday aimed at garnering the
behavior” and based on the rec- support of the centrist Ciudada-
ommendation of the experts. nos party, an initial sign of mo-
“You can never look into peo- mentum after months of stagna-
ple,” Mr. Uden told The Wall tion that has left Spaniards
Street Journal on Thursday. “But exasperated with the inability of
you have to realize that you can’t their political class to strike a deal.
punish people for something “We have taken a step, which
they haven’t yet committed.” I would describe as decisive, to-
—Andrea Thomas ward the goal of forming a gov-
THE WALL STREET JOURNAL.
cuted officials in charge of
ensuring the loyalty of Pyong-
yang’s elite class, citing un-
identified sources.
An eloquent English
speaker, Mr. Thae hewed to
the official party line as the
face of North Korea in a prom-
inent Western capital. In a
videotaped speech in London
in October 2014, Mr. Thae de-
scribed how he felt the British
ruling class and media were
brainwashing ordinary people.
He criticized Western media
for highlighting what he called
unwarranted stories on North
Korea—part of an effort, he
said, to turn attention away
from atrocities caused by
KIM HONG-JI/REUTERS
Western countries.
During the same talk, Mr.
Thae defended Pyongyang’s
nuclear-weapons program,
saying: “We want to protect
our people, our system, and
our sovereignty. And unless
we’re equipped ourselves, we
can’t do it.”
Those who knew Mr. Thae
personally, however, described
him as someone who could ap-
preciate the differences be-
tween the Western world and
North Korea’s portrayal of it.
“He had a good sense of the
contradictions between the of-
ficial position of his govern-
ment and the world he saw,”
said Mr. Nilsson-Wright of
Cambridge. He added that Mr.
Thae was also quite invested
in his children, one of whom
wanted to study medicine, and
was curious to learn more
about the U.K.’s higher-educa-
tion system.
pines’ commission on human
rights. Ms. De Lima’s inquiry
includes killings that preceded
Mr. Duterte’s presidency as
well as the recent violence.
“I don’t think the constitu-
tion has ever contemplated
such abuse of power on such a
scale, as it assumes that every
president will conduct himself
in a manner befitting the of-
fice he holds,” she said.
Mr. Duterte said Wednesday
that it was his duty as presi-
dent to name those suspected
of wrongdoing in the interests
of transparency. In early Au-
gust, he promised to investi-
gate unexplained killings of
suspected drug dealers.
At Thursday’s hearing, sen-
ators urged Mr. Duterte to
shift the focus of his campaign
from killing suspects to reha-
bilitating addicts. In the past
two months over 500,000 peo-
ple have surrendered them-
selves to authorities to seek
treatment and escape the
president’s crackdown, the
government says.
ernment,” Mr. Rajoy said.
Mr. Rajoy will face a confi-
dence vote, a necessary step to
form a government, on Aug. 30,
a parliament official said.
Spanish voters elected a divided
parliament on Dec. 20 and another
one on June 26. Mr. Rajoy’s conser-
vative Popular Party, which has led
the government since 2011, won
the greatest number of seats both
times, but fell short of a majority.
Lawmakers have been trying to
negotiate a government for nearly
eight months.
The deadlock has prevented
lawmakers from dedicating at-
tention to the pressing tasks of
lowering Spain’s 20% unemploy-
ment rate and budget deficit.
—Jeannette Neumann
ARGENTINA
Court Blocks Move
To Raise Gas Prices
The Supreme Court annulled a
move by President Mauricio Macri
to raise residential natural-gas
prices, hindering his hopes of slash-
ing utility subsidies and narrowing
a gaping fiscal hole this year.
In a unanimous ruling, the court
said the government can raise res-
idential gas prices but must first
hold a series of public comment
sessions before doing so.
The decision is a significant
but temporary setback for the
Macri administration. The gov-
ernment has been spending bil-
lions of dollars every year to
subsidize the cost of utility
rates, including natural gas, elec-
tricity, water and transportation.
The court ruling effectively
sends residential gas prices back
JASON LEE/REUTERS
to what they were in March, be-
fore the government raised rates
and slashed subsidies that had
kept home heating bills here
among the lowest in the world.
—Taos Turner
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | A5

07:00.66
03:09.92

01:53.36 03:27.95

01:54.66

00:51.14

RECORDING OLYMPIC DREAMS

We're proud to have timed these great moments in sporting history at Rio 2016.
Congratulations to Michael Phelps, the world's most decorated Olympian.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Friday - Sunday, August 19 - 21, 2016
EUTax CrackdownSpawnsTrans-Atlantic Spat
BRUSSELS—After a meet-
ing with U.S. Treasury Sec-
retary Jack Lew last month,
the European Union’s anti-
trust chief Margrethe Ve-
stager tweeted a photo of
herself standing awkwardly
next to the American finance
chief, with the two of them
facing in slightly different
directions.
It was a “very good meet-
ing,” she tweeted. But the
photo was fit-
BRUSSELS ting, for the
BEAT two were far
NATALIA from seeing
DROZDIAK eye-to-eye
over the EU’s
investigations
into the sweetheart tax deals
some multinational compa-
nies have sealed with Euro-
pean governments.
The trans-Atlantic dis-
cord could deepen this fall
when the European Commis-
sion, which holds the bloc’s
antitrust authority, is ex-
pected to decide on some of
its biggest cases, including
one involving Apple Inc. The
commission could require
the companies to pay back
large sums in unpaid taxes.
The simmering feud, cen-
tering partly around the
question of which country
has a claim to what corpo-
rate tax revenue, could
spark retaliatory tax mea-
sures by the U.S. and threat-
ens to undermine broader
Ex-Official
Departs
South
Sudan
BY NICHOLAS BARIYO
AND MATINA STEVIS
KAMPALA, Uganda—South
Sudan’s former vice president
and longtime opposition
leader has fled the country
following what a spokesman
for Riek Machar said was an
assassination attempt by
forces loyal to his longtime ri-
val, President Salva Kiir.
Mr. Machar reached the
Democratic Republic of Congo
on Wednesday, said Lambert
Mende, Congo’s information
minister. Mr. Machar’s aides
said he is expected to stay for
some days before traveling to
Ethiopia.
The U.N. on Thursday said
its Congolese mission, known
as Monusco, transferred Mr.
Machar within the DRC once
he had made his way to the
border with South Sudan.
Mr. Machar’s spokesman,
James Dak, on Thursday offered
no additional information on the
alleged assassination attempt.
Mr. Kiir’s office had no immedi-
ate response to the allegations.
The former vice president’s
departure comes weeks after
the collapse of an internation-
ally brokered power-sharing
deal aimed at calming the long-
running feud between him and
Mr. Kiir, a quarrel that has
mired South Sudan in almost-
constant conflict since it became
an independent nation in 2011.
After Mr. Kiir accused Mr.
Machar, his then-deputy, of
plotting a coup in 2013, a civil
war broke out that left an esti-
mated 50,000 people dead. In
April, Mr. Machar, accompanied
by some 1,000 troops, returned
to the capital Juba to resume
his post as vice president, fol-
lowing last August’s signing of
the power-sharing accord.
But less than three months
later, fighting with Mr. Kiir’s
forces forced him and some of
the estimated 40,000 troops
loyal to him to flee Juba.
The conflict in the world’s
youngest nation has left nearly
three million people homeless
and forced one million to flee
to neighboring countries. Oil
production has dropped by
half, to 120,000 barrels a day,
leaving the crude-dependent
nation struggling for revenue
to pay troops and finance ba-
sic imports, including food.
The U.S. has spent $1.6 bil-
lion trying to quell the escalat-
ing violence, with little success.
A Western diplomat said
the U.N. helped Mr. Machar
because it believed it was very
possible the South Sudanese
army would eventually capture
and kill him, a move it feared
could restart the civil war, and
not because of any desire to
assist Mr. Machar personally.
U.S. Treasury Secretary Jack Lew and EU antitrust chie Margrethe Vestager last month.
U.S. and EU efforts to snuff
out large-scale corporate tax
avoidance.
In a letter sent several
months before the Brussels
encounter to Ms. Vestager’s
boss, European Commission
President Jean-Claude
Juncker, Mr. Lew denounced
the investigations for “dis-
proportionately” targeting
U.S. companies. In some
cases, he wrote, the Europe-
ans seek to target income
they have no right to tax.
In her own letter fired
back to Mr. Lew, Ms. Ve-
stager said the commission
ECB Warned of Brexit Shock for Eurozone
BY TOM FAIRLESS
FRANKFURT—European
Central Bank policy makers
warned at their July meeting
that Britain’s vote to leave the
European Union created fresh
headwinds for the eurozone
and could affect the world
economy, suggesting they may
be ready to launch fresh stim-
ulus as soon as next month to
shore up the bloc’s economy.
But the minutes of the
ECB’s July policy meeting,
published Thursday, also
showed that policy makers
thought it was too soon to dis-
cuss new policy measures, as
they wanted to wait until the
extent of the economic disrup-
tion from the Brexit vote be-
came clearer.
The minutes shed light on
the debate within the ECB’s
25-member governing council
as it prepares for another
meeting on Sept. 8. Econo-
mists were divided on whether
the new details indicated that
the ECB was leaning toward a
boost to its €1.8 trillion ($2.03
trillion) stimulus—for the
third time in less than a year.
The ECB left its policy mix
unchanged at its July meeting,
and ECB President Mario
Draghi stopped short of sig-
naling that the bank would
boost its stimulus again soon.
Mr. Draghi has urged investors
Two Sides Squeeze South Africa’s Ruling Party
BY ALEXANDRA WEXLER
AND JOE PARKINSON
J O H A N N E S B U R G —T w o
young leaders from opposing
ends of the ideological spec-
trum are rising to reshape
South African politics as the
ruling party of Nelson Mandela
reels from its worst election
loss since apartheid collapsed.
On one side is Mmusi
Maimane, the first black
leader of the pro-business
Democratic Alliance, a histori-
cally white party, who sports
stylish suits and slick oratory
in a bid to make inroads with
South Africa’s expanding mid-
dle class. On the other is Ju-
lius Malema, the firebrand
leader of the Economic Free-
dom Fighters, an upstart left-
ist party that advocates na-
tionalizing mines and taking
back white-owned farmland.
In municipal elections this
month, both men scored blows
against the African National
Congress’s 22-year grip on
power. The DA won the most
votes in Nelson Mandela Bay,
which includes the manufactur-
ing center Port Elizabeth, and
Tshwane, home to the capital
Pretoria. The EFF, founded in
2013, garnered 8% of the na-
tional vote, emerging as a po-
tential kingmaker in constituen-
cies where no party
secured a majority, including the
economic capital Johannesburg.
WORLD NEWS
was impartially exercising
the bloc’s state-aid rules to
prevent companies from
reaping unfair gains.
T
he commission several
years ago decided to
more closely examine
so-called tax rulings, which
are comfort letters sent by
governments to multination-
als to provide clarity on how
a tax would be calculated.
The letters are deemed ille-
gal if they hand selective ad-
vantages to some companies.
The EU stresses it has
gone after many more Euro-
to wait to see the full effects
of its recent policy measures,
which include subzero interest
rates, €80 billion ($90.18 bil-
lion) a month of bond pur-
chases and cheap loans for
banks.
But with eurozone inflation
hovering around zero and the
economic outlook uncertain,
most economists still expect
the ECB to announce fresh
policy measures in September,
when new economic forecasts
will factor in the likely impact
of Brexit.
The Bank of England al-
ready has responded aggres-
sively to a weakened outlook
for the U.K. economy, cutting
interest rates and launching a
new bond-purchase program
at its Aug. 3 policy meeting.
Jennifer McKeown, an
economist with Capital Eco-
nomics in London, said the lat-
est ECB minutes appeared to
confirm that the central bank
was preparing to loosen policy
again. She highlighted remarks
attributed to the ECB’s chief
economist, Peter Praet, that
underlying inflation in the
euro area “continued to lack a
convincing upward trend and
remained an ongoing source of
concern.”
Others were more cautious.
Greg Fuzesi, an analyst at J.P.
Morgan in London, said the
ECB didn’t appear to be rush-
Although the ANC still re-
ceived the most votes across
the country, the rise of the DA
and EFF is ushering in an un-
certain era of minority-govern-
ment politics in some of South
Africa’s most important cities,
with Messrs. Maimane and
Malema poised to play leading
roles. Their rise underscores the
frustration with weak economic
growth and frequent allegations
of graft leveled against Presi-
dent Jacob Zuma’s ANC.
“These two young leaders
are coming from very different
vantage points but they are now
Economic Freedom Fighters leader Julius Malema, right, had led the African National Congress’ youth wing.
THE WALL STREET JOURNAL.
doing that,” Ms. Vestager entity within a multinational
said in an interview earlier firm. That could include off-
this year with The Wall shore holding companies
Street Journal. “What we’re used as mechanisms for de-
doing is for every com- ferring U.S. tax payments.
pany—be that a U.S. com- The application of the
pany or a European com- rules isn’t designed to be
pany—to make sure that anti-American, said Tom Ot-
their competitors don’t get tervanger, a European law
away with paying very, very professor at the University
little in taxes compared with of Leiden. If anything, he
themselves.” said, the EU is targeting cer-
U.S. lawmakers have also tain member states because
accused the commission of of big differences in corpo-
COURTESY MARGRETHE VESTAGER
trying to wrest power away rate-taxation rules among
from national governments the bloc’s governments.
that traditionally design The EU’s crackdown fol-
their own taxes. EU law, lowed disclosures in 2014
however, gives the commis- that many multina-
sion the right to open up le- tional companies struck
gal proceedings against sweetheart deals in member
member countries that don’t states such as Luxembourg,
abide by the bloc’s rules. Ireland and the Nether-
“It’s very difficult in lands that allowed them to
other regions of the world pay little tax in the bloc.
pean companies than Ameri- that don’t have this concept With at least one deci-
can ones over their tax ar- of…a supranational authority sion looming, on Ireland’s
rangements, including Fiat overriding national law to arrangements with Apple,
Chrysler Automobiles NV accept that,” said Philipp the trans-Atlantic spat will
and Swedish industrial com- Werner, a Brussels partner likely flare up again soon.
pany Atlas Copco.
at law firm Jones Day. “I un- But there could be a silver
Days after Ms. Vestager’s derstand that it’s hard to un- lining for the U.S.: a possible
riposte, Treasury said it was derstand for an American future boost in tax revenues.
reviewing a never-used sec- audience, for example.” “This might reduce future
tion of the U.S. tax code that U.S. base erosion,” according
W
would allow Washington to hen the commission to Daniel Shaviro, a tax pro-
impose retaliatory double does invoke its fessor at the New York Uni-
taxation on European citi- state-aid rules to versity School of Law, if
zens and companies on the require an EU country to re- “U.S. companies conclude, by
grounds that the EU subjects trieve unpaid tax money, reason of the state-aid cases,
U.S. companies to discrimi- that government must en- that the EU is less of a tax-
natory taxes. sure the money is returned planning haven than they
“I don’t see the case for and can claim it from any had thought.”
for fresh stimulus as a result
of the Brexit vote.
Mr. Fuzesi expects the ECB
to extend its bond-purchase
program beyond March 2017
and to cut its deposit rate by
0.1 percentage point at the
September meeting, but he
JASPER JUINEN/BLOOMBERG NEWS
said his confidence in that
outcome “has already tum-
bled,” and policy makers
might decide to do less.
At their July meeting, ECB
officials also expressed con-
cerns about Europe’s weak
banking sector, which they
worried could hamper the cen-
European Central Bank President Mario Draghi in July tral bank’s efforts to reduce
loan costs across the region.
ing toward another round of Still, they said “a great deal European bank stocks fell
stimulus, pointing to remarks of uncertainty” remains about sharply in the wake of the U.K.
in the minutes that the ECB how the economic shock could referendum, continuing a
should avoid fostering “undue unfold in the global economy. downward trend. Policy mak-
expectations” about its future Ms. McKeown expects the ers think the slump is partly
policy action. ECB to act aggressively at its due to the impact on banks’
Eurozone inflation was 0.2% September meeting, accelerat- profitability of the ECB’s low
in July, the EU’s statistics ing its asset purchases to €90 interest rates, according to the
agency confirmed earlier billion a month, extending minutes.
Thursday. That was up slightly their duration by six months Howard Archer, an econo-
from 0.1% the previous month, to September 2017, and cutting mist with IHS Global Insight in
but far below the ECB’s target the ECB’s deposit rate— London, said concerns over
of just below 2%, which it has charged to banks for storing the banks made it unlikely
missed for 3½ years. funds with the central banks— that the ECB would cut inter-
While ECB policy makers to minus 0.5% from minus est rates again. “While the
acknowledged “new head- 0.4%. ECB has indicated that inter-
winds” from the Brexit vote, Such action likely would be est rates could possibly go
they said the impact likely resisted by Jens Weidmann, lower, there is clearly height-
would be confined to the U.K. president of Germany’s influ- ened concern over the impact
and Europe, and the fallout in ential Bundesbank and ECB that negative or low interest
global financial markets had governing council member, rates are having on eurozone
been contained. who has said he sees no need banks,” Mr. Archer said.
central players in South African Mr. Maimane embraced the with more than a quarter
politics and their parties are EFF’s offer to vote in line with of the workforce jobless,
even influencing each other,” the party, but conceded that he alongside poor housing and
said Thabi Leoka, chief strate- and Mr. Malema would never service delivery.
gist at Johannesburg-based Ar- agree ideologically. The EFF won 25 seats in
gon Asset Management. Although the exact constella- Parliament in 2014 national
On Wednesday, as political tion of city governments re- elections after securing 6% of
parties wrapped up negotia- mains unclear, investors have the vote, but has no experi-
tions and power-sharing deals broadly welcomed the election ence governing on a local
for major cities, both leaders results, and the rand has gained level. The DA, which won 89
gave press conferences in Jo- around 5% against the U.S. dol- seats in those elections, has a
hannesburg. lar since the Aug. 3 vote. strong record fostering growth
Mr. Malema ruled out a for- But if Mr. Maimane can and development since it be-
mal coalition with any party forge new municipal coali- came the governing party in
but pledged to vote with the tions, they face the daunting the Western Cape province,
DA and other opposition task of improving the lives of which includes the tourism
groups to block the ANC. millions of South Africans, hub of Cape Town, in 2009.
Mr. Maimane, 36 years old, is
a preacher raised in the sprawl-
ing township of Soweto, famous
as the crucible of resistance to
white-minority rule. His political
career began in 2011, when he
ran and lost as the DA’s candi-
date for mayor of Johannesburg.
He became the DA’s parliamen-
tary leader in 2014. Before his
political career, Mr. Maimane
was a business consultant.
Mr. Malema, 35, was raised
by a single mother in the impov-
erished northern province of
Limpopo. He began his political
activism at age 9. His speeches
vaulted him to president of the
SIPHIWE SIBEKO/REUTERS
Youth League in 2008.
But his firebrand national-
ist policies and hate speech
against white South Africans
also sealed his expulsion from
the party in 2012. He founded
the EFF a year later.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Clinton Under Pressure Over Health Care
Left urges an option
run by government,
while conservatives
say law has failed
BY LAURA MECKLER
WASHINGTON—Aetna Inc.’s
decision to scale back partici-
pation in the Affordable Care
Act’s exchanges is putting new
pressure on Democrat Hillary
Clinton over health care, a
onetime signature issue that
has taken a back seat in her
presidential campaign.
The pressure is coming
from the right but also the
left. Liberals say the Aetna de-
cision shows the need for a
government-run option to
compete with the private in-
surance companies, or even
for a single-payer, Medicare-
for-all program, as Sen. Bernie
Sanders proposed again this
past week.
“The provision of health
care cannot continue to be de-
pendent upon the whims and
market projections of large
private insurance companies
whose only goal is to make as
much profit as possible,” Mr.
Sanders said in a statement.
The message to Mrs. Clinton,
an aide said, was that the Ver-
mont senator would continue
to pressure her on the issue if
she is elected president.
Study Suggests Zika Might
Pose Risk to Adult Brains
BY BETSY MCKAY
It is known that Zika can
cause brain damage in the fe-
tuses of infected pregnant
women. Now a new study sug-
gests the virus also may be
able to harm the brains of
some adults.
Scientists at the Rockefeller
University and the La Jolla In-
stitute for Allergy and Immu-
nology infected adult mice
with Zika and watched the vi-
rus zero in on and damage
cells that are important in
their brains to memory and
learning, in much the same
The findings signal that Zika may not be as
benign for adults as thought, scientists said.
way that researchers have doc-
umented how it attacks and
kills cells critical to fetal brain
development. The research
was published on Thursday in
the journal Cell Stem Cell.
The authors of the study
cautioned that it is difficult to
know the extent to which the
findings, in mice whose im-
mune systems were weakened,
apply to humans, and said they
plan further research. But the
U.S.
Watch
CHICAGO
Firing of 7 Officers
Sought Over Shooting
The Chicago police superin-
tendent has recommended firing
seven officers over their response
to the 2014 police-officer shoot-
ing of Laquan McDonald, a police
spokesman said Thursday, a case
that sparked allegations of a
coverup of police misconduct.
The superintendent’s decision
follows a report by the city’s in-
spector general sent to the de-
partment this week that recom-
mended firing 10 officers involved
in the case, police spokesman
Frank Giancamilli said. Two of the
10 officers have retired. All are
accused of lying about the inci-
dent in which their colleague Ja-
son Van Dyke fatally shot 17-
year-old Mr. McDonald, who was
carrying a knife, 16 times.
The department “will accept
the recommendation to submit
seven of the officers to the Po-
lice Board for separation,” said
Mr. Giancamilli in a statement,
adding that the department dis-
agrees with the recommendation
to fire the 10th officer. A repre-
sentative from the police union
couldn't be reached Thursday.
The police board will review
Superintendent Eddie Johnson’s
Democrats have tried to
move past debate over the Af-
fordable Care Act, a goal made
harder this week when Aetna
said it would withdraw from 11
of the 15 state health-care ex-
changes, unsettling the mar-
ketplaces and reducing con-
sumer options.
Mrs. Clinton has backed a
public option since 2007, and
she reaffirmed her support
during her Democratic pri-
mary against Mr. Sanders. He
and others on the left will be
pushing to make sure she car-
ries through, especially given
their concerns that she will
tack to the center if elected
president.
Conservatives, meanwhile,
say Aetna’s decision shows the
law isn’t working and should
be scrapped. “Aetna just today
announced that they are drop-
ping out, as are many of the
major insurance agencies.
Obamacare is a disaster,” Re-
publican presidential nominee
Donald Trump said at a rally
late Tuesday in Wisconsin.
Mr. Trump has also talked
repeatedly about premium in-
creases expected this fall, a re-
lated issue that also is prob-
lematic for the health-care
exchanges. He routinely pre-
dicts that the spikes will be
“election changing.” He also
accuses the Obama adminis-
tration of plotting to delay the
announcement of the in-
findings clearly suggest that
Zika may not be as benign an
infection for adults—or even
children—as has been thought,
particularly for those with
weakened immune systems,
they said. Damage to these
cells could potentially lead long
term to depression or other
cognitive problems, they said.
“Zika has the potential to
cause damage in the adult
brain,” said Joseph Gleeson,
adjunct professor and head of
the laboratory of pediatric
brain disease at New York’s
Rockefeller University, and an
author on the study.
The study delivers just the
latest unsettling news about a
virus that until recently wasn’t
thought to be terribly harmful.
Over the past year, doctors
and researchers have discov-
ered the mosquito-borne virus
can severely damage fetal
brains. It can be spread sexu-
ally by men and women. There
have also been other signs
that the virus can harm adults:
It has been linked to a rare
recommendation of firings, and
the seven officers all have a
chance to protest the decision. If
they choose to do so, the case
will be brought to the police
board and a hearing will be sched-
uled. A decision can take months.
Mr. Van Dyke was charged last
year with first-degree murder. He
has pleaded not guilty.
—Shibani Mahtani
JUSTICE DEPARTMENT
Use of Private Prisons
Will Be Phased Out
The Justice Department plans
to phase out use of private pris-
ons, a move that affects a small
percentage of the nation’s prison-
ers but could signal a broader ef-
fort to get states to follow suit.
The decision was outlined in a
memo from Deputy Attorney
General Sally Yates on Thursday,
who said private prisons compare
poorly to those run by the govern-
ment. The Justice Department’s
use of private prisons peaked in
2013, when they housed about
15% of federal inmates, or nearly
30,000 people. By next year, that
figure is expected to be less than
14,200 inmates.
Shares of Corrections Corpo-
ration of America and GEO
Group Inc. fell sharply following
a report on the development by
the Washington Post, which re-
ported the news earlier. Correc-
tions Corporation of America
shares were down about 37% in
late trading Thursday. Shares of
GEO were down 39%.
—Devlin Barrett
and John Carney
U.S. NEWS
Hillary Clinton has promised to ‘defend and improve’ the Affordable Care Act health-care law.
creases until after the elec-
tion.
“Premiums are going up at
a rate that nobody has ever
seen before,” he said last week
in Virginia. He predicted the
fall hikes will be “cata-
strophic…an increase like
never before.”
At the start of the cam-
paign, Mrs. Clinton outlined
proposals aimed at addressing
the high costs of health care,
neurological disorder, Guillain-
Barre Syndrome. Scientists are
exploring possible links with
encephalitis, too.
“This is one more ‘oh my
goodness,’ ” said Sujan
Shresta, a professor at the La
Jolla Institute of Allergy and
Immunology in La Jolla, Calif.,
and a study author who cre-
ated the mouse model used in
the research.
Dr. Gleeson, who runs a
neurobiology lab, approached
Dr. Shresta, an immunologist,
at his son’s high school in
April after hearing her give a
talk. Scientists had already
shown how Zika targeted so-
called neural progenitor cells,
which are responsible for gen-
erating neurons that form the
fetal brain. The virus killed
those cells or caused them to
stop functioning normally, im-
peding the development of
new brain tissue.
Drs. Gleeson and Shresta
wanted to see if Zika would
have the same effect on equiv-
alent cells in adult brains.
While developing fetal brains
are replete with such cells,
pockets remain in adults, par-
ticularly for generating neu-
rons involved in processing
new memories or information.
Shipwreck Located Under Lake Ontario
BY KRIS MAHER
A group of retirees who
hunt for sunken ships in their
spare time scored a huge
find far below the surface of
Lake Ontario in late June: the
second-oldest confirmed
shipwreck in the Great Lakes,
a 53-foot sloop named the
Washington that sank in a
storm in 1803.
“We’re always excited,”
said Jim Kennard, 73 years
old, a retired electrical engi-
neer who lives in Fairport,
N.Y., outside Rochester. “I tell
people you can’t be the first
on a mountain anymore. Most
mountains have been climbed.
But you can be the first one to
discover and look at a ship-
wreck.”
The rare underwater find is
giving historians a clearer pic-
ture of the types of vessels
that sailed on the lakes be-
tween the Revolutionary War
and the War of 1812, a period
from which few artifacts be-
yond written records of sail-
ing traffic survive.
When the ship sank, it was
reportedly carrying goods and
groceries from East India
worth $20,000. There were no
survivors.
“It just gives us a better
understanding of what life on
the Great Lakes was like at
such an early time,” said Car-
rie Sowden, archaeological di-
for instance, new limits on
out-of-pocket costs. But she
said little about the structure
or future of the law itself.
“She was hoping we had
just moved beyond a fight on
the ACA,” said Neera Tanden,
president of the Center for
American Progress and a long-
time Clinton policy adviser.
In their primary, Mr. Sand-
ers aggressively challenged
her on health care, saying a
Aedes aegypti, the mosquito that mostly spreads Zika, is found in many parts of the southern U.S.
They infected mice and then
did brain scans to find fluores-
cent biomarkers showing the
virus. The populations of
those cells “lit up like a
Christmas tree,” said Dr.
Gleeson. “We found Zika had a
profound effect,” killing cells
and reducing the production
of new neurons.
The findings would likely
apply to children as well as
adults because they have more
of these cells, Dr. Shresta said.
“Their brains are still develop-
rector at the National Mu-
seum of the Great Lakes in
Toledo, Ohio, which sponsored
the expedition that found the
wreck.
Between 6,000 and 8,000
ships are believed to have
wrecked in the Great Lakes,
including more than 600 in
Lake Ontario, according to Ms.
Sowden. Some ships crashed
into shore and broke apart,
while others burned. An esti-
mated 200 remain in Lake On-
tario.
Mr. Kennard’s team of retir-
ees found the Washington in
deep water off Oswego, N.Y.,
in late June.
They don’t plan to divulge
the location of the wreck, or
to salvage any part of the
ship, which technically now
belongs to the state of New
The Washington is the second-oldest wreck found in the Great Lakes.
Friday - Sunday, August 19 - 21, 2016 | A7
CHRIS KEANE/REUTERS
“Medicare for all” single-payer
plan was the only way to guar-
antee universal coverage. In
February, the Clinton cam-
paign quietly added to her
website a statement support-
ing the public option. She
hardly mentioned the matter
until July, when she reaf-
firmed her position after talks
to win Mr. Sanders’s endorse-
ment.
Clinton advisers say her
ing,” she said.
“I think this is a very, very
important finding, and the rea-
son for that is so far the focus
with Zika has been linked to
microcephaly and pregnancy,”
said Hongjun Song, a professor
of neurology at Johns Hopkins
University School of Medicine
in Baltimore. He was among
the team of scientists that
published a paper in March on
the virus’s effect on neural
progenitor cells and is con-
tinuing to research the effect
York. The men have released
photographs and a video of
the ship, whose mast is still
standing, which they took us-
ing a remotely operated vehi-
cle.
“The feeling that the state
has is that it’s a minimuseum.
Just leave it there. It probably
is preserved a lot better there
than if you bring it up,” said
Mr. Kennard.
Mr. Kennard said he goes in
search of shipwrecks on the
lake about 15 to 20 times a
year with fellow retirees
Roger Pawlowski and Roland
Stevens, who also live in the
Rochester area.
Mr. Kennard said he has
himself discovered about 200
wrecks in the Great Lakes, the
Finger Lakes and various riv-
ers.
SHIPWRECK WORLD
support for the idea is genu-
ine. In an economic speech last
week, she promised to “defend
and improve” the health law,
including “giving Americans,
in every state, a choice of a
public-option health-insurance
plan that will help everybody
afford coverage.”
“It will strengthen competi-
tion and drive down costs,”
she said.
Aides say Mrs. Clinton’s
hope is that, if elected, she
will be able to work with Re-
publicans to improve the law.
Chris Jennings, an outside ad-
viser to the campaign, cited
ideas aimed at increasing en-
rollment as areas where she
hopes to work with the GOP.
“People on all sides of this
issue need to ratchet back the
politics in health care and re-
flect where we used to be,” he
said, with the parties working
together.
Such talk about cooperation
with Republicans only fuels
suspicion on the left, though,
that she will abandon pursuit
of policies such as the public
option.
“I think her instincts are
more moderate than they like
to claim—more centrist, more
establishment,” said Bob Boro-
sage, co-director of the liberal
group Campaign for America’s
Future. He said he is hopeful,
though, “In her coalition, the
energy is more on the left.”
ALEX WILD
of Zika on the brain.
“Clearly Zika virus is a
beast and can do much more
damage,” he said.
Drs. Gleeson and Shresta
said they would like next to
test whether Zika attacks the
same cells in humans and ex-
plore the potential conse-
quences of infection.
“Our next step is to answer
those questions—do the cells
recover? To what degree and to
what extent are there deficits
in cognition?” Dr. Gleeson said.
One of Mr. Kennard’s finds
was the HMS Ontario, a Brit-
ish warship that sank in Lake
Ontario in 1780 and is the old-
est discovered shipwreck in
the Great Lakes.
The three men identified
the Washington by matching
several details known about
the ship from the historical
record, such as its missing
yawl.
The Washington sank after
getting caught in a storm on
Nov. 6, 1803. It was carrying a
crew of two and several mer-
chants. It typically trans-
ported furs and a variety of
household goods, including
salt, flour and tools.
Mr. Kennard said it was
clear the ship sank stern first,
because of the damage that
section of the boat sustained.
“It’s a thrill to be able to see
what that ship looks like and
write the final chapter of what
happened,” he said.
He said the men would be
back out on the lake as early
as Friday in search of other
wrecks.
They won’t return to the
Washington’s location, in part
to keep the site confidential.
Sometimes, he said, the men
even take out fishing poles so
others don’t know what
they’re up to.
“Once we find these things,
we don’t tend to ever go
back,” he said.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A8 | Friday - Sunday, August 19 - 21, 2016
INSIDER
Continued from Page One
other medical care and services.
Hedge funds routinely buy or
sell stocks based on predictions
of political-intelligence purvey-
ors such as Mr. Blaszczak.
The documents made public
in June by the Justice Depart-
ment and Securities and Ex-
change Commission are part of
criminal and civil insider-trad-
ing cases against the former Vi-
sium manager. They refer to a
“co-conspirator” and “political
consultant,” without naming the
person, for allegedly relaying
the market-moving information
to the Visium manager from
sources inside CMS. People fa-
miliar with the probe said the
references are to Mr. Blaszczak.
Mr. Blaszczak’s alleged tip to
the Visium manager is one
spoke of a broad federal investi-
gation of Mr. Blaszczak himself,
said the people familiar with
the probe. It is becoming one of
the most significant insider-
trading investigations involving
Washington’s political-intelli-
gence industry.
Mr. Blaszczak and his law-
yer didn’t respond to inquiries.
In a statement to the Journal
in 2014 given in connection
with a story it published that
year, Mr. Blaszczak said: “I
only use public information in
preparing all my reports,” and
“I am proud of my record, and
if needed, will vigorously fight
any false allegation.”
Visium, which hasn’t been
charged with wrongdoing, de-
clined to comment. When the
case was announced, Visium
founder and head Jacob Gott-
lieb said he was “deeply sad-
dened” by the events.
A CMS spokesman said the
agency “takes the protection
of sensitive information very
seriously, and employees un-
dergo regular training on how
to prevent the disclosure of
such information.” Employees,
he said, are taught to “answer
questions from the public us-
ing only publicly available in-
formation while safeguarding
non-public information.”
Other agencies, companies
and individuals in this article
declined to comment on the
record or didn’t respond to
inquiries.
Federal regulators and
prosecutors have spent years
examining whether political-
intelligence firms extract in-
formation from government
Political Intelligence at Work
A political consultant allegedly sent tips to a trader at a hedge fund, Visium, about a coming policy change
that affected home-health-care stocks the fund invested in, according to an SEC case against the trader.
That consultant was David Blaszczak, people familiar with the case said.
1 May 30, 2013 Blaszczak emails Visium and
says he is expecting Centers for Medicare &
Medicaid Services to propose a cut to Medicare
reimbursement rates for certain home-health
services of between ‘3% and 3.5%—but much closer
to 3.5%.’
$14 a share
1 2
13
12
11
10
9 the stock of Provenge’s maker,
8
30 31 03 04 05 06 07 10 11
May June
Between May 30 and June 27, SEC documents show, Visium increases certain short positions in two
home-health-care firms, decreases other short positions and purchases put options, betting the stocks
would decline…
…resulting in $285,000 in profits for Visium, SEC documents show.
Visium hasn't been charged with wrongdoing.
Souces: SEC documents; people familiar with SEC case
RADICAL
Continued from Page One
pushed hard for a consensus on
what type to promote.
Attendees gather with fea-
tured speakers in school class-
rooms or on the grass outside
to consider the year’s theme.
This year, it was anarchists in
the Spanish Civil War. A previ-
ous year, the question was
whether anarchists should be
anarchists in just their own
lives or should spread anarchy
in the lives of others.
In the closing vodka toast
last year, Mr. Kornilov ex-
horted: “I expect you all to go
out and behave by the highest
human standards, that is, like
anarchists.”
Every year, organizers also
form a volunteer brigade that
cleans up the Bakunin estate’s
employees and improperly
pass it to traders.
Tracking Mr. Blaszczak’s ca-
reer provides a peek into the
murky territory they are prob-
ing. The Wall Street Journal in-
terviewed scores of people
about the business of gathering
market-moving tips in Washing-
ton, including people who
worked with Mr. Blaszczak as
colleagues or competitors, and
filed more than two dozen
open-records requests with gov-
ernment agencies.
The review shows how Mr.
Blaszczak spent roughly a de-
cade working government con-
tacts for insights about coming
policy changes that roiled
health-care stocks and left his
competitors flabbergasted. He
has cooperated in the govern-
ment’s probe and could face
criminal charges, said people fa-
miliar with the probe.
Figuring out whether Mr.
Blaszczak broke the law could
be complicated, partly because
rules governing insider trading
in Washington don’t draw a
sharp distinction between mar-
ket-moving tips based on hard-
nosed research and insider in-
formation that is obtained
illegally from the government.
Last year, the SEC concluded
a lengthy investigation into
whether a political-intelligence
firm, Marwood Group, broke in-
sider-trading rules. Without
bringing insider-trading
charges, the SEC reached a set-
tlement in which the firm ad-
mitted to compliance failures
and paid a fine.
Uncanny knack
The Journal’s review didn’t
find evidence Mr. Blaszczak
might have broken insider-trad-
ing rules or that any CMS offi-
cial passed nonpublic informa-
tion to him or acted improperly
in dealing with him. Emails do
show he had personal access to
CMS officials who made the pol-
icy changes he had an uncanny
knack for knowing about before
the agency publicized them.
Mr. Blaszczak, with an under-
graduate degree in health ad-
ministration and a master’s in
public policy, interned at the
Food and Drug Administration
before joining CMS in 2000.
After five years, he left to
spend a decade working for a
string of policy-research
firms, most recently a firm he
founded, Precipio Health
Strategies.
He raised eyebrows among
regulators in early 2006 while
2 May 31 Visium agrees to a $100,000
annual contract with Blaszczak’s firm.
3 June 13 Blaszczak emails Visium a research
note updating the guidance, indicating the cut
would be between 3.25% and 3.5%.
4 June 27 CMS announces a 3.5% cut to the rates.
3 4
Amedisys
Gentiva Health Services
12 13 14 17 18 19 20 21 24 25 26 27 28 01 02 03 05
grounds. In its heyday, the man-
sion was a gathering place for
Russian literati. A plaque names
guests including writers Leo
Tolstoy and Maxim Gorky.
Now, the brigades shore up
the mansion’s rotting beams
and roof.
“Anarchists can be difficult
to unite,” said Nikolai Malinin, a
Ph.D. student from Moscow who
calls himself an anarcho-indi-
vidualist, one who avoids join-
ing anarchist groups. “But here,
there was a specific thing we
could work on—to try to keep
the house from collapsing.”
They have stabilized parts
of the house. In some years,
the repair brigades have fal-
tered when anarchists objected
to other anarchists giving
them direction.
A contested agenda might
have appealed to Bakunin, who
never left behind a calibrated
philosophy but inspired mil-
FROM PAGE ONE
David Blaszczak, pictured below at a conference in 2015, showed a knack for predicting policy
changes at Centers for Medicare and Medicaid Services, pictured above.
working at Washington Re-
search Group when he predicted
to clients that CMS would make
steep cuts in reimbursement
rates for procedures involving
medical-device companies, ac-
cording to people who were at
CMS then.
A few weeks later, the agency
did just that.
CMS, informed of Mr. Blaszc-
zak’s prediction, launched an in-
vestigation and dismissed sev-
eral employees allegedly
involved with the leak, said a
former CMS official involved in
the investigation. The SEC
looked into the matter and
spoke with Mr. Blaszczak over
the phone but never followed
up, a spokesman for Mr. Blaszc-
zak said in 2014; the spokesman
no longer represents him.
Afterward, CMS tightened
rules for how public officials
handled confidential infor-
mation.
Emails show Mr. Blaszczak
continued to correspond with
former CMS colleagues. He
sought meetings with offi-
cials over coffee, invited
them to brief small groups of
investors, offered VIP tickets
to a golf tournament hosted
by Tiger Woods and asked if
they were attending the an-
nual “CMS Orioles night out”
baseball game in Baltimore.
“We are able to give away
some free tickets and passes
to our hospitality tent and
skyboxes,” Mr. Blaszczak
emailed one agency official on
June 28, 2007. “Let me know
if you are interested—I can
July
THE WALL STREET JOURNAL.
lions with his peripatetic par-
ticipation in European revolu-
tions of the 1800s, when he
penned his famous phrase:
“The passion for destruction is
also a creative passion.”
His calls for upending order
made him a suspect of Kremlin
powers. In czarist Russia, he
was jailed until his teeth fell
out. Soviet leaders didn’t like
him much either, because of
his clashes with Karl Marx,
whom he called “from head to
foot an authoritarian.”
Bakunin’s fans expected a sea
change after the Soviet Union’s
1991 collapse, but were quickly
disappointed, Mr. Kornilov re-
called. A blueprint for a massive
park in the village was ignored;
it is tacked on Mr. Kornilov’s
log-cabin wall.
The Bakunin mansion, a
large part of which peasants
pried apart for firewood after
the 1917 Bolshevik Revolution
give you two tickets and
passes for Saturday. Our tent
includes air conditioning, free
food, open bar, tv’s etc.”
“It sounds like it is going to
be a great event,” the CMS of-
ficial replied, declining the in-
vitation.
In 2009, Mr. Blaszczak
joined a political-intelligence
firm, Potomac Research
Group, which worked for
roughly 100 Wall Street firms.
Late that year, he invited a
key CMS figure to speak at a
conference he organized to let
Wall Street investors speak
with agency officials.
“We plan on keeping the
meeting very small and expect
only 10-12 people total to at-
tend,” Mr. Blaszczak wrote in
a Dec. 16, 2009, email to Louis
Jacques, then head of the
CMS division that decided
whether the government
would pay for certain devices,
drugs and procedures.
Such meetings between
government officials and Wall
Street take place regularly.
Some securities regulators be-
lieve they are improper be-
cause investors shouldn’t have
better access to policy makers
than the general public.
When Mr. Jacques declined,
Mr. Blaszczak replied that one
of Mr. Jacques’s colleagues
“did some dinners with a com-
peting firm and a very small
group awhile back—so I
thought it was ok.”
Predicting a decision
In June 2010, Mr. Blaszczak
scored a coup predicting a ma-
jor coming decision by Mr.
Jacques’s unit. CMS was trying
to decide whether to pay for a
new prostate-cancer treatment,
Provenge, that cost $93,000. Mr.
Jacques’s unit would need to
open a formal review if it
planned to drop coverage, any
sign of which would be bad for
Dendreon Corp.
By early June, CMS officials
were leaning toward doing so.
Later that month, they sched-
uled the formal announcement
for June 30 after the close of
markets, CMS emails show.
Mr. Blaszczak beat them
to it.
On June 29, he alerted clients
at 12:42 p.m.: “Dendreon’s
Provenge Likely Being Consid-
ered for a Medicare NCD,” refer-
and which later was used as a
dormitory, began to crumble as
its owner, the regional govern-
ment, failed to renovate it.
The decay sparked those
first anarchist gatherings. Vol-
unteers began to converge each
summer to try to preserve what
was left. Mr. Kornilov moved to
the village in 1999 and two
years later began the readings.
A museum to the Bakunin fam-
ily opened in a corner of the vil-
lage school.
Attendance at the confer-
ences got a fillip two years
ago, when about 200 people
converged from as far as the
U.S. and Japan for Bakunin’s
200th birthday.
Russian anarchists of all
stripes have faced rising na-
tionalism and a crackdown on
demonstrations after the re-
turn of Vladimir Putin to
power in 2012.
And there have been dis-
THE WALL STREET JOURNAL.
agency to know. One justifica-
tion CMS would give for the
cuts, he said, was it had lowered
the estimate for treatment du-
ration to 30 minutes from 60.
On July 6, Mr. Blaszczak’s
firm, Potomac Research Group,
emailed clients that the big cut
predicted in his prior note
would likely be listed in a
chart. “In this chart, we antici-
pate CMS saying radiation
therapy centers will see
JONATHAN HANSON FOR THE WALL STREET JOURNAL
around a 20% reduction in the
CY 2013 proposed rule.” The
follow-up email was sent by a
member of Potomac’s sales
team under Mr. Blaszczak’s di-
rection, according to the email.
After markets closed that
day, CMS issued a 765-page
rule including an adjustment
of radiation time to 30 min-
utes. A chart on page 681
listed the cut: 19%.
In January 2013, Mr. Blaszc-
zak joined a health-care con-
sulting firm, Hillco Health,
now called ADVI Advisors. Un-
like previous employers, which
were in the political-intelli-
gence practice, his new firm
also represented health-care
companies before the govern-
ment as lobbyists.
Federal probe
That May, he allegedly pro-
vided the home-health-care tip
DJIMAGES.BIZ
that is part of the federal cases
involving Visium. In those pend-
ing cases, prosecutors charged
another Washington consultant
ring to a formal review. with providing Visium tips on
Dendreon shares fell nearly impending drug approvals from
10% that day. After CMS re- the FDA, where he once worked.
vealed its decision on June 30, That consultant pleaded
shares plunged an additional guilty and admitted he misled
17% in after-hours trading. his former colleagues, who
Mr. Blaszczak’s call set off believed he was talking to
alarms, according to emails them as a lobbyist for a drug-
reviewed by the Journal from industry group rather than on
the SEC investigation into investors’ behalf. Another Vi-
Marwood. sium trader committed sui-
“Guess Blasczak[sic] was cide after he was charged.
right. Clearly he is getting draft Government rules allow offi-
releases as they circulate,” one cials to talk more freely with
Marwood employee emailed an- lobbyists than investors. CMS
other. “He is publishing notes officials who previously rejected
on singular binary events—that Mr. Blaszczak’s invitations,
are supposed to be secret—that when he was strictly represent-
move the price of publicly ing investors, welcomed discus-
traded equities by ten percent,” sions when they involved his
the colleague responded. lobbying business, emails show.
“He could bring serious le- When he emailed CMS offi-
gal scrutiny to all firms in cials about an issue involving
our world,” a Marwood offi- privately held HeartFlow Inc.,
cial emailed a colleague. “It a company he represented,
just seems to have a potential the officials readily shared in-
to be bad—and have collat- formation. “Thanks for the re-
eral damage.” ply—it is very helpful,” Mr.
That September, CMS sent a Blaszczak wrote in a July 25,
memo to its employees reiter- 2013, email to one official.
ating rules on not disclosing In August, he finally landed a
Figuring out whether Mr. Blaszczak broke
the law could be complicated.
nonpublic information about meeting with the agency’s Mr.
pending decisions. Jacques. “Thank you for partici-
Mr. Blaszczak continued to pating in the meeting today and
have regular contact with CMS we really appreciate you being
officials, emails suggest. In No- candid with us,” he emailed Mr.
vember, he emailed a CMS offi- Jacques Aug. 30, 2013. “If you
cial, referring to a technical cal- don’t mind, we may have some
culation CMS uses to make follow-up questions for you.”
payments: “does the CF for 2011 Mr. Jacques replied: “Happy
listed in the reg ($25.5217) take to chat. Have a good holiday.”
into effect the upcoming 24.9% While fishing for informa-
cut if congress does not act by tion, Mr. Blaszczak sometimes
December 1?” dangled private-sector job of-
“Yes,” the official responded. fers. Such offers, if they are
In November 2011, he sent an viewed as a quid pro quo by
email: “do you have some time prosecutors, can be the linch-
Friday for a call to answer some pin of insider-trading cases,
general questions I have about securities lawyers say.
ced?,” referring to a process Mr. Blaszczak sent a Sept.
CMS uses to determine whether 24, 2013, email with the sub-
to reimburse companies. “Or ject line “interest in position?”
able to grab lunch?” The CMS to a CMS employee whose
official responded: “Happy to name was redacted; CMS said
answer general questions.” it wasn’t Mr. Jacques. “My
Mr. Blaszczak continued firm is looking to hire a per-
showing an ability to predict son with CMS experience in
the agency’s moves ahead of payment and/or coverage,” he
time. In a July 2, 2012, email to wrote. “You fit the description
clients, he predicted “signifi- of someone we are looking to
cantly higher than expected” hire.” The employee declined.
funding cuts for a radiation In 2014, Mr. Blaszczak’s
therapy and included details of firm hired Mr. Jacques. A few
the coming CMS decision diffi- months later, Mr. Blaszczak
cult for people outside the left the firm.
agreements among anarchists
about the way forward, said
Mr. Malinin, the Ph.D. student.
Russia’s largest anarchist
The trip is worth it for the
likes of Giulio Spiazzi, who
came this year from Verona, It-
aly, to deliver a lecture on anar-
group, he said, was riven by chist education.
dissent between anarcho-activ- “There is a big history of
ists and anarcho-platformists thinkers here, and that is won-
who wanted the group “to be derful,” said Mr. Spiazzi, who
more organized and rigid like runs a libertarian-leaning
in a party model.” school for children outside Ve-
The village may be an incu- rona. He noted that “for the
bator for free thought today, moment they do not have the
Mr. Kornilov said, because the opportunity to come down to
nearest police station is nearly the ground and practice.”
25 miles away over badly The museum, set aside in
paved roads. three rooms of the village
Attendance is also limited school, has shifted sails amid
by Mr. Kornilov’s leanings to- flagging interest in anarchy, de-
ward anarcho-primitivism, voting less space to Bakunin
which eschews many trappings and more to his better-behaved
of civilization. He has only one siblings and cousins, some of
outhouse that can be over- whom had successful careers in
whelmed by too many guests. the arts and medicine.
The school allows a few guests “In Russia there is this fear
to stay in a dormitory. Privi- of anarchy,” said Mr. Kornilov.
leged ones get to sleep in Mr. “I don’t know where it comes
Kornilov’s hayloft. from.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | A9
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

ARTS & ENTERTAINMENT

A Garden’s Geometry of Illusion

MASTERPIECE
TOM L. FREUDENHEIM
THERE’S SOMETHING a tad uncomfortable
about sensing that power is the primary
message in a garden, but at Château de
Vaux-le-Vicomte, a mere 30 miles from
Paris, it’s difficult to shake that sensation.
While not as vast as Versailles, for which
the landscaping was the inspiration, the gar-
den at Vaux-le-Vicomte is one of Europe’s
most perfect outdoor confections. The
happy flâneur, sauntering through on the
garden alone, might miss out on all the in-
trigue that forms a part of its history. Nico-
las Fouquet (1615-1680), its primary patron,
has even served as inspiration for literature
(Alexandre Dumas père’s “The Vicomte de
Bragelonne”) and film (Roberto Rossellini’s
“The Rise of Louis XIV”).
Fouquet was a protégé of the powerful
Cardinal Mazarin (1602-1661), who virtually
ruled France before Louis XIV (1638-1715)
reached his majority. A man of significant
personal wealth, Fouquet purchased the
property of Vaux-le-Vicomte in 1641, when
he was only 26 and a member of the Paris
Parliament. In 1650, already a discerning pa-
tron as well as Louis XIV’s finance minister,
Fouquet commissioned architect Louis Le
Vau to design his new château; Le Vau then
invited his friends, painter Charles Le Brun
and landscape designer André Le Nôtre to The garden at
create what remains a sublime and balanced Château de

ALAMY
composition. To accomplish so grand a Vaux-le-Vicomte
scheme, Fouquet purchased several nearby
villages for additional land and apparently
employed their former inhabitants (reput- fronts of the main château, move the eye just as Fouquet’s team of Le Vau, Le Brun and tourists. Although the garden is the crown
edly 18,000 people) to service the expanded from a virtually treeless park plateau of Le Nôtre were engaged by the king that very jewel of the site, the château itself warrants
property. All of this was accomplished in a walks and fountains, past a remote tree- year to design his much grander (if far less attention for its elegance and for a symme-
relatively brief period (c. 1658-61). filled rise through which there is yet an- beautiful) palace and gardens at Versailles. try that harmonizes with the garden and is
It’s not always easy to tease apart a large other view whose distance can’t be gauged. But Fouquet’s extravagance didn’t sit well essential to the indivisible compositional
and complex work of art, given the extraor- As they simultaneously expand the park’s with Louis XIV, who suspected that the royal perfection—a reflection of the collaboration
dinary equilibrium among its various horti- panorama and envelop it with their elegant treasury might have been involved. Louis had of extraordinary design talent. Some visitors
cultural and architectural elements. Yet Le embrace, trees play a major role in defining also begun to favor Jean-Baptiste Colbert may be tempted to skip the main building,
Nôtre’s garden invention remains the most the sublime experience of moving through (1619-1683), another Mazarin protégé, who but a trip to the cupola remains essential.
striking aspect of Vaux-le-Vicomte. The ele- the vast spaces. had Fouquet arrested. Voltaire, a century Viewed from above, the garden is as much a
gant parterres are deceptively simple geo- This is a tribute to Le Nôtre’s genius in later, is quoted as having remarked, “On 17 wonder as when one moves through it, with
metric designs that appear to be strictly manipulating perspectival elements. While August, at six in the evening Fouquet was the the added value of seeing more of the geo-
symmetrical. On closer examination one no- the pools and fountains required a canal sys- King of France: at two in the morning he was metric design that underpins its perfection.
tices that the symmetry is partially illusion- tem, the designer engineered the essential nobody.” Indeed, he died in prison. The encounter with Vaux-le-Vicomte’s
istic, with slight variations in fountain de- primary canal to be hidden from our long Fouquet’s widow eventually recovered history reminds us that gardening itself is
signs and plantings. view. So-called anamorphosis abscondita uses the property and lived there until selling it also always a power struggle—man and na-
Illusion, and even occasional visual trick- geometry to create illusions of spatial per- in 1705. A relatively limited subsequent ture figuring out who’s in charge. Time, the
ery, is part of the seductive game here, as is spective that alter the ways in which we un- ownership history appears to have kept real arbiter of who wins here, declares visi-
the gradual realization of just how much land derstand the space we inhabit, and Le Nôtre Vaux-le-Vicomte from total ruin. The family tors as the victors.
must have been moved, water redirected, and was a master of these visual manipulations. of the Count and Countess de Vogüé, de-
seemingly inconsequential structural ele- The inaugural celebration on Aug. 17, 1661, scendants of 19th-century owners, now own Mr. Freudenheim, a former art-museum
ments built to accomplish the entire project. featured lavish festivities. The event served the property and maintain it beautifully, director, served as the assistant secretary
Expansive vistas, such as those on both as a model for Louis XIV’s subsequent fêtes, while keeping it comfortably accessible for for museums at the Smithsonian.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 1365 Unscrambled,
14
PUZZLE
-10
-5 15 16
in a way CONTEST
Riga 66 “I’m With Her” or
Glasgow
g 0 “Make America
Moscow
osco 17 18
Copenhagen
Co
C p h g 5 Great Again” 30 Lacking color
10 19 20 21 67 Stan Getz’s 31 Light on a table,
Dublin
D b 15 instrument
Berlin
li 22 23 24 25 26 27 say
Amsterdam
A t d Warsaw
arsaw 20 Down 35 Citation shortener
LLondon
o d 25 28 29 30 31 1 Speed test 36 Art meant to
Brussels Frankfurt
kf 30
Kiev 32 33 34 35 36
2 HHH, to Greeks shock
Prague 35
3 Way off the road 38 Block brand
Munich
i h
Paris 37 38 39 40 4 Become available 40 Sign of approval
Vienna
V Warm
Budapest
d p
emotionally 42 Country on two
Geneva 41 42 43 44
Cold 5 Digital location continents
Milan Bucharest
h Stationary 45 46 47 6 Brief movement 43 It tells you if your
7 Novelist who balance is off
48 49 50 51 died in Milan in 46 Conger catcher
Showers
Rome Istanbul
t b 52 53 54 55 56 57 February 47 More like a
Madrid
d id Rain 8 Return address Cirque du Soleil
LLisbon
b
58 59 60 61 62 63 writer performer
T-storms 9 Video format 48 Data
64 65
Algiers
T i
Tunis Athens
Ath
Snow
10 Fancy container 49 Drew
66 67 11 Teetotaler’s Barrymore’s
Flurries counterpart grandaunt
Rabat
b 50 Treeless plain
12 Gentle cycle
Ice GRINNING FROM EAR TO EAR | garments 53 Name in the
Global Forecasts Today Tomorrow Today Tomorrow By Matt Gaffney 13 Short jackets “Hail, Caesar!”
City Hi Lo W Hi Lo W City Hi Lo W Hi Lo W 14 A thousand kilos credits
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; Geneva 28 17 pc 21 13 t Ottawa 30 17 s 32 20 pc The answer to this 21 It became Spike 41 One of the 55 “What a shame!”
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice
18 Trattoria drinks
Hanoi 27 26 r 31 25 t Paris 25 15 sh 24 14 sh week’s contest 22 Like Charlie, on original Ramones
23 Andre Agassi or 56 Big cousin of a
Havana 33 23 t 34 23 t Philadelphia 33 23 s 31 24 pc crossword is the TV’s “Charlie’s 43 Cherbourg chum butte
Today Tomorrow Hong Kong 30 27 t 31 27 t Phoenix 40 28 s 39 28 s Harry Reid
two non-theme Angels” 44 Hubbub
City Hi Lo W Hi Lo W Honolulu 30 24 pc 30 24 pc Pittsburgh 28 20 t 29 21 pc 24 In the attic, 57 Mythical
answers in this grid 26 Pool trick 45 Song like “Ode to
Amsterdam 24 16 pc 21 15 sh Houston 32 24 t 32 24 t Port-au-Prince 37 21 t 37 21 pc maybe boundary river
Anchorage 18 12 c 18 14 c Istanbul 31 23 s 31 24 pc Portland, Ore. 39 19 s 38 18 s that could be 28 How much more My Swiss Army 25 Govt. agency 59 It’ll keep you
Athens 34 24 s 34 24 s Jakarta 32 25 sh 31 24 sh Rio de Janeiro 29 23 pc 31 21 r combined to make a you sold that Knife”? with a flower logo from getting cold
Atlanta 31 22 c 30 22 t Johannesburg 22 10 s 23 6 s Riyadh 42 27 pc 42 25 s fifth theme entry. marionette for 48 Serious criminal 26 Dolphin
Baghdad 44 24 s 45 25 s Kansas City 30 18 t 24 13 t Rome 28 20 pc 29 20 s feet
Baltimore 33 21 s 30 22 pc Las Vegas 39 27 s 40 27 s Salt Lake City 34 18 s 32 18 s Across than it cost to 51 Arabian supporter, often 60 Org. featured in
Bangkok 34 28 c 33 27 c Lima 21 16 pc 22 16 pc San Diego 26 20 pc 26 19 pc build? Peninsula native 27 Court fig. “Patriot Games”
1 Detours
Beijing 31 23 c 32 23 s London 21 15 r 21 15 sh San Francisco 22 14 pc 23 14 pc 32 Solid-rock 52 Hartsfield- 28 Election year org. 61 “Hail, Caesar!”
Berlin 25 17 s 27 15 t Los Angeles 28 17 pc 28 17 pc San Juan 32 26 pc 32 25 pc 9 Revolutionary arm connection Jackson’s airport 29 Having already
Bogota 19 9 t 20 8 t Madrid 35 20 s 34 18 s Santiago 15 0 s 19 4 s 15 Not free 62 Fellows
33 It broadcasts in code had an owner 63 On the side of
Boise 34 16 s 33 16 s Manila 31 26 t 31 26 t Santo Domingo 33 23 t 33 23 pc 16 Without delay
Boston 28 20 s 28 21 s Melbourne 15 6 r 13 9 sh Sao Paulo 27 19 pc 25 11 r many foreign 53 Klinger, e.g.
Brussels 25 15 pc 21 14 sh Mexico City 22 15 t 23 14 t Seattle 36 17 s 34 17 s 17 Gathering with langs. 54 Scottish tops Previous Puzzle’s Solution
Buenos Aires 19 5 pc 13 0 pc Miami 32 24 pc 32 25 pc Seoul 34 26 c 33 25 c seminars like 34 On the schedule 58 Promotional C OMA S WA I T S L A P
Cairo 35 24 s 35 24 s Milan 29 21 pc 28 19 t Shanghai 36 29 pc 37 29 pc “Oasis Etiquette”? 37 Last place in the literature in an A D O R E A L D A T E R I
Calgary 21 11 c 24 10 s Minneapolis 25 16 c 21 13 sh Singapore 30 26 t 32 26 t MO N T E R R E Y K J A V I K
Caracas 30 25 pc 31 25 pc Monterrey 33 21 t 33 22 pc Stockholm 18 11 t 21 13 pc
19 Good source for standings ancient Roman P R A I S E D L E E T I D E
Charlotte 33 22 t 32 23 t Montreal 29 17 s 31 21 pc Sydney 23 11 s 18 9 s scores 39 “The Joy Luck showroom? S R A P S I
AM S T E R D AMA S C U S
Chicago 31 21 t 26 16 t Moscow 27 18 pc 24 15 sh Taipei 34 26 pc 33 26 pc 20 Enjoy Club” author 64 Campus security? MA C E D AMO R E N U B
Dallas 30 23 t 29 22 t Mumbai 30 26 sh 30 26 sh Tehran 36 20 s 35 20 s O N U S T R A C T T I M E
Email your answer—in the subject line—to crosswordcontest@wsj.com
s

Denver 24 9 t 24 10 pc Nashville 27 22 t 29 22 t Tel Aviv 31 24 s 31 24 s S I B WE L S H C R O A T

C A R A C A S A B L A N C A
Detroit 30 21 pc 30 19 c New Delhi 34 28 t 34 27 t Tokyo 31 25 pc 30 26 pc by 11:59 p.m. Eastern Time Sunday, August 21. A solver selected at random A N T A I D
Dubai 44 33 s 42 34 s New Orleans 32 25 pc 32 25 pc Toronto 30 20 s 30 20 pc will win a WSJ mug. Last week’s winner: Charlotte Reed, Arlington, MA. H A I R D O S L I N E A G E
Dublin 19 14 t 18 13 t New York City 31 24 s 31 24 s Vancouver 26 16 s 26 16 s I N D I A N A P O L I S B O N
Edinburgh 17 12 r 19 12 t Omaha 30 17 t 24 13 c Washington, D.C. 33 24 s 32 24 pc
Complete contest rules at WSJ.com/Puzzles. (No purchase necessary. K N O T I V E S C U B E D
Frankfurt 28 16 pc 24 15 c Orlando 33 24 t 33 24 t Zurich 26 14 pc 22 12 t Void where prohibited. U.S. residents 18 and over only.) E A S Y C E N T S P A R S

THE NUMBERS GAMES

©2016 Dow Jones & Co. Inc. All rights reserved. 6DJ4143

10,000 athletes. 200 countries. One source.

This summer in Rio, go beyond the medal count with interactive
graphics, predictions and analysis from The Wall Street Journal.
Read now at WSJ.com/Rio2016
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
‘We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.’ —Ronald Reagan
The No-Bailout Principle
The euro may be failing but currency unions can work just fine without fiscal or political union
The Euro
By Joseph Stiglitz
Norton, 416 pages, $28.95
BY BENN STEIL
BACK IN February 2010, with the
Greek government’s borrowing costs
climbing to new heights, Nobel
Prize-winning economist Joseph
Stiglitz—then an adviser to the
Greek prime minister, George Papan-
dreou—called for eurozone authori-
ties to intervene in markets and
“teach the speculators a lesson.”
Greece had no need of a bailout, he
said, no need of the International
Monetary Fund (IMF). “There is
clearly no risk of a default.”
Three months later, Greece ac-
cepted its first bailout package,
amounting to $120 billion. To date it
has received financial assistance, in
the form of loans and write-offs for
private-sector bondholders, amount-
ing to $450 billion.
Reading Mr. Stiglitz’s “The Euro:
How a Common Currency Threatens
the Future of Europe,” one gets no
sense that he ever considered the
Greek tragedy anything other than
inevitable. “Successive govern-
ments,” he writes, “had run uncon-
scionable deficits.” And the euro-
zone, which Greece joined in 2001,
was an unforgiving home for such a
spendthrift. It was built on the idea
of each state for itself in fiscal af-
fairs; there would be no bailouts.
The belief was that European gov-
ernments would run their economies
so as to avoid any risk of the finan-
cial markets cutting them off. And
just to make extra-sure, legally bind-
ing deficit limits were imposed.
But even fiscally prudent coun-
tries like Ireland and Spain blew
through these limits when property
busts wrecked their banks and sent
unemployment soaring after 2008.
Mr. Stiglitz is clear on who and what
are at fault for the suffering that fol-
lowed: Germany and its euro, cre-
ated in the Prussian image of austere
and merciless self-discipline.
“Truth,” Oscar Wilde said, “is
one’s latest mood.” And Mr. Stiglitz’s
mood is very different now than it
was in 2010, when he was advising
Greece. Then, saving the country
was a matter of burning “specula-
tors.” Today, the crisis was inevita-
ble. “Europe’s travails,” he tells us,
are owing above all to “one underly-
ing mistake: the creation of the sin-
gle currency.”
“The Euro” is Mr. Stiglitz’s 19th
book since he resigned as the World
Bank’s chief economist in 2000 after
a stormy three-year tenure. It sur-
veys the continuing crisis, makes a
case that the euro was misconceived
and that present policies are only
making things worse, and charts “a
way forward” on reform. What
FICTION CHRONICLE: SAM SACKS
JACQUELINE Wood-
son’s “Another
Brooklyn” (Amis-
tad, 175 pages,
$22.99) begins with
a funeral. August,
the narrator, has returned to New
York to bury her father. A depart-
ment store clerk and convert to the
Nation of Islam, he had raised Au-
gust and her brother alone. His well-
meaning deception about her absent
mother drove a wedge between
them, and August has built a life far
from Brooklyn. But the death creates
a hole through which the recollec-
tions of those years come rushing
back.
They return her to the Brooklyn
neighborhood of Bushwick in the
1970s, and to an apartment with “a
yellow Formica table and chair set in
the kitchen, small beds for my
brother and me in the single bed-
room, and a dark green pullout sofa
in the living room. Every evening, af-
ter my father kissed us good night,
we heard the squeal of springs as he
lifted the sofa into a bed for himself,
pillow-less and draped with a thin
floral bedspread.”
The memories, arranged in short,
discrete paragraphs of fine-cadenced
prose, evoke the corner bodega and
the handball court, the bent hypo-
dermics in the stairwells and the
roaming junkies who prompt August
stands out, however, is the relentless
indictment of past and present stew-
ards of the eurozone, whom he
charges with committing every pos-
sible sin against progressive eco-
nomic principles. In this, the book
reads much like Mr. Stiglitz’s earlier
ones on globalization and inequal-
ity—only now with the euro as chief
villain.
There are, first, the sins of com-
mission—policies imposed on coun-
tries in crisis to contain deficits and
increase labor-market flexibility.
These have fueled inequality, which
has in turn—Mr. Stiglitz insists—
hurt growth. This is a proposition
that even fellow Nobel laureate and
liberal icon Paul Krugman doesn’t
buy. But no matter.
A euro in a Greek bank is clearly worth less than a
euro in a German bank. The Greek bank and the Greek
government are simply more likely to go belly-up.
Then there are the sins of omis-
sion—the policies that would have
helped but were never pursued. Mr.
Stiglitz tells us, for example, that the
eurozone’s “crisis countries” needed
reforms “responding to the reality of
climate change.” And the green in-
vestments that they should have
made with Northern Europe’s money
“would have improved current ac-
counts by lowering the cost of en-
ergy.” This is a proposition that even
President Obama rejects, having
openly acknowledged that carbon-
emission reduction schemes are
likely to raise fuel and electricity
costs, not lower them. Again, just a
detail.
Mr. Stiglitz gives the sinners so-
briquets like “neoliberal,” “market
fundamentalist” and “gold bug.” He
alleges that some of them—name-
Brooklyn Memories
and her friends to walk the streets
with knives tucked into their knee-
socks. As she matures—and Bush-
wick is transformed by blockbusting
and white flight—we find her wear-
ing platform boots and dancing with
her boyfriend to Stevie Wonder, but
always dreaming of escape.
Ms. Woodson has had a fruitful
career as a young adult author, and
though “Another Brooklyn” is being
billed as her first novel for adults in
two decades, it will still speak most
powerfully to younger readers. The
The handball court, the
corner bodega, the white
flight, the hypodermic
needles in the stairwells.
book communicates a sense of long-
ing and loneliness that will instantly
resonate with teenagers of a certain
introspective temperament. “I knew
I was lost inside the world,” August
thinks, “watching it and trying to
understand why too often I felt like
I was standing just beyond the
frame—of everything.”
Older readers may wish that more
irony and complexity shaded these
reminiscences. But the purpose of
Ms. Woodson’s touching memorial-
BOOKS
less, of course—have confessed their
sins to him. “Increased unemploy-
ment in the crisis countries,” he
says, was actually part of their mas-
ter plan. “Secretly, many in the
Troika” of Greece’s creditors—the
European Commission, the European
Central Bank (ECB) and the IMF—
“thought of this as almost a neces-
sary means to the long-run end of
making the euro work.” He even
hints at official corruption in the
currency’s management, reminding
us that ECB president Mario Draghi
“had spent years at Goldman Sachs”
(three, to be exact).
Even for the sympathetically
minded, the book will be a bit of a
repetitious slog. But for patient
readers, there are moments of
amusement. These come particularly
when Mr. Stiglitz plays at evenhand-
edness. He suggests, for example,
that Europe needs to embrace a “di-
versity” of views. “Some societies,”
he explains, “may prefer more stabil-
ity and better systems of social pro-
tection, and greater expenditures on
public education and health; others,”
in contrast, “may be more commit-
ted to preserving existing inequali-
ties.” That’s right; some people want
to live in a Great Society, while oth-
ers want to stop upward mobility
and social progress.
But for all the polemic, many of
Mr. Stiglitz’s most damning observa-
tions are on target. He is right that
Germany’s insistence on Greece
slashing spending and raising taxes
in the midst of plummeting output,
in return for new loans with which
ization is to return you to that age
when experience cuts deep and “pain
skips over reason, aims right for
marrow.”
When Aaron Thier’s “Mr. Eter-
nity” (Bloomsbury, 258 pages, $26)
begins, in the inauspicious year of
2016, documentary filmmakers are
interviewing a wizened Floridian
who claims to be around 560 years
old. He says he came to the Ameri-
Friday - Sunday, August 19 - 21, 2016 | A11
GETTY IMAGES
to pay off the old, has been a cata-
strophic economic, social and politi-
cal failure. Piling more debt on bank-
rupt nations doesn’t work—it didn’t
work after the last century’s two
world wars, and it isn’t working
now. Germany, of all nations, should
know this.
The bailout doesn’t even merit
the term “aid,” since the self-interest
was so transparent. In March 2010,
two months before the announce-
ment of the first Greek bailout, Eu-
ropean banks held $149 billion of
Greek debt: $62 billion of this was
French; $37 billion was German. The
$120 billion in Troika loans to
Greece was therefore largely a back-
door bailout of European banks.
French ones were subsequently able
to eliminate almost all of their Greek
exposure by selling bonds, allowing
them to mature and then taking par-
tial write-offs in 2012.
But the Greek saga, however
tragic, doesn’t in the end tell us that
much about the euro’s original sins.
Mr. Stiglitz writes that “Greece
would likely not have borrowed in
German currency” had it remained
outside the eurozone, “precisely be-
cause it (and its lenders) should
have been aware of the risk that that
entailed.” This is nonsense. Develop-
ing countries have long borrowed
massively in U.S. dollars despite the
risks to them and their lenders. And
in 2000, a year before Greece joined
the eurozone, 79% of outstanding
Greek debt was already in euros—
and only 8% in drachmas. There
would have been a debt crisis irre-
spective of whether Greece adopted
the single currency as its own.
There are equally powerful rea-
sons to question Mr. Stiglitz’s cen-
tral criticisms of the eurozone. For
example, did the European Central
Bank’s “mandate to focus only on in-
flation” really cause it to pursue too
tight a monetary policy? The bank’s
cas with Columbus and has spent the
centuries seeking his lost love Anna
Gloria. He calls himself Daniel Defoe.
“Mr. Eternity” documents “Old
Dan’s” life both past and future. The
narrative is broken up into short
chapters and spliced together non-
ISTOCK/GETTY IMAGES
chronologically. In 1560, Defoe is a
conquistador searching for the fa-
bled city of El Dorado. In 1750, we
find him—“an old man like a hat-
mandate is to target inflation “be-
low, but close to, 2%.” Inflation has
been below that level for the past
three and a half years and is cur-
rently near zero. If ECB policy is too
tight, it is clearly not because it has
been slavishly meeting its mandate.
It has been moving farther and far-
ther away from it.
At times, Mr. Stiglitz wants to
have his cake and eat it too. He criti-
cizes the ECB for “resist[ing] quanti-
tative easing (QE) . . . long after poli-
cymakers in the United States and
Japan had augmented their tool kit
with QE.” Yet he argues elsewhere
that the most important effect of QE
has been negative—contributing to
“growing inequality,” which (he
says) hurts growth.
Mr. Stiglitz believes that for a
monetary union like the eurozone to
succeed it needs a political, fiscal
and banking union. In the U.S., a
dollar in an Arkansas bank is as
good as a dollar in a New York bank
because each is protected by credi-
ble federal deposit insurance. A euro
in a Greek bank, by contrast, is
clearly worth less than a euro in a
German bank. The Greek bank and
the Greek government insuring it
are more likely to go belly-up. Greek
euros are also more likely to be
forcibly turned into drachmas than
German euros—the way U.S. dollars
in Argentine banks were turned into
pesos in 2001.
It is worth recalling, though, that
at that very moment, while Greece
was joining the euro, Ecuador and El
Salvador were unilaterally installing
the U.S. dollar as their sole currency,
and it has remained so securely ever
since. There was, and has been, no
support from the United States—no
political, fiscal or banking union.
Currency unions can work with just
a credible “no bailout” principle. The
problem is that the principle has not
been upheld in the eurozone.
Still, it is hard to deny Mr.
Stiglitz’s conclusion that “the euro-
zone as a whole has done poorly.”
“The lesson,” as he sees it, “is that
markets are complex institutions
[and that] simplistic tinkering, based
on ideology rather than a more pro-
found appreciation of how markets
actually work, without a deep under-
standing of their complexities, can
lead to disastrous outcomes.” So if
only Joseph Stiglitz could control
the creation and distribution of
money, in the service of “societal
well-being,” the world would be a
better place. But until then, we have
the consolation of knowing that he
will write more books to remind us.
Mr. Steil, director of international
economics at the Council on For-
eign Relations, is the author, most
recently, of “The Battle of Bretton
Woods: John Maynard Keynes,
Harry Dexter White, and the Mak-
ing of a New World Order.”
stand with eyes”—aiding an escaped
slave. In 2200 he sails the channels
of an America devastated by global
warming. In 2500, as the ruined
country moves toward reunification,
Defoe is himself sold into slavery.
Our deathless hero rides out the
cycles of history by spinning yarns.
He has seen marvels, but he’s also a
mischievous liar, and the fun of this
wily book is in untangling the truth
from his trolling fabrications. “You
might be interested to know that I
killed Magellan,” he tells the docu-
mentarians. “I beat him to death
with a cuirass in the surf off Mac-
tan.” He also says that Indians gave
him medicine to regrow an ampu-
tated foot. No one believes him, but
then, in 2200, no one will believe
that there were once whales.
Mr. Thier’s dizzying time-travels
will inevitably call to mind David
Mitchell’s “Cloud Atlas,” and the
danger of such books is that they
tend to grow solemn and sanctimo-
nious as they peer into the future.
Happily, “Mr. Eternity” remains play-
ful even as it relates catastrophe. To
the immortal old man, human fate is
more absurd than tragic. Longevity
makes a mockery of foresight, and
the more he sees the less he really
knows: “Nothing will happen but
what will happen. The world exists
for a reason and we must always
wonder what it is.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Friday - Sunday, August 19 - 21, 2016
‘A bookstore is one of the only pieces of physical evidence we have that people are still thinking.’ —Jerry Seinfeld
Seinfeldia
By Jennifer Keishin Armstrong
Simon & Schuster, 307 pages, $26
BY EDWARD KOSNER
EVERYONE HAS A favorite episode
or moment from the “Seinfeld”
show—Jerry’s puffy pirate shirt and
his suede jacket or his encounters
with the close-talker and the woman
with man hands; the impermeable
maitre d’ at the Chinese restaurant;
Elaine’s spastic dancing or deciding
whether a potential beau was worth
the investment of a precious, discon-
tinued birth-control sponge; Kramer’s
at-home talk-show set; George’s mor-
tifying “shrinkage” after a dip in a
chilly pool or the time he quit his job
with a tirade, then showed up for
work the next day as if nothing had
happened. Yada, yada, yada.
Not to forget the surly mailman
Newman, J. Peterman or the Soup
Nazi or Festivus and Del Boca Vista,
Jerry’s parents’ Florida condo com-
NBC/GETTY IMAGES
munity, or Uncle Leo and his son, the
star of the Parks Department. All
were once fodder for Friday-morning
water-cooler conversations and now
generate internet chatter even though
the last original episode appeared
more than 18 years ago.
“Seinfeld” ran 172 episodes, most
of them half-hours (actually 22 min-
utes), over nine seasons, after the pi-
lot in July 1989. There was hardly a
dud, except for the hourlong jailhouse
finale watched by 76 million people
and panned by nearly every one of
them. The program is universally
ranked among the best sitcoms in TV
history, along with “I Love Lucy,”
“The Honeymooners,” “M*A*S*H,”
“The Mary Tyler Moore Show,”
“Cheers,” “Friends” and “The Simp-
sons.” TV Guide once rated it simply
the best show ever, with “The Sopra-
nos” a close second.
The series made Jerry Seinfeld
and his collaborator, Larry David—
one a successful stand-up comic, the
other a legendary flop—unimagin-
ably rich. The other stars—Jason Al-
exander as George, Michael Richards
as Kramer and Julia Louis-Dreyfus as
Elaine—made so much money that
they would never have to work
again, although all tried their own
sitcoms, and Ms. Louis-Dreyfus has
had two hits, reversing the supposed
“curse of Seinfeld.”
Hardly “a show about nothing,”
despite the enduring cliché, “Sein-
feld” offered obsessively close obser-
vation of the frustrations, annoy-
ances and idiocies of the everyday
life of 30-somethings in a narrow
slice of Manhattan. Yet it was so
smart and compulsively entertaining
that its very provincialism entranced
At the Birth of Modern Ballet
Wilde Times
By Joel Lobenthal
ForeEdge, 312 pages, $35
BY JUDITH FLANDERS
THE LIFE AND WORK of George Bal-
anchine, founder of the New York City
Ballet and choreographer of genius, is
hardly unknown territory: The Library
of Congress catalog lists nearly 300
titles exploring his art, his dance
company, his life and even his cat.
(Mourka was trained to leap balleti-
cally, and a book illustrating her pho-
togenic skills has duly been cat-
alogued.) Joel Lobenthal, associate
editor of Ballet Review, has seemingly
followed a more conventional path:
“Wilde Times” is ostensibly a biogra-
phy of an early Balanchine dancer, Pa-
tricia Wilde. But in truth the author
uses her career to chart the unfolding
of the New York City Ballet’s signa-
ture style and the creation of the pro-
totypical “Balanchine dancer.”
Without belaboring the point, Mr.
Lobenthal portrays a dance world
that has vanished. Wilde, by birth Ca-
nadian, moved to New York to study
dance at the shatteringly young age of
14, following the path set by her sis-
ter Nora, soon to join the Ballet
Russe. By 1945, the 17-year-old Ms.
Wilde had joined the same company.
Ms. Wilde’s adolescent experience
with the Ballet Russe saw her on a 79-
city tour, during which it was entirely
routine to give both matinee and eve-
ning performances, before rehearsing
after the final curtain, and then trav-
eling to a new city the next morning.
More importantly for her future,
Nothing To It
viewers around the country and,
when reruns started, the world. Like
most genuinely excellent achieve-
ments, it looked easy and inevitable.
It was just the opposite, as Jenni-
fer Keishin Armstrong shows in her
savvy and engaging “Seinfeldia”—a
discerningly reported account of what
turned out to be the most successful
and lucrative television program of all
time and its impact on TV and the
rest of pop culture.
“Seinfeld” was born in the late
1980s when Jerry, who had leveraged
his act in comedy clubs around New
York into guest spots on Johnny Car-
son’s and David Letterman’s late-night
shows, got a feeler from NBC about
doing a show of his own. He sought
out Larry David, with whom he’d
worked in the clubs, a famously iras-
cible comic renowned for walking out
on the stage, dismissing the audience
with a “Nah, I don’t think so” and
stalking off. With his receding hairline
and two clumps of wild gray hair, Mr.
David looked, said pal Richard Lewis,
like “a combination of Bozo and Ein-
stein.” He’d been a writer at “Satur-
day Night Live” for the 1984-85 sea-
son but had gotten only one sketch on
the air—and that at 12:50 a.m., just
before the show signed off.
The pilot was called “The Seinfeld
Chronicles,” and it had some resem-
blance to the later hit. Jerry played
a version of himself. The Kramer
character was based on one of Larry
David’s oddball neighbors whose real
name was Kramer. Jason Alexander
in the summer of 1945 Ms. Wilde
worked with a pickup company Bal-
anchine took to Mexico City, where
she danced in “Apollo,” a seminal
work in the Balanchine canon. “Bal-
anchine taught class every morning
at ten o’clock and conducted re-
hearsals late into the afternoon—
without, unlike most of the city, a si-
esta break,” Mr. Lobenthal recounts.
The dancers recalled this as a never-
again-matched period of close col-
laboration with the choreographer.
Where ballet training
once focused on strength
and stamina, Balanchine
insisted on tall, light and
fast dancers—Patricia
Wilde was a prototype.
Still, the New York City Ballet,
founded in 1948 by Balanchine and
Lincoln Kirstein, must have seemed
like just one more ephemeral group
when Ms. Wilde joined it in 1950. Bal-
anchine’s prodigious, untamed talent
would ensure its longevity, and then
its institutional status. Ms. Wilde was
part of that transformation: Bal-
anchine, as Mr. Lobenthal so astutely
notes, uniquely blended his own de-
sire for dance pared back to its es-
sence with the theatricality that the
Ballet Russe instilled into dancers
like Ms. Wilde and Maria Tallchief
(later to become one of the many
Mrs. Balanchines). This is the au-
thor’s gift: The ability to take an im-
permanent visual art and anatomize
BOOKS
played the Larry David character, re-
named George Costanza, because Mr.
David didn’t think he could write a
show and act in it at the same time.
Originally the only female character
was the cashier at the diner where
Jerry and George spent a lot of time
trying to figure whether Jerry’s
houseguest really wanted to have sex
with him. After the pilot was test-
screened in 1989 to lukewarm reac-
tion, Brandon Tartikoff, the head of
NBC entertainment, asked his col-
leagues: “Who will want to see Jews
wandering around New York acting
neurotic?”
But, as Ms. Armstrong notes,
“Seinfeld” had a charmed gestation.
The network approved a mini-run of
four original episodes for the follow-
ing spring, mostly because it was a
low-cost, low-risk bet on two offbeat
talents. The show was assigned to an
NBC executive who had never over-
seen a sitcom and offered no direc-
tion to the two creators, who had
never done a show themselves. Left
alone, Mr. David sought inspiration
from the only available source—
memories of misbegotten moments
in his own (and to some extent Mr.
Seinfeld’s) past.
That turned out to be the secret of
the show’s success—plus maniacally
intense work by the principals. With
the show approved for a full 1991-92
season of 22 episodes, to be produced
in Los Angeles, Mr. David imported a
group of young New York writers and
ordered them to scavenge their own
it for his readers, showing what
makes a dancer, or a piece, or a style,
so special. For instance, he uses Ms.
Wilde’s technical strengths—her
speed, her precision, and her fearless,
almost ferocious attack—to detail the
difference between older dance train-
RAYMONDA VARIATIONS Patricia Wilde and Andre Prokovsky in front of
Lincoln Center’s fountain in 1964.
ing, focused on “strength, stamina,
and control” and the more modern
choices of height, lightness, speed
and turnout. These choices were, in
great part, established through Bal-
anchine’s own preferences.
But while we read of Balanchine’s
endless supply of creativity, turned
into visual reality by Ms. Wilde and
her coevals, there is another story in
the background. Balanchine’s tower-
THE WALL STREET JOURNAL.
main.” Homosexuality? “Not that
there’s anything wrong with that”
were the last words on that subject
in another episode—another catch-
phrase that still resonates today.
“ ‘Seinfeld’ was a show written in
the ’90s about people remembering
their New York lives in the ’80s,”
one writer told Ms. Armstrong. After
each season all but one or two of the
writers, by now squeezed dry, were
replaced by a fresh crew from New
York. They would submit ideas or
plotlines or scenes only to have Mr.
David take their stuff back to the of-
fice he shared with Mr. Seinfeld and
rewrite it. Constant tweaking was
the norm. After Mr. David perfected
the idea of a dovetailed ending for
every episode—when all the ele-
ments of the story arc clicked to-
gether like a well-machined mecha-
nism—endless hours were spent
polishing these intricate payoffs.
The show became something of a
cult hit. It was originally scheduled on
Wednesday nights, where it got de-
molished in the ratings by Tim Allen’s
handyman comedy, “Home Improve-
ment,” on ABC. So for the 1992-93
season, NBC moved “Seinfeld” to a
prime spot on Thursdays, right after
“Cheers.” The program leapt from
40th in the ratings to fifth, and by
lives for story lines, plot twists and 1996 it was returning $200 million a
gags. As it turned out, many of the year in profits to the network. At that
show’s most memorable riffs were point, the ever-contrary Mr. David de-
spun from the writers’ darkest or cided that he’d had enough. He quit
most inane experiences. When his the show after 134 episodes. For his
“SNL” sketch ran in the last slot, Mr. finale, he killed off George’s fiancée,
David had stormed off the set in a Susan—by having her lick poisoned
rage only to turn up for work the next glue on the envelopes of her wedding
week—just as George does on the invitations—because the other actors
couldn’t stand working with the ac-
tress who played the part. Mr. Sein-
‘Seinfeld’ was a show feld took over as both star and show-
runner for the rest of the run.
written in ’90s L.A. by During the ninth season, even Mr.
people remembering Seinfeld wanted out, though he was
being paid $1 million an episode.
New York in the ’80s. When he broke the news to Jack
Welch, the chief of GE, which owned
NBC, Mr. Welch took him into a cor-
show. One writer had a girlfriend who ner and showed him a slip of paper
hated her big hands. Another had offering him $5 million per show. No
once found a typo on a Trivial Pursuit sale. The offer was emblematic of the
card—“The Moops” for “The astronomic wealth generated by
Moors”—that was alchemized into “Seinfeld.” Ms. Armstrong calculates
sitcom gold in the “Bubble Boy” epi- that the show has earned $3.1 billion
sode about a sick child living in a in syndication fees since 1998. Just
plastic quarantine enclosure. last year, the streaming service Hulu
The network executives didn’t al- paid $160 million to offer the entire
ways get “Seinfeld”—the author “Seinfeld” oeuvre to its subscribers.
writes that they hated “The Chinese In fact, the best way to enjoy
Restaurant,” a defining episode—but “Seinfeldia” is to read the book with
they kept their notes to themselves, TV remote in hand, calling up epi-
and Mr. David would have torn them sodes on Hulu as Ms. Armstrong
up if any were sent to him. “No hug- adroitly recounts the back story of
ging. No learning,” was his credo. these still-captivating shows that
One show about a masturbation-ab- were never, ever about nothing.
stinence contest got past the censors
by never mentioning the word—in- Mr. Kosner was the editor of News-
stead, Jerry, George, Kramer and week, New York, Esquire and the
Elaine vied to “master” their “do- New York Daily News.
ing artistic gift was not matched by institutional weakness: On tour the
an equivalent love of humanity, or dancers were forced to go into debt,
even the milk of human kindness. He their per diem payments well below
was frequently unforgiving and ruth- subsistence level. Mr. Lobenthal fails
less. Dancers were set at odds with to connect these two points, even as
one another; some were banished for he recounts both. There are other
daring to have private lives. Some- conclusions, too, that he fails to draw.
Ms. Wilde’s toughness is one of
these. Dancers are frequently spoken
of, and to, as children: They do what
they’re told without the diva-dom of
opera singers, or the independence
of actors. Yet many of the greatest
dancers worked as adults, as Ms.
Wilde did, from early adolescence,
and they had the survival skills that
came with it. In 1953, Ms. Wilde mar-
ried George Bardyguine, yet when,
after decades of marriage and two
children, he became ill and unreliable
in his post as technical director of
MARTHA SWOPE/NEW YORK PUBLIC LIBRARY
the Pittsburgh Ballet Theater, it was
Ms. Wilde, then its artistic director,
who told him he had to go. It appears
that she learned more than just cho-
reography from Balanchine.
The book’s starting-point, hun-
dreds of hours of interviews with
Wilde, perhaps prevents the author
from drawing these conclusions. In-
stead of the banal observations that
interviewees are prone to make—
does it tell us anything to know that
people Ms. Wilde stayed with were
times, suggests Mr. Lobenthal, the “Exceedingly nice”?—more of Mr.
choreographer deliberately created an Lobenthal’s astute analyses would
aura of uncertainty, even fear, simply have been of far greater value. None-
to increase his own enjoyment of a theless, Mr. Lobenthal has created a
piece of which he had begun to tire. new way of seeing an old subject,
The two sides of the choreogra- and it is very welcome indeed.
pher are mirrored elsewhere. Ticket
prices were kept deliberately low, to Ms. Flanders writes about dance for
ensure the widest possible audiences. the Times Literary Supplement. Her
That is, of course, laudable, but with- more recent book is “A Bed of Scor-
out other sources of funding, also an pions,” a crime novel.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | A13

BOOKS
‘The City of New York belongs almost as much to the South as to the North.’ —William Cullen Bryant

A Melting Pot’s Melting Point

less than invent battlefield photogra-
City of Sedition phy (he later goes broke, too). And
By John Strausbaugh Elizabeth Blackwell, a Florence Night-
Twelve, 423 pages, $30 ingale disciple, organizes a women’s
relief association to nurse the war
BY HAROLD HOLZER wounded—opposed at every turn by
hidebound military and medical es-
tablishments.
ON FEB. 19, 1861, toward the end of Books this dense invariably con-
his mostly triumphant journey to tain factual slips. “Peace Democrats”
Washington for his inaugural, Presi- could not possibly have filled Cooper
dent-elect Abraham Lincoln finally Union with “an estimated thirty thou-
reached the North’s most prosper- sand New Yorkers” for an 1864 rally;
ous—and, as John Strausbaugh would its Great Hall held at most two thou-
have us believe, most seditious—city. sand. Rebel saboteurs did not choose
Not surprisingly, New York welcomed “Thanksgiving weekend” to set New
Lincoln with what one newspaper York on fire in November 1864—that
called “little enthusiasm.” Walt Whit- beloved four-day break was not even
man, caught in traffic gridlock as Lin- celebrated at the time; rather, the
coln’s carriage reached his hotel, would-be terrorists chose to strike on
thought the reception even worse. He widely observed, now-forgotten,
sensed menacing “anxiety” behind the Evacuation Day. Horace Greeley nei-
“ominous silence.” ther supported Lincoln at the 1860
“I have no doubt,” the poet re- Republican Convention nor coveted a
called, “(so frenzied were the fer- Cabinet post in his first administra-
ments of the time) many an assassin’s tion. One gets the impression that
knife and pistol lurk’d in hip- or Mr. Strausbaugh has also neglected
breast-pocket there—ready, soon as some up-to-date scholarship, a prob-
ART RESOURCE

break and riot came.” Of course,
Whitman offered those observations
abetted by decades of hindsight. Ac-
tually, he was onto something more
crucial when he noted that Lincoln
“possess’d no personal popularity in
New York, and not much political.”
Therein lies the key to any study of
urban America during the Civil War.
Like most Northern hubs, especially
those with large immigrant popula-
tions, New York was overwhelmingly
Democratic in politics. Lincoln had
lost the 1860 presidential election in
Manhattan by a ratio of nearly two-
to-one—not enough of a margin to
prevent his winning the state, but a
reality check for Republicans who had
hoped his acclaimed speech at Cooper
Union eight months earlier would
portend seismic shifts in the city’s po-
litical culture. Convincing New York-
ers to go to war under a Republican
was never going to be a slam dunk.
In “City of Sedition,” Mr. Straus-
baugh acknowledges New York’s en-
trenched conservatism, and digs
deeper into the city’s ultimately vio-
lent opposition to Lincoln, Unionism
and emancipation. Like other recent
writers, Mr. Strausbaugh finds the
roots of its disloyalty sowed in a zeal
for pre-war, conscience-free com-
merce with the South, which spawned
a convenient moral indifference to
slavery, which was nourished by bla-
tant racism. In another sense, the city
could hardly help but establish close
commercial ties to the South. New
York thrived because of its harbor as-
sets, becoming the national transfer
point for slave-grown cotton destined
for European mills. In turn, the ship-
ping industry generated thousands of
New York jobs. And the city’s finan-
cial infrastructure—banking and in-
surance—came to rely on slave-made
products and their profitable shadow
DAYS OF RAGE A mob marches down Second Avenue during the 1863 New York Draft Riots.
subsidiaries, too. “New York,” argues
Mr. Strausbaugh, “was almost as eco-
nomically dependent on plantation
slavery as the Southern planters
were”—an exaggeration, perhaps, but
not by much.
Whether New York was any blinder
to slavery than other Northern cities
is the question. Mr. Strausbaugh
forcefully argues that such was the
case. Even if geography made it thus,
politics made it more so. New York’s
Democratic organizations rose to
power promising impoverished
whites they would never have to com-
pete with free blacks for jobs. By the
time the Draft Riots—more accurately
race riots—convulsed the city in 1863,
its horrific lynchings, mutilations and
destruction seemed almost inevitable.
This book’s strength is anecdotal
rather than analytical. Mr. Straus-
baugh vividly portrays a melting pot
at the melting point: overcrowded
streets, disease-ridden homes, rowdy
taverns, tainted water supplies and
appalling corruption masking neglect.
His New York bulges dangerously at
the seams—except, of course, among
the privileged, ever-mobile one per-
cent. Rich and poor alike race in and
out of the book at breakneck speed.
A number of these characters will
surely elicit surprise. Among the
prominent Southern slave-owners
who felt welcome in pre-war New
York was future Confederate Presi-
dent Jefferson Davis of Mississippi,
hailed as a hero in 1853 when he ar-
rived as U. S. Secretary of War to ded-
icate Barnum’s museum; during the
war his effigy would go on exhibit
there, hanging from a gallows. In
1844 outgoing president John Tyler
had married his second wife—an East
Hampton heiress, no less—at a Fifth
Avenue church, “a union of Old New
York and Old Virginia dynasties,” Mr.
Strausbaugh posits, “highly symbolic
of New York City’s close ties to the
plantation South.” (As a wartime
widow, Julia Gardiner Tyler would
maintain her Confederate loyalties
from Staten Island.) Such divided loy-
alty was not uncommon. When the
Union first split, Mansfield Lovell,
former commander of the Old Guard
of the City of New York, left the fed-
eral army to take charge of the Con-
federate defense of New Orleans.
After 150 pages of antebellum
scene-setting—engrossing, to be sure,
but perhaps too lengthy—Mr. Straus-
baugh gets to the war itself, and the
narrative takes on a sustained ur-
gency. Wartime Gotham brims with
political ferment, subterfuge and big-
otry, but also responds admirably—
even heroically—to the earliest calls
for volunteers to put down the rebel-
lion. The town’s elites join up first,
but New York soon raises, from its
poorest neighborhoods, Irish, Italian,
German, even Hungarian regiments.
The author follows key New Yorkers
to the battlefield, where they earn
and lose reputations as casualties
mount and Republicans push con-
scription and emancipation—stirring
fear and loathing from the city’s
poorest whites. As vividly as Mr.
Strausbaugh writes about Virginia
skirmishes and Washington politics,
one always yearns for the book to re-
turn to its teeming New York locus.
Among the irresistible figures pop-
ulating this turbulent home front are
mercurial New York Tribune editor
Horace Greeley, whose enormous in-
fluence never wanes despite growing
instability; handsome Mayor Fer-
nando Wood, who encourages the city
to leave the Union in order to main-
tain profitable trade with the South;
bombastic antislavery preacher Henry
Ward Beecher (actually based in
Brooklyn, then a separate city); and
gnarled ex-Senator John A. Dix, a vet-
eran of the War of 1812 who becomes
a major general in the Union army.
New York Democrats had
promised poor whites
they would never have to
compete with free blacks.
Assigned to New York City because, at
age 63, he is deemed too elderly to
fight, he fumbles suppression of the
1863 riots. For such dubious achieve-
ments, forts are named—in Dix’s case,
in New Jersey.
Tragic Stephen Foster appears
briefly as well, composing his senti-
mental Southern songs from his New
York—not his “Old Kentucky”—home,
yet losing his copyrights, ending up a
Bowery drunk, and dying penniless at
Bellevue at age 37. Swedish-born en-
gineer John Ericsson develops his
transformative ironclad warship from
Lower Manhattan, then builds the
U.S.S. Monitor in Greenpoint across
the East River. From his Union Square
galleries, Mathew Brady does nothing
lem his bibliography confirms. His as-
sertion that Lincoln came to New
York for his 1860 Cooper Union ad-
dress by way of Chicago (for editorial
help from newspapermen there, ac-
cording to myth) comes from a book
written more than 50 years ago, and
long since corrected.
If Mr. Strausbaugh now and then
introduces a jarring characterization
(1820s blackface stage star Thomas
Dartmouth Rice is described as “min-
strelsy’s Elvis,” and his signature
song, “Jump Jim Crow,” as “its
‘Hound Dog’”), he also adroitly links
past to present by imposing modern
community designations on Manhat-
tan’s wartime precincts. Thus we
learn that Greeley built a home
where the UN sits today, and that re-
cruits from the city’s first “colored”
regiment trained on Riker’s Island.
While some streets (and entire sec-
tions, like the notorious Five Points
slum) have mercifully vanished, Mr.
Strausbaugh takes us to DUMBO,
SoHo, Tribeca and other hip nabes
and helps us imagine how they
looked, smelled, and sounded a cen-
tury and a half ago. Unless I am mis-
taken, he has visited each and every
historic locale in person, and readers
could do worse than use his work as
a guide for doing the same.
Populated by an epic cast of char-
acters lurching through evocative tab-
leaux at a breakneck pace, Mr. Straus-
baugh’ s book stands alone, but never
still. At times it may seem breathless,
disorganized, glib and argumentative.
But so is New York itself.
Mr. Holzer, Director of the Roose-
velt House Public Policy Institute
at Hunter College, has written and
edited 52 books, among them
“Lincoln in New York” and “State of
the Union: New York’s Civil War.”

China’s Rebel With a Cause

The Problem With Me
By Han Han
Simon & Schuster, 217 pages, $24
BY JULIAN B. GEWIRTZ
IN EARLY 2012, Nescafé executives
were searching for a strategy to make
instant coffee catch on with more Chi-
nese consumers. They settled on a
risky idea: Han Han, the best-selling
novelist and blogger who had risen to
fame mocking China’s corrupt social-
ist system, would be the face of the
brand in the world’s largest market. In
a 30-second advertisement, Mr. Han
exhorts viewers to “Live out your
boldness!” He zips around on a motor-
cycle and cheers on a paraplegic ath-
lete before settling down with a bright
red mug of instant coffee.
Advertising Age called it “a water-
shed in commercial communication in
back up his attitude and charisma.
“Triple Door” sold two million copies
in China, and its author became a star.
Mr. Han took up blogging, publishing,
car racing and film directing while de-
veloping a distinctive writing voice
that was at once excitable, moody and
skeptical. Millions of adoring fans
(and not a few detractors) across
China followed his pronouncements.
“The Problem with Me: And Other
Essays about Making Trouble in China
Today” is a new volume culled from
The best-selling novelist
and blogger says what’s
deemed unsayable about
Communist Party
leaders, censorship and
status consciousness.
people “who hate the way unem-
ployed sounds.”
In one of the best pieces in this col-
lection, titled “Chess Pieces that De- the government’s motivations into
serted the Board,” he addresses the
anti-Japan protests that swept China
in the spring and summer of 2012. He
writes: “The government doesn’t want
the protests have official backing.”
This is subtle criticism of the theater
of nationalist protest in China, calling
question while stopping just short of
making explicit accusations.
In “The Problem with Cadres,” he
takes on the status distinctions that
shape Chinese society begin-
ning in elementary school.
“All the class cadres—or
teacher’s pets—have learned
from their good grades is how
to abuse power,” Mr. Han
writes. “Class cadres don’t do
anything, but they know how
to instruct others, and for that
purpose they’re told to wear
one stripe, two stripes, or
three stripes pinned to their
sleeves to show their rank and
the difference between them
and the ‘ordinary folk.’” He
concludes: “God knows what
kind of officials they’ll make
© IMAGINECHINA/ZUMA PRESS
disturb order in a public place,” called
Mr. Han “the archetypal modern citi-
zen” of China. Acknowledging the de-
sire for the good life while mocking
the absurdities of Chinese society, Mr.
Han’s writing provided a skeptical
perspective on a system that often de-
mands the suspension of disbelief.
I write “was” because Han Han’s
writing has mostly disappeared since
2013. He “now barely blogs at all,” as
translators Alice Xin Liu and Joel
Martinsen write in their introduction.
This change makes “The Problem with
Me” a strange book, marketed by its
publisher as a perspective on “making
trouble in China today” but devoid of
any essays written after Xi Jinping be-
came China’s president in March 2013.
Readers hoping to hear Mr. Han take
on Mr. Xi’s personality cult or the cen-
sorship ruckus spawned last year by
actress Fan Bingbing’s cleavage will be
disappointed.
Speculation about this change runs

China,” since the commercial lever-
aged “social criticism and controversy
to create intimacy with younger con-
sumers.” It paid off: The BBC reported
in June that Chinese millennials have
helped drive the near tripling of coffee
consumption in China over the past
four years, with Nestlé, the maker of
Nescafé, in a dominant position.
Who is Han Han? Mr. Han burst
onto the scene in 2000 as a 17-year-
old with his debut novel “Triple Door,”
a tale of schoolboy angst that dispar-
aged the country’s education system.
Mr. Han had dropped out of high
school but still managed to win a na-
tional essay contest, giving him an up-
by-the-bootstraps personal story to
more than a decade of Mr. Han’s blog
posts, essays and interviews. English-
language readers will immediately see
why Mr. Han has earned the respect of
many Chinese reformers: He says what’s
been deemed unsayable, targeting un-
scrupulous Communist Party leaders
and complaining about censorship, sta-
tus consciousness and abuse of power.
Mr. Han is often evocative and
funny, if sometimes slapdash, and his
writing here is wildly unpredictable
and occasionally electrifying. Crying
at boarding school is “an under-the-
sheets affair”; contemporary poets
only have “to master one skill: the
enter key”; and teachers are just
when they grow up.” rampant among his readers. Is Mr.
Not all of the essays here are Han simply a celebrity who has given
explicitly political. Mr. Han also up blogging because there are more
sticks up for confused young lucrative ways to stay in the lime-
people and admits to his own light? Or is he being silenced? Is he
imperfect character in frank es- frustrated by the sense that he
says on growing up, friendship couldn’t make China’s resilient au-
TANGY Fan Bingbing in ‘The Empress of China.’ and fatherhood. In “Actually, thoritarian system budge? Or has he
I’m a Writer,” he recalls that settled into the pleasures of family
war [with Japan]. Use your head: when he dropped out of high school, life? Whatever the cause, the reticence
They’re set up with all that delicious “The teachers told me not to harm so- of this potent rebel is keenly felt—no-
political power, so who wants a war ciety after I left, and asked me what I where more so than in China.
on their hands?” Instead, Mr. Han sug- planned to live on. Royalties, I replied.”
gests the protests are the govern- This mix of earnestness, anger, hu- Mr. Gewirtz is the author of
ment’s way of placating angry nation- mor and ambition is one reason why, “Unlikely Partners: Chinese
alists: “The ones beating, smashing, in a 2011 New Yorker profile, the ac- Reformers, Western Economists,
and looting must be punished by law, tivist Xu Zhiyong, now imprisoned for and the Making of Global China”
or else I’ll have to wonder whether the crime of “gathering a crowd to out from Harvard in January.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A14 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
Law and Order:
A Battle Over Money in Beijing Trump Unit
A
succession struggle is underway in continue to grow at a slower rate and would
China ahead of next year’s Communist emerge stronger in a couple of years. Whether Richard Nixon, law and and by the changes that we made.” No,
order’s most famous it was not worth anything.
Party Congress. And this time the cen- or not that is right, he stands to benefit politi-
practitioner, used the In a Journal article last month, an
tral fight is over monetary cally. reality of domestic un- administration official summarized the
policy instead of ideological Economic policy is If the economy does mud- rest to defeat Hubert Obama anti-terror policy. It reads like
slogans. The outcome has im- a flashpoint in the dle through, Mr. Xi can take Humphrey in the annus aggression with footnotes:
plications for China’s re- credit for prudent manage- horribilis, 1968. Presi- “Not just in Afghanistan, but in Iraq
sponse to slowing economic political succession fight. ment. He may be able to re- WONDER
dent George W. Bush and Syria, it’s very evident what his ap-
LAND
growth. place Mr. Li with Wang Qis- By Daniel
persuaded voters in proach is, which is to make sure we’re
On one side is Premier Li han, who has a strong 2004 that John Kerry doing everything necessary to disrupt
Henninger
Keqiang, who controls the machinery of gov- economic background and is in charge of would provide and ultimately defeat terrorist net-
ernment through the State Council and is sup- fighting corruption. uncertain leadership in works while significantly reducing the
posedly in charge of running the economy. He If bad debts do emerge that tip China into the post-9/11 war on terror. role of the U.S. military in terms of the
Donald Trump, always willing to test ground presence and also reducing the
emphasizes the health of the economy and the a recession, Mr. Xi can put the blame on Mr.
the limits of any thought, is campaign- resources associated with that pres-
need to keep it growing as rapidly as possible. Li for failing to manage the risks properly. Mr. ing for law and order on a global scale. ence.”
Mr. Li’s right hand, Vice Premier Zhang Li belongs to the same Communist Party fac- He’s accusing Hillary Clinton of being There is a specific, well-known rea-
Gaoli, said in March that he saw a “rosy out- tion as the last supreme leader Hu Jintao, un- soft on crime at home and soft on ter- son for a Democratic policy of “reduc-
look” for the first quarter, and after some dif- der whom most of the debt was accumulated. ror everywhere in the world. It’s “Law ing the resources associated with that
ficulties were overcome, next year would be So Mr. Li and his allies could be purged for and Order: Global Victims Unit,” Donald presence,” one that 50 former Bush of-
“blue sky and gentle water.” Officials under pursuing dangerous economic populism. J. Trump producer. ficials should have thought about be-
the State Council argued for more monetary While Mr. Xi has amassed greater power Tuesday in Milwaukee, which last fore unfurling their Hamlet-like state-
easing so the economy can make a U-shaped than his predecessor, he still faces resistance. weekend looked a lot like Baltimore’s ment last week on the election and
recovery, as Beijing did in previous slow- The National Development and Reform Com- 2015 street riots, Mr. Trump said: “The national security.
Hillary Clinton agenda hurts poor peo-
downs. mission issued a report that recommended
ple the most. There is no compassion in
On the other side, China’s cutting interest rates and lowering bank re- allowing drug dealers, gang members For global and domestic
supreme leader Xi Jinping serve requirements. The NDRC, which is under and felons to prey on innocent people.
has wrested control over eco- the State Council, removed the report from its It is the first duty of government to
disorder, Trump’s answer
nomic policy within the Party website the same day. But large state-owned keep the innocent safe.” looks better than hers.
away from Mr. Li. On May 9 companies will also lobby for monetary stimu- In Monday’s foreign policy speech he
an “authoritative person,” lus as they are squeezed by slow growth, and pledged to do a reverse-Obama by keep-
widely believed to be Mr. Xi’s their managers are Party cadres with ministe- ing Gitmo open and trying accused ter- The reason is guns versus butter,
chief economic adviser Liu rial rank. rorists in military tribunals. Likening military spending versus always un-
He, attacked the notion of a Even though Mr. Xi has so far failed to push his strategy to “the effort to take down sated domestic needs. The liberals’ bat-
rosy outlook. He predicted economic reforms and his motives may be po- the mafia,” he said “this will be the un- tle for butter began in the 1960s, when
derstood mission of every federal inves- they vilified Lyndon Johnson for spend-
the economy would follow an litical, his tight money policy will have posi-
tigator and prosecutor in the country.” ing on Vietnam and the Cold War rather
L-shaped trajectory and not Xi Jinping tive effects on China’s economy. Asset bubbles With most of the battleground states than the Great Society.
recover for one or two years. and excessive debt need to be squeezed out. looking more like Republican burial Right now, foreign-policy liberals and
China’s economy, in this view, has become The bankruptcy of zombie companies will grounds, it may be pressing the mem- some conservatives are pushing sotto
too reliant on loose monetary policy and make room for entrepreneurs to grow new brane of believability to say the Trump voce assurances that Hillary will “get it
credit expansion. Mr. Xi’s camp emphasizes firms. law-and-order strategy just might work. right” on national security. They had
the need for “supply side” reforms to reduce But once a credit bubble pops, it can be That said, Mr. Trump’s naming this better go line-by-line through the eco-
overcapacity in heavy industry and deflate as- hard to know when to reverse policy and ease week of the adept Republican political nomic-policy speech she gave last week
set bubbles. Allowing the central bank to cut monetary policy. After Japan’s bubble econ- strategist Kellyanne Conway as his cam- in Michigan. After the greatest outlay
rates aggressively now would only make the omy burst in 1990, the Bank of Japan waited paign manager means he may yet give on infrastructure spending “since World
situation worse. That explains why the central several years to act, fearing that it might rein- his supporters a competitive presiden- War II,” tuition-free college for the mid-
tial campaign. dle class and “debt-free for everyone,”
bank has left rates unchanged since last Octo- flate the bubble. That led to a liquidity trap
Democrats deserve to have a Trum- plus uncountable tax credits, anything
ber, even as inflation has slowed. that the country still hasn’t escaped. pian version of “law and order” un- Mrs. Clinton gets right will be on the
At times the Xi camp’s diagnosis of the Perhaps Mr. Xi and his advisers won’t loaded on them. I don’t think the Demo- cheap. Like her “intelligence surge.”
problems in the Chinese economy sounds like make the same mistake. But monetary policy crats are soft on crime and terrorism. This isn’t Bill Clinton’s center-left
the talking points of American investor Jim is now a central part of a succession strug- They’re just ambivalent. Ambivalence Democratic Party. It’s the left-only
Chanos and other China bears. The landscape gle, as next year’s Party Congress is sup- can get you killed, especially around party of Bernie Sanders, Elizabeth War-
is dotted with “zombie companies” that need posed to choose the two leaders who will people with guns and bombs. ren and Barack Obama. What they want
to be closed. After decades of denying that rule China from 2022-32. Mr. Xi has nailed Asked after every primary to rank is butter, lakes of it. Anti-terrorism gets
Chinese real estate is a bubble, the state me- his colors to the mast of tight monetary pol- four issues, Democrats nearly always to tread water, alongside the cops.
dia now warn that price rises are unsustain- icy. The difficulty he would face in making put terrorism fourth. It hardly came up Defeating Islamic terror is a rare uni-
in the Clinton-Sanders debates. fying issue for conservatives and indeed
able. a quick policy change shows how China’s out-
And whether the domestic shooters for the world. Unlike any conceivable
But instead of predicting a crash, Mr. Xi’s dated politics hamper the management of a are San Bernardino’s terrorists, Or- Democratic president, Donald Trump is
advisers predict that China’s economy will modern economy. lando’s nut or Chicago’s gangs, the at least willing to lead this battle, re-
Democrats’ offer the same silver bullet: flecting the truth that it won’t happen
gun control. without active, unrelenting U.S. leader-
Mr. Thae’s Korean Escape The problem with how they’ve teed ship.

T
up the cops has been the nonexistence No doubt this is yet another issue
hae Yong Ho had one of the world’s the North’s illegal businesses, these emissar- of any Democratic alternative beyond with which voters have to struggle,
toughest jobs. As North Korea’s deputy ies become more essential. patrolling the toughest streets with a wanting an alternative to the Obama-
ambassador to the United Kingdom, he Under Kim Jong Un’s rule the total number blue version of Casper the Friendly Clinton Democrats but burdened with
was supposed to improve of defectors has declined be- Ghost. misgivings that are of Mr. Trump’s own
On national security, an example of creation.
coverage of the Kim regime The defection of a senior cause of tighter border con-
progressive foreign policy’s half-in, But Donald Trump didn’t create the
in the capitalist media. South diplomat may signal trols. But the flow of high- half-out attitude was former Attorney law-and-order issue. Cities and nations
Korean media reports sug- value defectors has General Eric Holder’s remark in May under assault did that. Just now, his an-
gest the stress led him to de- broader dissatisfaction. increased. Last month a teen- that the traitorous Edward Snowden swer for both looks better than her an-
fect this week. age math champion asked for “actually performed a public service by swer.
More seriously, Mr. Thae asylum at the South Korean raising the debate that we engaged in Write henninger@wsj.com.
is the most senior North Korean diplomat to consulate in Hong Kong. Residents of Pyong-
cross over in two decades. Only those consid- yang are increasingly exposed to the South’s
ered most loyal to the regime are given such television and movies, and Kim Jong Un’s fail-
a plum posting in the West, and the fact that ure to reform and improve living standards
Mr. Thae was allowed to bring his family indi- may have increased dissatisfaction.
Don’t Forget Putin’s Pal
cates he was especially trusted. His disillu- South Korea and the U.S. should give defec-
sionment with Pyongyang could mean that tors like Mr. Thae a warm welcome and en-
In the White House
more of North Korea’s elite are starting to re- courage more to follow. The Kim regime with- By Sohrab Ahmari weapons after Russian regulars and
alize how much better life is on the outside. stood intense economic hardship and even

D
Most North Koreans are kept in line by fear. famine in the 1990s by maintaining unity onald Trump’s fondness for
But Pyongyang needs to send trusted citizens among the ruling elite. Such a campaign would Vladimir Putin emerged during
abroad to earn hard currency and buy essen- make Pyongyang more reluctant to send its the GOP primary, when he re-
tial imports. Even diplomats are asked to earn emissaries abroad, which will lead to more fused to condemn the Russian dictator
their keep through smuggling. As U.N. sanc- dissatisfaction. It’s one more promising way for murdering dissident journalists.
tions tighten and the U.S. and its allies restrict to hasten the downfall of an evil regime. Since then the New Yorker hasn’t
backed away from positions on NATO,
Ukraine and Syria that have no doubt
Kremlin-backed thugs illegally annexed
Crimea and carved up territory in east-
ern Ukraine. The White House still re-
fuses to sell Kiev the weapons it needs
to defend itself, even as Mr. Putin
threatens more aggression. The be-
trayal of Ukraine wasn’t Mr. Trump’s
doing.
Nor, finally, was it Mr. Trump whose

Trump Will Be Trump gone down well in Moscow.

Then again, so have President
inaction in Syria created an opportunity
for Moscow to outmaneuver Washing-

I
Obama’s policies over the past eight ton and downgrade U.S. prestige in the
n any diagnosis of Donald Trump’s cam- subtle. The website specializes in attacking— years. Middle East. The Syrian civil war has
paign troubles, the idea that the candi- often in nasty personal terms—Republicans The Trump campaign’s Putinist rhet-
date has been too constrained wouldn’t who refuse to assail immigration and trade. oric has the liberal press corps alarmed,
be our first guess. But Mr. Breitbart led the campaign and rightly so. “Vladimir Putin has a Obama administration
Trump is now telling the The nominee says he to defeat House Speaker Paul plan for destroying the West—and that policies have done plenty to
world that he is shaking up Ryan in his Wisconsin pri- plan looks a lot like Donald Trump,”
his campaign to unleash un-
wants to run as the mary this month. “Paul Ryan Franklin Foer wrote in Slate. The help a more assertive Russia.
Donald undiluted. Atlantic’s Jeffrey Goldberg called Mr.
diluted Donald in the last 80 Bows Down to Nationalist
Trump a “de facto agent” of Moscow.
days. Populism as His Career Vox’s Zack Beauchamp said Trump proved a humanitarian catastrophe, re-
“Everyone talks about, Flashes Before His Eyes,” said “made World War III—the deaths of sulting in some half a million dead and
‘Oh, you’ve got to pivot,’” Mr. Trump told a one headline. Mr. Ryan won 84% of the vote. hundreds of millions of people in nu- millions displaced. It has flooded
Wisconsin TV station on Tuesday. “I don’t Mr. Bannon wants Mr. Trump to run the clear holocaust—plausible.” Europe with refugees, destabilized Tur-
want to pivot. I don’t want to change. You way he did in the primaries as an unabashed Moscow’s hegemonic ambitions in key and added the phrase “barrel
have to be you. If you start pivoting, you’re populist and nationalist. We thought Mr. Eastern Europe and the Middle East bomb” to the lexicon of human deprav-
not being honest with people.” He said this Trump’s problem is that he hadn’t changed and Mr. Putin’s efforts to promote illib- ity.
hours before he added two new senior advis- from the primaries, that he hadn’t tried to eral, far-right politics in the West are But the war has also been a strategic
ers, whose job is help rescue what has been reach out to skeptical independents and Re- among America’s top security chal- boon to Moscow and its chief regional
a sinking candidacy. publicans, that he hadn’t until recently broad- lenges. So it’s good to see the journalis- client, Iran. Mr. Putin and the mullahs
tic left waking up. Too bad the same have deepened their military ties, as
One new hire, pollster Kellyanne Conway ened his message beyond trade and immigra-
crowd was often asleep over the past most recently evidenced by Russia’s use
as campaign manager, is encouraging. Ms. tion. But maybe Mr. Bannon sees a path to 270 eight years as Mr. Obama allowed that of an Iranian air base to target Syrian-
Conway is one of the best people in politics, electoral votes that others don’t. threat to metastasize to its current rebel positions on Tuesday. Mr. Putin’s
a sincere conservative with a talent for find- Then again, the essential truth about presi- scale. goal is to edge out Washington as the
ing the language to connect with voters who dential campaigns is that they always reflect It wasn’t Mr. Trump, after all, who in principal outside power in the Middle
aren’t policy wonks or political addicts. Dur- the candidates, for better or worse. The 2014 announced deep cuts to the U.S. East and he is succeeding. America’s
ing the GOP primaries she ran a Super PAC Trump campaign’s make-it-up-as-you-go oper- strategic arsenal, disabling 56 subma- long-term retreat from the region
associated with Ted Cruz, but everyone ation, its emphasis on personal branding over rine-based nuclear-launch tubes, con- wasn’t conceived in Trump Tower.
makes mistakes. She has also advised Mike policy, and its minimal attention to organiza- verting 30 B-52 bombers to conven- If polls prove right, Donald Trump is
Pence, the GOP vice presidential candidate, tion are all a reflection of Donald Trump’s tional use, and removing 50 missiles headed for defeat in November—in part
from underground silos—all well ahead because of his apparent affinity for the
and she has been the Trump campaign’s best management style and political choices.
of the 2018 deadline set by the New Russian dictator. But that doesn’t ex-
TV spokesperson by far in the last several So at least it’s truth in advertising that Mr. Start Treaty with Moscow and without cuse the historical amnesia and bad
weeks. Trump wants to run as unfiltered Trump from any reassurance that Mr. Putin would faith in the press over U.S.-Russian re-
Less encouraging is the arrival of Stephen here to November. The voters will be able to reciprocate. That was Mr. Obama. lations in the age of Barack Obama.
Bannon of Breitbart News as chief executive see what they’d get in the Oval Office, and if Nor was it the New York developer
for campaign operations. Breitbart has been he loses Mr. Trump would know, even if he who refused to supply the democratic Mr. Ahmari is a Journal editorial
called Mr. Trump’s Pravda, but Pravda is more didn’t admit it, that he is the man responsible. government in Kiev with defensive writer based in London.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | A15

OPINION

The Diversity Police Raid the Boardroom

By Mike Gonzalez rent requirements have generally be a part of their leadership struc-

B
been vague and have changed little tures.” He called Berkshire’s disclo-
erkshire Hathaway, the since the rule was adopted,” SEC sure “insolent” and lamented that its
profitable holding com- Chairman Mary Jo White complained actions are “perfectly permissible”
pany run by the Obama- in June. “Very few companies have under the law.
supporting investment disclosed a formal diversity policy.” Rep. Maloney, using her position
guru Warren Buffett, has Ms. White then suggested the SEC as ranking member of the House
for a few years included an interest- would propose a new rule requiring Subcommittee on Capital Markets,
ing nugget about diversity in its companies “to include in their proxy had the Government Accountability
proxy disclosures: statements more meaningful board Office draw up a report on corporate
“Berkshire does not have a policy diversity disclosures on their board boards. The report, which appeared
regarding the consideration of diver- members and nominees.” She also last year, cited research showing

CHIP SOMODEVILLA/GETTY IMAGES

sity in identifying nominees for
director. In identifying director nom-
inees, the Governance Committee
does not seek diversity, however
Forcing firms to disclose
the race and gender of
their directors is a step
toward de facto quotas.
defined. Instead, as previously dis-
cussed, the Governance Committee
looks for individuals who have very
high integrity, business savvy, an
owner-oriented attitude and a deep
genuine interest in the Company.”
This refreshingly direct disclosure
complies with a 2009 Securities and
Exchange Commission requirement
that companies disclose any plans
regarding board diversity. Yet the
SEC is no longer impressed. The reg-
ulatory agency is now threatening to
mandate much stricter diversity dis-
closures—which would allow activ-
ists to intimidate firms into forced
affirmative-action programs.
“Companies’ disclosures on board
diversity in reporting under our cur-
left the door open to having the rule that “the broader range of perspec-
specifically define what diversity tives represented in diverse groups
means. These developments should require individuals to work harder to
trouble businesses that simply want come to a consensus, which can lead
to hire the best people. to better decisions.”
Activists such as Aaron Dhir, a But only perspectives based on
professor at York University’s Os- ethnicity or sex need apply. Take
good Hall Law School in Toronto, Ford Motor Co., which defines diver-
have urged that companies be com- sity as a range of “experience in
pelled to consider “the socio-demo- SEC Chairman Mary Jo White at a U.S. Senate hearing in 2013. business, government, education and
graphic composition of their technology, and in areas that are
boards”—that is, directors’ sex and and outperforms its industry. On cietal pressure on companies to relevant to the Company’s global
ethnicities, not their diversity of ex- revenues of $200 billion, it has be- change behavior, rather than to dis- activities.” To Mr. Dhir, this is unac-
perience. At the very least, firms come the fourth-largest company on close financial information.” Her ceptable: “Many commentators who
could be forced to explain why they the S&P 500 list, behind Wal-Mart, comments came up again last year supported the SEC’s original rule
refuse to enforce quotas in the Exxon Mobil and Apple. when she fended off a similar effort proposal made it clear that they
boardroom. These aren’t only the But this push isn’t about perfor- by 40 Democratic senators. were concerned with ‘diversity’
ideas of an obscure professor. Rep. mance. Rather, its proponents want Alas, this time Ms. White seems along gender and racial lines.”
Carol Maloney (D., N.Y.) has been to open a new front in the campaign to be caving, though the same logic The professor’s radical views are
pressuring the SEC to force compa- to have government allocate partici- holds. Mandating onerous, politically matched at the highest levels of the
nies to identify “each board nomi- pation in society for groups it desig- motivated diversity disclosures will Obama administration. The White
nee’s gender, race, and ethnicity.” nates as protected classes. Mr. Dhir, reduce return on shareholder invest- House’s relentless drive to redefine
Investors are not clamoring for Rep. Maloney and the others want ment by crowding out information America as a kaleidoscope of groups,
politically motivated disclosure re- these disclosures so activists can use that does help evaluate a company’s rather than one united nation, is
quirements on the theory that forced them to intimidate companies. performance. about to invade the corporate board
diversity improves performance, if Chairman White made this point “The corporation is a place of room. Warren Buffett, call your of-
they seek the requirements at all. in 2013 when fending off an effort by significant power in today’s world,” fice. Or, better yet, try your friends
Berkshire—which chooses directors Sens. Charles Schumer (D., N.Y.) and Mr. Dhir argued in a blog post last in the Oval Office.
by integrity, business savvy and Harry Reid (D., Nev.) to have the SEC year. “Many companies have nearly
interest in the company—has en- require companies to disclose what as much influence over economic Mr. Gonzalez, a former speech-
joyed good governance without di- they spent on political campaigns. and social relations as government, writer for SEC Chairman Christopher
versity initiatives. The company cur- Such mandates, she said at the time, and women and members of racial Cox (2005-06), is a senior fellow at
rently tracks the S&P 500 average “seem more directed at exerting so- and ethnic minority groups ought to the Heritage Foundation.

America Leaves Its Allies to Battle Each Other in Iraq

By Aziz Ahmad and Tehran, but Iraqi Kurds, grate- Peshmerga. The recent shelling of members of the anti-Islamic State troops in Iraq, the next U.S. presi-
ful for their rescue from Saddam Kurdish mountains by Iran under coalition are resurfacing. The U.S. dent ought to consider embedding

T
Erbil, Iraq
he U.S. presidential race is
ramping up, and with it have
come declarations and prom-
ises. But solutions from Donald
Trump and Hillary Clinton for solv-
ing the turmoil in the Middle East
and the war on Islamic State won’t
succeed unless the U.S. untangles
the region’s webs of alliances and
enmities and recognizes America’s
true friends.
It’s a task that will require the
immediate attention of the next
president, and the candidates
should already be monitoring devel-
opments, especially recent deadly
clashes between Kurdish Peshmerga
forces and Iraqi Shiite paramilitar-
ies, as well as the renewed conflict
in Turkey. These events underline
what Washington prefers to ignore:
U.S. allies in the Middle East are
training their guns on each other,
and this could unravel the fragile
global coalition against Islamic
State.
Iraqi Kurdistan has been a long-
standing and reliable ally of the
U.S. The friendship began in the af-
termath of the 1991 Gulf War after
the U.S. imposed a no-fly zone in
the region. Washington was short
on friends in Baghdad, Damascus
Hussein’s genocidal intentions, the pretext of targeting an indige- can salvage the relationships be- advisers in these sensitive hotspots.
readily embraced America. nous Kurdish armed group has only tween its principal allies by re-en- In the long term, it is in America’s
Since then, the Iraqi Kurds have caused added consternation. gaging politically in the Middle interest to support an independent
proved themselves to be staunch al- Deadly clashes between nominal East and recognizing there is no Iraqi Kurdistan and allow it to play
lies and a stabilizing force in their U.S. allies have also permeated be- substitute for American leadership. a greater role in defusing regional
neighborhood, helping to defuse yond Iraq’s borders into Syria. Given Turkey’s strong relation- conflicts.
conflicts. Now, however, the Kurds ship with Iraqi Kurds, America Meanwhile, in Syria, U.S. pres-
are locked between American allies should throw its weight behind sure on YPG can end the group’s
unfriendly toward Kurdish aspira- Absent stronger leadership both allies for an immediate cease draconian policies toward other
tions of independence and their from Washington, the fire and the return of both par- Kurdish factions not inextricably
growing ties with the U.S. military. ties—PKK and Ankara—to talks in linked to the PKK. The return of
Attacks against Kurdish territory U.S.-Kurdish-Shiite the Kurdish capital, Erbil. To pre- the battle-hardened Roj Brigade,
aren’t new. Violent spillovers from partnership against vent future clashes, PKK and its af- made up of 3,000 Syrian Kurdish
the perpetual conflict to the north filiates should respect Iraqi Kurdis- men and women based in Iraqi
between Turkey and the Kurdistan Islamic State starts to fray. tan’s territory and obligations to Kurdistan, will ensure a quicker de-
Workers’ Party (PKK) have led to good neighborly relations by with- feat of Islamic State in northern
cross-border campaigns inside Iraqi drawing their forces. Syria (Rojava) and offset uncondi-
Kurdistan. The conflict, which has There, the Kurdish People’s Defense The next administration should tional U.S. support to YPG. It would
claimed more than 40,000 lives, Units (YPG) are America’s principal also include stability factors in its also secure a broader Kurdish buy-
was ended in 2013 thanks to a partners in the fight against Is- newfound detente with Iran and in and, backed by PKK peace talks,
peace process pushed by Kurdish lamic State. Yet their direct affilia- promote an equilibrium between re- potentially placate Turkish con-
President Masoud Barzani, only to tion with the PKK and coordination gional powers. Alas, the widespread cerns about creating a contiguous
unravel in 2015, leading to renewed with Bashar Assad’s regime compli- perception among U.S. allies is that area in Rojava analogous to Iraqi
bloodshed and the displacement of cates a U.S.-backed effort to clear the nuclear deal comes at the ex- Kurdistan.
thousands. the remaining Islamic State-occu- pense of regional security and long- This would create a convergence
Further exacerbating tensions pied area on the Turkish border. term U.S. engagement. between U.S. allies underpinned by
are the Iraqi Shiite militias that, YPG’s destructive blockade against In Iraq and Syria, there must be common interests and ensure that
backed by Iran and under the cover other Kurdish political factions is a political effort to ease Kurdish- Iraqi Kurdistan remains a beacon of
of U.S. warplanes, have cleared sig- also preventing the return of thou- Arab tensions and offer alternatives stability.
nificant territory from Islamic sands of experienced fighters eager to YPG. U.S. military support to
State. Their deployment to areas to join the fight against Islamic Iraqi groups should depend on their Mr. Ahmad is an assistant to the
that the Kurds have already retaken State. withdrawal from all areas cleared chancellor of the Kurdistan Re-
from Islamic State has led to As Islamic State loses ground, by the Peshmerga to prevent future gional Security Council. He writes
clashes and the deaths of several historical enmities among various clashes. Given the number of U.S. in a personal capacity.

India’s Human Rights Own Goal

By Sadanand Dhume Kashmir. Some members of the audi- publicly chant slogans offensive to without merit. But it’s one thing to elections in Kashmir.

I
t takes talent to turn an obscure
discussion in Bangalore on hu-
man rights into an international
embarrassment for the Indian gov-
ernment. But you can trust the Akhil
Bharatiya Vidyarthi Parishad, a stu-
dent group affiliated with the ruling
Bharatiya Janata Party, to pull off
such a feat.
On Monday, following demands by
ABVP activists, Bangalore police filed
a preliminary complaint against the
Indian chapter of the global human
rights group Amnesty International
for, among other things, sedition and
promoting enmity among communi-
ties.
The charges followed an Amnesty
International event Aug. 13 on al-
leged human rights abuses in Indian
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
Rupert Murdoch
Executive Chairman, News Corp
Gerard Baker
Editor in Chief
Rebecca Blumenstein, Matthew J. Murray
Deputy Editors in Chief
DEPUTY MANAGING EDITORS:
Michael W. Miller, Senior Deputy;
Thorold Barker, Europe; Paul Beckett, Asia;
Christine Glancey, Operations; Jennifer J. Hicks,
Digital; Neal Lipschutz, Standards; Alex Martin,
News; Ann Podd, Initiatives; Andrew Regal, Video;
Matthew Rose, Enterprise; Stephen Wisnefski,
Professional News; Jessica Yu, Visuals
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
WALL STREET JOURNAL MANAGEMENT:
Trevor Fellows, Head of Global Sales;
Chris Collins, Advertising;
Suzi Watford, Marketing and Circulation;
Joseph B. Vincent, Operations;
Larry L. Hoffman, Production
EDITORIAL AND CORPORATE HEADQUARTERS:
1211 Avenue of the Americas, New York, N.Y., 10036
Telephone 1-800-DOWJONES
ence reportedly raised slogans de- many Indians—as one of the coun-
manding freedom from Indian rule. try’s great strengths, many BJP sup-
The human rights group has dis- porters see it as a weakness.
missed the charges as “without sub- Though an opposition Congress
stance.” Party government controls the police
For Prime Minister Narendra investigating the incident, BJP lead-
Modi, the showdown with Amnesty ers have been at the forefront of
is only the latest in a string of con- whipping up passions against Am-
frontations with international non- nesty International on the streets
governmental organizations includ- and on national television. To possi-
ing Greenpeace and the Ford bly add to the NGO’s woes, the fed-
Foundation. The pattern underscores eral government has reportedly
tension between Mr. Modi’s prag- opened an investigation into its
matic foreign policy and his party’s funding.
sometimes dyspeptic base. To be sure, the odds of any Am-
On the world stage, Mr. Modi has nesty International employee facing
used India’s democracy to forge criminal charges, let alone going to
closer ties with the United States, prison, are exceedingly slim. The In-
Japan and other like-minded coun- dian Supreme Court has long held
tries. But instead of seeing demo- that a harsh colonial-era sedition law
cratic values—including the right to can only be used to curb speech that
incites violence or threatens public
order. Nonetheless, faced with ongo-
ing protests, on Wednesday Amnesty
temporarily shut its Indian offices
and postponed scheduled events in
Robert Thomson
Chief Executive Officer, News Corp Mumbai and Delhi.
William Lewis The BJP’s litany of complaints
Chief Executive Officer and Publisher against Amnesty goes beyond the
DOW JONES MANAGEMENT:
Kashmir event. On television and so-
Ashley Huston, Chief Communications Officer; cial media, party officials have casti-
Paul Meller, Chief Technology Officer; gated Aakar Patel, an outspoken
Mark Musgrave, Chief People Officer;
Edward Roussel, Chief Innovation Officer;
journalist appointed last year to
Anna Sedgley, Chief Financial Officer; head Amnesty in India, for being an
Katie Vanneck-Smith, Chief Customer Officer anti-Modi partisan.
OPERATING EXECUTIVES:
The organization’s critics also
Jason P. Conti, General Counsel; claim that it pays too much attention
Nancy McNeill, Corporate Sales; to alleged human rights abuses by
Steve Grycuk, Customer Service;
Jonathan Wright, International;
the Indian government, and too little
DJ Media Group: to the suffering of Kashmiri Hindus
Almar Latour, Publisher; Kenneth Breen, driven into exile by militants. Some
Commercial; Edwin A. Finn, Jr., Barron’s;
Professional Information Business:
highlight Amnesty’s collaboration
Christopher Lloyd, Head; with hardline Islamists in the United
Ingrid Verschuren, Deputy Head Kingdom—also criticized by this
newspaper—to question its even-
handedness.
Some of these concerns are not
criticize an organization you don’t
agree with, and quite another to try
and shut it down over that disagree-
ment. Virtually every major democ-
racy in the world observes this dis-
tinction. Only authoritarian countries
such as China, Russia and Turkey
routinely use heavy-handed laws to
crush non-governmental opposition.
A sedition charge brought
by BJP activists against
Amnesty International
undermines Narendra
Modi’s foreign policy.
Moreover, the case against Am-
nesty in India is built on a funda-
mental mischaracterization of geo-
politics. Many of the organization’s
critics see human rights groups as
part of a deep-rooted Western con-
spiracy to dismember India. This
may have been halfway plausible
during the Cold War when India all-
but-formally tilted toward the Soviet
Union. Today the idea is downright
risible.
Over the past two decades, the
rise of China, the threat from radi-
cal Islam, and India’s fast-growing
economy have largely aligned West-
ern and Indian interests. The U.S.
and India may not see eye to eye on
every issue, but as a matter of pol-
icy Washington seeks a strong In-
dia, not a weak one. This helps ex-
plain why the ongoing conflict in
Kashmir attracts much less global
attention than it did 20 years ago.
So does India’s well-earned reputa-
tion for broadly respecting demo-
cratic rights, including by holding
To his credit, Mr. Modi under-
stands these global trends. He also
recognizes that an India jammed be-
tween a hostile Pakistan and an in-
creasingly assertive China must cul-
tivate closer ties with the West in
order to protect its interests, mod-
ernize its military and grow its econ-
omy.
It’s no coincidence that Mr. Modi
has visited the U.S. four times since
his election two years ago. Or that
the first person he invited to preside
over India’s Republic Day (in 2015)
was President Barack Obama.
As part of his diplomatic strategy,
Mr. Modi has artfully highlighted In-
dia’s commitment to democracy. In
Tokyo in 2014, Mr. Modi character-
ized India and Japan as “two peace-
loving and democratic nations.”
At the British Parliament last year,
Mr. Modi expressed his appreciation
for being invited to speak at a “tem-
ple of democracy.” Addressing a joint
session of the U.S. Congress earlier
this year, Mr. Modi invoked the
“threads of freedom and liberty that
form a strong bond between our two
democracies.”
At home, in his annual Indepen-
dence Day address Monday, Mr. Modi
made a sharp break from the past by
mentioning the troubled Pakistani
province of Balochistan. Only an
ABVP protestor could possibly be-
lieve that a BJP-government can suc-
cessfully draw global attention to the
Pakistani army’s human rights
abuses against the Baloch while si-
multaneously going after Amnesty
International over a bout of slogan-
eering at an event.
Mr. Dhume is a resident fellow at
the American Enterprise Institute,
and a columnist for WSJ.com.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A16 | Friday - Sunday, August 19 - 21, 2016
Above, the men’s 100-meter final, which Jamaican Usain Bolt, center, won for the third straight Olympics. As this year’s Games conclude this weekend, the U.S.-Jamaica track rivalry will be featured.
BY MATTHEW FUTTERMAN
Rio’s Grand Finale
No sporting event celebrates its
ending as ritualistically as the
Olympics.
The Olympic flame is extinguished.
The Olympic flag is passed to the
next host city. The president of the
International Olympic Committee
calls on “the youth of the world” to
gather once again in four years to
celebrate peace through sport.
It’s been a strange Olympics, with
the competitions often overshadowed
by stories of sparse crowds, doping
controversies, pools with green water,
and the bizarre and still unraveling
tale of an alleged “confrontation” of
four swimmers, including Ryan Lochte.
So far the prediction of the U.S.
dominance led by the American
women has proved true. As of Thurs-
day afternoon, the U.S. had 31 gold
medals and 94 overall, followed by
Great Britain with 21 and 55. The U.S.
women have won 19 gold medals and
48 overall, compared with 11 gold and
41 overall for the men. Another five
medals, one of them gold, have come
from mixed events.
But there is still the matter of the
final weekend of competition. This
one brings special poignancy. For all
the breakout performances from im-
pressive 19-year-olds, such as gym-
nast Simone Biles and swimmer Ka-
tie Ledecky, who each won four gold
medals, these Games seem all about
the swan song.
Just as Michael Phelps won five
gold medals and a silver and prom-
ised he was done after a triumphant
swim meet, the sublime Jamaican
sprinter Usain Bolt says his Olympic
career will end with the 4x100-meter
relay Friday night. It’s hard to imag-
ine sprinter Allyson Felix, the most
decorated U.S. woman in track and
field, making another American team
four years from now. She is 30 years
old and first ran in the Olympics in
2004, when she was 18.
Neymar, the Brazilian soccer star,
Did Pool Favor Some Swimmers?
BY RACHEL BACHMAN
RIO DE JANEIRO—The 50-meter
Olympic freestyle is an all-out sprint
that confers upon its winner the title
of fastest swimmer in the world.
But a disturbing question is aris-
ing about the 50-meter competitions
just completed here at the Rio
Games: Did a current favor athletes
on one side of the pool?
Three scientists who previously
published peer-reviewed work show-
ing that a current influenced 50-
meter races at the 2013 world cham-
pionships say that the same problem
appears to have existed in the Olym-
pic pool in Rio. Led by Joel Stager,
director of Indiana University’s
Counsilman Center for the Science of
Swimming, the three researchers say
that Olympic results this month sug-
gest that a current boosted 50-meter
competitors in the higher-numbered
lanes of the eight-lane pool.
As evidence, they note that of the
eight men and eight women who
swam fast enough during the 50-
meter semifinals to qualify for the fi-
nal, all but one swam in lanes 4
through 8. Moreover, athletes who
swam in lanes 5 through 8 during
preliminaries or semifinals and
moved to lanes 1 through 4 for later
The final weekend of Olympic competition highlights fierce
rivalries in men’s soccer, track and field,
women’s volleyball and men’s basketball
has led his team to the final. His career
with Barcelona and with the Brazilian
national team will continue, but he
only played this tournament because it
was at home. His Olympic career will
likely end Saturday.
There will be other key moments
that have nothing to do with goodbye.
The U.S. men’s basketball team is
fighting to maintain its supremacy. A
new marathon champion will be
crowned. Volleyball, Brazil’s other na-
tional sport, concludes with a U.S.
women’s team led by the legendary
coach Karch Kiraly poised to medal.
Triathlete Gwen Jorgensen has been
largely unbeatable for two years. She
will try to work her magic Saturday
morning under the crucible of Olympic
pressure on Copacabana Beach.
Friday afternoon, Maggie Steffens
will lead the U.S. women’s water polo
team’s quest for a second consecutive
gold against Italy.
Here are some weekend highlights:
Track and Field
One of the great rivalries in sports
today is the U.S. vs. Jamaica in the
sprint relays. In relays, the ultimate
individual sport becomes a team
competition. The small island nation
that has less than 1% of the popula-
tion of the U.S., has been virtually
unbeatable during Bolt’s electric ca-
reer, which began in earnest in Bei-
jing when he was 21 years old.
Bolt’s ability to win races so effort-
lessly, mugging for the cameras as he
approaches finish lines, has left the
world breathless. Coming into the
Games, the mission for Friday night
was to provide Bolt with an unprece-
dented capstone of his career—a third
straight sweep of the 100, 200 and the
4x100-meter gold medals.
“We are very motivated,” said
heats got slower. They posted times
about a half percent slower in the
subsequent round—even though pace
tends to quicken as events progress.
Of the three male and three fe-
male medalists in the 50 freestyle fi-
nals, five swam in lanes 4 through 8.
The exception was American An-
thony Ervin, who won the 50-free
gold medal swimming in lane 3. Per-
nille Blume of Denmark won the
women’s 50 free in lane 4.
“It’s a big deal. This is horrific,”
said Stager, whose co-researchers
were Chris Brammer, a doctoral can-
didate in exercise physiology at Indi-
ana University, and Eastern Michigan
University professor Andrew Cornett.
Officials at FINA, swimming’s
world governing body, said they
were reviewing the analysis.
The alleged irregularities in times
at Rio’s pool appear to parallel those
documented in two published papers
by Stager, Brammer and Cornett.
One paper studying the 2013 world
championships, published in 2014 in
the journal Medicine & Science in
Sports & Exercise, showed that the
highest-numbered three lanes in the
eight-lane pool were faster in one di-
rection, and the lowest-numbered
faster in the other.
Whether the suspected current af-
Nickel Ashmeade, one of Bolt’s
teammates.
Yohan Blake, another teammate,
said after two consecutive Olympic tri-
umphs the Jamaicans have gotten into
the heads of the Americans, who, for
all their speed, have occasionally been
plagued by disqualifying trouble on
the baton transfers.
“We have the mental edge because
we are always winning,” said Blake. He
said the Jamaicans are so sure of
themselves that they rarely practice.
“We have the speed so we can just
concentrate on getting the baton
around and keeping it safe.”
Asked what a final victory in the re-
lay would do for his legacy, Bolt said,
“Someone told me that it would make
me immortal. I’ll go with that.”
The rivalry is no less fierce on the
women’s side, where upstart Ameri-
cans Tori Bowie and English Gardner
will try to out-run the defending
world champion Jamaicans, who are
led by 100-meter gold and bronze
medalists Elaine Thompson and
Shelly-Ann Fraser-Pryce.
The U.S. will rerun the 4x100 relay
preliminary Thursday night. Either
way, the U.S. will seek revenge Satur-
day night in the 4x400 relays. Felix
will take her star turn in the event and
LaShawn Merritt will try to win back a
gold medal that the U.S. lost in 2012
when Merritt and a teammate suffered
leg injuries before the final.
And for those who still crave an in-
dividual track race, Mo Farah of Great
Britain will go for a repeat 5k-10k gold
medal double. Farah’s finishing kick is
downright clinical. He fell in the mid-
dle of the 10,000 and still won.
Men’s Marathon
In nearly every other marathon,
the top runners are chasing prize
fected outcomes in longer races isn’t
clear. But in the one-length 50-meter
race, swimmers in the high-number
lanes appeared to gain a benefit. In re-
sponse to the 2014 study, a representa-
tive of Myrtha Pools acknowledged at
the time that “the times would say
there was” a current in the pool.
Myrtha constructed the pool used
at the 2013 world championships in
Barcelona and it also constructed the
pool used at the Rio Olympics. Both fa-
cilities are so-called temporary pools,
built especially for a competition and
then deconstructed.
Contacted this week, Trevor Tif-
fany, chairman of the board for
Myrtha Pools USA, said company offi-
cials floated a large jug in the Rio pool
before and during competition to test
for a current.
“We were required to do tests to
show that there was no movement of
water, and the tests were conclusive
that there was no movement of water,”
Tiffany said. If any current had been
detected, “obviously it would have
been of concern to us and of concern
to FINA,” swimming’s international
governing body.
“If we saw there was a current,
we’d have done something about it,”
Tiffany said. “There was no indica-
tion whatsoever.”
money and records. The Olympic
marathon is about a championship.
The pace often slows in this tactical
race, especially in the heat.
As always the East Africans are
favored. Eliud Kipchoge of Kenya
won this year’s London Marathon
in 2:03:05 and figures to be tough
to beat, but a slow marathon in
tough conditions makes less speedy
and more strategic runners more
competitive.
The U.S. brings two marathoners
at opposite ends of their careers.
Galen Rupp, winner of the U.S. tri-
als, is running just his second mara-
thon at age 30. Meb Keflezighi, who
won silver in 2004, is 41 years old
and has run more than 20. If this
isn’t his last race, it’s pretty close.
Rupp, fifth in the 10,000 on Saturday,
has speed in the final miles. Ke-
flezighi has proved he can get to a
podium in tough conditions and on a
flat course.
“This sets up pretty well for Meb,”
said his coach Bob Larsen. “He knows
how to race.”
Soccer
Olympic soccer generally takes a
back seat to other major tourna-
ments, in part because rules allow
only three players on each team older
than 23 years old.
But this tournament is different.
It’s in Brazil, the game’s spiritual
home, and Neymar and his mates are
on a redemption mission after losing
to Germany 7-1 in the World Cup
semifinals here two years ago. Ney-
mar fractured his back in the quarter-
final that year and ever since the
drubbing by Germany he has pledged
to win an Olympic gold for his coun-
try at home.
It didn’t start out well, with draws
Researchers studying Olympic results in Rio de Janeiro have found that
swimmers posted faster times in the higher-numbered lanes, including the 50-
meter men’s freestyle, with unusually high regularity.
A paper published in March by
the same authors in the Journal of
Sports Sciences analyzed the results
from 17 swimming competitions
from 2000 to 2013.
It found that biases in times
linked to specific lanes and direc-
tions occurred more often in tempo-
rary pools like the one in Rio than in
permanent pools.
In Rio, the lane bias also showed up
in the 800-meter and 1,500-meter
races, the other events analyzed by the
researchers. Swimmers in lanes 1
through 3 swam as much as .6 seconds
THE WALL STREET JOURNAL.
AGENCE FRANCE-PRESSE/GETTY IMAGES
against South Africa and Iraq, but the
Seleção sneaked into the knockout
round and took apart Honduras 6-0
in the semifinal Wednesday.
Neymar has not disappointed. In
front of a packed Maracanã Stadium
Wednesday, it took him all of 15 sec-
onds to send 75,000 fans into a
frenzy against Honduras. Just after
the opening whistle, Neymar charged
the defense, threw his body in front
of goalkeeper Luis Lopez’s attempt at
a clearance, and deflected the ball
into the net.
Now comes the final Saturday
against—Germany.
Basketball
The Olympic basketball competi-
tion has largely been an American
coronation since the NBA started
sending its best in 1992. The U.S.
women have lost gold just once since
1984, the men only once since 1992.
There have been chinks in the ar-
mor this year though. Even with the
likes of Kevin Durant and Klay
Thompson, the men have eked out
three-point wins twice so far. They
were losing to Australia at halftime
in group play before squeaking out
a win. In the semis Friday, they will
have to get by Spain, who pushed a
better U.S. team in the 2012 Olym-
pic final. The Aussies likely await in
the final. The days of automatic
gold medals appear to be over for
the U.S. men.
The women are more of a sure
thing. They had an average margin
of victory of 42 points through the
quarterfinals, but even they needed
a second-half burst to beat Japan
Tuesday. It’s a veteran team with its
own crew of aging and rickety
Olympic swan-songers.
“Right now, it’s more your
mind—it’s mind over matter,” said
guard Diana Taurasi, who is playing
for her fourth consecutive team
gold medal in Rio and may be at the
end of her Olympic road. “I’m 34.
Everything hurts.”
PATRICK B. KRAEMER/EUROPEAN PRESSPHOTO AGENCY
slower while heading toward the start-
ing blocks than they swam while mov-
ing away from them, according to an
analysis of split times by Brammer.
Swimmers in lanes 6 through 8
showed the reverse, logging faster
times while moving toward the start-
ing blocks than they did away from
them, according to Brammer. The
closer swimmers were to lanes 1 and 8,
the outer lanes of the pool, the greater
the effects on times, he said.
The International Olympic Com-
mittee didn’t immediately respond
to a request for comment.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
Euro vs. Dollar
1.20
BUSINESS & FINANCE
1.1336 s 0.41% FTSE 100
1.15
1.10
1.05
J J A J
As of 4 p.m. ET
© 2016 Dow Jones & Company. All Rights Reserved.
Uber to Test Self-Driving Taxis
Car-hailing service to
soon launch effort in
U.S.; strikes deal with
Geely’s Volvo for cars
BY GREG BENSINGER
AND JOHN D. STOLL
Uber Technologies Inc. will
enable customers in Pitts-
burgh later this month to
summon rides from autono-
mous vehicles, a bid to be the
first in a race among automo-
bile and technology companies
to make driverless cars widely
available.
On Thursday, Uber said it
would soon put 100 Volvo Car
Made in
China: The
Priciest
Market
Investors are about to be
welcomed to New China.
But can they afford the en-
try ticket?
The long-awaited an-
nouncement of the Shen-
zhen-Hong Kong trading link
means easy
access to a
market fa-
vored by the
privately
owned con-
STREETWISE sumer,
JAMES health-care
MACKINTOSH and technol-
ogy stocks
that ought
to be the winners from the
remaking of China.
Unfortunately, others got
there first. Shenzhen is the
world’s most expensive ma-
jor market, one of only two
tracked by Absolute Strategy
Research trading at more
than 20 times forward earn-
ings (the other is New Zea-
land). The transformation of
China is priced in already.
The opposite is true for
the state-owned banks and
smokestack stocks listed in
Shanghai. Shanghai is no lon-
ger screamingly cheap, as it
was when its trading link to
Hong Kong was announced in
2014. But like other emerg-
ing markets, its sub-13-times
price/earnings ratio is well
below developed markets.
Investors face a dilemma.
Shanghai is deservedly
cheap, dominated by banks
that are widely believed to
be understating bad loans
and with a long tail of un-
wanted miners and state-
controlled industrials. Shen-
zhen offers growth, but at a
high price: 25.7 times esti-
mated earnings for the next
12 months. The median com-
pany trades at an eye-water-
ing 67 times trailing earn-
ings, according to research
house Gavekal.
Adjust for the very high
expected profit growth in
Shenzhen, though, and New
and Old China seem about
equally valued, according to
calculations by Kinger Lau,
chief China equity strategist
at Goldman Sachs. Put an-
other way, valuations seem
entirely rational—so long as
you agree that profit growth
of close to 25% a year is likely
from the more-expensive
companies. As Mr. Lau says,
“Expectation for New China is
definitely pretty high.”
One argument for cough-
ing up for New China is that
Old China is so obviously po-
litical. The 10 largest banks
in Shanghai make up more
than a fifth of its market
value, with the smallest of
them about the same size as
Please see STREET page B2
SAMSUNG’S SHARES SET A RECORD TECHNOLOGY | B3
7000
6868.96 s 0.14% Gold
6500
6000
5500
J A
Corp. XC90 sport-utility vehi-
cles on the road in Pittsburgh,
where some customers will be
able to summon them for
short trips within the city. The
SUVs will have a human helper
in the driver seat in the event
a trip goes awry.
As part of that effort, Uber
reached a $300 million deal
with Swedish car maker Volvo
to co-develop additional au-
tonomous SUVs.
The San Francisco company
also agreed to acquire Otto-
motto LLC, a Silicon Valley
startup working on self-driv-
ing tractor trailers. That deal
could be valued at about 1% of
Uber equity, according to a
person familiar with matter,
Meat Casino
For nearly a century,
meatpackers physically
bought and sold
cattle for cash, setting a
market price. But over time
these transactions declined.
Now, a handful of cash
trades serve as a proxy for
much of the industry's base
price, prompting big swings
in futures prices.
PERCENTAGE OF
CATTLE-MARKET
TRADING BY TYPE
*2016 data through May
Source: USDA AMS Livestock, Poultry & Grain Market News (data);
Helen H. Richardson/The Denver Post/Getty Images (photo)
A Mad Market for Cattle Futures
BY KELSEY GEE
CHICAGO—Wild swings in
the cattle futures market have
prompted some traders to call
it “the meat casino.”
In response, the world’s
largest futures exchange has
refused to list new contracts,
leaving ranchers with fewer
tools to hedge the $10.9 billion
market. CME Group Inc. said
that is because trading of
physical cattle has become so
scant that the futures market
can’t get the signals it needs
to set prices.
“It’s madness. The market
Harley-Davidson to Pay
$15 Million in Emissions Suit
BY ARUNA VISWANATHA
AND BOB TITA
Harley-Davidson Inc.
reached a $15 million settle-
ment to resolve U.S. claims
that it violated air-pollution
laws amid growing govern-
ment scrutiny of vehicle emis-
sions on the road.
The company made or sold
340,000 “super tuner” devices
that improved engine perfor-
mance but increased engine
exhaust to levels beyond the
emissions levels the company
had certified with regulators,
according to a complaint and
consent decree, both filed
Thursday by the Justice De-
partment on behalf of the En-
1340
1351.20 s 0.63% WTI crude
1290
1240
1190
J J A J
THE WALL STREET JOURNAL.
implying a value of around
$680 million based on Uber’s
most recent valuation.
Uber Chief Executive Tra-
vis Kalanick has said he ex-
pects computer-controlled ve-
hicles to one day replace the
company’s legions of human-
operated cars. Such autos, in
concert with others on the
road, are believed by some
regulators and industry exec-
utives to be safer and more
reliable than traditional auto-
mobiles, which are prone to
human error.
Others share in Uber’s
dream, including the largest
U.S. auto manufacturers and
Lyft Inc., Uber’s chief rival in
ride hailing. But Uber and oth-
2005 ’06 ’07 ’08
Cash Formula
A negotiated transaction A contract to buy or sell at a
between a buyer and a base price that is discovered
seller who exchange cattle elsewhere—such as the
for an agreed-upon price national cash market
average—plus or minus
premiums or discounts
makes major moves for no rea-
son,” said Blake Albers, a cat-
tle feeder in Wisner, Neb.
The decision to delay new
contract listings is the culmina-
tion of alarms raised by the ex-
change and industry groups this
year that problems in the physi-
cal marketplace have affected
futures—a highly unusual melt-
down in a market that has at-
tracted more speculators.
Few producers complained
as cattle prices surged to re-
cord highs in 2014 and early
2015. But as prices this sum-
mer sank to five-year lows, fi-
nancial strain on the industry
vironmental Protection
Agency.
“We disagree with the EPA’s
position,” a spokeswoman for
Harley said. “But we’re going
to move forward and settle”
the complaint.
As part of the deal, which
involves no admission of
wrongdoing by the company,
Harley will stop selling the de-
vices by Aug. 23. It also
agreed to buy back and de-
stroy any of the devices still in
stock at dealerships.
The settlement comes as
German auto giant Volks-
wagen AG is in negotiations
with the U.S. government that
could result in a multibillion-
dollar criminal penalty over
50
48.22 s 3.06% German Bund
45
40
35
J A
ers have said it will be many
years before autonomous vehi-
cles are ubiquitous.
Ford Motor Co. this week
set a goal of producing fully
self-driving vehicles with no
steering wheel or pedals
within the next five years.
General Motors Co., which
has invested $500 million in
Lyft, also plans to test auton-
omous Chevrolet Bolt taxis
with its partner next year us-
ing technology it acquired
earlier this year in a $1 bil-
lion deal for startup Cruise
Automation Inc.
And Alphabet Inc.’s Google
has taken a lead on developing
driverless vehicles, with test
vehicles already cruising along
’10 ’11 ’12 ’13
Forward contract
An agreement to buy or
sell at a fixed or base price,
like a futures contract,
more than two weeks into
the future
has highlighted the extent of
the problem. Revenue from
cattle sales is forecast to drop
3.9% this year to $73.6 billion,
after falling 5.7% in 2015, ac-
cording to U.S. Department of
Agriculture data.
Live-cattle futures climbed
as high as $1.4155 a pound be-
fore free-falling to $1.1580
over seven weeks this spring.
That represents more than a
$10,000 drop in income for a
single contract. Many produc-
ers have lost money as prices
tumbled to a five-year low of
$1.07525 a pound this summer.
“Guys like me who have
its cheating on diesel-emis-
sions tests, and other car mak-
ers including Mercedes-Benz
maker Daimler AG face similar
investigations.
“Given Harley-Davidson’s
prominence in the industry,
this is a very significant step
toward our goal of stopping
the sale of illegal aftermarket
defeat devices that cause
harmful pollution on our roads
and in our communities,” said
John Cruden, who runs the
Justice Department’s environ-
ment division.
The EPA discovered the al-
leged violations through a rou-
tine inspection and launched
an investigation.
Please see SETTLE page B2
0.40
yield -0.079% 10-Year Treasury
0.20
0.00
-0.20
J J
Friday - Sunday, August 19 - 21, 2016 | B1
Silicon Valley roads.
Ride-hailing companies say
their services help reduce the
need for car ownership as
only dedicated drivers or driv-
erless cars would be needed
in the future. By enlisting au-
tonomous vehicles, Uber also
eliminates the need to pay its
fleet of contracted drivers,
many of whom have been agi-
tating for higher wages and
benefits such as more com-
prehensive insurance.
Volvo will conduct much of
the initial engineering on a
platform for an XC90 SUV that
is capable of piloting itself.
Uber and Volvo will use that
technology as the foundation
Please see UBER page B3
’14 ’15 ’16*
Negotiated grid
A negotiation between a
buyer and a seller that
results in an agreeable
base price, with specified
premiums and discounts for
higher or lower meat quality
THE WALL STREET JOURNAL.
been around a long time aren’t
putting as many positions on,”
said Dan Norcini, an indepen-
dent livestock-futures trader in
Coeur d’Alene, Idaho. “It’s just
not worth the risk anymore,
when there’s no rhyme or rea-
son to these price swings.”
Through July, futures vol-
ume fell 1.9% compared with
the same period in 2015, and
was down 9.7% from 2014, ac-
cording to CME data.
Each futures contract repre-
sents the obligation to buy or
sell 40,000 pounds, or around
35 head, of cattle. While few
Please see CATTLE page B2
Harley-Davidson is the sales leader in the U.S. motorcycle market.
2.25
yield 1.536%
1.50
0.75
0.00
A J J A
Sources: Tullett Prebon; SIX Financial
Uptick
Brent crude-oil futures price
$120 a barrel
100
Thursday: $50.89
80 2.1%
60
40
20
0
’14 ’15 ’16
Source: WSJ Market Data Group
THE WALL STREET JOURNAL.
Oil Firms
Need Rally
To Climb
Even More
LONDON—A rally that
pushed international crude-oil
prices above $50 a barrel
Thursday is a welcome sign for
many energy companies but
not enough to kick-start an in-
dustry in the midst of a two-
year slump, executives said.
By Sarah Kent,
Selina Williams
100%
and Erin Ailworth
“We’re in a little bit of an
75 upswing at the moment and
everybody’s got a smile on
their face because we might
be at $50 a barrel,” said Tony
50 Durrant, chief executive of
Premier Oil PLC, a British oil
company with operations
from the North Sea to the
25 Falkland Islands.
But, Mr. Durrant said in an
interview on Thursday, “ev-
ery day of every week I’m
0 talking to our joint-venture
partners around the world
and I hear people still cancel-
ing projects.”
Oil prices remain far below
the $100-a-barrel area that
energy companies had become
accustomed to during a nearly
decadelong run that ended in
2014, when a global oversup-
ply of crude sent prices skit-
tering down to as low as $27 a
barrel in January. On Thurs-
day, Brent crude, the interna-
tional benchmark, breached
$50 a barrel for the first time
in six weeks and, along with
the U.S. benchmark, entered
bull-market territory.
The rebound isn’t enough
yet to solve the problems of
even the biggest and most re-
silient oil companies.
It won’t be until next year
that BP PLC plans to generate
enough cash to be cash-flow
neutral—meaning it can cover
its capital spending and divi-
dend payouts—with oil prices
Please see OIL page B2
 Stocks in Europe end streak
of losses........................................ B5
KAREN BLEIER/AGENCE FRANCE-PRESSE/GETTY IMAGES
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Friday - Sunday, August 19 - 21, 2016
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A-B
Acton Capital Partners
.....................................B5
Aetna...........................A7
Alibaba Group.............B3
Alphabet......................B1
Amazon.com..........B2,B4
Apple...........................A6
Apple...........................B3
Atlas Copco.................A6
Australia & New
Zealand Banking Group
.....................................B8
Banca Monte dei Paschi
di Siena.....................B7
BancorpSouth Bank....B7
C-D
Chocoladefabriken Lindt
& Spruengli...............B4
Chonqing Casin
Enterprise Group......B5
CHX Holdings..............B5
Citigroup......................B5
CME Group..................B1
Corrections of America
.....................................A7
Credit Suisse Group ... B5
Crosslend.....................B5
Domo...........................B3
DP World.....................B4
INDEX TO PEOPLE
A Hsieh, Arthur..............B3
Ailes, Roger ................ B4
Ashe, Neil ................... B2
B Rodina, Maria............W2
Barnett, Kimberly......W2
Beldock, Brett............W2
Biederman, Jay...........B3
Blaszczak, David.........A1
Bottenbruch, Dagmar.B5
Burnham, Betsy.........W2
C T
Carandini, Filippo.......W2
Chappell, Jamie.........W1
Corbat, Michael...........B5
Cosby, Charlotte........W2
D Lu, Jay.........................B5
Darcy, Bill...................W1
Dennis, Richard...........B8
Dudley, Bob.................B2
F Moon, Wesley.....W1,W2
Foran, Greg..................B2
H Brian Cornell said patchy con-
Hager, Dave.................B2
Henderson, Emily......W2
Herron, Dave...............B5
Hoerger, Axel..............B5
OIL
Continued from page B1
at $50 to $55 a barrel, even af-
ter a series of huge cost cuts.
Exxon Mobil Corp. has said it
would be in a similar position
next year at $40 to $80 a bar-
rel and Chevron Corp. has said
it would balance its cash gen-
eration and spending at $52 a
barrel next year—after as
much as $5 billion in asset
sales.
As oil crosses back into $50
territory, some U.S. shale pro-
ducers with strong balance
sheets are starting to drill
again. For instance, Apache
Corp., based in Houston, set its
budget for 2016 assuming an
average oil price of $35 a bar-
rel, but higher prices in recent
months have allowed it to add
a rig in Texas and keep two
drilling in the North Sea that it
was planning to release.
But Dave Hager, chief exec-
utive of Devon Energy Corp.,
said many U.S. producers need
oil to hit $60. “I don’t think
you can generalize and say
that $50 oil would signal a
strong recovery,” he said in a
recent interview. “There are
many areas that are not as
strong in economics.”
Wood Mackenzie is fore-
casting that oil prices will av-
erage $55 a barrel in 2017, as
long as demand for oil holds
up and U.S. production doesn’t
kick back in. The Scottish en-
ergy consultancy said oil com-
panies have cut about $1 tril-
lion of capital investment in
new oil and gas projects, from
the shale fields of Texas to oil
deposits in the North Sea,
from 2015 to 2020.
For the largest companies,
the uptick to $50 a barrel
doesn’t help much in their
quest to maintain their divi-
dend payouts to investors this
year.
The giant businesses don’t
offer investors compelling
growth prospects as they
struggle to replace the millions
of barrels they pump each
year, making fat dividends an
important selling point for in-
vestors. For many retirees who
buy stocks directly or through
pension funds, the regular pay-
ADVERTISEMENT
The Mart
AVIATION
GULFSTREAM G650 FOR SALE
Best deal in the pre-owned G650 market
2013 MODEL Low hours/cycles
Customized for Long Range Travel
PHILIP RUSHTON AVIATRADE INC
1-908-696-1174
philiprushton@aviatrade.aero
THE WALL STREET JOURNAL.
BUSINESS NEWS
E-F
Event Horizon Capital &
Advisory....................B5
Ferrero International..B4
Fiat Chrysler
N-S
National Australia Bank
.....................................B8
Nestle.....................B4,B8
News Corp...................B4
Wal-Mart Pushes Up Profit
Automobiles.............A6
Ford Motor..................B1
Ottomotto...................B1
Premier Oil..................B1
Retailer’s upgrades
FrontPoint Financial
Services Fund...........B8
Rabobank.....................B5
Samsung Electronics..B3
at U.S. stores attract
G-H Sonterra Capital Master shoppers’ attention;
Fund .......................... B8
General Motors...........B1
GEO Group..................A7
Spotcap ....................... B5 low gas prices a boon
Starmind ..................... B5
Goldman Sachs Group B5
HarperCollins Publishers T-V
BY SARAH NASSAUER
.....................................B4 Target..........................B2
ANDREW FRANCIS WALLACE/TORONTO STAR/GETTY IMAGES
Hershey.......................B4 Tencent Holdings........B3
Wal-Mart Stores Inc. is
Hormel Foods..............B4 Twitter ........................ B3
HSBC ........................... B8 21st Century Fox........B4 reaping the benefits of spend-
Uber Technologies ...... B1
I-M ing heavily to improve stores
UBS..............................B5
Intel.............................B3
Vanguard Group..........B8 and draw shoppers, a sign that
International Business retailers need to work hard to
Vestas Wind SystemsB4
Machines...................B3
Visium Asset lure customers in an era of
Lenovo Group.........B3,B8
Management ............ A1 changing shopping behavior.
Macquarie Group ........ B8
Macy's.........................B2 W-Z Wal-Mart, previously the
Mars............................B4 Wal-Mart Stores.........B2
Mondelez International Westpac Banking........B8
poster child of staid retailers,
.....................................B4 Zhejiang Geely Holding reported strong second-quar-
Morgan Stanley..........B5 Group.........................B3 ter results on Thursday, with
sales at established stores up
for the eighth consecutive
quarter and more shoppers
visiting for the seventh period
R in a row. The retailer recently spent billions to make the company’s U.S. stores more efficient and pleasant.
I Raytcheva, Anna.........B5 The report followed weak
Ike, John .................... W2 Reider, Rachel............W2 sales from rival Target Corp. gains and low gasoline prices earnings Thursday. Those cus- the company were up 1.8% at
and mixed results from other are boosting household bud- tomers are visiting more of- $74.26 late Thursday.
K U.S. chains. Analysts said gets. But retailers touting ten, Mr. Foran said. Consumers are still “a little
Roger, François-Xavier
Kalanick, Travis...........B1 Americans are willing to shop, clothes, electronics and house- Executives attributed sales more cautious than the num-
.....................................B4
Kennedy, ChristopherW2 but favor stores that offer a hold staples from physical gains in the U.S. to improve- bers might indicate,” said
Kerin, John..................B5 S deal, slick service or an expe- stores are struggling to adjust ments they have made to Brett Biggs, the retailer’s fi-
Korbmacher, Martin....B5 Sallick, Peter ............. W2 rience that is difficult to pitch to other changes in consumer stores, as well lower gasoline nance chief. “But overall, we
Seehaus, Frank ........... B5 online, such as buying bulky behavior. prices that left shoppers with are seeing a consumer that is
L
Swinehart, Meredith.W2 lumber or fresh produce. Americans are being asked more money to spend. For the acting quite steadily.”
Lamel, Rachel............W1
This week home-improve- to spend more on health care first time in nine quarters, Wal-Mart is paying heavily
Lau, Kinger..................B1
ment chain Home Depot Inc. as costs rise, and are choosing Wal-Mart’s e-commerce sales to boost sales. “Unfortunately,
Lehman, David............B2 Thomas, Phillip..........W2
reported a 4.7% jump in sales to spend more on services rose faster than the previous the price of this stability has
Levandowski, Anthony Triebel, Toby ............... B5
at established stores for its such as travel and entertain- quarter. Sales were hurt by de- been a multiyear erosion in
.....................................B3 Truong, Quyen ............ B7 latest quarter, while TJX Cos., ment. And online retailers, flationary food prices, execu- margins and profitability,”
Lore, Marc...................B2 V the parent of T.J. Maxx, Home- mainly Amazon.com Inc., are tives said. John Zolidis, retail analyst at
Goods and other off-price gobbling up more spending. For the quarter ended July the Buckingham Research
Vari, Joe......................B3
Lu, Shengju.................B5 chains, posted a 4% increase. Wal-Mart has poured bil- 31, Wal-Mart reported earn- Group, wrote in a note.
Viola, Fabrizio.............B7
M Vollmer, Andrew.........B7 However, many apparel retail- lions recently into making its ings of $3.77 billion, or $1.21 a Wal-Mart’s operating in-
Marakby, Sherif..........B3 ers and department stores U.S. stores more efficient and share, up 8.6% compared with come fell 7.2% in the latest
W have reported lower foot traf- pleasant, boosting employee a year-earlier profit of $3.48 quarter, mostly because of in-
Wai, Wong Ming.........B3 fic and falling sales. wages and improving e-com- billion, or $1.08 a share. vestments in e-commerce and
Murad, Laith..............W2
Myama, Hymie .......... W2
Watson, Robin............B2 Target Chief Executive merce operations as it tries to Revenue edged up 0.5% to store-employee wage in-
fend off Amazon and keep $120.85 billion. creases.
Y
N-P sumer spending was to blame. shoppers happy to roam its On Thursday, Wal-Mart Earlier this month, Wal-
Yuamqing, Yang..........B3
Norreri, Valeria...........B4 Macy’s Inc.’s executives 3,500 giant U.S. Supercenters lifted its profit outlook for the Mart agreed to purchase dis-
Pittenger, Robert........B5 Z pointed to encroaching compe- for paper towels or milk. fiscal year ending in January. count online retailer Jet.com
Profumo, Alessandro..B7 Zolidis, John................B2 tition from online retailers. It “With transitions like this It also said sales at existing Inc. for $3.3 billion. Including
plans to close 100 stores, or you tend to gain first with ex- U.S. Wal-Mart stores, which the purchase and latest re-
14% of its physical store base, isting customers,” said Wal- rose 1.6% in the fiscal second sults, profit could fall as much
outs are an important source
of income.
In June, when oil prices
were around $50 a barrel,
later this fiscal year.
A strong job market, wage
Mart U.S. CEO Greg Foran, on
a conference call to discuss
quarter, would rise 1% to 1.5%
in the third quarter. Shares in
as 9% this year, Mr. Biggs said
in an interview.
Royal Dutch Shell PLC an-
nounced new spending cuts to
keep up its dividend payments,
adhering to what Chief Execu-
STREET Bulls Shop in Shenzhen
Shenzhen-listed stocks went to a big premium over Shanghai in
recent years as hopes grew for China’s economic rebalancing, but this
SETTLE
tive Ben van Beurden called a Continued from page B1 year they have made no headway. Continued from page B1
“lower forever mind-set.” Shell the biggest company listed in The lawsuit said Harley-Da-
is planning around prices in Shenzhen. If China makes 12-month forward price/earnings ratio vidson has made the tuners
the low $40s this year, rising bank equity holders share the 50 times earnings since 2008, including around
to $50 in 2017 and the mid- pain of the eventual bailout 15,000 “Screamin’ Eagle elec-
$60s in 2018. needed to deal with bad debts, 40 Shenzhen tronic fuel injection Race Tun-
The factors driving the mar- Shanghai’s market will be hit Shanghai ers” and around 325,000
ket rally include the shrinking hard. 30 “Screamin’ Eagle Pro Super
of an oil and gasoline glut. Yet, the future of Shenzhen Tuners,” which bypass emis-
20
Last week, the International stocks is almost as political, sions control functions.
Energy Agency said crude-oil for all that its companies tend 10
The tuning devices were
production would fall behind not to be state-controlled. The sold separately from Harley’s
consumption for the first time government has a lot of say 0 motorcycles. The company
in years. over the pace of the rebalanc- said the devices were intended
2004 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16
On Wednesday, the U.S. En- ing of the economy from infra- for motorcycles used in
ergy Information Administra- structure, construction and A-share indexes closed-course racing competi-
tion said U.S. crude inventories production to consumption, tions to increase the speed of
shrank by 2.7 million barrels and frequently slows the shift 0% the bikes. The devices also
last week and gasoline stocks by boosting lending to Old –5 could be deployed for on-
fell by 2.2 million barrels. China, as it did this year. As street motorcycles. The com-
At the same time, Saudi well as directing bank finance, –10 pany said it had sold the prod-
Arabia, the world’s top crude- central and regional govern- –15 uct under “an accepted
oil exporter, has signaled that ments decide on the pace of regulatory approach” for more
it was willing to cooperate shutdowns of unwanted old –20 than two decades.
with other big producers in- factories and mines, and of –25 The company said the after-
side and outside of the Organi- new investment. market-devices explained to
zation of the Petroleum Ex- Perhaps the simplest proxy –30 users the tuning levels at
porting Countries, a 14-nation for the shift is the exchange Jan. 2016 Feb. March April May June July Aug. which an engine would be out
cartel the kingdom is part of. rate. If the yuan, also known of compliance with the EPA’s
Energy companies have ex- as the renminbi, is strengthen- Note: through Wednesday regulations.
pressed more optimism about ing, money is switched from Source: Thomson Reuters Datastream THE WALL STREET JOURNAL. Harley-Davidson also alleg-
2017. producers to consumers, from edly sold 12,682 motorcycles
The volatile recovery ties in exporters to importers. that Shenzhen hasn’t been driven economy, but also that that didn’t meet regulatory re-
with the view that many large Since it began weakening a outperforming this year, it will happen faster than is quirements. The company
oil companies have touted over year ago, China’s currency has matching Shanghai’s 12% loss. priced in already. didn’t include those vehicles,
the past few months: that the fallen against the dollar at the To justify buying into New Given the financial and po- from model years between
broad oversupply that sent fastest rate since its 1994 de- China at these prices, inves- litical difficulty of managing 2006 and 2008, on EPA certifi-
prices crashing would fade in valuation, before rising a little tors need to think not only the decline of the old and in- cation applications, according
the second half of the year, al- in the past month. It should that the country will be able debted state-owned industries, to the lawsuit.
lowing the market to tighten perhaps be no surprise, then, to shift to a consumption- that requires a lot of faith. The company agreed to pay
as storage tanks are gradually a $12 million penalty and
drained. spend $3 million on a clean-air
How fast that ultimately
happens is crucial for big oil
companies. BP Chief Executive
Bob Dudley, who coined the
CATTLE means financial traders spend
most of the week with limited
up-to-date data.
“There is very little under-
around 18 months to grow to
slaughter weight, meaning
ranchers are exposed to possible
price swings in the 2017 winter.
project.
Harley-Davidson noted in
its latest quarterly financial
report that it expected to pay
phrase “lower for longer” Continued from page B1 lying information to use,” said Steve Sunderman, a partner a fine related to the case but
about oil prices, said last traders actually deliver or re- David Lehman, CME’s manag- at a feedlot in Norfolk, Neb., re- added it had reserved money
month he is no longer “as pes- ceive livestock, they look to the ing director of commodity re- calls watching cattle futures for the case.
simistic as some.” price of cattle sold at auctions search. The CME has listed prices earlier this year rise and Harley is the sales leader in
Earlier this week, Robin and at feedlots to keep futures only one live-cattle contract fall by more than one cent in the U.S. motorcycle market,
Watson, CEO of oil-services prices anchored to the real since March and it is set to ex- just 15 minutes, unprecedented accounting for about half all
company Wood Group PLC, world. But structural changes pire in October 2017. leaps in a market more accus- large motor bikes sold each
said the end of low oil prices to the way cattle are bought The CME has formed a tomed to daily moves of frac- year. The company said last
could be in sight. and sold have made it harder working group with cattlemen tions of a penny. The swings month that it would cut ship-
“It certainly feels like we’re to see physical market prices. to discuss fixes, including ways made him uneasy about locking ments of motorcycles this year
around the bottom,” he said in For nearly a century, meat- to increase the number of cash in a hedge for his cattle on a because of falling sales in the
an interview. packers and producers would traders. The exchange short- Friday, when prices had climbed U.S. that the company attri-
—Bradley Olson in Houston haul animals to stockyards and ened trading hours for the live- over $1.15 a pound only to settle buted to riders’ anxiety about
contributed to this article. auction barns, to physically stock futures contracts in Feb- at $1.12975, thinking the market the U.S. political climate and
buy and sell thousands of cat- ruary to confine market would likely climb further. global economic conditions.
tle almost daily for cash. activity to the daytime, when “You lose confidence in The company now expects
The number of participants liquidity is higher, after ranch- your decision,” he said. shipments to be about 1%
negotiating prices started to
decrease in the 1980s and to-
day, only small number of cash
ers complained that specula-
tors had too great an impact on
prices in the evening trading.
Some in the cattle industry
blame high-frequency traders.
But CME said that opening up
above to 1% below last year’s
volume. The company also
lowered its projected operat-
trades—which take place just “Every aspect of the cattle markets to a diverse group of ing profit-margin range.
TRAVEL
once or twice a week—serve as futures contract is under re- investors, including hedge Harley last month issued a
a proxy for the base price used view to see if there’s a way to funds and algorithmic traders, recall order for more than
Save Up To 60% by the rest of the industry. redesign so it’s a more effec- adds liquidity to products like 27,000 motorcycles with the
First & Business The deals that do take place tive tool for risk manage- cattle futures, which tend to be National Highway Traffic
INTERNATIONAL between cash-market buyers ment,” Mr. Lehman said. more thinly traded than gold Safety Administration after
Major Airlines, Corporate Travel and sellers frequently end up The failure to list contracts or oil. Just 10% of total volume the company determined that
Never Fly Coach Again!
being completed on Friday af- after October 2017 is a problem in live-cattle futures came a malfunctioning clutch could
www.cooktravel.net
(800) 435-8776 ter the 2:05 p.m. ET close of for ranchers buying calves this from high-frequency trading in cause certain bikes to move
the futures market. That summer. They typically need 2015, the exchange said. forward unexpectedly.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Samsung’s Shares Set a Record Close
Technology company’s
market cap hits $210
billion, puts it within
reach of Alibaba
BY JONATHAN CHENG
SEOUL—After three years of
struggle, shares of Samsung
Electronics Co. set an all-time
closing high Thursday, capping
a 30% rally this year that un-
derscores the technology gi-
ant’s improved fortunes.
Shares of the world’s larg-
est maker of smartphones by
shipments rose 4.7% to finish
the day at 1,640,000 Korean
won ($1,480) apiece, giving
Samsung a market capitaliza-
tion of 232 trillion won ($210
billion).
That makes Samsung five
times as valuable as Japan’s
Sony Corp. and puts it within
reach of Chinese internet gi-
ants Alibaba Group Holding
Ltd. and Tencent Holdings
Ltd. as Asia’s most valuable
technology companies.
It also puts Samsung ahead
of Intel Corp., Coca-Cola Co.
and Visa Inc. in market-cap
rankings, though main rival
Twitter Targets Lenovo Turns to Property for Boost
Extremist Content
BY YOREE KOH
Twitter Inc. said on Thurs-
day that it has suspended
235,000 terrorist-related ac-
counts over the past six
months, nearly double as
many as in the previous pe-
riod, reflecting stepped up ef-
forts to curb the proliferation
of extremist content on the so-
cial media site.
Twitter, which relies mostly
on users to flag content before
it takes action, said in a blog
post it has recently invested in
bigger teams reviewing re-
ports 24 hours a day, and bet-
ter spam-detection tools and
language capabilities.
One third of the suspended
accounts were identified
thanks to the spam tools,
Twitter said.
“There is no one ‘magic al-
gorithm’ for identifying ter-
rorist content on the internet,”
Twitter said in its blog post.
The efforts come after
Twitter came under fire for al-
lowing terrorist-related con-
tent to proliferate on its site.
It became the social media
site du jour for Islamic State
in recent years for its public
and anonymous nature that
made it easy to spread its pro-
paganda, recruit acolytes,
raise money and brag about
its accomplishments on the
battlefield.
Twitter prohibits the pro-
motion of violence and terror-
ism on its platform. But new
accounts could pop up more
quickly than Twitter could
take them down, thanks to the
ease with which users can cre-
ate new accounts on Twitter
with just an email address.
Twitter said it has “made
progress in disrupting the
ability of those suspended to
immediately return to the
platform.” The latest round of
suspensions comes after Twit-
ter said in February that it had
suspended 125,000 since the
middle of 2015.
There were particular
jumps in suspensions immedi-
ately following terrorist at-
UBER
Continued from page B1
to develop their own self-driv-
ing vehicle technologies,
which may one day be avail-
able for the Swedish auto
maker’s customers to pur-
chase.
Under the agreement, Uber
will buy XC90 SUVs manufac-
tured by Volvo. Volvo, owned
by China’s Zhejiang Geely
Holding Group Co., has been
among the more aggressive
players in the established auto
industry when it comes to de-
veloping and advocating for
autonomous vehicles.
Ottomotto, known as Otto,
is helmed by Anthony Levan-
dowski, a founder of Google’s
self-driving car program, who
left the company toward the
end of January. He was joined
by Lior Ron, another former
Alphabet employee who ear-
Apple Inc.’s market cap of
$562 billion—the world’s larg-
est—remains nearly three
times that of Samsung.
Samsung’s surge comes af-
ter the Suwon, South Korea-
based company reported its
most profitable quarter in two
years last month, as operating
profit at its mobile unit
jumped 57% in the April-to-
June period from a year ear-
lier.
The company’s recent surge
gives its stock even more sway
over South Korea’s stock mar-
ket, where it is already the
biggest component on the
country’s market cap-weighted
benchmark, the Kospi compos-
ite index.
Samsung accounts for about
21% of the South Korean stock
market by market cap, and is
more valuable than the index’s
eight next biggest companies
combined, a list that includes
Hyundai Motor Co. and SK
Hynix Inc., the world’s second-
largest producer of memory
chips.
The tech giant’s stock gains,
which have boosted the com-
pany’s value by 44% over the
past year, stand in contrast to
Apple, which has fallen 5.8%
tacks, Twitter said.
Other metrics—such as the
amount of time it takes to re-
spond to flagged accounts for
suspension, the lifespan of
these accounts and the number
of followers these accounts are
able to accrue—have “all de-
creased dramatically” over the
last six months, said Twitter in
a blog post.
Experts have noticed a drop
in Islamic State’s presence on
Twitter as well. An analysis of
English-language pro-ISIS
Twitter accounts in 2015
showed that the frequent sus-
pensions have limited the
reach of repeat offenders, ac-
cording to a report from the
George Washington Univer-
sity’s Program on Extremism
released in February.
Earlier this year, a lawsuit
The site suspended
235,000 terrorist-
related accounts
over past six months.
was brought against Twitter on
behalf of the widows of two U.S.
government defense contractors
who were killed in a shooting
spree attack in Jordan last No-
vember. The suit claimed that
while Islamic State was respon-
sible for the attack, Twitter
helped contribute to the attack
by allowing the terrorist group
to spread its propaganda on the
service. A federal judge
ruled last week that Twitter
isn’t legally liable for the pro-
ISIS propaganda tweets that led
to the contractors’ deaths.
Even so, Twitter stops short
of proactively searching for
terrorist content, differing
with more aggressive tactics
employed by Facebook Inc.
over the past year. In an un-
usual step, Facebook said that
hours after the San Bernar-
dino, Calif. shooting attack in
December it had on its own
searched and removed the
Facebook profile of one of the
alleged shooters.
lier led Google Maps and the
development of the Moto X
smartphone.
With about 90 employees,
Otto is working to retrofit big
rigs to travel without driver
intervention. Mr. Levandowski
has said he expects regulators
would look more fondly on ve-
hicles that operate primarily
on highways, rather than
dense urban streets.
Uber recruited researchers
and scientists from Carnegie
Mellon University, which is
based in Pittsburgh, hired the
hackers who wirelessly took
control of a Jeep in 2015, and
earlier this year hired former
Ford executive Sherif Marakby
to head its global vehicle pro-
grams.
Uber and Volvo said they
would work together on dy-
namic mapping, object identi-
fication and other technical
hurdles that face many
companies working on driver-
less cars.
TECHNOLOGY
Tech Titans
Samsung Electronics' shares rose 4.7% on Thursday to a record,
making the company the third Asian technology firm valued at more
than $200 billion.
Company Home
Tencent Holdings China
Alibaba Group Holding* China
Samsung Electronics South Korea
Taiwan Semiconductor Taiwan
Manufacturing
SoftBank Group Japan
Tata Consultancy Services India
Baidu* China
Keyence Japan
Hon Hai Precision Industry Taiwan
Sony Japan
*As of New York’s Wednesday close †As of Thursday
Source: FactSet
over the same period amid
slumping iPhone sales.
Samsung’s price-to-earnings
ratio, a measure of the pre-
mium that investors assign to
a company relative to profit
expectations, has nearly
caught up with Apple for the
first time in about three years.
Samsung shares recently rose
to trade above 10 times earn-
BY EVA DOU
BEIJING—Sales of personal
computers might be on the
wane, but at least there is real
estate.
Electronics manufacturer
Lenovo Group Ltd. posted
fiscal first-quarter earnings
Thursday that beat analysts’
estimates, but only because
of the sale of a property in
Beijing. Its sales of PCs and
mobile devices continued to
decline.
Lenovo reported operating
profit, a metric that investors
use to gauge a company’s per-
formance, of US$245 million
for the quarter ended June 30,
more than doubling from
US$96 million a year earlier.
Executives, speaking on a
conference call, attributed 49%
of the latest sum, or US$120
million, to the property sale.
Chief Financial Officer
Wong Wai Ming said during
the call that the sale of the
property, which it will lease
back, was part of efforts to
“monetize our noncore operat-
ing assets” to free up cash to
reinvest in the business, ac-
cording to a transcript pro-
vided by the company.
“This transaction resulted
in recording over US$120 mil-
lion in capital gains, which is
Battle Over Startup’s Books Heats Up
BY ROLFE WINKLER
A legal battle is escalating
between software startup
Domo Inc. and one of its for-
mer managers, who is fighting
the company for financial in-
formation.
Jay Biederman sued Domo
in Delaware on Monday, three
months after The Wall Street
Journal chronicled his at-
tempts to obtain the startup’s
financial statements so he
could estimate the value of his
shares in the company.
The lawsuit follows two le-
gal actions that Utah-based
Domo filed against Mr. Bieder-
man in June, the week after
the Journal story ran: a com-
plaint alleging defamation and
breach of contract, and a de-
mand for arbitration.
The defamation complaint
points to allegedly “disparag-
ing posts about Domo” that
Mr. Biederman put on his
Facebook page before the
Journal story ran. Domo,
which was valued by investors
at $2 billion in March, claims
in its complaint that the posts
have harmed its business.
The dispute illustrates the
challenges for small sharehold-
ers in gauging the health of
private tech startups, which
keep their financials concealed
for competitive reasons. Many
tech workers receive stock
awards when they join fast-
growing startups, and later
question their shares’ worth.
Mr. Biederman is invoking
section 220 of Delaware’s cor-
porate law, which can compel
locally incorporated companies
such as Domo to open up their
books to shareholders.
Mr. Biederman’s lawsuit
says that after he asserted his
Market capitalization, in billions†
$248
242
210
145
81
78
60
44
44
42
THE WALL STREET JOURNAL.
ings for the first time in sev-
eral years, according to data
from FactSet, while Apple’s ra-
tio has gradually fallen to
about 12.6 times at the end of
July.
Samsung’s rise this year
into fresh record territory
comes as vindication for long-
suffering shareholders of the
company.
shown in other operating in-
come in our financial state-
ments,” Mr. Wong said, ac-
cording to the transcript.
“We will continue to look
for such asset-monetization
opportunities to fund some of
our investments to drive our
business growth.”
Some industry analysts
questioned the company’s de-
cision to include the property
sale in its operating profit,
given that real estate isn’t a
continuing business for the
technology company.
“At my first glance at the
numbers, I thought it was
great,” said Arthur Hsieh, a
tech-sector analyst at UBS.
“But the more I dive into the
details, the more I think it is
really not that great.”
Lenovo said the company
consistently has classified
property sales as operating in-
come, “as these transactions
form an integral part of the
operating activities of Len-
ovo.”
The earnings highlight an
accounting difference between
the U.S. and countries such as
China, said Wang Xin, an as-
sistant professor of accounting
at the University of Hong
Kong. Under the U.S. Generally
Accepted Accounting Princi-
ples, or GAAP, a property sale
Domo executive Julie Kehoe looking over data on a wall board at the Utah-based startup in March.
rights under section 220,
Domo “sought to muzzle” him
by filing the litigation in Utah.
Domo is based in Utah, but in-
corporated in Delaware.
A Domo spokeswoman said
the company had asked Mr.
Biederman to sign a nondisclo-
sure agreement before provid-
ing financial records, but that
he refused to do so. She said
Domo wouldn’t comment fur-
ther on pending litigation.
It is customary for private
companies to ask shareholders
to sign a nondisclosure agree-
ment when seeking financial
information.
Mr. Biederman’s suit says
Domo’s lawyer sought to in-
clude “onerous provisions” in
the confidentiality agreement
that would deprive him of his
stockholder rights. The Domo
spokeswoman didn’t comment
on those provisions.
Friday - Sunday, August 19 - 21, 2016 | B3
The stock has traded almost
exclusively within a fixed band
since the beginning of 2012,
even as Samsung became one
of the world’s best-known
technology brands, outselling
Apple by as much as three
smartphones to one at one
point.
Investors, however, re-
mained unimpressed with
Samsung’s paltry dividends
and unconvinced about the
company’s ability to sustain its
smartphone lead, as other
once-dominant mobile-phone
players like Nokia Corp., Mo-
torola and BlackBerry Ltd.
quickly lost their crowns.
Unlike those companies,
Samsung has bounced back af-
ter two difficult years in
smartphone wars to reassert
itself as the industry’s domi-
nant player.
Samsung has managed to
push its mobile-profit margin
back up to 16%, the highest
level since 2014, after the com-
pany’s profit margin was rav-
aged by competition from low-
cost Chinese handset makers.
“These guys pulled them-
selves up from the abyss,” said
Joe Vari, a San Francisco-
based portfolio manager at Ar-
Share Reaction
Lenovo’s share price, intraday
minute-by-minute
HK$5.65
5.60
5.55 Aug. 18:
HK$5.47
5.50
5.45
5.40
5.35
4p.m. 9:30 a.m. Noon 4p.m.
Wednesday Thursday
Source: FactSet
THE WALL STREET JOURNAL.
by a tech company would be
listed as a one-time, nonoper-
ating item, he said. But com-
panies using International Fi-
nancial Reporting Standards,
or IFRS, have the option to list
it as an operating or nonoper-
ating item, he said.
The reported operating-
profit figure of US$245 million
easily trumped expectations of
US$187 million, according to
Thomson One Analytics. Len-
ovo shares jumped sharply
Thursday on the initial earn-
ings report, but gave up some
Robert Rice, a lawyer de-
fending Mr. Biederman in
Utah, said, “Mr. Biederman is
doing everything humanly pos-
sible he can do to defend him-
self against Domo’s claims.”
The episode dates back to
2011 when Mr. Biederman was
hired by Josh James, a friend
and Domo’s founder and chief
executive. Mr. Biederman al-
leges that Mr. James promised
him a specific ownership per-
centage in the company, but
after receiving his shares, the
company declined to tell him
what stake they represented.
Mr. Biederman holds 64,166
Domo shares that would be
worth $540,919 at the $8.43-a-
share price at which Domo
sold stock to investors last
year. But some mutual-fund in-
vestors have since marked
down their Domo shares, ac-
cording to The Wall Street
@wsjd | wsjd.com
tisan Partners Asset Manage-
ment Inc., which manages $95
billion in assets, and has been
betting on Samsung for the
past three years.
In an interview, Mr. Vari
chalked up Samsung Electron-
ics’ improved fortunes to the
company’s long-term focus
and its improved shareholder
returns.
Artisan Partners began buy-
ing shares of Samsung in late
2013 and has steadily boosted
its shareholdings in Samsung
over the past three years, Mr.
Vari said. Samsung is the big-
gest shareholding in Artisan’s
$11.1 billion International
Value Investor fund, account-
ing for 5.2% of the fund at the
end of June.
Samsung’s continued in-
vestment in semiconductors
and display panels—on the
magnitude of almost $20 bil-
lion a year—has given it a
technological lead over rivals
like Micron Technology Inc. in
memory chips and LG Display
Co. in smartphone displays.
That positions Samsung well
to ramp up its sales of smart-
phone components to handset
companies like Apple and ri-
vals in China, analysts said.
ground to close at 5.47 Hong
Kong dollars (71 U.S. cents)—
still a 2.2% rise from Wednes-
day’s close. The company said
its net income rose 64% from
a year earlier to US$173 mil-
lion. Sales fell 5.6% to US$10.1
billion, from US$10.7 billion.
Lenovo said revenue for its
PC and smart-device business
declined 7%, while mobile
sales fell 6% and its data-cen-
ter business rose 1%.
The company is facing the
same stiff winds affecting its
industry rivals. World-wide,
PC shipments declined 4.5% in
the second quarter and growth
in the smartphone market
slipped to 0.3%, according to
market-research firm IDC.
Lenovo said this year that
integrating its acquisitions of
Motorola Mobility and an IBM
server unit has been more
challenging than expected.
Lenovo Chief Executive
Yang Yuanqing said on a sepa-
rate call with reporters that
the company was investing
heavily in marketing and re-
tail channels for its smart-
phone business. “We defi-
nitely believe we are on track
to turn around the business,”
he said.
 Heard on the Street: Selling
property can’t fix it all......... B8
JEFFREY D. ALLRED/THE DESERET NEWS/ASSOCIATED PRESS
Journal’s Startup Stock
Tracker. Morgan Stanley said
Domo shares were worth $5.04
a share as of May.
In January 2015, the com-
plaint says, Mr. Biederman re-
quested financial information
to determine the value of his
stock. His suit filed Monday
says he was fired days later.
He again requested Domo’s fi-
nancials in January 2016. A
Domo executive told him
shareholders aren’t entitled to
financial information since the
company is private, according
to an email attached as an ex-
hibit to Mr. Biederman’s suit.
Under Delaware law, share-
holders may get their com-
pany’s financial data whether
the company is private or pub-
lic, as long as they state a
proper reason. Delaware law-
yers say “valuing shares” is
considered a valid reason.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Friday - Sunday, August 19 - 21, 2016
Nestlé Chases Premium Tier
As overall volume falls
Semisweet
in chocolate market, Nestlé holds a strong but declining share of the global chocolate market.
the firm seeks growth Top six confectionery companies by market share
in high-end segment
BY SAABIRA CHAUDHURI
KitKat owner Nestlé SA is
raising its game in high-end
chocolate to chase revenue
growth as overall chocolate vol-
ume declines.
Global chocolate volume fell
1.1% last year and is likely to be
flat this year from a year earlier,
according to Euromonitor. In
the U.S., the world’s largest
chocolate market, consumption
peaked in 2005 and has de-
clined 3% on average over the
past 10 years, according to UBS.
But revenue has grown 3% a
year on average since 2001, the
firm said, as companies have
sold health-conscious shoppers
pricier offerings with complex
flavor profiles, organic ingredi-
ents and less sugar.
That is forcing mainstream
chocolate companies such as
Nestlé to shift gears.
On Thursday, Nestlé reported
3.1% organic growth from a year
earlier in its confectionery busi-
ness for the six months ended
June 30, below growth in cate-
gories such as water, pet care
and coffee. François-Xavier
Roger, Nestlé’s chief financial
officer, called confectionery “a
difficult category,” adding that
growth was down year-to-year
with “no category growth over-
all in the U.S.”
Overall, Nestlé posted first-
half net profit of 4.1 billion
Swiss francs ($4.26 billion),
down 8.9% from 4.5 billion
francs over the same period in
2015. Revenue of 43.2 billion
francs was equivalent to or-
ganic growth—which strips
out the effects of currency
changes, acquisitions and di-
vestments—of 3.5%, aided by
strong sales in North America.
The company has missed its
sales target of organic growth
of 5% to 6%—dubbed the
“Nestlé Model”—for three
years running, raising ques-
Publisher Pursuing Ailes Memoir
BY JEFFREY A. TRACHTENBERG
Roger Ailes has a story to
tell. And HarperCollins Pub-
lishers is still eager to publish
it, despite Mr. Ailes’s recent
ouster as the head of Fox
News, another branch of the
Rupert Murdoch media empire.
A HarperCollins employee
says the publishing house is
willing to push ahead with the
memoir Mr. Ailes signed on to
write four years ago—depend-
ing on how frank and compel-
ling the manuscript proves to
be when it is submitted.
Meanwhile, 21st Century
Fox, the parent company of
Fox News, continues to inves-
tigate accusations of sexual
harassment against Mr. Ailes,
which includes a lawsuit by a
former anchor.
21st Century Fox and News
Corp, which owns HarperCol-
lins and The Wall Street Jour-
nal, were split in 2013 and still
count the Murdoch family as a
major shareholder. Mr. Mur-
doch, who is executive chair-
man of both companies, as-
sumed the role of chairman
and acting chief executive of
Fox News after Mr. Ailes re-
signed July 21.
Long before the contro-
versy broke out, HarperCollins
and Robert Barnett, Mr. Ailes’s
agent, struck a book deal in
2012, according to the Harper-
Collins employee familiar with
the situation.
Mr. Ailes’s memoir was en-
visioned as a behind-the-
scenes tale that blended
larger-than-life figures from
the worlds of politics, business
Gawker.com Will Shut Down Next Week
BY LUKAS I. ALPERT
AND TOM CORRIGAN
The scandal-plagued enter-
tainment and gossip site
Gawker.com says it will shut
down next week after Univi-
sion Communications Inc.
won a bankruptcy auction to
acquire its parent company
two days ago.
A person familiar with the
matter said the site will cease
publishing new stories Monday
but archives will be preserved.
Univision won a court-ad-
Mondelez
Mars International
14%
12
10
8 expected corner: Volkswagen.
6 hundreds of thousands of
4 Volkswagen car owners in the
2 San Francisco federal court
0
2012 ’14 ’16 ’12 ’14 ’16
Source: Euromonitor International
tions about its long-term
growth prospects.
The chocolate industry has
been consolidating over the
past decade, delivering effi-
ciencies to a handful of large
competitors that have helped
them battle falling volumes.
Mondelez International Inc.’s
recent $23 billion bid for Her-
shey Co. failed, but analysts
expect further consolidation.
The top six competitors con-
trol 60% of the market, ac-
cording to Euromonitor.
Nestlé, which bought 60% of
Chinese candy maker Hsu Fu
Chi in 2011, has mostly stayed
away from making sizable ac-
quisitions in confectionery. The
company has shown interest in
buying Ferrero International
SA but has been unsuccessful so
far, leaving its chocolate portfo-
lio skewed toward mainstream
chocolate with brands such as
KitKat, Crunch, Butterfinger
and Smarties.
As consumers have displayed
a taste for upscale chocolate,
Nestlé has worked to position
some of its existing brands as
premium offerings in certain
markets.
KitKat runs stores in Japan
that last year sold a limited-edi-
tion version of the chocolate
wafer covered in a layer of real
gold foil for ¥2,016 ($20).
More recently, Nestlé has
moved to take some of its local
Roger Ailes and his wife, Elizabeth Tilson, in New York last month.
and media, this person said.
HarperCollins believes that
a memoir by Mr. Ailes, who
formed deep ties to the Re-
publican establishment before
building the leading cable
news network, has plenty of
potential commercial appeal,
even though it is unclear how
much Mr. Ailes would be able
to say about his recent resig-
nation.
“This book has so much po-
tential,” said the HarperCollins
employee. “But you can’t pub-
lish it in the middle of all this
uncertainty. The legal process
has to run its course, as does
the election. You need time,
space and perspective. Books
by celebrity authors get de-
layed all the time.”
Mr. Ailes told the Holly-
wood Reporter last year that
he was writing his memoir for
HarperCollins because he
didn’t want his son “to have to
collect a bunch of New York
ministered bankruptcy auction
for Gawker Media Group on
Tuesday with a bid of $135
million. Gawker Media also in-
cludes the sites Deadspin, Life-
hacker, Gizmodo, Jalopnik,
Jezebel and Kotaku.
The sale agreement submit-
ted to the court includes a
clause that allows Univision to
decide to exclude Gawker.com
from the deal, up to three days
before the acquisition closes.
Univision’s acquisition still
has to be approved by U.S.
Bankruptcy Court Judge Stuart
BUSINESS NEWS
Nestlé Ferrero
’12 ’14 ’16 ’12 ’14
chocolate brands international,
highlighting their provenance
and heritage. Consumers, par-
ticularly millennials, have an in-
creasing desire for products
with strong local stories.
Nestlé in March said it would
invest €60 million ($68 million)
over three years to take its Ital-
ian chocolate brand Baci Perug-
ina global. It agreed to sell six
other Italian chocolate brands
to fund its focus on the hazel-
nut-studded bonbon.
Valeria Norreri—a Nestlé
brand manager who worked on
the international rollout of the
company’s San Pellegrino water,
which is now sold in 145 coun-
tries—is leading a new interna-
tional confectionery unit that
aims to turn Baci Perugina into
a global name.
“Sales results of several
countries confirm that the prod-
uct has the potential to win in
foreign markets,” she said in
March.
Nestlé last year decided to
take its almost-200-year-old
Swiss chocolate brand Cailler
international, in a bid to enter
what it described as “super-
premium chocolate,” tradition-
ally the province of names
such as Lindt, Godiva and Fer-
rero. The hazelnut-and-almond
chocolate, made with milk col-
lected within roughly 30 kilo-
meters of the Cailler flagship
store in Broc, Switzerland, is
Times articles to see what I
was like.”
His situation changed dra-
matically in July. Former Fox
News host Gretchen Carlson
sued Mr. Ailes, alleging that
she was fired after rejecting
his sexual advances and com-
plaining about a hostile work
environment. Mr. Ailes, who
has denied the allegations, re-
signed after agreeing to an
exit package valued at more
than $40 million.
The number of women who
have come forward to investi-
gators to say they also were
victims of Mr. Ailes has
climbed into the double-digits,
according to people familiar
with the matter.
HarperCollins already is
planning to publish a memoir
by Fox News anchor Megyn
Kelly, which promises the
scoop on her feud with Donald
Trump when it comes out a
week after the election.
M. Bernstein at a hearing
Thursday afternoon. If ap-
proved, the sale is expected to
close in early September.
Gawker.com said in its post
that staffers will be assigned
to other editorial roles at one
of the six other sites or at Uni-
vision. Gawker Media staffers
unionized last year, and the
union says that Univision has
agreed to recognize the exist-
ing contract.
Gawker.com had been at the
center of series of damaging
lawsuits over posts it had pub-
Chocoladefabriken
Hershey Lindt & Sprüngli
’16 ’12 ’14 ’16 ’12 ’14 ’16
THE WALL STREET JOURNAL.
now sold through Ama-
zon.com Inc. in the U.S., the
U.K., Germany and China, and
at airports in Dubai, Singapore
and Switzerland.
In February, Nestlé said it
was taking its pistachio-laden
Turkish chocolate brand Da-
mak to the U.S. The company
described Damak—which uses
pistachios from the Gaziantep
region of Turkey—as “an ad-
venturous taste experience not
found in any other chocolate.”
Analysts have criticized
Nestlé for its chocolate perfor-
mance in recent years, noting
its laggard position in the cate-
gory relative to its dominance
in coffee, water, infant nutrition
and other businesses.
The Swiss company’s confec-
tionery business, along with fro-
zen food, also increasingly looks
at odds with its ambition to be-
come a health and nutrition be-
hemoth, leading analysts to sug-
gest it could eventually look to
exit U.S. chocolate. Nestlé didn’t
immediately respond to a re-
quest for comment.
Hershey, Mars Inc. and
Chocoladefabriken Lindt &
Sprüngli AG all have bigger U.S.
businesses than Nestlé, and
Hershey and Mars have also
been pushing into high-end
chocolate of late.
 Heard on the Street: Nestlé’s
stock is bittersweet ............. B8
Booksellers say they are
anxious to find out if the book,
“Settle for More,” also con-
tains revelations regarding Mr.
Ailes. Ms. Kelly has been pub-
licly silent on Mr. Ailes’s resig-
nation, but New York Maga-
zine reported in mid-July that
she told investigators that he
made unwanted advances to-
DREW ANGERER/GETTY IMAGES
ward her years earlier, which
he has denied.
It couldn’t be learned
whether Mr. Ailes’s deal to
exit Fox News includes a non-
disclosure agreement that pre-
vents him from publicly dis-
cussing his departure. A
spokesman for 21st Century
Fox declined to comment on
the terms of Mr. Ailes’s exit.
Mr. Barnett declined to
comment. A lawyer for Mr.
Ailes didn’t respond to a re-
quest for comment, and Mr.
Ailes didn’t respond to a writ-
ten request for an interview.
Mr. Ailes, a veteran televi-
sion producer and political
consultant who worked with
former Presidents Richard
Nixon, Ronald Reagan and
George H.W. Bush, led the
launch of the Fox News Chan-
nel in 1996. He helped build
the network into the country’s
most-watched cable news net-
work while playing a key role
in the careers of such Fox
News stars as Bill O’Reilly and
Ms. Kelly.
Mr. Ailes’s first book, “You
Are the Message,” was written
with Jon Kraushar and pub-
lished in 1987 by Irwin Profes-
sional Publishing, an imprint
owned by McGraw-Hill Educa-
tion.
lished. One of those stories,
which featured a sex tape in-
volving former professional
wrestler Hulk Hogan, ulti-
mately forced the company
into bankruptcy.
Hulk Hogan, whose real
name is Terry Bollea, filed an
invasion-of-privacy suit
against the company and won
a $140 million jury verdict.
Gawker Media filed for
chapter 11 bankruptcy protec-
tion in June after a Florida
judge upheld the verdict.
Gawker has appealed.
THE WALL STREET JOURNAL.
Lawsuit Claims Bosch
Helped VW Dupe Test
BY WILLIAM BOSTON
Lawyers seeking compensa-
tion for owners of cars af-
fected by Volkswagen AG’s
emissions-cheating scandal are
turning up the pressure on
auto-parts supplier Robert
Bosch GmbH, and they are
getting assistance from an un-
Attorneys representing
U.S. filed a 742-page brief in
this week that relies heavily
on documents provided by
Volkswagen to support allega-
tions that Bosch, which sup-
plied the engine control unit
used in its diesel vehicles,
worked “hand-in-glove” with
the German car maker.
The allegations against Bo-
sch aren’t new but have ac-
quired greater urgency in the
wake of the $15 billion settle-
ment on behalf of U.S. Volks-
wagen customers and U.S. au-
thorities. Bosch wasn’t a party
to that settlement and still
faces civil litigation.
Bosch supplied the engine
control unit, which Volks-
wagen programmed to recog-
nize when its diesel vehicles
were undergoing emissions
tests. The Stuttgart-based
company has said that it isn’t
responsible for how its com-
ponents are integrated into
vehicles by customers.
But the lawsuit claims Bo-
sch didn’t allow manufacturers
to make changes without its
consent, saying it was “incon-
ceivable, then, that Bosch did
not know that the software it
was responsible for defining,
developing, testing, maintain-
ing and delivering contained
an illegal defeat device.”
Allegations that Bosch was
aware of the rigging first
emerged immediately after
U.S. authorities disclosed that
Volkswagen had rigged diesel
engines to cheat on emissions
tests.
The plaintiffs’ attorneys ar-
gue that the Clean Air Act not
only forbids the use of defeat
devices but also forbids the
sale of components used as
defeat devices if the seller is
aware that the component will
be used as such.
Plaintiffs’ attorneys said
Business
Watch
VESTAS WIND SYSTEMS
Deliveries Help Drive
Strong Earnings
Denmark’s Vestas Wind Sys-
tems, one of the world’s largest
makers of wind turbines, posted
a strong rise in second-quarter
net profit thanks to higher deliv-
eries in the U.S. and Germany.
The company said net profit
more than doubled to €278 mil-
lion ($313.8 million) in the three
months to June 30, from €125
million in the same period a year
earlier. Revenue grew 46% to
€2.56 billion from €1.75 billion.
Vestas’s strong earnings high-
light how wind-turbine makers
have recovered from a difficult
period at the start of the de-
cade, when many governments
questioned their support for re-
newable energy and big projects
were put on hold.
Crippled by losses, Vestas
had to cut jobs and sell a num-
ber of factories in 2012 and
2013.
Now, Vestas is expanding
again, with U.S. deliveries grow-
ing 45% on the year to 779
megawatts, partly due to the
country’s extension last year of
a key tax credit until 2023, with
a gradual reduction as of next
year.
—Kjetil Malkenes Hovland
Vestas’s results highlight a recovery among wind-turbine makers.
their case is “based almost en-
tirely on information produced
by Volkswagen,” publicly avail-
able documents, and their own
research. Bosch has provided
few documents, “none of
which merit consideration,”
they said.
The updated complaint
cites an email dated May 31,
2013, from a U.S.-based Volks-
wagen employee concerning 2-
liter diesel vehicles that refers
to a “proposed strategy” to
“get the executive order (from
CARB) based on the ‘Bosch’
strategy.” CARB is the Califor-
nia Air Resources Board, a
state environmental regulator.
A Bosch spokesman said in
an emailed statement that the
company was “cooperating
with the investigations in vari-
ous jurisdictions, and is de-
fending its interests in the liti-
gation. As a matter of policy,
and due to the sensitive legal
nature of these matters, Bosch
will not comment further con-
cerning matters under investi-
gation and in litigation.”
Updated suit claims
‘inconceivable’ parts
maker wasn’t aware
of improper use.
The plaintiffs’ lawyers are
now pressing Bosch to provide
information “but the evidence
already proves that Bosch
played a critical role in [the]
scheme to evade U.S. emission
requirements,” they said in the
court filing. Bosch’s actions,
they said, “demonstrate that
Bosch was a knowing and ac-
tive participant in the decade-
long illegal enterprise to de-
fraud U.S. consumers.”
Bosch’s electronic diesel
control unit, called the EDC
Unit 17, contains specific algo-
rithms to adjust fuel levels, air
pressure, recirculation of ex-
haust gas to lower NOx emis-
sions, and injection rates of
urea, the fluid used to break
down NOx into harmless com-
ponent parts before it is emit-
ted from a car’s tail pipe. EDC
Unit 17 also is used on diesel
vehicles from several manu-
facturers, including Volks-
wagen, BMW AG and Daimler
AG’s Mercedes-Benz.
DP WORLD
Ports Operator
Slows Capacity
Dubai-based global ports op-
erator DP World on Thursday
said it has slowed the addition
of new capacity amid an uncer-
tain outlook for trade growth,
despite posting a 50% jump in
first-half profit on the back of
acquisitions.
DP World is among the
world’s largest ports operators.
DP World’s net profit for the
six-month period climbed to
$608 million from $405 million a
year earlier. Revenue rose 10.2%
year over year to $2.1 billion,
helped by the acquisitions of
Jebel Ali Free Zone in the United
Arab Emirates and the Prince
Rupert terminal in Canada.
—Nikhil Lohade
HORMEL FOODS
Spam Sales Boost
Company’s Outlook
Hormel Foods Corp. boosted
its outlook for the year again as
revenue and profit rose, thanks
to the continued strength of its
Spam and Skippy products.
For 2016, the food maker
now anticipates earnings of
$1.60 to $1.64 a share, up from
its previous guidance of $1.56 to
$1.60. This is Hormel’s third
guidance increase for the year.
Hormel earned $195.7 million,
or 36 cents a share, up from
$146.9 million, or 27 cents a
share, a year earlier. Revenue
rose 5.2% to $2.3 billion.
—Anne Steele
AGENCE FRANCE-PRESSE/GETTY IMAGES
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
An Era Ends at Citigroup
The big bank’s last proprietary trader is leaving, amid a post-financial-crisis retrenchment
BY CHRISTINA REXRODE
Citigroup Inc.’s last real pro-
prietary trader is leaving the
building.
Anna Raytcheva, a Citigroup
trader who most recently ran a
proprietary-trading desk at the
New York bank, is leaving to
open her own hedge fund next
year.
Ms. Raytcheva said in an in-
terview this week that she ex-
pects to leave the bank later this
month. The move follows Citi-
group’s decision earlier this
year to close the proprietary-
trading desk that Ms. Raytcheva
ran. The lender, run by Chief Ex-
ecutive Officer Michael Corbat,
has a long history with proprie-
tary trading and has held on to
the strategy years longer than
other big banks.
Proprietary traders at banks
are high-paid employees that
Stocks in
U.S. Gain;
Europe
Rebounds
BY RIVA GOLD
AND IRA IOSEBASHVILI
U.S. stocks strengthened
Thursday, as oil prices rose
and the dollar weakened.
The Dow Jones Industrial
Average added 23.76 points, or
0.1%, to 18597.70 at 4 p.m.
Thursday in New York. The S&P
500 and the
THURSDAY’S Nasdaq Com-
MARKETS posite Index
both gained
0.2%.
The Stoxx Europe 600 rose
0.7%, snapping a four-session
losing streak.
Minutes from the Federal
Reserve’s latest meeting, re-
leased Wednesday, offered lit-
tle guidance for investors who
were expecting a clearer mes-
sage on the path of interest
rates from the U.S. central
bank.
“Given that the Fed did not
tip its hand yesterday, the
market is left to meander until
next week,” said Tom Carter,
managing director and trader
at JonesTrading International
Services LLC.
Fed Chairwoman Janet Yel-
len is scheduled to give a
speech next week at the cen-
tral bank’s annual conference
in Jackson Hole, Wyo.
U.S. stocks have notched
all-time highs in recent weeks,
while European stocks have
staged a steep recovery from
their post-Brexit lows.
Even with those highs,
“people are not feeling as
good as you might think they’d
feel,” said Seth Masters, chief
investment officer at Alliance-
Bernstein’s wealth-manage-
ment arm, pointing to deterio-
rating measures of investor
sentiment.
“We’ve gotten really used
to very low interest rates.
That creates vulnerability if
anything changes,” he said.
The WSJ Dollar Index,
which measures the dollar
against a basket of 16 curren-
cies, was down 0.5%.
U.S. crude oil rose 3.1% to
$48.22 a barrel, extending re-
cent gains on hopes the world’s
largest exporters would revisit
a deal to freeze output.
In Europe, miners re-
bounded, tracking metals
prices higher. Antofagasta
gained 5.3%, Anglo American
rose 1.7% and BHP Billiton
climbed 2.8%.
Earlier, Japan’s Nikkei Stock
Average fell 1.6%.
Comeback
Antofagasta’s daily share price
650 pence
Thursday: 571
600
5.25%
550
500
450
400
350
300
2015 2016
Source: FactSet
THE WALL STREET JOURNAL.
FINANCE & MARKETS
buy and sell for the firm’s own
account, rather than to match
investing clients with securities.
The firm’s trading roots go
back to Salomon Broth-
ers, whose 1980s trading ex-
ploits were featured in the
book “Liar’s Poker.” That firm
was ultimately folded into Citi-
group, whose billions of dollars
in trading losses during the fi-
nancial crisis prompted re-
peated taxpayer-led bailouts.
Banks used to routinely en-
gage in proprietary trading. Be-
fore the financial crisis, Citi-
group and other large banks,
including Goldman Sachs
Group Inc. and Morgan Stanley
had multiple desks dedicated to
the lucrative but risky practice.
But the “Volcker rule,” part
of the post-financial-crisis regu-
latory overhaul, banned most
types of so-called prop trading
and shifted banks’ trading ac-
China Firm Wants to Revive Chicago Bourse
BY DAVE MICHAELS
AND WILLIAM MAULDIN
A Chinese-led group of in-
vestors sees their takeover bid
for the Chicago Stock Exchange
as a way to reinvent the strug-
gling venue as a bridge be-
tween U.S. and Chinese mar-
kets, and a Western listings
outpost for Chinese firms.
But first, they have to per-
suade Washington that it isn’t a
Beijing plot to undermine
American financial markets.
“You have the proclivity for
exploitation and espionage,”
said Rep. Robert Pittenger, a
North Carolina Republican and
one of 45 lawmakers who wrote
the Obama administration this
year demanding a review of the
sale’s national-security risks.
“There’s extraordinary pressure
put on all these companies by
the state—that’s a given,” said
Mr. Pittenger, raising concerns
about what a Chinese-run com-
pany might do with broad ac-
cess to one of the engines of
the $26.3 trillion U.S. stock
market.
The Chicago exchange said
in February that a group led by
Chongqing Casin Enterprise
Group would acquire CHX
Holdings Inc., the exchange’s
owner, without announcing the
terms of the sale.
Advocates of the deal say
the possibility of seeing the ex-
change turned into a spy out-
post is remote, and that politi-
cians who don’t understand
trading have overstated the
risks.
“That’s not why investments
are made,” said Dave Herron, a
former chief executive of the
exchange. “No one would trade
on the entity if they thought
their information could be re-
leased.”
The political scrutiny and
prospective Chinese involve-
ment has cast the spotlight on
an exchange that clings to a
small niche in the U.S. trading
world, used mostly by brokers
who buy stocks and exchange-
traded funds, and hedge posi-
tions using the Chicago-based
futures and options markets.
The current owners, which
include several Wall Street
banks, have agreed to sell the
German Bankers Turn Into Tech Entrepreneurs
BY EYK HENNING
FRANKFURT—More German
bankers are trading ties for T-
shirts and trying to boost the
country’s struggling tech-
startup scene.
Axel Hoerger spent 20 years
rising through Goldman Sachs
Group Inc. and UBS Group AG.
Last year, he shifted gears and
launched a messaging
app called Poltergeist.
“At some point I thought I’d
seen enough in banking and
decided to take a break and
start something on my own,”
Mr. Hoerger said.
The 48-year-old, who has
hired a chief executive for his
venture and started a new
banking job, said Poltergeist
has around 200,000 users and
continues to grow.
“The first few months were
thrilling,” he said. He is “now
looking to raise funds that pro-
pel us to the next stage.”
He isn’t alone among Ger-
man bankers with Silicon Val-
ley dreams.
tivities to those on behalf of cli-
ents. To comply with the rule,
Citigroup sold or spun off busi-
nesses, including an emerging-
markets hedge fund and a pri-
vate-equity unit. It also closed
down Citi Principal Strate-
gies, its dedicated proprietary-
trading desk, in January 2012.
Such retrenchment has been
common at big banks over the
past five years, with proprietary
traders decamping to hedge
funds and other less-regulated
industries.
The Volcker rule makes ex-
ceptions for some assets, includ-
ing municipal bonds and other
government securities. The five-
person unit that the 44-year-old
Ms. Raytcheva most recently
ran, called the strategic-trading
desk, traded the bank’s own
money in U.S. Treasurys and
other securities issued by gov-
ernment agencies, including
The original Chicago Stock Exchange building entrance is preserved outside the Modern Wing of the Art Institute of Chicago.
exchange for $22 million, ac-
cording to people familiar with
the matter. While it generated
only $19.5 million in revenue
last year, its license remains
valuable because new ex-
changes face a gantlet of regu-
latory barriers.
The sale still needs approval
from the Securities and Ex-
change Commission, as well as
the Committee on Foreign In-
vestment in the U.S. led by the
Treasury Department, which
reviews national-security impli-
cations. The committee’s ques-
tions include whether the Chi-
nese government would have
influence over exchange own-
ers, according to people famil-
iar with the matter.
“The CHX is confident that
[the committee] will make an
informed, non-political decision
and find that there is no incre-
mental risk,” Chicago exchange
CEO John Kerin said in a state-
ment.
Founded in 1882 as a re-
gional platform for shares of
Midwest farm-equipment com-
“Many of the startups we’re
talking with over a potential
investment are founded by for-
mer bankers and business con-
sultants,” said Frank Seehaus
of German venture-capital firm
Acton Capital Partners GmbH.
“Those people stand out be-
cause they know how to pres-
ent the value drivers of busi-
ness models.”
The trend started after the
financial crisis. It is picking up
speed, as many European lead-
ers are calling for more home-
grown tech champions, indus-
try officials said.
The situation is especially
acute in Germany, where ven-
ture-capital firms last year in-
vested less than $1 billion in
young German companies, ac-
cording to the country’s pri-
vate-equity and venture-capital
association, BVK. Across Eu-
rope, the figure is roughly $15
billion, still dwarfed by the
U.S.’s $75.3 billion, according
to Dow Jones VentureSource.
Only two German compa-
nies are in the Billion Dollar
mortgage firms Fannie Mae and
Freddie Mac.
Citigroup still has some trad-
ers that can engage in Volcker-
compliant proprietary trades.
But Ms. Raytcheva’s desk was
the last stand-alone effort of
any significant size at the bank,
people familiar with the matter
said.
Citigroup closed the desk in
May, saying that trading oppor-
tunities had dried up and that
the capital could be better de-
ployed in client-facing busi-
nesses. Also, Ms. Raytcheva said
she found it limiting to run a
proprietary trading desk that
could deal only in a narrow set
of financial instruments.
“The industry is going
through a structural change,”
she said. “I think there is an op-
portunity for smaller, more-nim-
ble players.” She also said
she wanted to expand beyond
panies and railroads, the CHX
was until the early 1990s Amer-
ica’s second-largest exchange.
It has fallen from a market-
share peak of 10.6% in 1989 to
less than 1% this year, partly
because it was slow to adapt to
an era dominated by high-fre-
quency traders.
In 2006, a consortium of
marquee Wall Street firms, in-
cluding Goldman Sachs Group
Investors have to show it isn’t a Beijing
plot to undermine U.S. financial markets.
Inc. and Bank of America Corp.,
invested $20 million in the ex-
change to gain a voice in the
debate over the future of ex-
changes, which were once bro-
ker-owned utilities rapidly
transforming into for-profit
companies.
Hard up for cash, the ex-
change signed an agreement in
2015 with Chongqing Casin,
based in Chongqing, China. Ca-
sin owns majority stakes in an
Club of the world’s 50 biggest
startups: online fashion re-
tailer Zalando SE and Rocket
Internet SE, which itself devel-
ops startups.
For entrepreneurial bankers,
the shortage of new-venture
funding is itself an opportu-
nity. Ex-Goldman Sachs banker
Toby Triebel in 2014 founded
Spotcap, an online credit plat-
form that provides short-term
Attendees at a July tech conference in Berlin.
Friday - Sunday, August 19 - 21, 2016 | B5
CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL
Anna Raytcheva is leaving Citigroup later this month.
focusing primarily on U.S. Ms. Raytcheva, who grew up
macro trends. in communist Bulgaria, joined
Ms. Raytcheva said her hedge Citi as an interest-rate-options
fund, which doesn’t yet have a trader in 1994, four years before
name, would focus on global it merged with Salomon Broth-
bets in markets including for- ers parent Travelers Group. She
eign exchange. Most of the rose through the ranks of Citi-
other employees from Ms. Ray- group’s fixed-income unit and
tcheva’s former desk have during the 2008 financial crisis
stayed at the bank, trading on held a senior role that involved
behalf of clients, a bank spokes- managing risk for the bank’s
woman said. corporate treasury department.
GETTY IMAGES
eclectic mix of Chinese compa- the fact that stock exchanges
nies, including a property de- have regulatory duties under
veloper, an insurance company, U.S. laws and maintain access
two municipal commercial to the life cycle of every order.
banks, a private-equity fund, Its oversight arm will have ac-
and a micro lender, according cess to every trade, quote and
to its website. cancellation—as well as a code
Jay Lu, the son of Casin’s indicating the trader behind
majority shareholder, Shengju it—once regulators activate an
Lu, is a U.S. citizen and is also expanded audit trail of orders
investing in the deal, according that will start receiving data as
to people familiar with the early as next year. Having ac-
cess to those records could al-
low a foreign entity to copycat
a U.S. firm’s strategies, accord-
ing to U.S. traders.
The SEC review seeks to en-
sure that new owners could ef-
matter. Along with Jay Lu, fectively carry out their regula-
other entities held by U.S. in- tory duties by ensuring the
vestors would own more than independence of its oversight
50% of the exchange’s parent function. Some critics think the
company, North America Casin deal deserves even stricter
Holdings Inc., the people said. scrutiny. These critics note that
The investors hope that will di- China tightly restricts foreign
lute concern about China’s in- ownership of domestic compa-
fluence. nies, thus a U.S. firm is unlikely
Some traders and exchange to be allowed to buy a stake in
officials, speaking privately, say a Chinese exchange.
one of the biggest concerns —Kane Wu
about Casin’s bid stems from contributed to this article.
loans to small and midsize en- rizon Capital & Advisory
terprises. GmbH, a firm that invests in
“Whenever a portfolio in young companies and advises
our region is looking at raising startups on strategy and fund-
more than €20 million ($22.6 raisings. Mr. Korbmacher said
million), we can’t just rely on former colleagues initially
Europe or just Germany,“ said smiled at what they called his
Martin Korbmacher, who was “rather esoteric move for a
chairman of Credit Suisse AG’s banker.”
German and Austrian invest- His investments include Zu-
ment bank until 2011. rich-based Starmind, a knowl-
He then founded Event Ho- edge-management company
that uses artificial intelligence
to automatically route any em-
ployee’s question to the right
expert within an organization.
“Europeans need to find their
own solutions instead of rely-
ing on Silicon Valley,” he said.
Dagmar Bottenbruch, who
previously ran the German op-
KRISZTIAN BOCSI/BLOOMBERG NEWS
erations of Dutch lender Ra-
bobank NV, is now co-chief ex-
ecutive at Crosslend GmbH, a
platform that securitizes loans
of all sizes and markets them
to investors.
“There is abundant liquidity
on the market,” she said, “but
it doesn’t flow to where it’s
needed.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B6 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
16486.01 t 259.63, or 1.55% Year-to-date t 13.39% 342.91 s 2.44, or 0.72% Year-to-date t 6.26% 2187.02 s 4.80, or 0.22% Trailing P/E ratio * 24.91 21.70
High, low, open and close for each 52-wk high/low20033.52 14952.02 High, low, open and close for each 52-wk high/low 385.43 303.58 High, low, open and close for each P/E estimate * 18.57 17.65
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.09 2.04
All-time high: 2190.15, 08/15/16

* P/E data based on as-reported earnings from Birinyi Associates Inc.

17500 360 2200

65-day moving average

17000 65-day moving average 350 2160

16500 340 2120

16000 330 2080

Session high
DOWN UP 15500 320 65-day moving average 2040
t

Session open Close

Close Open
t

15000 310 2000

Bars measure the point change from session's open Session low
14500 300 1960
May June July Aug. May June July Aug. May June July Aug.

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2463.46 15.03 0.61 2033.03 • 2466.78 5.4 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1711.57 10.24 0.60 1471.88 • 1956.39 –0.3 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 915.61 5.94 0.65 691.21 • 1044.05 15.3 3.250 Australia 2 1.434 72.5 71.4 93.0 121.4 1.444 1.624 1.936
4.250 10 1.880 34.6 36.4 41.3 55.5 1.917 1.999 2.749
Americas DJ Americas 528.31 1.47 0.28 433.38 • 529.24 8.4
1.250 Belgium 2 -129.3 -127.3 -89.7 -0.595 -0.579 -0.175
-0.583 -132.5
Brazil Sao Paulo Bovespa 59269.00 –54.83 –0.09 37046.07 • 59417.88 36.7
1.000 10 0.119 -141.5 -140.3 -134.7 -120.7 0.150 0.239 0.987
Canada S&P/TSX Comp 14691.69 –5.91 –0.04 11531.22 • 14855.69 12.9
1.000 France 2 -0.568 -127.8 -129.6 -122.1 -89.5 -0.567 -0.527 -0.173
Mexico IPC All-Share 48445.17 186.24 0.39 39256.58 • 48956.06 12.7
0.500 10 0.137 -139.7 -137.9 -137.1 -122.0 0.173 0.215 0.975
Chile Santiago IPSA 3229.51 8.81 0.27 2730.24 • 3253.99 9.7
0.000 Germany 2 -0.613 -132.2 -134.8 -133.4 -97.2 -0.618 -0.641 -0.249
U.S. DJIA 18597.70 23.76 0.13 15370.33 • 18668.44 6.7
0.000 10 -0.079 -161.3 -160.0 -159.9 -154.6 -0.048 -0.014 0.648
Nasdaq Composite 5240.15 11.49 0.22 4209.76 • 5271.36 4.6
0.250 Italy 2 -0.076 -78.5 -81.0 -74.9 -61.1 -0.080 -0.055 0.111
S&P 500 2187.02 4.80 0.22 1810.10 • 2193.81 7.0
1.600 10 1.078 -45.6 -44.1 -33.2 -39.3 1.112 1.253 1.802
CBOE Volatility 11.55 –0.64 –5.25 11.02 • 53.29 –36.6
0.100 Japan 2 -0.191 -90.0 -91.0 -102.5 -71.7 -0.180 -0.332 0.005
EMEA Stoxx Europe 600 342.91 2.44 0.72 303.58 • 385.43 –6.3 0.100 10 -0.078 -161.2 -162.8 -181.6 -181.8 -0.076 -0.230 0.376
Stoxx Europe 50 2861.73 14.15 0.50 2556.96 • 3305.96 –7.7 4.000 Netherlands 2 -0.591 -130.0 -130.9 -129.1 -93.8 -0.579 -0.597 -0.216
Austria ATX 2267.49 15.95 0.71 1929.73 • 2515.09 –5.4 0.500 10 0.017 -151.7 -150.0 -149.1 -137.0 0.052 0.095 0.825
Belgium Bel-20 3518.09 22.57 0.65 3117.61 • 3773.73 –4.9 4.450 Portugal 2 0.522 -18.8 -25.2 -0.7 -37.8 0.478 0.687 0.344
France CAC 40 4437.06 19.38 0.44 3892.46 • 5011.65 –4.3 2.875 10 2.894 136.0 131.2 153.8 27.3 2.864 3.124 2.468
Germany DAX 10603.03 65.36 0.62 8699.29 • 11430.87 –1.3 0.250 Spain 2 -0.180 -88.9 -89.5 -84.6 -59.7 -0.166 -0.153 0.126
Greece ATG 572.25 4.76 0.84 420.82 • 731.18 –9.4 1.950 10 0.922 -61.2 -57.3 -34.2 -22.1 0.979 1.243 1.973
Hungary BUX 27700.12 –90.85 –0.33 20452.90 • 28100.59 15.8 4.250 Sweden 2 -0.645 -135.4 -137.9 -132.9 -120.5 -0.650 -0.635 -0.483
Israel Tel Aviv 1468.41 3.38 0.23 1378.80 • 1708.46 –3.9 1.000 10 0.076 -145.8 -148.5 -141.1 -152.8 0.068 0.175 0.666
Italy FTSE MIB 16673.58 145.22 0.88 15017.42 • 23011.01 –22.2 1.250 U.K. 2 0.145 -56.5 -57.2 -51.8 2.6 0.158 0.175 0.748
Netherlands AEX 451.69 4.12 0.92 378.53 • 474.87 2.2 2.000 10 0.552 -98.2 -98.5 -75.9 -29.8 0.568 0.827 1.896
Poland WIG 47967.07 –39.68 –0.08 41747.01 • 52634.79 3.2 0.750 U.S. 2 0.710 ... ... ... ... 0.730 0.694 0.722
Russia RTS Index 975.04 9.65 1.00 607.14 • 987.07 28.8 1.500 10 1.534 ... ... ... ... 1.553 1.585 2.194
Spain IBEX 35 8550.10 63.10 0.74 7579.80 • 10797.50 –10.4
Sweden SX All Share 502.57 4.11 0.82 432.78 • 530.82 –0.5 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8189.73 35.93 0.44 7425.05 • 9236.71 –7.1 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 52989.66 679.96 1.30 45975.78 • 54760.91 4.5 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 8/17/2016
Turkey BIST 100 77970.93 –176.89 –0.23 68230.47 • 86931.34 8.7
One-Day Change Year Year
U.K. FTSE 100 6868.96 9.81 0.14 5499.51 • 6955.34 10.0 Commodity Exchange Last price Net Percentage high low
343.00 3.25 0.96% 449.00 322.50
Asia-Pacific DJ Asia-Pacific TSM 1470.01 –1.55 –0.11 1188.42 • 1479.05 5.8 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 1014.25 -1.75 -0.17% 1,186.25 868.00
Australia S&P/ASX 200 5507.80 –27.20 –0.49 4765.30 • 5587.40 4.0
Wheat (cents/bu.)
CBOT
CBOT 444.50 1.50 0.34 551.50 425.25
China Shanghai Composite 3104.11 –5.44 –0.17 2655.66 • 3664.29 –12.3
Live cattle (cents/lb.) CME 110.450 -1.950 -1.73 125.475 105.250
Hong Kong Hang Seng 23023.16 223.38 0.98 18319.58 • 23151.94 5.1
Cocoa ($/ton) ICE-US 3,118 39 1.27 3,216 2,728
India S&P BSE Sensex 28123.44 118.07 0.42 22951.83 • 28208.62 7.7
Coffee (cents/lb.) ICE-US 141.95 3.85 2.79 157.65 119.40
Japan Nikkei Stock Avg 16486.01 –259.63 –1.55 14952.02 • 20033.52 –13.4
Sugar (cents/lb.) ICE-US 20.04 0.32 1.62 21.22 12.92
Singapore Straits Times 2836.98 –6.37 –0.22 2532.70 • 3083.07 –1.6
Cotton (cents/lb.) ICE-US 69.07 0.26 0.38 77.98 54.19
South Korea Kospi 2055.47 11.72 0.57 1829.81 • 2055.47 4.8 Robusta coffee ($/ton) ICE-EU 1817.00 32.00 1.79 1,886.00 1,423.00
Taiwan Weighted 9122.50 4.80 0.05 7410.34 • 9200.42 9.4
Copper ($/lb.) COMEX 2.1805 0.0170 0.79 2.3290 1.9710
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1357.90 9.10 0.67 1,384.40 1,066.00
Silver ($/troy oz.) COMEX 19.750 0.102 0.52 21.225 13.930
Currencies London close on Aug. 18 Aluminum ($/mt)* LME 1,695.50 8.50 0.50 1,695.50 1,451.50
Tin ($/mt)* LME 18,335.00 65.00 0.36 18,650.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Thu YTDchg Copper ($/mt)* LME 4,772.00 -36.50 -0.76 5,070.50 4,320.50
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,884.00 16.00 0.86 1,909.00 1,598.00
20% Europe Zinc ($/mt)* LME 2,265.00 -4.00 -0.18 2,306.50 1,467.00
s
Yen Bulgaria lev 0.5795 1.7255 –4.1 Nickel ($/mt)* LME 10,220.00 -180.00 -1.73 10,950.00 7,750.00
Croatia kuna 0.1515 6.602 –5.8 Rubber (Y.01/ton) TCE 156.20 1.00 0.64 159.30 150.80
10
Euro zone euro 1.1336 0.8822 –4.2
2578.00 -65.00 2,669.00 2,171.00
s
WSJ Dollar index
s Euro Czech Rep. koruna-b 0.0420 23.837 –4.2 Palm oil (MYR/mt) MDEX -2.46
0 Denmark krone 0.1523 6.5649 –4.5 Crude oil ($/bbl.) NYMEX 48.80 1.28 2.69 53.02 33.28
Hungary forint 0.003654 273.67 –5.8 NY Harbor ULSD ($/gal.) NYMEX 1.5395 0.0323 2.14 1.6047 1.0081
Iceland krona 0.008563 116.78 –10.3 RBOB gasoline ($/gal.) NYMEX 1.4164 0.0277 1.99 1.5121 0.9930
–10 Norway krone 0.1226 8.1573 –7.7
0.2643 3.7835 –3.6
Natural gas ($/mmBtu) NYMEX 2.707 0.048 1.81 3.0220 2.0490
2015 2016 Poland zloty
Russia ruble-d 0.01572 63.610 –11.5 Brent crude ($/bbl.) ICE-EU 51.02 0.94 1.88 53.81 32.51
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1197 8.3572 –1.1 Gas oil ($/ton) ICE-EU 457.00 14.75 3.34 481.75 307.00
Thu Thu
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0447 0.9572 –4.5
Turkey lira 0.3415 2.9282 0.4 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1290 7.7539 0.04
Ukraine hryvnia 0.0400 25.0280 4.3
Argentina peso-a 0.0671 14.9020 15.2
India rupee
Indonesia rupiah
0.0150
0.0000763
66.8404 1.0
13112 –5.2
U.K. pound 1.3142 0.7609 12.1 Cross rates London close on Aug 18
Brazil real 0.3096 3.2297 –18.5 Middle East/Africa
Japan yen 0.009997 100.03 –16.8
Canada dollar 0.7826 1.2779 –7.7 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002953 338.64 –0.03 Bahrain dinar 2.6522 0.3770 –0.02
Chile peso 0.001524 656.10 –7.4 Australia 1.3011 1.7100 1.3591 0.0130 0.1678 1.4748 1.0182 ...
Macau pataca 0.1252 7.9862 –0.2 Egypt pound-a 0.1126 8.8801 13.4
Colombia peso 0.0003434 2911.79 –8.3 Canada 1.2779 1.6794 1.3348 0.0128 0.1648 1.4484 ... 0.9823
Malaysia ringgit-c 0.2507 3.9894 –7.3 Israel shekel 0.2652 3.7705 –3.1
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7292 1.3714 –6.3 Kuwait dinar 3.3184 0.3014 –0.7 Euro 0.8822 1.1595 0.9214 0.0088 0.1138 ... 0.6904 0.6780
Mexico peso-a 0.0553 18.0712 5.1
Pakistan rupee 0.0095 104.750 –0.1 Oman sul rial 2.5976 0.3850 0.003 Hong Kong 7.7539 10.1909 8.1006 0.0775 ... 8.7894 6.0677 5.9596
Peru sol 0.3027 3.3035 –3.3
Philippines peso 0.0216 46.293 –1.2 Qatar rial 0.2747 3.640 –0.1 Japan 100.0340 131.4700 104.5200 ... 12.9010 113.4000 78.2900 76.8900
Uruguay peso-e 0.0350 28.610 –4.3
Singapore dollar 0.7464 1.3398 –5.5 Saudi Arabia riyal 0.2667 3.7501 –0.1 0.9572 1.2581 ... 0.0096 0.1234 1.0854 0.7492 0.7357
Venezuela bolivar 0.100100 9.99 58.4 Switzerland
South Korea won 0.0009023 1108.29 –5.8 South Africa rand 0.0748 13.3681 –13.6
U.K. 0.7609 ... 0.7948 0.0076 0.0981 0.8626 0.5954 0.5848
Asia-Pacific Sri Lanka rupee 0.0068719 145.52 0.9 Close Net Chg % Chg YTD % Chg
0.7686 1.3011 –5.2 Taiwan dollar 0.03184 31.407 –4.6 U.S. ... 1.3142 1.0447 0.0100 0.1290 1.1336 0.7826 0.7686
Australia dollar WSJ Dollar Index 85.28 –0.35 –0.41 –5.43
China yuan 0.1508 6.6303 2.1 Thailand baht 0.02894 34.560 –4.1 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

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

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.51244% 0.20040% ¥ TakedaPharm 4502 4540.00 -3.20 -25.14 CHF RocheHldgctf ROG 243.40 -0.25 -11.94 Last: 142.41 t 0.04, or 0.03% YTD s 4.5%
Three month 0.81100 0.32910 Asia Titans HK$ TencentHoldings 0700 203.00 5.18 32.94 £ RoyDtchShell A RDSA 1932.00 0.23 26.61
140
Six month 1.21011 0.53280 48.75 ... 4.61 77.68 High
HK$ AIAGroup 1299 ¥ TokioMarineHldg 8766 3836.00 -1.26 -18.59 € SAP SAP -0.03 5.86
50–day
One year 1.51544 0.85760 1577.00 -2.98 -8.92 70.17
¥ AstellasPharma 4503 ¥ ToyotaMtr 7203 5900.00 -1.76 -21.21 € Sanofi SAN 0.17 -10.73 Close moving average 135
Euro Libor AU$ AustNZBk ANZ 26.72 -0.19 -4.33 AU$ Wesfarmers WES 42.98 -0.56 3.29 € SchneiderElectric SU 60.87 1.43 15.81 Low 130
One month -0.37143% -0.10429% 20.86 -0.24 16.80 106.25 0.85 18.21
t
AU$ BHP BHP AU$ WestpacBanking WBC 29.99 -0.56 -10.64 € Siemens SIE
Three month -0.32029 -0.02643 HK$ BankofChina 3988 3.47 0.29 0.29 AU$ Woolworths WOW 23.75 0.76 -3.06 € Telefonica TEF 8.93 1.16 -12.73 125
Six month -0.20229 0.05200 HK$ CKHutchison 0001 98.15 -0.25 -5.99 € Total FP 43.65 0.70 7.91 120
One year -0.07343 0.15671 HK$ CNOOC 0883 9.76 ... 20.94 Stoxx 50 CHF UBSGroup UBSG 13.08 -0.23 -32.99
115
Euribor ¥ Canon 7751 2891.00 -0.93 -21.33 CHF ABB ABBN 21.41 1.18 19.21 € Unilever UNA 41.31 0.24 3.02
One month -0.36900% -0.09100% ¥ CentralJapanRwy 9022 16855 -1.46 -21.97 € ASMLHolding ASML 93.90 0.83 13.75 £ Unilever ULVR 3598.50 -0.43 22.96 20 27 3 10 17 24 1 8 15 22 29 5 12
Three month -0.29900 -0.03000 HK$ ChinaConstructnBk 0939 5.74 0.53 8.10 € AXA CS 18.00 0.45 -28.68 € Vinci DG 67.72 1.09 14.51 June July Aug.
Six month -0.19100 0.04200 HK$ ChinaLifeInsurance 2628 19.04 0.42 -24.14 € AirLiquide AI 98.80 0.38 -4.68 £ VodafoneGroup VOD 236.00 0.28 6.79
One year -0.04800 0.15900 HK$ ChinaMobile 0941 98.45 1.55 12.51 € Allianz ALV 131.90 0.34 -19.35 CHF ZurichInsurance ZURN 248.00 ... -4.02
Yen Libor AU$ CmwlthBkAust CBA 73.12 -1.24 -14.51 € Anheuser Busch ABI 111.70 0.18 -2.36
DJIA Stoxx 50
One month -0.07100% 0.05371% ¥ EastJapanRailway 9020 8595.00 -1.35 -24.93 £ AstraZeneca AZN 5046.00 -0.45 9.30
Last: 2861.73 s 14.15, or 0.50% YTD t 7.7%
Three month -0.02579 0.09214 ¥ Fanuc 6954 17120 -1.18 -18.79 € BASF BAS 72.75 0.93 2.87 $ AmericanExpress AXP 65.63 -0.08 -5.64
Six month 0.00286 0.13229 ¥ Hitachi 6501 479.30 -2.20 -30.69 € BNP Paribas BNP 43.38 -0.06 -16.94 $ Apple AAPL 109.08 -0.13 3.63 2925
One year 0.09886 0.24614 TW$ Hon Hai Precisn 2317 85.70 0.82 6.06 £ BT Group BT.A 393.40 -0.61 -16.60 $ Boeing BA 134.97 0.19 -6.65
$ Caterpillar CAT 83.37 -1.23 22.68 2850
Offer Bid ¥ HondaMotor 7267 2987.50 -1.34 -23.59 € BancoBilVizAr BBVA 5.20 0.42 -22.08
KRW HyundaiMtr 005380 132500 -1.85 -11.07 € BancoSantander SAN 3.72 0.13 -18.43 $ Chevron CVX 103.53 1.28 15.08 2775
Eurodollars
HK$ Ind&Comml 1398 4.90 0.41 4.70 £ Barclays BARC 160.65 0.31 -26.61 $ CiscoSystems CSCO 30.48 -0.78 12.24
One month 0.5500% 0.4500%
$ CocaCola KO 44.09 0.07 2.63
2700
Three month 0.9000 0.8000 ¥ JapanTobacco 2914 3912.00 -1.44 -12.50 € Bayer BAYN 96.80 1.20 -16.41
¥ KDDI 9433 3170.00 -2.19 0.51 £ BP BP. 435.55 0.65 23.04
$ Disney DIS 96.63 -0.25 -8.04 2625
Six month 1.2500 1.1500
¥ Mitsubishi 8058 2074.50 0.07 2.29 £ BritishAmTob BATS 4834.00 -1.27 28.19
$ DuPont DD 69.46 1.22 4.29 2550
One year 1.5500 1.4500
526.70
$ ExxonMobil XOM 88.91 0.91 14.06
Latest 52 wks ago ¥ MitsubishiUFJFin 8306 -1.72 -30.43 CHF FinRichemont CFR 60.15 1.43 -16.57 20 27 3 10 17 24 1 8 15 22 29 5 12
$ GenElec GE 31.43 0.43 0.88
¥ Mitsui 8031 1295.00 -0.31 -10.41 € Daimler DAI 62.01 0.39 -20.07 June July Aug.
Prime rates $ GoldmanSachs GS 166.06 0.24 -7.86
¥ Mizuho Fin 8411 166.20 -1.13 -31.75 € DeutscheTelekom DTE 15.39 0.59 -6.84
U.S. 3.50% 3.25% $ HomeDepot HD 134.80 -0.99 1.93
¥ NTTDoCoMo 9437 2674.00 -1.09 7.65 £ Diageo DGE 2168.50 -0.44 16.81
Canada 2.70 2.70 $ Intel INTC 34.97 -0.14 1.51
AU$ NatAustBnk NAB 27.27 -0.66 -9.70 13.74 1.25 -0.43
Japan
Hong Kong
1.475
5.00
1.475
5.00 ¥ NipponStl&SmtmoMtl 5401 2068.00 -0.10 -14.40
€
£
ENI
GlaxoSmithKline
ENI
GSK 1674.50 -0.36 21.96
$
$
IBM
JPMorganChase
IBM
JPM
161.37
65.95
0.58
0.09
17.26
-0.12
Dow Jones Industrial Average P/E: 20
¥ NipponTeleg 9432 4691.00 -2.92 -3.00 £ HSBC Hldgs HSBA 543.80 0.17 1.42 $ JohnsJohns JNJ 120.69 -0.51 17.49 Last: 18597.70 s 23.76, or 0.13% YTD s 6.7%
Policy rates
ECB 0.00% 0.05%
¥ NissanMotor 7201 961.10 -2.56 -24.88 € INGGroep INGA 10.57 1.10 4.19 $ McDonalds MCD 117.07 -0.03 -0.91
Britain 0.25 0.50
¥ NomuraHldgs 8604 452.10 -1.97 -33.43 £ ImperialBrands IMB 4060.00 -1.10 13.20 $ Merck MRK 63.63 0.54 20.47 18500
Switzerland 0.50 0.50
¥ Panasonic 6752 1020.00 -0.68 -17.78 € IntesaSanpaolo ISP 1.90 0.80 -38.44 $ Microsoft MSFT 57.60 0.07 3.82
HK$ PetroChina 0857 5.34 -0.74 4.91 € LVMHMoetHennessy MC 157.40 0.87 8.63 $ NikeClB NKE 57.22 0.63 -8.45 18000
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 40.70 2.52 -5.13 £ LloydsBankingGroup LLOY 53.87 0.73 -26.28 $ Pfizer PFE 35.19 0.14 9.01
U.S. discount 1.00 0.75 17500
Fed-funds target 0.25 0.00
$ RelianceIndsGDR RIGD 30.40 -0.49 -0.65 € LOreal OR 172.70 -0.63 11.20 $ Procter&Gamble PG 87.42 0.53 10.09
Call money 2.25 2.00
AU$ RioTinto RIO 49.32 -0.48 10.31 £ NationalGrid NG. 1081.50 1.07 15.36 $ 3M MMM 179.17 -0.39 18.94 17000
KRW SamsungElectronics 005930 1640000 4.73 30.16 CHF Nestle NESN 79.50 1.47 6.64 $ TravelersCos TRV 117.78 0.31 4.36
Overnight repurchase rates 16500
U.S. 0.57% 0.21%
¥ Seven&I Hldgs 3382 4384.00 -0.07 -21.01 CHF Novartis NOVN 78.45 -0.13 -9.62 $ UnitedTech UTX 109.30 0.33 13.77
Euro zone n.a. n.a.
¥ SoftBankGroup 9984 6455.00 -4.61 5.15 DKK NovoNordiskB NOVO-B 309.50 0.06 -22.61 $ UnitedHealthGroup UNH 142.17 0.32 20.85 20 27 3 10 17 24 1 8 15 22 29 5 12
¥ Sumitomo Mitsui 8316 3383.00 -1.60 -26.55 £ Prudential PRU 1396.50 -0.07 -8.79 $ VISAClA V 80.23 -0.75 3.46 June July Aug.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 110.00 0.73 17.33 £ ReckittBenckiser RB. 7418.00 -0.15 18.10 $ Verizon VZ 52.86 -0.58 14.37 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 176.00 -0.56 23.08 £ RioTinto RIO 2465.00 1.17 24.53 $ WalMart WMT 74.26 1.82 21.14 Sources: WSJ Market Data Group; Birinyi Associates
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | B7

GLOBAL FINANCE

Agency Goes Undercover in Bank Probe

Regulator deploys
‘mystery shoppers’ to
ferret out any lending
bias in mortgages
BY YUKA HAYASHI
AND ARUNA VISWANATHA
WASHINGTON—In 2013, a
loan officer at BancorpSouth
Bank’s Madison, Ala., branch
received visits from two people
with similar profiles within 10
Undercover operations are its pertain to personal informa-
common in criminal probes. tion collected from individuals
But they are rarely used by reg- and don’t apply to cases such
ulators in civil law-enforcement as that of BancorpSouth, add-
cases because of limits imposed ing, “The bureau will continue
under the 1974 Privacy Act and to use all available tools, as the
other concerns. circumstances warrant, to fur-
That law maintains that gov- ther its mission of protecting
ernment officials must identify consumers from discrimina-
themselves if seeking informa- tion.”
tion from individuals. Some CFPB critics have previously
agencies interpret that as pro- raised questions about the
hibiting any covert investiga- agency’s tactics, including the
tions. agency’s reliance on educated
The CFPB and others argue guesses to identify minority

THOMAS WELLS/ASSOCIATED PRESS

days of each other, both saying
they were first-time home buy-
ers—one white, the other black.
The employee allegedly steered
the black customer to a smaller
and more expensive loan, even
though her stated income and
credit score were higher than
the white applicant’s.
When the Consumer Finan-
cial Protection Bureau took ac-
tion against the bank in June
for allegedly discriminating
against African-American cus-
tomers in mortgage lending,
the federal watchdog agency
disclosed that the aspiring bor-
rowers were “mystery shop-
pers,” or undercover investiga-
tors, sent in by the agency.
The case is the latest exam-
ple of the five-year-old CFPB
testing boundaries with its en-
forcement tactics, a pattern
that has sparked clashes be-
tween the agency and the fi-
nancial industry and Republi-
can lawmakers.
it doesn’t apply to “mystery
shopping,” because that tactic
is used only to seek informa-
tion that would be available to
any member of the public, and
doesn’t involve eliciting per-
sonal information about indi-
viduals.
The agency won’t discuss
the extent of its use of such
mystery shoppers, and the Ban-
corpSouth case is the only one
in which the CFPB has dis-
closed deploying them.
Quyen Truong, a partner at
Stroock & Stroock & Lavan LLP
who served as the agency’s
deputy general counsel until
May, said implementing the
mystery-shopping program
“took significant efforts but it’s
been up and running.” She
added that the agency devel-
oped the program “after evalu-
ating all the potential legal re-
strictions.”
The use of mystery shoppers
signals the CFPB’s new empha-
BancorpSouth signed a $10.6 million settlement with the CFPB and the Justice Department in June.
sis on combating so-called red-
lining—a bank’s refusal to lend
to residents in certain neigh-
borhoods marked by a hypo-
thetical red line on a map—and
other forms of alleged lending
discrimination against minority
borrowers. “To this day, the
lines of segregation remain evi-
dent and their impact persists,”
CFPB Director Richard Cordray
said in a July 19 speech, as he
pledged to fight “active dis-
crimination.”
BancorpSouth signed a $10.6
million settlement with the
CFPB and the Justice Depart-
ment on June 29. It didn’t ad-
mit wrongdoing and it disputed
the findings, though it didn’t
specify which parts. The bank
also criticized the methods
used in the case.
“We have concerns with the
way the information was col-
lected, and selectively re-
leased,” the Tupelo, Miss., bank
said in a statement, adding that
it has “zero tolerance for this
type of behavior” from employ-
ees.
The CFPB’s use of under-
cover investigators “is a worri-
some precedent, because…we
borrowers in auto-lending dis-
crimination cases and the un-
usually heavy application of
fines for a real-estate transac-
tion law, now contested in
court by lender PHH Corp. In a
case revolving around the
scope of the CFPB’s investiga-
tive authority, a district court
in April ruled against the
agency’s attempt to compel a
see more and more aggressive college accrediting agency to
civil law-enforcement activity hand over oral testimony in an
by the government, so that civil investigation.
law enforcement borders on, if Spokesmen for the SEC and
not bleeds into, criminal law the Financial Crimes Enforce-
enforcement,” said Andrew ment Network, the Treasury
Vollmer, a former deputy gen- Department’s anti-money-laun-
eral counsel at the Securities dering unit, said their agencies
and Exchange Commission who don’t use undercover opera-
now teaches at the University tions.
of Virginia’s law school. “What In 2011, criticism from Re-
we do not have are the corre- publican lawmakers prompted
sponding protections of the the Department of Health and
criminal law-enforcement sys- Human Services to drop plans
tem for the accused.” to use mystery shoppers dis-
Sam Gilford, a CFPB spokes- guised as patients to probe care
man, said the privacy act’s lim- access at doctors’ offices.

Italian Bank Executives Probed

BY GIOVANNI LEGORANO
MILAN—Banca Monte dei
Paschi di Siena SpA Chief Ex-
ecutive Fabrizio Viola and tje
bank’s former chairman, Ales-
sandro Profumo, are being in-
the investigation stems from
a complaint filed by some
shareholders, who claimed
they incurred losses on hold-
ings in the bank due to the
incorrect booking of two de-
rivatives, which date back
law, being under investigation
doesn’t imply guilt or directly
lead to indictment.
The news comes as the
bank is readying a plan to sell
roughly €28 billion ($31.61
billion) in bad loans, which
by the sale of the bad loans.
The plan is being closely
watched as Monte dei Paschi
emerged as the worst-capital-
ized bank after recent stress
tests carried out by the Euro-
pean Banking Authority, and

MARCO TACCA/GETTY IMAGES

vestigated by prosecutors for
possible false accounting and
market manipulation in rela-
tion to past derivatives trans-
actions, two people familiar
with the matter said Thurs-
day.
According to the people,
several years.
Prosecutors in Milan are
also carrying out other inves-
tigations revolving around
the two transactions involv-
ing former executives at the
bank, who have denied any
wrongdoing. Under Italian
have been one of the main
drags on its profitability. In
parallel, the bank said it
would initiate a capital in-
crease of up to €5 billion, or
more than seven times its
current market value, to
cover for the losses generated
as it has been a source of ma-
jor instability for the coun-
try’s banking system.
Since the beginning of the
year, the bank’s shares have
lost more than 80% of their
value, while Italian banks
have shed half. Alessandro Profumo, left, and Fabrizio Viola are under scrutiny.

FINDING OPPORTUNITIES
IN LEVERAGED CREDIT
A breakthrough approach to multi-asset credit investing

EATON VANCE
ON MULTI-ASSET
CREDIT INVESTING

Volatility doesn’t have to rule out an investment. For those in the know,
it creates opportunities. At Eaton Vance, the Multi-Asset Credit investing
team uses leading-edge analysis, aiming to turn market inefficiencies into
success for investors.

Watch online at
cs.efinancialnews.com/eaton-vance

Issued by Eaton Vance Management (International) Limited (“EVMI”), which is authorised and regulated by the Financial Conduct Authority in the United Kingdom and is located at 125 Old Broad Street, London, EC2N 1AR. EVMI is
a wholly owned subsidiary of Eaton Vance Management (“EVM”). EVM is an investment adviser registered with the United States Securities and Exchange Commission (SEC) and is a wholly owned subsidiary of Eaton Vance Corp.
(“EVC”). The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. ©2016 Dow Jones & Company, Inc. All Rights Reserved. 5F4142
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B8 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

Email: heard@wsj.com
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

Brexit Still
Makes Case
Nestlé’s Stock Tastes Bittersweet OVERHEARD
The most investors in in recession-struck Brazil Memories on Wall Street

For Easing Nestlé have to fear may be a

less-fearful investment envi-
ronment.
Markets have moved on There was plenty to get
quickly from Brexit. But gloomy about in second-
questions about its impact quarter results from the
remain firmly embedded in Swiss branded-goods com-
the minds of policy makers. pany. At 3.1%, organic
Little clarity has emerged growth—a key measure of
Gimme a Break
Nestlé annual organic growth*
and Russia has proved sur-
prisingly resilient. Analysts
also are divided on whether
are short in part because
trading is a young person’s
game.
8% U.K. supermarkets can pass When the Federal Re-
on higher import costs to serve raised rates in De-
6 First half: shoppers during a price war cember for the first time
3.5% and possible post-Brexit since 2006, commentators
4 slowdown pointed out that a signifi-
The second reason why in- cant number of those buy-

EUROPEAN PRESSPHOTO AGENCY

in the wake of the U.K.’s June sales performance that strips vestors seem happy to shrug ing and selling bonds
23 vote to leave the Euro- out currency movements— 2 off Nestlé’s growth problems hadn’t experienced such
pean Union. Prime Minister was the weakest in years. It may be its status, for now, as an event in their profes-
Theresa May has declared also fell short of analysts’ 0 a haven in stormy seas. The sional lives.
that “Brexit means Brexit,” a forecasts of 3.5%. 2004 ’06 ’08 ’10 ’12 ’14 ’16 company sells such a bewil- A far smaller percentage—
succinct but empty slogan, The key culprit is falling dering array of brands in certainly none under the age
*Excludes portfolio changes and currency
with little follow-up on the prices in developed markets. effects such an encyclopedic list of of 40—were in the field for a
actual logistics of Britain’s In the first half Nestlé’s Source: the company countries that Robert Wald- seminal event that saw its
extrication. In terms of im- brands, which range from THE WALL STREET JOURNAL. schmidt, an analyst at Libe- anniversary on Wednesday:
mediate effects, U.K. eco- KitKat to Nescafé to Shred- rum, likens it to a stock port- Russia’s debt default.
nomic data have swung to ded Wheat, were 0.7% figure, implying second-half tives. For the same reason, folio whose benchmark index The reverberations crip-
and fro: While July’s pur- cheaper than in the previous growth of 5%. Mr. Roger said price in- is global growth. pled hedge fund Long Term
chasing managers’ indexes year. Intense price competi- Mr. Roger’s assurances for creases would be necessary There is a paradox here: Capital Management and
showed a sharp downturn, tion in China, where Chief Fi- 2016 are underpinned by in the U.K. following June’s Weak numbers from Nestlé might have brought down
July retail sales rose sharply. nancial Officer François-Xa- price increases Nestlé has Brexit vote and the pound’s act as a bearish indicator, the world financial system
But the U.K. vote clearly vier Roger said the food-and- pushed through already in plunge. prompting investors to push if not for Fed intervention.
hung over the July meetings beverage market was Brazil, Russia and other The risk is that raising its defensive shares to ever- Though LTCM wasn’t partic-
of both the Federal Reserve showing zero growth, is an- emerging markets. Since prices encourages shoppers higher earnings multiples. A ularly exposed, it was in-
and the European Central other problem. many of the group’s input to trade down to cheaper low-growth world may not be volved in many other
Bank. The Fed minutes use Mr. Roger insisted the sec- costs are priced in dollars, brands. This would under- good for Nestlé’s numbers, crowded trades that un-
the term “Brexit” 20 times; ond quarter would mark a the devaluation of the Brazil- mine Nestlé’s strategy of but it is good for Nestlé’s wound in unison.
the ECB account kicks off by “cyclical low” in pricing. He ian real in particular has “premiumization”—pushing stock. A global recovery Masters of the universe
noting the vote as the most pledged full-year growth on weighed on its margins, off- consumers toward posher could be oddly painful. have less rope with which to
significant event since the a par with last year’s 4.2% setting cost-cutting initia- products. Until now, business —Stephen Wilmot hang themselves these days
governing council last met. in the aftermath of a simi-
True, there is relief here larly unexpected event.
that the immediate impact
proved contained. The Fed
notes that, in the near term,
Lenovo: Selling Property Can’t Fix Everything But there have been warn-
ings that mom and pop, who
have even shorter memories,
the prompt recovery in fi- Is the world’s largest per- pricing pressure. The com- Lenovo’s data-center busi- are in a similarly crowded
nancial markets alleviated sonal-computer maker also a Dial Down pany managed to churn out a ness, often seen as a bright trade. Years of ultralow inter-
uncertainty. But both institu- property developer? Per- Lenovo’s smartphone shipments slight gain in profit through spot, also is in the red. The est rates have pushed them
tions sound cautious on lon- haps. cost savings. company blamed “business into funds owning stocks or
ger-term effects. The ECB On Thursday, Lenovo re- 25 million But unless revenue picks transition” and competition bonds offering at least a little
says uncertainty could affect ported a 64% increase in net 20 up, such maneuvers will be in China. This shows the lim- bit of yield.
the global economy “in deep- income for the last quarter, 15 harder to pull off. itations of Lenovo’s approach Vanguard Group took the
er and less predictable ways” far exceeding analysts’ esti- 10 The company’s other busi- to compete on prices. Len- unusual step last month of
than through direct trade. mates. The earnings beat, 5 nesses looked even worse. ovo’s research-and-develop- closing a dividend-growth
And both the Fed and the however, didn’t come from Smartphones continued to ment expenses have fallen mutual fund to new investors
0
ECB note that one possible selling more computers, but lose money. Management’s 9% during the quarter from a and a recent paper co-au-
reason for market resilience from the sale of a property 2014 ’15 ’16 hope to turn around that year earlier. Without new thored by a Fed economist
was that investors expected in Beijing. The transaction Sources: the company; IDC segment by moving up the technology that sets its warned of the possibility of
looser monetary policy—and resulted in more than $120 THE WALL STREET JOURNAL. value chain will be challeng- products apart, there only is “run-like behavior” in such
not just in the U.K. million of capital gains, ing. Samsung’s Galaxy 7 and so much cost-cutting can do. funds when rates eventually
Brexit as a global phenom- slipped into its operating Sales of personal comput- a new iPhone coming in Sep- Lenovo might look cheap rise.
enon will wax and wane. But profit, instead of being ers continued to slide, tember will continue to rule trading at around 10 times That doesn’t mean yields
as a long-term source of un- booked as one-off nonoper- though at a slower pace. PC the high-end segment. In Le- forward earnings. But with- can’t keep falling, but retail
certainty and potential dis- ating income. Excluding that, shipments fell 2%, but reve- novo’s home turf of China, it out a meaningful pickup in investors unprepared for capi-
ruption, it looks likely to re- Lenovo’s operating profit nue for the segment—which faces an uphill battle against sales, it could well be a value tal losses may be playing a
main a factor on the side of would be halved and would includes tablets and ac- incumbent leader Huawei trap. There are only so many game of Russian roulette
easier monetary policy. have come in much lower counted for 69% of the to- and upstart brands such as buildings it can sell, after all. without realizing it.
—Richard Barley than consensus estimates. tal—dropped 7%, indicating Oppo and Vivo. —Jacky Wong

FINANCE & MARKETS

Legal Pain for Australian Banks

in the summer months.
Finance Saudi Arabia produced 10.550
million barrels a day in June, up

BY ROBB M. STEWART Watch from 10.270 million barrels in

May, JODI data shows.
—Summer Said
MELBOURNE, Australia—A
lawsuit filed in the U.S. ac- STANDARD BANK
cuses Australia’s biggest
banks and a number of inter- CHINA
African Lender Says
national investment banks of
Home-Price Gains Earnings Increased
fixing Australia’s primary in- Standard Bank Group Ltd.,
terest-rate benchmark. Held Pace in July Africa’s biggest lender by assets,
The lawsuit echoes allega- Average home prices in July reported an uptick in earnings
tions against three of the were up 0.7% from a month ear- helped by its focus on the conti-
Australian lenders by the lier, almost matching June’s nent, despite a regional drought,
country’s securities regulator, 0.71% pace and slowing from lower commodity prices and poor
which accuses them of manip- May’s 0.84%, according to calcu- growth in several countries.
ulating the bank-bill swap lations by The Wall Street Jour- The Johannesburg-based bank
rate between 2010 and 2012. nal based on data released by said headline earnings, which
All three have denied wrong- the National Bureau of Statistics. strip out certain exceptional and
doing. Compared with a year earlier, one-off items, rose 4.7% to 10.86
AGENCE FRANCE-PRESSE/GETTY IMAGES

Filed by two U.S. invest- the average price of a new home billion South African rand ($808
ment funds and a trader, the in 70 cities was up 6.1% in July, million) in the six months to
lawsuit casts a wider net, accelerating from 5.52% in June. June 30 from the same period
claiming that more than a The gain marked the seventh the previous year.
dozen banks and two broker- consecutive month of year-over- Poor performance in part of
ages intentionally and sys- year increases. West Africa was offset by higher
tematically manipulated the —Dominique Fong growth in East African countries,
benchmark rate and rate- said Ben Kruger, the bank’s chief
based derivatives prices to SAUDI ARABIA executive. —Alexandra Wexler
gain hundreds of millions of
dollars or more in illegitimate NAB is among the lenders named in the suit, filed by two U.S. investment funds and a trader.
Nation Exported MONGOLIA
profits. More Oil in June Rates Rise to 15%
The filing names, among tled based on the bank-bill to comment on continuing le- Before late September Saudi Arabia increased its oil
others, Australia & New Zea- swap rate, since at least Jan- gal action. Other defendants 2013, the Australian bench- exports in June as it pumped at Mongolia’s central bank raised
land Banking Group Ltd., uary 2003, were overcharged weren’t immediately reach- mark was based on submis- near-record-high levels while its benchmark interest rate to a
Commonwealth Bank of Aus- and underpaid in their own able for comment. sions from up to 14 local and burning less petroleum for elec- record 15% as it battles a crash-
tralia Ltd., National Austra- transactions, and were unable The lawsuit was filed in overseas banks. After elimi- tricity than the same month last ing currency and investors dump
lia Bank Ltd., Macquarie to accurately price deriva- the U.S. District Court for the nating the highest and low- year, official data showed. its government bonds.
Group Ltd. and Westpac tives based on the benchmark Southern District of New York est, the Australian Financial Crude exports in June rose to The Bank of Mongolia in-
Banking Corp. rate or determine their set- on Tuesday, according to a Markets Association would 7.456 million barrels a day, the creased rates by 4.5 percentage
The Australian Securities tlement value. copy viewed by The Wall calculate the mean of the highest for the month of June points, putting its benchmark
and Investments Commission Street Journal. rest. Since September 2013, since 2012, compared with 7.295 rate above those of most other
had previously filed lawsuits In June, the Australian Se- the benchmark has used an million barrels in May, according countries, including Nigeria’s 14%
against National Australia
The lawsuit alleges curities and Investments electronic compilation of the to figures provided by the king- and Brazil’s 14.25%. The bench-
Bank, or NAB, Westpac and that the defendants Commission began legal ac- midpoint in the locally traded dom to the Joint Organisations mark rate in Ukraine is 15.5%.
ANZ. tion against National Austra- market for reference bank Data Initiative. The Mongolian currency, the
The suit, which seeks
manipulated money- lia Bank in federal court in bills, eliminating the need for The country’s new energy togrog, has fallen 16.7% in the
class-action status, is led by market transactions. Melbourne, alleging “uncon- submissions from the banks. minister, Khalid al-Falih, pledged past two months to 2,256
Sonterra Capital Master scionable conduct” and mar- On Thursday, ANZ said in June that Riyadh had no inten- against the U.S. dollar after
Fund, FrontPoint Financial ket manipulation with regard there had been no allegations tion of flooding the market, but reaching a one-year high in the
Services Fund LP and trader Westpac denied the allega- to rate setting between June by the Australian regulator of since then, its production has in- wake of the U.K.’s vote to leave
Richard Dennis. It alleges tions in the claim and said 2010 and December 2012. The collusion among the banks it creased at a rate faster than it the European Union.
that the defendants manipu- that if served, it would de- commission began similar has taken action against. needs to meet domestic demand —Gregor Stuart Hunter
lated money-market transac- fend the allegations vigor- proceedings against Westpac
tions during the fixing win- ously. ANZ and Common- in early April and against
dow for the bank-bill swap
rate, made false rate submis-
wealth Bank also said they
planned to defend against any
ANZ a month earlier.
Since 2012, the regulator
Advertisement INTERNATIONAL INVESTMENT FUNDS
sions, bought or sold money- action, while National Austra- has been investigating banks’
market instruments at a loss lia Bank reiterated that it trading dating back to 2007 [ Search by company, category or country at europe.WSJ.com/funds ]
to create artificial derivatives didn’t agree with the claims in Australia’s bank-bill swap-
prices, and shared proprie- previously made by Austra- rate market, the benchmark NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
tary information on deriva- lia’s securities regulator. Mac- used in the country’s mar-
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
tives based on the bank-bill quarie declined to comment. kets. The probe came after Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
swap rate. A spokesman at HSBC rate-fixing scandals else- CAM-GTF Limited OT OT MUS 08/12 USD 303036.29 8.2 3.8 -7.7
The result, the suit alleges, Holdings PLC, which was where, including one over
was that anyone who engaged among the international manipulation of the London Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown aren’t registered with the
For information about listing your funds,
in U.S.-based transactions banks named in the U.S. suit, interbank offered rate, or Li- U.S. Securities and Exchange Commission and aren’t available for sale to United
States citizens and/or residents except as noted. Prices are in local currencies.
please contact: Freda Fung tel: +852 2831
priced, benchmarked or set- said the company wasn’t able bor. All performance figures are calculated using the most recent prices available. 2504; email: freda.fung@wsj.com
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com

MANSION
INSIDE:
Arnold Palmer Goes
Back to the Golf Course
Dan Neil
What barbecue test-chauffeurs
is to Texans, the Aston Martin
this delicacy is Lagonda Taraf,
to Hawaiians a 195-mph limo
W5
W6

EATING | DRINKING | STYLE | FASHION | DESIGN | DECORATING | ADVENTURE | TRAVEL | GEAR | GADGETS
© 2016 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | W1

The End of the

Lukewarm Bath
For decades, safely ‘tasteful’ bathrooms have
been decorated in tepid neutral shades.
But now resale-be-damned color—from truly
cool blues to emphatic black—is on tap again

ERIC PIASECKI/OTTO

BLUE PLANK SPECIAL A bathroom in Millahue, Chile, designed by Alex and Carrie Vik, owners of Viña Vik retreat and VIK Winery, features board-like UonUon porcelain tiles from 14OraItaliana.

the process. Renovating with help from As home-design trends shift, Mr. Gia- Mr. Moon. His more fearless clients,
BY DEBRA JO IMMERGUT
New York designer Wesley Moon, Mr. vos appears to be ahead of the curve. he said, are thirsting for color and “ready

I
N RECENT DECADES, Americans
have maintained that the most de-
sirable—and resalable—bathrooms
should be scrupulously boring. A
compulsively neutral color scheme
has been the ideal: soothing whites, timid
taupes, muted wood or stone. But graphic
designer Constantine Giavos of Manhattan
was having none of it. This year, he and
his wife, Rachel Lamel, a fashion execu-
tive, moved into an Upper East Side
apartment, escaping their old beige-tiled
“absolute mediocrity” of a bathroom in
Giavos binged on color in one of the full
baths, tiling the walls and floors in celery
green and pink respectively. Bonus: Black
Osborne & Little wallpaper featuring
snowy swans floating through green wa-
ter lilies with coral flowers.
Mr. Giavos knew he was bucking
common wisdom—the extroverted tiling,
in particular, was a resale red flag—and
his own mother-in-law expressed skepti-
cism. He shrugged. “We really wanted
to love the space,” he said. “That’s so
overlooked. Wouldn’t you rather enjoy
the place you live?”
Even if the powder room has traditionally
been a canvas for decorating bravado, the
full bath has long been a neutral zone.
Permanent tiles, vanities and fixtures
don’t come cheap and homeowners
typically play it safe, following the lead
of housing developers. Result: an under-
stated Calvin Klein-like aesthetic that
won’t offend anyone. Lately, however,
designers say more clients are willing to
go in a Gucci-like direction: idiosyncratic,
colorful, even ornamented. “It’s a re-
sponse to the boredom of two-and-a-half
decades of neutral bathrooms,” said
to rebel.”
A gutsier palette may also reflect con-
fidence in the strengthening real-estate
market, said Jamie Chappell, who tracks
trends as creative director of San Fran-
cisco’s Fireclay Tile. Sales of existing
homes reached a nine-year peak this
May, according to the National Associa-
tion of Realtors, and Bill Darcy, CEO of
the National Kitchen and Bath Association
(NKBA), noted that “consumers are
stretching themselves.” Mr. Darcy is mid-
bathroom design himself, leaving behind
Please turn to page W2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
W2 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

OFF DUTY

BATHED IN
COLOR
Continued from page W1
beige tiles in his previous home
and opting for blue walls and dark
cabinets: “My wife and I are fairly
traditional people, but we’re using
bolder colors than we ever have
before.”
Not that we’re likely to revisit
the candy-pink sinks and toilets of
the mid-20th century or the mauve
molded-plastic shower stalls of the
1970s—excesses that left American
homeowners with a design hang-
over, noted Peter Sallick, CEO and
creative director of Danbury, Conn.-
based bath-fittings firm Water-
works. To detox, he said, designers
turned to the crisp, white subway
tile, Carrara marble and polished
chrome that are still popular today.
The recession in 2008 pushed the
achromatic trend further, with
risk-averse consumers favoring
‘Purple, orange, acid
green—you can tire of
these,’ said one architect.
styles that were “very McMansion
feeling, very depersonalized.”
Over the years, whether borrowing
Edwardian spit-and-polish from the
Ritz or Zen-inspired earthiness
from Canyon Ranch, a neutral bath
became codified as “calming” and
eminently tasteful.
Since 2014, however, Mr. Sallick’s
firm has added 160 new hues to its
ceramic tile lines—Peacock Green
and Marmalade among them—and
doubled its nonneutral offerings
overall. At Fireclay Tile’s headquar-
ters, Ms. Chappell has been watch-
ing a similarly colorful story unfold.
“The packing table used to be a sea
of white tile and maybe a handful
of blues and greens,” she said.
“Now it’s the opposite.”
According to a 2015 survey of de-
signers belonging to the NKBA, be-
tween 10% and 15% of its members
expect to decorate more baths in
green, blue and black this year. Why
the absence of reds? Biology, appar-
ently. A study at Australia’s Curtin
University, published in 2015, found
that blue surroundings physiologi-
cally calmed students, while red
and yellow increased heart rates.
Biorhythms aside, cool tones
offer an entry point for the color-
shy, said Los Angeles designer
Emily Henderson, because they
evoke water and feel intrinsic to the
bathroom. Misadventures in reds,
pinks and oranges are more likely
to yield rooms of the “we must
change this...tomorrow” sort.
For New York architect John
Ike—who installed high-energy
aquatic-colored tiles in the guest
bath of his San Diego home—the
trendier the tone, the shorter-lived
its allure. “Purple, orange, acid
green—you can tire of these,”
he said.
Moody, cooler shades that have
no whiff of faddishness enrich an
early-20th-century master bath in
Riga, Latvia, designed by Filippo
Carandini and Maria Rodina of
Milan’s Linee Studio. They covered
the walls in Farrow & Ball’s Break-
fast Room Green, then painted
doors and woodwork in F&B’s
Stone Blue. Mr. Carandini recom- Watery Hues Make Sense
mended less saturated hues, Blues and greens suit a
noting that “full tones look cheap. bathroom’s purpose as well as
If you like red,” he advised, “use a the SoCal location of architect
light pink and bring in reds with John Ike’s San Diego home.
details like towels.”
If you use similar paint colors at
least somewhere else in the rest of Adventurous sorts are also ex-
your home, entering your bathroom ploring the absence of color. While
won’t seem like an abrupt swerve browsing online images of bath-
into peacockitude. Mr. Carandini rooms glammed up in black tile and
also chose Stone Blue for the ebony paint, Mr. Giavos wondered
nearby living room. That way, he why he’d rarely seen such inky
said, it’s not “a regular house with spaces in the analog world. He and
a ‘crazy’ bathroom.” his wife, guided by Mr. Moon, took
the plunge in their apartment’s
master bath, choosing oil-black Ann

CLOCKWISE FROM TOP: WILLIAM WALDRON; LINEE STUDIO; JEFFERY CROSS

Pattern Need
Not Overwhelm
In an Oakland, Calif.,
bathroom, Christina
Zamora used the
same geometric
Heath Ceramics’
Half Hex Mix tiles
in two colorways for
a graphic but not
overly loud effect.
Sacks tiles (oversize for a more
modern look), smoked mirrors and
faucets in a toned-down French
Gold finish. “I have this weird fetish
for super-luxurious ’80s style,” Mr.
Giavos admitted.
For some, shiny black bathrooms
trigger unwelcome memories of
reckless nightclub antics. Mindful of
that, Los Angeles designer Betsy
Burnham used soft, matte blacks in
the master bath of a local client’s
home. “Not harsh, not glossy, noth-
ing Italian modern,” she said of the
lightly distressed vanity painted in Muted Beats Candy Bright Mid-toned Farrow & Ball paint lends a
Benjamin Moore Ebony King, the Riga, Latvia, bathroom by Linee Studio quiet, palatable personality.
dusky mosaic marble underfoot and
the antiqued-glass mirror. Paradoxi-
cally, the clients reported that it Swinehart, a features editor at the rooms are an ideal place to splash
brightened their mornings. décor site Remodelista, can attest. out a little. “They aren’t rooms you
For now, most sinks and toilets Bored by her bathroom’s “lifeless socialize in, or rooms where you
remain starkly white, but Pirch, mismatch of tepid ivory hues,” she spend hours on end,” she pointed
the high-end kitchen-and-bath re- painted the walls a flat pitch black. out. She’s heard the most regrets
tailer with a newly opened show- The result “felt like a dungeon.” She from “people who have stayed safe
room in New York’s Soho district, determinedly groomed herself in but wished they’d done something
touts matte black MGS faucets and the gloom for a year before repaint- more interesting.” In what is truly
a swooping charcoal Apaiser tub. ing the space a light gray. Her take- the most intimate space in the en-
Neutrals still sell best, said Pirch away: Don’t blacken a tiny bath. “In tire home, success lies in finding
chief marketing officer Laith a large room, you have space for the sweet spot between overly
Murad, but an edgier aesthetic is contrasting elements: a claw-foot bland and over-the-top. “In the
emerging: “Think of fashion in the tub, a generous rug, an ample mir- morning, you need a room that
late 1990s. It’s all about colors ror,” she said. In a small room, doesn’t demand much of you,” said
that accentuate shape.” choose subtle complex shades. Mr. Ike. “On the other hand, you
Of course, even professionals Still, for Charlotte Cosby, head may want to start your day with
commit color blunders, as Meredith of creative at Farrow & Ball, bath- a little thrill.”

pea greens and acid greens,” (a deep aubergine) and Rectory

WC WISDOM FROM PROS
Homeowners are more likely to bust out in the
bathroom with a designer’s help. Here, some privy tips
said Cambridge architectural
designer Kimberly Barnett.
“Not that a room can’t be
quirky and different,” but
colors should feel as if
“they belong to the same
composition.”
Check your closet. New
York’s Wesley Moon asks clients
to show him a favorite outfit,
then riffs on the colors and
 Get tap happy. Boston textures.
designer Rachel Reider recently Don’t bring home strays.
juiced up a neutral bathroom Tones and patterns lovely in one
with a lemon-yellow Vola sink setting (say, a Marrakesh hotel)
spigot, a 1968 design by mid- may be painfully wrong in
century master Arne Jacobsen, another (your minimalist home).
offered in 19 powder-coated ”Context is crucial,” counseled
brights and metallics. “It’s a Filippo Carandini, a Milan
fairly easy change up,” said Ms. designer.
Reider. Vola HV1 Faucet, from Build a mood board. Putting
$1,300, hastingstilebath.com samples of flooring, fittings and
Don’t start from scratch. paint together makes the big
Your house has a working pal- picture easier to visualize. “John
ette, so draw from those hues, has an exhaustive selection of
tiles and material in his office,”
said Hymie Myama, a client
of New York architect John Ike.
“He lays them all out so we
can see them.”
 Forget wimpy accesso-
ries. Palm Springs designer
Christopher Kennedy is a fan of
white bathrooms punctuated by
bold strokes and art that
makes a statement. He’s even
installed a sculpture in a
shower stall. “I always find it
a bit juvenile to say, ‘Just bring
in colors in towels and bath
mats.’” Try these graphic
powder-coated pendants. Mini
Pendants, from $225 each,
bendgoods.com
Remain in light. At a
client’s request, New York
designer Brett Beldock recently
decked a master bath in bur-
gundy and chocolate brown,
illuminated it with high-voltage
LED fixtures and a lighted
mirror. “Have great light on
your face and overhead,” she
recommended, “and install
dimmers so you can opt for the
ambience of a dark bath.”
Flatter yourself. “We avoid
said Mr. Kennedy. “They aren’t
so great on the skin.” Said Ms.
Beldock, “The color that’s hip-
pest right now is blush because
it makes you look beautiful.”
Think superficially. The
same color tile can be jewellike
in a gloss finish and earthy in a
matte finish, explained New York
designer Phillip Thomas. Go for
high shine if your bathroom
could benefit from more light,
and less reflective finishes for
quieter but still-saturated color.
 Steep in it. “We’re seeing
clients paint the underside of
free-standing baths in
stronger shades,” said
Farrow & Ball’s Charlotte
Cosby. Top choices: Pelt
Red (a black-tinged crimson).
Drummonds, a British bath-
fittings firm, newly showing
within Lapicida’s space in New
York’s D&D Annex, will custom
paint one of their cast-iron
soakers, such as this multihued
Liffey model. Liffey Bathtub,
$10,350, 212-794-0157
Throw back, but modern-
ize. Retro looks need refresh-
ing. While their celery-and-pink
palette nods to the 1950s,
the tiles in the guest bath of
Mr. Moon’s recent project are
an updated 6-inch square, and
the frameless glass
shower and recessed
medicine chest have
modern lines.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | W3

OFF DUTY
BREAKFAST 2.0

Be Cool,
Caffeinated ...OR PICK UP
ROOTS For those
skipping caffeine,

Or Not turmeric and black

pepper provide the
kick in a creamy
iced latte.

Cold brewing makes a killer iced coffee.

But even the decaf crowd can charge up
with a refreshing turmeric latte

acidic cup that offers a

BY ELIZABETH G. DUNN
complex expression of the
flavors of the beans you’ve

L
AST YEAR, on
a monstrously
hot day in July,
I moved from an
apartment build-
ing chilled to sweater tem-
perature by central air con-
ditioning to a hundred-year-
old house outfitted with
a collection of ancient, un-
derperforming window units.
On good days, I like to talk
about what a joy it is to
fully experience the seasons
again outside the confines of
a hermetically sealed high
rise. On bad days, there is
a lot of cold brew.
selected to brew. Matt
Swenson, director of U.S.
operations for Nobletree
Coffee, a farm-to-cup opera-
tion based in Brooklyn,
suggested using medium-
roast beans grown in Brazil,
which will produce a bold,
chocolaty iced drink that
lends itself to sweetener
or a splash of milk.
Coffee abstainers deserve
a summer drink to match
cold brew’s charisma, and
for that role I nominate the
iced turmeric latte, a quirky
beverage that came to my
attention when the version

F. MARTIN RAMIN/THE WALL STREET JOURNAL, STYLING BY ANNE CARDENAS

Cold brew is nothing
short of a revelation
when it’s 85 degrees
in your pre-dawn
kitchen.
Cold brew—coffee brewed
with cool rather than hot
water—is nothing short of
a revelation when it’s 85
degrees in your predawn
kitchen and the thought of
boiling water makes you feel
faint. The process is simple:
Steep coffee grounds for half
a day or more in room-tem-
perature water, and then
strain off a coffee concen-
trate that can sit in the
refrigerator for at least
a week. When you want an
iced coffee, pour some of the
concentrate over ice along
from Café Gratitude in
Los Angeles was featured
in “America’s Best Break-
fasts,” Lee Brian Schrager
and Adeena Sussman’s atlas
of morning meals.
Turmeric, an earthy tast-
ing, vibrantly yellow spice
in the ginger family, was
until recently best known
for its inclusion in curry
powder. Now, its potent
anti-inflammatory proper-
ties are giving it a star turn
among wellness enthusiasts,
who mix it with non-dairy
milk to create an elixir
widely referred to as
“golden milk.” The turmeric
latte at Café Gratitude was
one of the first on the
scene—though it’s worth
noting that haldi ka doodh,
a hot mixture of turmeric
and cow’s milk, has long
figured in Indian cuisine.
Café Gratitude’s concoction
is made with almond milk,
raw honey and turmeric
MAKE YOUR
BEANS COUNT...
Cold brewing makes
a uniquely flavorful
and mellow iced
coffee.
Cold-Brew Iced Coffee Cafe Gratitude’s Turmeric Latte
This recipe produces enough coffee concentrate to make Turmeric root can be found at health food stores and many super-
multiple servings. You can store the concentrate in the refrigerator markets. Some peel it before juicing, but that’s not necessary here.
and partake over the course of the following week. If you can’t find the root, substitute3/4 teaspoon turmeric powder dis-
ACTIVE TIME: 5 minutes TOTAL TIME: 18 hours (includes solved in 2 tablespoons water. TOTAL TIME: 15 minutes SERVES: 1
cold-brewing coffee) SERVES: 1
For the turmeric juice: 1 cup unsweetened
For the concentrate: For the iced coffee: 4 ounces fresh turmeric root almond milk
3 cups filtered water 1/
2 cup cold brew
3/
4 cup water 1 tablespoon honey or agave
11/4 cups medium-coarse concentrate For the latte: 1/
8 teaspoon freshly ground

with a little additional water
and, if you’re so inclined,
some milk or cream. No
more settling for a weak
brew because you’ve poured
hot coffee over ice. And it
certainly reduces the labor
involved in the morning
coffee ritual.
The benefits of cold brew
transcend convenience
and keeping your cool. Ex-
traction at lower tempera-
tures yields a richer, less
juice. It also includes black
pepper oil, which, according
to Ryland Engelhart, the
restaurant’s co-owner, sub-
stantially improves the
body’s ability to access
turmeric’s many vaunted
health benefits. Whether
or not those interest you,
the drink is savory but
light, a small reminder
that caffeine isn’t the only
invigorating way to start
a hot day.
ground coffee (slightly 1/
2 cup filtered water,
coarser than for a chilled
drip coffee maker) Whole milk (optional)
1. Make the concentrate: In a large French press or other quart-size
vessel, combine ground coffee with 3 cups room-temperature water.
Stir to combine and let sit 18 hours. Strain coffee into a clean ves-
sel, either by depressing the plunger of the French press or straining
the liquid through cheese cloth. Press on grounds to release as
much liquid as possible. You should have a little over 2 cups coffee
concentrate. Store in a sealed container in the refrigerator up to
1 week for use in more cold-brew iced coffees.
2. Make the coffee: Fill a large glass with ice and add coffee and
water. Stir. Top off with whole milk, if desired.
2 tablespoons turmeric juice black pepper (optional)
1. Make the turmeric juice: Combine turmeric root and water in
a blender or food processor and purée, scraping down sides from time
to time, until smooth, about 2 minutes. Pass through a fine-mesh
sieve or cheese cloth, pressing on solids. You should have about 1/2 cup
juice—more than you’ll need for this recipe. Store in a sealed container
in the refrigerator up to 4 days for use in more lattes.
2. For the latte: In a small saucepan, heat almond milk and honey
over medium heat, stirring, until honey is dissolved, 3-4 minutes. Let
cool to room temperature. Fill a tall glass with ice, add turmeric juice,
and top with almond milk and pepper, if using.
—Adapted from “America’s Best Breakfasts” by Lee Brian
Schrager and Adeena Sussman

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

Grilled Lamb Chops With Herbed Labneh

TED CAVANAUGH FOR THE WALL STREET JOURNAL, FOOD STYLING BY JAMIE KIMM, PROP STYLING BY NIDIA CUEVA; ILLUSTRATION BY MICHAEL HOEWELER

“COOKING OVER fire is the most primitive Middle Eastern yogurt cheese, laced with
thing you can do,” said chef Curtis Stone. a chimichurri of herbs and olive oil. That
He gets in touch with his inner caveman at chimichurri also dresses a side dish
the huge grill that anchors his new Gwen of wax beans, haricots verts and radishes.
Butcher Shop & Restaurant in Los Angeles. Mr. Stone finds the smoky flavor
This recipe, Mr. Stone’s third Slow Food the fire imparts to the meat irresistible.
Fast contribution, calls for grilling lamb rib “After all these thousands of years, you’d
chops over blazing heat just long enough to think we would have come up with
achieve a good char on the outside and something better, but we clearly ha-
a tender, rosy interior. The chops are served ven’t,” he said. “This is just the best
The Chef: over a thick schmear of labneh, the creamy tasting way to cook.” —Kitty Greenwald
Curtis Stone
TOTAL TIME: 35 minutes SERVES: 4
His Restaurants:
Maude and Gwen Kosher salt and freshly chopped oregano drizzling
Butcher Shop & ground black pepper 11/2 tablespoons finely Juice and zest from 1 lemon
Restaurant, both in 3/
4 pound yellow wax beans chopped thyme 1/
2 cup labneh or full-fat

Los Angeles 3/
4 pound haricots verts Aleppo pepper (optional) Greek yogurt
3 cup finely chopped parsley 3 cup plus 1 tablespoon 12 lamb rib chops
1/ 1/

What He 11/2 tablespoons finely olive oil, plus extra for
Is Known For:
Making the leap 1. Bring a medium pot of salted water to a boil
from top kitchens over high heat. Light grill.
in Australia 2. Add wax beans and haricots verts to boiling
and England to water and cook until just crisp-tender, about
American TV. 2 minutes. Transfer beans to an ice water bath.
Intimate restaurants Once cooled, remove beans and thoroughly dry.
that pay tribute 3. Next, make chimichurri sauce: In a small
to great bowl, combine parsley, oregano, thyme, Aleppo
ingredients. pepper and a pinch of salt, smashing with
spoon or fork until herbs start to break down.
Stir in 1/3 cup olive oil, lemon zest and 2 tea-
spoons lemon juice. Season with salt to taste.
4. In a small bowl, stir 1½ tablespoons chimi-
churri sauce into labneh and season with salt
3 radishes, thinly sliced
and olive oil to taste. In a large bowl, toss beans
with remaining chimichurri. Season with salt,
lemon juice and/or more oil to taste.
5. Season lamb chops with salt, pepper and
1 tablespoon oil. Grill meat over high heat until
seared and medium-rare within, 1-2 minutes per
side. Off heat, season meat with a sprinkle of
salt and a squeeze of lemon juice.
6. To serve: Arrange beans on a serving platter.
Scatter radishes over beans, season with pepper
and drizzle with oil. Next, smear a generous
amount of labneh over a large platter. Arrange
chops over labneh and drizzle everything with oil. SCHMEAR CAMPAIGN Serving the lamb chops over the creamy labneh,
Serve both platters family style. instead of smothered in it, lets guests choose how much sauce to take.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
W4 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

OFF DUTY

A Legging to
Stand On

ANDRÉS OYUELA FOR THE WALL STREET JOURNAL, STYLING BY REBECCA MALINSKY, HAIR BY ANTHONY JOSEPH, MAKEUP BY BETHANY TOWNES, MODEL: RACHEL FINNINGER/DNA MODEL MANAGEMENT
Often dismissed as a faux pas, the
body-hugging not-quite-pants are being recast
(and embraced) by the high-fashion set

leggings that are polished at how to use them in their

BY NANDINI D’SOUZA
and luxurious—in short, leg-
WOLFE
gings that are appropriate
anywhere but the gym. “At
wardrobes.”
Of course, there are leg-
gings and then there are leg-

F
OR MANY, leg- one point, seeing leggings in gings. Those dreamed up by
gings are fash- everyday life looked sloppy,” Céline creative director
ion’s bad penny, said Saks Fifth Avenue SVP Phoebe Philo are made of the
coming back and fashion director Roopal smoothest black matte
again and again Patel. “It meant you weren’t stretch fabric, with zips at
thanks to regrettable mo- getting dressed and making the calf, and cut to univer-
ments of mod, 1990s grunge an effort.” sally flatter.
revivals, various fitness Leggings’ presence on the “It’s all about finding the
crazes and Gigi Hadid’s Snap- fall runways of brands such right ones,” agreed Gina To-
chat. To others, they’re the as Céline, Valentino and Vic- var, fashion director of Ama-
most comfortable item in the toria Beckham has fashion- zon Fashion. “They’re not all
closet, a go-to that’s easier to minded individuals like Ms. created equally and some are
wear than jeans and even Patel seeing things differently. far better suited for a work-
slimming, when styled right. Among the most telling mo- out.” If you’re wearing leg-
With the rise of “athleisure,” ments: In his much antici- gings as a style statement,
some women go to extremes, pated debut as artistic direc- she recommended options in
dressing as if in a perpetual tor of Balenciaga, Demna faux leather, smooth but
state of heading to-or-from- Gvasalia paired stirrup sturdy ponte knit, or velvet.
the-gym, no matter the occa- pants—leggings’ kissing One of fall’s freshest ver-
sion. The debate rages on: cousin—with couture-crafted sions is the knit legging, with
Leggings...trashy or trés chic? puffer jackets. “Leggings are its shades of sweet balletic
This fall, perhaps in reac- the cat with nine lives,” Ms. romance. On Valentino’s run-
tion to the look’s worst abus- Patel added. “This evolution way, finely ribbed iterations
ers, designers are offering has made women look again strolled by in black and pink,
tucked into the brand’s signa-
ture Rockstud heels and flats,
TIGHT DONE RIGHT // HOW TO WEAR LEGGINGS topped with flaring dresses
WHEN YOU’RE NOWHERE NEAR THE GYM and tailored wool peacoats.
Victoria Beckham also
showed ribbed knit styles but
in a heftier wool. They
draped cozily over the ankle,
and were layered under pol-
ished windowpane coats and ON THE GAM When cleverly cut from luxe fabrics, leggings can be a valid style statement.
long belted sweater vests. Leggings, $155, wolford.com; Loewe Dress, $2,350, nordstrom.com; Mules, $475, 31philliplim.com;
With the new prominence Ellipse Ring, $305, annelisemichelson.com; Molten Ring, $225, jenniferfisherjewelry.com
of leggings, there’s a pair for
every woman. At Saks, Ms. leather look for winter, as trans-occasional,” said Grit fall’s decidedly un-athletic
Patel said, leggings come in long as she can get the pro- Seymour, creative director of looks haven’t changed her
all manner of luxe materials: portions of what she wears Wolford, which offers a vast opinion. “Instead, put on
technical stretch nylon, on top right. “I like it when I collection of high-quality leg- tights or straight-leg black
leather, new treatments of feel covered, like a riding gings. A good pair can be the jeans,” she said. Leggings, she
denim, sequins and velvet. look with a blazer and boots,” key to wearing that other- maintained, are for walking
You might try the Row’s wise too-skimpy shift dress the dog. “Don’t wear leggings
body-sculpting leggings in a to the office or a sheer lace unless you’re also wearing a
scuba-like stretch nylon/elas- dress for evening. As demon- sports bra.”
tane for $450 or one of the ‘Leggings are the cat strated at left, leggings can Stylist and creative consul-
many options in leather and with nine lives. This make a dress with a high tant Danielle Nachmani is an-
suede by Saint Laurent and side-slit appropriate for other naysayer. Like Ms.
Vince, to name a few. evolution has made work, add some edgy warmth Friedlander, she views leg-
The influx of fashionable women look at them to a sequined spaghetti-strap gings as a uniform of com-
leggings is good news for dress, and prevent a tweed- fort. However, she is recon-
women, such as New York again.’ and-sequin minidress from sidering her stance after
lawyer Sharon Makowsky, veering too revealing. seeing fall’s runways. Her ad-
who have been designating Despite the current cheer- vice is to keep the look clean,
certain leggings in their she said. “That looks less like leading for leggings, nonbe- pairing leggings with a white
Left: Leggings, $350, 31philliplim.com; Dress, $2,495, Calvin wardrobe as special “dress- workout clothes.” lievers persist. Ruthie Fried- shirt or creating a tonally
Klein Collection, 212-292-9000; Rings, $325 and $265, up” wear. Ms. Makowsky One element of leggings lander, content editor for New matched look. “Then it’s pur-
jenniferfisherjewelry.com; Heels, $945, valentino.com. Middle: wears black Lululemon leg- that can’t be ignored is their York-based agency the Wall poseful, and it doesn’t look
Knit Pants, $980, Valentino, 212-355-5811; Nina Ricci Dress, gings for weekend outings, efficiency as a wardrobe Group, last year penned a dic- like you’re going to gym,” she
$5,690, Ikram, 312-587-1000 and Heels, Nina Ricci, 33-01-8397- keeping them in a separate problem-solver. “They are tatorial essay for Elle.com ti- said. Might she wear leggings
7212. Right: Leggings, $590, and Dress, $8,100, Céline, 212- drawer from those she works shaping and concealing, mul- tled “Please Let’s Stop Wear- herself? “Who’s to say? I’d be
535-3703; Pumps, $675, Gianvito Rossi, 646-869-0201. out in. She’s contemplating a tifunctional, trans-seasonal, ing Leggings as Pants.” And open to trying.”

POINTS OF DISTINCTION

MIGHTY BLOUSE SIDE PART

In place of two ties
that can be fashioned
With lanky, elegant sleeves and into a bow, this
asymmetric scarf can
an off-kilter bow, this top has the
either hang loose or
power to play many roles be knotted to
the side.
IF YOUR CLOSET held an awards ceremony,
the bow-neck silk blouse would win Most
Dependable. It might also win Most Likely
to Succeed. And perhaps Most Likely to Get
a Second Date. Fully bow-tied, the classic top
exudes executive confidence. With the ties
loosely intertwined and hanging down, it has
a free-spirited allure. No wonder many women
own more than a few. So why buy one more?
Italian label Sportmax offers a compelling CUFF
argument to do so. New for fall, its silk geor- STUFF
gette blouse is refreshed by a tunic length The longer cuffs
that falls anywhere from mid-thigh to the fall over your hands
DAVID CHOW FOR THE WALL STREET JOURNAL, STYLING BY ANNE CARDENAS

knee, depending on your height. “I like the instead of primly

idea of this kind of proportion you can wear buttoning closed
in different ways,” explained Sportmax cre- at the wrist.
ative director Grazia Malagoli. The blouse
layers smoothly over leggy, tailored trousers
or a flaring midi skirt for a modern long-
over-long look. Or wear it alone as a dress,
with bare legs now, and tights later. TUCK
Instead of the standard-issue twin neck VS. TUNIC
ties, a single scarflike piece hangs asymmetri- With a longer
cally down the front; it can also be woven silhouette, it has the
through a loop on the left side of the collar versatility to be tucked
to create a half-bow. The elongated cuffs in, layered over or
are more louche than ladylike. Ms. Malagoli worn solo.
likes the way they fall and move as a woman
goes about her day: “They give a strong
attitude.” Tunic Blouse, $765, Sportmax,
212-674-1817 —Rebecca Malinsky
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | W5

OFF DUTY
IN SEARCH OF THE SECRET SAUCE POKE
Kahuku Superette

Honolulu’s Ahi
The seaside Kahuku area, on
Oahu’s North Shore—an hour
drive from Honolulu—is famous
for its corn fields, colony of

Moment
Poke, a Hawaiian raw-fish salad, is suddenly
everywhere. But it still tastes best in its rightful
home, served with a side of sun, sea and no fuss
BY MARTHA CHENG
I DON’T KNOW why it took the
rest of the country so long to catch
on to poke. I’ve been hooked on
Hawaii’s beloved raw-fish dish,
pronounced poh-kay, ever since
I moved to Oahu, nearly 10 years
ago. As common to the islands as
hamburgers are to the mainland, it’s
Hawaii’s version of ceviche, minus
the citrus, often made with cubed
ahi (yellowfin or bigeye tuna) and
seasoned with soy sauce and ses-
ame oil. Rare is the supermarket or
social gathering that doesn’t have
poke. Elsewhere, you might bring
wine and cheese to a party; in Ha-
waii, it’s more likely beer and poke.
Now that poke is popping up all
over the continental U.S., from
San Francisco to New York, I find
myself thinking: It’s about time.
Still, for variety and freshness, no-
where beats Honolulu, the capital
(and culinary center) of poke’s
birthplace state. “Poke is Hawaii’s
food,” said chef and poke evangelist
Sam Choy. “No other food has the
kind of history [on] the islands.”
(Mr. Choy launched Poke to the
Max food trucks in Seattle, in 2013,
and a brick and mortar restaurant
of the same name, also in Seattle,
earlier this year.)
In Hawaiian, the word “poke”
means to slice or cut crosswise into
pieces. The dish has existed in some
form for centuries. Ancient Hawai-
ians would harvest reef fish (the
small fish you might see when snor-
keling in Hawaii), slice and season
them with salt harvested from the
ocean, inamona (roasted and
crushed kukui, or candlenut) and
limu (seaweed). But it wasn’t until
the 1970s that poke’s popularity
began to grow, thanks to advances
in commercial fishing, which made
deep-sea, large fish such as ahi
more available. Hawaii’s multicul-
tural influences, a result of the
Japanese, Chinese, Filipino and
Korean laborers imported to work
the sugar and pineapple planta-
tions, contributed new seasonings
to the poke mix.
These days, while you can get
poke made with everything from
beets to beef, ahi poke still reigns
supreme. The three local favorites
are shoyu ahi (flavored with soy
sauce), limu ahi (also called Hawai-
ian-style, made with Hawaii’s
crunchy, salty seaweed) and spicy
ahi (a creamy concoction made with
spicy mayonnaise). And it’s gener-
ally a no-fuss affair, scooped into
a plastic deli container and eaten
with toothpicks or chopsticks, or,
for a more filling meal, served cold
over hot rice. Sure, you can find
artfully plated iterations at some
swanky island restaurants, but the
very best versions come out of
hole-in-the-walls that look like
backdrops from the original 1970s
“Hawaii Five-0.” The spots listed
here, for example, may not win any
design awards, but they take great
care with their ahi and their mari-
nades. The key, as Mr. Choy put it,
is “the yin and yang of flavors—the
salty, the sweet, the freshness of
the seafood, the crunch.”
food trucks selling fresh
shrimp, and Kahuku Superette.
When Tina Lee took over the
Superette, a nondescript gen-
eral store, in 1992, she started
making a secret sauce for her
poke that drew locals and tour-
ists from around the island, as
well as the high-school stu-
dents from across the street (if
you show a school ID, you get
free rice with your poke).
Ms. Lee, originally from
Korea, took a cue from kimchi
recipes and ferments soy sauce
with heaps of fresh ginger and
other mystery ingredients. It
makes for a pleasant, mildly
pungent poke that pairs best
with rice. Her shoyu poke is the
star, but I prefer the under-
stated limu ahi, slicked with
sesame oil and sprinkled with
limu, green onions, chili flakes
and sesame seeds. Whatever
you order you’ll be getting
some of the best ahi around,
firm and free of sinew. Get
your poke to go and head
straight to Waimea Bay, one
of my favorite spots on Oahu
for its wide, sandy beach
and deep clear waters just past
the shorebreak (56-505
Kamehameha Hwy).
THE POPULAR POKE
Ono Seafood
Oddly stuck to the side of a two-story building,
not too far from Diamond Head, this little sea-
food market is a candy store for seafood lovers.
You’ll find a fridge stuffed with sashimi, fish
jerky, little bags of dried cuttlefish and smoked
octopus and various pickled and marinated sea-
weeds. Behind the counter, mother-and-daugh-
ter owners Judy Sakuma and Kim Brug (right)
mix the poke to order. The most popular, shoyu,
comes coated with soy sauce that’s slightly
sweet and infused with shards of ginger. Order
the shoyu as a poke bowl, and they’ll scoop it
over hot rice and drench it with extra sauce. The
Hawaiian-style poke is just as good, made with
crisp limu and sea-salt crystals, nutty inamona
and flakes of chili pepper. The picnic tables next
to the parking lot fill up quickly; take your poke
bowl to someplace a little more scenic, like
nearby Kaimana Beach, Waikiki’s quieter and
less touristy strand (747 Kapahulu Avenue).

THE OLD-SCHOOL POKE THE FISHERMAN’S POKE

Tamashiro Market Ahi Assassins
As pink as Waikiki’s Royal Hawaiian hotel but much less regal (note the giant Fisherman Joshua Schade and
red crab on the facade), Tamashiro opened in 1947 in the Kalihi neighborhood. his partner, Erika Luna, opened
It offers one of the widest varieties of seafood in Honolulu and caters to Kalihi’s Ahi Assassins, where the busi-
multicultural residents, which means you’ll find the Filipino cascaron, a fried, ness cards and staff T-shirts
sweet, sticky rice ball and the Samoan version of poke, oka, marinated in coco- read “Slayed, weighed and fil-
nut milk and lemon juice. You can try before you buy, but even so, I can never leted in Hawaii,” in 2014 after
decide between ahi shoyu and kajiki (blue marlin), in which the white fish is years of selling Mr. Schade’s fish
speckled with black sesame seeds (802 North King St., tamashiromarket.com). straight off the boat to family
and friends. The takeout-only
spot is tucked into the second-
floor corner of a small office
THE PERFECTIONIST’S POKE complex in Manoa, near the
MARCO GARCIA FOR THE WALL STREET JOURNAL

Maguro Bros University of Hawaii; look for the

In Honolulu’s Chinatown, inside Kekaulike Market, you’ll find Maguro Bros’ little pennants printed with ahi out-
seafood counter with a few tables. The setting doesn’t have the scope or size of lines strung on the balcony like
Tokyo’s Tsukiji Market, where Junichiro Tsuchiya, one of the brothers, worked as prayer flags. Inside, guys with
a fish buyer, but it has its own energetic charm, particularly around noon when strong forearms break down fish
the businessmen in aloha shirts stream in for lunch. In the glass refrigerated case, beside the poke display case.
you’ll see hunks of fresh ahi (“maguro” means tuna in Japanese), which the The Lunatic is my favorite varia-
Tsuchiya brothers meticulously transform into poke. They mix to order ever-so- tion here, with a garlicky sauce,
gently, adding light touches of finely ground inamona to the ahi limu, for example, hint of sugar and a heat that
and infusing shoyu with ume (preserved plum) and shiso (an herb that tastes of slowly builds (2570 S. Beretania
basil, mint and fennel) for an unusual brightness (1039 Kekaulike St. #113). St., ahiassassins.com).

SITES & SIGHTINGS

POKÉMON ON TOUR
With Pokémon Go city tours now on offer
everywhere from San Francisco to Reykja-
vik, it was inevitable that tour operators
would start plotting entire vacations around
the augmented-reality mobile game. The
travel company Zicasso now sells bespoke
Pokémon-inspired trips through Australia
and/or New Zealand, designed with families
in mind. A private guide will show travelers
around, say, Sydney Harbour or Milford
Sound, while giving tips on hunting down
Pokémon, including Australasia’s resident
Kangaskhan. For parents who shudder at
the thought of a Pokémon vacation—imag-
ining a glut of screen time and gazillion dol-
lars of cellphone charges—there’s good THE GUINNESS EXPRESS
news: All itineraries are customizable, so Belmond, the company which operates the famed
you can spend ample Venice Simplon-Orient-Express as well as three other

WINGING IT TO CUBA time cruising along the

In the latest sign that Cuba’s days as
on, American will offer daily flights
Great Barrier Reef or
other places still too
touring trains in the United Kingdom, is expanding its
array of luxury locomotives. The 40-passenger Belmond
Grand Hibernian will rumble across the Republic of
GETTY IMAGES (CUBA); BELMOND (TRAIN)

a verboten destination are over, now
you can book a commercial flight
there from the U.S. with a little
mouse-clicking. Whereas once you
had to fly to Cuba on an airline char-
ter or via a third country, JetBlue is
selling direct tickets starting at $99
one-way on its thrice-weekly hops
from Fort Lauderdale to Santa Clara
set to launch Aug. 31. From Sept. 7
from Miami to Cienfuegos and
Holguin at fares from $180 round-
trip. (Other cities will follow, as will
more airlines.) Still, don’t expect to
spend your stay sipping mojitos on
a beach; the U.S. only allows its citi-
zens to visit Cuba for one of 12 rea-
sons, including humanitarian projects
or educational activities (jetblue.com;
aa.com). —Barbara Peterson
remote for Pokémon.
And Zicasso is offering
a portable hot spot
for travelers who
book by Oct. 1, 2016
and travel by Dec. 31,
2017 (from $2,499
a person for a 7-day
trip; zicasso.com).
—Sydney Lazarus
Ireland and Northern Ireland, starting Aug. 30., on two-,
four- and six-night round-trip journeys departing from
Dublin. What takes so long in a country this small? Itin-
eraries include daily excursions such as falconry lessons
at Ashford Castle or a round of golf in Killarney. Mean-
while, the observation car doubles as an Irish pub, com-
plete with live music and a bottomless glass of Guin-
ness. The Grand Hibernian will run through October,
then resume in April, 2017 (from about $3,570 a per-
son, for a two-night journey; belmond.com). —S.L.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
W6 | Friday - Sunday, August 19 - 21, 2016
RUMBLE SEAT: DAN NEIL
Aston Martin Lagonda: The Thoroughbred Limo
COUNTY WARWICKSHIRE, in
the West Midlands, is where
we lay our scene. Two weeks
ago, the weather was nice,
and when the weather is nice
in England, sonnets and oil
paintings just happen. A fresh
breeze curled the treetops.
Clouds tumbled. Bands of
sunlight moved across open
fields as if searching for peas-
ants to transfigure.
And so close to the factory!
Yes, about that: The Mid-
lands is the historic heart of
the British car industry, in-
cluding Gaydon, home to Jag-
uar Land Rover and Aston
Martin. The Midlands is also
a global center of stubborn-
ness. The pastoralism visitors
enjoy is only by dint of
bloody rows over land use,
zoning, agricultural subsidies
and NIMBY-ism going back
to the Middle Ages.
Where’s this going? The
roads. Just outside the indus-
trial zones and motorways,
the roads pipe down to nar-
row, hold-your-breath country
lanes. And the car in hand,
the Lagonda Taraf, by Aston
Martin, is as wide as church
doors. By all rights, a car and
a half. Shrubbery snapped the
left-side mirror as I gave way
to an oncoming lorry. Jeez!
That mirror is about half my
annual salary.
The Taraf—a $1 million,
195-mph super-sports limou-
sine—is nothing less than
a commissioned piece built
for the company’s Middle
Eastern financiers, who are
also clients, if the usual ar-
rangements apply. Since 2014,
Aston Martin has rounded
up more than $700 million in
funding to reboot the com-
pany in the next five years,
with three new car lines
(sports car, GT, and super-
luxury Lagonda sedan) and
a crossover to be built in
Wales, the DBX. Aston is go-
ing after Rolls-Royce and
Bentley, cheeky monkey.
Along the way, discreet
gentlemen made discreet
inquiries about building
a proper limousine. Yes, the
answer came back, it would
be feasible to modify the
aluminum structure under
the (cramped, beautiful)
Rapide S sedan, extend the
wheelbase 7.9 inches, and
devote that extra space to
the rear-cabin accommoda-
tion. Such a car appeared
in draft form at the 2014
Geneva motor show, cast in
a wrathful shadow of car-
bon-fiber and turreted black
glass. It took its name and
inspiration from the pencil-
thin Lagonda of the 1970s.
Mechanically, the Taraf
retains the Rapide’s naturally
aspirated 5.9-liter, 540-hp
V12—a sonorous glory, with
THE FIXER: MICHAEL HSU
A Trick for Clearer Calls on Your Smartphone
Q I have a hard time
hearing people when
I’m making a call with my
smartphone. Is there a way
to improve the sound quality?
A Despite all the audio-
enhancing technology
packed into them, smart-
phones fall short when it
comes to phone calls for
two reasons: 1) Holding your
smartphone’s speaker directly
next to your ear can be a chal-
lenge because it’s difficult
to sense where the speaker
is; and 2) If you take calls
outside the quiet of your
home (yappy pugs notwith-
standing), background noise
is a problem.
A quality Bluetooth headset
can help, since its speaker
nestles right in your ear.
Although some early headsets
suffered from poor audio
quality, I’ve had no problems
with the latest models.
LET ‘ER RIP, JAMES
The limited-edition
Aston Martin Lagonda
Taraf is essentially a
195-mph limousine.
savage torque at mid-clock—
and eight-speed rear trans-
axle. The presence and aural-
ity of the powertrain has
been retrenched beneath
the Taraf’s deeper drifts of
soundproofing, and you can
only dig them out again with
a very heavy foot.
Taraf also inherits the
prominent driveline tunnel,
and the bondage-tight leather
hillock dividing the cabin east
and west. Compared to an-
The Taraf is as close
to an instant classic
as I have ever driven.
other super-sport limousine,
the Bentley Flying Spur, the
Taraf’s owner accommoda-
tions are decidedly cozy. They
make the Bentley look like
a chrome-plated bedpan.
The Taraf uses Aston’s
legacy cabin electronics,
much of which dates back
more than a decade. Among
the fantasia: the crystal key-
fob, crystal-button gear se-
lectors, the cluster of rotary
dials capped in pewter-like
alloy, and the world’s least
readable GPS screen.
In Aston’s new cars, like
the DB11 I’ll review next week,
the cockpit electronics and
rotary controller are all
The bigger challenge is
background noise. Few
Bluetooth headsets block
ambient sound competently.
One easy fix: Replace the
headset’s stock eartip with
a noise-isolating one, like
Comply’s Isolation T-Series
Foam Tips ($7 per pair).
Audiophiles often use these
with earbud headphones,
but the tips will work with
Bluetooth headsets that have
earbud-like tips.
Jabra’s Eclipse Bluetooth
headset ($100) is a light-
weight, low-profile model
that’s compatible with
Comply’s T200 size tips.
In my tests, the difference in
call quality is drastic, espe-
cially when you’re talking
on a noisy street or cacopho-
nous train station.
Have a lifestyle problem that
a gadget might solve? E-mail
us: thefixer@wsj.com
OFF DUTY
sourced from Mercedes-Benz.
While these devices function
vastly better, I miss the gor-
geous, awkward steampunk of
the old dials. I predict this era
of Aston switchgear will be
hugely collectible. As long as
collectors don’t try to tune
the stereo.
How does the Taraf drive?
Well, the driver is an em-
ployee, so who really cares?
Beyond that, the Taraf feels
familiar, with the same stiff,
resolute timber as the other
Astons built on the aluminum
VH monocoque. The Taraf’s
stately skin is lightweight car-
bon-fiber, not pressed alumi-
num, as with the Rapide S.
As a result the larger car
weighs about the same as
the smaller, around 4,500
pounds. The sport of the car
is roundly girdled and modu-
lated for this application, but
the Taraf can still rip. Confi-
dence builds, eventually.
But it’s like graduating from
a medium to an extra-large
broadsword.
Want one? Too bad. Most
of the 200 Tarafs are spoken
for, and nearly all of them are
headed to the Orient as fast
as cargo 747s can carry them.
The Taraf is not homologated
for sale in the U.S. market.
Wait. Two hundred copies,
practically all sold, not even
U.S. legal? Then why even
write about it? Because the
Taraf is as close to an instant
classic as I have ever driven.
THE WALL STREET JOURNAL.
FROM TOP: DAN NEIL/THE WALL STREET JOURNAL; ASTON MARTIN
The highlight of my car the Zagato-bodied Vanquish. a safe bet they don’t involve
year is next weekend, when In this respect, Aston is doing many naturally aspirated V12
I serve as an honorary judge regular business like pre-war engines, spring suspensions
at the Pebble Beach Concours luxury automakers with and mechanical limited-slip
d’Elegance, in Monterey, Calif. coach-building boutiques. diffs. The Taraf appears at
While I’m no authority on In any event, with only 200 the twilight of the old Aston
classic cars, I know what clas- copies, many of them des- regime, a bell-jar of all that
sic-car experts look for in tined for private collections has been winning, charismatic
awarding Best in Show. The in faraway places, the Taraf is and self-styled about Aston
Taraf has the cut of a car a born unicorn. in the 21st century, from the
that could earn Best in Show, Bloodline: The car world is big-Brit 12s to the crazy lux-
circa 2066, let’s say. on the threshold of a techni- ury-Zeppelin controls.
I thought you’d ask, so cal transformation, the details You want one. You know
I have a list. of which are hazy, but it’s you do.
Imposing beauty: Well,
we’ll see about the beauty,
won’t we? But the Taraf is
certainly an eyefull—17.7 feet
nose to tail and almost 6.3
feet wide, and not a wasted
inch. The Taraf combines fine
line and sheer scale, a multi-
plier of magnificence.
Backstory: You have the
geopolitically rich tapestry
of pampered sheiks being
whisked across the desert in
the back of their custom As-
ton Martins, a notion some-
where between Scheherazade
and Daniel Yergin. The Taraf
has historical resonance and 2017 ASTON MARTIN LAGONDA TARAF
will speak to future genera-
tions much as the gilded car-
riages in the Hermitage do. Price, as tested: $1 million Power/torque: 540 hp at
I predict History will also ask Powertrain: Front-mid 6,650 rpm/465 pound-feet
who in their right minds mounted naturally aspirated at 5,500 rpm
would want to ride in the 5.9-liter DOHC V12 with Length/weight: 212.5
back seat at 180 mph. variable valve timing: inches/4,500 pounds (est.)
Rarity: Aston Martin seems eight-speed automatic rear Wheelbase: 125.6 inches
to have passed some critical transaxle with manual-shift 0-60 mph: 4.4 seconds
threshold in making limited- mode; rear-wheel drive with EPA fuel economy: N.A.
series cars. Examples include limited-slip differential. Trunk capacity: 14 cubic feet
the One-77 (with 77 made) or
KIERSTEN ESSENPREIS
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.

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

‘The collector’s need is precisely

for excess, for surfeit, for profusion.
It’s too much—and it’s just enough
for me.’ —Susan Sontag

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

© 2016 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | W7

Hard-Core House Collectors

Self-diagnosed house addicts are a rare category of buyers who acquire homes out of
love of real estate rather than practical need: A designer falls for French châteaux.

Beverly Hills Rancho Mirage Idaho Malibu

CLOCKWISE FROM TOP LEFT: LISA CORSON FOR THE WALL STREET JOURNAL; BEN STEIN; WIQAN ANG FOR THE WALL STREET JOURNAL; LISA CORSON FOR THE WALL STREET JOURNAL (2)

BEN’S BUNGALOWS Writer, actor and economist Ben Stein, above, in the living room of his Beverly Hills, Calif., home. He owns 13 homes with his wife, Alexandra Denman. They own one in Malibu, two
in Rancho Mirage, two in West Hollywood and two in Washington, D.C., among others. They own four condos in the same building in Sandpoint, Idaho, to eliminate the possibility of noisy neighbors.

BY KATY MCLAUGHLIN
Some people collect wine or paintings. Others
like stamps or model trains. Then there’s Ben
Stein, a writer, actor and economist, and his wife,
Alexandra Denman: They collect homes.
The couple owns 13. They’ve got a house in Bev-
erly Hills and one in Malibu, plus two West Holly-
wood condominiums. Then there are two Washing-
ton, D.C., apartments, a house in Rancho Mirage,
Calif., and a condo to boot. And there are others.
Though an economist by trade, Mr. Stein said
his investments—none of which are rented out—
don’t represent a cagey financial plan. Instead,
it’s a syndrome: “I would say I’m a house ad-
dict,” Mr. Stein joked.
Self-diagnosed house addicts are a rare category
of property buyers who acquire homes not neces-
sarily to rent them out, flip them or because they
need a place to stay. They do it for the thrill of the
purchase and the fantasy a new home can inspire.
In some cases, multiple home buyers come out on
top financially. In other cases, their proclivity for
property has dismal financial consequences.
Many well-off Americans own more than one
Please turn to page W8

FROM TURKEY TO MIAMI FOR LUXURY

HOUSE
OF THE DAY
wsj.com/houseoftheday
Amid global turmoil, Turkish buyers see condos in South Florida as a stable investment—and a vacation venue.

BY ALINA DIZIK

Long a hub for Latin Amer-

icans, Miami is now attracting
TRAVIS MARK

newcomers from across the

Atlantic: affluent Turkish
home buyers looking for sta-
ble investments in real estate. United States
In the past two years, A $3.275 million
Turkish buyers have set their Manhattan ‘jewel box’
sights on Miami’s condo de-
velopments, purchasing large
properties for use as second
ALEXIA FODERE FOR THE WALL STREET JOURNAL (4)

or third homes. Overall, lux-

ury-condo developers are
seeing about 5% of precon-
struction inventory sold to
SAUL GOODWIN

buyers from Turkey, accord-

ing to developers.
“There’s a good return on
investment, and the returns
are in dollars,” says Hilal Europe
Borque, who in December Italian farmhouse with
opened a Miami franchise of modern updates
Istanbul-based Turyap Realty.
Real-estate agents estimate
about 10,000 Turks live in the
city part time. Many potential
buyers are also interested in
meeting the requirements for
the EB-5 visa, which after an
investment of at least
$500,000 eventually allows
KNIGHT FRANK

them to acquire permanent

U.S. residency.
Earlier this year, three
units at the Ritz Carlton Res- Australia
SCENE IN SOUTH FLORIDA The Miami skyline, top, from Biscayne Bay. Above, from left: a Le Corbusier sculpture in the Design Dis- idences Sunny Isles Beach Queensland retreat
trict; the beach in Sunny Isles Beach, Fla.; the Miami airport, where Turkish Airlines last year added a daily Istanbul-to-Miami flight. Please turn to page W12 with a golf course
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
W8 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

MANSION

HARD-CORE HOUSE COLLECTORS

CLOCKWISE FROM TOP LEFT: CHEYENNE ELLIS; STRIBLING & ASSOCIATES; MARINA FAUST
CRAZY FOR CHÂTEAUX In-
terior designer Timothy Corri-
gan serially buys French châ-
teaux. Le Château du Grand-
Luce, right, is currently on the
market for $11.4 million; Châ-
teau de Gallerande, above.

OLIVIER KONING FOR THE WALL STREET JOURNAL (5)

OWNING ON OAHU Thomas Yue owns three houses on the Hawaiian island of Oahu. Though two of his homes on the North Shore represent an investment of millions, Dr. Yue spends most of his time
in a more modest house near Makakilo. He also is in contract to buy two condos in Ward Village. From left to right: his home near Makakilo, a North Shore home, Dr. Yue, view from a Ward Village condo.
CLOCKWISE FROM LEFT: KELLY MARSHALL FOR THE WALL STREET JOURNAL (2); DOROTHY HONG FOR THE WALL STREET JOURNAL (2)

HOUSE HOBBYIST Real-es-

tate agent Robby Browne, top,
owns a home in Bridgehamp-
ton, N.Y., left, and five apart-
ments in two buildings on New
York’s Central Park West. Two
of the units, above and below.

Continued from page W7
home: The 2013 Survey of Con-
sumer Finances from the Federal
Reserve showed that just under
40% of respondents in the top 10
percentile of income owned at
least one second home. World-
wide, people with at least $30 mil-
lion in assets have an average of
2.9 properties, according to a re-
port published last year by global
research firm Wealth-X and So-
theby’s International Realty. The
world’s 2,479 billionaires have an
average of four homes apiece.
True house collectors easily
blow past the averages.
Robby Browne, a real-estate
agent with Corcoran Group in
Manhattan, owns four apartments
in a building on Central Park
West, and one unit in another
park-side building one block
away. He is currently shedding a
West Village apartment, which is
on the market for $5.35 million,
only to buy another one, which is
in contract for $6.5 million. He
also spent roughly $1.5 million
building a house in Bridgehamp-
ton, N.Y., near the beach.
Some of Mr. Browne’s acquisi-
tions have been very lucrative,
while others demonstrate that pas-
sion, not profit, is the guiding
force. Comparable units to one he
owns on Central Park West cur-
rently sell for about three times
what he paid for it, and he makes
$18,000 a month renting it out.
His four apartments in one
building seem less logical: He lives
in one, uses another for guests,
and has two small units—under
100 square feet each—that he uses
for storage, he said.
The West Village apartments
represent his long-held ambition
to move downtown—“but in the
end I can never bring myself to,”
said Mr. Browne. After realizing he
couldn’t face the move, he leased
the unit he is selling. He still
hasn’t decided if he’ll move into or
rent out the new one.
Mr. Browne said he has almost
always made money on the 22
properties he has bought and sold
over the past 30 years, though not
as much as he would have if he’d
invested in gentrifying parts of
Brooklyn or Queens.
Though buying in prestigious
neighborhoods can be a sound fi-
nancial investment, house collec-
tors say they are not primarily
driven by the bottom line.
Part of Mr. Stein’s motivation: “I
don’t like noisy neighbors,” he
said. His sensitivity to noise
prompted him to buy not one but
four condos in a resort-style build-
ing on Lake Pend Oreille in Sand-
point, Idaho, where he and Ms.
Denman spend summers. Starting
in the mid-2000s, they purchased
their own three-bedroom unit, plus
the one next door and two down-
stairs, so that no neighbors can
cause “any vibrations,” he said.
It was a neighbor’s loudly ring-
ing telephone that prompted Mr.
Stein to purchase the apartment
next door to his in a West Holly-
wood building. Why didn’t he just
sell his unit next to the noisy one?
He loves the “fantastic view” from
the building and enjoys the peace
and quiet in the apartment, he
said. Plus, that condo could sell for
roughly $700,000, said Anna Sad-
owska, an agent at Teles Proper-
ties—over a half-million more than
he paid for it in 1997.
Mr. Stein declined to discuss
how he has fared financially from
his real estate, but said, “if I’d put
the money in the stock market, I
would have done way better.”
Beyond noise issues, he theo-
rized that his love of homes
stems from his mother’s interest
in property at time when Jewish
families like his were barred from
purchasing in many neighbor-
hoods of Washington, D.C., where
he grew up.
“It very much means some-
thing to me that I can live wher-
ever I want now,” said Mr. Stein.
Thomas Yue, an anesthesiologist
and president of Regional Anesthe-
sia Services, a provider of doctors
and nurses in Minnesota, owns
three houses on the Hawaiian is-
land of Oahu and is in contract to
buy two condos in Ward Village, a
new development under construc-
tion between downtown Honolulu
and Waikiki, for a total of $3.7 mil-
lion. He also has a house in St.
Paul, a ski condo in Vail, Colo., an
apartment in San Francisco and
another in Millbrae, Calif. He
doesn’t rent out any of his proper-
ties, he said.
Though two of his homes on
Oahu’s North Shore represent an
investment of about $11 million,
Dr. Yue spends most of his time in
a more modest house about 30
miles south, he said. The North
Shore homes were renovation and
building projects that he enjoyed
creating, “like you would with a
work of art.”
Timothy Corrigan, 58, is a
Paris- and Los Angeles-based in-
terior designer who suffers from
an exotic strain of real-estate ad-
diction: He buys French châteaux,
serially.
In the late 1980s, he reno-
vated his first château in Nor-
mandy and sold it for under $1
million. In 1992, he renovated an-
other about 60 miles southwest
of Paris and sold it for roughly
$1.6 million. In 2003, he bought
and sold a Loire Valley château
within a year when a different
one became available. Today, that
château—a 40,000-square-foot
palace on 74 acres about an hour
by train from Paris—is on the
market for $11.4 million.
His total take from his château
sideline: zero, he said. He has lost
money on every one—and will lose
money again, even if the current
property sells for the list price.
“The restoration of châteaux is
not a moneymaking business, but I
just love the process,” said Mr.
Corrigan.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | W9

MANSION
BALANCE SHEET

An ‘Experimental’ Hillside Home

A Luxembourg couple builds a modern home with odd angles to appeal the senses—’like an artwork’

BY RUTH BLOOMFIELD
COSTS
To the north of Luxembourg
City, an origami of a house clings Site prep, framing,
to the steeply sloping terrain. foundation
Step inside and it is clear this is
a home with an utter disregard $295,000
for symmetry, straight walls or
conventional geometry. Insulation, siding,
“So many houses just look the windows
same. We did not want to build a
house which looked like a shoe- $190,000
box,” says Eliana d’Alimonte, a 40-
year-old high-school teacher, of Plumbing, electric
her home in the small European
country of Luxembourg. $117,000
Mrs. d’Alimonte and her husband,
Valerio, 45, spent 18 years saving up Painting, décor
to build a modern home. They
bought a small apartment in Luxem- $53,000
bourg City in 1998 and patiently
worked their way up the property Bathrooms
ladder from there, renovating homes
and even building two apartments. $15,000
In 2008, the couple paid
€400,000, or about $450,000, for a Kitchen
sloping 4.5-acre lot that had for-
merly been used to grow fruit and $59,000
vegetables in Mühlenbach, a leafy
neighborhood 2 miles north of the Built-in furniture
city center.
They asked François Thiry, a $22,000
partner at Polaris Architects in
Luxembourg, to design something Landscaping,
fresh, relaxed and creative. “We ORIGAMI HOME The sloping garden room
wanted a house which appeals to kitchen wall in the d’Alimonte fam-
the senses, like an artwork, and ily home, above, seen from the $77,000
that was maybe a little experimen- mezzanine floor. Valerio and Eliana
tal,” says Mr. d’Alimonte, who d’Alimonte, far left, with their chil- Professional fees
works for an organization that dren, Carlotta, 8, and Edgar, 6.
promotes Luxembourg tourism. From the outside, the d’Alimonte $100,000
After six months of design work house is a puzzle clad in gray tiles.
during 2009, Mr. Thiry came back Below, an orange sofa is one of the TOTAL
to them with a plan for a geomet- few spots of color in the 2,691-
ric, four-story, concrete house square-foot home. $928,000
molded into the slope of their
tricky site. Inside the 2,691-square- a flight of stairs, a master bedroom
foot home, the lower floor features tucked into the very peak of the

ANNA KATINA FOR THE WALL STREET JOURNAL (4)

a double-height kitchen and dining
room, with one wall sloped sharply
inward. A window has been care-
fully inserted into this inward-
sloping wall, while to the rear of
the room double glass doors open
onto a small deck, with a short
path leading down to a lawn.
Above the kitchen—and at
street level—is a cutout mezzanine
giving space for a living room and
study overlooking the dining area.
To help furnish the oddly
shaped space (no room in the
house is a simple square or rectan-
gle) built-in cabinetry and shelves
display books on art, design, archi-
tecture and film. To bring in maxi-
mum light, a large picture window
overlooks the garden.
On the two upper floors are bed-
rooms for the couple’s children,
Carlotta, 8, and Edgar, 6, and a fam-
ily bathroom. There is a also “par-
ents’ apartment” consisting of a
double-height sitting room and, up
building, with an en suite bathroom
and a small, private balcony.
Work on the two-year, $928,000
project began in the fall of 2010.
Simply preparing the site and build-
ing the structure were engineering
challenges that took more than a
year to execute. First, a section of
the hillside had to be dug out to
provide a level lot, and deep founda-
tions dug to prevent the house from
slipping down the hillside. With the
cast-concrete structure, reinforced
with steel, in place, work was able to use a minimum of different ma- color in the room—a deliberate deci- things are a little different. “The
to begin on the interior. terials so that it would be as sim- sion. Mr. d’Alimonte says he wanted children want to climb up the
The kitchen walls are clad in pan- ple as possible. We did not want a a house that was about “architecture walls and jump—we have to ex-
els of concrete formed in timber house that showed off.” not decoration” so as not to detract plain that it is not a playground,”
molds to imprint a wood-grain pat- The kitchen floor is pale gray from features like a central staircase says Mrs. d’Alimonte.
tern; still visible are circular marks polished concrete, and the room it- with concrete treads, and balus- And it isn’t only children who
in these walls made by the horizon- self is skewered with sloping sup- trades made of engineered wood. are fascinated by the origami
tal steel poles that supported the porting columns. To complement With its hard surfaces and house. “Sometimes we have been
building during its construction. this industrial feel, the kitchen sharp lines, anxious parents might here and have been able to see a
“We did not want a polished cabinets and work surfaces are see the d’Alimonte family home as person with their nose up against
house, and you can see the hands stainless steel. something of a deathtrap. Carlotta the glass of the front door, trying
of the men who worked here,” says An L-shaped sofa in a marma- and Edgar have adapted well, but to see what the house can be like
Mr. d’Alimonte. “We also wanted lade-orange is the only splash of when their friends come over, inside,” says Mr. d’Alimonte.

PRIVATE PROPERTIES | CANDACE TAYLOR

A Classic Hamptons House Lists for $18.95 Million

In East Hampton Village,
N.Y., an early example of Shin-
gle-style architecture is going
on the market for the first time
in a century with an asking
price of $18.95 million, accord-
ing to listing agent Peter M.
Turino of Brown Harris Stevens
of the Hamptons.
Built in the 1890s, the
roughly 10,000-square-foot
home is “the quintessential
Shingle-style Hamptons
house,” said local architect Er-
ica Broberg Smith. “This is
probably the most copied
house in the Hamptons.”
The 10-bedroom house, within
walking distance to Main Beach,
sits on 3.3 acres. With a gambrel
roof and deep wraparound porch,
it has been preserved largely as it
was when it was built, Mr. Turino
said. He added that a new owner
will likely want to renovate.
BROWN HARRIS STEVENS

The house was designed for

Schuyler Quackenbush by his
wife’s brother, architect Cyrus
L.W. Eidlitz, who lived across
the street, according to the
book “East Hampton (Images
of America)” by John W. Rae.
Around 1915, it was purchased house passed to their daughter erty is owned by their estate. ily “are scattering and making cated to another part of the with a swimming pool on
by Ogden M. Edwards and his Katherine and her husband H. In a statement, the family their lives elsewhere.” property. The family rented it out roughly 1 acre, that property is
wife Lela Harkness. Willis Nichols. The Nicholses said they are selling because In the 1940s, one wing of the for years before selling the parcel. listed with Brown Harris Ste-
In the 1940s ownership of the died in the 1980s and the prop- the many branches of the fam- home was removed and relo- Now a three-bedroom house vens for $7.5 million.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
W10 | Friday - Sunday, August 19 - 21, 2016
A Golf Legend Stays on Course
After leaving the pro tour, he returned to live where he grew up—next to a Pennsylvania country club
My father taught me to play golf. He showed me how to grip a club when I was 3 and gave
me my first valuable lesson: hit the ball hard, then go find the ball and hit it hard again. My
father was the greenkeeper and golf pro at Latrobe Country Club. He learned from the club’s
original pros, who were Scottish.
Our first home was in Youngs-
town, Pa., a little town near the
country club. It was a normal two-
story, white frame house across
the street from my paternal grand-
parents. My grandmother was a
terrific cook, and I loved her
homemade bread and pies, espe-
cially apple and cherry.
My father, Deke, started work-
ing at the Latrobe Country Club’s
nine-hole golf course as a young
man in 1921 after being on the
crew that built the course. He be-
gan teaching members after be-
coming the golf pro in 1931.
When I was 6, we moved to a
small three-story frame house next
to the golf course. It was comfort-
able and had a big fireplace in the
living room that was going most of
the winter. At first we didn’t have
a furnace.
What made the house special
was that the country club’s sixth tee
was 50 yards from our front door. I
didn’t practice there when I was lit-
tle, only in areas just off the course.
My bedroom was often cold.
The house was exposed, so the
wind used to blow through my
room. But I was barely there ex-
cept to sleep. I was out on the golf
course every chance I got.
Once I started grade school, my
mother, Doris, became the club’s
bookkeeper. She eventually took
up golf and became a fairly good
player. She called me “fella” and
taught me to be a gentleman—how
to be polite, how to talk to people
and how to act at dinner. She
thought that was important.
As soon as I was old enough, I
worked the grounds at the course.
I learned how to set cups on the
greens, mow the fairways and trim
the fringes.
I was even able to earn some
pocket change. At the sixth hole,
there was an irrigation ditch that
crossed the fairway about 100
yards from the tee. I’d lay in wait-
ing for lady golfers to come along.
Then I’d offer to drive their
balls over the ditch for a nickel. I’d
come home each day with about
30 cents, which came in handy for
ice cream and movies.
When America entered World
War II in 1941, the golf course was
short on labor. I began putting in
full days in the summer of ’42,
mowing the fairways and greens in
the morning, working in the pro
shop in the afternoon and working
as a caddie in-between.
I remember two golf lessons
The Playboy Mansion Sells for $100 Million
The Playboy Mansion is no
longer owned by Playboy.
The sale of the mansion to
next door neighbor Daren
Metropoulos closed this week
for $100 million, said a spokes-
person for Mr. Metropoulos.
According to public records, it
is the highest price ever paid
for a Los Angeles residence.
The roughly 5-acre Holmby
Hills estate was listed in Janu-
ary for $200 million. As part of
the deal, Playboy Enterprises
founder Hugh Hefner, 90, will
continue to occupy the mansion
for his lifetime. Playboy will pay
Mr. Metropoulos $1 million a
year for upkeep of the property
while Mr. Hefner is living there,
according to people with knowl-
edge of the transaction.
Mr. Metropoulos, a 33-year-
old principal at private-equity
firm Metropoulos & Co. and a
current co-owner of Hostess
Brands, bought his current
1920s house, which had been
used by Mr. Hefner’s former
wife to raise their two children,
from Mr. Hefner in 2009 for
$18 million and has restored it.
He said he intends to connect
the two estates after Mr. Hef-
ner’s tenancy ends, creating a
7.3-acre compound.
HOUSE CALL | ARNOLD PALMER
from my early years quite well.
The first came during the high-
school championships in 1946. My
ball wound up in the rough behind
a row of trees at the old course at
Penn State. The trees were too tall
to hit the ball over, so I had to
find another way. I picked a nar-
row gap between the trees and fo-
cused on the space, blocking out
everything else.
I hit the ball hard with a 5-iron,
and it shot right through the gap
PRIVATE PROPERTIES | CANDACE TAYLOR
MANSION
and onto the green. It taught me
that as long as I could hit the ball
straight, I’d have a big advantage,
so I worked on doing just that.
The second lesson occurred
around the same time. I missed a
short putt at a junior tournament
in Pittsburgh. In frustration, I
threw my putter over the gallery
of fans and some small trees.
Though I wound up winning the
tournament, my father let me have
it on the way home in the car. “If
TEE TIME Clockwise from above left: Arnold Palmer in his office last year; with
his father, Deke, and sister Lois Jean, in 1935; playing at the Latrobe Country
Club, around 1952; and at about age six, with his sister at his home.
you ever throw a club like that
again, you’ll never play in another
tournament.” Grace mattered—win
or lose.
Today, my wife, Kit, and I live
near the third hole at the Latrobe
Country Club. When we were first
married in 2005, we were in the
original house where I lived with
my first wife, Winnie, who died in
1999, and where we raised our two
daughters—Peggy and Amy.
Kit and I wanted to change
some things about the house but
Amy objected. She said, “Daddy,
this is the house I was raised in.
You can’t change that.” My solu-
tion was to build a new house,
about 50 yards away.
It’s a two-story home with a ce-
dar-shake roof built into a land-
scaped hillside. What makes it spe-
cial is that it has a lot of glass. I
like a lot of light. I like to look out
at the trees and the course and the
surroundings.
I still mix ice tea with lemon-
ade—what became known as an Ar-
nold Palmer. I came up with it one
THE WALL STREET JOURNAL.
BRIAN HENRY; ARNOLD PALMER (3, HISTORICALS)
day in 1960 when I returned home
from the golf course. Winnie always
made a pitcher of ice tea for lunch.
To give the tea a little lift, I
suggested we try a ratio of 75% tea
and 25% sweetened lemonade. I
liked it so much I’d take it out to
the golf course in a thermos.
Then some years later, I was in
Palm Springs where my company
was building a new golf course. It
was 115 degrees out there. A a
bunch of us went to have lunch. I
asked the waitress if she could
make my tea-lemonade mixture.
At the next table, a woman who
recognized me said to the wait-
ress, “I want an Arnold Palmer—
what he’s having.” From there, the
name spread. I still drink it today,
but now I add a little cherry juice.
—As told to Marc Myers
Arnold Palmer, 86, won 62 PGA
Tour events from 1955 to 1973 and
seven major championships. He
was awarded the Presidential
Medal of Freedom in 2004 and the
Congressional Gold Medal in 2009.
“I look forward to eventually
rejoining the two estates and
enjoying this beautiful property
as my private residence for
years to come,” he said in a
statement.
The Playboy Mansion, pur-
chased by Playboy Enterprises
in 1971 for $1.05 million, is Mr.
Hefner’s longtime home and is
famous for its parties. The
LISA CORSON FOR THE WALL STREET JOURNAL
roughly 20,000-square-foot
home has 29 rooms. Mr. Hef-
ner added a heated swimming
pool and a grotto in the 1970s.
The property also contains a
zoo with exotic birds and mon-
keys, and is one of the only
homes in Los Angeles to have
a zoo license.
The sale price includes many
of the statues on the property
and the contents of the game
room, including pinball ma-
chines, according to people
with knowledge of the transac-
tion. The price doesn't include
most of the mansion’s furni-
ture.
The listing agents were Gary
Gold and Drew Fenton, of Hil-
ton & Hyland, and Mauricio
Umansky, of the Agency. Jade
Mills, of Coldwell Banker Pre-
views International, represented
Mr. Metropoulos.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Friday - Sunday, August 19 - 21, 2016 | W11

ADVERTISEMENT

NEWPORT, RHODE ISLAND
Elegant 13,000+ sf mansion, built for Commodore William Edgar, a
founding member of the NY Yacht Club. Designed by McKim, Mead, & White,
the premier architectural firm of the period, who also designed Hyde Park’s
Vanderbilt Mansion, Newport’s ‘Rosecliff’ on Bellevue, and the Villard Houses in
Manhattan, now the New York Palace. The c1885 ‘Commodore Edgar House’ is
considered one of their finest examples of Colonial Revival architecture.
$4,150,000 GustaveWhite.com
KIAWAH ISLAND, SOUTH CAROLINA
Oceanfront living at its best: 75 Forestay enjoys ultra privacy, an
expansive wraparound deck with covered porch, private beach boardwalk,
and sweeping Atlantic Ocean views. The 4BR home features a second floor
master suite with spa-inspired bath, gourmet kitchen, breakfast room,
dining room, and a glass-enclosed, two-story great room with fireplace.
$6,895,000 kiawahisland.com/real-estate
ANNA MARIA SOUND, FLORIDA
Own it. Enjoy it. Rent it. Just moments from the world-famous beaches
of Anna Maria Island, Marina Walk offers you all the luxuries of the award-
winning Harbour Isle lifestyle with the option to place your waterfront Resort
Home with our preferred rental agency for short term rentals. Don’t miss your
chance to own a vacation home that can work for you year round!
From the $500’s mintofla.com

Gustave White Sotheby’s International Realty Kiawah Island Real Estate Minto Communities
phone: 401.849.3000 phone: 866.312.1780 phone: 866.713.1319

NEWPORT, RHODE ISLAND THE NORTHWOODS, WISCONSIN BIG TIMBER, MONTANA

‘Quatrel’ Sited on 1.24 acres on Bellevue Avenue across from Doris Duke’s Rare opportunity to own a scenic, tranquil paradise! Located just one
‘Rough Point,’ this 9,800 sf manor offers every amenity while retaining an hour north of Minocqua, this natural wilderness includes over 265 acres of
old world charm. Historic interiors with lovely detail and marble fireplace prime hunting land, and 12,000 feet of frontage on Owl Lake, known for
mantles, were designed by Ogden Codman Jr. and have been restored to the outstanding fishing. The many building sites and access routes throughout
highest standards. Amenities include a state-of-the-art geothermal heating/ make this a great investment property.
cooling system and elevator. Includes two-bedroom Carriage House.
$6,495,000 GustaveWhite.com $1,800,000 www.OwlLakeLegacy.com
Adam Redman, Broker/Owner
Gustave White Sotheby’s International Realty Redman Realty Group
phone: 401.849.3000 phone: 715 892 7325 Adam@RedmanRealtyGroup.com
270 Acre Ranch in Spectacular Horse Whisperer Country. East of
Bozeman, MT. right at 11,000’ Mountains & National Forest. Nice modern
3bd/3ba house. Central air & heat. 50’ porch to view your own pristine private
valley. 3-car garage. Barn. Run a few horses or cows or leave the land beautifully
natural & enjoy the abundant wildlife & upland birds. Hike the mountains,fish the
nearby Yellowstone River. Private financing available. (Brokers Protected)
$850,000 www.MileHighMontana.com
Edward Clement, Owner
phone: 704.975.0205

NEAR THE BERKSHIRES, NEW YORK 1460 NORTH LAKE WAY, PALM BEACH, FLORIDA CELEBRATION, FLORIDA
FANTASTIC BARGAIN! 26+/- acre renovated farm. Gorgeous setting. 5 Stunning custom lakefront Plantation style estate. Property has Summerbourne - 10 minutes from Walt Disney World! Newly
BR/3BA country home, 3,500’+ ten stall barn, riding ring, 60’X120’ steel approximately 150 feet +/- of water frontage, deep water dock, 5 completed Coastal inspired estate with breathtaking water, golf and
building with office, 26’X36’ garage, fishing pond, trout stream, great bedrooms, 7 full baths, 3 half baths, gym, and 4 car garage. Spectacular conservation views. Open, airy floor plan showcases high-end finishes &
paddock views, more! Convenient to Berkshire attractions, Saratoga/ oversized lakefront loggia and porches. Smart home with the highest quality materials throughout. Features 4BR and 6BA, 5537 sqft. Kitchen designed
Saugerties racing/ horse show venues. Major renovations – over $1.8M finishes and technological amenities. with family entertaining in mind. Guest house, private pool and home
invested! Won’t last. theater. 55 minutes to Atlantic beaches.
$795,000 RobinsonHollowFarm.com Exclusive - $28,500,000 1460NorthLakeWay.com $2,475,000 http://bit.ly/306acadia
Christian Angle Real Estate Regal Real Estate
National Land Partners, LLC Christian J. Angle Chris Christensen
phone: 877.888.7545 phone: 561.629.3015 phone: 407.312.8003 email: chris@regalrealtyorlando.com

NAPLES, FLORIDA NAPLES, FLORIDA CHARLESTON, SOUTH CAROLINA

New Luxury Single-Family, Villa and Coach Homes at The Isles of
Collier Preserve! Over half the 2,400 acres are dedicated to lakes, nature
preserves and natural habitat. The Isles Club is now open and features a
clubhouse, fitness center, resort-style pool, lap pool, yoga lawn, tennis and
pickleball courts, kayak launch and 8 miles of scenic kayak, hiking and biking
trails! 5 Mins. from Downtown Naples and the Gulf beaches.
From the mid $300s to over $1 million mintofla.com
Minto Communities
phone: 888.483.8708
Minto Single-Family Estate Homes located in an area famous for Located in the most coveted section of Charleston, this South of Broad home
extraordinary golf communities. TwinEagles boasts not just one championship has been exquisitely restored, blending historic details with contemporary
course awarded “Best New Private Course in America” by Golf Magazine, but style. Parterred gardens, gracious piazzas and pool make for perfect outdoor
two 18-hole, tour-quality courses and a spectacular 47,000 sq. ft. country entertaining. Formal living spaces with modern touches, state-of-the-art
club lavished with every imaginable amenity. Best of all, golf membership kitchen, spacious master suite, wine cellar, and more grace this turn-key home.
initiation fee is included with every Minto new home purchase.
From the mid $500s to over $1 million mintofla.com $5,950,000 www.38Church.com
The Cassina Group
Minto Communities Robertson Allen
phone: 888.379.9868 phone: 843.442.6534 email: rallen@TheCassinaGroup.com

To Advertise Call: +44 (0) 207-572-2124

For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
W12 | Friday - Sunday, August 19 - 21, 2016 THE WALL STREET JOURNAL.

MANSION

FROM TURKEY TO MIAMI FOR LUXURY

Continued from page W7
under construction were sold to
Turkish buyers for about $4 mil-
lion each, says Edgardo Defortuna,
a developer and founder of For-
tune International Group, a real-
estate firm. The building, co-devel-
oped by Fortune and Chateau
Group, offers mostly three- and
four-bedroom units, along with a
kids club, and 2.2 acres of land-
scaped outdoor area set along the
beachfront.
Just two years ago, “we’d hardly
get interest, let alone any sales,”
said Mr. DeFortuna. Last month, the
company website recorded a sharp
uptick in visitors from Turkey. A
high-end real-estate website, Luxury
Portfolio, cites a 58% increase in
web traffic from Turkey in June,
compared with June 2015.
Turkish buyers are typically
looking for larger beachfront units HELPFUL INFLUX OF NEW BUYERS A view of downtown and Biscayne Bay. The increase in sales to Turkish buyers has helped offset an overall decline in Mi-
to host extended family, says Reid ami’s luxury market, which has created a glut of unsold units, agents say.
Boren of Two Roads Development.
Mr. Boren is increasingly market-
ing Miami to Turks looking for
more stable investments, espe-
cially after the country’s recent
coup attempt. Terror attacks
across Europe and a tumbling lira
back home have also helped fuel
Turkish interest.
“We call this ‘Plan B,’ and it’s
part of our marketing strategy”
for buyers from the country, says
Mr. Boren, who traveled to Istan-
bul last month and hosted sales
presentations at a luxury hotel. Af-
fluent Turks typically own second
homes in the South of France and
London, but many now view the
U.S. as a more stable investment
than those locations, he adds.
Mr. Boren recently sold an $8.6
million, two-story penthouse unit
in his 399-unit Biscayne Beach
building to a Turkish buyer. The
building, which is scheduled for
completion in December, is lo-
cated in Miami’s Edgewater

ALEXIA FODERE FOR THE WALL STREET JOURNAL

neighborhood and will have a pri-
vate beach. The penthouse comes
with a private rooftop pool and
the buyer added a wine fridge
and replicated the master bath to
create a second master suite, Mr.
Boren says. “The Turkish buyers’
level of sophistication is ex-
tremely high.”
Gulsah Cantas, founder of Istan-
bul-based interior architecture and
design firm Kontra, has visited Mi-
ami numerous times on behalf of TRAVELING AGENT Real-estate agent Nurdan Yildirim has a mostly Turkish clientele. Ms. Yildirim is shown with a model of the Auberge Miami, a 60-story lux-
clients for the past two years. Cur- ury-condominium tower that will go up in midtown. In June, she traveled with developers at the Related Group to Istanbul to host sales presentations.
rently she is working on interiors
for four Turkish clients in Miami.
Last month, she scouted out the
Louver House, a 12-unit South
Beach preconstruction building
with units from $1.9 million to $3.6
million, on behalf of several poten-
tial buyers. “Life is easier here,”
said Ms. Cantas. “There’s good
weather, good food and it’s fun.”
Turkish developers are also in-
vesting in the area. Last year, the Is-
tanbul-based Suzer Group partnered
with another real-estate firm, ASSR
Capital, to buy a nearly 1-acre
oceanfront property for $41 million
with plans to spend another $105
million to build a luxury hotel, says
founder Baran Suzer. Separately,
Mehmet Bayraktar, a Miami-based
developer who previously worked
on mixed-use projects in Istanbul,
has developed Island Gardens, a ma-
rina with slips for superyachts on
Miami’s Watson’s Island. Nearby ho-
tels and restaurants are slated for
completion in 2019.
Because of the Turkish influx, a
newly built consulate was com-
pleted earlier this year in Miami’s
Brickell City Tower. And Turkish
Airlines in October 2015 added a
BRICK VISUAL/RENE GONZALEZ ARCHITECT (2, RENDERINGS)

daily Istanbul-to-Miami route.

For Turkish buyers, Miami’s lux-
ury condos can be more affordable
than the similarly exclusive areas of
Istanbul or Bodrum, a seaside desti-
nation, where prices are more than
three times more per square foot,
says Carlos Rosso, president of the
developer Related Group. His com-
pany’s building, Residences by Ar-
mani Casa in Sunny Isles Beach, has
gotten a lot of interest from poten-
tial buyers in Turkey. “They want
names that are instantly recogniz-
able,” Mr. Rosso says.
In 2014, Tugba Koc, 33, pur- PRICE DIFFERENCES Rendering of the Louver House, a luxury 12-unit South Beach pre-construction building where units sell from $1.9 million to $3.6 million.
chased a two-bedroom condo in For Turkish buyers, Miami’s luxury condos can be more affordable compared with similarly exclusive areas of Istanbul or Bodrum, a seaside destination.
the Icon building in Miami’s South
Beach, where similar units sell for agent who worked with Ms. Koc on many are eager to hold face-to- The full-service building with a re- staggered payments where half of
close to $2 million. The family the deal, says the increase in sales face meetings, she adds. sort-type feel was a draw for Ms. the home price is paid after con-
moved in after a yearlong renova- to Turkish buyers has helped off- In November, Hulya Uyar paid Uyar, who wanted to be farther struction is completed. Often, de-
tion, which included knocking set an overall decline in Miami’s $700,000 for a two-bedroom condo away from the crowds of South tails of the sale are ironed out
down walls to create an open floor luxury market, which has created a on the 16th floor of Hyde Beach Beach. “The [development’s] beach over the phone, but Ms. Fucci and
plan and updating the marble floor. glut of unsold units. “The local House, located north of Miami in club was very important,” said Ms. part of her team visited Istanbul
The ability to walk to nearby res- people here are not really buying, Hallandale, Fla. When construction Uyar who spends a few months of twice in the past six months to
taurants and stroll along the beach so there’s huge competition be- on the building is finished in late the winter in the city. meet potential buyers. When her
is key, said Ms. Koc who owns the tween developers.” In June, she 2018, condo owners will be allowed Peggy Fucci, founder of real-es- clients arrive in the U.S., they’re
property with her sister and par- traveled with developers at the Re- to rent their furnished units for up tate agency OneWorld Properties ready to close the deal. “When
ents. “We have a view of the ocean lated Group to Istanbul to host to 150 days a year, allowing the 49- Brokers, says her new Turkish cli- they come to Miami to shop,
and downtown,” she said. sales presentations. Despite recent year-old cosmetics importer to ents are eager to invest in precon- they’ve already decided that they
Nurdan Yildirim, the real-estate security issues in the country, earn income on her investment. struction properties that have want to live here,” she says.