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ASIAN-AMERICAN
THE UPSIDE VOTERS AND
OF FEELING DOWN THE GOP
PERSONAL JOURNAL | A8 GERALD F. SEIB
CAPITAL JOURNAL | A2

TUESDAY, AUGUST 23, 2016 ~ VOL. XXXIV NO. 143 WSJ.com EUROPE EDITION
DJIA 18529.42 g 0.12% NASDAQ 5244.60 À 0.12% NIKKEI 16598.19 À 0.32% STOXX 600 340.43 À 0.09% BRENT 49.16 g 3.38% GOLD 1337.70 g 0.20% EURO 1.1316 g 0.09%

What’s Syngenta Deal Clears Major Hurdle

News ChemChina receives
approval in U.S. for
billion takeover of Swiss seed
giant Syngenta AG.
The decision in favor of
with the power to block deals
it deems a threat to the na-
tion’s security—because about
its size, but also what it repre-
sents for China. Acquiring the
Swiss seed and pesticide sup-
Chinese companies are on a
spending spree—signing $159.2
billion in overseas deals so far
$43 billion takeover China National Chemical, or a quarter of Syngenta’s sales plier’s intellectual property this year, surpassing the record
Business & Finance ChemChina, comes amid grow- come from North America. would be hugely valuable for amount in the full year 2015,
of Swiss seed giant ing opposition to Chinese in- While analysts and Chinese China as it seeks to feed a according to Dealogic.
vestment from Europe to Aus- industry officials hailed the growing middle class and mod- The shopping push by China
U.S. regulator ap-
A proved ChemChina’s
planned takeover of Swiss
BY BRIAN SPEGELE
AND KATHY CHU
tralia. If completed, it would be
China’s largest overseas acqui-
decision as a major step for-
ward for what would be a
ernize its sprawling agricul-
tural industry.
comes amid urgency inside its
labyrinth of state-owned en-
sition to date. landmark Chinese takeover, It would also serve to sup- terprises to diversify their
firm Syngenta, which would
China Inc.’s global ambitions The industry had been the deal still faces potential port the government’s push sales streams as China’s econ-
be China’s biggest over-
cleared a big obstacle after the watching for a decision from roadblocks from regulators in to win state-owned enter- omy slows.
seas acquisition so far. A1
U.S. national-security regulator the Committee on Foreign In- the European Union. prises greater access to lucra- ChemChina’s deal for Syn-
 Pfizer agreed to buy Me- approved China National vestment in the U.S., or ChemChina’s deal for Syn- tive overseas markets includ- genta marked a bold move onto
divation for about $14 bil- Chemical Corp.’s planned $43 CFIUS—a government body genta is significant not only for ing the U.S. Please see DEAL page A2
lion, adding a crown jewel
of the market for cancer
drugs to its portfolio. B1
 European stocks are
A Tested Europe Shows a United Front Emails
vulnerable to political
risks that could derail the
region’s feeble recovery. B1 Show Bids
 Shareholders of the de-
funct Lebanese Canadian
Bank are suing Deloitte’s
For Access
Middle Eastern unit, seek-
ing $128 million. B5
 Volkswagen said work
To Clinton
hours would be cut for BY REBECCA BALLHAUS
roughly 27,700 employees
GUIDO BERGMANN/BUNDESREGIERUNG/HANDOUT/EUROPEAN PRESSPHOTO AGENCY

in Germany as a result of a
Emails released Monday
dispute with a supplier. B2
provide new examples of a
 Speedo dropped its en- Clinton Foundation official
dorsement deal with Ryan seeking access to the State De-
Lochte after the Olympic partment on behalf of donors
swimmer’s scandal. B1 at a time when Hillary Clinton
led the department.
 Kobe Bryant unveiled a
The emails—obtained
$100 million venture-capital
through a lawsuit by conserva-
fund for investing in tech,
tive watchdog group Judicial
media and data firms. B5
Watch—could fuel criticism
 Chinese imports are that the Clinton family’s chari-
claiming a bigger part of table foundation, in fundraising
the U.S. aluminum market, with wealthy donors, corpora-
supplying wraps for food tions and foreign nations, cre-
and other products. B1 ated a conflict of interest for
Mrs. Clinton during her work
 BlueScope Steel posted
as the top U.S. diplomat.
its biggest profit since
In an exchange from June
2008, a turnaround that
2009, a Clinton Foundation offi-
has eluded many rivals. B4
cial and longtime aide to former
SUMMIT: The leaders of the EU’s three biggest countries post-Brexit—from left, Italy’s Matteo Renzi, Germany’s Angela Merkel and France’s President Bill Clinton wrote to
World-Wide François Hollande—met near Naples on Monday. They proposed increased cooperation on security matters but said little about the economy. A3 Huma Abedin, a top adviser to
Mrs. Clinton at the State De-
partment, seeking a meeting
 Newly released emails between the crown prince of
Bahrain and Mrs. Clinton.
suggest a Clinton Founda-
tion official sought access
to the State Department on
behalf of donors. A1
ALCOHOL FIRMS FACE THREAT “Cp of Bahrain in tomorrow
to Friday. Asking to see her,”
the official, Doug Band, wrote,
using shorthand for “crown
 President Obama’s trou- prince.” He added: “Good
bled Pacific-region trade Amid warnings from public-health officials about risks of moderate drinking, industry fights back friend of ours.”
deal is threatening to be- Ms. Abedin, a longtime con-
come a foreign-policy fail- BY JUSTIN SCHECK producers have been helped by a no- sive and sprawling as the threat it per- fidante of Mrs. Clinton who is
ure for the U.S. in Asia. A1 AND TRIPP MICKLE tion, enshrined in a number of govern- ceives, including attacking anti-alcohol now working for her Demo-
 European leaders pro- ments’ dietary advice, that a little alco- advocates’ research and working with cratic presidential campaign,
posed closer cooperation in At a brewers’ conference this spring, hol can provide modest coronary and governments to formulate policy. Alco- responded that Crown Prince
areas like intelligence shar- an alcohol lobbyist fired a warning other health benefits. hol companies are also funding their Salman bin Hamad al Khalifa
ing and border defense. A3 shot in what has become a multimil- Rapidly, that advice is shifting as own research, including a plan by four had sought a meeting with Mrs.
lion-dollar global battle. Public-health health-policy officials around the world companies to contribute tens of mil- Clinton the previous week “thru
 France’s Sarkozy will officials “want to tell you that alcohol scrutinize their previous advice in the lions dollars toward the cost of a rig- normal channels” and that the
run to become the nation’s causes cancer,” Sarah Longwell, manag- light of research pointing to possible orous study. secretary of state had said she
leader next year. A3 ing director of the American Beverage cancer risks. Said Beer Institute President Jim “doesn’t want to commit to
 The U.K. plans to segre- Institute, told the crowd. The industry, The change is pressuring the alco- McGreevy, addressing executives at an anything for Thurs or Fri until
gate Muslim extremists she said, was in danger of losing its hol industry in some of its biggest April conference about the alcohol crit- she knows how she will feel.”
from other prisoners. A3 “health halo.” markets, including the U.S., the U.K. ics: “We can’t let them gain traction.” Two days later, Ms. Abedin
For decades, beer, wine and liquor and Russia. Its response is as expen- Please see DRINKS page A6 Please see CLINTON page A2
 Iran said that Russia
had stopped using an Ira-
nian air base to carry out
airstrikes in Syria. A3 Britain May Still Have a Little Death Toll
 Police and vigilantes
have killed about 1,800 peo-
Chance to Stay With EU Soars in
ple in the Philippines since i i i Duterte’s
Duterte took office. A5
 An Islamic extremist
At Mini-Europe theme park, no decision Drug War
pleaded guilty to destroy- has been made; Big Ben, pub display CARNAGE: In the
ing centuries-old Muslim seven weeks since
shrines in the Malian des- Philippine President
ert city of Timbuktu. A4 BY VALENTINA POP figures at the bottom of Big Rodrigo Duterte
 Kerry warned South Su- Ben, holding up banners for took office, police
dan’s leaders that U.S. aid BRUSSELS—Add this to the and against. and vigilantes have
would evaporate if they many questions posed by the But, as with the real EU, killed some 1,800
British referendum vote to Mini-Europe wasn’t expecting people amid an
ROMEO RANOCO/REUTERS

failed to halt violence. A4

leave the European Union. to cope with a departure. Mr. antidrug crackdown.
 European researchers Should Britain be ousted from Meeus thought the British Left, relatives of
say they can shrink lab Mini-Europe? would vote to stay. slain people in
animals and make them Thierry Meeus When he said before- Manila during a
transparent. A5 opened the Mini-Eu- hand that a Brexit hearing into drug-
rope amusement park vote would lead to the related killings. A5
CONTENTS Markets Digest..... B6 here with his family in eviction of Britain’s
Arts & Ent............... A9 Opinion.............. A10-11
Business & Fin.. B1-4 Personal Journal.. A8
1989 as a celebration six buildings from the
Capital Journal...... A2 Sports........................ A12 of the then-European exhibit, he didn’t think
Community. Each it would actually hap-
Crossword.............. A12
Finance & Mkts. B5-8
Heard on Street.... B8
U.S. News.................. A7
Weather................... A12
World News........ A2-5
country was repre-
sented by miniature
pen. The result came
as a “shock for Mini-
U.S. Encounters Trouble on Asia Trade Plan
€3.20; CHF5.50; £2.00; versions of its iconic Europe,” he said. BY JOHN LYONS 12-nation Trans-Pacific Part- on everything from trade to its
U.S. Military (Eur.) $2.20
buildings. For the U.K., The park, which lies nership for years as central to commitment to a region where
these included the Mini Big Ben in the shadow of the President Barack Obama’s a shift of U.S. military and U.S. might has underpinned se-
Houses of Parliament Brussels Atomium, a troubled Pacific-region trade other resources to Asia. Now, curity since World War II.
and a 12-and-a-half-foot rep- giant structure meant to rep- deal is threatening to become with opposition toward the “For the simple reason that
lica of the Big Ben clock tower. resent an iron crystal magni- a foreign-policy failure in Asia, pact mounting on both the the U.S. invested so much in it,
Initially, the possibility of fied 165 billion times, displays where the U.S. loaded the ac- right and left in Washington, the deal acquired a kind of to-
Brexit offered a marketing op- replica buildings from all 28 cord with strategic signifi- the likelihood of its ratification talistic value that goes way be-
s Copyright 2016 Dow Jones & portunity. A few days before EU member countries. cance as a counterweight to in Congress appears bleak. yond its economic merits,”
Company. All Rights Reserved
the June 23 vote, Mr. Meeus When Finland joined the EU the rise of China. Failure at this point, experts said Euan Graham, a former
created a display of miniature Please see MINI page A6 U.S. officials have billed the say, would dent U.S. credibility Please see PACT page A7
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A2 | Tuesday, August 23, 2016
Asian-Americans’ Quiet Impact on Contest
CAPITAL JOURNAL
GERALD F. SEIB
D
onald Trump has made
overtures in the last
few days to Hispanic
and African-American voters,
trying to whittle away at the
giant advantages Hillary Clin-
ton enjoys among them.
There is a third group
that gets less attention, but
one that pro-
vides Demo-
crats a simi-
lar strategic
edge: Asian-
Americans.
Asian-
Americans are the fastest-
growing racial group in the
nation. More than nine mil-
lion of them will be eligible
to vote in November, an in-
crease of 16% from four
years ago.
The bad news for Repub-
licans is that this growth in
the Asian-American elector-
ate appears to be accompa-
nied by an increasing tilt to-
ward the Democrats. One
national poll of Asian-Ameri-
can voters earlier this year
found a 12-point increase in
those who identify as Demo-
crats since 2012, to 47%
from 35%.
Can that matter? Ask
Democratic Sen. Mark War-
ner of Virginia. He won re-
CLINTON
Continued from Page One
wrote to Mr. Band again. “We
have reached out thru official
channels.”
The new emails were ob-
tained through a Freedom of
Information Act lawsuit filed
by Judicial Watch against the
State Department. The 725
pages of emails from Mrs.
Clinton’s personal server in-
cluded material that wasn’t
handed over to the govern-
ment as part of the Demo-
cratic nominee’s archive.
Josh Schwerin, a spokesman
for the Clinton campaign, de-
fended Mrs. Clinton’s actions as
secretary of state. “Once again
this right-wing organization
that has been going after the
Clintons since the 1990s is dis-
torting facts to make utterly
false attacks,” he said. “No mat-
ter how this group tries to mis-
characterize these documents,
the fact remains that Hillary
Clinton never took action as sec-
retary of state because of dona-
tions to the Clinton Foundation.”
A spokesman for the Clinton
Foundation, a nonprofit organ-
ization established by Mr. Clin-
ton, didn’t immediately return
DEAL
Continued from Page One
the global stage by the Chinese
company, whose ambitious
founder and chairman, Ren Ji-
anxin, has for years looked to
raise its international profile.
The company also said last
year it was acquiring Italian
tire maker Pirelli & C. SpA for
around $7.7 billion.
The Chinese chemicals in-
dustry celebrated the U.S. deci-
sion, which was announced
Monday in a joint statement by
the companies. The deputy sec-
retary-general of the state-
backed China Petroleum and
Chemical Industry Federation,
Pang Guanglian, described the
A Syngenta lab in Beijing. ChemChina’s deal for the Swiss seed giant marked a bold move.
election two years ago by the
narrowest of margins, de-
feating Republican Ed Gilles-
pie by fewer than 18,000
votes out of 2.18 million
cast. Virginia’s large popula-
tion of Asian-Americans
likely provided the differ-
ence. They make up 5% of
the state’s electorate, and a
pre-election poll showed
them going for Mr. Warner
by a 2-to-1 margin.
For Mr. Trump and his
party, Asian-Americans are
another example of how his
get-tough stance on immigra-
tion represents a two-edged
sword. It has helped galva-
nize support and drive up en-
thusiasm among working-
class whites, many of whom
think immigration has dam-
aged them economically and
undermined the American
culture they have known.
M
eanwhile, on the
sliding scale of the
diverse American
electorate, votes gained
there are offset by votes lost
to groups who hear chants
of “build that wall” as an
ominous sign.
Mr. Trump and his sup-
porters insist that his poli-
cies are directed not at immi-
gration generally but at
illegal immigration specifi-
cally, but they have had a
hard time getting that mes-
sage across. Over the week-
end, his campaign appeared
to begin softening its tone;
his new campaign manager,
Kellyanne Conway, said Mr.
Trump wouldn’t necessarily
stick with his pledge to seek
requests for comment. Mrs.
Clinton had attached her name
to the foundation after she left
the U.S. government and sub-
sequently removed it when she
started her presidential cam-
paign.
Meeting with foreign heads
of state is a primary role for a
U.S. secretary of state. Critics
of Mrs. Clinton have raised
questions about Clinton Foun-
dation officials’ access to and
influence in the State Depart-
ment during her tenure.
The Kingdom of Bahrain
has donated between $50,000
and $100,000 to the Clinton
Foundation since its founding,
according to the organization’s
disclosures. The crown prince
in 2005 launched a scholar-
ship program through the
Clinton Global Initiative, a
wing of the foundation that
coordinates charitable proj-
ects, that was intended to “ed-
ucate select Bahraini students
to take leadership roles in the
private and public sectors,”
according to the CGI website.
By 2010, the crown prince
had spent more than $32 mil-
lion on the project, according
to the website. The funds
don’t go to the CGI.
In a separate exchange, Mr.
Band sought Ms. Abedin’s help
U.S. approval as a key hurdle to
closing the deal.
“This is a very important
step for ChemChina,” said
Mr. Pang. “The likelihood
that the European Union will
pass this is huge.”
Syngenta’s stock rose nearly
11% in Zurich Monday.
“The CFIUS approval re-
moves a major potential hurdle
and should come as a relief to
Syngenta shareholders,” said
Christian Faitz, co-head of
chemicals research at broker-
age Kepler Cheuvreux.
U.S. Sen. Charles Grassley
(R., Iowa) had expressed con-
cern about how the deal
would affect U.S. food secu-
rity, and had sought a formal
role for the U.S. Department
of Agriculture in CFIUS. The
WORLD NEWS
Republican nominee Donald Trump hasn’t had much success attracting support from Asian-Americans.
deportation of 11 million un- grant views,” even if they
documented aliens. agreed with that candidate
Still, the hole he and his on other issues.
party faces appears to be Such readings frustrate
deep, including with Asian- Republicans who think
American voters. Asian-Americans ought to
A survey earlier this year have a more natural affinity
by the Asian and Pacific Is- with the GOP. While Asian-
lander American Vote proj- Americans are hardly mono-
ect, a nonpartisan organiza- lithic—they include those
tion that works to mobilize with roots in the Philippines,
voters of Asian heritage, Korea, China and Vietnam as
found that 61% of Asian- well in the Asian subconti-
American registered voters nent countries of India and
held an unfavorable view of Pakistan—many have a wide
Mr. Trump, while a nearly entrepreneurial streak that
identical share held a favor- would seem in sync with Re-
able view of Mrs. Clinton. publican policies.
The same survey found that Surveys suggest they
40% said they would vote aren’t strongly rooted in ei-
against a candidate who ex- ther party, and aren’t espe-
pressed “strongly anti-immi- cially liberal. The APIAVote
in obtaining a visa for a member
of a U.K. soccer league at the re-
quest of Casey Wasserman,
president of the Wasserman
Donald Trump has accused
Mrs. Clinton of engaging in a
“pay for play” operation while
head of the department, citing
Foundation, which has donated emails that have been released.
between $5 million and $10 mil- The new emails were also
lion to the Clinton Foundation. notable because they discussed
Ms. Abedin appeared hesi- an interaction between a Clin-
tant to get involved. “I doubt ton Foundation donor and Mrs.
we can do anything, but Clinton. Past email exchanges
maybe we can help with an in- have depicted foundation offi-
terview,” she wrote. “I’ll ask.” cials seeking access to State
She wrote again: “I got this Department officials, but not
now, makes me nervous to get the secretary of state herself.
The emails could fuel criticism the Clinton
Foundation created a conflict of interest.
involved but I’ll ask.” While Mrs. Clinton is no lon-
Mr. Band responded: “Then ger involved with the founda-
don’t.” tion, her husband and daugh-
It was unclear what ulti- ter, Chelsea, continue to attend
mately occurred or whether the organization’s events. The
the player got the visa he was Clinton Foundation said both
seeking. Mr. Band declined to would stop raising money for
comment Monday. A spokes- the organization and turn over
woman for the Wasserman operations to independent par-
Foundation didn’t return calls ties if Mrs. Clinton was elected
for comment. president. The foundation also
The latest emails provided would no longer accept foreign
further fodder for Republicans and corporate donations if Mrs.
who have been critical of Mrs. Clinton won.
Clinton’s ties to her family’s While at the State Depart-
foundation and its donors dur- ment, Ms. Abedin received a
ing her time at the State De- special designation from the
partment. Republican nominee agency that allowed her to
Treasury-led committee is
made up of representatives
from 16 U.S. departments and
agencies including the Trea-
scrutiny of the consolidating
crop-protection space.
The European Commission
has opened a full-blown inves-
sury, Homeland Security and tigation into the proposed
Defense Departments. merger of Dow Chemical and
In Europe, regulators are ex- DuPont Co., looking at whether
pected to scrutinize the deal’s the deal would reduce competi-
effects on the crop-protection tion in the crop-protection and
chemicals industry given that petrochemicals space.
ChemChina owns a majority If European regulators take
stake in Adama, a large insecti- issue with the ChemChina-Syn-
cide and weedkiller supplier in genta deal, the companies can
the region along with Syngenta resolve antitrust concerns by
and Dow Chemical Co., accord- selling assets, according to Mr.
ing to Bernstein Research. Redenius.
ChemChina and Syngenta While lawyers say a deal be-
say they expect the deal to tween Syngenta and Chem-
close at the end of 2016. Jer- China would be fairly comple-
emy Redenius, a senior analyst mentary, there may potentially
at Bernstein Research, said be other hurdles in an EU re-
that might be optimistic, given view of the deal.
the European Commission’s A European Commission
spokeswoman declined to
comment.
As it has done in previous
cases involving Chinese buyers
with ties to the government,
EU antitrust regulators are
likely to conduct an audit to
determine which other Chinese
state-owned companies active
in the agrochemical sector
would have to be grouped in
with ChemChina. If considered
to be part of a wider group of
companies, that could then in-
crease the possibility of Chem-
China’s overlaps with Syngenta.
“You could have a fight over
KIM KYUNG-HOON/REUTERS
the company analysis because
it’s not always clear how much
control the Chinese state has
over a particular company and
whether the state coordinates
that company’s activities with
the other Chinese players in
the sector,” said David Ander-
THE WALL STREET JOURNAL.
will be significantly larger
than that. In addition to Vir-
ginia, Asian-Americans make
up 9% of the electorate in Ne-
vada, 7% in New Jersey and
3.1% in Minnesota. In Califor-
nia, they make up almost 15%
of the electorate.
L
ike Hispanics, Asian-
Americans’ political ac-
tivism hasn’t always
matched their numbers, but
that may be changing. The
number of Asian-Americans
running for Congress rose to
GERALD HERBERT/ASSOCIATED PRESS
40 this year from eight just
eight years ago. In one of the
nation’s most prominent Sen-
ate races, Democratic Rep.
Tammy Duckworth of Illinois,
an Asian-American fluent in
Thai and Indonesian, is seek-
ing to knock off Republican
Sen. Mark Kirk.
Long-term trends mean
the impact of Asian-Ameri-
survey showed 23% called cans will only rise. Immigra-
themselves liberal, 19% con- tion from Asia is rapidly
servative and a whopping overtaking immigration from
48% moderate. Latin America as the largest
But many of these Asian- source of new arrivals. The
Americans also are making Pew Research Center says
their marks in the high-tech that Asians already outnum-
world, where Mr. Trump’s ber Hispanics among immi-
immigration policies are un- grants who have arrived in
popular. Moreover, there are the last five years, partly be-
signs that Democratic out- cause of a sharp drop in im-
reach to Asian-Americans has migration from Mexico. By
simply been better than that 2065, a Pew study says,
of the Republicans. Asians will outnumber His-
So what difference does panics among all immigrants.
all this make, now and in the That’s the real reason Re-
future? Nationally, the impact publicans ought to be wor-
of Asian-Americans isn’t ried about their standing
huge. They make up only with Asian-Americans. They
about 4% of eligible voters. are arriving as a full-fledged
But in some key battle- political force, and 2016 is
ground states their impact only the start.
work there while also doing
outside work. During that pe-
riod, she held two other posi-
tions, at the Clinton Founda-
vestigation of Mrs. Clinton’s
use of private email when she
was secretary of state. The
documents in question are a
tion and at Teneo, a consulting trove of thousands of previ-
firm founded by Mr. Band. ously undisclosed emails found
Mr. Band had been a long- by agents during their now-
time aide to Mr. Clinton and completed criminal probe of
was a chief adviser in helping Mrs. Clinton’s email practices.
the former president launch The State Department is
the Clinton Foundation after sorting through 14,900 docu-
leaving the White House. ments to determine which ones
Earlier this month, Judicial contain sensitive government
Watch released a separate batch information and which are
of emails showing Mr. Band strictly personal conversations.
seeking help from top aides to The emails could be released as
Mrs. Clinton to set up a meeting early as mid-October, just a cou-
between a State Department of- ple weeks before the November
ficial and a top donor to the election between the Demo-
Clinton Foundation, Lebanese- cratic nominee and Mr. Trump.
Nigerian billionaire Gilbert Cha- Mrs. Clinton has provided
goury. In that email exchange, about 30,000 emails to the
Mr. Band employed similar lan- State Department, most of
guage, calling Mr. Chagoury a which have been made public. A
“key guy there and to us.” roughly equal number, she has
The Clinton campaign has said, were deleted as containing
since said that Mr. Chagoury personal information and not
had been seeking to offer the related to government work.
State Department his insights There are numerous law-
on the Lebanese election, suits seeking to uncover
rather than looking to elicit emails of Mrs. Clinton and her
any action. senior advisers, and judges on
Separately, a federal judge those cases have generally
on Monday pressed the State pushed the State and Justice
Department to quickly release Departments to provide the
nearly 15,000 documents dis- documents more quickly.
covered by the Federal Bureau —Devlin Barrett contributed
of Investigation during its in- to this article.
son, a Brussels-based antitrust
partner at Berwin Leighton
Paisner LLP, who has previ-
ously represented a Chinese
company by farming out some
of the debt to other banks and
selling shares in Syngenta to
co-investors.
state-owned company that had This week, ChemChina
to undertake a similar audit. plans to sign a $12.7 billion
As the deal has awaited syndicated loan agreement
regulatory approval in the U.S. with more than 10 banks to
and elsewhere, ChemChina help fund the deal, according
has also pushed ahead to se- to people familiar with the
cure funding. situation.
ChemChina’s advisers, —Lilian Lin, Kane Wu
HSBC Holdings PLC and China and Natalia Drozdiak
Citic Bank International, have contributed to this article.
provided financing for the en-
tire $43 billion bid. Bankers THE WALL STREET JOURNAL.
are working to put in place Europe Edition ISSN 0921-99
longer-term funding for the The News Building, 1 London Bridge Street,
London, SE1 9GF
Thorold Barker, Editor, Europe
CORRECTIONS 
Grainne McCarthy, Senior News Editor, Europe
Cicely K. Dyson, News Editor, Europe
Margaret de Streel, International Editions Editor
AMPLIFICATIONS Darren Everson, Deputy International Editor
Joseph C. Sternberg, Editorial Page Editor
Anna Foot, Advertising Sales
The name of law firm Jacky Lo, Circulation Sales
Andrew Robinson, Communications
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incorrectly given as Sherman
& Sterling in a Page One arti- Katie Vanneck-Smith,
Global Managing Director & Publisher
cle Monday about companies
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THE WALL STREET JOURNAL. Tuesday, August 23, 2016 | A3

WORLD NEWS
Russia-Iran Alliance Shows Strain U.K. Will
Segregate
Tehran criticizes tone aligned, Mr. Kupchan said.

in Moscow, says Syria

While they both back Mr.
Assad, for example, Iran is Extremist

RUSSIAN DEFENCE MINISTRY/EUROPEAN PRESSPHOTO AGENCY

airstrikes from its thought to be more committed

territory have ended

to keeping him in power under
any political settlement to end
the Syrian conflict.
Prisoners
A military alliance between Wariness of foreign inter- BY ALEXIS FLYNN
Tehran and Moscow showed ference has long been part of
signs of strain as newly the Iranian psyche. LONDON—Muslim extrem-
launched Russian bombing As colonial powers jostled ists held in U.K. jails will be
missions to Syria from an Ira- for control over resources in segregated from fellow in-
nian air base came to a quick the early 20th century, Russia mates, the British government
end and Iran’s defense minister and the U.K. agreed to split said Monday, a move designed
accused Russia of “showing Iran into areas of influence. to stem radicalization among
off.” During World War II, Russia the broader prison population
and the U.K. jointly invaded that some warn risks strength-
By Aresu Eqbali in Iran. And in 1953, U.S. and ening existing networks.
Tehran and Asa Fitch British intelligence organized a It comes as a government
in Dubai An image released Thursday coup that unseated Prime Min- report said prison staff were
RUSSIA
showing a Russian Sukhoi Su- ister Mohammad Mossadegh ill-equipped to deal with the
Russia and Iran had been 34 fighter-bomber based at Black Sea and consolidated power with problem of radicalization be-
fostering closer ties centered Hamedan air base in Iran GEORGIA the U.S.-backed shah. hind bars. Britain, like other
around their mutual interests carrying out airstrikes in Syria. The revolution in 1979 over- countries in Europe, is con-
in Syria, where both back Pres- threw the shah and brought cerned that convicted terror-
AZER.
ident Bashar al-Assad’s embat- ential country and that they 100 miles ARM. the current Islamic Republic ists are using jail time to forge
tled government. The coopera- are present in all the security into being. ties with petty criminals, pros-
100 km
tion reached a new level a week developments of the region Several high-ranking mem- elytizing and recruiting for
TURKEY C a sp ia n
ago, when Russia announced it and the world,” he said. Se a
bers of Iran’s parliament had their extremist cause.
was using an air base in west- The use of the base was played down the significance “Preventing the most dan-
ern Iran for bombing missions short-term and without a writ- of the Russian deployment. gerous extremists from radi-
to Syria in support of the Assad ten agreement, he added. IRAN But a day after the air- calizing other prisoners is es-
regime’s forces. Foreign Ministry spokesman strikes began, Mr. Larijani, the sential to the safe running of
The deployment to the air- Bahram Ghasemi later an- Raqqa Mosul parliament speaker, said coop- our prisons and fundamental
Tehran
field in Hamedan was the first nounced that the Russian mis- eration with Russia didn’t to public protection,” said Jus-
time since the Islamic Revolu- sions had stopped. “It was a SYRIA IRAQ mean Iran was handing Mos- tice Secretary Liz Truss.
tion in 1979 that Iran has al- particular operation,” he said. Hamedan cow ownership of one of its The chairman of an influ-
air base
lowed a foreign power to use “They came, they went and bases. Another lawmaker said ential parliamentary over-
Damascus
one of its military bases. they finished it.” Russia was only using the base sight committee said the pro-
While the move didn’t en- Mr. Ghasemi said the Rus- Baghdad to refuel. cess would need to be
gender public protests, some sian sorties weren’t meant to A third lawmaker asked carefully managed to avoid
lawmakers, including parlia- be a secret, but said the coun- THE WALL STREET JOURNAL. about the constitutionality of making extremist activity eas-
ment speaker Ali Larijani, re- tries had agreed not to dis- allowing Russia’s bombing ier. Critics worry that housing
acted last week with a tone close them until after certain, dan base in the Islamic Repub- with footage of warplanes fly- missions. Iran’s constitution hardened terrorists together
of defensiveness that sug- unspecified objectives had lic of Iran by Russia aviation ing sorties. Russian military bans the establishment of will allow them to cooperate
gested worries about a politi- been reached. will take place on the basis of news releases boasted of de- foreign military bases on Ira- and share ideas.
cal backlash. He didn’t preclude the pos- mutual agreements on combat- stroying militant targets. nian soil. “We should be wary of cre-
On Monday, the Iranian de- sibility that the airstrikes ing terrorism and the current “It was clearly too much for Russia was one of six coun- ating a colony of jihadists,”
fense minister, Brig. Gen. might resume, but didn’t spec- situation in Syria,” the Russian the Iranian domestic political tries that negotiated a deal said Keith Vaz, a member of
Hossein Dehghan, rebuked ify under what conditions. Defense Ministry said. traffic to bear,” said Cliff Kup- with Iran last year under the opposition Labour Party
Russia for publicizing the de- A spokesman for the U.S.- Iran is Mr. Assad’s biggest chan, chairman of the political which Tehran agreed to scale who heads the Home Affairs
ployment, portraying it as led coalition fighting Islamic military and financial benefac- risk consultancy Eurasia back its nuclear program in ex- Committee.
posturing. State in Syria and Iraq de- tor, while Russia began air- Group. “The way in which the change for an easing of inter- The mostly classified report
“There was a showing-off clined to comment. strikes in support of Mr. Assad Russians made this public, national economic sanctions. was written by former prison
and a discourteous attitude be- Russia’s military confirmed last September, using war- there was too much backlash, Amid the nuclear diplomacy, governor Ian Acheson. It
hind the announcement,” he that its aircraft had returned planes based in Syria, deepen- and Dehghan’s comments re- Russia agreed to revive a found that an Islamic gang
was quoted as saying by the to Russia after completing ing its involvement in the five- flected that clearly.” stalled deal to sell Iran its culture had permeated the
semiofficial Iranian Students’ their missions, but didn’t year conflict. The short-lived nature of powerful S-300 surface-to-air country’s jails, where the num-
News Agency. provide further details or When the Russian military the arrangement could also be missile defense system. A sub- ber of Muslim prisoners has
“Naturally the Russians comment on Gen. Dehghan’s announced the strikes from a sign of how Iran’s and Rus- stantial part of that system more than doubled since 2002,
would like to show that they remarks. Iran, state-dominated televi- sia’s overlapping regional in- was delivered this year, ac- according to Ministry of Jus-
are a superpower and an influ- “Further use of the Hame- sion in Russia was blanketed terests haven’t been perfectly cording to Iranian officials. tice data.

European Leaders Move to

Improve Intelligence Sharing
BY ZEKE TURNER

BERLIN—Leaders from
France, Germany and Italy
proposed Monday to step up
cooperation in areas such as
intelligence sharing and bor-
der defense, without giving
any sign that they will grow
RICCARDO DE LUCA/ASSOCIATED PRESS

closer economically in re-

sponse to Brexit.
“In the face of Islamist ter-
ror and the civil war in Syria,
we have to do more for both
our internal and external secu-
rity,” said German Chancellor
Angela Merkel, calling for na-
tional intelligence services
across the EU to share infor-
mation with each other more Matteo Renzi, left, greets Angela Merkel at Naples Airport.
closely.
She was speaking during a “Europe is on the witness minister rejected calls for fur-
meeting near Naples with stand,” Ms. Merkel said. “We ther financial integration pro-
French President François Hol- respect the Britons’ decision posed by a cadre of EU foreign
lande and Italian Prime Minis- to leave, but at the same time ministers.
ter Matteo Renzi. The leaders the remaining 27 of us want to After Germany took in a
of the European Union’s three show that we are focused on disproportionate share of the
biggest countries by popula- creating a prosperous Europe.” refugees who arrived in Eu-
tion—without the U. K.— were At a June meeting in Berlin, rope last year, Ms. Merkel is
planning for a informal meet- days after the Brexit vote, Ms. only willing to make limited
ing of EU leaders in Bratislava, Merkel, Mr. Hollande and Mr. sacrifices to boost solidarity in
Slovakia, next month. Renzi identified three areas— the bloc. Increased sharing of
Earlier Monday a spokes- security, economic growth and financial risks or loosening of
man for Ms. Merkel said the youth employment—on which the rules that govern member
September summit would be they could focus to reignite state’s debt levels and banking
aimed at “starting a mutual citizens’ interest in the EU. sectors are off the table.
process of reflection…and be- Agreeing on the precise de- “With upcoming state and
coming clear about which Eu- tails could take time. France also national elections, there’s
rope we want.” and Germany have long little to no appetite in Ger-
Ms. Merkel’s talks in Italy clashed over the best way to many on the European eco-
were the first in a series of boost growth, create jobs and nomic integration front,” said
meetings she has scheduled tackle immigration and terror. Mujtaba Rahman, managing
this week with more than a In the wake of the Brexit vote director for the Eurasia Group
dozen EU leaders to prepare. in June, Germany’s finance consulting firm in Europe.

BENTLEY B05
UNITIME
Sarkozy to Seek Presidency Again
BY WILLIAM HOROBIN The declaration ends a be among the front-runners,
long-running flirtation during but former Prime Minister
PARIS—Nicolas Sarkozy an- which Mr. Sarkozy prepared a Alain Juppé remains the favor-
nounced his candidacy for the campaign behind the scenes ite to head the center-right
2017 French presidential elec- without officially declaring his ticket.
tions Monday, four years after intent. That enabled him to re- Mr. Sarkozy’s entrance into
he pledged to retire from poli- main leader of the conserva- the 2017 race also raises the
tics when he was defeated by tive Les Républicains party possibility of a rematch
Socialist François Hollande. right up to the deadline for against Mr. Hollande. Although
“France demands we give it declaring candidacies for the polls show he is the least pop-
everything. I’ve felt that I have center-right primaries. ular president in history, Mr.
the strength to lead this fight The comeback pits Mr. Hollande is laying the ground-
at such a troubled time in our Sarkozy against rivals from his work to run for re-election by
history,” Mr. Sarkozy said party, who are lining up to pledging tax cuts and saying
Monday in a message posted block his path. Opinion polls he will reduce unemployment
on his social media accounts. show that Mr. Sarkozy would by the end of this year.
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 | Tuesday, August 23, 2016
Zimbabwe’s President Faces New Threats
Widening protests are
the latest challenge to
92-year-old Mugabe;
a pastor goes viral
Zimbabwe’s economy is run-
ning out of cash. Its worst
drought in decades is aggra-
vating financial collapse. The
ruling party is riven by infight-
ing. And a marriage counselor
turned social-media hero is
mobilizing thousands of work-
ers to paralyze the country.
By Gabriele Steinhauser
in Johannesburg
and Bernard Mpofu
in Harare, Zimbabwe
These are just some of the
challenges encircling President
Robert Mugabe, at 92 years old
the world’s oldest head of state.
He has cracked down on op-
ponents, dialed up anti-West-
ern rhetoric and threatened
anyone who steps out of line.
But with protests now
spreading to some rural areas
that have traditionally been a
Mugabe stronghold, the grow-
ing scale of the challenges has
prompted former party offi-
cials, Western diplomats and
political opponents to ques-
tion how much longer the
man who led Zimbabwe’s in-
dependence war—and ruled
this southern African nation
for 36 years—can stay in
power.
JihadistPleadsGuiltytoDestruction EthiopiaRunnerFears
BY GABRIELE STEINHAUSER
A Malian jihadist accused
of leading an al Qaeda “moral-
ity brigade” that bulldozed
centuries-old Muslim shrines
in Timbuktu became the first
person to plead guilty at the
International Criminal Court,
handing a much-needed suc-
cess to the embattled tribunal.
Ahmad Al Faqi Al Mahdi
faces up to 30 years in prison
for deliberately destroying
nine mausoleums of Muslim
saints and the door of a
mosque—most of them listed
as Unesco World Heritage
sites—during a 10-month
siege of the fabled Malian city
in 2012 and 2013.
Militants used drills and
shovels to desecrate the holy
sites, which they considered
idolatrous. The revered monu-
ments in the heart of the 900-
year-old city, a legendary way
station for camel caravans,
had been carefully maintained
since the Middle Ages.
Mr. Al Mahdi’s confession
and cooperation with the
court are expected to lead to a
lighter sentence, following an
agreement with the prosecu-
tion that it wouldn’t appeal a
jail term of between nine and
11 years.
“I would like to seek the
pardon of the whole people of
Timbuktu,” said Mr. Al Mahdi,
his bushy hair pulled back
from his face and his beard
neatly shaved.
Kerry Threatens to Cut
Aid to South Sudan
BY MATINA STEVIS
NAIROBI, Kenya—U.S. Sec-
retary of State John Kerry
warned South Sudan’s warring
leaders that U.S. aid would
evaporate if they failed to halt
the spiraling violence that has
plunged the world’s youngest
nation into a humanitarian
emergency.
Mr. Kerry was in Nairobi for
talks with regional allies on
South Sudan, where the break-
down of a peace deal last
month has resulted in hun-
dreds of deaths, mass rapes
and attacks against aid work-
ers. Two Chinese peacekeepers
deployed with the United Na-
tions mission in the country,
known as UNMISS, have also
been killed.
The U.N. and victims have
alleged that government forces
were responsible for much of
the violence against civilians in
the capital, Juba, last month.
South Sudan’s President Salva
Kiir called the allegations grave
and pledged to investigate.
Mr. Kerry said that Wash-
ington planned to add $138
million this year to help with
food and medicine needs but
stressed that continued aid
would be contingent on politi-
Zimbabwean antiriot police last week in the capital Harare dispersed protests against the central bank’s plan to reintroduce local currency.
“What you have is highly
incendiary conditions in Zim-
babwe.…[It’s] ripe for a power
grab,” said Charles Laurie,
head of Africa at political-risk
firm Verisk Maplecroft.
On Monday, leaders of 18
opposition parties met in Ha-
rare with the aim of forming a
coalition to challenge Mr.
Mugabe in the 2018 elections.
Mr. Al Mahdi, who the
court believes was born
around 1975, is the first per-
son on trial for the destruc-
tion of historic monuments
and buildings, an act defined
as a war crime by the Rome
Statute, which established the
court. He is also the first de-
fendant to plead guilty in the
court’s 14-year existence.
The swift handling of Mr.
Al Mahdi’s case is a victory
for the ICC and its prosecutor,
Fatou Bensouda, who has
come under pressure follow-
ing failures to win guilty ver-
dicts in several high-profile
cases.
An arrest warrant for Mr.
Al Mahdi was issued last Sep-
tember, and he was handed
over to The Hague-based
court eight days later. Despite
his guilty plea in court on
Monday, the trial is expected
to last around one week.
In a statement to the court
on Monday, Ms. Bensouda
urged the judges to take seri-
ously the destruction of reli-
gious and historic buildings as
acts of war.
“Culture is who we are,”
she said. “This cultural heri-
tage shapes the spirits and
identity of our own genera-
tion and generations to
come.”
She also pointed to other
wanton destruction of historic
and religious monuments,
such as the demolition of
parts of the ancient Syrian
cal progress.
“We made it crystal clear
that this is not forever. We’re
not just going to fill in the void
and provide help incessantly if
they’re not prepared to do
what’s necessary for their peo-
ple,” Mr. Kerry said.
The U.S.—the biggest donor
to South Sudan—has played a
vital role in helping the nation
emerge from a decadeslong
war of independence against
Sudan that ended in 2011. It
has spent $1.6 billion since the
conflict along ethnic lines
erupted in South Sudan in De-
cember 2013.
A power-sharing deal that
sought to calm the long-run-
ning feud between Mr. Kiir and
former Vice President Riek
Machar collapsed weeks ago.
Mr. Machar last week fled to
neighboring Congo but still
commands thousands of sol-
diers at home.
Mr. Kerry also said that a
new 4,000-strong force, made
up of troops from South Su-
dan’s neighbors and mandated
under the U.N. to help protect
Juba specifically, would help
provide security for civilians
and improve the mobility and
effectiveness of troops already
there under UNMISS.
HK JP KO ML SI
WORLD NEWS
But without a clear constitu-
tional path for replacing the
president before then, it is un-
clear what would happen
should he die or be forced to
step aside.
Although not formally on the
agenda, the recent upheaval is
likely to come up at a summit of
southern African leaders in
Swaziland that starts next week.
Mr. Al Mahdi at The Hague
town of Palmyra by Islamic
State and—just last month—
the deadly attack on a Shiite
shrine north of Baghdad.
“This worrying trend must
be stopped in its tracks,” she
said.
The prosecution accuses
Mr. Al Mahdi of being the
leader of the so-called hisbah,
an Islamic “morality brigade,”
which administered justice in
Timbuktu during the city’s oc-
cupation by Ansar Dine, a
Tuareg movement associated
with al Qaeda in the Islamic
Maghreb. Mr. Al Mahdi said in
court Monday that he demol-
ished the shrines following or-
ders from the city’s Islamic
court and because he believed
that Islamic law forbade the
construction of buildings on
top of tombs.
By the time French para-
troopers liberated Timbuktu
Rio’s Endgame: Avoiding a Backslide
BY PAUL KIERNAN
RIO DE JANEIRO—South
America’s first Olympic Games
are over, and they were good
enough.
Rio’s lush scenery provided
a memorable backdrop. Secu-
rity glitches and long lines im-
proved as the Games pro-
ceeded. A new subway line ran
practically glitch-free. A men’s
soccer gold medal for the
hosts went a ways toward re-
claiming the spotlight from
U.S. swimmer Ryan Lochte’s
robbery hoax.
More important, the 2016
Olympics weren’t the epic di-
saster many had feared. Water
pollution didn’t ruin the sail-
ing competition, hastily built
infrastructure didn’t collapse
and haphazard security prepa-
rations didn’t enable a terror-
ist attack. Most visitors had a
splendid time.
Rio’s next challenge—to
avoid backsliding into the dec-
adence that has defined the
city since Brazil moved its
capital to Brasília in the early
1960s—may prove more
daunting.
Brazil is mired in its worst
recession in generations, a cri-
sis from which Rio had been
partly sheltered as public offi-
cials worked to ensure a suc-
IN UK FR MN PR
Political chaos in Zimbabwe
would risk unsettling a region
struggling with the downturn in
commodity prices and China’s
economic slowdown.
Mr. Mugabe has survived
crises by cutting unexpected
deals with rivals and ruthlessly
quelling dissent. “It’s always
easy to call the end of Mugabe
too early,” Mr. Laurie said.
in early 2013, 14 out of the
city’s 16 mausoleums had
been vandalized. Around the
same time the ICC, at the re-
quest of the Malian govern-
ment, opened an investigation
into alleged war crimes.
Since then, local craftsmen
with the help of Unesco and
PATRICK POST/PRESS POOL
international financing have
restored the devastated mon-
uments. “We rebuilt them
even better than they were
before, with our ancestral
savoir-faire, and with their
modern skills,” said Alassane
Hasseye, chief of the tradi-
tional bricklayers of Timbuktu
who led the reconstruction ef-
forts.
But the wounds in the des-
ert city run deeper than the
rubble left by the militants.
“We do want to forgive Ah-
mad Al Madi, but we need to
be sure that he is being sin-
cere during this trial,” said Di-
adié Hamadoun Maiga, a
member of Timbuktu’s Islamic
High Council who led a local
crisis committee during the
occupation.
Islamist militants remain
active in the region and regu-
larly attack security forces
and civilians who are slowly
returning to the city. “To us,
there is still a long way to go
before we feel we can have
justice in Timbuktu,” Mr.
Maiga said.
—François Rihouay
in Bamako, Mali,
contributed to this article.
cessful Games. Venue con-
struction provided thousands
of jobs. Legions of national
guardsmen and military forces
helped secure the streets.
When Rio’s governor declared
a fiscal calamity in June, the
state promptly received a fed-
eral bailout earmarked for
Olympic commitments.
But for Cariocas, as Rio res-
idents call themselves, the
party is over. Violent crime is
rising after years of decline.
The state unemployment rate
jumped to 11.4% in the second
quarter, exceeding the national
average for the first time since
A view from the Engenhao Olympic Stadium in Rio on Aug. 14
THE WALL STREET JOURNAL.
menting the downfall of his
country while dissecting the
colors of a Zimbabwean flag.
The video sparked a social-
media movement under #This-
Flag and on July 6, a “stay away”
called by Mr. Mawarire shut
much of the capital as workers
stayed home and schools closed
for the day. A week later, the
pastor’s call for a nationwide
strike led to his arrest.
He was released after thou-
sands of supporters held a
vigil outside the courthouse
and has since left for the U.S.,
where he says he is meeting
exiled Zimbabweans and plan-
ning his next move.
A few days later, a group of
influential veterans of Zimba-
bwe’s national liberation war de-
nounced the president’s “dicta-
PHILIMON BULAWAYO/REUTERS
torial tendencies.” They vowed
to no longer support Mr. Mugabe
in future elections and threw
their weight behind Vice Presi-
dent Emmerson Mnangagwa.
The political backlash comes
as Zimbabwe’s economy is slid-
ing toward its biggest crisis
since 2009.
Mr. Mawarire, the pastor,
But now the president faces said his movement isn’t back-
a growing public challenge from ing a candidate to succeed Mr.
a protest movement personified Mugabe and he has no plans
by Evan Mawarire, a Pentecos- to seek political office.
tal pastor who until this year Others, meanwhile, warn
was doling out relationship ad- that it is too early to call Mr.
vice to a congregation of 60 Mugabe’s demise. “He’s been in
people in the capital, Harare. power for 36 years,” said Temba
In April, Mr. Mawarire Mliswa, a former ZANU-PF pro-
posted a video on Facebook in vincial chairman. “He’s learned
which he recorded himself la- the art of managing people.”
ForLifeAfterProtest
BY MATINA STEVIS is killing my people, so I stand
with all protests anywhere.…I
NAIROBI, Kenya—In a rare raised my hands to support
act of defiance, an Ethiopian with the Oromo protest,” Mr.
distance runner who finished Lilesa said, adding that he had
second in Sunday’s Olympic family at home, including a
marathon made a symbolic wife and two children, and rel-
protest against his govern- atives in prison. “If not kill
ment’s crackdown on Oromos, me, they will put me in
the country’s largest tribe. prison,” he said.
As Feyisa Lilesa crossed the A spokesman for the Ethio-
finish line along Rio’s Samba- pian government said Mr.
drome stadium, he crossed his Lilesa shouldn’t be worried
arms above his head to make and that he would be wel-
an X sign, a gesture that has comed as a hero. Still, rights
become emblematic of the experts think the marathoner
struggle of the millions of is right to be afraid.
Oromos. “Lilesa would likely be in
Community leaders from danger if he were to return
the tribe—who are estimated home,” said Felix Horne, Ethi-
to number more than a quar- opia senior researcher with
ter of Ethiopia’s 95 million Human Rights Watch.
population—say the Addis
Ababa government has tram-
pled on their fundamental
rights and launched crack-
ADRIAN DENNIS/AGENCE FRANCE-PRESSE/GETTY IMAGES
downs on protests that have
left some 1,000 people dead
since January. Ethiopia’s gov-
ernment has said it was tar-
geting “anti-peace” elements
that were looking to destabi-
lize the country.
After his silver-medal per-
formance, Mr. Lilesa told re-
porters that if he returned to
Ethiopia he feared for his life,
hinting that he might seek
asylum as the Rio Olympics
drew to a close.
“The Ethiopian government Feyisa Lilesa in Rio on Sunday
2012. Oil prices, the lifeblood
of the state budget, remain be-
University’s School of Ad-
vanced International Studies.
low $50 a barrel. Rio’s 2.9-bil- “Rio is kind of an ornament, a
lion-real ($906 million) bailout lovely ornament, but it doesn’t
won’t go far against a 20-bil- have any money.”
lion-real deficit that caused The city has made great
hospitals to reduce capacity, strides since its 1990s nadir.
schools to close and police to Rio’s murder rate has fallen
threaten to strike this year. 75% since 1994. In dozens of
“The Cariocas next week, favelas once controlled by
they’ll go back to polluted wa- drug gangs, police have estab-
ters, dirty beaches, bus hold- lished a full-time presence in
ups, bank robberies and the hopes of better integrating the
stuff they have been living communities into the city.
with for quite a long time,” Authorities have also
said Riordan Roett, director of poured billions of dollars into
the Latin American Studies public-transportation projects
program at Johns Hopkins that could ease chronic grid-
lock, crediting the Olympics for
giving them a hard deadline.
Daniel Alencar, a brand
strategist at FutureBrand in
São Paulo, believes the Olym-
pics could make a difference in
improving Rio’s image. But
that depends on whether the
city can hold on to its recent
advances.
“Perceptions of Brazil are
almost like an electrocardio-
gram,” Mr. Alencar said.
“What we need to do is not let
PAUL ROBINSON/REUTERS
this peak be followed by a val-
ley. We need to build upon the
legacy…so that two months
or six months from now, nega-
tive news doesn’t overshadow
all the positive news the city
has had.”
 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. Tuesday, August 23, 2016 | A5

WORLD NEWS

Philippine Drug War’s Toll Soars See-Through

RatsOffer
BY TREFOR MOSS

MANILA—Police and vigi-

Secretary Perfecto Yasay said
the Philippines would never
really quit the U.N. The presi-
lantes have killed about 1,800 dent had been “tired, disap-
people in the Philippines in pointed [and] hungry” when
the seven weeks since Presi- he made his remarks at
dent Rodrigo Duterte took of- around 1 a.m. Sunday, he said.
fice pledging to wipe out crim- Mr. Duterte, the former
inals, the country’s top police mayor of Davao City, swept to
OrganInsight
BY DANIELA HERNANDEZ
European researchers have
devised a method to make ani-
mals such as rats see-through
and also to shrink them in

FRANCIS R. MALASIG/EUROPEAN PRESSPHOTO AGENCY

official said.
National police chief Ronald
Dela Rosa on Monday told a
Philippine Senate panel inves-
tigating extrajudicial killings
that officers had shot dead 712
suspected drug dealers as part
of Operation Double Barrel
since July 1—the day after Mr.
Duterte took office.
He defended the actions of
officers, however, and said po-
lice condemned the killing of a
further 1,067 people by vigi-
lantes, blaming those deaths
on drug syndicates.
The figures highlight the
scope of the violent crack-
down under Mr. Duterte’s ad-
ministration. From Jan. 1 to
May 9, the day he was elected
president, police shot dead 39
drug suspects.
The rapidly rising death toll
and erratic statements by Mr.
Duterte have raised fears in
the business community that
foreign governments and in-
A boy grieved after one of his relatives was killed in a police operation in Manila on Friday.
vestors will be scared away,
undoing the work of his prede-
cessor, Benigno Aquino III,
who was widely credited with
restoring the Philippines’ eco-
nomic credibility.
“Human-rights groups are
very capable of halting any as-
sistance or aid, not to mention
influencing the decisions of in-
vestors,” said Peter Perfecto,
executive director of the
Makati Business Club.
The extent of the antidrug
carnage came to light after an-
other outburst by Mr. Duterte
over the weekend. The presi-
dent threatened Sunday to pull
the Philippines out of the
United Nations following criti-
cism of his calls for the sum-
mary killing of suspected drug
dealers. Mr. Duterte said the
U.N. was “stupid” for interfer-
victory in May’s national elec-
tions on an uncompromising
anticrime platform. “Kill them
all,” he told a rally in March,
referring to criminals.
Mr. Dela Rosa said that po-
lice were actively investigating
around 900 extrajudicial kill-
ings, and promised to cooper-
ate with the Senate probe.
Last week, however, Mr. Du-
terte lashed out at Leila De
Lima, the senator leading the
inquiry, accusing her in a live
TV appearance of being an
“immoral woman” who had al-
ing in Philippine affairs after legedly used kickbacks from
Agnes Callamard, the U.N. drug dealers to buy a house
Special Rapporteur on Extraju- for her supposed lover. Ms. De
dicial Killings, said she may Lima denied the allegations.
visit the country to study the Ms. De Lima on Monday
recent wave of violence. Ms. produced a string of witnesses
Callamard had been invited to who described the surge in vi-
do so by Mr. Duterte’s chief le- olence they had experienced in
gal counsel, Salvador Panelo, recent weeks related to the
who told her the administra- war on drugs.
tion had nothing to hide. “Blatant disregard for hu-
On Monday, Foreign Affairs man life has to stop,” she said.
some cases to a third of their
original size to get a better
window into their anatomy.
The research, conducted on
dead animals and described in
a paper published Monday in
the journal Nature Methods, is
a step toward making humans’
sizable organs, including the
brain, more easily probed.
“The shrinking capability is
not that big [yet], but we’re
going in that direction,” said
Ali Erturk, a neuroscientist at
the Institute for Stroke and
Dementia Research at Ludwig
Maximilians University of Mu-
nich and the study’s lead au-
thor.
To turn dead mice and rats
into smaller, clear versions of
their former selves, the team
strips tissues of fats that typi-
cally make them opaque. They
also pull out water, miniaturiz-
ing tissues. It takes about four
days to make a whole animal
transparent.

attend public schools taught by

World
Watch
JAPAN
Kuril Islands Visitor
Detained by Russia
Japan on Monday protested
the detention by Russia of one
of its citizens visiting the dis-
puted Kuril Islands, a Japanese
official said.
Relations between Tokyo and
Moscow have been strained for
decades over the Kuril Islands,
which were seized by Soviet
troops in the closing days of
World War II and are now con-
trolled by Russia. Tokyo says
three islands in the chain plus
one set of tiny islets are part of
its territory, a position Moscow
rejects.
“Through diplomatic channels,
we are working to have the [de-
tained] man return to the city of
Nemuro,” Chief Cabinet Secre-
tary Yoshihide Suga said about
the unidentified man, who was
detained after baggage check at
an airport on Monday.
The detainee, a member of a
visa-free visit program that
started in the 1990s, had an un-
declared sum of ¥4 million
($40,000), Kyodo News re-
ported, citing local media.
Japanese Prime Minister
Shinzo Abe is planning to visit
Russian President Vladimir Putin
in Vladivostok in September. The
two countries never signed a
peace treaty after World War II.
Mr. Abe has expressed hope
that an agreement on a treaty
could be reached between Mos-
cow and Tokyo.
Mr. Suga said he didn’t ex-
pect the incident to affect the
Abe-Putin meeting.
—Olga Razumovskaya
and Peter Landers
MEXICO
Dissident Teachers
Plan More Protests
Dissident teachers in south-
ern Mexican states stayed away
from classrooms Monday at the
start of the school year and
planned more protests to press
demands that the government
repeal an overhaul of the public-
education system.
Returning to schools across
the country were around 25.7
million primary and secondary
pupils, some 23 million of whom
more than one million teachers.
Leaders of the CNTE, a dissi-
dent faction of the national
teachers union, said its members
are maintaining their months-old
strike in the states of Oaxaca,
Chiapas, Guerrero, Michoacán
and parts of Mexico City.
The group, which is strongest
in Oaxaca state, also planned
further blockades and protest
marches. The CNTE has around
80,000 members in Oaxaca and
150,000 nationwide.
For the past several months
the CNTE and members of other
protest groups have closed high-
ways, blocked access to airports
and shopping centers, and van-
dalized and looted stores, mostly
Advancing the Science
in southern states.
A series of meetings since
late June between CNTE leaders
of Smart Energy
and interior ministry officials
failed to end the protests as the
group is demanding the revoca-
tion of the 2013 overhaul of ed-
ucation laws, a key part of
which requires teachers to take With some of the greatest minds in engineering and computer
performance tests.
The CNTE says the new laws science, the Siebel Energy Institute pushes the boundaries of
seek to privatize public educa-
tion and violate teachers’ labor innovation to address today’s pressing energy challenges.
rights.
The changes are widely seen
as essential to raise Mexico’s ed-
ucation levels.
—Anthony Harrup
CANADA
Wholesale Trade
Grew 0.7% in June
Canadian wholesale sales
rose in June for a third consecu-
tive month and beat market ex-
pectations, as this segment of
the economy proved to be one
of the few bright lights in an
otherwise dreary second quarter.
June wholesale trade rose
0.7% from May to a seasonally
adjusted 56.42 billion Canadian
dollars ($43.89 billion), Statistics
Canada said Monday. May’s data
were revised slightly upward to
an increase of 1.9% versus the
earlier 1.8% estimate.
In volume terms, sales rose
0.6% month over month.
For the second quarter, Cana-
dian wholesale trade advanced
0.6% on a nonannualized basis,
the data agency said. The Siebel Energy Institute funds research grants in data analytics,
Wholesalers emerged as
among the most resilient per- including statistical analysis and machine learning, to accelerate
formers in the Canadian econ-
omy for the April-to-June period, advancements in the safety, security, reliability, cost efficiency,
as the overall economy strug-
gled with soft U.S. demand, low and environmental integrity of modern energy systems.
commodity prices and the fallout
from wildfires in the energy-pro-
ducing province of Alberta.
—Paul Vieira
www.SiebelEnergyInstitute.org

A D V I S O R Y B O A R D
YU NAKAJIMA/ASSOCIATED PRESS

The Siebel Energy Institute is a project of the Thomas and Stacey Siebel Foundation.
All research results will be shared in the public domain.
PREVIEW: Japanese Prime Minister Shinzo Abe appeared as the
Nintendo computer game character Super Mario at the closing
ceremony of the Rio Olympics on Sunday. Mr. Abe is hoping the
2020 Games in Tokyo will give his country a psychological boost.
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 | Tuesday, August 23, 2016
DRINKS
Continued from Page One
In January, the U.K. weak-
ened 20-year-old advice saying
moderate drinking could bene-
fit the heart, calling that bene-
fit less than previously
thought. It issued new guide-
lines saying alcohol raises the
risk of certain cancers.
“There is no safe level of
drinking,” U.K. Chief Medical
Officer Sally Davies told a Brit-
ish television interviewer.
Also in January, the U.S. De-
partment of Health and Human
Services scrapped the part of
its guidelines that said light
drinking could lower the risk
of heart disease for some peo-
ple. Asked why, an HHS
spokeswoman said more re-
view was needed “to better
understand health outcomes
that may or may not be associ-
ated with moderate alcohol
consumption.”
Meanwhile, South Korea,
citing possible cancer risks,
this year joined Australia in
tightening maximum recom-
mended alcohol consumption.
A few years earlier, Russia re-
stricted alcohol sales and
raised beer and vodka taxes
following a World Health Or-
ganization study describing
various dangers it said drink-
ing posed to health, such as
leading to more accidents and
infections. (Countries differ in
what they consider moderate
or light drinking.)
The threat to the alcohol in-
dustry isn’t as sharp as that
faced by tobacco, which shrank
due to rapidly changing public
attitudes and government pol-
icy after it was determined
that smoking causes lung can-
cer, heart disease and other
ailments.
Nonetheless, governments’
alcohol advice matters, even if
few would-be bar patrons ever
consult it. It filters into policy
on liquor taxes, retail-sales
hours and advertising restric-
tions. More subtly, it can in-
form public attitudes toward
drinking. Brewer Anheuser-
Busch InBev NV now includes
in its corporate risk statement
that the WHO seeks to reduce
what it calls the harmful use of
alcohol by 10%.
Alcohol consumption fell in
Australia after its government
advised less drinking in 2009,
dropping to 9.7 liters a person
Holding the Line
Here is what some countries recommend as the most a person
should drink in a day.
Netherlands 0.7 drinks
0.7
Grenada
U.K.*
Germany 0.9
Italy
0.9
U.S.
1.0
France
Spain
Canada
Fiji†
1.4
Note: 1 drink= 14 grams of alcohol, equivalent to a mixed drink with 1.5 oz. of 80-proof spirits
*Weekly value divided by 5 to reflect recommended no-drink days
†Two different agencies recommend different limits
Source: International Alliance for Responsible Drinking
MINI
Continued from Page One
in 1995, the castle of Olavin-
linna was added, complete
with a mini-sauna where a na-
ked miniature figure comes
out and dips into the water.
Hungary, which joined in
2004, is represented by a rep-
lica of its thermal baths, com-
plete with miniature old men
playing chess inside. The last
country to join the EU and
Mini-Europe was Croatia, in
2013, represented by a 13th-
century church with varnished
roof tiles.
Now the park is filled with
more than 80 landmark cas-
tles, churches and monuments
all built to 1/25 scale.
The city of Brussels, which
owns the land on which Mini-
Europe stands, has been con-
sidering taking back the prop-
erty. The latest proposal from
city fathers is to build a shop-
ping mall and amusement park
based on a Belgian cartoon
character there. Mr. Meeus is
confident he will be able to ex-
tend the park’s operating li-
cense beyond December, when
it is due to run out.
Patrick Bontinck, CEO of
Visit Brussels, the capital’s
VASILY MAXIMOV/AGENCE FRANCE-PRESSE/GETTY IMAGES
each year from 10.6. In Mary-
land, liquor, wine and beer
sales all slipped after the state
raised alcohol taxes in 2011.
Alcohol sales in Russia tum-
bled more than 20% over sev-
eral years when the govern-
ment moved against drinking
after the WHO report.
The near-consensus the in-
dustry enjoyed until recently—
that light drinking can actually
improve health in some ways—
dates back to research four de-
cades ago. A California cardiol-
ogist named Arthur Klatsky
was trying to figure out what
lifestyle factors might affect
cardiovascular health. In what
he says was a surprise, he dis-
covered that light drinkers had
fewer heart attacks than ab-
stainers, as well as a lower
statistical risk of dying from
coronary heart disease.
It “changed the paradigm
for studying the effects of al-
cohol,” according to the Alco-
holic Beverage Medical Re-
search Foundation, whose
precursor organization at
times funded Dr. Klatsky.
In 1995, the U.S. Depart-
ment of Health and Human
Services revised its alcohol
guidance, eliminating the
statements that alcohol had
“no net health benefit” and
that drinking “is not recom-
mended.” Instead, HHS said
moderate drinking was associ-
1.4
1.4
1.6
1.6
1.7
Men
1.7 Women
2.0
2.1
1.4
2.9
1.8
3.0
2.0
2.1 4.3
2.9
THE WALL STREET JOURNAL.
tourism agency, said he hopes
Mini-Europe can be kept as
part of the new shopping-mall
project.
As for the U.K. models, he
is hoping for a compromise.
“Britain will still be in Europe,
geographically,” Mr. Bontinck
said. “We hope they will find a
way to keep them.”
The U.K. models have a to-
tal value of €600,000, or about
$680,000, Mr. Meeus esti-
mates. And last year he spent
€150,000 to repair the West-
minster Palace and the Big
Ben tower—adding in new
gold-colored details to reflect
the renovation of the original.
“It will be a nightmare to
put them in the garbage,” he
said, wearing a bright yellow
raincoat and holding a blue
umbrella on a recent rainy day
at the park.
He is still hoping Brexit
won’t happen. While British
Prime Minister Theresa May
has said Brexit means Brexit,
Mr. Meeus said he isn’t con-
vinced the U.K. will leave the
bloc at the end of negotia-
tions, which are expected to
last two years.
Nevertheless, he is making
contingency plans. Instead of
removing the models, he is
considering setting up a fence
and a border post saying “you
FROM PAGE ONE
ated with a lower risk of coro-
nary heart disease in some
people.
“Science is on our side,” a
beer executive told an industry
conference the next year. Patti
McKeithan of Miller advised
convention-goers to start ev-
ery meeting with legislators by
saying that “alcohol can be
part of a healthy diet,” accord-
ing to documents in tobacco-
litigation archives, where they
can be found because Miller
was owned by tobacco com-
pany Philip Morris at the time.
Now, newer research is once
again shifting the consensus.
One of the first signs came
when WHO officials set out
nearly a decade ago to develop
a new alcohol policy. They
planned to focus on “global
burden of disease,” assessing a
broad range of possible effects,
including indirect ones such as
rates of accidents and certain
infections.
“It was that sort of thing
coming out of the WHO that
made us fear for our lives,”
said Mitch Ramsay, then an ex-
ecutive at SABMiller PLC.
His job was dealing with
governments in parts of Africa,
a region brewers looked to for
growth. A negative WHO re-
port risked new restrictions
there.
Miller offered several Afri-
can governments “a whole
workshop about alcohol, and
what are the policies and how
should they be managed,” Mr.
Ramsay said. It paid for an
Australian health official to
advise them, and Mr. Ramsay
discussed ways to reduce
problem drinking. He stressed
that curbing beer sales would
hurt the economy and that
brewers have a right to sell al-
cohol in the countries.
“We intercepted” an alcohol
policy in Malawi that would
have raised taxes, Mr. Ramsay
said. He said the country’s
government asked for input on
the policy, which was pushed
by an NGO, and he argued that
the tax, by making Miller la-
gers pricey, would tempt peo-
ple to drink harmful home-
made hooch.
Botswana initially moved
ahead with a policy Mr. Ram-
say wrote but then rolled it
back and adopted a stringent
alcohol tax. Formerly a cash
cow for Miller, Botswana
ceased to be.
are now leaving the European
Union and entering the U.K., a
former member of the EU.”
And when visitors make
their way toward France and
the Eiffel tower, another sign
would say “you are now enter-
ing the EU.”
He is also trying to come up
with plans if the U.K. splits up
and Scotland joins the EU.
“And here, maybe we will
get a Scottish installation, the
Loch Ness monster,” he said.
For now, a sign indicates
Before the vote in June, the park created a display of miniature figures for and against Brexit.
Botswana’s health ministry
confirmed Mr. Ramsay’s ac-
count. Malawi’s health minis-
try didn’t respond to ques-
tions.
In a 2010 report, the WHO
labeled drinking harmful on a
population-wide scale, “even
when consideration is given to
the modest protective effects,
especially on coronary heart
disease, of low consumption of
alcohol for some people aged
40 years or older.”
It said “the harmful use of
alcohol is a significant contrib-
utor” to some diseases, such
as diabetes, and suggested that
governments tax it to reduce
consumption.
More recently, public-health
officials have focused on re-
search associating light drink-
ing to a higher risk of certain
forms of cancer.
Governments’ alcohol advice matters, even
if few would-be bar patrons ever consult it.
Mark Bellis, a public-health
official in Wales, said scien-
tists’ newfound ability to iso-
late the effects of alcohol
from other factors such as
diet and exercise has revealed
“overwhelming evidence de-
tailing more or less linear re-
lationships between cancer
and alcohol.”
The U.K., in revising its
guidelines early this year,
said its review of research
concluded that “the risk of
developing a range of ill-
nesses (including, for exam-
ple, cancers of the mouth,
throat and breast) increases”
with any amount drunk on a
regular basis.
“To link that with alcohol
is a real game-changer,” said
Linda Bauld, a health-policy
professor at the University of
Stirling in Scotland who
helped get U.K. health offi-
cials to change their recom-
mendations.
The new U.K. guidance
didn’t deny benefits from alco-
hol for heart health but said
these “are less and apply to a
smaller group of the popula-
tion than previously thought,”
potentially reducing death
risks only in women over 55.
Spirits maker Diageo PLC,
facing a bill in Ireland that
would introduce alcohol adver-
tising bans, minimum pricing
the result of the referendum
and that negotiations will
last at least two years: “All
monuments will be on display
in Mini-Europe until…a final
decision is taken.” Other rep-
resentations of the U.K. in-
clude William Shakespeare’s
birthplace in Stratford-upon-
Avon, the Circus of Bath, Do-
ver Castle and an English vil-
lage, complete with a pub, a
post office and a butcher’s
shop.
James Carver, who sits in
THE WALL STREET JOURNAL.
Pour Results
A fall in Russian beer sales
accelerated when Moscow
cracked down about 2011
following World Health Organiza-
tion criticism of its alcohol use.
Annual sales by volume
12 billion liters
10 8.17
8
6
4
2
0
2001 ’03 ’05 ’07 ’09 ’11 ’13 ’15
1 liter = 0.26 gallons
Source: Euromonitor International
THE WALL STREET JOURNAL.
Beer drinkers at a bar in
Moscow, left. New government
health policies aimed at
reducing drinking are pressuring
the alcohol industry in some of
its biggest markets, including
the U.S., the U.K. and Russia.
and warning labels, funded a isn’t designed to measure can-
moderation-focused group in cer risk.
Ireland called Stop Out-of-Con- The companies know “find-
trol Drinking. The group be- ings could go either way,” said
came a focus of controversy a Pernod Ricard spokesman,
after the spirits maker’s in- Jack Shea, but they believe
volvement was publicized. The “it’s important to get a conclu-
Irish legislation remains under sive and definitive answer for
consideration. public-health reasons for con-
In Scotland, Diageo sup- sumers and our business.”
ported a legal battle led by the At Boston University School
Scotch Whisky Association and of Medicine, two doctors have
European wine producers that been dueling for years over
aims to block a law setting these issues.
minimum prices on alcohol. One, Tim Naimi, is part of a
The law awaits a final court group of university research-
ruling in Scotland. ers who receive government
In the U.S., Guy Smith, a grants and publish frequently
former tobacco-industry exec- about the health effects of
utive who now works for Dia- drinking. The other, Curtis El-
geo, recently called a study of lison, long had funding from
alcohol advertisements “junk alcohol-industry groups,
science” that tarnished those though he says he stopped
behind it. Though the rebuke taking such funding in 2013
didn’t involve research on when a new medical-school
dean objected.
In a March analysis of past
research on alcohol and mor-
tality, Dr. Naimi and his co-au-
thors described what they
called a flaw in some studies
health implications of drink- that found more heart disease
ing, it sent a message to alco- in nondrinkers than in light
hol researchers that their work drinkers. Some of the non-
was open to being questioned. drinkers were people who used
“We push back when there to drink but had quit because
are dumb studies,” Mr. Smith of illness, the analysis said. Af-
said. ter correcting for that and
Brewer AB InBev last year other issues, they concluded
launched a program called that moderate drinking had no
Smart Drinking Goals that net health benefits.
aims to address the WHO’s Their analysis, in turn, drew
concerns by reducing the use criticism from Dr. Ellison, who
of alcohol in six cities by 10% has an office in the same BU
over 10 years. AB InBev re- building as Dr. Naimi. Dr. Elli-
cently introduced a nonalco- son gained renown over two
holic Budweiser in Canada and decades ago for work that
aims to have 20% of its volume gave alcohol, especially wine,
come from no- or low-alcohol credit for the “French para-
beer by 2025. dox” of low heart-disease
AB InBev and Diageo are death rates despite diets high
joining with rivals Heineken in saturated fat.
NV and Pernod Ricard SA to A group of researchers he is
contribute $55.4 million to- part of said the Naimi analysis
ward the cost of the first ran- failed to acknowledge studies
domized trial assessing alco- finding alcohol beneficial, and
hol’s health effects. The study criticized it for disqualifying
will be overseen by the U.S. animal studies that have
National Institute of Alcohol shown that alcohol raised the
Abuse and Alcoholism. protective form of cholesterol.
Researchers plan to enroll The omission was “unconscio-
8,000 subjects who are older nable,” said the Ellison group,
than 50 and at risk for heart the International Scientific Fo-
disease. Some will be ran- rum on Alcohol Research.
domly assigned to abstain In 2014, the two had a tart
from alcohol and the others to public debate over the health-
have one drink a day. The fulness of drinking. They ha-
study will compare the inci- ven’t had a discussion of alco-
dence of heart attack, stroke hol since.
and Type 2 diabetes in the —Saabira Chaudhuri
groups after about six years. It contributed to this article.
the European Parliament as a
member of the UK Indepen-
dence Party, which backed
the campaign to leave the EU,
leave the EU—and possibly
Mini-Europe, too.
Mr. Carver suggested it
would make sense to repatri-
is a hard-liner over Mini-Eu- ate the models to the U.K.
rope too. He says the British “I’m sure with all the theme
buildings shouldn’t stay on parks across the world and in
after Brexit. the U.K., for sure someone
The option of building a will be interested in buying
fence around the U.K. models them,” he said.
is “perhaps a metaphor for During a recent visit to the
how expensive it is to get rid park, Harry Mutarudin, a 37-
of us,” he said. year old Ph.D. student from
He predicts that other Malaysia, who has lived in
countries will follow suit and London for three years, said
that while he was rooting for
Remain, the vote was clear.
“Britain voted to leave, so I
think the U.K. models should
be removed,” he said.
Another visitor, overhear-
ing Mr. Mutarudin, voiced dis-
agreement. “You can’t remove
us from Europe, we’re still go-
ing to be part of it,” said Mick
Johal, a 45-year-old British
pharmaceuticals salesman. Mr.
VALENTINA POP/THE WALL STREET JOURNAL
Johal, a Leave sympathizer,
said Mini-Europe should sim-
ply switch to include all coun-
tries on the continent.
For the EU, Brexit will be a
hugely complicated negotia-
tion. Thanks to its simpler sys-
tem of government, the Brexit
process at Mini-Europe will be
less fraught. For now, Mr.
Meeus hasn’t made his mind
up if the U.K. should leave.
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.
Zika Renews Focus on Abortion Debate
Some Southern states,
most vulnerable to
spread of virus, have
tightened restrictions
BY ARIAN CAMPO-FLORES
AND DAN FROSCH
MIAMI—For the dozen
or so pregnant women in-
fected with the Zika virus in
the care of Christine Curry, an
obstetrician and gynecologist
here, pregnancy has become a
wrenching exercise in risk
evaluation.
“Some women will say,
‘This is nature. Whatever the
world or God brings me, I will
deal with,’ ” said Dr. Curry, an
assistant professor of obstet-
rics and gynecology at the
University of Miami. “Other
people have less tolerance of
risk.…They will choose to end
this pregnancy because the
unknowns are too severe.”
The increase in the number
of pregnant women possibly in-
fected with Zika—which
reached 529 in the states and
the District of Columbia as of
Aug. 11, according to the Centers
for Disease Control and Preven-
tion—is focusing renewed at-
tention on the controversial is-
sue of late-term abortions.
It comes as many state leg-
islatures are tightening restric-
tions on such procedures.
Some of the most active efforts
are in the South, one of the re-
gions most vulnerable to the
spread of Zika by mosquitoes.
While the virus might not
infect the fetus, if it does, it
can cause birth defects includ-
ing microcephaly, an abnor-
mally small head associated
with improper brain develop-
ment. The fetus may appear
healthy in early ultrasounds,
Federal Judge Temporarily Blocks Transgender Rules
BY DAN FROSCH
DALLAS—A federal judge in
Texas has temporarily blocked
the Obama administration’s di-
rective allowing transgender
public-school students to use
the bathroom of their choice,
siding with Texas and a coali-
tion of 12 other states that
filed a lawsuit over the issue.
In a ruling issued late Sun-
day, U.S. District Judge Reed
O’Connor said the administra-
tion failed to take proper steps
in crafting the recent guide-
lines, which say schools should
let students use the bathroom
of their chosen gender identity.
Judge O’Connor said that
because the guidelines were in
effect legally binding regula-
tions, the Department of Edu-
cation should have held a for-
mal process allowing those
affected—in this case, states
and school districts—to pub-
licly comment on them.
“The Guidelines are, in prac-
tice, legislative rules—not just
interpretations or policy state-
ments because they set clear le-
gal standards,” Judge O’Connor
PACT
Continued from Page One
U.K. foreign officer who stud-
ies regional security at the
Lowy Institute for Interna-
tional Policy in Sydney. “To
leave Asian partners hanging
now would be disastrous for
U.S. leadership in the region.”
The administration contin-
ues to hold out hope for the
TPP’s passage. “We’re a vote
away from either cementing
our leadership in the region or
handing the keys of the castle
to China,” said U.S. Trade Rep-
resentative Michael Froman.
But that argument hasn’t
helped solidify backing in Con-
gress, where the pact is op-
posed by most Democrats and
now lacks the support of key
Republican lawmakers who
championed the TPP and other
trade pacts for years. Both ma-
jor presidential candidates also
have attacked the deal.
Last week, GOP Sen. Pat
Toomey, former president of
the Club for Growth, a bastion
of free-market economics, came
out against the TPP in a bid to
win working-class voters in his
Pennsylvania re-election race.
At the same time, Demo-
cratic presidential candidate
Hillary Clinton, who has said
she opposes the pact in its cur-
rent form, is under increasing
A groundskeeper at a Miami garden spraying pesticide to kill mosquitoes, part of an effort to stop the spread of the Zika virus.
only to display signs of birth
defects late in the pregnancy
or after birth. Yet as more time
passes, abortion becomes less
of an option because of state
restrictions on the procedure,
especially late in pregnancy.
Republican Sen. Marco Ru-
bio, whose home state of Flor-
ida is grappling with the con-
tinental U.S.’s first known
cases of Zika virus transmitted
by mosquitoes, drew impas-
sioned responses when he said
this month that he op-
posed abortion for pregnant
women infected with the vi-
wrote. “Although Defendants
have characterized the Guide-
lines as interpretive…their ac-
tual legal effect prove that they
are ‘compulsory in nature.’ ”
Judge O’Connor, who was ap-
pointed by George W. Bush in
2007, said he granted the in-
junction because the guide-
lines—as Texas and its co-plain-
tiffs have argued—could result
in the loss of federal education
funding if they weren’t followed.
The judge also said in his
ruling that the guidelines ap-
peared to conflict with exist-
ing federal education regula-
tions passed in the 1970s that
referred to an individual’s sex.
“It cannot be disputed that
the plain meaning of the term
sex...meant the biological and
anatomical differences be-
tween male and female stu-
dents as determined at their
birth,” he wrote.
The decision was a setback
for the Obama administra-
tion’s effort to weigh in on
transgender bathroom use by
students, which the adminis-
tration has framed as a civil-
rights matter. A Justice De-
pressure from the left to make
a clean break with the deal,
which she supported while
serving as Mr. Obama’s secre-
tary of state.
The U.S. “pivot” to Asia, un-
veiled in 2011, reflected con-
cern about China’s bid to turn
economic might into hard
power in a region with growing
importance. Tensions have
risen, with China testing U.S.
military dominance by making
claims on the South China Sea
and protesting a U.S. antimis-
sile installation in South Korea.
Freighting the accord
with geopolitical
implications has
raised its stakes.
The proposed pact, which
was finalized last year, would
cut or reduce some 18,000 tar-
iffs for a group of Pacific Rim
nations in the Americas, Asia
and Oceania—accounting for
40% of the global economy.
China, not part of the Trans-
Pacific deal, is negotiating a
separate Asia pact without the
U.S. China is also pledging
more regional loans through a
new bank and a $40 billion Silk
Road fund.
Many trade experts say the
Obama administration is exag-
gerating when it depicts the
U.S. NEWS
rus. “I’m going to err on the
side of life,” he told Politico.
Florida bans abortions after
24 weeks of pregnancy, with
exceptions if the pregnancy
endangers the mother’s health.
“His position is pretty out-
rageous on Zika and women’s
ability to make decisions about
what’s best for us,” said Sasha
Bruce, senior vice president of
campaigns and strategy at
Naral Pro-Choice America,
which supports abortion rights.
Antiabortion groups ex-
pressed support for his stance.
“Disease must be confronted
A U.S. directive would allow transgender public-school students to use the bathroom of their choice.
partment spokeswoman said
the agency “is disappointed in
the court’s decision, and we
are reviewing our options.”
In North Carolina, the state
deal as a make-or-break mo-
ment for whether the U.S. or
China writes the rules of global
trade. The China-backed accord
doesn’t create new trade frame-
works: It is a run-of-the mill,
tariff-cutting exercise. The two
pacts aren’t mutually exclusive.
Asian nations always intended
to join both.
But freighting the TPP ac-
cord with geopolitical implica-
tions has raised its stakes. “For
America’s friends and partners,
ratifying [the trade pact] is a
litmus test for your credibility,”
Singapore Prime Minister Lee
Hsien Loong said in Washing-
ton this month. Observers saw
Mr. Lee as speaking for the
other Asian signatories: Japan,
Vietnam, Malaysia and Brunei,
with Indonesia, South Korea
and others considering it.
To be sure, the U.S. is deeply
integrated with Asia through
big trade relationships with
China and other economies, as
well as defense treaties with
nations such as Japan, South
Korea and the Philippines. Such
U.S. ties to Asia are unlikely to
change, regardless of the trade
pact’s fate, many experts say.
But Asian leaders who spent
political capital to support the
pact will be less likely to do so
again if it fizzles, experts say.
Smaller countries that balance
relationships with both China
and the U.S. may doubt the U.S.
Take Vietnam, seen as the
with life-affirming solutions,”
said Clarke Forsythe, acting
president of Americans United
for Life, a legal and advocacy
group. “When faced with the
challenge of a child with re-
duced abilities, the best ap-
proach is to equip the parents
with skills, resources and sup-
port.”
The debate echoes argu-
ments in the 1960s over an epi-
demic of rubella, or German
measles, which can cause birth
defects if a mother is infected
during pregnancy. Al-
though abortion was still
and the Obama administration
have filed dueling lawsuits over
a state law passed in March re-
quiring transgender people to
use the public bathroom of the
pact’s big winner, with an esti-
mated 11% boost to its economy
by 2025. Four decades after
fighting a war, the U.S. and
Vietnam are becoming closer
amid shared concerns over
China’s expansion in the South
China Sea, waters Vietnam also
claims. This year, the U.S. lifted
a ban on lethal-weapons sales
to Vietnam. The nation got spe-
cial exceptions to join the pact.
“We still hope that Obama
will be able to ratify the deal
during his last months,” said
Luong Van Tu, Vietnam’s for-
mer deputy trade minister.
But no one has more at
stake than Shinzō Abe, the
prime minister of Japan, the
closest U.S. ally in the region.
Mr. Abe made the pact central
to his domestic and foreign
strategies—and faced signifi-
cant opposition from Japan’s
powerful farm lobby and other
local interests to do it.
Mr. Abe’s “Abenomics” plan
to pull the world’s third-largest
economy from its long morass
relies on the pact as a driver of
growth and reform.
If the TPP fails, “there will
be a very negative impact from
the viewpoint of economic se-
curity,” said Yorizumi Wa-
tanabe, a former Japanese
trade official.
—William Mauldin,
Chieko Tsuneoka
and Vu Trong Khanh
contributed to this article.
Tuesday, August 23, 2016 | A7
expert on state laws at the or-
ganization. Many of the states
that ban the procedure earliest
in pregnancy, around 20 weeks,
are in the South.
Another 19 states ban abor-
tion at the point when the fetus
becomes viable—meaning it
could survive outside the
womb—which can vary, per-
haps 23 weeks for one mother
and 27 weeks for another, she
said. Only seven states—includ-
ing Oregon and New Mexico—
have no restrictions on
later abortion. None of them
have been hit hard by Zika.
“If you’re a woman in this
situation, weighing the termi-
GASTON DE CARDENAS/TRIBUNE NEWS SERVICE/ZUMA PRESS
nation of a pregnancy, you
face a legal landscape that is
complicated,” Ms. Nash said.
Abortion clinics contacted in
Florida, Texas, New York and
Louisiana reported that they
hadn’t observed any increase in
the number of women seeking
abortions as a result of Zika, or
weren’t yet tracking it. But “ev-
eryone seems to be nervous
about it,” said Kathaleen Pitt-
man, administrator for the Hope
Medical Group for Women in
Shreveport, La.
Of the 529 cases of possibly
infected pregnant women
identified by the CDC, so far
mostly illegal, more than 11,000 five have resulted in losses of
women sought the procedure, fetuses with birth defects.
or had miscarriages, during the Such losses stemmed from
outbreak, according to the CDC. miscarriages, stillbirths or
In recent years, a growing abortions.
number of states have added According to a study pub-
restrictions on abortion, espe- lished in the New England
cially later in pregnancy, ac- Journal of Medicine in July,
cording to the Guttmacher In- requests for abortions through
stitute, a research organization a telemedicine service surged
that supports abortion rights. late last year and early this
Twenty-four states ban the pro- year in some parts of Latin
cedure after a specific point in America affected by Zika. In a
pregnancy, ranging from about group of seven countries, in-
20 to 27 weeks, with exceptions cluding Brazil and Colombia,
for the life and health of the such requests increased be-
mother, said Elizabeth Nash, an tween 36% and 108%.
climate created by the law.
Earlier this month, the U.S.
Supreme Court also temporar-
ily blocked a transgender stu-
dent in Virginia who identifies
as male from using the boys’
bathroom at his high school,
giving local officials time to
appeal a lower-court ruling
that sided with the student.
Texas and other states filed
a federal lawsuit in May seek-
ing to stop the administration’s
guidelines, which were issued
that same month, from taking
effect. “We are pleased that
the court ruled against the
Obama administration’s latest
illegal federal overreach,” said
LUCY NICHOLSON/REUTERS
Texas Attorney General Ken
Paxton in a statement.
Paul Castillo, staff attorney
for Lambda Legal, one of sev-
eral gay-rights groups that
filed a friend-of-the-court
brief in support of the guide-
lines, said, “The injunction
takes the extraordinary step of
sex corresponding to their harming transgender students
birth certificate. Last month, and ignoring the law as it ex-
the National Basketball Associ- ists in other jurisdictions.”
ation pulled its next All-Star —Valerie Bauerlein
Game from Charlotte, citing the contributed to this article.
U.S.
measure of everything made by
factories, mines and utilities, rose
at a 0.5% clip in July, up from a
Watch 0.3% pace a month earlier.
Employment measures also
helped pull the index higher: U.S.
employers created 255,000 jobs
last month, and wages for pri-
vate-sector workers matched
ECONOMY their strongest annual pace of
growth in seven years. Mean-
Gauge of Activity while, more Americans joined
Increased in July the labor force, keeping the job-
Economic activity across the less rate steady at 4.9%.
U.S. picked up in July, according —Lisa Beilfuss
to a report Monday, underpin-
ning hopes the nation’s economy CALIFORNIA
has gained some steam after a
drab first half of the year.
Wildfire Growth
The Chicago Fed National Ac- Forces Evacuations
tivity Index climbed to 0.27 last A wildfire in central California
month from a revised 0.05 in that destroyed 47 structures has
June and compared with an av- grown, officials said Monday.
erage of -0.19 in the second The California Department of
quarter. Still, from a year earlier, Forestry and Fire Protection said
the gauge is down from 0.34. the blaze in San Luis Obispo
A weighted basket of 85 indi- County has charred nearly 50
cators measuring four broad cat- square miles—up from about 43
egories of the economy, the in- square miles a day earlier—and
dex is meant to provide a was only partially contained.
snapshot of national economic Residents of at least 50
activity and inflation pressures. mostly rural homes near Lake
Readings at zero suggest the Nacimiento were ordered to
U.S. economy is growing at its leave late Sunday. Several other
long-run trend level, while nega- nearby communities have been
tive prints indicate below-average under evacuation orders for days.
growth. The -0.70 mark signals Meanwhile, a 58-square-mile
recession risk. fire that destroyed 105 homes in
Production-related indicators Southern California was almost
paced last month’s increase, ac- entirely contained and all evacua-
cording to the Fed bank. Manu- tion orders were lifted.
facturing industrial production, a —Associated Press
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A8 | Tuesday, August 23, 2016 THE WALL STREET JOURNAL.

PERSONAL JOURNAL

CHRISTOPHER KAESER/THE WALL STREET JOURNAL

Emotions such as anger, envy and loneliness can be turned around to help you change your behavior and be happier.

The Case for Negative Thoughts: They Actually Help

BY ELIZABETH BERNSTEIN
Good news: There is an upside
to feeling down.
In a movement that experts are
calling “the second wave of posi-
tive psychology,” many psycholo-
gists are recognizing that negative
feelings that make us uncomfort-
able or unhappy may sometimes
be good for us. If we pay attention
to them, they can help us identify
what is wrong and motivate us to
seek change.
This is a response to the ap-
proach popular since the late
1990s, when
BONDS ON the field of
RELATIONSHIPS positive psy-
chology arose,
emphasizing
upbeat emotions and traits with
the goal that people should flour-
ish, not simply be free of distress.
Thousands of research studies,
books and magazine articles were
published to help people under-
stand how to use the power of the
positive to be happier.
Think of negative feelings “like
a baby’s cry,” says Frank McAn-
drew, a professor of psychology at
Knox College in Galesburg, Ill. “It’s
unpleasant and aversive, but it will
motivate you to do something that
is good.”
Not all negative emotions have
a good side. Feelings such as hope-
lessness, worthlessness or de-
spair—psychologists call these
“empty” emotions—typically signal
depression and are pretty much
impossible to turn to your advan-
tage. If people have these feelings
and they persist more than two
weeks, they should seek profes-
sional help, experts say.
Beneficial negative feelings—
ones that typically can be har-
nessed for positive change—in-
clude guilt, anger, sadness, anxiety,
envy and loneliness. Unlike the
empty emotions, these are often
based in reality; something has
happened to make you feel this
way. And they are meant to be
warnings that we need to protect
ourselves from bad behavior, ei-
ther our own or someone else’s.
The trick is to be able to iden-
tify the emotion, then figure out
what change in your behavior will
alleviate it. The goal is to harness
it for positive transformation.
Here is how you do that:
Label the Feeling
Name the emotion with one
word. Tell yourself: “I’m angry.” Or
“I’m sad.”
If you’re having trouble recog-
nizing exactly what you’re feeling,
tune into your body, breathing
deeply for five to 10 breaths, says
Mariel Diaz, a licensed clinical so-
cial worker in San Diego. Is your
heart racing? You’re likely anxious.
Do you have a heavy feeling in
your chest? You’re probably sad.
Does your jaw feel tense? That is a
sign of anger.
Make a Pros and Cons List
A negative emotion is a signal
that something needs to change.
But how do you know if you make
that change you will feel better?
You’ll need to weigh the conse-
quences.
Think of what behavior caused
the emotion you are feeling. Then
write down in a list all the ways
the behavior makes you feel good.
On the other side of the page,
write down all the ways the behav-
ior makes you feel bad.
Say you feel guilty because you
went out last night with a group
of people and gossiped about a
friend who wasn’t there. In the
“pro” column, you might write
that it felt nice to have the group’s
attention. In the “con” column, you
might say you are worried your
friend will find out. Ask yourself:
Are the pros worth the cons?
“Feeling bad can be protective
because it can tell you what you
need to avoid,” says Dion Metzger,
an Atlanta psychiatrist who often
tells patients to use this technique.
Listen for “Should”
We all have an inner critic tell-
ing us what we “should” do. It is
important to listen to it.
Imagine you’re at a cocktail
party, listening as another guest
describes her promotion at work.
She’s excited about her new re-
sponsibilities; she’ll get to travel
overseas and she got a nice raise.
After a few minutes you start to
feel annoyed and find yourself lik-
ing her less. You’re envious.
What’s your inner critic saying?
That you should work harder to
impress your boss? Or you should
start networking and look for a
new job? “The inner critic is tell-
ing you what action to take,” says
Ms. Diaz, the San Diego therapist.
Imagine a Redo
Think of what triggered your
negative feelings. Then run
through the event again in your
mind, but imagine yourself alter-
ing your behavior. What would you
have done differently to feel better
now?
The trick is to identify
the emotion, then figure
out what change in your
behavior will alleviate it.
Say you spent an entire week-
end alone, running errands and
watching TV. By Sunday evening
you felt lonely and sad. Redo your
weekend in your mind. What you
would have done differently?
Would you have called friends and
made plans? Taken yourself out to
dinner? Researched a new hobby
so you have something fun and so-
cial to do next weekend? Plan to
do these things going forward.
Talk to a Child
Imagine a child who feels as
you do. Then imagine helping that
child understand those feelings
and how to avoid them in the fu-
ture.
What if that child was anxious
because she hadn’t prepared for a
test? What would you suggest she
do in the future?
“If you think of a child in dis-
tress, it awakens a compassionate
response,” says Tim Lomas, a psy-
chologist and lecturer at the Uni-
versity of East London.
Take Baby Steps
Trying to alter behavior too
quickly doesn’t work because it
produces something called cogni-
tive dissonance, a discrepancy in
what you’re thinking and how
you’re behaving.
Take it slow, as you would if
you were going to change yourself
physically. Identify the way you
should behave to feel better.
Maybe you have a friend who is al-
ways late for dinner and keeps you
waiting. You are mad at him but
also mad at yourself because you
put up with his rudeness.
You may hate confrontation and
find it uncomfortable to challenge
your friend, while you are still
fuming. Take deep breaths. Re-
mind yourself why you like your
friend and that his company is
worth it. Then tell him how his be-
havior makes you feel.
“Big changes are the result of
small steps repeated consistently
over time,” Ms. Diaz says.

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THE WALL STREET JOURNAL. Tuesday, August 23, 2016 | A9

ARTS & ENTERTAINMENT

On Stage, Adele Makes Small Talk

BY JOHN JURGENSEN
DURING EVERY CONCERT on
her current 88-date tour,
Adele delivers a version of the
same disclaimer to her audi-
ence. “I better warn you. I do
talk a lot,” she said on a re-
cent Saturday night in Los
Angeles. “I have 10 songs and
the rest is chat.”
In fact, Adele performed 16
songs that night, but she was
true to her word. The power-
house singer devoted about an
hour to music (68 minutes),
and spent almost as much time
(41 minutes) on banter.
She shot down a rumor
about singing at the Super
Bowl, gushed over the cheese
at a local grocery store, and
told a self-deprecating story
about sprinting to catch an
Olympic run by Mo Farah, a
fellow Brit, on TV. She posed
for numerous selfies and in-
vited two fans on stage to
video chat with their friend
who was too sick to at-
tend. She marveled at
how much cursing she
minutes running today.
sciousness to explain his artis-
tic ambitions and settle scores.
‘JUST SING!’ Adele Such open-ended mono-
I do love it when at a show in logues are rare on blockbuster
Amsterdam. concert tours, where choreog-
someone falls over. raphy, stage effects and set
I can’t help but laugh out lists are rehearsed to the min-
loud, even when ute. Adele clearly built flexible
my son falls. talk time into her show, dur-
ing which she’s usually on
Hahaha! stage alone, backed only by
video screens or a small en-
semble of musicians.
There are canned anec-
dotes she uses every night to
set up songs, including ones
about her decision to write a
One glass James Bond theme song and
of wine, that’s all I always her admiration for Alison
I’m allowed. I’m not Krauss and Bob Dylan. She
burp before this gets laughs nightly by describ-
a one-glass kind of girl. next one. ing the “miserable” mood of
I like a bottle. her songs, and thanking peo-
ple who agreed to accompany
fans to the show, including
husbands, boyfriends and oth-
ers “who didn’t want to be
here.” Still, she’s surprisingly
comfortable with what stand-
up comedians call crowd
work, including moments
I spent when she invites people on
eight-and-a-half stage to sing into her micro-

PHOTO ILLUSTRATION BY THE WALL STREET JOURNAL; GETTY IMAGES

does and commented
on the scent of a My bum is very heavy,
nearby audience mem-
ber (“a bit hempy, but so I can tell you that’s
so nice.”) like 30 minutes
It was an intimate if for me.
mostly one-sided conversa-
tion with about 18,000 peo-
ple. Like her seven other con-
certs this month at L.A.’s
Staples Center arena—and
every other date on her cur-
rent tour—the venue was
sold out. Last week, when
Adele postponed a concert in
Phoenix, she turned the an-
nouncement into a tête-à-
tête. “My cold has gotten the
better of me,” said the singer,
sounding congested in a selfie-style video
posted online, “and as you can hear, even if
I did the show it wouldn’t be very good.”
She’s more than halfway through one of the
most successful tours of the year, having
grossed about $77.5 million and sold
724,000 tickets so far, according to Pollstar.
Her most recent album, “25,” has sold 8.9
million copies to date—more than the latest
albums by Beyoncé, Drake and Taylor Swift
combined, according to Nielsen Music.
More than her sales figures, Adele’s lo-
quaciousness speaks to the unique nature of
her stardom. While tear-jerking songs like
“Someone Like You” and “Hello” hit listen-
ers on an emotional level, her candid chat
helps them relate to her as a person. Some
fans upload video clips that focus exclu-
sively on between-song banter. In Minne-
sota, she cackled with laughter about a
Burger King dish called Mac N’ Cheetos
(“How can I not eat that?”). In London, she
described the uncomfortable state of the
I better
warn you. I do talk a lot.
You’re cheering. We’re five
songs in. You may not be
cheering by the end
of the night!
thong under her gown. She described how
she has cut back on her drinking, recalling a adding an expletive.
night in Barcelona when she painted a hotel
bathroom red after drinking “12 jugs of san-
gria.” Recurring themes include her plus-
size figure, the highs and lows of raising her every moment of the concert experience,
3-year-old son, and the self-doubt she felt
while writing new music (“The songs were
sh—”) after a long hiatus.
Adele isn’t always so voluble. She de-
clined to comment for this article.
What fans perceive as the gab of an ev-
erywoman, some critics hear as a momen-
tum-killing distraction. “Adele shines when
she sings, breaks the spell when she jab-
bers,” read the San Francisco Chronicle’s
headline about a recent concert. A review of
the same show by the San Jose Mercury
News carried the headline, “Adele sounds
great, but too chatty.” The singer fired back at H&M. The only music superstar who ri-
at those critics, both of whom were male,
how else? In a spiel during a concert a cou-
ple nights later. “I got bad reviews in San
Jose. I was like, ‘shut up, dude,’” she said,
Until recently, stage banter was an
ephemeral footnote to music history. Before
audiences used camera phones to document
stars’ unscripted ramblings, comic asides
and occasional meltdowns were typically
lost to posterity. Those captured on bootleg
recordings and live albums were legend-
building, such as Lou Reed’s shtick on 1978’s
“Take No Prisoners,” in which he (mid-song)
mocks hecklers, tells non-sequitur stories
and cracks jokes: “What do I look like,
Henny Youngman up here, man?”
Today, banter routinely goes viral and
gets reported as breaking celebrity news, as
when outlets picked up Adele’s in-concert
quip about her credit card getting declined
vals her verbosity on stage is Kanye West.
He is the opposite of conversational, how-
ever, using his marathon streams-of-con-
phone, sometimes with im-
pressive results.
With three albums under
her belt, it’s not as if Adele is
lacking the material needed to
sing longer. Perhaps she just
felt the need to catch up with
her public after her last tour
was cut short five years ago.
Despite the smash success of
her previous album “21” (11.7
million copies sold), Adele
canceled many of her concerts
to undergo laser surgery to re-
pair a polyp and a bleeding
area on her vocal cords. The
doctor who performed that
procedure says that Adele’s
chats between songs don’t
necessarily give her voice a break, nor do
they cause it harmful stress. “It’s just her
style. From a medical standpoint, there’s no
impact either way, either to rest it or as a
negative,” said Steven M. Zeitels, a Harvard
Medical School professor and director of the
Massachusetts General Hospital Voice Center.
For Kristin Johnston, who spent $375 on
the resale market for her ticket to one of
three sold-out concerts in Chicago last
month, Adele’s banter made the perfor-
mance seem “intimate”—despite the fact
that Ms. Johnston was seated with her sis-
ter near the roof of the 23,000-seat United
Center arena. “I enjoyed hearing about her
life and the stories behind the songs,” she
said, unlike other audience members who
wanted more music for their money. “There
was somebody near me who yelled more
than once, ‘Just sing!’ I thought that was
kind of rude, but I understood the point.”
—Alexandra Berzon
contributed to this article.

ERICKA BURCHETT/THE WALL STREET JOURNAL (BELOW) ART

BOOKS
A Classic Rivalry
Over Greek Tragedies
BY EBEN SHAPIRO
FOR MORE THAN 60 years,
students of Greek drama have
turned to the University of Chi-
cago Press’s “The Complete
Greek Tragedies.” Now, like
Sparta challenging Athens, two
classics scholars are setting out
to topple the long-time incum-
bent of Greek drama.
This week, Penguin Random
House’s Modern Library is pub-
lishing Mary Lefkowitz and
James Romm’s “The Greek
Plays,” with the goal of becom-
ing the new go-to edition for
students and devotees of the
classics.
Ms. Lefkowitz, who taught
classics at Wellesley College for
more than four decades before
retiring in 2005, says the proj-
ect, which she worked on for
nearly 10 years, was spurred
by frustration with the Univer-
sity of Chicago editions. Some
of the translations, she says,
were “truly lousy.” She found
the accompanying scholarly
notes lacking and says the edi-
tions were packaged in an “irritating”
fashion. “Each play was in a different
little book,” she says. So the two schol-
ars commissioned new translations and
packaged the 16 most popular trage-
dies, including “Medea” and “Oedipus
the King,” in a single volume.
The University of Chicago Press,
which has fended off many challenges
GOING GREEK James Romm and Mary Lefkowitz, the good idea to go along with it,
scholars behind ‘The Greek Plays,’ at New York’s
Metropolitan Museum of Art.
talk. The University of Chicago Press’s
edition is “one of our most important
backlist titles and really helps pay the
bills,” Ms. Bielstein says. Modern Li-
brary plans an initial print run of
10,000 copies. Mr. Romm, who teaches
at Bard College, and Ms. Lefkowitz dis-
cussed their book over email. Edited
from a joint interview.
even strangers might discuss as a com-
mon experience. Now, imagine an audi-
ence that included not 10, but 30 or 40
percent of the citizenry—albeit, women
and foreigners excluded—and that held
immensely more complex meaning than
an awards ceremony, forcing viewers to
confront the most fundamental
questions of mortality and politi-
cal life. If you can imagine that,
you get a sense of the social co-
hesion the tragic festivals
brought to the city of Athens.
What Greek play is most rel-
evant to our times?
JR: Any one of them can seem
“most relevant” on any given
day, depending on what’s going
on in the world. But I’d say “Al-
cestis” pops up most often for
me, in that it deals with very
real (and flawed) characters and
with psychological complexity.
Its central figure, Admetus, is
fated to die unless he can find a
substitute; he chooses to let his
wife die in his place, hardly the
act of a larger-than-life hero!
ML: I’d pick Euripides’s “Bac-
chae”—A new ecstatic religion
has come to town, with weird
transgender behavior, the libera-
tion of women, and outlandish
music; the old folks think it’s a
but the young king tries to stop
it, and ends up torn to pieces by
his mother and aunts. The story
suggests that you can’t object to cultural
change, even when it makes you uncom-
fortable or upsets the status quo.
How do you rank Athens, fifth cen-
tury B.C., among artistic watersheds
like the Renaissance, Elizabethan
theater, 1968-1972 for rock music?
ML: Elizabethan theater may be the
Photography’s
Paper
Passions
BY J.S. MARCUS
OVER THE COURSE of its history,
photography has left a trail of also-
ran processes—techniques that
flourished and faded, alternate ways
of recording reality. In a new exhibi-
tion, the J. Paul Getty Museum at
Los Angeles’ Getty Center will draw
attention to paper negatives, an
early method that some curators
and collectors revere for its paint-
erly riff on photographic clarity.
“Real/Ideal: Photography in France,
1847-1860,” which opens Aug. 30, re-
calls the careers of Édouard Baldus,
Gustave Le Gray, Henri Le Secq and
Charles Nègre. All four created pho-
tos developed from paper negatives
to capture the buildings and byways
of Second Empire France.
Paper negatives had “a brief mo-
ment of glory,” says the Getty’s Karen
Hellman, who relied on the museum’s
renowned photography department
for most of the 150 works and ob-
jects on view. The paper process first
flourished in France in the late 1840s,
following a cross-Channel rivalry be-
tween two of photography’s pioneers.
Louis Daguerre was capturing real
images on small sheets of silver-
treated copper—soon widely known
as daguerreotypes. In England, Wil-
liam Henry Fox Talbot was creating
negative images on sensitized paper,
which could then be used to create
“positive” photographic prints.
Daguerreotypes were better for
portraits, Ms. Hellman says, but
prints from paper negatives were
more suited to architecture and
NEGATIVE SPACE A paper negative
of the Cathedral of Saint-Gatien of
Tours (1851) by Gustave Le Gray
and Auguste Mestral.
dividual photographic styles. Baldus
and Nègre both photographed Avi-
gnon’s Papal Palace, in the South of
France. Baldus aimed for a monu-
mental, panoramic effect, says Ms.
Hellman, while Nègre shot the scene
from a lower vantage point.
Le Gray was one of the first to
treat his paper negatives with wax,
which Ms. Hellman says helped to
consolidate the paper fibers in the
paper negative, so the image re-
corded was sharper. When glass-
plate negatives began to replace the
paper technique during the 1850s, he
promoted the newer technology.
Today, Le Gray is the best known
of the four, and his works now fetch
the highest prices at auction, says
Darius Himes, Christie’s international
head of photographs. In February, a
pin-sharp Le Gray naval scene from
1856-57, developed from a glass-plate
negative, sold for $965,000 at a sale
at Christie’s New York. The presale
RMN-GRAND PALAIS/ART RESOURCE, NY

over the years, sounds unfazed by the
latest would-be usurper. “It’s only 16
plays? It’s just one volume? Are they
going to do other volumes? What’s the
plan?” asks Susan Bielstein, Chicago’s
executive editor. “The Complete Greek
Tragedies” are in their third edition, she
says, which includes new translations
and new notes.
At stake is more than tragic trash
closest analogy, because Shakespeare is landscapes. Ms. Hellman says that estimate was $300,000 to $500,000.
Is there any contemporary parallel to still being read and performed. But an- the title of the exhibition is a re- The Getty show, which closes Nov.
the Athenian drama festivals? Is it cient Athenian tragedy with its emo- minder that photography is “tied to 27, includes loans from Paris’s Musée
more the Oscars or the Nobel prize? tional impact may be closer to rock mu- the real” but is also “a medium with d’Orsay and France’s National Library.
JR: No, there’s no parallel, but the Oscars sic, with songs that are still being sung. creative possibilities.” It features paper and glass negatives
come close in one respect: They’re antici- The four photographers were of- as well as the finished photos. Mu-
pated and watched by a large segment of JR: The Florentine Renaissance also of- ten drawn to similar subjects, like seum-goers can consider whether, as
the population, about 10% currently. Such fers an analogue, in the way that, in historic buildings, and the show glass-plate negatives replaced paper,
widespread viewership makes the Oscars both cases, the entire city took part in chronicles the early emergence of in- something compelling was lost.
a socially unifying event, something that the great art forms of the era.
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 | Tuesday, August 23, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
Humans at the Wheel:
Clinton’s Punitive ‘Exit Tax’ Unsafe at Any Speed
H
illary Clinton and Donald Trump are hav- exit tax will deter inversions, which means it
ing a tax debate of sorts, with the Demo- wouldn’t raise much money. Which is it? “If someone had taking over occasionally. Autonomous
told you 10 years vehicles would also give new mobility
crat wheeling out the familiar class-war- Mr. Trump’s plan—when he bothers to men-
ago—even five options to people who can’t drive be-
fare artillery. Mr. Trump hasn’t tion it—recognizes the real years ago—that a cause of age or disability.
replied on the specifics, but the Trump’s plan would problem, which is that compa- major American The industry is looking for ways to
irony is that his reform would stop the corporate nies headquartered in the U.S. car company would get people comfortable with the idea.
solve the problem that Mrs. are taxed far more than compa- announce the mass Uber announced last week that ran-
Clinton claims to be angry ‘inversions’ she deplores. nies based in other countries. INFORMATION production of a ve- domly selected passengers in Pitts-
AGE
about—namely, the wave of Thirty-one of the 34 OECD By L. Gordon
hicle with no steer- burgh will get free rides in exchange
American companies fleeing countries have cut corporate ing wheel, you for agreeing to be driven by a self-driv-
Crovitz
for foreign tax climes. taxes since 2000, leaving the U.S. with the high- would have said ing car. An engineer will still sit at the
“Corporations should not abandon profitable est rate in the industrialized world. they were crazy.” wheel, with a co-pilot to monitor the
operations here in the United States to move The U.S. system of world-wide taxation With these words, Ford CEO Mark Fields performance of the software. CEO Tra-
hopes to wave regulators out of the way vis Kalanick sees a day when, without
abroad, just to give shareholders a quicker re- means that a company that moves from Dublin,
of fully self-driving cars. the expense of a driver, “the cost of
turn, CEOs a bigger bonus and unions a weaker Ohio, to Dublin, Ireland, will pay a rate that is Ford announced last week its fully taking an Uber anywhere becomes
hand to play,” Mrs. Clinton said in her Michigan less than a third of America’s. A dollar of profit autonomous cars will be on the road cheaper than owning a vehicle.”
economic speech on Aug. 11. earned on the Emerald Isle by an Irish-based by 2021. This makes Ford the first tra- The Obama administration is long
Mrs. Clinton is targeting so-called inver- company becomes 87.5 cents after taxes, which ditional auto maker to join Google in overdue on its pledge to issue new reg-
sions, where U.S.-based companies move their it can then invest in Ireland or the U.S. or some- focusing on cars that can’t be driven ulations allowing innovation. Car com-
headquarters by buying an overseas competitor, where else. But if the company stays in Ohio and by humans. The combined influence of panies hope regulators will let innova-
as well as foreign takeovers of U.S. firms for tax makes the same buck in Ireland, the after-tax Google plus Ford might just be enough tion proceed to see how well tech-
considerations. These migrations are the result return drops to 65 cents or less if the money is to outpace U.S. regulators, whose in- nology can develop safe self-driving
of a U.S. corporate-tax code that supplies incen- invested in America. stinct is to ban anything they don’t cars, instead of banning technologies
fully understand. before their potential is known.
tives to migrate—and Mrs. Clinton wants to en- Mr. Trump proposes to cut the U.S. corporate
The prospect of mass-producing
act even more restrictions and penalties than rate to 15% from 35% (or 40% counting average cars without steering wheels or ped-
President Obama already has. state rates). Fifteen percent is low enough to als means U.S. regulators will either U.S. regulators will either
The Democrat would impose what she calls deter inversions while making the country more allow these innovations on American
an “exit tax” on businesses that relocate out- attractive to capital investment and better roads or cede to Europe and Asia the let self-driving cars on
side the U.S., which is the sort of thing ba- primed for higher wages. He would also offer testing grounds for self-driving tech- American roads or cede
nana republics impose when their economies a preferential rate of 10% for the $2 trillion al- nologies. By investing in autonomous
sour. She’d conduct a census and then catego- ready earned overseas. vehicles, Ford and Google are presum- the testing to others.
rize any multinational with more than 50% Mrs. Clinton calls this tax-cutting for billion- ing regulators will have to allow the
U.S. ownership as a domestic concern that aires and corporate-jet owners, which shows new technologies, which are develop-
would be subject to a tax on its deferred prof- how unhappy her Presidency could be. Such ing faster even than optimists imag- Google and Ford need “permission-
ined when Google started working on less innovation,” a concept popularized
its if it inverts. She isn’t specifying the puni- Trumpian pragmatism—10% of $2 trillion is
self-driving cars in 2009. by George Mason University’s Adam
tive tax rate. better than 35% of $0—is the only realistic way “The appropriate first-mover unit of Thierer, which means allowing new
Unlike most countries, the U.S. taxes resi- for Mrs. Clinton to fund her infrastructure plan, innovation is not the car, or even the technologies and business models to
dents—businesses and individuals—on their and Republicans in Congress have sounded out car company,” writes innovation con- develop by default, with regulations
world-wide income, not merely the income that Democrats for such a deal for years. President sultant Chunka Mui in Strategy+Busi- following as needed. This approach ex-
they earned in the U.S. But tax law allows them Obama has rebuffed their entreaties, settling ness. “It is the nation.” Singapore’s plains the success of the internet,
to defer taxes on overseas profits until they bring for nothing—and now Mrs. Clinton is setting government has invited developers of where websites and services were
the money back to invest at home. herself up for the same. self-driving cars to relocate to the is- launched without having to ask bureau-
U.S.-based companies have about $2 trillion As for Mr. Trump, he could be pointing out land nation to avoid what he called crats for permission until the Obama
parked in foreign subsidiaries. Mrs. Clinton that his corporate-tax plan would raise worker “the tangled web of competition, policy administration imposed regulations on
wants to change the rules retroactively to take incomes, as most economic research suggests. fights, regulatory hurdles and en- prices and practices.
trenched interests governing the pace Transportation Secretary Anthony
a government cut from this overseas cash pile. And why not challenge Mrs. Clinton for sup-
of driverless-car development and de- Foxx instead recently confirmed the
Mr. Trump may want to build a wall to prevent porting a status quo that is driving jobs and in- ployment in the U.S.” worst instinct of regulators by signal-
immigrants from coming to America, but Mrs. vestment overseas? And maybe even benefiting Google has armed itself for its regu- ing an end to open innovation for self-
Clinton wants to build a tax wall to stop Ameri- China, Japan and Mexico? latory battles by hiring four former top driving cars. “I’ve been encouraging
cans from escaping. “If they want to go,” she After nearly a decade of Obama-Clinton eco- regulators from the National Highway our team to think about . . . the extent
threatened in Michigan, “they’re going to have nomics, the country needs a debate about how Traffic Safety Administration, includ- to which we should encourage pre-
to pay to go.” to revive growth and raise incomes. The corpo- ing a former head. Reuters reported market-approval steps,” he said at an
By the way, Mrs. Clinton says she’ll use the rate-tax proposals show that whatever Mr. that when Google was disappointed by industry conference in San Francisco
proceeds of the exit tax to fund what she calls the Trump’s risks as President, the main risk from draft legislation in California that last month. “That would require indus-
greatest “investment” in roads, bridges and air- Mrs. Clinton is four more years of the same dis- would require self-driving cars to have try and the department to be more in
backup steering wheels and pedals, it sync and more rigorous on the front
ports since World War II. But she also says the mal economic performance.
headed to Texas. There, “Google execu- end of development and testing.”
tives made no bones about wanting Mr. Foxx’s regulatory approach fol-

A Trump Deportation Reversal? regulations more accommodating than

California’s.” Austin approved the cars
lows the traditional “precautionary
principle” under which bureaucrats

D
in exchange for assurances on safety prohibit new innovations until their
onald Trump on policy is something less other day, about what he will do with that,” Mr. and liability. developers can prove them safe. It sti-
than a North Star, but that has its ad- Sessions said on CBS’s “Face the Nation.” “But When Ralph Nader called cars “un- fles experimentation by curtailing in-
vantages if he jettisons one of his least he did listen, and he’s talking about it.” safe at any speed,” he turns out to have novations too soon.
attractive positions. Could the Go for it, Mr. Trump. The been right—but for the wrong reason. Any “pre-market-approval steps” of
Republican be reconsidering Hints emerge that he Clinton campaign will cry He blamed manufacturers, but the chief the kind the Obama administration
his promise to deport the 11 “flip-flop,” but most voters reason cars are unsafe is their drivers. now threatens would give bureaucrats
million or more illegal immi-
is rethinking one would welcome the change as Six million accidents a year in the U.S. the power to pick which technologies
result in 35,000 deaths and two million can develop and which are banned. If
grants estimated to be living of his worst policies. a sign of political progress injuries. More than 90% are caused by that happens, the winner in the race to
and working in the U.S.? and tolerance. A policy of human error. Google and Ford argue au- the next revolution in transportation is
That’s the intriguing possi- mass deportation could never tonomous cars are safer than partially likelier to be Singapore than Detroit or
bility coming from the Trump campaign on the happen without the kind of human and eco- self-driving cars that rely on drivers Silicon Valley.
weekend. Mr. Trump met Saturday with his new nomic disruption the American people won’t
Hispanic advisory council and attendees told support once they see what it requires. House-
the press the candidate seemed to be moving to-house searches and forced family separation
LETTERS TO THE EDITOR
in that direction. Univision reports that three would cause a political uproar that would stop
attendees said Mr. Trump “plans to present an such a policy cold, as it should. The abrupt re- Taxes Make U.S. Companies Takeover Targets
immigration plan in Colorado Thursday that moval of millions from the workforce would
Regarding Kevin Hassett and to think that the individual will still
will include finding a way to legalize millions probably cause a recession.
Aparna Mathur’s “The Cure for Wage spend the same amount of money?
of undocumented immigrants.” It’s possible to improve U.S. immigration Stagnation” (op-ed, Aug. 16): The in- The idea that corporations can simply
Trump advisers Kellyanne Conway and Sen. controls without such a draconian policy that verse relationship between corporate pass higher taxes along to customers
Jeff Sessions didn’t deny the reports on Sunday. millions of Republican primary voters didn’t tax-rates and wages is challenged by without unfavorable business conse-
“What I’m certain about is that he did not make favor. Mass deportation is a political and eco- the left, but the left’s logic doesn’t quences is nonsense. If prices could
a firm commitment yesterday, or the meeting the nomic loser. make sense. If an individual’s personal have been higher before the tax in-
tax-rate jumped to 15% from 35% with- crease, they would have been. In a
out any increase in income, is it logical global marketplace, with U.S. corpora-
Ortega’s Nicaraguan Coup tions paying a tax rate of 35% and
non-U.S. competitors paying as little

F
reedom and human rights have had a Mr. Ortega has returned to power by ex- Joseph Stiglitz Blames the as 15%, American companies have lit-
bad run in Latin America in the past de- ploiting democratic rules and then changing Euro for Progressive Failure tle margin for pricing error and are
pressured to keep all expenses, includ-
cade. Venezuela has become a Cuban them once in power. Center-right President Ar- Benn Steil reviews “The Euro” ing wages, down. When tax rates are
satellite and holds scores of noldo Aleman (1997-2002) (Books, Aug. 19) by Nobel Prize-win- high, businesses naturally cut ex-
political prisoners. Pluralism The Sandinista has negotiated a deal with Mr. Or- ning economist Joseph Stiglitz, who penses and investment in order to
hangs by a thread in Bolivia, become a dictator tega to lower the threshold indicts the currency for causing eco- maintain profit margins.
Ecuador and El Salvador. Yet for a first-round victory in nomic pain and suffering in Europe. Progressives relish a high corporate
the collapse of democracy may amid U.S. indifference. the presidential election to Eurozone stewards, particularly Ger- tax-rate and a higher minimum wage,
be most poignant in Nicara- 35%. That allowed Mr. Ortega many, made it impossible for debt- but maybe not as much as non-U.S.
gua, which fought back to split the anti-Sandinista crisis countries such as Greece to businesses appreciate the U.S. govern-
against the Communist Sandinistas during the vote in 2006 and win. continue progressive economic poli- ment making American companies less
cies that could have restored growth competitive through taxes and, possi-
Cold War only to see them return with a ven- The judiciary and the electoral council were
and the ability to repay debt. In- bly, more attractive takeover targets.
geance amid U.S. indifference. already heavy with Sandinistas. Mr. Ortega and stead, euro villains forced countries ALAN JONES
Last month Sandinista President Daniel Or- his allies first lifted the constitutional prohibi- to contain deficits and increase la- Atlanta, Ga.
tega purged Nicaragua’s opposition from Parlia- tion on presidential re-election in 2011. Then bor-market flexibility, fueling in-
ment. In November he will run for a third five- he pushed through legislation to permit indefi- equality and unrest. Mr. Stiglitz ar- Even if Mr. Hassett and Ms.
year term with his wife, Rosario Murillo, as his nite presidential re-elections so he could run gues that the success of a monetary Mathur are right that slashing corpo-
vice-presidential candidate. Elections under Mr. again this year. union such as the eurozone requires rate-income taxes would boost wages
Ortega have never been transparent and he has Now 70 years old, Mr. Ortega has used finan- the full integration of a political, fis- in the aggregate, the next question to
barred international observers from this one. cial resources and advice from Venezuela to cal and banking union. ask is: Is this going to raise every-
He has blocked serious presidential challengers, bully his way to absolute power and great A progressive economist blaming a one’s wages or just the wages of
so this won’t be much of a contest. wealth. He is believed to be one of the richest currency union for the failure of pro- those at the top? Corporate-income
gressive policies is no surprise; nor is tax cuts are supposed to boost wages
Readers may recall how Mr. Ortega led the men in the country. Many in the business com-
Mr. Stiglitz’s belief that the fix for Eu- by incentivizing investment in plants
Sandinista revolution that toppled Anastasio munity went along with his gradual accretions rope’s problems lies in greater top- and equipment, which boosts econ-
Somoza in 1979 with the help of the Soviet of power, and now it may be too late to prevent down administration and progressive omy wide productivity. But for most
Union. He moved quickly to establish a Commu- a full-fledged dictatorship. In June the Supreme policies. The laughable part of Mr. of the past few decades, increases in
nist beachhead in Central America. This Court removed and replaced the leader of the Stiglitz’s analysis is his concession that, economy wide productivity haven’t
spawned the grass-roots Nicaraguan resistance main opposition party. When some of his own even though Europe needs region wide translated into wage increases for the
known as the Contras aided by the U.S. Mr. Or- party members refused to accept the ruling, Mr. progressive policies, it also needs to vast majority of workers.
tega won one rigged election in 1984. But when Ortega kicked them out of Congress. embrace a diversity of views. DAN CRAWFORD
he agreed to another with international observ- All of this has happened with nary a peep The nature of the progressive-con- Washington, D.C.
ers in 1990, he lost to Violeta Chamorro. from the Obama Administration. Contrast that servative divide is that progressives
The Sandinistas accepted defeat but refused with the way the White House aggressively mo- want government experts to manage Letters intended for publication should
economic affairs and to equalize indi- be addressed to: The Editor, 1211 Avenue
to surrender their weapons or their judiciary bilized Latin American governments in 2009 vidual outcomes, while conservatives of the Americas, New York, NY 10036,
seats. The “commandantes” of the revolution when Honduras used constitutional means to want individuals to make decisions or emailed to wsj.ltrs@wsj.com. Please
had enriched themselves by confiscating prop- remove a law-breaking president and then in- and take risks in competitive markets include your city and state. All letters
erty in what was known as “the piñata,” and sisted that new elections be held on schedule. that may lead to unequal outcomes. are subject to editing, and unpublished
many Nicaraguan property owners have never Latin Americans have noticed the U.S. double TIM LIVINGSTON letters can be neither acknowledged nor
returned.
been compensated. standard, and Nicaraguans are paying the price. Alexandria, Va.
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.
What Trump’s Foreign Policy Gets Right
By John Bolton
H
ad one of Donald
Trump’s Republican op-
ponents during the
campaign for the GOP
nomination given the
same speech on combating global
terrorism he gave last week, it
would have raised few eyebrows.
Naturally, competing candidates
would have disputed particular
points—some vigorously—but the
speech’s overall analysis fits well
within mainstream conservative and
Republican thinking.
Some Trump opponents and sup-
porters alike will be distressed by
this news, but the speech visibly
sharpens the contradictions with Hil-
lary Clinton, who clearly would con-
tinue President Obama’s nonstrategy
The GOP nominee’s speech
last week was a serious
contribution, in sharp
contrast with Clinton
and Obama’s nonstrategy.
concerning radical Islam—now con-
firmed to include paying ransom for
hostages. More broadly, the speech
underlines why terrorism and other
grave national-security threats
should take center stage in the presi-
dential race.
Mr. Trump rightly sees an ideo-
logical war being waged against the
West by a hateful, millenarian
obsession targeting core American
constitutional and philosophical
principles. From that assessment
flow several policy consequences,
most important the imperative to
destroy the terrorist threat rapidly
and comprehensively before it kills
and maims more innocent people.
Mr. Trump correctly argues that, in
combating Islamic State, al Qaeda
The Climate Prosecutors Can’t Dodge Congress Forever
By Elizabeth Price Foley
F
or a sense of how far the left
will go to enforce climate-
change orthodoxy, read the
recently released “Common Interest
Agreement” signed this spring by 17
Democratic state attorneys general.
The officials pledged to investigate
and take legal action against those
committing climate wrongthink. Be-
ginning late last year, the attorneys
general of Massachusetts, New York
and the U.S. Virgin Islands, all signato-
ries to the agreement, issued broad-
ranging subpoenas against Exxon Mo-
bil and conservative think tanks. They
sought documents and communica-
tions related to research and advocacy
on climate change.
Concerned that these investiga-
tions were designed to chill First
Amendment rights, the House Com-
mittee on Science, Space and Technol-
ogy issued its own subpoenas. In mid-
July the committee, led by Rep.
Lamar Smith (R., Texas), asked the at-
torneys general to produce their com-
munications with environmental
groups and the Obama administration
about their investigations.
They have indignantly refused to
comply. New York Attorney General
Eric Schneiderman claimed, in a July
13 letter to Mr. Smith, that the com-
By Bari Weiss
F
or my grandparents’ genera-
tion, moral courage meant
storming Omaha Beach. For
my parents, it was marching for
civil rights. For mine, it’s defend-
ing a movie featuring an orgy
between a taco, a pita, a bagel, a
hot dog and a bun.
“Sausage Party” is a new comedy
produced by Seth Rogen, the Cana-
dian made famous by flicks such as
“Knocked Up.” It’s squarely in the
tradition of other R-rated animated
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and others, “we must use ideologi-
cal warfare” as well as stronger mil-
itary and intelligence operations,
and be “a friend to all moderate
Muslim reformers.” This strategy is
entirely consistent with what Jor-
dan’s King Abdullah II and other
Arab leaders characterize as a civil
war within Islam.
In contrast, Mr. Obama and Mrs.
Clinton still believe terrorism is a
law-enforcement issue. They fail to
grasp the ideological war we are in
and therefore refuse to combat the
enemy effectively. There were once
those who didn’t see Communism
as an ideological threat. They
played down their views publicly
because U.S. public opinion was
overwhelmingly contrary, as Mrs.
Clinton and Mr. Obama are doing
now regarding terrorism. Mr.
Trump should emphatically move
the debate about radical Islam into
the campaign spotlight. Let’s see
who stands where.
Mr. Trump’s speech also demon-
strated his willingness to face the
hand dealt an incoming president,
rather than following ideological ab-
stractions, as Mr. Obama has consis-
tently done. Although Mr. Trump re-
stated his opposition to President
George W. Bush’s 2003 invasion of
Iraq and overthrow of the dictator
Saddam Hussein, he nonetheless ar-
gues correctly that Mr. Obama’s
“reckless” withdrawal of U.S. forces
in 2011 rested on an “election-driven
timetable” that “surrendered our
gains in that country and led directly
to the rise of ISIS,” thereby constitut-
ing “a catastrophic mistake.”
The wider implications of Mr.
Trump’s speech were apparent in the
subsequent commentary on two
points: The GOP nominee’s immigra-
tion views as they intersect with ter-
rorism, and his disdain for “nation
building.” Let us take them in turn.
Mr. Trump correctly identified the
terrorist threat as fundamentally
ideological. It would be inexcusable
mittee was “courting constitutional
conflict” by failing to show “a due re-
spect for federalism.” Massachusetts
Attorney General Maura Healey, in a
similar letter dated July 26, asserted
that the subpoenas are “unconstitu-
tional” because they are “an affront
to states’ rights.”
This view is utterly wrong. Feder-
alism is a critical component of the
constitutional architecture. The fed-
eral government exercises only lim-
ited and enumerated powers, and the
states, under the Tenth Amendment,
possess all other powers “not dele-
gated to the United States.” But when
the federal government acts within
its delegated powers, it is entitled to
supremacy over the states.
The Supreme Court has long rec-
ognized Congress’s power to investi-
gate any matter within its legislative
or oversight competence. With that
comes a corresponding power to en-
force its inquiries. The justices
wrote in Barenblatt v. U.S. (1959)
that the scope of Congress’s power
of inquiry “is as penetrating and far-
reaching as the potential power to
enact and appropriate under the
Constitution.”
Similarly, in McGrain v. Daugherty
(1927), the court held that “the
power of inquiry—with the process to
enforce it—is an essential and appro-
Is That Libidinous Latina Taco Gay or Bi?
masterpieces: “Team America:
World Police” and “South Park: Big-
ger, Longer & Uncut.”
Which is why so many people ran
to see it. “Sausage Party” pulled in
$34.3 million in the U.S. its first
weekend. The audience in my the-
ater was in hysterics over the neu-
rotic bagel and the misogynistic la-
vash warring over shelf space, the
horny hot dog desperate to leap out
of his plastic packaging to get in-
side a soft bun, the flamboyant fruit
shaking their jazz hands, and . . .
you get the picture.
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OPINION
The candidate speaking on foreign policy in Youngstown, Ohio, on Aug. 15.
for America not to combat that ide-
ology in multiple ways, both offen-
sively and defensively. Countering Is-
lamic State’s successful propaganda
and recruitment efforts, especially
digitally, and exposing them for the
barbarians their conduct proves
them to be are critical elements of a
winning plan.
Confronted with ideological
threats, America is entirely justified
in raising appropriate immigration
protections, which is neither unprece-
dented nor contrary to existing law.
Even now, a central statutory require-
ment for U.S. naturalization is that
applicants be “of good moral charac-
ter, attached to the principles of the
Constitution . . . and well disposed to
the good order and happiness of the
United States.” That sounds very
much like Mr. Trump’s speech, and
hardly earth-shaking. Whether exist-
ing authorities suffice or whether
new legislation is needed is unclear,
but the broad policy isn’t.
On nation building, the debate is
confused, with many advocates mis-
takenly conflating it with “interven-
tion.” The two are different. Presi-
dent George H.W. Bush’s November
priate auxiliary to the legislative
function.” That’s why lawmakers
passed a law to make contempt of a
congressional subpoena a crime, pun-
ishing anyone who willfully refuses to
answer “any question pertinent to
the question under inquiry.”
The subpoenas to state attorneys
general regarding their climate cru-
sade easily fall within Congress’s leg-
The U.S. officials who
subpoenaed Exxon face
questions from the House
—and they have to answer.
islative and oversight competence.
The House Science Committee has ju-
risdiction over matters relating to
scientific research. Its rules authorize
the chairman to issue subpoenas on
behalf of the committee.
Further, Congress has ample
authority to investigate and sanction
violations of First Amendment rights
that are committed by state officials.
For instance, the Ku Klux Klan Act of
1871 includes a provision—lawyers
often call it simply “section 1983,” re-
ferring to its place in Title 42 of the
U.S. Code—authorizing monetary
Some critics interpreted this tale
of anthropomorphic groceries
awakening to the truth—humans
are not gods—as a parable about
religion or enlightenment. Meh. I
think it’s just fun.
Silly me. This naive, cisgen-
dered white woman forgot we now
live in a culture where fun is
highly problematic.
At Salon, a writer was incensed
by Bill Hader’s character, Firewater,
because “alcoholism is a major epi-
demic in Native communities.” A
Slate reviewer scored the movie for
overlooking the fact that hot dogs
come from “cows or pigs, two intel-
ligent and empathetic creatures that
often endure ‘a horrible existence’
before they’re slaughtered.”
Notable & Quotable
Bob Meyer, chancellor of the Univer-
sity of Wisconsin-Stout, in an Aug. 5
email to students, faculty and staff:
“French Trappers on the Red Cedar”
on the second floor will be relocated to
the Dean’s Conference Room on the
first floor of Harvey Hall. “Perrault’s
Trading Fort” on the first floor of Har-
vey Hall will be relocated to room
504A in the Robert S. Swanson Library
and Learning Center, the future loca-
tion of University Archives. . . .
I also want to emphasize that, de-
spite opinions to the contrary, it was
never my intent to “censor” these
Tuesday, August 23, 2016 | A11
BLOOMBERG NEWS
1992 decision to intervene militarily
in anarchic Somalia, and his succes-
sor Bill Clinton’s far-different poli-
cies, highlight the distinction.
Agree or disagree with President
Bush’s Somalia intervention, he pre-
cisely defined his limited objective
of opening channels for humanitar-
ian supplies. Although the military
operations were blessed by the
United Nations Security Council, Mr.
Bush was always clear that they
would be under U.S. command. So
fixed was Mr. Bush on the interven-
tion’s limits, he showed remarkable
deference to President-elect Clinton
by offering to withdraw all American
forces by Jan. 20, 1993.
But Mr. Clinton had much
grander objectives, namely practic-
ing “assertive multilateralism.” So-
malia was his chosen vehicle for na-
tion building. Mr. Clinton’s amb-
assador to the U.N., Madeleine
Albright, praised Security Council
action endorsing the president’s na-
tion-building project, saying, “With
this resolution, we will embark on
an unprecedented enterprise aimed
at nothing less than the restoration
of an entire country as a proud,
damages against state officials who
infringe a constitutional right.
Congress’s broad investigatory
power clearly extends to state offi-
cials. In February, the House Over-
sight Committee compelled Darnell
Earley, the emergency manager of
Flint, Mich., to testify on the contam-
ination of that city’s drinking water.
Mr. Earley initially refused to appear,
but he quickly acceded to its sub-
poena after the committee’s chair-
man, Rep. Jason Chaffetz (R., Utah),
threatened to call the U.S. Marshals
to “hunt him down.”
Under the Supremacy Clause of
the Constitution, privileges grounded
in state law—such as the attorney-cli-
ent privilege or work-product privi-
lege—aren’t binding on the federal
government. The letter to Rep. Smith
from the Massachusetts attorney
general, for example, argued that the
committee’s subpoena seeks docu-
ments that are “either attorney-client
privileged” or “protected from disclo-
sure as attorney work product.” Con-
gress is obligated to honor neither of
those state-law privileges.
When Congress subpoenas the
White House or agencies in the
executive branch, there is a delicate
balancing of competing constitutional
interests. This is because the execu-
tive often refuses to comply by invok-
But such critics pale beside the
Social Justice Warriors over at a
queer website called Autostraddle.
The site ran a lukewarm review from
A Seth Rogen romp runs
into the Maoist mind-set
of lesbian social justice
warriors. Hilarity ensues.
a freelancer who praised the movie
for including a gay character—a li-
bidinous lesbian Latina taco voiced
by Salma Hayek. The next day the
site took down her post and pub-
lished a 2,600-word apology illus-
paintings or remove them from public
view. I simply wanted to get them into
situations where we had some control
over who would view them. These relo-
cations will achieve that objective. . . .
. . .[T]hey will be made available for
public viewing, along with a document
that explains their historical signifi-
cance and the concerns Native Ameri-
cans have expressed about how they
are portrayed in the paintings. After
all, a university needs to encourage a
free flow of ideas, even if those ideas
make some people uncomfortable, as
long as we don’t foist those ideas on
unaware or unwilling recipients.
functioning and viable member of
the community of nations.”
Disaster soon followed. And sub-
sequent American nation-building
efforts in other countries fared little
better. Although bilateral financial,
technical and military assistance can
advance U.S. foreign-policy objec-
tives, the local peoples themselves
must know what they are about.
America can’t do it for them and
shouldn’t pretend otherwise.
This foreign-policy reality has been
clear since the Marshall Plan. Follow-
ing World War II, Washington pro-
vided assistance in various forms but
insisted that European states conduct
nation rebuilding, relying on existing
legal, political and cultural founda-
tions far stronger than those preva-
lent in less-developed regions. Mr.
Trump isn’t committing heresy by
saying America’s recent attempts at
nation-building haven’t ended well.
He’s telling the truth.
More important, whether Mr.
Trump is “interventionist” or “non-
interventionist” in his proclivities is
really a nonissue, as are academic
flights of fancy such as characteriz-
ing U.S. “multilateralism” positively
and “unilateralism” negatively. These
are essentially word games about
tools rather than policies, like asking
in the abstract “do you favor using a
knife or a spoon?” Obviously, the
critical question for real policy mak-
ers is “to do what?”
National security should be cen-
tral to the 2016 presidential contest.
Mr. Trump’s speech is a serious con-
tribution to that end. He needs to
maintain his focus and discipline,
and by so doing compel Mrs. Clinton
to defend her intention to continue
President Obama’s failed polices.
Mr. Bolton is a senior fellow at
the American Enterprise Institute
and the author of “Surrender Is Not
an Option: Defending America at the
United Nations and Abroad” (Simon
& Schuster, 2007).
ing a presidential privilege grounded
in Article II of the Constitution.
But there is no such difficult con-
stitutional balancing required here.
When Congress subpoenas state
attorneys general in the rightful
exercise of its legislative and investi-
gative power, all assertions of state
authority give way because of the
Supremacy Clause. No state offi-
cial—whether judicial, legislative or
executive—may resist a legitimate
federal command.
Throughout the Obama administra-
tion, congressional powers have been
increasingly usurped by the executive.
The White House has unilaterally re-
written statutes, ignored congressio-
nal subpoenas and arrogated to itself
the power of the purse. These actions
have too often received the blessing of
congressional Democrats, who have
allowed partisanship to override their
fidelity to the Constitution and their
institutional self-interest.
To begin restoring Congress’s con-
stitutional authority, the House of
Representatives should push back
against these state attorneys general
and vigorously litigate to enforce the
Science Committee’s subpoenas.
Ms. Foley is a constitutional law
professor at Florida International
University College of Law.
trating in supernova tones the Mao-
ist mind-set of the hard left.
Editor Heather Hogan explained
that she heard from readers “who
were upset that we labeled the taco
a lesbian when it seems more likely
that she was bisexual.” Other read-
ers “questioned the consent of the
sexual encounter between the taco
and the hot dog bun.”
Ms. Hogan saved her harshest
self-criticism for having allowed the
review to be written by a person
whose epidermis was not a suffi-
cient shade of brown: “First and
most damning, we allowed a non-
Latina writer to cover a story about
a caricature of a Latina.”
It sounds as if she would gladly
commit seppuku, if only that didn’t
require the sin of cultural appro-
priation: “I am wholly sorry for the
pain and anger I caused you,” she
wrote. “I offer you no justification.
I was blinded by my own whiteness
existing inside a system of white
supremacy. I must do better. I will
do better.”
It’s the sort of apology one might
hear from a prisoner in North Ko-
rea, the country Seth Rogen de-
picted in his 2014 blockbuster, “The
Interview.” When young American
bloggers display less tolerance and
humor than Kim Jong Un, we have a
problem. To borrow a word from
Donald Trump, a politician the hard
left has had a hand in creating: Sad!
Ms. Weiss is an associate book
review editor at the Journal.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Tuesday, August 23, 2016 THE WALL STREET JOURNAL.

SPORTS

15 Olympic Stories That Aren’t Ryan Lochte

It’s time for everyone to crank about that perfect penalty winner
out an Olympic wrap-up list, and from the nation’s soccer idol? It’s
let me assure you: This will be a like Rio baked it into the recipe.
Ryan Lochte-free experience. I’ve Amazing final weekend drama from
had my fill of Ryan Lochte, and the the Maracanã. A day later, Neymar
debates over Ryan Lochte, and all was courtside for another Brazil
exclusive interviews with Ryan gold, in men’s volleyball.
Lochte, and I’m assuming you Kristin Armstrong. Three
have, too. Here are Olympics, three time-trial gold
14 seismic events medals, and in between, two amus-
from Rio that have ingly unsuccessful retirements for
blissfully nothing the now 43-year-old cyclist. An ex-
to do with Ryan traordinary figure in U.S. bike rac-
Lochte. ing, Armstrong will also be re-
(Remember, the membered for her sacrificial effort
JASON GAY point of these lists in the women’s road race three
is for everyone to days before the time trial. Rather
get mad and point than saving her energy, she gave
out the person or events I foolishly everything for her teammates.
missed, or my wanton bias toward Team GB. Mo Farah, Laura
two-wheeled sporting events.) Trott, Andy Murray…they’re amaz-
Simone Biles: Total truth here: ing. I work with a zillion Brits and
I’m a gymnastics dingbat. I still ha- if I don’t mention this they’ll kick
ven’t figured out how it’s scored; I me in the shins.

LUIS ACOSTA/AGENCE FRANCE-PRESSE/GETTY IMAGES

couldn’t judge a thing. All I know is Claressa Shields. Another back-
that Biles has reached that place in to-back gold winner; Shields, a
sports where, no matter what you boxer from Flint, Mich., has not
know or don’t know, you simply lost a fight in more than four years.
have to put down everything when If you haven’t yet, read Kevin Hel-
she’s competing. It’s a space liker of the Journal’s story about
achieved only by legends—Usain Shields’s perseverance through a
Bolt, Michael Phelps, the 1992 Dream difficult childhood and the kindness
Team. It’s riveting, room-stopping of a Flint stranger, Corey Taylor,
theater. Biles changes the way we who continues to help her navigate
view human limits. She pushes the life at home after Olympic glory.
boundaries of what’s possible. OK: Distance! Allyson Felix had a
I’m starting to sound like an Apple brilliant Rio, and now is the most-
commercial. But Biles is a brilliantly decorated U.S track and field ath-
talented rush of joy. I cannot think Ryan Lochte aside, the performance of U.S. gymnast Simone Biles was arguably the top memory from the Rio Games. lete ever. Yet the real surprise were
of anything in Rio that matched the the distance runners, where the U.S.
experience of seeing her. leaders were too timid to tackle. On of the Oromo people. It was a sim- count of an Olympic moment I read. took six medals in races of 1500
Our National Fish. The aquatics and on it went. Submerged in wa- ple but breathtakingly brave state- Carmelo Anthony. Anthony has meters or longer—none bigger than
center in the Rio Olympic Park ef- ter, America feels unstoppable. ment that Lilesa admitted could had a somewhat tortured life as an Matthew Centrowitz’s triumph in
fectively turned into a pool party at Monica Puig. There was no big- cost him his freedom or his life. NBA superstar—a talented player the men’s 1500, the first for the U.S.
an Orlando Holiday Inn Express. ger surprise in Rio’s tennis tourna- The U.S. Women’s National who has never broken through as a team since 1908, when NBC Kintes-
Every night felt like a delirious ment than the thrilling run of Puig, Basketball Team. This veteran-led league champion, and yet now he cope would broadcast the games 3
American celebration. There was a World No. 34 who rollicked team routinely gets short thrift, has three gold medals after an months after they happened.
Phelps, of course, who has vowed through the women’s singles to win but they’re as dominant a force as Olympic career that began with The Wall Street Journal’s
retirement, but I’ll believe that a gold medal, the first ever for her the modern Olympics have. In Rio that embarrassing 2004 bronze in Caipirinha Drinking Team. Out-
when we get to Tokyo and look native Puerto Rico. I’d come up they won a sixth consecutive gold Athens. But it’s not just that: An- standing record-breaking perfor-
around. There was the astonishing with something smart to say but medal, and have not lost in the thony has emerged as both a leader mance by the troops, particularly
Katie Ledecky, whose world records I’ll leave it to Pulitzer winner and Summer Games since 1992. and a passionate spokesperson for between midnight and 3 a.m., when
will have a good shot at outliving “Hamilton” creator Lin-Manuel Bolt. I mean, come on. Bolt. inequality in his own country and we would gather to watch our fa-
us all. There was Simone Manuel, Miranda: “Everyone at Casa What else is there to say? elsewhere—on an off-day, he vis- vorite Rio TV show, “É Campeão,”
achieving history as the first Afri- Miranda is bawling,” he tweeted. Stripping Mongolian Wrestling ited one of Rio’s favelas. “What starring Mark Spitz and Carl Lewis,
can-American to ever achieve Feyisa Lilesa. We live in a time Coaches. Just when you think the most people call creepy, scary and among others, dubbed into Portu-
swimming gold (and doing it in which making a statement in Olympics are family entertainment… spooky, I call comfy, cozy and guese. Several bars closed with
twice). There was Anthony Ervin, at sports might mean a choice in foot- Mara Abbott. Did you read Mara home,” he wrote on Instagram. chairs on tables. Will be tough to
35 a remarkable geezer comeback wear. Ethiopia’s Lilesa finished sec- Abbott’s WSJ story of what it was There may have been greater bas- beat that record in Tokyo. And no
saga, taking gold in the men’s 50 ond in Sunday’s marathon and hit like to just miss out on a medal in ketball Olympians, but none have one had to apologize on TV.
meters. There was 19-year-old Lilly the line crossing his arms over his the women’s cycling road race? I’ll taken more out of the experience
King, winning and being unafraid to head—a symbol of protest over the wait here. Hopelessly biased here, than Anthony. He gets it.  Speedo drops endorsement deal
address a doping issue that sport Ethiopian government’s treatment but it’s the best first-person ac- Neymar Jr. What do you say with Lochte................................................ B1

Weather The WSJ Daily Crossword | Edited by Mike Shenk

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Calgary 15 9 r 19 8 pc Minneapolis 30 21 s 27 15 t Singapore 32 26 t 31 27 t N O R D I C D E A N C A I N
Caracas 30 23 pc 30 23 t Monterrey 34 19 s 35 19 s Stockholm 22 12 s 23 14 pc 21 Greek god of war 50 Fur tycoon John 66 Rudolph of O N O S O R E T R A I N S
N I T R O S C U R R Y
Charlotte 32 20 s 31 20 pc Montreal 26 16 s 30 19 s Sydney 17 11 r 15 9 r 22 Baseball’s Musial Jacob “Bridesmaids” B I G D A D D Y K A N E
Chicago 28 20 s 27 21 t Moscow 27 16 t 20 14 c Taipei 34 27 pc 34 27 sh A R M E D A I R S L E T
Dallas 33 23 c 33 23 s Mumbai 30 27 sh 30 26 sh Tehran 33 22 s 34 21 s 23 •Diner 51 •Oscar winner 67 Hoppy B O A S B A L M S J E D I
Denver 30 13 pc 23 10 c Nashville 31 21 s 33 23 pc Tel Aviv 31 26 s 31 26 s sandwiches for “Cocoon” amphibians A N N P A C T S E G E R
Detroit 28 17 s 30 22 pc New Delhi 34 26 pc 33 27 t Tokyo 30 24 sh 29 26 t M I C H A E L C A I N E
26 Destroy, as a 55 “Frozen” 68 Tiara C R A N K Y L O A N S
Dubai 43 34 s 42 34 s New Orleans 34 26 t 32 26 pc Toronto 28 16 s 30 22 pc S H O R T S D I A L L O B
Dublin 18 11 r 19 12 pc New York City 26 19 s 29 20 s Vancouver 22 14 s 25 15 s hotel room snowman adornments T I M K A I N E D E F A M E
Edinburgh 16 10 r 18 10 pc Omaha 29 21 t 27 16 t Washington, D.C. 30 20 s 31 20 s A C E I D O L U N I T A S
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 28 16 pc 30 18 s Orlando 34 25 t 32 24 t Zurich 26 12 s 27 14 s B O O L E N T P E T E R S

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SONY AIMS TO UPDATE ITS BASE PLAYSTATION TECHNOLOGY | B3
Euro vs. Dollar
1.20
BUSINESS & FINANCE
1.1316 t 0.09% FTSE 100
1.15
1.10
1.05
J J
As of 4 p.m. ET
© 2016 Dow Jones & Company. All Rights Reserved.
Pfizer to Acquire Key Cancer Drug in Deal
On the Rise
Medivation daily share price
$90
80
70
60
50
40
30
20
2015 ’16
*Through 9:46 a.m. EDT Monday
Source: WSJ Market Data Group
THE WALL STREET JOURNAL.
Chinese Output Hits U.S. Aluminum-Foil Makers Speedo
Imports of ultrathin
wraps for food and
other staples displace
U.S. producers
BY JOHN W. MILLER
For decades, Camel ciga-
rettes were wrapped with an
ultrathin foil made at a plant
in Winston-Salem, N.C. Then,
last summer, the factory’s
owner sold the facility as part
of a strategy to buy more of
its foil from China.
The first U.S. casualties of
China’s dramatic ramp-up in
aluminum production were
smelters, a capital-intensive
business that depends on low-
cost energy. Now, Chinese im-
ports are claiming a bigger
part of the aluminum market,
supplying the wraps for potato
chips, pill packages and yogurt.
Camel’s original foil sup-
plier, Alpha Aluminum Inc.,
first tried to diversify into
heavier aluminum to survive.
But in July, it suspended pro-
duction, putting 100 employ-
ees out of work. The shutdown
leaves only one U.S. company
still making the kind of light-
gauge foil used to wrap food,
pharmaceuticals and other
consumer staples.
The U.S. market for all alu-
minum foils is valued at
roughly $5 billion, and is now
36%-supplied by imports, up
from only 16% in 2007, accord-
ing to the Aluminum Associa-
tion, an industry group.
The leading supplier is
China, whose shipments of foil
to the U.S. have risen almost
10-fold, to 265 million pounds,
in the past decade.
It Is Scarily
Quiet in U.S.
Stock Market
It’s quiet. Too quiet. Even
by the standards of August,
the S&P 500 has been re-
markably tranquil, moving
by less than in any other 30-
day period in more than two
decades.
Multiple
measures
show the
calm. Real-
ized volatil-
STREETWISE ity has col-
JAMES lapsed to
MACKINTOSH levels last
seen in Sep-
tember
1995, when a painful series of
rate increases had been re-
placed by a pause between
Federal Reserve cuts. With
the S&P 500 down slightly
on Monday, the index has
had only five daily moves of
more than 0.5% in either di-
rection in the past 30 trading
sessions, equaling the lowest
Please see STREET page B2
7000
6828.54 t 0.44% Gold
6500
6000
5500
A J J A
BY JONATHAN D. ROCKOFF
Pfizer Inc. said Monday that
it had agreed to buy biotech
Medivation Inc. for about $14
billion, in a move that adds one
of the crown jewels of the multi-
billion-dollar market for cancer
drugs to Pfizer’s portfolio.
The agreement ends months
of bidding for San Francisco’s
Medivation, one of the most de-
sired independent biotechs be-
cause it sells a leading prostate-
cancer drug.
Pfizer will pay $81.50 a
share, a 21% premium to Medi-
vation’s closing stock price Fri-
day. Medivation shares moved
up nearly 20% to $80.40 in trad-
ing on Monday in New York, as
Pfizer shares fell 5 cents to
$34.78.
ALPHA ALUMINUM
An Alpha Aluminum plant in North Carolina in 2015. The company suspended production last month
at the cost of 100 jobs, leaving only one U.S. producer of light-gauge foil.
With tiny Alpha’s exit and
bigger aluminum makers such
as Alcoa Inc. and Novelis out
of the commodity-foil busi-
ness, JW Aluminum Co. of
Goose Creek, S.C., is the only
domestic producer left spe-
cializing in light-gauge foil.
A few companies, including
Reynolds Consumer Prod-
ucts, which makes kitchen foil
in Louisville, Ky., still have
large market shares in niche
markets, but even the kitchen
foils sold under grocery-store
names increasingly are made
from foil that is imported from
China, say distributors.
Unlike the American steel
Mounting Political Risks
Threaten European Shares
BY RIVA GOLD
AND GEORGI KANTCHEV
Stocks in Europe are looking
pretty cheap—but this time, in-
vestors aren’t rushing in.
With lackluster corporate
profits, tepid economic growth
and a fragile banking system,
the market is vulnerable to a
range of political risks in the
coming months that could de-
rail the region’s feeble recovery,
investors say.
Negotiations between the
U.K. and the European Union
concerning the future of their
relationship are likely to hang
over markets for some time,
while Italy holds a constitu-
tional referendum this fall as it
struggles to clean up its highly
indebted banks.
Meanwhile, Germany and
France each hold elections in
2017, with the potential to shake
up the leadership of the bloc’s
two biggest powerhouses.
1350
1337.70 t 0.20% WTI crude
1300
1250
1200
J J A J
THE WALL STREET JOURNAL.
Medivation’s drug, Xtandi, al-
ready generates about $2 billion
in yearly sales and has the po-
tential to more than double, ac-
cording to analysts.
Pfizer said the deal would
add 5 cents to earnings in the
first full year after closing and
isn’t expected to affect its 2016
financial guidance. Pfizer said it
plans to finance the transaction
with its cash holdings.
If the acquisition isn’t com-
pleted, Medivation could pay
Pfizer a $510 million termina-
tion fee, according to a regula-
tory filing.
News of the impending deal
was reported Sunday.
Pfizer has been seeking to ex-
pand its lineup of such oncology
treatments. Xtandi would give
the New York drug company a
industry, which also is facing a
flood of Chinese imports but is
bigger and has much more po-
litical clout, the aluminum in-
dustry hasn’t been as vocal
about tariffs.
Lured by a rich and open
market, Chinese companies
such as Zhenjiang-based
Dingsheng Aluminum Group
have bulked up their capacity.
For Dingsheng, the U.S. has
become a critical part of its
business. Guo Yu, a manager
at a Dingsheng subsidiary, said
the U.S. was appealing because
its buyers tend to be larger
companies, and orders are
much bigger than in other
Taken individually, investors
easily could overlook these
sources of uncertainty, much as
markets rebounded quickly af-
ter the initial selloff following
the U.K.’s vote in June to leave
the EU. The European Central
Bank’s willingness to buy gov-
ernment bonds in Europe’s
trouble spots has helped subdue
what would otherwise have
marked a period of more pro-
nounced volatility, investors say.
But with underlying vulnera-
bilities in the bloc’s financial
sector and weak economic
growth, some say the market is
primed for a pullback should
political risks materialize.
“The market is too sanguine
about political risks in Europe
as investors are hunting for in-
come,” said Stefan Scheurer,
vice president at Allianz Global
Investors. If political uncer-
tainty in Europe continues to be
elevated, European share prices
could fall by as much as 15%, ac-
50
47.05 t 3.03% German Bund
45
40
35
J A
beachhead in prostate cancer
complementing its breast-can-
cer treatment Ibrance, which is
on track to be a blockbuster.
Medivation’s drugs in devel-
opment also could complement
Pfizer’s efforts to develop com-
binations of cancer agents with
so-called immunotherapies,
The company will get a top prostate-cancer
drug with $14 billion purchase of Medivation.
which deploy the immune sys-
tem in the fight against cancer.
The acquisition would fur-
ther Pfizer CEO Ian Read’s ef-
forts to bolster what he refers to
as the innovative side of the
company’s business. The move
“accelerates our strategy in line
markets such as the Middle
East or India.
A combination of govern-
ment help and a buildup of
consumer culture has boosted
Chinese foil capacity to 3.7
million tons a year from
250,000 tons in 2004, and foil
consumption to 2.4 million
tons in 2014 from 594,000
tons in 2005, according to
U.K.-based market researcher
CRU Group.
In addition to having access
to low-cost electricity from
new Chinese power plants,
aluminum producers also ben-
efit from Chinese tax policy.
China applies a 15% value-
cording to Allianz.
Some investors already have
lost interest. Outflows from the
region’s equities have continued
for 28 consecutive weeks, with
net redemptions exceeding $90
billion over that period, accord-
ing to fund-tracker EPFR Global.
Nonetheless, the Stoxx Eu-
rope 600 index is up more than
10% from its post-Brexit lows,
helped by the Bank of England’s
move to cut rates and buy
bonds. The gap in yields be-
tween German government
bonds and those of Europe’s ec-
onomically weaker countries, a
Please see RISK page B2
Delivering news and insight
on finance and markets
from London
Download on the App Store
0.40
yield -0.087% 10-Year Treasury
0.20
0.00
-0.20
J J
with our priorities,” he said on a
call with analysts Monday.
The deal is expected to close
in the third or fourth quarter of
2016 and is subject to custom-
ary closing conditions and U.S.
antitrust clearance.
Pfizer agreed to take over Al-
lergan PLC late last year in a
$150 billion deal, but the two
companies parted ways in April
after the Obama administration
targeted the proposed combina-
tion with new rules.
Mr. Read has said Pfizer
would decide by year’s end
whether to split into two, with
China's Foil Impact
Rising imports of aluminum foil
from China are putting some U.S.
producers out of business.
400 million pounds
300
200
100
0
2005 ’10 ’15
Source: Global Trade Information Services
THE WALL STREET JOURNAL.
added tax rebate on exported
foil, and a 15% duty on raw
aluminum.
Chinese producers deny the
charge made by many U.S.
producers that they get unfair
subsidies or dump their metal
in the U.S.
Among contracts that have
been lost to foreign Chinese
suppliers are those for some
of the U.S.’s best-known con-
sumer brands, including
Wendy’s Co. and Capri-Sun,
according to foil distributors
and salespeople.
A spokesman for Wendy’s
said the chain’s hamburger
wraps are made from paper
“mainly sourced from North
America” and foil from Asia.
A representative for Kraft
Heinz Co., owner of the Capri-
Sun juice brand, declined to
comment.
The thin, flexible packaging
Please see FOIL page B4
Beyond Brexit
Investors expect Europe's packed political agenda
to continue to pressure markets.
Stoxx Europe 600
Percentage change in 2012 and the current year
20%
10
0
–10
–20
–30
40 80
Trading days into each year
Stoxx Europe 600 Banks
30%
20
10
0
–10
–20
–30
–40
40 80
Source: Thomson Reuters
2.25
yield 1.541%
1.50
0.75
0.00
A J J A
Sources: Tullett Prebon; SIX Financial
Tuesday, August 23, 2016 | B1
one company selling fast-grow-
ing brand-name drugs such as
Ibrance and another selling
drugs that have lost patent pro-
tection—a move that often has
been discussed in recent years.
Financial Chief Frank D’Ame-
lio said Monday that the Medi-
vation deal “will not impact the
timing of any decision” to break
up the company.
Some analysts have said
Pfizer needs to do more deals to
add patent-protected drugs if
that side of the company was to
develop the critical mass of rev-
enue it would need to function
on its own.
Cancer is one of the pharma-
ceutical industry’s biggest mar-
kets, with world-wide sales
amounting to roughly $80 bil-
Please see PFIZER page B2
Drops
Swimmer
World
130M
Lochte
BY STEVEN PERLBERG
Swimwear company Speedo
China USA has dropped its endorse-
256M ment deal with Ryan Lochte in
67% of the wake of the Olympic swim-
total
mer’s Rio de Janeiro scandal.
“While we have enjoyed a
winning relationship with
Ryan for over a decade and he
has been an important mem-
ber of the Speedo team, we
cannot condone behavior that
is counter to the values this
brand has long stood for,” the
company said Monday.
Speedo said it will donate a
$50,000 portion of Mr.
Lochte’s fee to a charity for
Brazilian children. Terms of
the swimmer’s endorsement
deal weren’t disclosed.
“I respect Speedo’s decision
and am grateful for the oppor-
tunities that our partnership
has afforded me over the
years. I am proud of the ac-
complishments that we have
achieved together,” Mr. Lochte
said in a statement.
Last week, as Mr. Lochte’s
tale of an alleged robbery un-
raveled, Speedo said it was
“following the situation.”
Speedo’s move Monday fol-
lows a bizarre controversy
that shifted attention away
from sports during the last
week of the Olympics.
Mr. Lochte originally
grabbed headlines when he
said he and three fellow U.S.
Please see LOCHTE page B2
2012, year of Greek debt crisis
Current year
June 23 Brexit referendum
120 160 200 240
2012, year of Greek debt crisis
Brexit referendum
Current year
120 160 200 240
THE WALL STREET JOURNAL.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Tuesday, August 23, 2016 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS NEWS

These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

A-C
Alcoa............................B1
Allergan.......................B1
Alpha Aluminum.........B1
American Beverage
Institute....................A1
Anheuser Busch InBev
.....................................A6
ASRR Capital..............A2
Astellas Pharma.........B2
Avant...........................B5
Guggenheim
Investments..............B7
Guggenheim S&P 500
Equal Weight
Nintendo......................B3
Novelis ........................ B1
O-S
VW Dispute Hits Six Auto Plants
Financials..................B7
Oracle Flexible BY SARAH SLOAT wagen and the suppliers to re-
Packaging..................B1
Guggenheim S&P 500 solve the dispute quickly.
Pernod Ricard ............. A6
Equal Weight Real Volkswagen AG said work “This is about thousands of
Prosper Marketplace..B5
Estate........................B7
Renesas Electronics ... B3
hours would be cut for roughly jobs that could be affected by
Harris...........................B3 27,700 employees as a result shorter working hours,” a min-
Reynolds Consumer
Heineken.....................A6 of disputes with suppliers that istry spokesman said. “There’s
Products....................B1
I-J RingDNA......................B5 have disrupted production at a responsibility to approach

SEBASTIAN GOLLNOW/DPA/ZUMA PRESS

Baltic Exchange..........B7
BlackRock....................B7
China Gas....................B3
Cross River Bank........B5
CRU Group...................B1
D-F
Deloitte & Touche.......B5
Dingsheng Aluminum
Group.........................B1
Elevate Credit.............B5
Facebook......................B8
Financial Services Select
Sector SPDR Fund....B7
Fortescue Metals Group
.....................................B3
Foxconn Technology....B3
G-H
Gawker Media.............B3
General Electric .......... B3
Innovation Network of
Japan.........................B3
Intersil.........................B3
iShares Edge MSCI
Minimum Volatility
USA Index.................B7
JBG..............................B7
Johnson & Johnson....B2
Juicero.........................B5
JW Aluminum.............B1
L-N
LegalZoom...................B5
LendingClub.................B5
Medivation..................B1
Melo7 Tech Partners..B5
Mini-Europe................A1
NEC..............................B3
Nest Investments.......B5
New York REIT............B7
Sanofi..........................B2
Scopely........................B5
Sharp...........................B3
Shearman & Sterling..A2
Singapore Exchange ... B7
Société Générale.........B5
Sony.............................B3
Speedo USA................B1
State Street Global
Advisors....................B7
Steel Partners Holdings
.....................................B5
Suzer Group................A2
T-V
Towngas......................B3
Unilever.......................B8
Univision
Communications.......B3
Volkswagen.................B2
several plants in Germany.
Production halts have hit
Volkswagen’s plant in Wolfs-
burg, Germany, severely,
where 10,000 workers are af-
fected, the car maker said.
Plants in Emden, Zwickau,
Kassel, Salzgitter and Braun-
schweig will work reduced
hours in the coming days.
Volkswagen warned that it
couldn’t foresee further devel-
opments, but according to its
current planning, most stop-
pages would end as of this
weekend. In Kassel and Salz-
gitter, production measures
will end early next week.
Workers at VW’s factory in Wolfsburg, Germany, on Friday.
production could cost Volks-
wagen between €50 million
($56.6 million) and €100 mil-
lion in operating profit, but
stressed that various factors
made estimates tricky.
these issues as constructively
as possible and resolve them
as constructively as possible.”
Volkswagen employs
276,000 people in Germany,
73,000 of them in Wolfsburg.
The company is still sorting
out financial and strategic is-
sues caused by a scandal that
erupted nearly a year ago
when U.S. authorities dis-
closed Volkswagen rigged ve-
nied responsibility for the sit- hicles with software that let
uation, saying Volkswagen them perform better in pollu-
canceled contracts without ex- tion tests than on the road.
planation or compensation Volkswagen later said the soft-
and the decision to halt deliv- ware was installed in some 11
ery was taken to protect their million vehicles world-wide.

INDEX TO PEOPLE Volkswagen, still reeling

A-D
Anthony, Carmelo.......B5
Belden, William..........B7
Bernstein, Stuart M...B3
Blitzer, David..............B7
Bollea, Terry................B3
Bryant, Kobe...............B5
Denton, Nick...............B3
G-H
Hoffman, David...........B7
J-L
Jianxin, Ren................A2
King, Matt...................B2
Korn, Brian..................B5
Lin, Victor ................... B7
N-O
Nahl, Ghazi Abu..........B5
R-S
Rees, Ken....................B5
Rosenbluth, Todd........B7
Sakoda, Jon.................B5
Stibel, Jeff..................B5
T-W
Tai, Jeng-wu ............... B3
Takahashi, Kozo..........B3
from an emissions scandal
that has cost it billions of dol-
lars, last week said a shortfall
in seating and gearbox compo-
nents meant it had to adjust
production for some models,
including the Golf and Passat.
Analysts said a weeklong
suspension of Golf and Passat
The company couldn’t be
reached immediately for com-
ment on the potential cost of
strikes.
The auto maker and two
suppliers—Car Trim and ES
Automobilguss—resumed ne-
gotiations Monday to resolve
the matter after the suppliers
cut delivery. The suppliers de-
workforces.
“This is really a rare inci-
dent as suppliers typically
Despite the German output
disruptions, the head of Volks-
wagen’s works council, Bernd
want to avoid stopping the Osterloh, said he wasn’t con-
production lines at a manufac- cerned that the current wran-
turer,” said Commerzbank au- gle with suppliers would lead
tomotive analyst Sascha Gom- to job cuts.
mel. —Hendrik Varnholt
Germany’s Economics Min- and Andrea Thomas
istry on Monday urged Volks- contributed to this article.

Gou, Terry ................... B3
O'Neal, Shaquille........B5
RISK
Thiel, Peter ................. B3
Woodard, Jared...........B2 there. In France, Marine Le Pen, ground zero for political risk.” to be heavily weighted to the fi-
the leader of the anti-EU Na- Many of the concerns have nancial sector, which means a
tional Front, has seized on the moved toward Italy, which is sustained recovery without a

Eli Lilly, AstraZeneca Drug Continued from the prior page

Brexit vote. France holds presi-
dential elections in the spring.
holding a constitutional referen-
dum in the fall. Prime Minister
stabilization of the region’s
banks is unlikely.

Secures Fast-Track Status

common measure of stress in “At the end of the day…if Matteo Renzi has staked his po- That comes amid a weak
the eurozone, have narrowed countries intimate their desire litical future on winning the backdrop for European earnings
significantly. to leave, no central-bank activ- vote, which would reduce the more broadly. The forecast 12-
BY DENISE ROLAND mild Alzheimer’s in a separate After the U.K. vote, “every- ity can compensate for that,” powers of the Italian Senate, the month forward earnings per
trial. one thinks ‘Phew, I’m glad that’s said Brett Wander, chief invest- upper house of parliament. He share for the Stoxx Europe 600
LONDON—AstraZeneca PLC BACE inhibitors are the lat- over!’ but the headwinds from ment officer for fixed income at has indicated he would step is $19.20, according to FactSet,
said Monday that the Alzhei- est glimmer of hope in a field Brexit will come slower and Charles Schwab Investment down from office if he lost the compared with a forecast of
mer’s drug it is codeveloping littered by failures, but they over a longer period of time, as Management. referendum. $20.71 a year ago. As of Friday,
with Eli Lilly & Co. has received could stumble in later-stage economies in the European Meanwhile, tensions are A vote against Mr. Renzi’s the forward price-to-earnings
fast-track designation from the development. Union adjust to a new structural ramping up between Russia and plan could upset confidence in ratio of the Stoxx Europe 600
U.S. Food and Drug Administra- Research recently released framework,” said Marie Ukraine, after Ukrainian Presi- the eurozone’s third-largest was 15.2, compared with 17.1 for
tion, a status designed to speed by the trade group Pharma- Schofield, portfolio manager dent Petro Poroshenko warned economy, just as Italy’s banking the S&P 500, FactSet said.
up the development of promis- ceutical Research & Manufac- and chief economist at Colum- last Thursday of a possible inva- sector is teetering. European companies have
ing new medicines. turers of America showed bia Threadneedle Investments. sion by Russia. “One of the key unknowns seen their returns on equity
The drug, dubbed AZD3293, there were 123 Alzheimer’s The Brexit vote already has The last time political risks here is the health of the Euro- continue to fall back to their
is part of a hot new class of drug failures between 1998 emboldened right-wing parties in Europe were this high was in pean banking system,” said Mat- 2009 and 2011 lows, according
Alzheimer’s drugs called BACE and 2014, and just four medi- in Europe who want their coun- the summer of 2012 when the tias Sundling, equity strategist at to Ankit Gheedia, strategist at
inhibitors which act to prevent cines approved. tries to follow the U.K. out of Greek debt crisis was at its Danske Bank. “The most vulner- BNP Paribas.
the formation of a substance The high level of risk in- the EU. A general election in the height, said Ajay Rajadhyaksha, able is Italy, and Italian banks.” “Foreign exchange has been
known as amyloid, whose volved in Alzheimer’s research Netherlands early next year will head of macro research at Bar- Italian bank shares are down the only significant driver of
build up in the brain is partly drove Astra’s decision to be the first test for nationalist clays. “But that was just about nearly 50% this year, while the earnings upgrades for eurozone
thought to be the main cause collaborate with Lilly, which has forces on the Continent, and one small country, the size of Euro Stoxx banks index is down equities during the past year [as
of the degenerative disease. a longer history of developing opinion polls suggest that popu- Connecticut,” he said. Now, “Eu- roughly 30%. the euro weakened] and this
The FDA awards fast-track drugs for the disease. The pair list parties are gaining ground rope is once again becoming the European stock markets tend tailwind is now over,” he said.
status to drugs it believes struck a risk-and-reward shar-
could fulfill an unmet need in ing deal in 2014 that handed
a serious condition. It means
AstraZeneca will have in-
creased access to officials at
the agency while developing
Lilly the leading role in design-
ing and running the clinical tri-
als for the drug, previously de-
veloped solely by Astra.
STREET Maybe Calm, Maybe Complacent
The S&P 500 has moved around less in the past 30 days than in any other such period in the
past 20 years, as measured by realized volatility, holding down the VIX gauge of implied volatility.
the drug, to minimize delays. The two will share the costs Continued from the prior page
Earlier this year AstraZen- of development, and, if the since October 1995. And trad- S&P 500 30-day realized volatility, daily data
eca and Lilly said they would drug is successful, future reve- ing volumes have dropped far 80 40
progress the drug to the final nues, equally. more than is usual for the
stage of testing in patients Lilly also agreed to a series summer break.
with early stage Alzheimer’s. of payments to AstraZeneca as This lull in activity looks to 70 30 CBOE VIX
They also plan to start test- the drug progresses through many like yet another symptom
ing the drug in patients with various milestones. of central banks pouring money
60 20
on troubled markets. Why
worry when you can sit back,

PFIZER EvaluatePharma.
But J&J is developing a new
prostate-cancer drug that could
pose a threat to Xtandi, accord-
collect the dividend and be sure
the policy makers have your
back? Yet a lack of worry itself
is often a reason for concern.
50

40
10

0
Realized
volatility

Continued from the prior page ing to analysts. Implied volatility, a proxy for 2014 ’15 ’16
lion a year and growing more Medivation was put in play the cost of options, has col- 30
than 10% annually, according to after French drug company lapsed alongside realized vola-
EvaluatePharma. Sanofi SA made an unsolicited tility, with the CBOE VIX in-
Despite charging high prices, proposal of $52.50 a share in dex on Friday dropping to 20
often surpassing $100,000 a cash, which the biotech rejected levels last seen in the summer
year per patient, companies ha- in April, saying the offer sub- of 2014—a period of calm that
10
ven’t faced the challenges secur- stantially undervalued the com- ended decisively with a panic-
ing reimbursement that have pany. Medivation shares were buying of bonds that October. Realized
limited sales of new drugs for trading as low as $26.41 in Feb- Previous periods of very low 0 volatility
other diseases. ruary. volatility were in early 2011, be- 2006 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16
Medivation is one of the few Following Sanofi’s proposal, fore the U.S.’s near-default and
independent biotechs left with a a bidding war ensued. With loss of triple-A status, and Jan- Note: Data through Friday Source: Thomson Reuters Datastream THE WALL STREET JOURNAL.
cancer treatment that already is Pfizer’s deal, Medivation is uary 2007, a few months before
approved and selling well. CEO fetching more than double the the collapse of two Bear Stearns “Last week and the week the next few months and that of puts—that is, implied volatil-
David Hung says he decided to $6 billion it was valued at ear- hedge funds marked the begin- before, you had to make sure further ahead. Investors seem ity—down.
found the company in 2003 af- lier this year. ning of the credit crunch. your machine was actually on to think volatility will pick up Faith in how far central
ter watching a 28-year-old On Monday, Sanofi said that There is more going on now because it was flashing so in- a bit, and again the oddity is banks will protect against
breast-cancer patient die during while it saw benefits to a poten- than just the summer holidays. frequently,” he said. where it stands now, not what losses comes and goes, though.
his oncology fellowship. tial deal with Medivation, “we The markets are very rarely Investors have become investors are doing. In market-speak, the Yellen put
Xtandi has held its own are first and foremost a disci- this serene, with S&P 500 real- more relaxed as this year’s re- “Everything feels distorted is less out of the money if a
against a rival prostate-cancer plined acquirer and remain ized volatility lower only a bound has continued, but sur- and unnatural, you know the smaller price fall pushes the
treatment from Johnson & committed to acting in the best dozen times in the past half- veys and market technical source of that is the central Fed to act. At the moment, in-
Johnson called Zytiga. interests of Sanofi sharehold- century. In data back to 1928, measures don’t suggest they banks but equally there’s noth- vestors seem to think the put is
Xtandi, which Astellas ers.” this level of volatility appeared are gripped by complacency. ing to stop them carrying on,” barely out of the money at all.
Pharma Inc. also offers, could —Austen Hufford frequently only during the pe- Excuses can be made for the said Matt King, head of credit The danger, then, is not so
be one of the top-selling cancer and Noemie Bisserbe riod from the 1951 removal of low level of the VIX, too. The strategy at Citigroup. much complacency about mar-
drugs by 2020, according to contributed to this article. the Federal Reserve’s cap on implied volatility measured by Wall Street has long seen kets, but complacency about
bond yields to President the VIX should offer a pre- central-bank action through the central banks. The lesson of
ADVERTISEMENT Nixon’s 1971 scrapping of the mium to realized volatility, a lens of the options market, the past seven years is that
dollar’s link to gold. reward for the risk taken by since Alan Greenspan’s tenure policy makers will step in ev-
The Mart Jared Woodard, a strategist
at Bank of America Merrill
option sellers. Excessive com-
placency should show up in a
as Fed chairman. The so-called
“Greenspan put” has under cur-
ery time disaster strikes. But
investors tempted to rely on
Lynch, said the Brexit vote had shrinking risk premium, but at rent Fed chief Janet Yellen be- the central banks should note
AVIATION CAPITAL WANTED shocked investors into closing the moment, the gap between come the “Yellen put,” named that disasters did still strike,
big positions. Without many the VIX and realized volatility for an option used to protect and markets had big falls be-
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ricated the account and foot- station on the way back from a A Ralph Lauren spokesman contributed to this article.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
MIKE BLAKE/REUTERS
A man wearing a virtual-reality headset played a game at a Sony PlayStation event in Los Angeles earlier this year.
Sony Readies New Version
Of Standard PlayStation
BY TAKASHI MOCHIZUKI
TOKYO—Sony Corp. plans
to introduce a new PlayStation
4 standard model alongside a
high-end version next month,
people familiar with the mat-
ter said, in an effort to main-
tain demand for the best-sell-
ing videogame console.
With the release of the two
models, Sony hopes to attract
hard-core fans and more ca-
sual users to its videogame
platform, analysts said.
The company has been try-
ing to build a community of
users so that it can earn con-
sistent revenue from subscrip-
tions and software downloads.
Sony has said that it would
hold a news conference at the
PlayStation Theater in New
York on Sept. 7.
A spokesman for Sony said
the company would talk about
the PlayStation 4 business at
the news conference.
Sony said in June that it
Sharp Aims
To Restore
Its Image
BY TAKASHI MOCHIZUKI
TOKYO—Sharp Corp. will im-
plement a large-scale corporate
restructuring to achieve profit-
ability, with the hope of restor-
ing the brand’s image as a global
provider of innovative consumer
electronics, the company’s new
chief executive said Monday.
“My mission as the leader
of Sharp is to turn around this
company without any further
delay,” said Tai Jeng-wu, who
became CEO as part of the
takeover by iPhone assembler
Foxconn Technology Group.
Mr. Tai, the right-hand man
to Foxconn Chairman Terry
Gou, took over from Kozo Taka-
hashi when Foxconn’s ¥388.8
billion ($3.88 billion) deal to
buy more than a 60% stake in
Sharp closed this month.
Mr. Gou said in April that
he had pursued ownership of
Sharp because of the Osaka-
based company’s record of in-
novative products, such as mi-
crowaves and air-purifiers, in
addition to Sharp being a ma-
jor display-panel provider for
Apple Inc.’s iPhone and iPad.
On Monday, Mr. Tai said the
company would invest aggres-
sively in research and develop-
ment, and that Taiwan’s Fox-
conn, formally known as Hon
Hai Precision Industry Co.,
would provide support for
component-procurement and
manufacturing.
Mr. Tai also said a restruc-
turing would include cutting
Sharp’s workforce. Mr. Gou has
said there would be layoffs, and
Sharp executives said previ-
ously that they would number
in the thousands and mainly be
at overseas locations.
Sharp fell into financial
trouble a few years ago as it
began to rely on the display-
panel business, which is vola-
tile because of the rapidly
changing smartphone land-
scape.
planned to introduce a high-
end version of PlayStation 4
with enhanced graphics capa-
bilities, but it hasn’t publicly
discussed plans to refresh its
standard model.
Macquarie Securities ana-
lyst Damian Thong said he ex-
pects the new standard model
to be slimmer and less expen-
sive than the current $350 de-
vice. He said that it would
mark a shift in strategy for
Sony because the company
previously stuck to releasing
one console at a time and tried
to sustain demand with regu-
lar price cuts.
In June, Microsoft Corp. an-
nounced a smaller version of
its flagship Xbox One console,
called the Xbox One S.
The PlayStation 4 console
made its debut in 2013. More
than 40 million units have
been sold so far globally, ac-
cording to Sony. That outpaces
the Xbox One, which has sold
an estimated 20 million units
Gawker Founder Reaches Noncompete Agreement
BY PATRICK FITZGERALD
Gawker Media Group’s new
owner, Univision Communica-
tions Inc., would pay Gawker’s
founder $16,666 a month for
the next two years in exchange
for a promise not to work for
the gossip site’s rivals.
Nick Denton would be paid
about $400,000 by Univision,
according to a noncompete
pact filed with the U.S. Bank-
ruptcy Court in New York.
The Spanish-language broad-
caster last week won a bank-
ruptcy auction for Gawker with
a $135 million bid, and then said
it was shutting down the site.
The company insisted on
Business
Watch
NINTENDO
Firm Sells Shares
In Seattle Mariners
Nintendo Co. said it has
completed the transaction to
sell much of its stake in a U.S.
Major League Baseball team,
the Seattle Mariners. The Japa-
nese company previously said
the deal would close by the
end of this month.
The ownership transfer,
which brings $661 million to
the Kyoto-based company, will
allow Nintendo to focus on its
core videogame business, ana-
lysts say.
It is preparing to launch its
next-generation videogame
hardware, code-named NX, in
March while expanding the
availability of its wide range of
popular game characters be-
yond consoles to smartphone
games, amusement parks and
motion pictures.
A spokesman for Nintendo
said the company still owns
10% of First Avenue Entertain-
TECHNOLOGY
since its debut in 2013, accord-
ing to analysts. Nintendo Co.
says its Wii U has sold 13 mil-
lion units since 2012.
Sony Chief Executive Kazuo
Hirai has described the Play-
Station business and related
services as the leading engine
of the company’s growth.
Ahead of the September
news conference, Sony has cut
production of PlayStation 4 to
adjust inventory, people famil-
iar with the matter said.
Several e-commerce web-
sites in Japan, including Sony’s
own, said the PlayStation 4
was out of stock.
PlayStation 4 sales have
been weaker in Japan than in
the U.S. Data from videogame
magazine publisher Famitsu
showed sales of the console in
Japan have been declining
slightly in recent weeks. Nev-
ertheless, stocks of the device
are likely to run out as the
company limits production.
“The white model was gone
the noncompete agreement
with Mr. Denton, who earned
$500,000 a year at Gawker, as
a condition of the sale.
Univison intends to merge
the sites Deadspin, Lifehacker,
Gizmodo, Jalopnik, Jezebel
and Kotaku into its Fusion Me-
dia Group. But the company
said it wouldn’t operate
gawker.com going forward.
Under the pact, Mr. Denton
won’t “associate with any
business enterprise that en-
gages in the business” in the
U.S., Puerto Rico or Hungary,
without Univision’s consent.
In a letter to Gawker’s staff
last week announcing the
mothballing of gawker.com,
ment, the Mariners’ operating
company.
—Takashi Mochizuki
PETRONAS
Second-Quarter Net
Declined Sharply
Petroliam Nasional Bhd., Ma-
laysia’s national oil company
more commonly known as Pet-
ronas, said Monday that its net
Nintendo aims to focus on its videogame business after selling much of its Seattle Mariners stake.
two weeks ago and we just
sold our last black model in
stock,” said the chief of the
videogame floor at an elec-
tronics store in Tokyo. “Our
central purchasing department
warned us we wouldn’t get any
for now because the item is
simply not in distribution
channels.”
Hideki Yasuda, an analyst at
Ace Research Institute, said
the soon-to-be unveiled Play-
Station 4 consoles are part of
a larger push to accelerate the
business, including the Octo-
ber introduction of virtual-re-
ality headset PlayStation VR.
Sony has been trying to lure
a wider audience to its Play-
Station network by adding
nongame content, such as the
PlayStation Vue cloud-based
television-streaming service.
Sony has said it plans to
ship more than 20 million
PlayStation 4 units in the year
ending in March, up from 17.7
million in the previous year.
Mr. Denton said he was get-
ting “out of the news and gos-
sip business.”
Mr. Denton has told friends
he is interested in creating
new online discussion forums,
according to a person familiar
with his thinking, and those
ventures wouldn’t be affected
by the noncompete agreement.
Gawker Media filed for
chapter 11 bankruptcy protec-
tion in June after a Florida
jury awarded former profes-
sional wrestler Hulk Hogan,
whose real name is Terry Bol-
lea, $140 million.
Mr. Bollea sued Gawker, Mr.
Denton and another editor for
invasion of privacy after the
profit for the second quarter
declined 86% from a year ear-
lier because of lower oil prices
and higher net impairment on
assets.
Petronas registered a net
profit of 1.6 billion ringgit
($398.7 million) in the April-June
period, compared with a net
profit of 11.1 billion ringgit a year
earlier. Quarterly revenue fell
21% to 48.4 billion ringgit from
Tuesday, August 23, 2016 | B3
@wsjd | wsjd.com
Renesas Electronics
Weighs Intersil Buy
BY TAKASHI MOCHIZUKI characterized as speculation.
Intersil, based in Milpitas,
TOKYO—Renesas Elec- Calif., traces its lineage in part
tronics Corp. said it is in to a chip startup founded in
talks to buy U.S.-based chip 1967 by Jean Hoerni, one of
maker Intersil Corp., a move the industry’s pioneers. The
that could strengthen the Jap- business was acquired by Gen-
anese company’s business of eral Electric Co. and later by
making semiconductors for Harris Corp. The Intersil
automobiles. name, which had been retired,
“We are considering vari- reappeared in 1999 when the
ous options for growth in- operations were spun off to
cluding” a possible deal with form an independent company.
the U.S. company, Renesas The company sells semi-
said Monday. A deal, if conductors for a variety of
reached, would be valued at applications that include
around 300 billion yen ($3 cars, computers, consumer
billion), according to a person electronics products and
familiar with the discussions. aerospace hardware. Intersil
Intersil shares rose 20% to Chief Executive Necip Say-
$18.74 in New York on Monday. iner, who was appointed in
The sharp advance put the 2013 to lead a turnaround ef-
company’s market value at fort, has tried to focus the
about $2.54 billion. business on chips used to
The possible deal, which manage power. Intersil also
was reported earlier in the day has a major sideline making
by the Japanese business daily chips designed to withstand
Nikkei, represents a bid by Re- radiation exposure, a feature
nesas to stay ahead in an in- needed in aerospace gear.
dustry that has seen consider- It posted second-quarter
able recent consolidation. profit of $1.4 million on reve-
Intersil’s customers include nue of $134 million.
companies in the automotive Innovation Network Corp.
and aerospace businesses. The of Japan, a Japanese govern-
company had revenue of $522 ment-backed fund that owns a
million and profit of $7.2 mil- majority stake in Tokyo-based
lion in 2015. Renesas, was looking for a
Talks between the compa- buyer for the company last
nies follow a multiyear acqui- year, people familiar with the
sition wave in the chip indus- matter said at the time, but no
try, including 67 deals in 2015 deal has resulted.
that reached a record $125.7 Renesas was formed
billion in transaction value, ac- through a fusion of chip-mak-
cording to data provider Dea- ing units of NEC Corp., Mit-
logic. For this year through subishi Electric Corp. and Hi-
late July, the research firm tal- tachi Ltd. In late June, Bunsei
lied 41 mergers or acquisitions Kure was named its new presi-
valued at $70 billion. dent and chief executive.
An Intersil spokeswoman de- —Don Clark
clined to comment on what she contributed to this article.
TOMOHIRO OHSUMI/BLOOMBERG NEWS
Bunsei Kure on June 28, the day he became president of Renesas.
gossip site published a story Mr. Denton personally is li-
featuring video of the former
wrestler having sex.
Shortly before Gawker filed
able for $10 million of the
$140 million judgment and
jointly liable, along with for-
for bankruptcy, it emerged mer Gawker editor A.J. Daule-
that many of the legal strug- rio, for a further $115 million.
gles facing the company had Claiming he was unable to
been secretly backed by Sili- pay the judgment, Mr. Denton,
con Valley billionaire and in- who founded Gawker in 2002,
vestor Peter Thiel, who ac- was forced to file for personal
knowledged financing the bankruptcy this month.
cases brought by Mr. Bollea His only two assets, he
and others. says, are his 30% stake in
Mr. Thiel, who had been Gawker and an apartment in
outed as gay in 2007 by Manhattan, which he lists at a
Gawker’s now-defunct Valley- combined value of less than
wag blog, said his intention $50 million.
was to stop Gawker from prof- —Lukas Alpert
iting off exposing details of and Tom Corrigan
people’s private lives. contributed to this article
61.3 billion ringgit. sign of the technology giant’s
—Yantoultra Ngui struggle to offer attractive apps.
The company, based in
SAMSUNG ELECTRONICS
U.S. Music Service
South Korea, said in a notice
posted on its website that it
would discontinue the stream-
To Close Next Month ing service as of Sept. 22. It
Samsung Electronics Co. didn’t provide a specific reason
plans to shut down its music- for ending the service, and a
streaming service in the U.S. spokeswoman for Samsung de-
next month, just over two years clined to elaborate.
after its launch, in the latest Samsung said the service,
which is powered by Slacker Ra-
dio in the U.S., would continue
to be available in other markets
including China, Malaysia and
South Korea.
The service was discontinued
in Australia and New Zealand
earlier this year.
—Eun-Young Jeong
FORTESCUE METALS
Net Profit Triples,
Dividend Jumps
Fortescue Metals Group Ltd.
reported a tripling in annual
profit and said it would increase
STEPHEN BRASHEAR/GETTY IMAGES
its final dividend sixfold as the
Australian mining company cut
costs and benefited from a re-
cent recovery in iron-ore prices.
Fortescue reported net profit
of US$984 million for the year
through June, up from a profit
of US$317 million in the previous
12 months.
—Rhiannon Hoyle
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 | Tuesday, August 23, 2016
BlueScope Steel Forges Big Gains Valeant Continues
Profit climbs sharply as cost-cutting plan pans out for Australia’s largest steelworks
BY RHIANNON HOYLE
SYDNEY—A year ago, Blue-
Scope Steel Ltd. worried that
its Port Kembla steelworks—
Australia’s biggest, with more
than 4,000 workers—no longer
had a future.
Now, with manufacturing
operations spanning the U.S. to
Southeast Asia, BlueScope has
achieved a turnaround that has
eluded many of its biggest ri-
vals so far. On Monday, Blue-
Scope posted annual net profit
of 353.8 million Australian dol-
lars (US$269.8 million)—its
biggest since 2008 and a near
tripling of the company’s
A$136.3-million profit for the
prior financial year.
The gains come as broad
challenges pressure steelmak-
ers world-wide. China flooded
the global market with steel
made at a fraction of the cost
of material produced else-
where. Governments from the
U.S. to Australia risked a global
trade war by imposing tariffs
on steel imports, fearing inac-
tion would lead to steep job
losses. A BlueScope domestic
competitor, Arrium Ltd., be-
came insolvent.
BlueScope Chief Executive
Paul O’Malley offered Port
Kembla’s labor unions a deal:
Support a cost-cutting plan
that included 500 job losses, a
three-year wage freeze and sus-
pension of bonus payments,
and BlueScope would keep the
steelworks south of Sydney
open. That bet paid off when
BlueScope told investors in Oc-
tober an agreement had been
reached.
“There is nothing more sat-
isfying than saving 4,500 jobs,”
Mr. O’Malley said. “Twelve
months ago, we weren’t sure
whether the steelworks had a
future.”
In contrast, U.S. Steel Corp.
continues to be unprofitable
despite cutting thousands of
jobs and idling plants. In Eu-
rope, German conglomerate
ThyssenKrupp AG has held
talks with Tata Steel Ltd. of In-
dia and other steel groups over
a potential tie-up as those com-
panies seek to strengthen
themselves in rocky markets.
London-based Caparo Indus-
tries PLC initiated bankruptcy
proceedings last year for 16 of
its 20 steel businesses.
FOIL
Continued from page B1
foil that is used to wrap food
is the hardest hit, according to
industry experts. At the start
of this year, only two special-
ized producers remained: JW
Aluminum, which has plants in
South Carolina and three
other states; and the now-
closed Alpha Aluminum in
Winston-Salem. JW Aluminum
declined to comment.
Alpha’s mill was built by
cigarette maker R.J. Reynolds
Tobacco Co. in 1960, and sold
Model. CEO. Stanford Teacher, Too.
BY DAHLIA BAZZAZ
For two weeks next May,
M.B.A. students at Stanford
University will be taking tips
in personal branding from the
former host of “America’s
Next Top Model.” Tyra Banks
is slated to make her teaching
debut at the school as a guest
lecturer, co-teaching a class
on creating and protecting a
personal brand.
Some 25 graduate students
will receive instruction from
Ms. Banks on how to harness
all forms of old and new me-
dia to showcase their
strengths. The former Victo-
ria’s Secret model and chief
executive of TYRA Beauty will
also deliver tips on handling
press exposure as a business
leader. The first assignment
for the class, “Project You:
Building and Extending your
Personal Brand,” asks stu-
dents to create a short video
introducing both themselves
and the vision for a brand, ac-
cording to the official course
description.
Ms. Banks, 42 years old,
said her teaching style will be
engaging and fun, but tough:
“If I see somebody not paying
attention, I’m gonna call on
them.”
She added that she makes
it her goal while speaking to
college-aged audiences to
keep them off their phones,
Nerves of Steel
Australia's BlueScope Steel is regaining its footing, helped by cost cuts and higher prices, even as the
steel sector continues to grapple with a global glut.
BlueScope annual net profit
A$200 million
0 650
–200
–400
–600
–800
–1,000
–1,200
FY2010 ’11 ’12 ’13 ’14 ’15 ’16
Note: Fiscal year ends June 30; A$1 million = US$0.76 million; 1 U.S. ton = 0.91 metric ton
Sources: Company reports (BlueScope profit); The Steel Index (coil price); Wind Info (China exports)
The global steel industry’s
woes have become a significant
issue for many governments,
given the jobs at risk. The U.K.
government has met with Tata
Steel as it considers the future
of its British operations, which
employ 11,000 people at nine
plants. The U.S. and Europe
have imposed hefty tariffs on
imports of certain steel prod-
ucts in an effort to shore up
profits of local producers.
Most lawmakers and indus-
try executives direct their com-
plaints at China, the world’s
No. 1 steel producer, which has
been churning out steel at a re-
cord daily pace. China’s first-
half exports hit 57.12 million
metric tons, up 9% year-to-year.
China’s premier, Li Keqiang, re-
BlueScope has also kept paying dividends
despite the industry’s global headwinds.
cently said the steel-supply glut
is a global problem and “not
triggered by one country.”
“I think we should plan for
global oversupply occurring for
some time,” Mr. O’Malley said.
He said Port Kembla will
need to keep reducing costs to
stay open for the long run and
warrant the next large upgrade,
which will be required in about
a decade.
Still, he expects BlueScope’s
underlying earnings to rise 50%
in the six months through De-
cember, compared with the
January-June period.
BlueScope’s recovery has
to Alpha last year. Faced with
competition from Chinese im-
ports, Alpha began to diversify
in favor of heavier aluminum
products. But last month Al-
pha suspended operations, and
is looking for outside inves-
tors, its owners say.
Robert Gamba, who re-
cently resigned as Alpha’s
chief executive, said margins
at the 24-million-pounds-a-
year plant had been consis-
tently squeezed by imports,
which are 20% less expensive
than his products. “Buyers are
always bringing up the prices
they can get in China,” he said.
Alpha says an important
Tyra Banks, shown in New Orleans last month, is CEO of TYRA
Beauty. She will co-teach a Stanford class about personal brands.
unless it is to “tweet some-
thing I’ve said.”
Celebrity sightings have
become increasingly common
on the campuses of the U.S.’s
top business schools. In 2000,
Oprah Winfrey taught a “Dy-
namics of Leadership” class
at Northwestern University’s
BUSINESS NEWS
U.S. hot-rolled coil price
US$700 a U.S. ton
600
550
500
450
400
350
2015
benefited from the U.S. tariffs,
which sent local steel prices
sharply higher. U.S. benchmark
hot-rolled coil is up almost 60%
this year to roughly US$596 a
ton, according to the Steel In-
dex. Prices in Europe and Asia
are also sharply higher.
During the year, BlueScope
bought out Cargill Inc. from
their U.S. venture North Star
for US$720 million.
When BlueScope bought the
rest of North Star in October,
management targeted net-debt-
to-earnings, an important fiscal
metric, of less than one times
within 12 to 18 months. Net-
debt-to-earnings was recorded
as 1.6 times in late 2015 and
halved to 0.8 time by the end of
June.
“They had very strong prof-
itability despite what we agree
are very weak operating condi-
tions,” said Moody’s Investors
Service analyst Matthew
Moore.
BlueScope has faced painful
decisions before. A strong Aus-
tralian dollar, caused by a min-
ing boom, made its products
less competitive. In 2011, Blue-
Scope abandoned its unprofit-
able export business that his-
torically accounted for about
half its sales.
It also snubbed the strategy
pursued by Arrium, spun off
from BHP Billiton in 2000. Ar-
factor in its closing the North
Carolina plant was that the
previous owner, Oracle Flexi-
ble Packaging Inc., overstated
the value of assets.
An Oracle spokesman de-
clined to comment.
China’s cheaper prices be-
came impossible to resist for
Alufoil Products Co. Inc., a
Long Island maker of alumi-
num foil and once an Alpha
customer.
“A couple of years ago, I
started buying much more
from China, because it was
cheap and usually pretty good
quality,” says Howard Lent,
the 78-year-old president of
Kellogg School of Manage-
ment. Notable students are
making star turns at B-
schools, too. In the wake of a
doping ban, tennis player Ma-
ria Sharapova enrolled in an
executive-education course at
Harvard Business School this
summer. Ms. Banks herself
Chinese steel exports
14 million metric tons
12
10
8 drug-industry veteran Paul Her-
6 cial officer. Now comes the hard
4
2 role,” said Louise Chen, an ana-
0 CFO
’16 2015 ’16
THE WALL STREET JOURNAL.
rium bought iron-ore mines to
counter the rising cost of steel-
making ingredients, but the
strategy unraveled as a 70%
slump in iron-ore prices left the
company struggling to repay
debts. Arrium’s lenders called
in insolvency specialists earlier
this year.
BlueScope hasn’t ruled out
buying parts of Arrium’s busi-
ness, although Mr. O’Malley
was circumspect about a deal.
“To be honest, investing in
North Star at the moment is
probably as good as it gets in
steelmaking,” he said.
BlueScope has also kept pay-
ing dividends, including a final
payout of three Australian
cents a share, despite the
global headwinds.
Sandon Capital analyst
Campbell Morgan was among
those who advocated closing
the Port Kembla steelworks.
Now, he says the deal reached
by BlueScope and the unions is
a “fantastic outcome.”
When BlueScope’s share
price tumbled toward A$3 a
share in the middle of last year,
from almost A$7 a year earlier,
Sandon Capital bought up al-
most 700,000 shares over May
and June 2015 for an average
price of A$3.30 each.
“It’s always a hairy experi-
ence when you are buying com-
modity companies as they’re
bumping along the bottom of
the cycle,” Mr. Morgan said.
BlueScope’s stock has more
than tripled to A$8.72 since
reaching a 2½-year low in late
June last year.
the family-owned, 18-person
company, which now sources
90% of its aluminum rolls from
abroad, up from 40% a decade
ago. Twenty percent of its
supply now comes from China,
up from a marginal amount a
few years ago.
Mr. Lent says he would “ob-
viously prefer to buy all Amer-
ican,” but domestic suppliers
can’t always give him the re-
quired specifications. “I get
told ‘no’ too often in this
country. In China, when I ask
for something, the answer is
always ‘yes.’ ”
—Junya Qian
contributed to this article.
completed an HBS executive-
education program in 2012.
In June, rapper LL Cool J
and National Basketball Asso-
ciation players Pau Gasol and
Chris Paul attended a four-
day course at HBS on the
“Business of Media, Enter-
tainment, and Sports.” In that
course, actor Channing Tatum
participated as a “live case”
study.
Ms. Banks is planning the
course with co-instructor Al-
lison Kluger, a management
PARAS GRIFFIN/GETTY IMAGES FOR 2016 ESSENCE FESTIVAL
professor at Stanford, and a
former producer for “The
View” and “Good Morning
America.”
Ms. Kluger approached Ms.
Banks with the idea of teach-
ing a short course after see-
ing her speak at a recent
Stanford event. During her
talk, Ms. Banks shared anec-
dotes about her transition
into entrepreneurship, which
included cold-calling CEO
Tony Hsieh of online shoe and
clothing company Zappos for
guidance about how to start
her own company.
“I was mesmerized,” said
Ms. Kluger, who teaches
courses in leadership and
communication. “She’s a nat-
ural.” Ms. Kluger and Ms.
Banks will spend the next few
months planning the details
of the course, which will be
available for registration on a
first-come, first-served basis.
THE WALL STREET JOURNAL.
Shake-Up, Hiring
New Finance Chief
BY VIPAL MONGA
Valeant Pharmaceuticals
International Inc. largely com-
pleted a makeover of its top
ranks on Monday by hiring
endeen as its new chief finan-
part: execution.
“It is going to be a cleanup
lyst for Guggen-
heim Securities,
JOURNAL. referring to Mr.
Herendeen’s task
at the embattled
Canadian drugmaker. “The first
thing they have to do is string
together a couple of good quar-
ters,” she said.
In his new post, the 60-year-
old executive, who Valeant
lured away from animal-health
giant Zoetis Inc., succeeds Rob-
ert Rosiello, who will stay on as
head of corporate development
and strategy. The Wall Street
Journal first reported the
change in Valeant’s executive
lineup on Sunday night.
Mr. Herendeen’s appoint-
ment continued a management
shake-up at Valeant, which
hired a new chairman and chief
executive this spring, named a
new general counsel earlier this
month, and has expanded its
executive committee and given
some of its senior executives
bigger roles.
On Monday, Valeant’s stock,
which traded above $260 a
share last year, was at $31.28,
up 8.8%, in midafternoon New
York trading. The company’s
market value has fallen sharply
over the past year as its strat-
egy of acquiring drugs and
sharply raising their prices, and
its accounting practices, have
come under heavy scrutiny
from regulators and investors.
Earlier this year, Valeant had
a close brush with defaulting on
some terms of its debt, because
it was late to file its annual re-
port.
The company has since been
sued by shareholders and faces
an investigation by federal
prosecutors into whether it de-
frauded insurers by obscuring
its ties to a mail-order phar-
macy that boosted sales of its
drugs. Valeant has said it has
been cooperating with the in-
vestigation.
In an interview with the
Journal, Mr. Herendeen said he
is walking into Valeant with
eyes wide open.
“In no way do I want to min-
imize the challenges facing the
company and the potential for
other things to go bump in the
night,” he said. “As a new team
we need to look back and deal
with this.”
He emphasized that he took
the job because he saw poten-
tial in the turnaround effort led
by Joseph Papa, who became
Valeant’s chief executive in
April.
Mr. Herendeen cited
Valeant’s heavy debt burden as
an immediate source of con-
cern, because it limits the com-
pany’s options. The drugmaker
has more than $30 billion of
long-term debt on its balance
sheet.
Mr. Papa has said the com-
pany will sell assets to reduce
its debt load. He has had suc-
cess in recent weeks amending
some terms of that debt to give
Target Cuts Ties With
Indian Textile Supplier
BY PREETIKA RANA
NEW DELHI—U.S. retailer
Target Corp. said it was sever-
ing ties with one of India’s larg-
est textile suppliers, Welspun
India Ltd., after concluding the
company sold it phony Egyp-
tian cotton sheets.
Shares of Welspun, widely
touted as an Indian-manufac-
turing success story, fell 20%,
the daily limit, on Monday
morning before trading of the
stock was temporarily sus-
pended. It is expected to re-
sume Tuesday.
Target, one of Welspun’s
largest customers, on Friday al-
leged the Mumbai-based com-
pany had violated supply con-
tracts by using non-Egyptian
cotton. Cotton sourced in Egypt
is more expensive and consid-
ered softer and more absorbent
than other varieties.
“This is an issue of highest
it more leeway in managing its
cash.
But Valeant is still struggling
with the fallout from its ac-
counting troubles. Last week, T.
Rowe Price Group Inc. filed a
lawsuit against it, alleging that
Valeant engaged in “a fraudu-
lent scheme” that cost share-
holders billions of dollars.
“Valeant intends to defend
itself and cannot comment fur-
ther on ongoing litigation,” a
company spokeswoman said of
the lawsuit.
Earlier this month, the com-
pany reaffirmed its earnings
forecast for the year following a
string of reductions, and ana-
lysts upgraded their rating of
the stock.
Mutual-fund giant Fidelity
has also sharply boosted its
stake this year.
Mr. Papa said in an emailed
statement that he hired Mr.
Herendeen because of his
“strong operational focus and
BRYAN ANSELM FOR THE WALL STREET JOURNAL
Zoetis executive Paul
Herendeen is now Valeant CFO.
disciplined approach to finan-
cial management.”
Mr. Herendeen shepherded
Zoetis through costs cuts, ac-
quisitions and a brush with ac-
tivist investor William Ackman,
who bought into the company
in 2014.
Mr. Ackman is also an inves-
tor in Valeant and a board
member, but Mr. Herendeen
said Mr. Ackman didn’t speak
with him directly about the CFO
job.
Mr. Herendeen said his selec-
tion for the Valeant post fol-
lowed a summertime interview
process that included lengthy
conversations with Valeant’s
Mr. Papa and Mr. Rosiello.
Before his stint as Zoetis’s
CFO, Mr. Herendeen was fi-
nance chief at drugmaker War-
ner Chilcott PLC, which was
purchased by a consortium of
private-equity firms in 2005.
Mr. Herendeen helped manage
its debt-heavy balance sheet,
and helped sell the company to
Actavis Inc. in 2013.
Mr. Herendeen, a hockey en-
thusiast, said he didn’t leave
Zoetis because of any issues
with the animal-health com-
pany, which he came out of re-
tirement to join two years ago.
Rather, he said, success in turn-
ing around Valeant could be a
capstone to his career.
Late Sunday, Zoetis, whose
shares rose about 50% during
Mr. Herendeen’s tenure as CFO,
said it would name Glenn David
as its new finance chief. Mr. Da-
vid was interim CFO at Zoetis
before Mr. Herendeen’s arrival.
priority for us and we will take
all necessary steps to address
it,” Welspun said.
Welspun began as a small
silk mill in India in 1985 and
quickly blossomed into one of
Asia’s largest textile makers,
supplying sheets, rugs and pil-
lowcases to some of the biggest
names in retail including Wal-
Mart Stores Inc., Bed Bath &
Beyond Inc., J.C. Penney Co.
and Macy’s Inc.
Welspun’s management held
a conference call with investors
to try to allay fears before mar-
kets in India opened Monday,
according to an analyst who
participated.
American retailers accounted
for two-thirds of Welspun’s
$878 million in sales for the
year ended March 31, according
to Mumbai-based brokerage
Edelweiss Securities. Edelweiss
said Target accounted for about
10% of Welspun’s sales.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Tuesday, August 23, 2016 | B5

FINANCE & MARKETS

Banks’ Ties to Online Lenders Get Scrutiny
FDIC proposes greater ceive increased supervisory
attention.”
supervisory attention That may enable increased
to ‘rent-a-charter’ scrutiny of online lenders even
though they aren’t banks.
arrangements The proposed change adds
to a flurry of legal activity and
BY TELIS DEMOS state regulatory moves to cur-
such banks were “very focused sion, Madden v. Midland Fund-
on safety and soundness, even ing LLC, that could make it im-
more so than other banks of possible to collect on some
their size.” loans in New York, Connecticut
In recent years, fast-growing and Vermont. After last year’s
online lenders have outsourced ruling, several firms stopped
the technical parts of lending making loans above certain in-
to bank partners or have lent terest rates in those states.

BRENDAN HOFFMAN/BLOOMBERG NEWS

AND PETER RUDEGEAIR tail the ability of the young through individual state li- In July, Colorado authorities
firms to bypass state laws. The censes. sent letters to Avant and Mar-
Federal and state regulators scrutiny also aligns with a Among the most active lette Funding LLC saying state
are increasingly scrutinizing broader effort by U.S. watch- banks working with online law would apply to loans made
partnerships between banks dogs to focus on risks of banks lenders are WebBank, a unit of by them, although banks origi-
and online lenders, reducing using outside partners. conglomerate Steel Partners nated the loans, according to
some uncertainty about the Though the FDIC has had Holdings LP, and Cross River reports by Kroll Bond Rating
rules in an area where the guidelines for relationships be- Bank in New Jersey. Agency Inc.
startups have thrived. tween banks and outside ven- The banks declined to com- Avant and Marlette subse-
Financial-technology up- dors, the new proposal focuses ment on the FDIC guidelines. quently removed certain loans
starts such as LendingClub specifically on lending part- The FDIC is seeking comment The FDIC is focusing on risks of banks using outside partners. made to Colorado borrowers
Corp., Avant Inc. and Prosper ners, including proposing on the proposal. from bond offerings , Kroll
Marketplace Inc. have raised yearly examinations rather The lender-bank partner- Some experts argue rent-a- tor has the authority to exam- added.
hundreds of millions of dollars than every 18 months. It also ships are sometimes known as charter arrangements reduce ine certain service providers The Colorado Department of
in funding partly on the prem- recommends that banks should “rent-a-charter,” since the risk. Taxpayers aren’t in danger and vendors. Law declined to comment.
ise that they can offer borrow- set “performance standards for lender pays the bank to take on of being on the hook if a loan Meanwhile, court decisions Avant Chief Executive Al Gold-
ers better terms than banks, third parties” and “require ac- its status as a national financial fails, while borrowers are given in Maryland and West Virginia stein said he expected to re-
which must shoulder larger cess to data.” institution not subject to state wider access to credit even if over the past two years de- solve the matter soon. Mar-
compliance burdens. Fewer than 50 U.S. banks usury laws that cap interest banks don’t want to take risks. fended state regulatory actions lette did not respond to a
The startups’ regulatory work closely with online lend- rates. Online lenders that partner to stop an online lender from request for comment.
advantage may be fleeting. ers, estimates Brian Korn, a The bank reviews the credit with banks, such as Elevate making loans at interest rates A revised Connecticut law
Last month, the Federal De- partner at Manatt, Phelps & policies submitted by its online Credit Inc., have already been higher than the states permit, that took effect in July requires
posit Insurance Corp. pro- Phillips LLP. “The FDIC wants partner, then uses its capital to subject to some FDIC examina- though the lender was working companies that sell leads to
posed guidelines, including to make sure these banks are fund each loan until an investor tions, according to its chief ex- with a partner bank. lenders for people who want
one that banks that partner doing their homework and ultimately takes it over. The ecutive, Ken Rees, because The U.S. Supreme Court this small loans, even if they don’t
with third-party firms to aren’t just puppets,” he said. whole process typically takes a under a decadesold law, a year declined to review a May ultimately originate them, to
make loans “will generally re- He added that in his experience day or two. bank’s primary federal regula- 2015 U.S. appellate-court deci- obtain licenses as lenders.

Kobe Bryant, Partner Unveil a Venture Fund Deloitte

BY DENNIS K. BERMAN Is Sued by
Meet Kobe Bryant, venture
capitalist.
The retired Los Angeles Lak-
Holders
ers basketball star on Monday
unveiled his venture-capital
fund, a $100 million vehicle for
Of Lender
investing in technology, media BY NICOLAS PARASIE
and data companies.
Mr. Bryant, who turns 38 DUBAI—Several sharehold-
years old Tuesday, isn’t going ers of defunct Lebanese Cana-
it alone. He is joining with Jeff dian Bank have filed a lawsuit
Stibel, 43, a longtime entrepre- against Deloitte & Touche’s
neur and investor who was in- Middle Eastern unit, seeking
troduced to Mr. Bryant by a $128 million in damages from
mutual friend. They have the audit firm for allegedly
named their firm Bryant Stibel failing to detect the lender’s
and will be based in the Los claimed involvement in money
Angeles area. laundering and terrorist-fi-
The two have been invested nancing schemes.
DAVID CRANE/LOS ANGELES DAILY NEWS/ZUMA PRESS

in 15 companies since 2013, but The group of 11 minority

only after Mr. Bryant’s retire- shareholders, who jointly own
ment from basketball have they around one-fourth of Lebanese
decided to formalize their rela- Canadian Bank, claim Deloitte
tionship and fund. “deliberately ignored a reason-
The two men are contribut- able suspicion of money laun-
ing the $100 million—which dering/terrorist financing” at
they expect to invest over the the Beirut-based lender, ac-
next few years—and aren’t cording to court documents
seeking outside investors yet. seen by The Wall Street Jour-
Current investments include nal.
sports media website the Play- The claimants allege that a
ers Tribune, videogame de- top Mideast Deloitte executive
signer Scopely, legal-services was in charge of Lebanese Ca-
company LegalZoom, a tele- Kobe Bryant waves to fans after scoring 60 points in his final National Basketball Association game in April. nadian Bank’s audit during
marketing-software firm called what was later described by
RingDNA and a home-juicing business of investing in compa- been holding 6 a.m., one-on- the help of Rhode Island gov- [NBA player Andre] Iguodala.” U.S. authorities as a period of
company called Juicero. nies so someone can use Kobe one workouts with young NBA ernment agencies. The com- Is the world ready for an- systemic money laundering,
In an interview, the two men as an endorser. That’s not in- players to help improve their pany filed for bankruptcy in other athlete alighting into the because of lax controls.
said their skills complement teresting,” said Mr. Stibel, who skills, and said he has a similar 2012. business world? At least one
each other, with Mr. Stibel began his career in brain re- impulse when backing entre- Former Los Angeles Laker— venture capitalist—New Enter-
bringing experience building search and later founded and preneurs. and ex-teammate of Mr. Bry- prise Associates’ Jon Sakoda—
The bank settled
companies and Mr. Bryant con- developed tech companies. “If you would have asked me ant—Shaquille O’Neal has also says there is room. Mr. Sakoda with U.S. authorities
tributing a creative, if obses- “The point is to add real value.” 10 years ago, I would say I made a number of investments worked with Messrs. Stibel and
sive, flair for details around Mr. Bryant, who is known need to win now,” Mr. Bryant in technology and entertain- Bryant in their investment in
in 2013 for $102
marketing, branding and story- for his painstaking preparation said. “Age tends to give you ment startups. Perhaps the sports website Players Tribune. million.
telling. He, in fact, designed and training, said he also perspective. The most impor- most similar comparison is to “There are a lot of similarities
the company’s new logo with brings the ability to identify tant thing I enjoy now is help- New York Knick Carmelo An- between trying to build a ca-
inspiration from piano keys. entrepreneurs with a robust ing others be successful. I en- thony, who started Melo7 Tech reer in sports with longevity Deloitte’s Middle East office
They even bonded over work ethic. joy doing that much much Partners for largely early- and in business, too. Athletes declined to comment on the
shared injuries. In the case of “Sometimes you can spot it more, that’s something that stage tech investing. are taken incredibly seriously matter, citing confidentiality
6-foot-6-inch (1.98 meter) Mr. right away, other times not so lasts forever, and hope they do Mr. Bryant said he doesn’t by entrepreneurs.” and regulatory obligations to-
Bryant, an Achilles rupture much,” he said. “It’s the inner that for the next generation.” view himself as a rival to Adds Mr. Stibel: “The most ward its client.
during a 2013 game against the belief that a person has that he Many retired athletes are those players. “I think it’s in- important things are grit and “We are confident that we
Golden State Warriors; and in will endure no matter what the known for their powerful—and teresting that the immediate intelligence. You have to have have served our client with
the case of 5-foot-7-inch (1.7 obstacle may be. It’s that per- often failed—business ambi- reaction from people would that passion that you can suc- highest degree of integrity and
meter) Mr. Stibel, a broken foot sistence, the entrepreneur do- tions. About 10 years ago, be competitiveness between ceed. The business and idea professionalism, and we stand
in a mishap with a Manhattan ing what he or she truly be- baseball pitcher Curt Schilling myself and others. I’m more will change over and over by the quality of our work,” a
cobblestone. lieves in and truly loves to do.” launched a videogame com- interested in how I can help again. But the entrepreneur spokeswoman for Deloitte said.
“We don’t want to be in the This summer Mr. Bryant has pany and raised money with Shaq, Melo [Anthony] or persists.” U.S. authorities in 2011 la-
beled the Beirut-based bank a
“primary money-laundering

U.S. Stocks Slip as Crude-Oil Prices Decline

concern” that helped drug
traffickers launder money and
finance the Lebanese group
Hezbollah.
BY RIVA GOLD than 0.1%, while the Nasdaq Janet] Yellen speaks Friday to lar is strengthening, you’re Lebanese Canadian Bank
AND IRA IOSEBASHVILI Composite rose 0.1%. Smooth Summer see if they can read anything bearish on commodities and eventually settled in 2013 with
In Europe, the Stoxx Europe Daily moves of at least 1% between the lines.” on many emerging markets, the U.S. authorities for $102
U.S. stocks slipped Monday, 600 rose 0.1%, with Syngenta on the S&P 500, quarterly Ms. Yellen is slated to speak which have funded themselves million but denied any wrong-
dragged down by commodity- helping to lead the way up af- Friday at the Jackson Hole in dollars.” doing.
linked shares. ter clearing a regulatory hur- 30 days Symposium in Wyoming. The stronger dollar helped Deloitte was Lebanese Ca-
Major U.S. stock indexes ha- dle in its takeover deal. Fed Vice Chairman Stanley drag down dollar-denominated nadian Bank’s auditor from
ven’t covered much ground in Syngenta rose 11% after 25 Fischer on Sunday struck an commodities, with U.S. crude 1995 and is still involved in its
recent weeks. The S&P 500 China National Chemical said optimistic note on the econ- oil down 3% at $47.05 a barrel liquidation. Most of the bank’s
was on track for it had received clearance from 20 omy’s short-term outlook, call- and gold down 0.2% at assets were sold to the Leba-
MONDAY’S its 31st consec- a U.S. national-security regula- ing inflation within “hailing $1,337.70 an ounce. nese branch of France’s Soci-
MARKETS utive session tor for its planned $43 billion 15 distance” of the bank’s 2% tar- Fears that a recent bull mar- ete Generale in 2011, following
without a move acquisition of the Swiss pesti- get and noting economic ket in oil prices could prompt the U.S. allegations.
of 1% or more in cide and seed company. The 10
growth is expected to pick up more production also weighed Shareholders of Lebanese
either direction, the longest deal is still subject to antitrust in the coming quarters. on oil prices. The number of Canadian Bank said they
such stretch in two years. The and other regulatory reviews. The WSJ Dollar Index, which rigs drilling for oil in the U.S. picked the English-language
5
index hit its 11th record of the With corporate earnings measures the U.S. currency has risen for eight consecutive court of Dubai’s financial hub
year last Monday but has since season winding down in the 1
against 16 others, gained 0.1%. weeks, oil-field-services firm because it adheres closest to
pulled back. U.S., markets have been fluctu- 0 Expectations of higher interest Baker Hughes said Friday. international standards in the
“It’s the epitome of the dog ating on mixed signals from 2015 ’16 rates tend to boost the dollar, The S&P 500’s energy sec- Middle East.
days of summer,” said Kent Federal Reserve officials, re- Note: Third-quarter 2016 as of Aug. 22 as higher borrowing costs make tor lost 0.9% by late afternoon. The claimants include a
Engelke, managing director at flecting investors’ uncertainty Source: FactSet the U.S. currency more attrac- Shares of Marathon Oil fell member of Qatar’s royal family
Capitol Securities Manage- over the timing and rationale THE WALL STREET JOURNAL. tive to yield-seeking investors. 7%. Halliburton lost 3.9%. and Nest Investments Holding
ment Inc. “We are all just sit- behind the bank’s next steps. The Fed’s plans and its im- Elsewhere, the yen’s rela- SAL, a Qatari investment vehi-
ting on our hands.” Energy shares’ moves have “there isn’t much out there,” pact on the dollar remain “the tive weakness helped Japan’s cle linked to Ghazi Abu Nahl, a
In 4 p.m. trading, the Dow been more pronounced, track- said Peter Costa, president of pulse of much of the market’s Nikkei Stock Average eke out a prominent Middle Eastern
Jones Industrial Average ing recent swings in oil. trading firm Empire Execu- focus,” said Neil Dwane, global 0.3% gain. The dollar rose businessman who also heads
slipped 23 points, or 0.1%, to Investors are searching for tions Inc. Most “are waiting strategist at Allianz Global In- nearly 0.1% against the yen to one of the region’s largest in-
18529.42. The S&P 500 fell less things to trade off of, and for when [Fed Chairwoman vestors. “If you think the dol- ¥100.28. surance groups.
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 | Tuesday, August 23, 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
16598.19 s 52.37, or 0.32% Year-to-date t 12.80% 340.43 s 0.29, or 0.09% Year-to-date t 6.94% 2182.64 t 1.23, or 0.06% Trailing P/E ratio * 24.85 21.63
High, low, open and close for each 52-wk high/low20012.40 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 * 18.60 17.42
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 2.10 2.06
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 65-day moving average

17000 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 2455.84 0.37 0.02 2033.03 • 2466.78 5.1 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1701.55 1.79 0.11 1471.88 • 1956.39 –0.9 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 904.59 –5.75 –0.63 691.21 • 1044.05 13.9 3.250 Australia 2 1.456 71.4 67.3 81.2 122.8 1.427 1.531 1.849
4.250 10 1.913 37.4 28.7 34.8 55.3 1.868 1.915 2.594
Americas DJ Americas 527.05 –0.36 –0.07 433.38 • 529.24 8.2
1.250 Belgium 2 -134.8 -127.3 -79.5 -0.566 -0.554 -0.174
-0.606 -132.0
Brazil Sao Paulo Bovespa 57685.24 –1413.68 –2.39 37046.07 • 59417.88 33.1
1.000 10 0.117 -142.1 -140.6 -132.8 -108.3 0.174 0.239 0.958
Canada S&P/TSX Comp 14741.31 53.85 0.37 11531.22 • 14855.69 13.3
1.000 France 2 -0.570 -131.1 -131.9 -123.3 -78.8 -0.565 -0.514 -0.167
Mexico IPC All-Share 48299.26 1.80 0.004 39256.58 • 48956.06 12.4
0.500 10 0.136 -140.2 -139.2 -135.2 -109.1 0.189 0.214 0.950
Chile Santiago IPSA 3241.37 9.05 0.28 2730.24 • 3253.99 10.1
0.000 Germany 2 -0.624 -136.6 -136.4 -133.2 -86.8 -0.610 -0.613 -0.247
U.S. DJIA 18529.42 –23.15 –0.12 15370.33 • 18668.44 6.3
0.000 10 -0.087 -162.5 -161.2 -159.4 -147.3 -0.031 -0.027 0.568
Nasdaq Composite 5244.60 6.22 0.12 4209.76 • 5271.36 4.7
0.250 Italy 2 -0.111 -85.3 -83.9 -76.8 -49.0 -0.085 -0.049 0.131
S&P 500 2182.64 –1.23 –0.06 1810.10 • 2193.81 6.8
1.600 10 1.115 -42.3 -44.3 -32.5 -18.3 1.138 1.242 1.858
CBOE Volatility 12.27 0.93 8.20 11.02 • 53.29 –32.6
0.100 Japan 2 -0.197 -93.8 -95.8 -104.7 -61.2 -0.204 -0.328 0.009
EMEA Stoxx Europe 600 340.43 0.29 0.09 303.58 • 385.43 –6.9 0.100 10 -0.070 -160.8 -166.7 -179.1 -168.2 -0.086 -0.225 0.359
Stoxx Europe 50 2834.26 –3.81 –0.13 2556.96 • 3305.96 –8.6 4.000 Netherlands 2 -0.605 -134.7 -133.5 -127.8 -84.0 -0.581 -0.559 -0.219
Austria ATX 2256.79 –11.41 –0.50 1929.73 • 2515.09 –5.8 0.500 10 0.022 -151.6 -151.5 -147.3 -125.4 0.065 0.093 0.787
Belgium Bel-20 3510.61 8.08 0.23 3117.61 • 3773.73 –5.1 4.450 Portugal 2 0.576 -16.6 -15.3 -5.0 -18.1 0.602 0.669 0.440
France CAC 40 4389.94 –10.58 –0.24 3892.46 • 5011.65 –5.3 2.875 10 3.009 147.0 141.6 147.4 57.8 2.997 3.040 2.619
Germany DAX 10494.35 –50.01 –0.47 8699.29 • 11430.87 –2.3 0.250 Spain 2 -0.187 -92.9 -93.4 -88.2 -47.2 -0.180 -0.164 0.149
Greece ATG 566.01 4.69 0.84 420.82 • 731.18 –10.3 1.950 10 0.937 -60.1 -62.9 -44.2 -2.8 0.952 1.124 2.013
Hungary BUX 27572.95 –26.82 –0.10 20452.90 • 28100.59 15.3 4.250 Sweden 2 -0.630 -137.1 -139.2 -136.0 -115.2 -0.638 -0.642 -0.531
Israel Tel Aviv 1471.23 0.60 0.04 1378.80 • 1627.31 –3.8 1.000 10 0.128 -141.0 -144.9 -137.6 -146.8 0.132 0.191 0.573
Italy FTSE MIB 16369.14 59.08 0.36 15017.42 • 22874.96 –23.6 1.250 U.K. 2 0.119 -62.3 -59.4 -58.4 1.4 0.161 0.135 0.635
Netherlands AEX 447.63 –1.09 –0.24 378.53 • 474.87 1.3 2.000 10 0.562 -97.7 -96.1 -76.8 -33.0 0.620 0.799 1.711
Poland WIG 47619.49 82.77 0.17 41747.01 • 51909.32 2.5 0.750 U.S. 2 0.742 ... ... ... ... 0.754 0.719 0.621
Russia RTS Index 963.29 –2.39 –0.25 607.14 • 987.07 27.2 1.500 10 1.538 ... ... ... ... 1.581 1.566 2.041
Spain IBEX 35 8468.00 17.40 0.21 7579.80 • 10631.60 –11.3
Sweden SX All Share 499.21 –0.44 –0.09 432.78 • 530.82 –1.2 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8157.85 30.57 0.38 7425.05 • 9080.56 –7.5 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 52828.93 56.98 0.11 45975.78 • 54760.91 4.2 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 8/19/2016
Turkey BIST 100 77953.27 –192.32 –0.25 68230.47 • 86931.34 8.7
One-Day Change Year Year
U.K. FTSE 100 6828.54 –30.41 –0.44 5499.51 • 6955.34 9.4 Commodity Exchange Last price Net Percentage high low
343.25 -0.50 -0.15% 449.00 322.50
Asia-Pacific DJ Asia-Pacific TSM 1464.63 –0.97 –0.07 1188.42 • 1479.05 5.4 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 1015.00 10.50 1.05% 1,186.25 868.00
Australia S&P/ASX 200 5515.10 –11.60 –0.21 4765.30 • 5587.40 4.1
Wheat (cents/bu.)
CBOT
CBOT 435.25 -9.50 -2.14 551.50 425.25
China Shanghai Composite 3084.81 –23.30 –0.75 2655.66 • 3651.77 –12.8
Live cattle (cents/lb.) CME 110.150 -0.100 -0.09 125.475 105.250
Hong Kong Hang Seng 22997.91 60.69 0.26 18319.58 • 23151.94 4.9
Cocoa ($/ton) ICE-US 3,011 -88 -2.84 3,216 2,728
India S&P BSE Sensex 27985.54 –91.46 –0.33 22951.83 • 28208.62 7.2
Coffee (cents/lb.) ICE-US 146.05 4.45 3.14 157.65 119.40
Japan Nikkei Stock Avg 16598.19 52.37 0.32 14952.02 • 20012.40 –12.8
Sugar (cents/lb.) ICE-US 20.44 0.67 3.39 21.22 12.92
Singapore Straits Times 2841.19 –2.83 –0.10 2532.70 • 3083.07 –1.4
Cotton (cents/lb.) ICE-US 68.31 0.28 0.41 77.98 54.19
South Korea Kospi 2042.16 –14.08 –0.68 1829.81 • 2056.24 4.1 Robusta coffee ($/ton) ICE-EU 1826.00 9.00 0.50 1,886.00 1,423.00
Taiwan Weighted 8981.81 –52.46 –0.58 7410.34 • 9200.42 7.7
Copper ($/lb.) COMEX 2.1525 -0.0250 -1.15 2.3290 1.9710
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1342.60 -3.60 -0.27 1,384.40 1,066.00
Silver ($/troy oz.) COMEX 19.010 -0.439 -2.26 21.250 13.865
Currencies London close on Aug. 22 Aluminum ($/mt)* LME 1,662.50 -38.00 -2.23 1,700.50 1,451.50
Tin ($/mt)* LME 18,425.00 50.00 0.27 18,650.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Mon YTDchg Copper ($/mt)* LME 4,788.00 -30.50 -0.63 5,070.50 4,320.50
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,894.00 -9.00 -0.47 1,909.00 1,598.00
20% Europe Zinc ($/mt)* LME 2,288.00 -15.00 -0.65 2,306.50 1,467.00
Yen Bulgaria lev 0.5784 1.7288 –4.0 Nickel ($/mt)* LME 10,300.00 -90.00 -0.87 10,950.00 7,750.00
s
Croatia kuna 0.1511 6.617 –5.6 Rubber (Y.01/ton) TCE 154.40 -0.70 -0.45 159.30 150.80
10
WSJ Dollar index Euro zone euro 1.1316 0.8837 –4.0
s
Czech Rep. koruna-b 0.0419 23.885 –4.0 Palm oil (MYR/mt) MDEX 2542.00 -36.00 -1.40 2,669.00 2,171.00
0 Denmark krone 0.1520 6.5777 –4.3 Crude oil ($/bbl.) NYMEX 47.44 -1.67 -3.40 53.02 33.28
Hungary forint 0.003644 274.42 –5.5 NY Harbor ULSD ($/gal.) NYMEX 1.5058 -0.0328 -2.13 1.6047 1.0081
s Euro Iceland krona 0.008571 116.67 –10.4
–10 RBOB gasoline ($/gal.) NYMEX 1.4037 -0.0348 -2.42 1.5121 0.9930
Norway krone 0.1215 8.2291 –6.9
0.2626 3.8074 –3.0
Natural gas ($/mmBtu) NYMEX 2.702 0.083 3.17 3.0220 2.0490
2015 2016 Poland zloty
Russia ruble-d 0.01545 64.722 –10.0 Brent crude ($/bbl.) ICE-EU 49.58 -1.61 -3.15 53.81 32.51
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1193 8.3842 –0.7 Gas oil ($/ton) ICE-EU 445.50 -7.75 -1.71 481.75 307.00
Mon Mon
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0393 0.9622 –4.0
Turkey lira 0.3396 2.9447 0.9 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1290 7.7533 0.03
Ukraine hryvnia 0.0395 25.2945 5.4
Argentina peso-a 0.0671 14.8930 15.1
India rupee
Indonesia rupiah
0.0149
0.0000757
67.1947 1.5
13218 –4.5
U.K. pound 1.3137 0.7612 12.2 Cross rates London close on Aug 22
Brazil real 0.3102 3.2233 –18.6 Middle East/Africa
Japan yen 0.009972 100.28 –16.6
Canada dollar 0.7726 1.2944 –6.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002945 339.55 0.2 Bahrain dinar 2.6501 0.3773 0.1
Chile peso 0.001494 669.30 –5.5 Australia 1.3111 1.7225 1.3628 0.0131 0.1692 1.4839 1.0130 ...
Macau pataca 0.1253 7.9838 –0.3 Egypt pound-a 0.1126 8.8776 13.4
Colombia peso 0.0003460 2890.58 –8.9 Canada 1.2944 1.7002 1.3452 0.0129 0.1669 1.4645 ... 0.9871
Malaysia ringgit-c 0.2483 4.0276 –6.4 Israel shekel 0.2648 3.7766 –3.0
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7274 1.3748 –6.1 Kuwait dinar 3.3174 0.3014 –0.7 Euro 0.8837 1.1610 0.9184 0.0088 0.1140 ... 0.6828 0.6741
Mexico peso-a 0.0546 18.3205 6.5
Pakistan rupee 0.0095 104.840 –0.1 Oman sul rial 2.5970 0.3851 0.03 Hong Kong 7.7533 10.1854 8.0587 0.0773 ... 8.7724 5.9901 5.9134
Peru sol 0.3012 3.3200 –2.8
Philippines peso 0.0215 46.529 –0.7 Qatar rial 0.2747 3.641 –0.1 Japan 100.2770 131.7100 104.2200 ... 12.9340 113.4600 77.4700 76.4700
Uruguay peso-e 0.0352 28.420 –5.0
Singapore dollar 0.7403 1.3508 –4.8 Saudi Arabia riyal 0.2666 3.7505 –0.1 0.9622 1.2638 ... 0.0096 0.1241 1.0889 0.7434 0.7338
Venezuela bolivar 0.100150 9.99 58.4 Switzerland
South Korea won 0.0008910 1122.33 –4.6 South Africa rand 0.0735 13.6047 –12.1
U.K. 0.7612 ... 0.7913 0.0076 0.0982 0.8615 0.5881 0.5806
Asia-Pacific Sri Lanka rupee 0.0068785 145.38 0.8 Close Net Chg % Chg YTD % Chg
0.7627 1.3111 –4.5 Taiwan dollar 0.03145 31.793 –3.4 U.S. ... 1.3137 1.0393 0.0100 0.1290 1.1316 0.7726 0.7627
Australia dollar WSJ Dollar Index 85.65 0.09 0.11 –5.01
China yuan 0.1504 6.6499 2.4 Thailand baht 0.02884 34.680 –3.7 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

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

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.52217% 0.19940% ¥ TakedaPharm 4502 4545.00 0.33 -25.06 CHF RocheHldgctf ROG 244.30 0.74 -11.61 Last: 142.82 s 0.06, or 0.04% YTD s 4.8%
Three month 0.82544 0.33160 Asia Titans HK$ TencentHoldings 0700 204.80 1.49 34.12 £ RoyDtchShell A RDSA 1901.00 -1.32 24.57
145
Six month 1.22900 0.52455 HK$ AIAGroup 1299 48.30 0.42 3.65 ¥ TokioMarineHldg 8766 4004.00 -0.02 -15.03 € SAP SAP 77.31 -0.90 5.36
One year 1.53294 0.83335 High
¥ AstellasPharma 4503 1554.00 1.44 -10.25 ¥ ToyotaMtr 7203 6100.00 1.23 -18.54 € Sanofi SAN 69.56 -0.22 -11.50 140
Euro Libor AU$ AustNZBk ANZ 26.62 -0.22 -4.69 AU$ Wesfarmers WES 43.23 0.46 3.89 € SchneiderElectric SU 60.43 -0.79 14.97 Close 50–day
Low moving average 135
One month -0.37143% -0.10500% AU$ BHP BHP 20.95 -1.60 17.30 AU$ WestpacBanking WBC 29.97 -0.17 -10.70 € Siemens SIE 105.95 -0.98 17.88
Three month -0.32029 -0.03000 HK$ BankofChina 3988 3.45 ... -0.29 AU$ Woolworths WOW 24.10 0.84 -1.63 € Telefonica TEF 8.77 -0.19 -14.31 t 130
Six month -0.20229 0.05200 HK$ CKHutchison 0001 98.05 0.82 -6.08 € Total FP 42.45 -1.42 4.95 125
One year -0.07200 0.15671 HK$ CNOOC 0883 9.74 -0.61 20.69 Stoxx 50 CHF UBSGroup UBSG 12.90 0.16 -33.91
120
Euribor ¥ Canon 7751 2894.00 -0.79 -21.25 CHF ABB ABBN 21.12 -0.19 17.59 € Unilever UNA 40.83 -0.69 1.80
One month -0.36900% -0.09400% ¥ CentralJapanRwy 9022 16735 0.81 -22.52 € ASMLHolding ASML 94.46 -0.05 14.43 £ Unilever ULVR 3565.50 -1.14 21.83 27 3 10 17 24 1 8 15 22 29 5 12 19
Three month -0.29900 -0.03200 HK$ ChinaConstructnBk 0939 5.79 0.70 9.04 € AXA CS 17.55 0.26 -30.44 € Vinci DG 66.90 -0.18 13.12 June July Aug.
Six month -0.19000 0.04100 HK$ ChinaLifeInsurance 2628 18.56 -1.17 -26.06 € AirLiquide AI 97.40 -0.98 -6.03 £ VodafoneGroup VOD 233.65 -0.60 5.72
One year -0.04600 0.16000 HK$ ChinaMobile 0941 97.85 -0.86 11.83 € Allianz ALV 129.25 0.12 -20.97 CHF ZurichInsurance ZURN 244.40 0.12 -5.42
Yen Libor AU$ CmwlthBkAust CBA 73.12 -0.45 -14.51 € Anheuser Busch ABI 110.95 -0.67 -3.02
DJIA Stoxx 50
One month -0.06243% 0.05300% ¥ EastJapanRailway 9020 8764.00 3.40 -23.46 £ AstraZeneca AZN 5091.00 0.65 10.28
17150 -1.07 -18.64 65.37 -0.24 -6.01 Last: 2834.26 t 3.81, or 0.13% YTD t 8.6%
Three month -0.02329 0.08786 ¥ Fanuc 6954 € BASF BAS 71.51 -0.87 1.12 $ AmericanExpress AXP
Six month 0.00357 0.13157 ¥ Hitachi 6501 494.90 1.14 -28.43 € BNP Paribas BNP 43.02 1.02 -17.64 $ Apple AAPL 108.51 -0.78 3.09 2925
One year 0.09743 0.24329 TW$ Hon Hai Precisn 2317 85.40 0.12 5.69 £ BT Group BT.A 395.35 1.00 -16.19 $ Boeing BA 134.99 0.41 -6.64
¥ HondaMotor 7267 3131.00 1.23 -19.92 € BancoBilVizAr BBVA 5.13 0.81 -23.08 $ Caterpillar CAT 83.59 -0.30 23.00 2850
Offer Bid
KRW HyundaiMtr 005380 132000 -0.38 -11.41 € BancoSantander SAN 3.66 0.66 -19.61 $ Chevron CVX 101.97 -0.34 13.35 2775
Eurodollars
HK$ Ind&Comml 1398 4.96 1.02 5.98 £ Barclays BARC 160.05 -0.19 -26.88 $ CiscoSystems CSCO 30.63 0.36 12.80
One month 0.5500% 0.4500%
43.74
2700
Three month 0.9000 0.8000
¥ JapanTobacco 2914 3887.00 0.57 -13.06 € Bayer BAYN 95.89 -0.48 -17.19 $ CocaCola KO -0.41 1.82
¥ KDDI 9433 3105.00 -0.29 -1.55 £ BP BP. 427.90 -1.48 20.88 $ Disney DIS 95.89 -0.52 -8.75 2625
Six month 1.2500 1.1500
¥ Mitsubishi 8058 2152.00 0.09 6.11 £ BritishAmTob BATS 4889.00 0.34 29.65 $ DuPont DD 69.95 0.24 5.03 2550
One year 1.5500 1.4500
¥ MitsubishiUFJFin 8306 528.60 -0.68 -30.18 CHF FinRichemont CFR 59.40 -0.75 -17.61 $ ExxonMobil XOM 88.01 0.24 12.91
Latest 52 wks ago
1355.00 0.89 -6.26 $ GenElec GE 31.33 0.26 0.58 27 3 10 17 24 1 8 15 22 29 5 12 19
¥ Mitsui 8031 € Daimler DAI 61.41 ... -20.84
June July Aug.
Prime rates ¥ Mizuho Fin 8411 167.60 -0.30 -31.17 € DeutscheTelekom DTE 15.17 -0.23 -8.20 $ GoldmanSachs GS 166.26 0.02 -7.75
U.S. 3.50% 3.25% ¥ NTTDoCoMo 9437 2673.00 0.75 7.61 £ Diageo DGE 2149.50 -1.33 15.78 $ HomeDepot HD 135.34 -0.09 2.34
Canada 2.70 2.70 AU$ NatAustBnk NAB 27.29 -0.04 -9.64 € ENI ENI 13.44 -0.22 -2.61 $ Intel INTC 35.36 0.34 2.64
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥ NipponStl&SmtmoMtl 5401 2106.50
4609.00
-0.71
0.46
-12.81
-4.69
£ GlaxoSmithKline GSK 1664.00 -0.27 21.19 $
$
IBM
JPMorganChase
IBM
JPM
160.03
65.80
-0.01
-0.09
16.28
-0.35
Dow Jones Industrial Average P/E: 20
¥ NipponTeleg 9432 £ HSBC Hldgs HSBA 539.50 -0.68 0.62
Policy rates ¥ NissanMotor 7201 960.60 -0.81 -24.92 € INGGroep INGA 10.49 0.43 3.40 $ JohnsJohns JNJ 119.14 -0.65 15.99 Last: 18529.42 t 23.15, or 0.12% YTD s 6.3%
ECB 0.00% 0.05% ¥ NomuraHldgs 8604 457.70 -0.04 -32.60 £ ImperialBrands IMB 4033.50 -0.41 12.46 $ McDonalds MCD 115.43 0.37 -2.29
Britain 0.25 0.50 1039.50 1.07 -16.20 $ Merck MRK 63.55 0.30 20.31 18500
¥ Panasonic 6752 € IntesaSanpaolo ISP 1.85 1.04 -40.16
Switzerland 0.50 0.50 HK$ PetroChina 0857 5.31 -0.19 4.32 € LVMHMoetHennessy MC 156.15 -0.57 7.76
$ Microsoft MSFT 57.67 0.09 3.95
$ NikeClB NKE 58.67 -0.39 -6.13 18000
Australia 1.50 2.00 HK$ PingAnInsofChina 2318 40.80 -0.61 -4.90 £ LloydsBankingGroup LLOY 55.54 0.54 -23.99
U.S. discount 1.00 0.75 $ RelianceIndsGDR RIGD 30.10 -0.82 -1.63 € LOreal OR 170.95 -0.44 10.08
$ Pfizer PFE 34.84 -0.40 7.93 17500
Fed-funds target 0.25 0.00 AU$ RioTinto RIO 49.20 -1.18 10.04 £ NationalGrid NG. 1081.00 0.05 15.31
$ Procter&Gamble PG 86.85 -0.53 9.37
Call money 2.25 2.00 1665000 -0.60 32.14 $ 3M MMM 179.07 -0.30 18.87 17000
KRW SamsungElectronics 005930 CHF Nestle NESN 78.10 -1.01 4.76
4441.00 0.73 -19.98 $ TravelersCos TRV 116.96 -0.43 3.63
Overnight repurchase rates ¥ Seven&I Hldgs 3382 CHF Novartis NOVN 78.15 0.26 -9.97 16500
6494.00 0.20 5.78 $ UnitedTech UTX 108.52 -0.57 12.96
U.S. 0.41% 0.17% ¥ SoftBankGroup 9984 DKK NovoNordiskB NOVO-B 314.40 1.85 -21.38
3436.00 -0.09 -25.40 $ UnitedHealthGroup UNH 142.10 0.04 20.79 27 3 10 17 24 1 8 15 22 29 5 12 19
Euro zone n.a. n.a. ¥ Sumitomo Mitsui 8316 £ Prudential PRU 1381.00 -0.14 -9.80
110.10 0.92 17.44 $ VISAClA V 81.01 0.67 4.46 June July Aug.
HK$ SunHngKaiPrp 0016 £ ReckittBenckiser RB. 7388.00 -0.50 17.62
Sources: WSJ Market Data Group, SIX 173.00 -0.86 20.98
$ Verizon VZ 52.55 0.19 13.70 Note: Price-to-earnings ratios are for trailing 12 months
TW$ TaiwanSemiMfg 2330 £ RioTinto RIO 2386.50 -2.43 20.56
Financial Information, Tullett $ WalMart WMT 72.71 -0.14 18.61 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL. Tuesday, August 23, 2016 | B7

FINANCE & MARKETS

Shedding REITs Will Hit Yields Finance

Real-estate stocks will fund’s sponsor. The ETF will re-
move the real-estate stocks
soon move out of from its portfolio through what
some financial funds are known as “in-kind” transac-
tions so there will “little to no”
to their own sector tax impact, he said.
The impact to the fund’s
BY DAISY MAXEY yield is expected to be “ex-
tremely small,” he added. While
Yield-hungry investors could its yield may decline, it won’t
be in for a surprise next month likely decline by as much as
when certain financial-sector 0.20 percentage point “by cur-
funds cut much of their stakes rent estimates,” he said. The
in dividend-heavy real-estate fund currently yields 1.95%, ac-
Watch
BALTIC EXCHANGE
Deal Advances
For SGX Takeover
SINGAPORE—The proposed
acquisition of Baltic Exchange
Ltd. by Singapore Exchange Ltd.
moved a step closer on Monday,
with the two bourses agreeing to
previously announced terms of

MIKE MERGEN/ BLOOMBERG NEWS

investment trusts, with some
experts pegging the possible
cut in yield at as much as 0.20
percentage point.
The estimated dividend yield
for the financial sector based
on Aug. 1 data is 2.28%, but
that is expected to fall to 2.08%
after real-estate stocks move to
their own sector, according to
S&P Dow Jones Indices. The es-
timated dividend yield for the
real-estate stocks that will no
longer be part of the financial
sector in the S&P 500 is 3.1%, it
says.
The expected drop in yield
might seem minuscule, but in a
world of low interest rates,
even a small drop has a big im-
pact, experts say.
“A lot of people will sit down
and crunch the numbers, and
they may change their minds”
about some holdings as a result
of the change, said David
Blitzer, managing director and
chairman of the index commit-
tee at S&P Dow Jones Indices.
The change is coming be-
cause two major index provid-
ers—S&P Dow Jones Indices,
part of McGraw Hill Financial,
and MSCI Inc.—plan to break
out publicly traded equity real-
estate investment trusts and
real-estate management and
development companies from
the financials sector and put
them into a new equity real-es-
tate investment trusts sector
under their classification stan-
dard.
The change will occur after
the close on Aug. 31 but will be
implemented in the indexes on
Sept. 16. Mortgage REITs will
remain in the financials sector,
which also includes banks and
insurance companies.
Vanguard says the impact on yield depends highly on the market environment and other factors.
After the changes, funds that
are indexed to either the S&P
or MSCI financial-sector bench-
marks will have to remove the
bulk of their holdings in the re-
categorized REITs. Those funds
that continue to hold some of
the affected real-estate stocks
risk a tracking error—a differ-
ence between the portfolio’s re-
turns and those of its index—
which is important to some
investors, said Todd Rosen-
bluth, director of exchange-
traded-fund and mutual-fund
research at S&P Global Market
Intelligence.
“When REITs are removed,
the dividend yield should go
down a little bit,” said Victor
Lin, a trading strategist at
Credit Suisse. Whether it is a
big enough change to make a
difference to investors in finan-
cial funds will depend on their
sensitivity and whether they
are using the ETF for yield or
for exposure to the financial
sector, he added.
Fund companies are taking
different tacks to comply with
the shift, with some simply
planning to remove real-estate
stocks from their financial
funds, and others planning to
shift investors’ money already
in real-estate stocks into real-
estate funds they don’t cur-
rently own.
Companies will notify inves-
tors of any changes. Investors
should watch carefully to be
sure they know what funds
they own after changes are
made, if their exposure to real-
estate stocks and their yield
has changed and what they will
owe in taxes if they hold a fund
in a taxable account. Not all
funds will make the shift on
Sept. 16; some will wait until
their next scheduled rebalance.
So far, fund companies are
saying there will be minimal to
no tax impact on investors,
though they are making no
guarantees.
Guggenheim is taking a different approach
to shedding REITs.
Vanguard Group plans to
transition 26.4% of the securi-
ties in the $3.8 billion Vanguard
Financials Index Fund and
26.4% of the securities in the
$3.7 billion Vanguard Financials
ETF out of the funds through a
quarterly rebalance. The turn-
over created by the change
should be minimal, said spokes-
man David Hoffman.
“However, the fund will en-
gage in trading to complete the
transition,” he said.
While the change isn’t ex-
cording to ETF.com.
Guggenheim Investments is
taking a different approach to
shedding REITs. Real-estate
stocks will be removed from
the $145.5 million Guggenheim
S&P 500 Equal Weight Finan-
cials ETF, and the fund’s share-
holders will receive shares of
the $2.8 million Guggenheim
S&P 500 Equal Weight Real
pected to result in capital- Estate ETF as well as a small
gains distributions, Vanguard amount of cash to capture frac-
can’t provide specific esti- tional shares. The approach ap-
mates of turnover, transaction pears to be similar to that of
costs or capital gains or losses the $15.6 billion Financial Se-
because they depend on the lect Sector SPDR ETF, which is
market environment and other sponsored by State Street
factors as the transition oc- Global Advisors.
curs, he said. The real-estate shares will
The shift will leave the be exchanged for securities in
fund’s investors with no expo- “in-kind” transactions, which
sure to real-estate stocks other are unlikely to generate capital
than mortgage REITs. gains, said William Belden,
Vanguard can’t estimate the managing director at Guggen-
potential impact to yield, which heim Investments. Shares of
is “highly dependent on the the REIT fund will be paid out
market environment and other via a special distribution con-
factors,” it said. sisting of the fund’s shares.
The yield on the firm’s finan-
cials ETF, currently 2.19% ac-
cording to ETF.com, will drop
when the REITs are removed, a
spokesman for Guggenheim
said. But the fund’s sharehold-
Another large fund that will ers will benefit from receiving
be affected is the $15 billion shares of the real-estate fund,
iShares Edge MSCI Minimum he added. The real-estate fund
Volatility USA ETF. As of Aug. now yields 1.85%, according to
15, the ETF had 10.4% of its as- ETF.com.
sets invested in the real-estate Operating fees and expenses
sector, according to Morning- for the Guggenheim real- estate
star Inc. ETF will be waived from July 11
The percentage of the fund’s through the date of the rebal-
assets in real-estate stocks will ance, according to the com-
likely be reduced slightly, and pany’s filing with regulators.
the percentage of its assets in The fund was launched in Au-
financial stocks will increase gust of last year in anticipation
slightly, according to a spokes- of the new real-estate sector
man for BlackRock Inc., the classification.
the deal.
Owners of Baltic Exchange
representing 74% of the total eq-
uity in the exchange, and its di-
rectors, will vote in favor of the
acquisition, Singapore Exchange
said in a regulatory filing.
Baltic Exchange shareholders
will get £160.41 (US$209.75) a
share in cash. In addition, they
will get £19.30 a share as a spe-
cial dividend, valuing the com-
pany at £87 million, Singapore
Exchange said. The acquisition is
expected to be completed by No-
vember, it said.
The Baltic Exchange is a 272-
years-old compiler of freight
rates and maritime market infor-
mation. In 2012, Hong Kong Ex-
changes & Clearing Ltd. bought
the London Metal Exchange.
—Gaurav Raghuvanshi
NEW YORK REIT
Firm to Liquidate
After Failed Merger
New York REIT Inc. said
Monday that it would liquidate
its assets and turn over the pro-
ceeds to shareholders, just
weeks after it called off a
merger with JBG Cos. following
investor opposition.
The company estimates that
shareholders will receive be-
tween $8.73 and $11.50 a share.
New York REIT shares closed at
$10.03 Friday, up 4.7% over the
past three months. The com-
pany said it was talking with po-
tential buyers who were inter-
ested in acquiring individual
properties but that it would also
be open to offers for the entire
company. New York REIT was
created after the financial crisis
as real-estate prices slumped.
—Austen Hufford

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B8 | Tuesday, August 23, 2016
Email: heard@wsj.com
Pfizer Pays
A Dear Price
For Growth
So much for big pharma’s
bargain hunt.
That is one takeaway from
Pfizer’s acquisition of Medi-
vation for $14 billion, in-
cluding debt. That translates
to an equity value of $81.50
a share.
Such an outcome would
have been nearly impossible
to predict at the start of the
year. Medivation traded as
low as $26.41 a share in Feb-
ruary.
At the time, the biotech
bear market was raging, and
big pharma executives spoke
of scooping up biotech as-
sets on the cheap.
Instead, a bidding war for
Medivation broke out. Mon-
day’s announcement shows
the situation has changed.
Pfizer is paying about 12
times projected 2017 sales
for Medivation, beating out
the French drug maker
Sanofi in the process. That
is certainly a full price.
Pfizer picked up a rare
property in Medivation. With
a high-quality drug, the
prostate-cancer treatment
Xtandi, on the market and a
couple of promising late-
stage assets, Medivation is
significantly less risky than a
pure development-stage
company.
Very few midsize biotech
companies offer a similar
profile to potential buyers.
Shares of one such midsize
company, BioMarin Pharma-
ceutical, leapt 7% Monday
afternoon after the Mediva-
tion deal was announced.
And there is definitely no
shortage of big plodding
pharma companies looking
to boost growth. That supply
and demand imbalance
leaves Pfizer and its compet-
itors with a simple choice:
Skip this kind of deal alto-
gether, or be prepared to pay
up for the privilege.
—Charley Grant
Yield Chasers Pressure
Volatility Insurance
BY JON SINDREU
Why is insuring against
swings in financial markets so
extremely cheap? One possi-
bility: Investors are desperate
to sell insurance because they
just can’t get yield anywhere
else.
Despite a politically
charged calendar ahead, the
implied volatility of options—a
gauge of how expensive this
insurance is—is now surpris-
ingly low. In the U.S., the
CBOE VIX volatility index,
which measures the implied
volatility of options in the S&P
500 stock-market index, is
close to record lows.
Speculators are betting it
will go even lower. According
to the U.S. Commodity Futures
Trading Commission, hedge-
fund positioning on VIX fu-
tures was recently the most
bearish ever.
In a research note Monday,
analysts at Bank of America
Merrill Lynch suggested that
implied volatility is so low be-
cause the market is overflow-
ing with sellers of these con-
tracts, who are out to collect
whatever premiums they can.
Buyers of options get to fix
a price at which they can buy
or sell securities. That makes
them a nice form of insurance
against price swings.
Sellers of options get paid
premiums to compensate them
for the risk of swings. Selling
lots of options against unlikely
REUTERS
A brokerage house in China
HEARD ON THE STREET
Small World
Key policy rates for selected economies
8%
6
4 Sweden
2 ian bank could provide the
0
–2
2007 ’09 ’11 ’13
Note: U.S. rate since 2008 shown as upper end of Fed target range Source: FactSet
Central Banks’ Odd Union
Breaking up really is hard
to do—if you’re a central
banker. Talk of monetary-
policy divergence has proved
to be difficult to turn into
reality in a low-growth, low-
inflation world.
Sure, the spotlight is on
the U.S. Federal Reserve’s ef-
forts to raise interest rates,
especially as the policy shin-
dig in Jackson Hole, Wyo.,
looms. But the bigger global
picture is of yet more policy
easing in developed econo-
mies. The headlines have
been taken by high-profile
actions this year such as the
Bank of Japan’s introduction
of negative rates, the Euro-
pean Central Bank’s bond
buying and the Bank of Eng-
land’s kitchen-sink to Brexit.
But they are far from
alone. In the past 12 months,
the central banks of Austra-
lia, New Zealand, Norway
and Sweden have all eased
policy, too, in some cases re-
versing earlier moves to
raise rates.
Arguably, even the Fed
has come into line with this
trend. It entered 2016 bran-
dishing as many as four rate
increases; markets think
even one increase is far from
a sure thing. The change in
those expectations alone ac-
counts for a substantial dose
of easing, reflected by the
drop in long-term U.S. rates.
events can generate a steady
stream of income.
Investors are currently in a
tight spot because of de-
pressed yields across the de-
veloped world, which has trig-
gered abundant flows into
emerging markets. Betting on
volatility to stay low is an-
other daring way to recover
lost revenue.
Volatility is now broadly
subdued, which many analysts
attribute to loose monetary
policies by central banks, fuel-
ing the belief that it will re-
main low in the near future as
well.
The logic is similar to sell-
ing home insurance against
fire. Because most insured
houses don’t burn down, the
premiums that homeowners
pay compensate the expenses
for the insurer when a few of
them do. Of course, in order to
turn a profit, premiums must
be high enough in relation to
the frequency of fires.
Right now, they don’t seem
very attractive.
The gap between implied
volatility—how much is paid
as protection against future
fires—and historical volatil-
ity—the frequency of fires in
the past—is well below the av-
erage for the last year. If it
keeps narrowing, as hedge-
fund positioning seems to sug-
gest it will, it could expose in-
vestors to hefty losses.
“Selling volatility can in-
deed be a profitable strategy
when volatility is elevated, but
doing so at current levels ex-
poses investors to highly
asymmetric risks,” Bank of
America analysts said. “While
it is uncertain where the next
shock will come from, we be-
lieve there are several possi-
bilities. To name a few: A
faster Fed hiking cycle than
the market is expecting, U.S.
election uncertainty, and tur-
moil in Italian banks.”
Indeed, were volatility to
spike up—not unlikely consid-
ering how low it is now—in-
vestors may be forced to sell
assets to cover their losses, in
turn driving volatility up and
triggering more losses.
FINANCIAL ANALYSIS & COMMENTARY
Australia
U.S.
U.K.
Eurozone
BLOOMBERG NEWS
From left to right: Bank of Japan’s Haruhiko
’15 Kuroda; European Central Bank’s Mario Draghi;
Federal Reserve’s Janet Yellen
Seen globally, the picture ac-
tually looks more like con-
vergence than divergence.
Two big factors help ex-
plain this. The first is the
contrast between global fi-
nancial markets and the lo-
cal policy settings of central
banks. Countries with nega-
tive policy rates account for
nearly 25% of global gross
domestic product, Standard
& Poor’s notes based on
World Bank data. Because
nearly any positive rate rela-
tive to zero looks high, even
small moves to tighten mon-
etary policy start to look like
a big deal in financial mar-
kets. The prevalence of loose
monetary policy is sending
cash cascading across bor-
ders in search of higher re-
turns—and pushing up cur-
rencies for higher-yielding
markets.
That is increasingly affect-
ing monetary policy. The Re-
serve Bank of New Zealand
cited this factor directly in
its most recent rate cut,
even as it raised its growth
forecast and worried about
rising house prices. The Fed,
in discussing longer-term
monetary policy in its most
recent minutes, noted that
monetary transmission in
the U.S. occurs through mar-
kets that are “quite globally
connected.” A stronger dol-
lar would have consequences
FINANCE & MARKETS
Wanted: Stocks That Act Like Bonds
BY MIKE BIRD
With bond yields around the
world plunging to fresh lows
this year, investors have been
seeking out alternatives. That
has made bond proxies, or
bond-like-stocks, a hot com-
modity.
Companies in sectors that
usually provide reliable, and
even rising dividends have
seen their share prices driven
upward, even without a con-
summate improvement in prof-
itability. That has pushed
price-to-earnings ratios to
their highest levels in years in
parts of the market.
P/E ratios, which measure a
company’s share price against
its last 12 months of earnings,
can signify a number of things.
In the case of a company
such as Facebook, which has a
P/E ratio of 59.9, the ratio
means that investors expect
much higher earnings in the
future. The same is true of Chi-
nese stocks.
In the case of consumer sta-
ples giants in the developed
world, that explanation is less
likely. But low interest rates
make those stocks increasingly
attractive too. Earnings may
not be expected to boom, but
the income stream offered by
dividends is still much more
attractive than offered in bond
markets.
Unilever is an obvious ex-
ample because it has been a
large, listed company for de-
cades, and a FTSE 100 constit-
uent since the index launched
in 1984. As a result, it has a
long history of earnings and
uninterrupted dividends for an
investor to assess. Unlike most
large companies today, Uni-
lever wasn’t an upstart three
decades ago: it was already a
multinational giant.
Today, Unilever’s price-to-
earnings ratio is around 28, at
the highest level in 16 years,
according to FactSet. Its divi-
dend yield of 2.61% is far more
attractive than the U.K.’s 10-
year government bond yield,
which fell below 1% in the af-
termath of the EU referendum.
Unilever’s shares are now
worth more than all the cumu-
lative earnings that the com-
THE WALL STREET JOURNAL.
for the U.S.—and for China
and emerging markets,
which have both benefited
from the Fed’s reticence in
raising rates and acted as a
brake on its ambitions.
Second, the bond market
appears to be content to play
along. Deutsche Asset Man-
agement recently noted that
all its investment ideas are
“directly tied” to central-
bank policies, adding that it
assumes that “we will not
witness a rate-tightening cy-
cle that deserves the name.”
The power of low rates and
quantitative easing appear to
have stifled any dissent
against the policy orthodoxy
currently en vogue.
Low inflation globally is
also at the heart of this co-
nundrum and it remains a
prospective source of disrup-
tion. One key reversal: Oil
markets have bounced
sharply, meaning that for the
first time in more than two
years, the price for Brent
crude is higher than a year
ago. The global drag on in-
flation may fade.
But it may take time to
shift a market mind-set that
has appeared to discount the
risk inflation will return. In
the meantime, central banks
are operating in what looks
like a strange kind of global
monetary-policy union.
—Richard Barley
Unilever has a history of earnings and uninterrupted dividends.
Highly Valued
Shares of firms regarded as reliable dividend payers
are trading at premium valuations.
30 times
25
20
15
10
5 government bonds in 1993 or
0
2010 ’11 ’12
Source: FactSet
pany has made since it joined
the FTSE 100 32 years ago, ad-
justed for inflation.
The company’s past perfor-
mance, of course, doesn’t tell
us everything about how it will
perform in the future. But
since it makes its money in ev-
eryday consumer items, rather
than some potentially revolu-
tionary new technology, it does
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THE WALL STREET JOURNAL.
WSJ.com/Heard
Surprise Winners
In Bad-Loan Sales
An imminent sale of bad Spinning off equity in se-
loans by a little-known Ital- curitizations to existing
shareholders would help
key that unlocks the great deals get done by bridging
Italian debt cleanup. The the gap between what the
major surprise is investors market will pay for bad
in Italy’s battered banks loans and where banks want
might be the big winners. to sell.
The lender is Banca For MPS, it means a valu-
Popolare di Bari, which is ation difference of €1.6 bil-
due to make the first gov- lion on a €9.2 billion securi-
ernment-guaranteed bad- tization. MPS’s stock will be
loan securitization sale be- worth €1.6 billion less to
fore the end of August. shareholders, but the equity
When that happens, it will they get will offset the de-
face a knotty issue: how to cline.
offload the riskiest equity The ultimate value of the
piece of the deal. Its bigger equity will only be known
rival and Italy’s most trou- once all bad loans have
bled bank, Banca Monte dei been processed.
Paschi di Siena, has a plan Shareholders who like the
for its much larger deal due structure, such as Swiss
this fall: It will give the eq- value investor BWM, see it
uity to its own shareholders. as a way for banks to shed
In bad-loan deals the eq- bad loans (and boost their
uity is the first piece to take stock) at current market
losses if recoveries don’t go prices, while shareholders
as planned. If recoveries get to reap the gains when
significantly exceed expecta- those prices prove too pes-
tions, returns on the equity simistic. However, some in-
could be fantastic. vestors might be barred
Most of a securitization from owning securitization
is funded by a supposedly equity by their investing
safe senior bond, which will mandates.
get an Italian government For believers in Italy’s re-
guarantee. The senior bond form and recovery, it looks
is supported by a smaller a very lucrative trade. But
mid-ranking mezzanine even for pessimistic share-
bond and then equity be- holders there is little to
neath that. lose. These options on re-
But in Italy, banks must structuring success are
sell more than half the eq- worth keeping if you can.
uity and mezzanine bonds —Paul J. Davies
for the senior bonds to
qualify for the government
guarantee that is meant to Making Markets
make the whole thing work. Sales of bad loans recorded and
An industry rescue fund, At- in progress
lante, is expected to buy the Italy
€150 billion Rest of Europe
mezzanine debt, but the eq-
uity looks harder to shift.
This matters because af- 75
ter a heavy-handed push
from European regulators, 0
Italy is finally driving 2012 ’13 ’14 ’15 ’16*
banks to deal with their €1=$1.133 *Through end of first quarter
€360 billion ($407.5 billion) Source: PricewaterhouseCoopers
bad-loan piles. THE WALL STREET JOURNAL.
streams of income is extremely
desirable.
Unilever is hardly alone. P/E
ratios for the S&P 500 and
MSCI Europe’s consumer sta-
ples sectors are at multiyear
AGENCE FRANCE-PRESSE/GETTY IMAGES
highs.
The incredible demand for
yield income, whether from
bonds or equities, seems to be
the major driving force in mar-
kets right now, and it isn’t
without risk. Equity markets,
even in the least volatile sec-
tors, vary in price by far more
than sovereign bonds.
An even the most-iron clad
company dividend isn’t the
same as a bond’s coupon. Fail-
ure to pay the coupon on a
bond means a company or
country has officially de-
faulted. Dividends, on the
Unilever P/E ratio other hand, are usually discre-
for the past 12 tionary.
months It is a common belief that
aggressive pursuit of risk is
MSCI Europe
the major cause of financial
consumer-staples
P/E ratio mishaps, but the desire for
safety can be a big problem
S&P 500 too. It is when investors be-
consumer-staples
P/E ratio
lieve something is basically
safe—whether that is Mexican
investment-grade mortgage
backed securities in 2006—
that things can go awry.
’13 ’14 ’15 ’16 Defensive equities aren’t the
THE WALL STREET JOURNAL. only place where investors are
hunting for yield. Emerging-
suggest that it is extremely market bonds are back in fash-
highly valued. ion too.
When a company has been a For as long as bond yields in
world-beater with a large mar- advanced economies stay low,
ket share for the past three de- investors are likely to look for
cades, it might be seen as bond-like assets elsewhere, in-
tempting fate to value it as if it cluding the equity market. But
will do the same thing again. that also exposes those stocks
But in a low interest rate to the serious risk of a selloff if
world, an asset that can pro- interest rates rise more quickly
vide steady growth and regular than expected.
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