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

Berlin’s Green
Meet the Digital Energy Fiasco Is
BEN FRASER/WEDDINGS BY TWO

Wedding Crashers About to Worsen

HOME & DIGITAL | A12 OPINION| A10
THURSDAY, APRIL 14, 2016 ~ VOL. XXXIV NO. 52 WSJ.com EUROPE EDITION
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Frustrated Migrants Meet Resistance

Failing
What’s
Grade for
News
Business & Finance
Big Bank
U .S. regulators ordered
five big banks to re-
‘Wills’
vise their plans for a pos-
BY RYAN TRACY
sible bankruptcy or face
potential sanctions. A1
WASHINGTON—Regula-
 EU regulators called for tors ordered five big U.S.
changes to a privacy ac- banks to make significant re-
cord with the U.S., leaving visions to their so-called liv-
firms in legal limbo about ing wills by Oct. 1 or face po-
sending data to the U.S. A1 tential regulatory sanctions, a
stern warning that under-
 Exxon challenged a U.S.
scores fears that the compa-
government probe into
nies remain “too big to fail.”
whether the firm conspired
J.P. Morgan Chase & Co.,
to cover up its understand-
Wells Fargo & Co., Bank of
ing of climate change. B1
America Corp., Bank of New
AMEL EMRIC/ASSOCIATED PRESS

 U.S. regulators said York Mellon Corp. and State

they plan to ban Thera- Street Corp. were told by the
nos’s founder from blood Federal Reserve and the Fed-
testing for failing to fix eral Deposit Insurance Corp.
problems at its lab. B1 that their plans for a possible
bankruptcy don’t meet the le-
 Peabody became the lat-
gal standard laid out in the
est U.S. coal company to
2010 Dodd-Frank law, which
file for bankruptcy, setting
STAND BACK: A migrant trying to remove razor wire along a fence was stopped by Macedonian police at the Greek border village of requires that firms have cred-
the stage for a fight among
Idomeni on Wednesday. Migrants and police continued to clash, highlighting the anger of people trapped in Greece by border closures. A4 ible plans to go through bank-
creditors for its assets. B1
ruptcy at no cost to taxpayers.
 A U.S. court cleared the The regulators said the

Extremists Name Attackers

way for Argentina to pay its banks have until October to
debt and return to the capi- present acceptable plans or
tal markets for the first face higher capital require-
time in over 15 years. B5 ments, restrictions on
growth or activities, or other
 J.P. Morgan’s profit fell
sanctions.
6.7% last quarter but the
decline in trading wasn’t Islamic State claims tacks in Paris and Brussels English-speaking magazine in a Paris suburb days after Bank stocks, however, ral-
and put out a hit list for more “Dabiq.” the November attacks in the lied in morning trading, led
as sharp as expected. B5 suicide-bomb brothers than a dozen prominent mod- A Belgian prosecutor de- French capital, was the ring- by J.P. Morgan, which re-
 A U.K. regulator pro- arranged terror strikes, erate Muslims in the West. clined to comment on the leader behind the Paris terror ported smaller-than-expected
posed plans to shake up Khalid and Ibrahim el- claims, but a French police of- spree as well as the operative declines in earnings and reve-
the way investment banks puts out a hit list Bakraoui, the two brothers ficial cast doubt on them. commander on the ground. nue for the first quarter de-
market IPOs to clients. B5 who blew themselves up at a “Let’s not forget this is a pro- The magazine listed four of spite difficult trading condi-
BY VALENTINA POP Brussels metro stop and at paganda tool for Islamic the Brussels assailants, all tions.
 A Swiss politician and a
the city’s main airport, re- State,” he said. dead, and glorified their role The regulators were split in
former bank employee were
BRUSSELS—Islamic State spectively, were responsible The claims contrast with in the attacks in both cities. their assessments of Goldman
convicted of breaching
identified what it said were for “all preparations for the French investigators’ account But it said nothing of the sur- Sachs Group Inc. and Morgan
banking secrecy rules. B8
the main organizers and the raids in Paris and Brussels,” that Abdelhamid Abaaoud, viving suspects arrested or Stanley.
bomb maker behind the at- according to Islamic State’s who was killed in a police raid Please see TERROR page A6 The FDIC said that Gold-
World-Wide man Sachs’s plan didn’t meet
the legal standard, while the
Fed didn’t give that negative
 Islamic State said two
brothers organized the Paris
and Brussels attacks and it
THE SOCIAL-MEDIA BATTLEFIELD assessment.
The two regulators took
the opposite stance on Mor-
issued a hit list of moderate gan Stanley. The Fed “identi-
Muslims in the West. A1 Islamic State’s online footprint has shrunk amid a crackdown, but new accounts keep popping up fied a deficiency” in Morgan
Stanley’s plan that it said
 The CIA and U.S. allies didn’t meet the legal stan-
have drawn up plans to sup- BY CHRISTOPHER S. STEWART and YouTube, joined by online hackers and dard, but the FDIC didn’t go
ply more-powerful arms to AND MARK MAREMONT similarly minded groups, have for months Active Twitter accounts using that far, the agencies said in a
moderate rebels in Syria if aggressively battled the spread of Islamic any of seven hashtags related news release.
the truce collapses. A3 Hours after the Brussels terror attacks, a State material online. Accounts and posts to Islamic State Citigroup Inc. was the only
 Syrian peace talks re- notorious Islamic State operative posted a that would have stayed alive for weeks now bank whose plan wasn’t re-
30,000 live accounts
sumed, as the regime held Twitter message on behalf of the extremist sometimes last as little as a few hours. jected by either agency, al-
elections that opponents group, which had taken responsibility for Islamic State supporters, particularly on 25,000 though the Fed and FDIC said
said were illegitimate. A3 the slaughter and warned of more to come. Twitter, have responded to the crackdown its plan had “shortcomings
20,000
 Macedonian police and “We promise black days for all crusader by opening accounts almost as quickly as that the firm must address”
migrants clashed at the Greek nations allied in their war against Islamic gatekeepers delete them. 15,000 by July 2017.
border, as frustration over State,” tweeted Abu al-Walid, a presumed This battle, a signature element of war- The living wills had been
10,000
border closures grows. A4 nom de guerre. fare in the age of technology, has emerged submitted by the eight U.S.
Twitter closed that account and similar as a vital front against the spread of Islamic 5,000 Please see WILLS page A2
 Egypt’s Sisi defended his ones in the hours and days that followed. State extremism—its ideology, recruitment
decision to cede control of Mr. Walid kept surfacing. Using his 464th and financing. 0  Capital Account: Big banks
two small Red Sea islands Twitter account, he circulated photos of Islamic State controls a limited amount of 2015 ’16 have risks—and benefits..... A2
to Saudi Arabia. A3 sweets handed out to celebrate the attacks. territory in Iraq and Syria, but social media Source: WSJ analysis by Recorded Future  J.P. Morgan Chase’s profit
 An Egyptian man who U.S. companies such as Twitter, Facebook Please see SOCIAL page A6 THE WALL STREET JOURNAL. takes trading hit...................... B5
hijacked a plane is seeking
asylum in Cyprus. A3
 A paralyzed man used an
implant in his brain and his EU-U.S. Want to Watch Zombies 24/7?
thoughts to move his arm,
researchers reported. A7
 Paris’s Bataclan, the site
Data Privacy
Changes
There’s a Pay Site for That
i i i Oracle #1
Cloud ERP
of the deadly terror attack, Niche subscription video services stream
will reopen in November. A4

Sought tightly focused fare; ‘Trout TV’

Inside European Union privacy reg- BY SHALINI RAMACHANDRAN unoccupied digital terrain. The
MARKETS B5 ulators called for changes to a Shaolin Kung Fu master
new EU-U.S. privacy accord, Last year Chuck Meré and launched “Hungry Monk
China’s financial boosting the chances that the
deal will end up challenged in
his buddy surveyed the world Yoga,” a $15-a-month stream-
of subscription online video, ing service in which he can be
calm won’t last dominated by the likes of Net- seen striking intense poses in
flix, and spotted an under- orange robes while teaching
By Sam Schechner
in Paris served market. There wasn’t a martial arts mixed with yoga.
and Natalia Drozdiak service dedicated The wave of
CONTENTS Money & Inv...... B5-8 in Brussels specifically to en- niche subscrip-
Arts & Ent............... A9 Opinion.............. A10-11
thusiasts of the tion video ser- 1,800 207
Business & Tech. B1-4 Personal Journal.. A8
Capital Account.... A2 Technology............... B3 court and leaving thousands of zombie apoca- vices includes
Crossword.............. A12 U.S. News.................. A7 companies that transfer per- lypse. “Chris Cox Horse- Oracle Cloud Workday Cloud
Heard on Street.... B8 Weather................... A12 sonal information across the Now, for $5 a manship” and ERP Customers ERP Customers
Markets Digest..... B6 World News........ A2-5
Atlantic in legal limbo. month, people Ning Yeh’s
€3.20; CHF5.50; £2.00; A body representing na- can sign up for “OASlife,” teach- “Oracle has their act together better than SAP”
U.S. Military (Eur.) $2.20
tional data-protection authori- “Zombie Go ing Chinese Aneel Bhusri, Workday CEO
ties in the EU’s 28 states said Boom,” which brush-painting,
Wednesday that the trans-At- streams videos of Wang Bo which each sell
lantic deal, dubbed Privacy Mr. Meré and for about $20,
Shield, should include clearer friends cheerfully brandishing twice the price of Netflix. For-
limits on how U.S. surveillance chain saws, Christmas trees, mer paralegal Kriston Leagh Midsize and large scale Enterprise Fusion ERP Cloud customers.
agencies conduct bulk collec- pencils and a “lock in a sock” offers a $5 pole-dancing-as-a-
s Copyright 2016 Dow Jones & tion of personal information for to destroy zombie effigies. sport service featuring moves oracle.com/modern-finance or call 1.800.ORACLE.1
Company. All Rights Reserved
national security purposes to In California, Zen Buddhist like the “Cupid Sneak Thru” Copyright © 2016, Oracle and/or its affiliates. All rights reserved.
Please see DATA page A2 monk Wang Bo spied similarly Please see STREAM page A2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Thursday, April 14, 2016 THE WALL STREET JOURNAL.

WORLD NEWS

Big Banks Have Big Risks—and Big Benefits

A
handful of companies them they had inadequate think tank, notes. Large com- an advantage to size. The Bi-
have achieved such as- plans to deal with a possible panies overwhelmingly prefer partisan Policy Center report
tonishing size and failure. Without acceptable to do business with large, notes large banks were the
reach in the past decade that “living wills,” banks face a global banks. Their chief exec- first to offer automated-
the sudden collapse of any series of penalties that could utives consider their cash- teller machines, online bill
would be potentially cata- end in their breakup. management, foreign-ex- payment and small-business
strophic to the economy. The preoccupation with change and cross-border- credit scoring. Economies of

MARK LENNIHAN/ASSOCIATED PRESS

With their size, they have ac- banks’ size is well-founded. payments services essential. scale may also apply to risk
cumulated profits and politi- The havoc when big banks Big banks are no match management and regulation;
cal clout to match, at times fail, and the perception the for Apple in the affections of J.P. Morgan now employs
defying the federal govern- government won’t let that hipsters, Hollywood or Mr. 43,000 staff in “controls,” up
ment’s efforts happen, enables them to bor- Sanders, but one constitu- from 24,000 in 2011, and 18%
to keep Ameri- row cheaply and grow still ency seems to rather like of total head count.
cans safe. larger. them: consumers. Their sat-

B
I’m talking, Yet as in technology, size isfaction ratings have risen ig banks also make big
of course, confers unique benefits in steadily since 2010 and now mistakes, but this
about Apple, banking: economies of scale J.P. Morgan’s size is a concern for regulators, but Chase bank top those of regional banks, doesn’t automatically
CAPITAL Google, Face- in technology, branding and offers customers a host of benefits. Above, a New York branch. according to J.D. Power. Bank mean they are more prone to
ACCOUNT book and Ama- risk management; network of America, J.P. Morgan failure. With size comes
GREG IP zon. effects that attract custom- Treasury secretary, for say- nate a nonbank as Chase, Citibank, Wells Fargo greater diversification across
But I could ers; and broad geographic ing MetLife’s failure could systemically important. The and US Bank added nearly 25 regions, industries and busi-
also be talking and sectoral diversity. If reg- damage the economy but not court decision, if upheld, million retail deposit ac- ness lines, and thus less vol-
about J.P. Morgan Chase, ulators ignore these attri- detailing how such a failure could compromise this criti- counts between 2010 and atile revenue. One study
Bank of America, Wells butes while dwelling solely could occur. Nor did it con- cal weapon in the crisis-pre- 2014, during which they found that when geographic
Fargo and Citigroup. on the danger of size, they sider the costs of regulating vention arsenal. were barred from acquisi- restrictions on branch bank-
The difference is that no risk leaving the economy MetLife like a bank, “a con- Yet it also makes a useful tions. In the same period, the ing fell, more-efficient banks
one wants to break up the worse off, not better. sideration that is essential to point. Because a financial number of accounts at banks gained market share, loan
first group but everyone, it That was the implicit reasoned rule making.” crisis, like a terrorist attack with less than $10 billion in losses declined and custom-
seems, wants to break up the message that U.S. District The decision puts the fed- or pandemic, is so unpredict- assets dropped by 35 million. ers benefited.
second. “Apple is not de- Judge Rosemary Collyer de- eral government in a bind. able, the value of preventing Since the majority of Big banks need stiffer
stroying the fabric of Amer- livered in a decision, un- One of the lessons of the fi- one is not easily quantified. those big banks’ deposits regulation and higher capital
ica,” Bernie Sanders, a Demo- sealed last week, that re- nancial crisis was companies But that too easily becomes were below the $250,000 to neutralize the harm their
cratic presidential candidate, versed the federal such as American Interna- an excuse to ignore costs al- federally insured limit, cus- failure could inflict on the
told the New York Daily government’s designation of tional Group, an insurer, can together, whether to civil lib- tomers weren’t likely seeking economy and to remove any
News last week. “J.P. Morgan the giant insurer MetLife as be just as intertwined with erties or economic growth. implicit government backing subsidy that their too-big-to-
Chase, and virtually every a “systemically important fi- the financial system as In the case of big financial for deposits over that limit. fail status garners. Antitrust
other major bank in this nancial institution” in need banks. If rules are tightened companies, regulators have to Rather, surveys suggest, cus- cops should bar them from
country,” he added, are de- of special oversight and only on banks, risky activity weigh the benefits of size tomers are attracted to big using their size to quash
stroying the national fabric. heightened capital standards. is likely to migrate to these against the risks that big banks’ branch and cash-ma- competitors. The endgame is
While federal regulators The court rapped the Fi- nonbank institutions. That’s banks become “too big to chine networks. not, however, to drive such
haven’t sought the breakup nancial Stability Oversight why the Dodd-Frank finan- fail.” Those benefits aren’t Investment in technology banks out of existence; that’s
of the big banks, on Wednes- Council, made up of federal cial-regulatory overhaul em- trivial, as a 2014 report by has huge fixed and low mar- a decision customers and
day they warned five of regulators and headed by the powers the FSOC to desig- the Bipartisan Policy Center, a ginal costs, and thus gives shareholders can make.

WILLS Harsh Grading

The Federal Reserve and Federal Deposit Insurance Corp. graded
“Living Will” bankruptcy plans for eight of the largest U.S. banks.
Wells Fargo said the firm
was disappointed in the re-
sults and would address regu-
lators’ concerns. Regulators
DATA the balance are billions of dol-
lars in business, particularly in
the online-advertising and
cloud-services sectors.
Continued from Page One Here is how each institution did. “acknowledged the continued Continued from Page One “A battle in court is all but
banks that had been deemed steps Wells Fargo has taken in ensure that the accord con- assured,” said Eduardo
“systemically important finan- enhancing its resolution plan forms with EU privacy law. Ustaran, a privacy lawyer at
cial institutions,” or SIFIs, Failed and we view the feedback as The opinion by the group of Hogan Lovells, where he works
that are seen as being so large Both agencies said these banks submitted plans that didn’t meet constructive and valuable to privacy regulators undermines with technology companies.
that their distress could put the legal standard and detailed "deficiencies." our resolution planning pro- the proposed data-transfer ac- “Organizations will have to
the economy at risk. cess,” the statement said. cord, which EU and U.S. offi- carry on doing global business
The agencies “are commit- Among the other banks cials rushed to create after the without knowing if they are
ted to carrying out the statu- graded, the regulators said EU’s top court last fall invali- breaking the law.”
tory mandate that systemi- that Bank of America needs to dated its predecessor because Tech-industry groups on
cally important financial improve its computer models of concerns about mass sur- Wednesday acknowledged that
institutions demonstrate a and processes estimating li- veillance in the U.S. regulators had created a new
clear path to an orderly fail- quidity needs and clarify its While Wednesday’s non- hurdle to plans by the Euro-
ure under bankruptcy at no triggers for declaring bank- binding opinion doesn’t halt pean Commission, the bloc’s ex-
cost to taxpayers,” FDIC Qualified Pass ruptcy. the EU process for approving ecutive body, to finalize the
Split Decision
Chairman Martin Gruenberg The agencies said they didn’t Goldman, Morgan Stanley, the newdata-transfer frame- framework before summer.
said in a statement Wednes- The agencies disagreed on and Citigroup won’t need to work—and even includes some “[W]e hope that the
these banks, with each finding find deficiencies, though they
day. “Today’s action is a sig- did see shortcomings to be show they have addressed the praise of it—the call for changes called for can be as-
nificant step toward achieving just one didn’t meet the legal regulators’ concerns until July changes suggests that at least sessed speedily without signif-
standard. addressed.
that goal.” 2017, when all eight firms will some EU regulators believe icantly delaying the implemen-
Overall, the regulators file fully revised plans. the deal doesn’t pass legal tation of this much needed
were less harsh in their as- The regulators said Gold- muster. That opens the possi- legal tool,” said Digital Europe,
sessments on the Wall Street- man and Morgan Stanley fell bility of enforcement against which includes Apple Inc., Al-
focused firms than on the uni- short on processes for deter- companies that use the frame- phabet Inc.’s Google and Mi-
versal and commercial banks. mining how much liquidity work if no changes are made. crosoft Corp.
While officials say they are Source: Federal Reserve, FDIC THE WALL STREET JOURNAL. their various units would “We believe there is still work Vera Jourová, the EU’s jus-
imposing a much-needed new need to sustain themselves to do, and urge the commission tice commissioner, said the
caution on a financial system banks’ chief executive officers regulators to understand feed- once their parent filed for to resolve our concerns,” said Is- commission “will work to
that collapsed eight years ago, except Wells Fargo’s, issued a back in more detail. bankruptcy protection and abelle Falque-Pierrotin, head of swiftly” include the regulators’
critics say that the tight leash statement Wednesday de- “If other firms can satisfy didn’t offer enough details on France’s data-protection author- recommendations before it ap-
they have attached to the scribing the regulators’ con- [regulators on living wills], plans to wind down the deriv- ity and chairwoman of the pan- proves the framework, but
largest banks may be under- cerns as “technical shortcom- then I’d be surprised if we atives contracts. EU group, adding that court didn’t say how she and her
mining the sector’s recovery, ings” that the industry is can’t,” Chief Executive James While Citigroup’s plan challenges are possible. colleagues would resolve ques-
imposing new rules that dis- committed to address. Dimon said. fared best among the eight, Wednesday’s opinion leaves tions about U.S. surveillance
courage lending, crimp mar- “No financial company Wells Fargo, which had regulators said that, among businesses in sectors ranging guarantees.
ket liquidity, and erode bank should be considered too big previously received more-pos- other things, it does need to from social media to heavy in-
profitability. to fail,” he said. itive feedback than other develop a more-detailed play- dustry without clear guidance
John Dearie, acting chief J.P. Morgan on a call with companies, was found to have book outlining how it would on how to legally send infor-
executive of the Financial Ser- reporters Wednesday said the made “material errors…that go through various stages of mation—like social-media pro-
vices Form, a trade group rep- bank was disappointed in the undermine confidence” in its the bankruptcy process, regu- files or personnel data—to the Delivering news and insight
resenting all of the large results but would work with preparedness for bankruptcy. lators said. U.S., lawyers say. Hanging in on finance and markets
from London

STREAM Aviation nerds can sub-

scribe to “AeroCinema”; fly-
fishing fans can sign up for
“Trout TV.” Firms like Pivot-
his friends sitting on a couch
playing “Street Fighter.” He
says he has a few thousand
subscribers.
people pay up every month or
might they simply sign up,
watch all the shampoo videos,
and then disconnect? He is
hard to compare, since Netflix
has 75 million users while the
Chinese brush-painting service
has fewer than 100. Netflix de-
Download on the App Store

Continued from Page One

and the “Twisted Butterfly.”
share, Vimeo and TAPP pro-
vide platforms for anyone to
Mr. Meré’s subscribers get to
see content days ahead of You-
contemplating switching to a
pay-per-download model to
clined to comment.
Former Republican candi-
CORRECTIONS 
In the age of binge-watch-
ing, there is unending faith
launch subscription services in
exchange for a cut of the reve-
Tubers, as well as “extra stuff
that may get us in trouble on
preserve the $1,500 in revenue
he says “Lather Fantasies”
dates Sarah Palin and Herman
Cain launched subscription
AMPLIFICATIONS
Readers can alert The Wall Street
that consumers who already nue. Pivotshare Chief Execu- YouTube” that is more “rated R.” brings in a month. services with TAPP a couple of Journal to any errors in news
may pay for some combination tive Adam Mosam says more The biggest hurdle of “Zom- Jashin Yeh Panza, whose fa- years ago, but they didn’t de- articles by emailing
wsjcontact@wsj.com.
of Netflix, Amazon, Hulu and than 10,000 creators have bie Go Boom” is getting its fan ther is the star of the Chinese vote enough time to make
ordinary cable will open their signed up on his site. base—predominantly 14-year- brush-painting service, says them successful, says TAPP
wallets further for esoteric Some of the aspiring old boys, Mr. Meré says—to one 90-something-year-old Chief Executive Jon Klein, a THE WALL STREET JOURNAL.
fare like “Lather Fantasies,” a streaming czars are adopting pay up. “If they ask their par- customer calls her office if she former CNN president. Repre- Europe Edition ISSN 0921-99
$20-a-month service founded Hollywood business tactics ents, ‘Hey, can I pay $5 a isn’t regularly uploading new sentatives for Ms. Palin and The News Building, 1 London Bridge Street,
London, SE1 9GF
by a Tampa Bay businessman like “windowing,” or saving month to watch zombie heads videos. “She [said] she goes to Mr. Cain didn’t respond to re-
that shows clothed people ex- exclusives for paying custom- blow up?’ I mean, what are bed with my dad every night,” quests for comment. Thorold Barker, Editor, Europe
Bruce Orwall, Senior Editor, Europe
cessively shampooing each ers to differentiate from what their parents going to say?” Ms. Panza says. At the end of the day, the Cicely K. Dyson, News Editor, Europe
other’s hair. (It sounds kinkier they post online free. Mr. Meré asks. She says about 3% to 5% of winners of the niche stream- Margaret de Streel, International Editions Editor
Darren Everson, Deputy International Editor
than it actually is.) Ryan Gutierrez, or “Goo- At “Lather Fantasies,” the painting channel’s cus- ing derby may not be the big
The would-be digital ma- tecks” in the videogaming founder Peter Repak is grap- tomer base has canceled in the names. “The subscription Joseph C. Sternberg, Editorial Page Editor
vens aren’t playing around. world, entices paying sub- pling with the same questions past year, a “churn” rate less video-on-demand superstar Anna Foot, Advertising Sales
They are tracking the same scribers to his $5 “Excellent big media companies like HBO than Netflix’s 9% in 2015, ac- could be anywhere,” says Mr. Jacky Lo, Circulation Sales
Stuart Wood, Operations
metrics as Comcast or Net- Adventures” by peddling early and CBS have to consider for cording to Parks Associates Klein. “Might be the guy Jonathan Wright, Commercial Partnerships
flix—including demographics access to videos of him and their streaming products: Will market-research firm. It is pumping your gas.”
and “churn,” the percentage of Katie Vanneck-Smith,
Global Managing Director & Publisher
people who drop subscriptions
over time. Advertising through Dow Jones Advertising
Sales: Hong Kong: 852-2831 2504; Singapore:
“We’re competing with the 65-6415 4300; Tokyo: 81-3 6269-2701;
big shots, the likes of Netflix Frankfurt: 49 69 29725390; London: 44 207
842 9600; Paris: 33 1 40 17 17 01; New York:
and Hulu,” says Mr. Meré of 1-212 659 2176
“Zombie Go Boom.” He says he
Printers: France: POP La Courneuve; Germany:
has “hundreds” of paying sub- Dogan Media Group/Hürriyet A.S. Branch; Italy:
scribers and hopes to reach Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
several thousand. Waltham Cross, EN8 8DY;
ZOMBIE GO BOOM; OASLIFE (PAINTING)

The Web has plenty of free, Registered as a newspaper at the Post Office.
niche YouTube channels, but it Trademarks appearing herein are used under
license from Dow Jones & Co.
has been hard for even YouTube ©2015 Dow Jones & Company. All rights reserved.
stars to make a living off ads. Editeur responsable: Thorold Barker M-17936-
2003. Registered address: Avenue de Cortenbergh
That has driven people like Ms. 60/4F, 1040 Brussels, Belgium
Leagh of “Power Pole Sports” to
charge a monthly fee instead. NEED ASSISTANCE WITH
Plus, she says she doesn’t want YOUR SUBSCRIPTION?
her high-end fare mixed in with By web: http://services.wsje.com
By email: subs.wsje@dowjones.com
the “yahoos” peddling pole ac- By phone: +44(0)20 3426 1313
robatics on YouTube. Streaming video subscription services include ‘Zombie Go Boom,’ left, and Ning Yeh’s Chinese brush-painting lessons from ‘OASlife.’
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Thursday, April 14, 2016 | A3

WORLD NEWS
U.S. Draws Up ‘Plan B’ for Syria
BY ADAM ENTOUS
Regime
Holds Vote
WASHINGTON—The Central
Intelligence Agency and its re-
As Talks
gional partners have drawn up
plans to supply more-powerful
weapons to moderate rebels in
Get Started
Syria fighting the Russia- BY RAJA ABDULRAHIM
backed regime in the event the
country’s six-week-old truce BEIRUT—Talks aimed at end-
collapses, according to U.S. ing Syria’s five-year war re-
and other officials. sumed in Geneva, as the govern-
The preparations for a so- ment in Damascus held
called Plan B center on provid- parliamentary elections that the
ing vetted rebel units with opposition and Western govern-
weapons systems that would ments said were illegitimate and
help them in directing attacks undermined the negotiations.
against Syrian regime aircraft Syrians in areas under gov-
and artillery positions, the of- ernment control were choosing
ficials said. among more than 3,500 candi-
JOSEPH EID/AGENCE FRANCE-PRESSE/GETTY IMAGES

The Wall Street Journal dates for the 250-seat parlia-

first reported in February that ment on Wednesday, state me-
President Barack Obama’s top dia reported. President Bashar
military and intelligence ad- al-Assad and his wife were
visers were pressing the White shown voting in the elections,
House to come up with a Plan which are held every four years.
B to counter Russia in Syria. Mr. Assad said the opposi-
Since then, fresh details have tion’s goal was to undermine
emerged on the nature of the Syria’s social structure and its
new weaponry that could be national identity, expressed by
deployed under the covert the constitution, and that this
program. year saw “an unprecedented
The preparations were dis- number” of voters compared
cussed at a secret meeting of Residents of Damascus on Tuesday walked past campaign banners of candidates for this week’s Syrian parliamentary elections. with past elections “through-
spy chiefs in the Middle East out the past decades.”
just before the cease-fire took ante, if needed,” a senior U.S. Russian counterparts, who have ists’ hands for use against civil- with his counterparts in the Salem al-Meslet, a spokes-
effect on Feb. 27 and in follow- official said of the CIA’s mes- backed the Assad regime with ian aircraft, the spy agency’s Gulf. man for the High Negotiations
on exchanges between intelli- sage to the coalition supporting air power since last year, has goal now is to prevent more of Specifically, Mr. Kerry urged Committee, the opposition’s
gence services. antiregime rebels, adding that been that the moderate opposi- them from slipping uncontrol- Saudi, Qatari and other re- representative body in Geneva,
In those meetings, officials the administration’s main focus tion isn’t going away and that a lably into the war zone, accord- gional partners to use their in- said “the people of Syria de-
briefed on the deliberations now was to find ways to make return to full-scale fighting ing to U.S. and intelligence offi- fluence with the rebel groups serve the chance to choose
said, coalition members re- the cessation of hostilities and could end up putting more Rus- cials in the region. they support to continue to their leadership. Free elections
ceived provisional assurances political negotiations stick. sian pilots in danger, according Coalition partners have pro- abide by the truce and remain must be held in Syria after the
from the CIA that they would A CIA representative de- to U.S. officials. posed ways to mitigate the risk. engaged in the U.N.-brokered political transition.”
be given approval to expand clined to comment on the de- To coalition partners in- They have suggested tinkering political negotiations, accord-
support to Syria’s moderate liberations. cluding Turkey and Saudi Ara- with the Manpads to limit how ing to U.S. officials.
opposition. The discussions of Plan B bia, the CIA has twinned as- long their batteries would last Truce violations have in-
France and Germany
Coalition members have come as representatives from surances that the U.S. will or installing geographical sen- creased in recent weeks, raising criticized Syria for
agreed on the outlines of Plan the regime of President Bashar allow the anti-Assad coalition sors on the systems that would fears it could fall apart and
B, but the White House must al-Assad and the opposition to supply more weapons with prevent them from being fired spurring intelligence agencies
holding elections in
still approve the list of spe- resume U.N.-brokered negotia- warnings that they would be outside designated areas of to ready the Plan B package. a ‘full civil war.’
cific Plan B weapons systems tions in Geneva this week. mistaken to go behind Wash- Syria. But Washington has re- Obama administration officials
before they can be introduced Development of the weapons ington’s back to provide weap- mained cool to the idea. acknowledge the cessation of
to the battlefield. list is part of a broader behind- ons systems that Mr. Obama U.S. and Middle Eastern offi- hostilities has become increas- France and Germany have
Officials said the CIA has the-scenes effort by the Obama has decided so far not to in- cials declined to specify the ingly shaky. But these officials said they won’t accept the
made clear to its allies that administration to deter its ad- troduce to the battlefield. precise systems that could be say they don’t think it is on the election results.
the new systems, once agreed versaries in the Syrian conflict The agency’s principal con- introduced on the battlefield verge of collapse. “Holding free and fair elec-
upon, would be given to the while preventing the U.S.’s co- cern focuses on man-portable due to the sensitivity of the In private meetings with tions is simply impossible in the
rebels only if the truce and the alition partners who are sup- air-defense systems, known as program. their Russian counterparts, Mr. current situation, with all the
concurrent political track to- porting the moderate opposi- Manpads. The CIA believes that Secretary of State John Kerry and CIA Director John refugees, in a full civil war situ-
ward a lasting peace—Plan A— tion from taking matters into rebels have obtained a small Kerry stressed the importance Brennan have warned the alter- ation. All reports show that and
fall apart and full-scale fight- their own hands. number of Manpads through il- the White House has placed on native to the truce could be a so does common sense,” Ger-
ing resumes. The private message con- licit channels. Fearing these maintaining the cease-fire dur- dangerous escalation on the man foreign ministry spokes-
“The agreement is to up the veyed by U.S. officials to their systems could fall into terror- ing private meetings last week battlefield, U.S. officials said. man Martin Schaefer said.
A spokesman for the French
foreign affairs ministry de-

Egyptian Hijacker Asks nounced what he called “sham

elections.”
Mr. Meslet was en route to

For Asylum in Cyprus Geneva where United Nations

Syria envoy Staffan de Mistura
was to meet opposition repre-
BY NEKTARIA STAMOULI Mr. Mostafa was facing sentatives. The government
charges including hijacking, has said its delegation would
Seif Al Deen Mostafa, the abduction and counts related arrive on Friday.
Egyptian man who admitted to terrorism and possession of The first round of the cur-
hijacking a plane and diverting explosives. rent negotiations collapsed in
it to Cyprus, asked for political Cypriot and Egyptian offi- February amid a government
asylum in the country, accord- cials described him as a men- offensive in the northern city
ing to the Cypriot interior tally fragile man whose stated of Aleppo. The second ad-
minister. quest to be reunited with his journed March 24, having
The minister, Socrates family sparked an interna- made little progress.
Hasikos, told the state-owned tional security crisis. Both the elections and the
Cyprus News Agency on Mr. Mostafa hijacked the talks occur amid a partial
Wednesday that his govern- plane shortly after takeoff cease-fire that is under severe
AMR NABIL/ASSOCIATED PRESS

ment would have to consider from Alexandria en route to strain after six weeks. Dozens
Mr. Mostafa’s asylum claim be- Cairo and demanded to be of government soldiers and al-
fore it could fulfill a promise taken to Greece, Cyprus or lied militiamen were killed
to Egyptian authorities to ex- Turkey. Tuesday during an attack
tradite him. According to investigators south of Aleppo by rebels, in-
Local officials say Mr. Mo- in Cyprus, Mr. Mostafa said he cluding fighters with the al
stafa, 59 years old, has hired a had wanted to visit his ex-wife Qaeda-linked Nusra Front, the
lawyer and is fighting extradi- and their children, whom he U.K.-based opposition moni-
tion to Egypt, fearing possible hadn’t seen for 24 years, after Activists on Wednesday protesting the president’s decision to cede the islands to Saudi Arabia. toring group Syrian Observa-
mistreatment by authorities Egyptian authorities barred tory for Human Rights said.
there.
However, the officials said
his asylum application would
probably be rejected and his
him from traveling to see
them.
His ex-wife told Cypriot po-
lice that she and her children
Egypt’s Sisi Defends Decision Rebels launched an offen-
sive in the area more than a
week ago following repeated
cease-fire violations by gov-
extradition would take place
by April 22.
Mr. Mostafa admitted hi-
hadn’t spoken to Mr. Mostafa
in 10 years, officials said.
During six hours of negotia-
To Give Saudis Red Sea Islands ernment forces, antigovern-
ment activists said. In re-
sponse, the regime announced
jacking an EgyptAir Airbus tions on the tarmac after land- an operation to retake Aleppo,
320 passenger jet on March ing in Cyprus, Mr. Mostafa in- BY TAMER EL-GHOBASHY tensions with Iran. It clears vated and railing about an un- which has been divided be-
29, and was detained in a Cy- sisted that a four-page letter the way for the construction specified conspiracy working tween rebel and government
priot prison in Larnaca near be passed to his former wife, CAIRO—President Abdel of a 9.3-mile bridge across the to destabilize Egypt that was control since 2012.
the airport following his ar- and demanded the release of Fattah Al Sisi sought to quell Straits of Tiran linking the two fueled, he said, by social-me- Neither side has yet to de-
rest. 63 women imprisoned in Cairo. public outrage over his deci- countries, at an estimated cost dia activists who were spread- clare an end to the truce.
Earlier this month, Cypriot What he said was an explo- sion to cede control of two of $3 billion to $4 billion. ing false information. “The regime’s escalation of
prosecutors and the Justice sive belt strapped around his Red Sea islands to Saudi Ara- Many Egyptians, including The narrow Straits of Tiran indiscriminate attacks against
Ministry approved his extradi- torso turned out to be fake. All bia, saying he hadn’t surren- lawyers and prominent politi- form the mouth of the Gulf of civilians shows how Assad
tion to face trial in Egypt. 63 passengers and crew were dered Egyptian territory but cians, accused Mr. Sisi of sell- Aqaba, on which the Jordanian isn’t committed to the Geneva
Prosecutors in Cyprus said released unharmed. instead restored rightful own- ing the islands to Saudi Ara- port of Aqaba and the Israeli talks, and doesn’t want a polit-
ership to the Saudis. bia—a reference to the billions port of Eilat are located. ical solution,” Mr. Meslet said.
“We didn’t relinquish even a of dollars in trade and loan The islands became a flash- Syrian Information Minister
grain of sand,” Mr. Sisi told high- agreements the kingdom has point in 1967 when then-Egyp- Omran al-Zoubi said Tuesday
ranking officials and other pub- extended to Egypt and its tian President Gamal Abdel the cease-fire was producing
lic figures in a televised speech weakened economy since Mr. Nasser announced Egyptian positive results.
Wednesday. He said the transfer Sisi became president. plans to bar all Israeli ships Mr. Zoubi also told state
of control of the strategic islands During King Salman’s visit, and vessels carrying goods to media that Wednesday’s elec-
GEORGE MICHAEL/AGENCE FRANCE-PRESSE/GETTY IMAGES

of Tiran and Sanafir to the king-
dom came after years of study
and negotiation that began be-
fore he took office in 2014.
Egypt declared on Saturday
that the two islands fall within
Saudi waters, a day after the
two nations signed a maritime
border agreement.
Egypt has administered the
islands since 1950.
The announcement of the
transfer came during a five-
day visit to Cairo by Saudi
Arabia’s King Salman, who
Seif Al Deen Mostafa arriving at a court in Larnaca on March 30. was seeking to bolster their
He is said to fear mistreatment if he is sent back to Egypt. alliance in the face of growing
Egypt and Saudi Arabia signed
agreements totaling $24 bil-
lion in loans and investments
to Egypt’s energy, health-care,
and transportation sectors, in-
cluding the bridge.
Khaled Ali, a prominent la-
bor-rights attorney and one-
time presidential candidate,
has filed a legal motion to
block the transfer of control of
the islands, which must be ap-
proved by Parliament.
Mr. Sisi fired back at his
critics, denying that the ced-
ing of the islands to Saudi
Arabia was politically moti-
and from Israel from passing tions weren’t at odds with at-
through the straits. tempts in Geneva to reach a
Israel had said preserving political settlement of the con-
its navigation of the straits flict, which has left at least
was a vital national interest 260,000 people dead. The elec-
and any attempt to block it an tions are required by the con-
act of war. It launched a pre- stitution, which remains in ef-
emptive military strike against fect until a new version is
Egypt and its Arab allies. drafted, he said.
By the end of the brief war, On Monday, U.S. State De-
Israeli forces had seized con- partment spokesman Mark
trol of the Gaza Strip and the Toner said that with the talks
Sinai Peninsula, including the under way in Geneva and Syria
straits, from Egypt, the West still in turmoil, elections were
Bank and East Jerusalem from “at best premature and not
Jordan and the Golan Heights representative of the Syrian
from Syria. people.”
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A4 | Thursday, April 14, 2016 HK JP KO ML SI IN UK FR MN PR THE WALL STREET JOURNAL.

WORLD NEWS

Migrant Clashes Erupt at Border EU Agreement

With Turkey
Still Has Risks,
Outbreaks of violence
with police at Greek- Official Warns
Macedonian frontier
The European Union’s deal
highlight brewing crisis with Turkey to better control
the flow of migrants to Europe
BY STELIOS BOURAS still poses legal and ethical
concerns, said a top EU official
ATHENS—Migrants and who helped broker last month’s
Macedonian police clashed for agreement.
the second time in recent days The acknowledgment follows
at the country’s Greek border, criticism of the March 18 agree-
highlighting the growing frus- ment from humanitarian organi-
tration of migrants trapped in zations, in particular plans to
squalid conditions in Greece put asylum seekers in detention
by border closures. centers on Greek islands before
At the village of Idomeni, returning them to Turkey.
on Greece’s border with north- “The deal with Turkey isn’t
ern neighbor Macedonia, a perfect and we’re fully aware
group of up to 100 migrants of its risks and weaknesses,”
DANIEL MIHAILESCU/AGENCE FRANCE-PRESSE/GETTY IMAGES

threw rocks and tried to rip said European Council chief

down the border fence on Donald Tusk in the European
Wednesday, according to Parliament in Strasbourg on
Greek police. Macedonian riot Wednesday.
police responded by firing tear “We did everything we
gas and stun grenades. could to ensure the agreement
Greek police stepped in to respects human dignity, but I’m
prevent an escalation and a conscious everything depends
repeat of violent clashes on on how it will be imple-
Sunday, when scores of people mented,” he said.
were injured, mostly by tear Europe would have headed
gas or plastic bullets fired by toward “political catastrophe,”
Macedonian police. with right-wing radicalism tri-
The outbreaks of fighting at umphing and border-free travel
Idomeni are a sign of how within the bloc being abol-
Greece is turning into a pres- A migrant threw a tear-gas shell back at Macedonian riot police during clashes at the country’s border with Greece on Wednesday. ished, if it had failed to secure
sure cooker for some 54,000 its external borders and control
migrants stranded in the coun- turn to troubled regions in the lems at the more than 30 offi- Iraq, has been sleeping in a in a small tent with his wife, who is crossing its frontiers,
try, often with little food and Middle East or South Asia. cial camps around the country two-person tent for 22 days their 6-year-old daughter, and Mr. Tusk said.
living in wretched conditions. Outbreaks of violence in- but say they are doing their alongside two cousins. his mother for the past 20 He warned of alternative
The migrants, including volving refugees and other mi- best, given limited time and Greece’s government has days. A driving instructor back routes forming to circumvent
Syrian war refugees as well as grants have become an almost resources and the scale of the ruled out using force to move in his hometown of Aleppo, the now-closed migrant route
Iraqis, Afghans and others daily occurrence in Greece. humanitarian challenge. refugees away from the make- Mr. Halae complained of rats from Turkey to Greece and
fleeing conflict or poverty, At Idomeni, where nearly One of the most over- shift camps at Idomeni and Pi- and “other animals” in the northward through the Bal-
mostly want to seek asylum in 11,000 refugees and migrants crowded accommodation cen- raeus. Instead, it is trying per- government shelter where he kans. He said that since the
Germany and other parts of are gathered, some people ters is at the disused Athens suasion. There has been some slept previously. start of the year, roughly
Northern Europe. But the once have blocked the train tracks airport at Hellenikon, where success. At Piraeus, more than His biggest concerns, how- 20,000 migrants had come to
heavily traveled trail into the between Greece and Macedo- more than 4,500 migrants a thousand people have left ever, is how his family can get Europe, particularly to Italy and
continent has been blocked by nia, while others have on occa- have been put up, exceeding for an official accommodation a hot shower. They can’t af- Malta, by crossing the Mediter-
the closure of borders in the sion blocked traffic on nearby the camp’s planned capacity of center in recent days, reducing ford to pay the €30 ($34) that ranean Sea.
Balkans. roads. 4,000. On Tuesday, refugees the number sleeping in the local hotels are demanding for “The numbers of would-be
A deal between the Euro- Efforts by Greek authorities smashed the windows of the rough at the port to 3,805 mi- a few hours in a room when migrants in Libya are alarming.
pean Union and Turkey to to shift them to nearby camps main building to cool it down grants by Wednesday. they can wash and rest, he We must be prepared to show
send back migrant who cross have proved largely fruitless. amid a bout of warm weather. Akram Halae from Syria said. The family has caught solidarity to Malta and Italy,”
the Aegean Sea to Greece has Many fear that if they leave Migrants at Hellenikon also said he preferred the port, the flu in recent days, he said. Mr. Tusk said. He noted,
coincided with a sharp reduc- the area, they may miss their complain about a shortage of along with all its risks. Out- Like most of the trapped though, that so far only African
tion of new arrivals in Greece chance to get across the bor- working toilets. Many prefer breaks of violence among mi- migrants, Mr. Halae is at a migrants had come this year
in recent weeks. But tens of der. Others complain about the to camp in tents alongside a grants over food regularly take loss. “All I can do is sit here via this route, not Syrians, sug-
thousands already in Greece overcrowded conditions at the busy highway nearby. place at Piraeus. Reports of and wait for something to gesting that the closing down
face an uncertain future, un- state-run shelters. Down the road at Athens’s sexual harassment against happen. I don’t know what— of the route via Turkey hasn’t
able to travel deeper into Eu- Greek government officials main port of Piraeus, Hussein women are frequent. just something. There is noth- redirected the migrant flow.
rope and many afraid to re- acknowledge there are prob- Ali Abdul, a 45 year old from Mr. Halae has been sleeping ing else I can do,” he said. —Valentina Pop

World Bataclan Announces

Watch Lineup for Reopening
BY NICK KOSTOV
PARIS—The Bataclan, the
BRITAIN music venue where 90 people
were gunned down during No-
Two Groups to Lead vember’s terror attacks here,
‘Brexit’ Debate will have British rock star Pete
The U.K.’s electoral watchdog Doherty on the bill for one of
designated an official group to the first concerts when it re-
represent each side of the de- opens this fall.
OSSERVATORE ROMANO/PRESS POOL
warmth and conviviality,” the
owners said. “We would like to
maintain the classless
and festive spirit that has al-
ways characterized it.”
Senegalese star Youssou
N’Dour and the Super Êtoile
de Dakar will perform on Nov.
18, while the U.S. rock group
Nada Surf will play on Dec. 2.

bate over Britain’s membership The concert hall has been The French group MZ will per-
in the European Union. closed for renovation form on Dec. 3.
The Electoral Commission since Nov. 13, when Kalash- The Eagles of Death Metal
chose Vote Leave, backed by nikov-wielding terrorists were in the middle of their set
London Mayor Boris Johnson stormed past security and at the Bataclan when three
and five cabinet ministers, to massacred revelers during a French-born terror-
lead the campaign to exit the gig by the U.S. band Eagles of ists stormed in and opened
EU ahead of the June 23 vote. Death Metal. fire on the crowd of 1,500 peo-
Britain Stronger in Europe, Although the Bataclan own- ple. Most of the 130 killed dur-
which is working closely with LEVITY: Pope Francis joked with Paris firemen after Wednesday's Vatican weekly general audience. ers have yet to fix a reopening ing the string of attacks
Prime Minister David Cameron, date, they said four concerts around Paris were young rev-
will lead the campaign to re- ing steel industry, European termine whether they were tioned the boost isn’t likely to would take place this Novem- elers at the concert hall or on
main. The announcement comes Commission President Jean- dumped on the market and we be sustained given tepid global ber and December. restaurant terraces.
ahead of the start of the official Claude Juncker said. will take other measures if nec- demand. One, on Nov. 16, will be Many of businesses tar-
campaign on Friday. Speaking to EU lawmakers, essary.” He didn’t elaborate on Exports increased 11.5% in headlined by Mr. Doherty, co- geted have reopened, includ-
—Jenny Gross Mr. Juncker said that while the further measures. March year-over-year in dollar frontman of The Libertines ing the restaurant La Belle
and Nicholas Winning sector must deal with global —Laurence Norman terms, the General Administra- and Babyshambles and former Equipe, where 19 people were
overproduction, it also deserves tion of Customs reported on boyfriend of supermodel Kate killed.
EUROPEAN UNION specific help. He said the bloc CHINA Wednesday. This compared Moss. While announcing the con-
needed to act to counter unfair with February’s 25.4% decline The club’s management said cert lineup, the Bataclan man-
Juncker Urges Help trading practices and invest in
March Exports Rose, and exceeded a median 8.5% work had begun to fix the agement also paid tribute to
For Steel Industry steel industry workers. But Caution Prevails increase forecast by 14 econo- hall’s infrastructure and equip- the people killed at the venue
The European Union should “Free trade should be fair Chinese exports expanded in mists polled by The Wall ment without changing the on Nov. 13 and their families.
take additional measures if nec- trade. We are now investigating March for the first time in nine Street Journal. layout. They said more shows would
essary to support the bloc’s ail- steel products from China to de- months, but economists cau- —Mark Magnier “We will try to maintain its be announced soon.

Vote Deals Blow to South Korean Leader

BY ALASTAIR GALE cial figures. The main opposi-
tion Minjoo Party was ahead
SEOUL—South Korea’s rul- in 108 seats. A further 47
ing party appeared set to fall seats are assigned based on
short of a majority in a na- proportional representation
tional parliamentary election according to shares of the
while youth unemployment hit
a record 12.5% in February.
Ms. Park was elected in
2012 with a pledge to deliver
an economic transformation
similar to the industrialization
The main opposition Minjoo
Party has emphasized welfare
projects, such as raising pen-
sions and increasing the mini-
mum wage, while tapping into
voters’ anxiety about South Ko-
LEE JIN-MAN/ASSOCIATED PRESS

Wednesday, dealing a setback overall vote. Opinion polls be- South Korea experienced in rea’s wealth distribution. A
to President Park Geun-hye’s fore the vote had indicated the the 1970s and 1980s. But her study by the IMF released last
stalled economic-reform pro- Saenuri Party, which held a lit- efforts to boost the weak ser- month showed the top 10% of
gram as growth slows. tle over half the seats until vices sector and foster cre- workers account for almost
Political power and policy- some lawmakers defected ative industries such as tech- half of total income in South
making is heavily concentrated ahead of the election, would nology startups have largely Korea, the highest level in Asia.
in the presidency in South Ko- secure a majority. sputtered. The opposition’s perfor-
rea, but a strong showing for The weakening economy A spokesman for Ms. Park mance in the election will
the main opposition party may have turned voters away didn’t immediately respond to likely embolden it to challenge Kim Chong In, a chairman of the main opposition Minjoo Party,
jeopardizes Ms. Park’s efforts from Ms. Park’s party. On a request for comment. Labor Ms. Park’s economic proposals. tracked winning candidates in Wednesday’s parliamentary election.
to push economic deregulation Tuesday, the International reforms proposed by Ms. Park “There will be more policy
and labor reforms through Monetary Fund lowered its to lower youth unemployment gridlock,” said James Kim of tor in the election. Cheol-soo, made an aborted
parliament before her term growth forecast for South Ko- by loosening job protection for the Asan Institute for Policy The poll was also notewor- run for the presidency in 2012
ends in less than two years. rea for this year to 2.7%, below older workers have been mired Studies, a Seoul think tank. thy for the emergence of a and may now have some mo-
With around three-quarters the global average of 3.2% and in political bickering. A study General public support for new center-left party headed mentum for another bid.
of the votes counted just after less than half of the growth by the Korea Economic Re- Ms. Park’s tough approach to by a former software entre- The next presidential elec-
midnight local time, Ms. Park’s rates the country experienced search Institute, a think tank, North Korea, including cutting preneur who is popular among tion is at the end of 2017 and
conservative Saenuri Party during its industrialization. showed it took parliament 517 off all economic links follow- younger voters. The People’s Ms. Park’s five-year term for-
was leading in 106 of 253 Household debt, meanwhile, days on average to pass each ing Pyongyang’s nuclear-bomb Party was ahead in 26 areas, mally ends in February 2018.
seats with directly elected rep- has risen to a record $1 trillion law during the just-ended four- test earlier this year, didn’t according to the preliminary South Korean presidents by
resentatives, according to offi- as of the end of last year, year term, the slowest ever. appear to be a significant fac- count of votes. Its leader, Ahn law are only allowed one term.
 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.
REUTERS/NACHO DOCE
A couple in Campinas, São Paulo state, in March prepared food in the shipping container in which they have constructed a home.
Brazilian Economy Tanks
As Political Upheaval Looms
BY PAUL KIERNAN
RIO DE JANEIRO—For the
past two months, Brazilian fi-
nancial markets have staged
wild rallies over any sign that
left-leaning President Dilma
Rousseff might be ousted from
office, even as the nation’s
economy spiraled further into
the depths of its worst crisis
in generations.
Now, with a crucial im-
peachment vote looming on
Sunday, investors may soon get
their wish for new leadership.
If two-thirds of lawmakers in
Brazil’s lower house vote to try
Ms. Rousseff on charges of
doctoring the government’s
fiscal numbers, she will have to
step aside, at least temporarily.
But while markets are
cheering, the prospects for a
growth rebound remain dim,
even if Ms. Rousseff is suc-
ceeded by a more business-
friendly head of state.
“The economy suffers from a
variety of original sins,” said
João Pedro Ribeiro, a Brazilian
economist at Nomura in New
York. He says Brazil’s “potential
growth”—how fast gross domes-
tic product is capable of expand-
ing in the long term—is now
“very, very low” in comparison
with other developing countries.
The president’s critics say
she has mismanaged her na-
tion’s once-flourishing econ-
Venezuela Blunts Opposition Lawmakers
BY ANATOLY KURMANAEV
AND SARA SCHAEFER MUÑOZ
CARACAS—Four months af-
ter the Venezuelan opposition
swept elections to control con-
gress, the victory looks hollow.
Although socialist President
Nicolás Maduro conceded the
results, he has since under-
mined the National Assembly.
Since January, when the
new assembly was sworn in,
Mr. Maduro has stripped it of
economic-oversight powers
and his ministers have skipped
hearings on corruption and
the economic melt-
down. Through his allies on
the top court, the president
has blocked legislation, even
uncontroversial measures like
food subsidies for the elderly.
An initiative proposed by the
government would go even fur-
ther: A constitutional amend-
ment proposed last week by the
president’s legal adviser, Her-
mann Escarra, would amend the
constitution so congress could
be dissolved within months.
On Monday night, the Su-
preme Court, which is packed
with Maduro loyalists, annulled
an amnesty law passed by the
legislative body that aimed to
liberate some 80 political pris-
oners, including jailed opposi-
tion leader Leopoldo Lopez.
“When this government
loses at the polls, it then takes
away the power of the institu-
tions,” said Henry Ramos Allup,
the opposition president of con-
gress. “It happened at the mu-
nicipal level, at the state level,
and now it’s happening to the
national congress.”
For many Venezuelans, the
government’s efforts to blunt
the assembly has prompted
omy and lacks the political
skills to push badly needed
overhauls through Congress.
Brazil’s GDP shrank 3.8% last
year—the biggest contraction
in a quarter-century, and a
stark turnaround from the 7.5%
growth notched in 2010, the
year Ms. Rousseff was elected.
The economy is now pro-
jected to contract 3.8% in 2016.
The bleeding will likely con-
tinue regardless of who Brazil’s
president is because the gov-
ernment has virtually ex-
hausted its firepower to fight
the crisis. Years of economic
stagnation, combined with con-
stitutionally mandated spend-
ing on things like health care,
education and pensions, have
left Brazil’s public sector with
a deficit of nearly 11% of GDP.
“We talk about entitlement
spending in the U.S., but I
mean, that is what Brazil
does—90% of the budget is en-
titlement spending. There is
no discretionary spending,”
said Edwin Gutierrez, who
manages $11 billion in emerg-
ing-market debt at Aberdeen
Asset Management.
The fixes Brazil needs would
require politically unpopular
decisions. Ms. Rousseff’s likeli-
est successor, Vice President
Michel Temer, has signaled a
pro-market agenda but will
likely have “a very narrow hon-
eymoon” to implement it, said
President Nicolás Maduro, left, has accused congress of conspiring to overthrow his government.
questions on whether demo-
cratic change is possible.
“We’ve lost faith,” said An-
gelis Martinez, a student who
in December joined spontane-
ous celebrations in the Petare
slum after the elections. “We
don’t know whom to trust any-
more, whom to support. None
of it seems to matter. The gov-
ernment carries on doing what
it wants.”
The government’s moves
have dimmed the prospect for
economic change in the oil-
rich country, and emboldened
opposition hard-liners who say
a coup or street protests are
the only way to create change.
“The government is using ev-
ery maneuver it can to resist
the opposition congress because
WORLD NEWS
Christopher Garman, head of
country analysis at risk consul-
tancy Eurasia Group.
A Supreme Court judge re-
cently ordered Brazil’s Con-
gress to charge Mr. Temer with
the same offenses it lodged
against Ms. Rousseff. Several
high-ranking PMDB members
have been implicated in a wide-
reaching corruption scandal.
A newly energized leftist
opposition, meanwhile, is
likely to oppose any austerity
measures he tries to impose.
“As a result, the binary
manner by which markets are
treating this weekend’s vote is
probably somewhat mis-
placed,” Mr. Garman said in a
research note on Tuesday.
Many challenges ahead are
enshrined in Brazil’s 1988 con-
stitution, which makes it prac-
tically impossible for the gov-
ernment to lay off civil
servants and allows workers
to start collecting social secu-
rity at an average age of 54.
Such problems, along with
other obstacles to growth like
pervasive red tape and poor
infrastructure, were masked
from 2003 to 2011 by rising
prices for Brazil’s commodity
exports. When commodity
prices began to falter during
Ms. Rousseff’s first term, she
intervened in the economy
with populist policies that
temporarily sustained con-
it recognizes it as a threat to its
own existence,” said Eric Farns-
worth, vice president of the
Council of the Americas, which
promotes trade. “If the legisla-
ture can’t legislate and the Su-
preme Court is not indepen-
dent, by definition that is an
assault on democracy.”
Some here say they worry
about a social explosion in a
country where food, medicine
and other basic goods are in
short supply. Critics say Mr.
Maduro’s administration has
declined to make changes
needed to alleviate suffering.
“He’s been given the oppor-
tunity to change course, but
he does nothing,” said Carlos
Berrizbeitia, a longtime oppo-
sition lawmaker. “And the sit-
sumer spending but ultimately
left Brazil with a gaping bud-
get deficit.
Ms. Rousseff attempted to
right the fiscal ship after her
2014 re-election by naming a
respected banker, Joaquim
Levy, as finance minister with
the task of implementing an
austerity program. News of
the appointment boosted Bra-
zil’s stocks and currency in a
phenomenon that local media
called the “Levy effect.”
But his most important
measures fell flat, and he re-
signed in December.
Mr. Levy’s struggles may
bode poorly for Mr. Temer’s
hopes of swiftly delivering his
party’s promise to overhaul
the pension system, cut waste-
ful government spending and
stimulate private investment.
“We thought when Joaquim
Levy came on board…that Brazil
was moving in the right direc-
tion,” said Michael Henderson,
an analyst at Maplecroft. “But
there is a lot of inertia there; a
lot of these structural problems
are hard to weed out. There are
a lot of vested interests.”
The cautious view of Mr.
Henderson and other econo-
mists contrasts with the eu-
phoria that has overtaken Bra-
zil’s financial markets in recent
weeks as impeachment pro-
ceedings against Ms. Rousseff
picked up speed in Congress.
REUTERS
uation is very dangerous.”
Mr. Maduro has accused
congress of being “murderers,
terrorists and fascists,” and of
conspiring to overthrow the
government. Government sup-
porters clad in red scream in-
sults from the balcony, dis-
rupting proceedings. Mr.
Maduro cast the proposal to
dissolve congress as a mea-
sure to thwart a coup d’état.
“If I see that we are head-
ing toward a coup through the
use of the congress,” he said
last week, “I personally will
activate such a mechanism.”
Government opponents say
the inaction has badly deterio-
rated Venezuela’s economy. Its
triple-digit inflation is the high-
est in the world, and economists
Thursday, April 14, 2016 | A5
Defections Make
Impeachment of
Rousseff Likelier
BY ROGERIO JELMAYER
AND PAULO TREVISANI
SÃO PAULO—Political allies
are deserting President Dilma
Rousseff, weakening her
chances of surviving a crucial
impeachment vote in Congress
set for Sunday.
Ms. Rousseff’s government
has been scrambling to cobble
together enough support to
stave off an impeachment vote
in Brazil’s Chamber of Depu-
ties. She needs 172 votes in
the 513-member body, includ-
ing abstentions or no-shows,
to kill the proceeding and
avoid a trial in the Senate.
The Progressive Party, or
PP, said late Tuesday that its
46 members in the lower
house of Congress were leav-
ing the coalition government
with Ms. Rousseff’s leftist
Workers’ Party, or PT, and
were free to vote as they
choose on Sunday.
That followed a March 29
decision by Brazil’s largest po-
litical party, the centrist Bra-
zilian Democratic Movement
Party, or PMDB, to leave the
coalition.
The PMDB’s leader in the
lower house, Leonardo Pic-
ciani, told allies earlier
Wednesday that he wouldn’t
be able to deliver even 25 of
his party’s 66 lower-house
members in support of the
president, the Agencia Estado
news agency reported.
The defections “have made
an impeachment trial in the
Senate almost inevitable,” said
Rafael Cortez, a political ana-
lyst at São Paulo-based con-
sultant Tendencias Consulto-
ria. “Not just because of the
number of votes they repre-
Dilma Rousseff, seen on Tuesday, is scrambling for support.
say the country is set to experi-
ence its sharpest contraction
since declaring independence
from Spain two centuries ago.
The newly elected lawmak-
ers had vowed to tackle the
problems. But the Supreme
Court has declared most of
their initiatives unconstitu-
tional. This month, two-thirds
of congress voted against ex-
tending President Maduro’s
emergency decree, which gives
him broad powers over the
budget and the distribution of
food and essential goods.
Hours later, the Supreme Court
overruled the assembly.
The court has also annulled
a law that would have re-
quired the central bank to re-
lease economic figures and
limit printing of money, and
took away congress’s power to
remove Supreme Court judges.
Senior ministers have made
clear their unwillingness to work
with congress. This year, law-
makers subpoenaed Eulogio del
Pino, head of the state-owned oil
company Petróleos de Venezu-
ela SA, central-bank head Nel-
son Merentes, and industry and
trade minister Miguel Pérez
Abad to testify on the financial
woes and allegations of corrup-
tion. None showed up. Messrs.
del Pino, Merentes and Pérez
didn’t respond to messages
seeking comment.
“They won’t go because
they want the public to see
that they don’t have anything
to say about the country’s cri-
sis,” said José Guerra, a law-
maker who has been pushing
for government ministers to
testify on economic policy.
—Kejal Vyas in Bogotá and
Mayela Armas in Caracas
contributed to this article.
sent, but because the recom-
mendation will attract votes
from undecided lawmakers,
too.”
Leaders of the Social Demo-
cratic Party, or PSD, were to
announce later Wednesday a
decision to either maintain an
earlier decision to support the
president or free the party’s
36 members in the Chamber of
Deputies to vote as they
choose.
The embattled president
did receive some encourage-
ment from another party, the
Democratic Labor Party, or
PDT, which said its 20 federal
deputies will vote in her favor.
The party is “siding with de-
mocracy and the constitution,”
the PDT’s whip in the Chamber
of Deputies, Weverton Rocha,
said in a speech.
Ms. Rousseff faces charges
that her government manipu-
lated budget figures when she
ran for re-election in 2014 to
make the country’s financial
condition appear better than it
was. She has denied the alle-
gations and has likened the
impeachment effort against
her to an attempted coup
d’état.
The Chamber of Deputies is
scheduled to vote Sunday af-
ternoon on whether the evi-
dence against the president is
strong enough to merit a Sen-
ate impeachment trial. To pass
the motion, the opposition
needs votes from 342 deputies
in the lower house.
A running tally published
online at midday Wednesday by
the newspaper Estado de S.
Paulo showed 318 deputies say-
ing they will vote for impeach-
ment, a figure that has in-
creased sharply in recent days.
JOSE CRUZ/PLANET PIX/ZUMA PRESS
Ex-President
Of Argentina
Defends Acts
BY TAOS TURNER
BUENOS AIRES—Former
President Cristina Kirchner
delivered an impassioned
speech to thousands of sup-
porters on Wednesday after
testifying about allegations
that Argentina’s central bank
illegally traded derivatives late
in her term, costing the coun-
try billions of dollars.
Mrs. Kirchner made her
first public address since leav-
ing office in December outside
a federal courthouse here, af-
ter she met Federal Judge
Claudio Bonadio, who is over-
seeing the case. Mrs. Kirchner
didn’t answer his questions,
but instead issued written tes-
timony saying the accusations
against the central bank are
unfounded and politically mo-
tivated.
“I have said this publicly
and I will say it again: I am
not afraid of you,” she wrote,
adding that Judge Bonadio
was conspiring with President
Mauricio Macri’s government
to put her in jail on “absurd”
and “made-up” charges.
Judge Bonadio is investigat-
ing allegations that the central
bank sold $17 billion of dollar
futures contracts at artificially
low prices, allegedly violating
the bank’s charter, which says
it must sell derivatives at mar-
ket rates, which later cost the
bank billions.
The court appearance and
speech come amid rising ten-
sions between the Macri ad-
ministration and her support-
ers.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Thursday, April 14, 2016
SOCIAL
Continued from Page One
puts the terror group within
reach of every smartphone,
laptop and desktop computer
in the world. Its potent use of
social media has far surpassed
al Qaeda, which in past years
released poor-quality videos to
Al Jazeera and other media
outlets to bolster calls for
global jihad.
On Twitter, Islamic State
supporters engage in a noisy
online war of words. Working
around the clock, militants
send tweets that swing be-
tween promises of paradise
for believers and brutal death
to all who oppose their brand
of religiosity in a digital
clash of civilizations waged
every day.
On the other side are those
who seek to do more than bat-
tle to a draw. Twitter, which
ramped up its antiterror fight
last summer, removed more
than 26,000 suspected pro-Is-
lamic State accounts in March,
nearly four times the number
erased in September, accord-
ing to an analysis conducted
for The Wall Street Journal by
Recorded Future Inc., a threat-
intelligence firm based in
Somerville, Mass.
Islamic State supporters
have tried to keep pace, estab-
lishing more than 21,000 ac-
counts in March, compared
with about 7,000 in Septem-
ber, the analysis found.
Twitter said in a statement
on its website earlier this year
that it condemned “the use of
Twitter to promote terrorism,”
saying it had deleted 125,000
accounts since mid-2015 for
threatening or promoting ter-
rorist acts. As a result, the
company said, it had seen
“this type of activity shifting
off Twitter.”
Islamic State operatives
mocked the Twitter announce-
ment, sending their own mes-
sage: A tweet of a bullet-rid-
dled version of the company’s
bluebird logo. The group also
distributed a video taunting
the shutdown efforts by Twit-
ter and Facebook. “Is that all
you can do?” read a banner at
the video’s end.
Joining the battle are pri-
vate intelligence firms and
such crowdsourcing organiza-
tions as CtrlSec, which draws
online hunters around the
world to watch for suspected
terrorists on social media and
other parts of the Web.
Over the past year, CtrlSec
said it has identified about
120,000 Twitter accounts
linked with Islamic State, in-
cluding hundreds featuring
Mr. Walid. At least three of his
accounts were reported and
deleted on the day of the
Brussels attacks that killed 32
people.
“No terrorist organization
in history has launched as dy-
namic and ultimately effective
global influence operation on-
line as Islamic State,” said Mi-
chael S. Smith II, chief operat-
ing officer of Kronos Advisory.
The Charleston, S.C., security
consulting firm collaborates
with CtrlSec to monitor Is-
lamic State’s online activities.
No one outside Islamic
TERROR
Continued from Page One
still at large, raising questions
over whether the account was
designed to protect others.
The magazine also listed
around a dozen prominent
Muslims it called “overt cru-
saders” as targets, naming
people in the U.S., U.K. and
Canada.
The magazine claimed that
the Bakraoui brothers gath-
ered weapons and explosives,
rented safe houses and made
plans for the two attacks. Bel-
gian investigators have said
they also found that the
brothers rented safe houses
used by both the Paris and
Brussels attackers.
French investigators have
said they suspect Salah Abde-
slam, who is in custody in
Belgium and whose brother
blew himself up during the
Paris attacks, was the logis-
tics chief for the Paris attacks.
Both the Abdeslam brothers
rented accommodation and
cars used by the assailants in
their own names.
Pieter Van Ostaeyen, a Bel-
gian expert in Islamic affairs,
said the Islamic State’s claim
was very likely exaggerated.
“I doubt the Bakraoui
brothers had the operational
knowledge,” Mr. Van Ostaeyen
said. “They could have helped
easily in providing the weap-
State seems to know who con-
trols Mr. Walid’s Twitter ac-
counts. His profile picture is a
bearded man who resembles
Abu Musab al-Zarqawi, the
founder of al Qaeda in Iraq, a
precursor to Islamic State. Mr.
Zarqawi was killed in a 2006
U.S. airstrike.
The profile picture, which
has been used for more than a
year, is a way for Islamic State
followers to find each new
Walid Twitter account. His ac-
count usernames vary, typi-
cally three letters followed by
a three-digit number that in-
creases with every iteration:
@vtr488 became @ctr489, for
example.
Some of Mr. Walid’s earlier
usernames collected more
than 6,000 followers. Even
with the recent shutdowns,
the account still gathers as
many as 2,000 or more follow-
ers, presumably sympathizers
ripe for recruitment or dona-
tions.
Mr. Walid’s account was
first spotted early last year,
using a longer honorific that
suggested he was from Ku-
wait: Abu Walid Kuwaiti.
CtrlSec believes Mr. Walid’s
account is run by an Islamic
State official who may be in
charge of a recruiting network
in Saudi Arabia. Mr. Smith
said it was also possible sev-
ons, as they were hardened
criminals, but I don’t see
them capable of organizing all
of this.”
The Bakraoui brothers
turned to the Islamic State
cause while in prison in Bel-
gium, the magazine says. Ac-
cording to Belgian prosecu-
tors, 27-year-old Khalid, and
his brother, 29-year-old Ibra-
him, were convicted carjack-
ers and bank robbers who had
spent time in jail but failed to
be flagged up as radicals be-
fore the attacks.
In June 2015, Turkey re-
turned Ibrahim el-Bakraoui
from the Syrian border, but
because of an administrative
blunder, Belgian authorities
never got hold of him.
The magazine also identi-
fied Najim Laachraoui, the
other suicide bomber at the
Brussels airport, as the bomb
maker for both the Paris and
Brussels attacks. Belgian and
French prosecutors had found
Mr. Laachraoui’s DNA on the
suicide vests used in the ter-
rorist attacks in Paris on Nov.
13, and believed he was in-
volved in the assembly of the
suitcase and backpack bombs
used in the Brussels attacks.
Mr. Laachraoui, a 24-year-
old Belgian of Moroccan de-
scent, went to Syria in 2013
and fought on several fronts
for Islamic State until he was
injured in the leg and decided
to return to Europe to mount
attacks, according to the
FROM PAGE ONE
eral people run the account,
all conforming to a single
style.
One of Mr. Walid’s first
tweets, in February 2015,
boasted of a fight against U.S.-
backed Kurdish forces that
garnered valued weapons for
the militants, according to re-
cords kept by Kronos Advisory
and Recorded Future.
A month later, Mr. Walid
tweeted other alleged military
successes. That account was
reported to U.S. Special Opera-
tions Command. “I’ll tell @US-
SOCOM where you are if they
Some Islamic State-related content has
shifted to other parts of the Web.
let me eat your liver and brain
after they kill you,” the user
tweeted to Mr. Walid.
Others flagged Mr. Walid to
Twitter, which soon closed the
account.
Mr. Walid, who posts in Ar-
abic and occasionally in Eng-
lish and other languages, often
evades Twitter’s countermea-
sures. When an online Islamic
State hunter reports his user-
name, he sometimes changes
names to keep the account
alive a bit longer.
The Walid account is part
of a decentralized media em-
magazine.
In his return to Europe,
the Islamic State magazine
said that Mr. Laachraoui was
assisted by a more seasoned
fighter, Mohamed Belkaid, a
40-year-old Algerian who
was shot dead in a police
raid in Brussels a week be-
fore the March 22 attacks
that killed 32 people and in-
jured over 340.
Belgian prosecutors believe
that raid prompted the Is-
lamic State-linked terrorists
to speed up their plans to
strike.
On March 15, a joint Bel-
gian-French team of investi-
gators were carrying out what
authorities described as a
check on an apartment in the
Brussels neighborhood of For-
est where electricity and wa-
ter had been cut off because
of unpaid bills, when they
were fired upon.
During the hourslong gun-
battle that ensued, Mr.
Belkaid was killed as he was
shooting a Kalashnikov from a
window, allowing two other
suspects to escape, according
to authorities.
“It was the raid in Forest
that precipitated the at-
tacks,” said Thierry Werts, a
spokesman for the Belgian
prosecutor.
After the raid, police found
several assault rifles, ammu-
nition and Islamic State pro-
paganda, as well as the fin-
gerprints of Mr. Abdeslam.
pire run by Islamic State,
which relies on supporters
world-wide to distribute mis-
sives in at least half a dozen
languages, intelligence ana-
lysts said.
Messages and videos often
originate at Islamic State’s
provincial propaganda offices
or the al-Hayat Media Center,
the group’s propaganda-pro-
duction wing focused on non-
Arab audiences, intelligence
experts said.
On a typical day, Mr. Walid
posts dozens of tweets in a
role that is part jihadist news-
wire and part militant cheer-
leader. His most frequent
posts are about Islamic State
military activities, but he also
posts photos of fighters who
have been “martyred,” as well
as images of alleged spies be-
headed.
“He tweets and posts pic-
tures that only a psychopath
would tweet,” said Lara Abdal-
lat, a Jordanian-born woman
who works for CtrlSec, the
group monitoring Islamic
State on social media.
Charlie Winter, a researcher
at Georgia State University
A still image from a bystander’s video of people fleeing the Brussels airport after the March 22 blasts.
Mr. Abdeslam and another
suspect were captured three
days later.
Prosecutors said over the
weekend that it was the ar-
rest of Mr. Abdeslam that
forced the cell to abandon
plans of striking again in
France and carry out the
March 22 attacks at the air-
port and a subway station in
THE WALL STREET JOURNAL.
that used any of seven
hashtags commonly employed
by Islamic State propagan-
dists, the company found a
40% reduction in these ac-
counts in March compared
with August.
Militant sympathizers are
also being shut down faster.
The median lifespan of a tar-
MEGAN MAY FOR THE WALL STREET JOURNAL (LEFT); MICHAEL S. SMITH II/KRONOS ADVISORY
geted account was less than
two days, the analysis found,
compared with several weeks
last summer.
Mr. Walid’s accounts, which
a year ago lasted a week or
longer, now survive for at
most a day and sometimes for
less than an hour.
Some Islamic State-related
content has since shifted to
other parts of the Web, includ-
ing Telegram, a Berlin-based
messaging service that is a
mix of public and private
channels.
Messages from Islamic
State, also known as ISIS or
ISIL, often appear first on a
private Telegram channel and
are then spread on Twitter
and other public platforms by
agents such as Mr. Walid, ter-
rorism analysts said.
“There’s an almost infinite
Above, security consultant number of other platforms on
Michael S. Smith II, who tracks which ISIS supporters can dis-
Twitter accounts linked to seminate their propaganda,”
Islamic State members. Left, a Mr. Winter said.
messages between Mr. Smith Telegram didn’t respond to
and Islamic State operatives. a request to comment. In Janu-
ary, it said on Twitter it was
who tracks Islamic State, said removing as many as 10 Islamic
those operating the Walid ac- State channels a day and had
count were “spending all of banned more than 660 public
their time trying to make sure channels since November.
Islamic State propaganda Islamic State messages on-
gathered in the darkest cor- line generally fall into two
ners of the Internet reaches main categories: military tri-
Twitter.” umphs and the building of an
In dueling tweets earlier Islamic utopia.
this year, Mr. Walid taunted an Earlier this year, Mr. Walid
Arabic-speaking anti-Islamic tweeted about a car bombing
State activist who often mocks in Iraq, along with lifestyle
the Walid account by posting a news of Islamic State’s meat
version of its profile picture inspections and complaints di-
with a monkey face. vision. Of late, he has posted
“There is nothing you can photos of spring flowers and
do, you dog,” Mr. Walid other idyllic scenes of daily
tweeted, “if the account is de- life under militant rule. Barba-
leted or hacked, within three rism also continues to surface
minutes I’ll be back with a regularly.
new one.” On a recent March after-
Islamic State supporters noon, the Walid account posted
use other forms of social me- a routine mélange of news re-
dia but favor Twitter because ports and combat images—in-
of its reach and anonymity. cluding men blown up—when a
Twitter has 320 million active CtrlSec activist joined the
users world-wide, and new ac- Twitter conversation, respond-
counts can be created without ing to images of a decapitation.
using a real name. The activist, who goes by
Twitter Inc., which declined @kitten_spatt, alerted two of
to comment for this article, Twitter’s official accounts:
takes pride in its role as a “#ISIS psychopath.”
global forum of diverse opin- Learning he had been spot-
ion. ted, Mr. Walid blocked @kit-
The company relies mostly ten_spatt from viewing more
on Twitter users, including of his messages. He also
CtrlSec, to report offensive switched usernames from
content. Internal company @xgd393 to @zyd393, to
teams review reports to decide mask the account from Twitter
who to ban. investigators.
Of the 500 Islamic State ac- The CtrlSec operative found
tivists tracked by Mr. Smith, him and reported his new
of Kronos Advisory, about 95% username: “Abu Walid Ku-
return after being terminated. waiti/ major #ISIS propagan-
“In the name of God the dist/393rd acct.”
merciful may account 139 re- To ensure Twitter wouldn’t
main a thorn in the throats of miss him, @kitten_spatt also
the infidels and apostates…” noted the underlying user
one supporter tweeted in Feb- identification number for the
ruary. account, which the activist re-
Even so, Twitter’s shut- trieved with a special service.
downs are making it more dif- Twitter suspended Mr.
ficult for the terror group to Walid within about an hour.
operate on its service, the Shortly after, a new Walid
analysis by Recorded Future account surfaced, along with
found. Looking at accounts the images of beheading.
ASHER GUNSBERG/REUTERS
Belgium’s capital instead. vestigators are focusing on
Meanwhile, three suspects three main areas in their
arrested Tuesday in a raid in probes, including the Paris at-
the Brussels neighborhood of tacks, the Brussels attacks
Uccle in connection with the and an attack foiled last
Paris attacks have been re- month in France, in which
leased without charges, Mr. suspects were arrested in
Werts said. France, Belgium and the Neth-
He said that investigations erlands.
were continuing into several —Inti Landauro in Paris
strands and terror cells. In- 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.
Cruz Takes Campaign to Unlikely Places
In hunt for delegates,
GOP hopeful makes
pitch in New York’s
Democratic districts
BY JOSH DAWSEY
NEW YORK—Texas Sen. Ted
Cruz went to a Dominican-Chi-
nese eatery in the Bronx last
week and met with black and
Spanish pastors. The next day,
the Republican presidential
hopeful visited a matzo-baking
center in Brooklyn to talk with
Jewish voters.
Republicans in New York
don’t often campaign in such
Democratic strongholds. They
head for Staten Island and the
state’s western stretches. But Mr.
Cruz, who is trailing his rivals in
state polls, has focused on Dem-
ocratic congressional districts,
where his team hopes to pick up
at least some of the state’s 95
delegates in the April 19 primary.
“There are orphan districts
in New York we feel like we can
target that have few Republican
voters, and we can get more
people to turn out and vote,”
said Catherine Frazier, a Cruz
spokeswoman. “You can expect
our time in the state is going to
be targeting specific coalitions.”
The Cruz campaign’s micro-
targeting is the latest iteration
of its strategy of winning
enough delegates, sometimes in
unlikely places, to block Donald
Trump’s ability to secure the
1,237 needed to clinch the nom-
ination before the July conven-
tion. If there is a contested
convention, another candidate,
such as Mr. Cruz, could wind
up the party’s standard bearer.
On Tuesday, House Speaker
Paul Ryan said he didn’t want to
be considered and that the nom-
inee should be someone who
ran in the primary campaign.
U.S.
Watch
ECONOMY
Fed Cites Expansion
In Most Regions
Economies have expanded in
most regions of the U.S., supported
by firming labor markets, rising
wage pressures and modest in-
creases in consumer spending, the
Federal Reserve said Wednesday.
The Fed found nearly all of its
12 regions reported growth, ac-
cording to its regional survey of
economic conditions, known as the
beige book. The report paints a
brighter picture of the economy
compared with earlier in the year,
but Federal Reserve officials aren’t
expected to raise rates at their
next policy meeting on April 26-27.
The latest beige book covers
the period from late February
through April 7. Eleven out of 12
districts said growth expanded
over that period, and most said
business contacts expect growth
going forward.
Nearly all districts reported
strengthening labor markets, al-
though Cleveland reported a de-
cline in employment. Wages rose
across every district except Atlanta.
—Anna Louie Sussman
and Eric Morath
HEALTH
Group Urges Change
In Painkiller Usage
In another sign of growing
alarm about painkiller addiction, a
group of state health officials, doc-
tors and consumer advocates are
calling for a stricter approach to
treating pain in hospitals and clinics.
The group of 60, including se-
nior health officials from Pennsyl-
vania, Vermont, Alaska and
Rhode Island, is recommending
new guidelines for pain treat-
ment, saying current standards
are too aggressive and contribute
to overuse of addictive painkillers.
In a letter sent Wednesday to
the head of the Centers for
Medicare & Medicaid Services,
the group urges the agency to
stop surveying patients about
how well their pain was con-
trolled while in the hospital, a set
of questions the agency uses to
help judge hospital performance
and determine payment. The
group argued the pain questions
“have had the unintended conse-
quence of encouraging aggressive
opioid use” because hospitals aim
for high scores on the surveys.
CMS officials didn’t respond
to a request for comment.
—Jeanne Whalen
Republican presidential candidate Sen. Ted Cruz speaking at a restaurant in the Bronx borough of New York last week.
Of New York’s 95 delegates,
14 are awarded based on state-
wide primary results. The rest
are allocated based on primary
results in each of the 27 con-
gressional districts. If a candi-
date wins less than 50% of the
vote in a district, the second-
place finisher gets one of the
district’s three delegates.
Mr. Trump has 743 dele-
gates, while Mr. Cruz has 545.
Mr. Trump has often com-
plained about losing delegates
in states where he won the pop-
ular vote, and he recently hired
a campaign operative, Paul
Manafort, to revamp his strat-
egy. His campaign didn’t re-
spond to requests for comment.
Device Shows Promise for Paralyzed Patients
BY AMY DOCKSER MARCUS
A paralyzed man has used
an implant in his brain and his
thoughts to move his own arm,
an advance in a decadeslong
research effort to restore
movement to people with spi-
nal-cord injuries.
Researchers from Ohio
State University and Battelle
Memorial Institute reported in
Nature that they implanted a
tiny device in Ian Burkhart’s
motor cortex, the part of the
brain that controls movement.
Mr. Burkhart, 24, has quadri-
plegia as a result of a diving
accident four years ago and
can’t move his arms and legs.
His brain still sends signals to
move his limbs, but the signals
never arrive.
The implanted device acts
as a “neural bypass” system,
picking up the brain signals
and sending them to a com-
puter that decodes them. The
system then delivers electrical
stimulation to Mr. Burkhart’s
arm muscles through a sleeve
embedded with electrodes and
worn around his arm.
In the experiment, Mr. Bur-
khart was able to perform a
set of routine tasks that in-
volve very complex hand and
finger movements, including
grasping a bottle, pouring its
contents into a jar and picking
up a stick and stirring the
contents.
“The uniqueness is, for the
first time, we link brain sig-
nals in a high-fidelity and re-
producible fashion within mil-
liseconds to an individual who
can move his own hands,” said
Chad E. Bouton of the Fein-
stein Institute for Medical Re-
Demand Rises for Worker Visas
BY MIRIAM JORDAN
The government said it has
received more than 236,000
applications from companies
for skilled-worker visas,
known as H1-Bs, exceeding
last year’s record by at least
3,000.
A total of 85,000 of the vi-
sas are available, as mandated
by Congress. Of that total,
20,000 are allocated to for-
eign workers with advanced
degrees from U.S. universities.
U.S. companies request the
visas for workers typically in
the technology field, though
they are also used for em-
ployees who work in other
U.S. NEWS
His grousing intensified in
the wake of Saturday’s Colo-
rado GOP convention, which
met in lieu of a primary and
awarded all of the state’s avail-
able delegates to Cruz sup-
porters. Mr. Trump argued the
system disenfranchised mil-
lions of Colorado Republicans
who had no primary to vote in.
“That system is set up so the
crooked politicians can make
sure they get somebody in
who’s not part of what we’re do-
ing,” Mr. Trump said Tuesday.
Mr. Cruz, speaking to con-
servative radio host and sup-
porter Glenn Beck on Tuesday,
said of Mr. Trump’s attacks,
“Donald is a very sore loser.
Quadriplegic Ian Burkhart was able to move his arm after having a ‘neural bypass’ device implanted.
search in Manhasset, N.Y., who
was previously at Battelle and
is one of the authors of the ar-
ticle.
The case comes at a time
when the field of so-called
brain-computer interfaces is
receiving an infusion of fed-
eral money and a push to cre-
ate applications that aren’t
just interesting research proj-
ects but are also practical for
patients.
Last year, researchers led by
a team at the University of
California, Los Angeles, pub-
lished a study showing five
men with paralysis making
step-like movements through
electrical stimulation to the
spinal cord. BrainGate, a multi-
institutional project develop-
ing and testing its own neural-
implant system, has shown
patients able to control a key-
sectors such as architecture
and art.
For the fourth consecutive
year, the cap was reached
within five days.
Federal officials also said
Monday that they had com-
pleted the computer-gener-
ated lottery selection for the
visas. That left most compa-
nies that applied for the visas
without the job candidates
they wanted.
Demand for the visas has
been rising since the eco-
nomic recovery began several
years ago. Last year, there
were 233,000 applications; in
2014 there were 172,500 H1-B
visa applications.
He doesn’t handle losing well.”
Party officials have de-
fended their processes against
Mr. Trump’s onslaught. “The
rules were set last year,” Re-
publican National Committee
Chairman Reince Priebus said
Monday on Twitter. “Nothing
mysterious—nothing new. The
rules have not changed.”
Colorado Sen. Cory Gardner
also pushed back against Mr.
Trump, faulting him for not
putting adequate effort into
the state. “Elections are won
by those who show up,” said
Mr. Gardner on CNN Tuesday.
“It is not a coronation.”
Mr. Cruz’s best moments have
come in caucuses, local conven-
board and move a robotic arm.
Ali Rezai, director of Ohio
State’s Center for Neuromodu-
lation and one of the paper’s
authors, said the system right
now can be used only in the
lab. Mr. Burkhart has a trans-
mitter on his head that has to
be plugged in to work. Brain
signals change depending on
everything from the tempera-
ture in the room to what
someone is focusing on, and
the algorithm that decodes
those signals has to adjust in
real time. The ability of the
electrodes to transmit clear
signals can erode over time;
Mr. Burkhart may eventually
need the device removed.
“The goal is to eventually
get this out of the lab and
make it available beyond one
or two research subjects,” Dr.
Rezai said.
The applications are filed
in the spring so that foreign
workers can start their jobs in
the U.S. in the new fiscal year,
Oct. 1 or later.
Companies apply for the
H1-B visas with a specific job
candidate in mind.
“U.S. employers who paid
thousands of dollars in legal
fees believe that our immigra-
tion system has failed them,”
said Roxanne Levine, a New
York immigration attorney.
U.S. Citizenship and Immi-
gration Services, the federal
agency that oversees the H1-B
program, said it would return
government fees to the appli-
cants. But most companies
Thursday, April 14, 2016 | A7
of the borough is Republican.
“This is all about the dele-
gates,” said J.C. Polanco, a
Bronx political operative and
former Board of Elections
president who has worked
with Mr. Cruz’s campaign.
“They are light years beyond
everything we’ve seen here.”
Beyond its size and diversity,
Mr. Cruz has other problems in
New York. He damaged himself
when he criticized Mr. Trump
by saying he had “New York val-
ues,” a remark that angered Re-
publicans and Democrats alike.
“I don’t think there is a
whole lot Cruz can do to turn
himself around in New York,”
said Charles Joyce, one of the
state’s two GOP national-com-
mittee members. Mr. Joyce
said he hadn’t heard from the
Cruz campaign and that his
message wouldn’t be well-re-
BRYAN THOMAS/GETTY IMAGES
ceived in much of the state.
In addition, targeting Repub-
licans in the Bronx can be diffi-
cult, “because there are so few
of us,” Mr. Polanco said. He said
the campaign had largely fo-
cused on using social media to
communicate with supporters.
When he arrived at a Bronx
event, Mr. Cruz was heckled
tions and small state primaries— over his position on climate
very different environments change and immigration. Mr.
from New York. The latest WSJ- Cruz also met with about 50
NBC poll of likely New York Re- ministers. That lunch was inter-
publican primary voters released rupted by loud protesters, and
Monday showed Mr. Trump at some of the pastors said they
54%, with Ohio Gov. John Kasich weren’t committed to Mr. Cruz.
at 21% and Mr. Cruz at 18%. Mr. Cruz’s campaign said he
Ms. Frazier said the Cruz last week visited the Chabad
campaign is focusing its can- Neshama Center in Brighton
vassing, calling and social-me- Beach, a heavily Jewish Brook-
dia efforts in certain areas but lyn neighborhood, to speak to
declined to say how the cam- Hasidic and Orthodox Jews, a
paign specifically picked them. powerful voting bloc, about his
The Bronx is about 6% Repub- pro-Israel stances. In addition,
lican, while Brooklyn is about the campaign staged an event
9%, according to a 2012 state in Brooklyn last week with
report of registered voters. Mr. black business leaders.
Cruz also held an event in —Janet Hook
Manhattan, where about 10% contributed to this article.
derbilt University and vice
president of the North Ameri-
OHIO STATE UNIVERSITY WEXNER MEDICAL CENTER/BATTELLE MEMORIAL INSTITUTE
can Neuromodulation Society.
Researchers are also studying
the use of such devices in peo-
ple with other conditions, in-
cluding ALS, or amyotrophic
lateral sclerosis, and in those
who have suffered strokes, al-
though it isn’t clear yet
whether extracting brain sig-
nals from such patients might
differ.
Dr. Konrad said new tech-
nology may need innovative
funding methods. The project
in the Nature paper was
funded primarily by the uni-
versity, Battelle and private
philanthropists. It has been
challenging to find successful
business models to commer-
cialize brain-computer tech-
nology, even when experi-
ments demonstrate the
Developing brain-computer difference restoring function
interfaces involves more than can make in people’s lives.
scientific challenges. Mr. Bou- “How much does it mean
ton said researchers think not for Ian Burkhart to be able to
only about how to restore move his hand?” Dr. Konrad
movement, but also how to asked.
make it natural. Everyday ac- Mr. Burkhart lives with his
tions, such as shaking some- father and stepmother outside
one’s hand, is actually a com- of Columbus, Ohio, studies
plex process, he says. Scientists business management in col-
are trying to find ways to give lege and helps coach the high-
patients sensory feedback, too. school lacrosse team for which
“Touch is so important for he used to play. He says the
this technology,” he said. contrast between what he did
“When you shake hands, you in the lab during the three-
want to feel the hand and ad- times-a-week training session
just your grip.” and what he does at home is
For now, one of the major sharp.
obstacles is the small market “I would like to be able to
size. Spinal-cord injuries affect do things on my own instead
approximately 150,000 people of asking for help or waiting
in the U.S., and not all of them for someone else to help me
are eligible to use such a de- with it,” he said. “The things I
vice, said Peter Konrad, pro- do in the lab, I would love to
fessor of neurosurgery at Van- have in everyday life.”
KEITH BEDFORD/REUTERS
U.S. Citizenship and Immigration Services oversees the visa program.
also pay attorneys who help from jobs that pay well. They
prepare the petitions. say some companies seek
Critics say the program H1-B visas as a way to import
displaces American workers cheaper foreign talent.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A8 | Thursday, April 14, 2016 THE WALL STREET JOURNAL.

PERSONAL JOURNAL.

Why You’ll Want Amazon Microphones in Your Home

Alexa shows how gadgets Now, for the sobering reality:
Despite what you may imagine, Al-
become more useful when exa is not a digital genie.
they get ears of their own My list of quibbles with Alexa
is long enough that I only recom-
BY GEOFFREY A. FOWLER New Speakers mend these products to the adven-
From left, Amazon’s Tap, Echo Dot turous for now. Her response to
Millions of people in the last and Echo all let you talk to Alexa too many questions is, “Sorry, I
year or so bought microphones so from anywhere in your home. can’t find the answer to the ques-
that Amazon.com could listen in tion I heard.” If you have more
on them at home. I’m one. And I than one Alexa product in a small
just got more, built into new home, she might try to respond si-
speakers called the Tap and the multaneously in multiple rooms.
Echo Dot. You have to learn to speak her
Some day, Amazon could be grammar, and the more talents she
embedded in appliances, listening gets, the more awkward the lingo.
all over your house. (“Alexa, ask Mom Jokes to tell me
Why would you want that? Be- a joke.”) And unless you activate a
cause your own voice is turning special lock code, anyone who
JOSHUA SCOTT FOR THE WALL STREET JOURNAL, STYLING BY ANNE CARDENAS

into the best in- walks up to Alexa can order things

put device since with your Amazon account. I’ve al-
the Enter key. ready been pranked by “friends.”
And Amazon has Think of Alexa less like a per-
found the first sonal assistant such as Siri, and
genuinely killer more like an operating system for
PERSONAL use for it: playing the house. A lot of stuff in our
TECHNOLOGY music. homes—fridges, toys, coffee pots,
This idea is even toilets—have had a harder
slightly less bon- time participating in the Internet
kers than it sounded in late 2014 revolution because they aren’t key-
when Amazon debuted its Echo board or touchscreen friendly. Re-
speaker and Alexa talking tech. cently, Amazon opened Alexa to
It—or should I say she?—is an ar- devices made by other companies.
tificial intelligence, like the “bot” The first is a digital family white-
Facebook introduced for its Mes- board called the Triby.
senger this week. When you call Life with Alexa has also made it
Alexa’s name around an Echo, she clearer what sorts of tasks don’t
wakes up and responds in a perky lend themselves to operating by
voice. voice. Any interaction that re-
“Alexa, what’s the weather to- quires more than two sentences of
day,” you can ask from up to 20 how gadgets can become more without the compromises of the tle chilly? Ask Alexa to turn up the back and forth is annoying, includ-
feet away. “Right now in San Fran- useful when you just talk to them. Echo’s just-OK-sounding tube Nest thermostat. Getting dark? ing more-considered decisions like
cisco, it’s 63 degrees,” she re- Alexa’s always been able to stream speaker. One limitation, for now, is Ask her to turn on the Hue con- buying things. Alexa can’t recog-
sponds. With no taps or futzing music, but was limited in her that there’s no way to make multi- nected lights in the living room. nize individual voices, so you
with apps required, Alexa points to sources. In February, she gained ple Dots and Echos around the Need some more razors? Ask Alexa wouldn’t trust her with tasks like
a future where not all tech is the ability to play Spotify, the all- house play the same song and stay to re-order them—this is an Ama- unlocking the front door.
crammed onto a smartphone you-can-eat streaming music buf- in sync. zon product after all. The Echo and its new pal Dot
screen. fet. Spotify turned Alexa into an The $130 Tap is a battery-pow- At last count, Alexa had over are useful because they ensure Al-
It’s impressive technology, incredible DJ: Now I just name any ered portable Bluetooth speaker 500 “skills,” thanks to Amazon’s exa is always available, no digging
though Alexa herself has a long artist, song or playlist aloud, and that can also join Wi-Fi networks decision late last year to open her around for a phone. In the new
journey ahead. The $180 tube- the dance party begins. to connect to Alexa in the cloud. In to developers, who can make capa- Tap speaker, she loses much of her
shaped Echo was a dud when I re- Amazon is waging a full-on my tests, it didn’t sound as good bilities you add to her. One favor- magic, because you have to press a
viewed it in early 2015. Because I talking assault on home entertain- as similarly priced and sized mod- ite: Meat Butler tells you how to button to summon her. (Amazon
mostly just use Amazon for shop- ment. Last year, it added Alexa’s els from Beats and JBL—and about cook whatever you want. (If you says an always-listening Tap would
ping, Alexa didn’t know enough talents to its Fire TV streaming the same as the less expensive like your steak rare, Alexa recom- have had terrible battery life.)
about me—my contacts, my mes- video box, which includes a micro- Jawbone Mini Jambox. Battery life mends serving it at a USDA-flaunt- In a year of using the Echo,
sages, my travels—to even be a phone in its remote. This month’s doesn’t stand out, either. But this ing—but chef-approved—125 de- Amazon’s bot has gone from the
bumbling assistant like Apple’s new additions to the Alexa family one has a button on the front that grees “to inspire the palate.”) butt of jokes in my house to a
Siri. In my house, we primarily bring her skills to new speakers at lets you summon any song or play- Alexa is fast, too. Call her computer we talk with daily. Even
used the Echo to set kitchen tim- lower prices. list with your voice. name, even if a TV is on elsewhere though we continue to depend
ers, making Alexa a very expensive The $90 Echo Dot is a smaller Music was Alexa’s Trojan Horse in the room, and she’ll hear you dearly on our smartphones, it’s
spaghetti assistant. Alexa microphone that plugs into into my house. I’m now busy try- without the seconds of painful de- clear to me now that many of the
Since then, though, Alexa’s the line-in of an existing Hi-Fi sys- ing other talents that she’s gaining lay you get when you call “Hey breakout gadgets of the future will
been in school—and is proving tem, so you can listen to music at an impressive clip. Feeling a lit- Siri” on an iPhone or Apple Watch. have ears and a voice of their own.

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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Thursday, April 14, 2016 | A9

ARTS & ENTERTAINMENT

Thrills, Chills and Kills

BY LUCY FELDMAN

SCREENWRITER Erin Cressida Wilson, the

new go-to voice for female-driven movie
thrillers, has spent the past three months
hunkered down in her New York apartment.
By day, she’s adapting “Maestra,” L.S. Hil-
ton’s new femme fatale novel, for Sony’s
Pascal Pictures. By night, she’s talking
through rewrites of the screenplay for sci-fi
thriller “Ghost in the Shell” with a Dream-
Works team in New Zealand.
Shortly before diving into “Maestra,” she
finished a draft screenplay of “The New
Winter,” based on a coming mystery by
Anna Snoekstra, for Universal. She has an-
other thriller book-to-film adaptation in the

FROM TOP: ERIN PATRICE O’BRIEN FOR THE WALL STREET JOURNAL; EVERETT COLLECTION
works, but it’s still under wraps.
She wasn’t always this busy. Ms. Wilson,
52 years old, came up as a playwright in the
New York theater scene of the ’80s and ’90s
and gradually found her way into screenwrit-
ing, mostly for small, independent films. It
was business as usual when she signed on to
adapt an unpublished book by an unknown
author for DreamWorks in 2014. But days af-
ter she turned in her first draft, the book
came out and exploded. It was Paula Haw-
kins’s “The Girl on the Train.”
In Hollywood, she’s long been associated
with provocative, often
dark work. Her screen-
play for “Secretary,”
the 2002 erotic-roman-
tic film about a sadistic
lawyer and his masoch-
istic assistant, won an
Independent Spirit
award. She followed
that with screenplays
for “Fur: An Imaginary Known for provocative work like ‘Secretary,’ left, Erin Cressida Wilson, above, is the go-to screenwriter for female-driven thrillers.
Portrait of Diane Ar-
bus,” about the subver- former stripper,” says “The Girl on the Train” because it’s a psy- doesn’t judge her. “There are reasons people
sive photographer, and Ms. Wilson. But in gen- chological thriller told through the voice of are bad, and they’re so fascinating,” she
“Chloe,” about the eral, she writes from a an unreliable woman, and “Fifty Shades of says. “There are so many ways to be bad.”
twisted manipulation place of fantasy, which Grey,” because of its graphic sex. Ms. Hilton Other screenwriters considered for “The
of a married woman by she sees as the root of a bristles at the latter comparison—there’s no Girl on the Train” had suggested simplifying
a young escort. thrill. “Thrillers are a lot romance in her novel. the novel’s different perspectives and mixed
Maybe, uncon- about subtext and fan- Adapting these thrillers brings a welcome chronology. But Ms. Wilson found a way to
sciously, she’s been tasy, and rage and sex stability, Ms. Wilson says. “After years of the- synthesize those elements in her pitch.
writing thrillers all and desire,” she says. ater, working for so little, it’s actually a breath She moved the story to New York from
along, says producer All those themes of fresh air to have a paid job that’s about the London, placing protagonist Rachel on the
Michael Costigan, a combine in “Maestra,” marketplace and commerce,” she says. train line along the Hudson River between
longtime collaborator. where the protagonist In writing the script, Ms. Wilson digs Manhattan and Poughkeepsie. “I actually
“A thriller is about a approaches both sex and past Judith’s seeming heartlessness into her thought I’d get pushback on that,” she says.
character who’s at a boiling point of tension, slaughtering with determination. “I felt like history. She questions the sexism that brings The Hudson views are more picturesque
and all of her characters always are.” I was reading something quite horrific and the character to the edge—and wonders if it than those Ms. Hawkins imagined Rachel
Mr. Costigan recalled a meeting with di- quite light at the same time,” says Ms. Wil- might explain why many readers are snap- watching out the train window, but that
rector Tony Scott and Ms. Wilson where she son, who reads the story of Judith, an assis- ping up female-driven thrillers. “There’s a only heightens the tension, she says. Ms.
shared an “intimate, risqué” detail from her tant at a British auction house who un- lot of rage that’s been generated from centu- Hawkins read the script but found it diffi-
life to push an idea for a scene. “All of us at leashes her ruthless side, as a fairy tale. ries of being mistreated,” she says. “We see cult to imagine the final result. “Basically I
the table blushed. I remember Erin looking at “It’s the coming-of-age of a murderer.” Judith turn around and take power.” was happy,” she says. “The things I really
us thinking, ‘What’s the big deal?’ ” G.P. Putnam’s Sons bought “Maestra” and Some early reader reviews of “Maestra” wanted to keep—the darkness and charac-
“I know that sometimes I walk into rooms the promise of two sequels in a seven-figure dismissed its leading lady as hard to relate terization, the sense of paranoia and self-
and people expect a dominatrix to enter, or a deal. The novel has been compared with to. She is a killer, after all. But Ms. Wilson doubt—all that’s in there.”

RIJKSMUSEUM

PLAYLIST: IAN KAHN

ART

Importing
Beauty
BY BARRYMORE LAURENCE
SCHERER
Salem, Mass.
At the Peabody Essex Mu-
seum, “Asia in Amsterdam: The
Culture of Luxury in the
Golden Age” makes a visual
banquet of the aesthetic and
cultural legacy of the Nether-
lands’ era of maritime explo-
ration and East Asian trade.
Organized by the PEM and
the Rijksmuseum, Amster-
dam, it features over 200 ob-
jects gathered from both muse-
ums’ collections and loans from 60
other institutions as well as the
Dutch, English and Swedish royal
collections. These objects—includ-
ing extraordinary furniture, intri-
cate Japanese lacquer work, Chi-
nese painted porcelain and
dazzling Indian textiles—show
how, at the end of the 16th century,
the Dutch overtook the initial in-
roads made by Portugal in East
Asia. In 1602 they established the
Verenigde Oostindische Compagnie
(or Dutch East India Company), the
world’s first multinational joint
stock company, whose fleet sailed
around Africa’s Cape of Good Hope
to return with immense cargoes of
exotic treasure, spices and tea.
By focusing on some of the
most beautiful objects brought
back to the Netherlands, the show
charts the burgeoning wealth gen-
erated by the Dutch East India
Company and the burgeoning ac-
quisitiveness that resulted. More-
over, it vividly illustrates the influ-
ence of these imports on Dutch
arts and sciences with important
paintings, drawings, maps, prints
and books as well as decorative
and scientific objects.
The exhibition probes the very
East Indian cradle of carved ebony and ivory (1650–1700)
Wonderful still lifes and interior
scenes underscore the fascination
Dutch artists had with the exotic
imports. It is thrilling not only to
marvel at the depiction of reflected
light and translucence in Willem
Kalf’s “Still Life With Porcelain
Bowl, Nautilus Cup and Fruit”
(1662), but to be able to compare
the painting’s covered porcelain
bowl with one displayed nearby, its
bright colors now worn away.
The decorative objects include a
magnificent East Indian cradle of
carved ebony and ivory; scintillat-
ing jewelry set with diamonds,
pearls and rubies; Japanese cabi-
nets covered with enamels and re-
constituted denticles (scales) of
ray or shark skin; and meticulously
dyed and patterned textiles.
Part of the allure of many
works here lies in their interweav-
ing of historical, social and aes-
thetic ideas. For instance, two
Rembrandt ink drawings of the
powerful Mughal ruler Shah Jahan
(builder of the Taj Mahal) show the
Dutch master not just copying Mu-
ghal miniatures, but interpreting
III, combines a pagoda-like shape
with painted Baroque designs and
armorials in blue.
An examination of the Dutch
engagement in Asia includes a
frank look at the burden the Dutch
East India Company imposed on
indigenous peoples. In 1621, 44
chieftains and 10,000 people of
Banda (one of the Spice Islands, as
the Indonesian Moluccas were
called then) were massacred on the
orders of Jan Pieterszoon Coen,
founder of Batavia (modern Ja-
karta, Indonesia), to gain control of
Banda’s nutmeg crop. Coen’s 1625
portrait, attributed to Jacob Wa-
ben, hangs in the show. Nearby is a
moving documentary on the
cakalele dance, still performed by
the Bandanese to reassert their
spiritual unity with their slaugh-
tered ancestors.
The show’s didactics are su-
perb. Wall texts and labels are en-
hanced by film and video, interac-
tive elements and animation. And
you proceed through the easy flow
of galleries to the unobtrusive ac-
companiment of 17th-century
Matchmaker
Leonard Cohen
Actor Ian Kahn, 43,
plays George Wash-
ington on AMC’s
“Turn: Washing-
ton’s Spies,”
which begins its
third season on
April 25. He spoke
with Marc Myers.
When I was a junior in high school
in 1989, I fell for a girl in my theater
class. She was a sophomore and the
first love of my life. The following
year I broke it off. She was a deep
woman and, admittedly, I was a jerk.
As a parting gift, she gave me a CD:
“The Best of Leonard Cohen.”
I appreciated Cohen’s music, but
with his Bob Dylan rumblings, he
wasn’t my favorite singer. The Co-
hen song I liked most was “HALLE-
LUJAH,” but the version I loved best
was by Jeff Buckley, who released it
on his album “Grace” in 1994.
That same year, I graduated from
Skidmore College and moved to New
York. In 1996, I was just getting over
a long college relationship when I
met a woman named Nicole at a res-
taurant in Greenwich Village where
she tended bar. A friend knew her.
From the start, I thought she was
the most beautiful and kindest
woman I had ever met. But every
time I’d ask Nicole out, she turned
Jeff Buckley
performs in New
York in 1991.
me down. Instead, we be-
came friends and I’d wave
to her when I passed her
restaurant.
In 1999, I relocated
to Los Angeles and
spent three years there
before moving back to
New York. Some time after
I returned, I went by the res-
taurant to see if Nicole still worked
there. She didn’t, but she happened
to be there. We talked and began
dating. Like me, she loved Buckley’s
“Hallelujah.”
The ballad opens with Buckley on
guitar, and his voice is so haunting
and pure: “Your faith was strong but
you needed proof / You saw her
bathing on the roof / Her beauty and
the moonlight overthrew you / She
tied you to a kitchen chair / She
broke your throne, and she cut your
hair / And from your lips she drew
the Hallelujah.”
I asked Nicole why she had turned
me down years earlier. She said a
friend told her I was seeing someone,
which wasn’t the case. Nicole said, “I
didn’t trust you then anyway. You’re a
better man now.” She was right.
We married in 2008 and have
been together for 14 years. Now
when I hear Buckley’s “Hallelujah,” it
touches me deeply and makes me
grateful for Nicole and our two boys.
JACK VARTOOGIAN/GETTY IMAGES

nature of luxury at the time, as in
its vivid evocation of what 17th-
century Europe regarded as the
miracle of porcelain. Visitors are in-
vited to handle a 17th-century
earthenware cup and a 17th-century
Chinese porcelain plate to compare
the former’s coarse opacity with
the latter’s translucent elegance.
and enlivening them—having al-
ready incorporated Eastern fancies
into his etched “Self-Portrait as an
Oriental Potentate With a Weapon”
(1634). Similarly, a majestic pair of
Delft flower holders made by the
De Grieksche A factory for Eng-
land’s Queen Mary II and her
Dutch-born husband, King William
chamber music recorded by the
Newberry Consort. This exhibition
and its splendid catalog constitute
unforgettable portraits of a cosmo-
politan society linking two conti-
nents and of the most complex
commercial enterprise of its time.
—Mr. Scherer writes about music
and the fine arts for the Journal.
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A10 | Thursday, April 14, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK History of a Climate Con
How’s this for an senator who has gained notoriety lately
Winded in Germany irony? As U.S. state
attorneys general gin
by urging the Justice Department to
launch a RICO investigation of climate

G
ermany has spent some €200 billion cleaner gas, have been closing left and right while up a fake securities- skeptics. He doesn’t urge his Rhode Is-
($228.09 billion) since 2000 transform- soaring electricity prices push industries over- fraud case against oil land constituents to adopt the lifestyle
companies over cli- sacrifices that would actually reduce
ing its energy industry into a green seas and bankrupt households. Job losses run to
mate change, starting fossil-fuel consumption. Mr. White-
dream, and now Berlin wants the tens of thousands. BUSINESS
with Exxon Mobil house’s devotion to understanding cli-
to spend more. Witness its lat- Berlin’s renewable Now the effort to suppress WORLD
Corp., the U.S. Securi- mate science at all is so microscopic
est attempt to discourage in- additional wind-power devel- By Holman W.
vestment in wind power,
energy fiasco is about opment threatens to make Jenkins, Jr.
ties and Exchange that, in his latest letter of complaint to
Commission has the Journal, the only science he cites is
which happens to be the only to get even worse. matters worse. By favoring launched a real secu- a Gallup poll.
renewable energy generation solar, Berlin would be picking rities-fraud investigation of America’s Or take Paul Krugman’s columns in
that makes even vague sense the power source that most biggest solar-power company. the New York Times insisting that if you
for Germany. exacerbates the problems with the energy SunEdison’s sin: allegedly exaggerat- don’t vote Democratic this fall, the planet
A review now under way of the 2014 renew- transformation. It’s the most expensive, requir- ing its amount of cash on hand to resist is doomed. The colossal unmentionable is
able-energy law could change the way Berlin ing the greatest subsidies—at least €116 billion an impending bankruptcy. that climate activism today exists to pro-
A little history is in order to appreci- mote the Democratic agenda, whatever it
chooses new generating capacity. The current in today’s prices over the lifetime of the solar
ate the cynical nadir of climate politics in may be this week. One thing it isn’t,
system of subsidies and feed-in tariffs (require- capacity built between 2000 and 2014. Ger- the U.S. You wouldn’t know it from media though, is advocacy of, or even mention
ments that utilities buy renewable electricity at many has a climate and geography with about coverage, but the closest the U.S. Con- of, policies that might actually alter the
above-market prices) has led to a bonanza of so- as much sunshine as Alaska, so solar is also the gress came to passing a serious (if still course of climate change.
lar- and wind-farm construction, and renew- least reliable renewable. ineffectual) cap-and-trade program was
ables now provide one-third of electricity gener- The market distortions caused by overreli- during the George W. Bush administra-
ated in Germany. ance on expensive but undependable power al- tion in early 2007. Then, within days of Al Gore had a revelation:
The renewables never seem to fall in price the ready have pushed German utilities to rely Barack Obama’s election in 2008, Al Gore Energy taxes would
way boosters promise, and with costs skyrocket- more on cheap and dirty coal-fired power announced a revelation: the “climate cri-
ing Berlin needs a cheaper way to boost renew- plants to make up the shortfall when renewable sis” no longer required such unpleasant, be a loser for Obama.
able capacity to its self-imposed goal of 45% of sources can’t meet demand. de facto energy taxes. The problem could
be solved with painless handouts to
electricity generation by 2025. There are no heros here, least of all the wind green entrepreneurs. The president’s power-plant rules,
The proposed solution is a bidding system in industry currently bemoaning its bad political Hooray! Everybody loves a handout. even if climate models are accurate,
which renewable producers would compete for luck at potentially missing the subsidy- and feed- The activist duo Michael Shellenberger would affect global temperature a cen-
the right to produce a share of the planned new in tariff boat. Even if Berlin allows wind genera- and Ted Nordhaus noted that the shift tury hence by 0.03 degrees Celsius. His
green capacity based on who can offer the lowest tors to bid for their share of new capacity, taxpay- in Mr. Gore’s thinking was “highly sig- fuel-mileage rules, though costly to De-
price. An auction process is supposed to make ers and power consumers still will be on the hook nificant.” “He knows that cap-and-trade, troit and a life-support for Tesla, would
green energy more affordable. But Berlin wants for major new expenses. One problem with wind, and most any new regulation, would have even less effect.
to exclude new wind producers from this auc- which helps explain why it’s falling out of favor, raise energy prices—a political non- The renewable subsidies that Sun-
tion, at least as long as other producers such as is that someone would need to build expensive starter during a recession.” Edison exploited so recklessly that it may
solar are available. This despite—or perhaps be- and unsightly new transmission lines from the A proposed oil tax swiftly disappeared soon be in chapter 11 are good for killing
from the Obama transition website. With birds. The nonbinding Paris agreement
cause of—the fact that wind is the cheapest form windy north of Germany to the industrial south.
control of all three branches of govern- Mr. Obama signed in December explicitly
of green power in Germany. All of this—the job losses, the unreliable ment in hand, the imminent climate stipulates that India and China, the two
It makes you wonder if there’s any form of en- power supply, the astonishing amounts of threat to humanity suddenly appeared fast-growing emitters, will keep on emit-
ergy-price signal that governments won’t ignore. spending that could top €1 trillion over the com- not so urgent after all—passing a “signa- ting as if no agreement had been signed.
Germany’s 16-year-old Energiewende, or energy ing decades, and the rising coal emissions to ture” health-care law did. We could go on—not that, under any
transformation, already has wrecked the coun- boot—amounts to one of the more monumental Democrats, it turned out, were in fa- circumstances, a serious whack at global
try’s energy market in its quest to wean the econ- blunders of modern governance. vor of climate root canal only when Re- greenhouse emissions was ever in the
omy off fossil fuels and nuclear power. Tradi- Berlin likes to think of itself as a green-energy publicans were in charge. cards.
tional power plants, including those that burn example to the rest of the world. It sure is. OK, this is old hat, but what should Last week, Oxford University scientists
be striking is how thoroughly the cli- said that, to avoid serious climate risks,
mate lobby has played along. Its main all building of gas and coal plants must
Trouble in Kim’s Kitchen function today has become stringing up
apostates as a distraction from Demo-
stop this year—which isn’t going to hap-
pen. Does this mean you should despair

T
cratic unwillingness to propose policies over a possible human effect on climate?
hirteen North Koreans defected to the In February South Korea urged its citizens costly enough that they would actually No. Climate models are highly uncertain
South last week from China. That may to stop patronizing North Korean restaurants influence the rate of increase of atmo- and suggest a broad range of possible
not seem significant, especially since abroad, part of a broader tightening of policy spheric greenhouse gases. outcomes; the media reports only the
they were waitresses rather after the North’s latest nu- Take the Exxon prosecution, promoted worst-case scenarios. And left out is the
than high officials. But in the North Korean defectors clear and missile tests. by the attorneys general of New York and most important variable of all, the near-
secretive and topsy-turvy California and a host of their Democratic certainty of large changes in how humans
world of the Kim regime,
raise questions about Meanwhile, the U.S. and
United Nations imposed new brethren. Though the case is never produce and distribute energy over the
this gutsy group defection the regime’s control. financial sanctions. Soon re- meant to be adjudicated in a courtroom, next 100 years thanks entirely to the in-
suggests trouble in the ports circulated that the res- suppose it were and suppose a jury dependent advance of technology.
somehow found for the plaintiffs. How In the meantime, if the attorneys gen-
workers’ paradise. taurants owed staff back would Exxon pay a securities-fraud judg- eral are looking for real disclosure viola-
The North Korean restaurant in Ningbo that wages and some shut down. ment? By selling oil and gas. tions to prosecute, the place to start is
employed the defectors is one of 130 that It’s nonetheless surprising that a group of Attacking Exxon is not climate policy the climate lobby’s support—expressed
Pyongyang runs in China and 11 other coun- workers defected together, since North Kore- making; it’s a distraction. Its purpose is in increasingly vituperative and vicious
tries to earn some $10 million annually. They ans are encouraged to report on each other to foster an atmosphere conducive to the terms—for subsidies and handouts in the
attract customers not with the food, which is for disloyalty. It’s also unusual that Chinese Gore-Obama green pork-barrel strategy. name of climate change that will have no
terrible and overpriced, but with a glimpse authorities allowed them to leave China for Or take Sheldon Whitehouse, the U.S. impact on climate change.
into the North’s totalitarian facade. Attractive a third country instead of detaining and repa-
waitresses sing and dance to kitschy ballads triating them to the North. LETTERS TO THE EDITOR
praising the Kim family. It’s too early to say that Kim Jong Un’s hold
The restaurants are controlled by the Kim on the Pyongyang elite is slipping as sanctions
family’s Office 39, which coordinates the sale begin to bite. But this week South Korea dis- The Big Banks Are More Equal Than Others
of drugs and other criminal activities abroad, closed that a senior colonel from Pyongyang’s The correspondent banking system systemic risks posed by our too-big-
suggesting they are fronts for money launder- powerful Reconnaissance General Bureau de- that Jamie Dimon describes (“Large to-fail institutions.
ing. They are staffed only with hand-picked fected last year. Signs that the regime is under Banks and Small Banks Are Allies, Not CAMDEN R. FINE
regime loyalists—preferably those with family stress show that the North is not as self-suffi- Enemies,” op-ed, April 7) has existed President and CEO
members back in North Korea who will be cient as it likes to claim, and more pressure for 200 years. While the story of Independent Community Bankers of
punished if they defect. could bring it to its knees. America’s financial system is one of America
interdependence, the reliance of to- Washington
day’s largest banks on a government
Paul Ryan Bows Out guarantee against failure has destabi-
lized the banking ecosystem and
Regulations brought about by the
actions of banks like Mr. Dimon’s are

P
threatens institutions not deemed absolutely affecting our ability to
aul Ryan tried Tuesday to shut down the is often imaginary. They could benefit from more “too big to fail.” serve members and the communities
election speculation—or conspiracy the- optimism and less fever-swamp suspicion. Community banks are critical of in which we live and work, through no
orizing—that he is running a shadow To the extent Mr. Ryan’s noncampaign wasn’t the largest financial firms, not fault of our own. The regulatory cost
presidential campaign, and so a Trump-Cruz boogeyman, merely due to their size but because impact on the credit-union industry
much the better. The Speaker He may have to save support for the Speaker does concentrating most of the industry’s was $6.1 billion in 2014. The lost reve-
may be needed to save the Re- the GOP House from reflect dissatisfaction with the assets in a handful of banks puts the nues to credit unions from services
publican House majority from presidential field. Many Re- entire system at risk. The 2008 crisis discontinued or reduced because of
a November blowout at the a presidential blowout. publicans still want leaders showed that the largest banks are added regulation is at least an addi-
top of the ticket. who are willing to take on the powerful enough to bring down the tional $1.1 billion. This total impact of
Nothing Mr. Ryan could say financial system, prompt a multitril- $7.2 billion is equivalent to an aston-
hard problems, preferably
lion-dollar taxpayer backstop and ishing 80% of industry earnings and
would suppress the whispers that he is prepar- without the polarization that has defined the cause massive economic disruption, 6% of our credit unions’ net worth.
ing to airdrop into Cleveland in July, over- Obama era, and Mr. Ryan’s natural optimism which exacerbated banking industry It’s time for policy makers to act by
power the other candidates and emerge as the and substantive solutions fit that bill. consolidation. This isn’t a question of recognizing the need for regulatory re-
GOP nominee—though he tried for the ump- But his more important task this year may be large and small. It’s a fundamental lief for credit unions and small banks.
teenth time. “I do not want, nor will I accept, leading a political salvage operation—and per- question of concentration, risk and JIM NUSSLE
the Republican nomination,” he said. “Count haps a major rebuilding job in 2017. The GOP has moral hazard. President/CEO
me out: I simply believe that if you want to be a splendid opportunity to defeat a weak Demo- America faces many challenges. Credit Union National Association
the nominee for our party to be the President, cratic nominee this year. One of them is how to address the Washington
you should actually run for it. I chose not to do But Messrs. Trump and Cruz have employed
this, therefore I should not be considered, pe- a strategy of seizing the GOP nomination by
riod, end of story.” running against half of the conservative coali- Tocqueville and the Best America Has to Offer
We disagree that the GOP convention must tion, rather than uniting it. Both men have ap- Responding to Joseph Epstein’s The decline of U.S. politics reflects
pick someone who has run for the office this proval ratings low enough that their nomination “These Are the Best the U.S. Can Do?” the moral decline of U.S. society. Our
year. The nominee is likely to be one of the men could cost the Senate majority as well as the (op-ed, April 7): Alexis de Tocqueville founders taught that religious moral-
now running, but in our view the delegates can White House and Supreme Court. During the fall answered Mr. Epstein’s question some ity is indispensable to a free republic.
and should choose the candidate most likely to campaign, Mr. Ryan may have to focus on saving 180 years ago in “Democracy in Amer- In a country of free citizens, the citi-
win. If none of the current candidates wins a the House majority as the last line of defense ica.” “In the United States . . . the pur- zens must govern themselves, and
majority of the delegates after two or three bal- against a repeat of 2009-10 unbridled progres- suit of wealth generally diverts men of the soundest basis for self-gover-
lots, anything can happen, and the delegates sive government. great talents and strong passions from nance is religious morality. Over the
have to nominate someone. If the GOP does lose in a rout in November, the pursuit of [political] power; and it past 60 years progressives have
Yet this also isn’t the best year for the 46- someone will also have to rebuild from the ru- frequently happens that a man does steadily eaten away at the Christian
not undertake to direct the fortunes of roots of American culture, with un-
year-old Mr. Ryan to be the nominee, as the ins. Mr. Ryan is trying to rally the House GOP
the state until he has shown himself fortunate results.
paranoia about his nonexistent candidacy behind a governing agenda that could defend incompetent to conduct his own. The This moral decline is evident in
showed. This innuendo crested in recent weeks against a down-ballot crash, while pointing to vast number of very ordinary men candidates who promise freedom
as Donald Trump and Ted Cruz stoked grassy- the future. The Wisconsinite stands for the who occupy public stations is quite as without responsibility and substitute
knoll fears about a plot to overthrow the will strain of reform conservatism that puts a prior- attributable to these causes as to the personal attacks for policy
of voters. Both candidates and their camps are ity on promoting faster economic growth that bad choice of democracy. In the United arguments.
building “corrupt bargain” narratives if they creates jobs, increases incomes and expands op- States I am not sure that the people BRAD TUPI
lose, and so Mr. Ryan would be set up for likely portunity. These convictions have had a rough would choose men of superior abilities Upper St. Clair, Pa.
defeat in November. year, but reviving them is crucial to the future even if they wished to be elected; but
Yet what are Messrs. Trump and Cruz so of GOP presidential ambitions. it is certain that candidates of this de-
scription do not come forward.”
afraid of? They claim to be riding popular move- Some conspiracists still claim Mr. Ryan isn’t Letters intended for publication should
Only those elected through the be addressed to: The Editor, 1211 Avenue
ments, but they can’t be that popular if someone sincere about not wanting the nomination be- current failed system have the power of the Americas, New York, NY 10036,
who didn’t even run can abscond with the prize cause he also said he didn’t want to succeed to change it, but having come or emailed to wsj.ltrs@wsj.com. Please
so easily. One weakness in both candidacies—and John Boehner as Speaker. But the latter was a through that very system, they are include your city and state. All letters
a reason Hillary Clinton leads both in the polls— job no one wanted. The GOP convention will the least likely to do so. are subject to editing, and unpublished
is that their politics depends on nurturing a have to choose from the many people who do ALAN KELLY letters can be neither acknowledged nor
returned.
sense of grievance and disenfranchisement that want this job, badly, Mr. Ryan not included. Kansas City, Mo.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
Trump’s Plan to Win Conservative Support
By Fred Barnes
N
ewt Gingrich has been a
friend of Donald Trump’s
for the past decade. He
hasn’t endorsed Mr.
Trump’s presidential bid,
but they talk frequently. Mr. Trump
is anti-left wing and anti-political
correctness, Mr. Gingrich says, while
acknowledging this: Mr. Trump is
not a conservative.
Yet it is conservatives to whom
Mr. Trump must appeal as he tries
to “pivot”—Mr. Gingrich’s term—to
a campaign style that is less chaotic
and personality-driven. Mr. Trump
needs more conservative support to
lock up the Republican nomination
and to have a chance of winning the
general election against Hillary Clin-
ton, the likely Democratic nominee.
Newt Gingrich calls it a
‘pivot’—a series of policy
speeches tailored to a vital
bloc of GOP voters. But will
Trump stick to the script?
Attracting conservatives won’t be
easy. Many are fiercely opposed to
Mr. Trump, some to the point of de-
claring that they wouldn’t vote for
him under any circumstances. And
with the GOP convention only three
months away, it’s awfully late to be-
gin pursuing the GOP’s most impor-
tant bloc of voters after having
largely ignored them.
There are other problems. As the
longtime conservative political an-
alyst Michael Barone has observed,
“Trump speaks conservatism as a
After Hillary Beats Bernie, She’s Going to Need Him
Former U.S. Secre-
tary of State Hillary
Clinton will be the
Democratic Party’s
presidential nomi-
nee, and there is
POLITICS nothing that Sen.
Bernie Sanders can
& IDEAS
do about it.
By William
The Vermont sen-
A. Galston
ator’s campaign is
reportedly planning
an all-out assault on the democratic
legitimacy of the party’s 712 super-
delegates, who make up about 15%
of the total. But on what basis? As
of today, Mrs. Clinton leads Mr.
Sanders by 250 among delegates
won in primaries and caucuses. She
has received 2.4 million more popu-
lar votes than he has.
A recent synthesis of exit polls
shows that of 27 demographic cat-
egories, Mr. Sanders has the edge
in three. Despite his recent win-
ning streak, she has prevailed in
more states, and his string of vic-
tories has narrowed her edge by
only 79 delegates.
That’s the good news for Mr.
Sanders, and it is about to end. Be-
tween now and the end of April,
Stalled Chinese Reforms, Stalled Chinese Economy
By James Zimmerman
C
hinese Premier Li Keqiang
promised last month that
there would be no hard land-
ing for his country’s economy. In-
deed, there’s no reason the current
economic transition must result in
a catastrophic decline in growth.
But with headwinds increasing,
China will need all the help it can
get. Sometimes foreign companies
wonder whether Beijing fully appre-
ciates this.
In many ways, China and the U.S.
are closer than ever before. Last
year, $18.3 billion in foreign invest-
ment flowed between the two coun-
tries, with an additional $562 bil-
lion in trade. Both now offer 10-
year visas to each other’s citizens.
And China is a topic every U.S.
presidential hopeful must address
on the campaign trail. Interactions
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second language he hasn’t bothered
to master.” The candidate may have
felt he would score points with the
pro-life movement with his recent
advocacy of punishment for women
who have abortions. He was wrong
and had to reverse his position
publicly.
Nor is Mr. Trump up to speed on
conservative politics. Before the re-
cent Wisconsin primary, he relent-
lessly attacked Scott Walker, the
state’s Republican governor, who had
endorsed Ted Cruz. Mr. Walker was
an early dropout from the presiden-
tial race, and thus a “loser” in Mr.
Trump’s mind. But Mr. Walker is
enormously popular in his home
state, and assailing him backfired on
Mr. Trump, who lost the primary.
Mr. Trump’s political instincts
haven’t helped him with conserva-
tives. He decides day-to-day what to
say and frequently speaks off the
cuff. He is often rash and undisci-
plined. His conservative detractors,
especially those in policy and media
circles, are appalled.
To bring stability to his cam-
paign, Mr. Trump now plans a series
of formal speeches on policy issues,
set pieces drafted by speechwriters
and delivered from prepared texts.
This assumes Mr. Trump follows
through with the speeches. Avoiding
distractions may result from the re-
cent hiring of a professional cam-
paign manager, Paul Manafort.
The model is his speech last
month in Washington to the Ameri-
can Israel Public Affairs Committee
(Aipac). He used the address to cor-
rect the impression he had left in a
televised debate that he would not
be a strong defender of Israel.
Speaking to Aipac in a sports arena,
he read the text on a Teleprompter
Democrats will hold primaries in six
states—New York, Maryland, Con-
necticut, Delaware, Pennsylvania and
Rhode Island. Unless a late Sanders
surge reverses Mrs. Clinton’s lead,
she will win the majority—perhaps
all—of these states, and her lead
among delegates and in the popular
vote will expand significantly. By the
end of April, she will have upward of
90% of the delegates she needs to
claim the nomination.
The pace of the campaign slows
significantly in May, with fewer
than 200 delegates at stake. Unless
Mr. Sanders wipes her out on June
7 in California and New Jersey—and
there is no evidence that he will—
she will end the nominating contest
with more than enough delegates to
claim victory, including a majority
of delegates earned in primaries and
caucuses as well as a margin of mil-
lions in the popular vote.
So how exactly will the Sanders
forces make the case that Mrs. Clin-
ton’s nomination would violate the
people’s will?
Recently, Mr. Sanders has been
arguing that he would make a
stronger general-election candi-
date, and he has a fair amount of
between the world’s two largest
economies are growing in both fre-
quency and complexity.
But the American Chamber of
Commerce in China has witnessed
another trend emerging over the
past few years. China has been
building walls and turning away
from international norms.
This can be seen when foreign
nongovernmental organizations are
blindsided by draft laws that
threaten their ability to operate in
China. It can be seen in restrictions
that defy the World Trade Organiza-
tion by limiting the direct delivery
of cloud services by foreign-invested
enterprises. And it can be seen in
the medical-device and pharmaceuti-
cal industries, where innovative and
life-saving products have difficulty
reaching Chinese consumers due to
standards that are sometimes not
based in science.
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Almar Latour, Publisher; Kenneth Breen,
Commercial; Edwin A. Finn, Jr., Barron’s;
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
GETTY IMAGES
Donald Trump campaigning in Albany, N.Y., April 11.
with few ad libs. He got several
standing ovations.
In a similar way, Mr. Trump
wants to use the policy speeches to
persuade conservatives, among
other skeptics, that he is more in
sync with their thinking than they
imagine. If he fails, Republican de-
fectors or a third-party conserva-
tive candidate would doom his al-
ready slim chance of winning the
presidency.
The first speech is likely to focus
on naming a Supreme Court justice
to replace Antonin Scalia, who died
Feb. 13. At a meeting with a group of
conservative leaders last month, Mr.
Trump asked for a list of potential
conservative nominees. The Heritage
Foundation and the Federalist Soci-
ety are putting one together.
Another speech would discuss ed-
ucation. It would give him an oppor-
survey evidence to back his claim.
But using this argument to sway
the superdelegates would be an ap-
peal to their judgment, not to dem-
ocratic legitimacy.
She may be uninspiring,
but her competence could
be what 2016 voters want.
Besides, it won’t work. Demo-
crats who have been around the
track a few times understand that
while Mrs. Clinton has been sub-
jected to unrelenting scrutiny for a
quarter of a century, Mr. Sanders’s
record has been left virtually un-
touched. The Clinton campaign has
been reluctant to antagonize voters
whose support they will need in
the general election, and Republi-
cans are holding their fire in the
vain hope that they will have the
opportunity to run against Mr.
Sanders in the fall.
The real question is how well
Mrs. Clinton will do in November.
The answer depends on a few things
she can control and many more that
International businesses have
been patient, waiting for China to
reform and enter the global busi-
ness community as an equal and en-
gaged player. But AmCham China
members are growing weary. A re-
cent member survey shows 37% are
“pessimistic” or “slightly pessimis-
tic” about the next two years’ regu-
latory outlook.
China has gotten this far with
great support from the international
community. Its membership in the
WTO, for example, has generated
immense dividends. Hong Kong and
mainland China now rank as the No.
2 and No. 3 recipients of foreign di-
rect investment.
As the No. 1-ranked recipient of
FDI, the U.S. knows the value of en-
gagement through investment. It also
understands that investment is not
just about money, but also technol-
ogy and innovation. In China, all of
these will be important for the stable
growth Mr. Li promises.
We hope China’s disconnect can be
corrected to help it achieve its reform
and development goals. We see three
areas in particular where direct and
immediate attention is needed.
The most pressing is fairness
and transparency. While the rule of
law has been a top concern for
American businesses and China’s
own policy plenums for several
years, this year marks the first
time inconsistent and unclear rules
have topped AmCham China mem-
bers’ concerns.
The difficulty in obtaining busi-
ness licenses is also of high concern.
Licensing should be a simple proce-
dure, but in China it’s a major dis-
criminatory barrier to doing busi-
ness. Economies benefit from
competition and transparent en-
forcement of regulations. China
should embrace more open policies
for receiving input on draft laws and
tunity to explain his opposition to
Common Core standards for math
and English and why he favors local
and state control of schools.
If he follows Mr. Gingrich’s ad-
vice, Mr. Trump will also speak
about infrastructure—that is, large,
expensive public projects. This is a
subject he emphasized in his best-
selling 1987 book, “The Art of the
Deal,” with the conservative-
friendly theme of government in-
competence and the efficiency of
private enterprise.
The most precarious speech for
Mr. Trump would be on foreign pol-
icy and national security. The issue
isn’t one he can duck, since his
views—sounding more like Presi-
dent Obama than Ronald Reagan—
have alarmed many conservatives.
Like Mr. Obama, he is leery of pro-
jecting American power around the
she cannot. She can try—within lim-
its—to placate Mr. Sanders’s back-
ers at the nominating convention.
She could decide to choose a popu-
list-tinged figure—Ohio Sen. Sher-
rod Brown, for example—as her
running mate. If the Democrats
emerge from their convention uni-
fied and energized, Mrs. Clinton’s
fall prospects will rise—all the more
so if Mr. Sanders campaigns vigor-
ously on her behalf.
Because every presidential elec-
tion comes down to a choice, the
identity of the Republican nominee
will make a big difference. Although
Donald Trump is the ultimate wild
card, there is no evidence that he
would prevail in a general election.
Texas Sen. Ted Cruz is focused,
strategic and well-organized, but his
hard-edge conservatism would make
it difficult for him to expand his
support beyond his party’s base.
Ohio Gov. John Kasich runs well
ahead of Mrs. Clinton in national
surveys, but rank-and-file Republi-
cans appear in no mood to nominate
someone from their party’s moder-
ate-conservative wing.
Mrs. Clinton is not a visionary,
and her candidacy has done little to
procuring business licenses.
China’s restrictive stance toward
investment also deserves more at-
tention. The Brookings Institution
describes China’s investment envi-
ronment as the strictest among the
G-20. How can the country weather
Beijing is placing more
restrictions on foreign
businesses and disengaging
from the world economy.
an economic slowdown without sup-
port from other nations? Foreign di-
rect investment into the U.S. ex-
pands annually at a brisk pace,
having risen 30% in 2015, but U.S.
investment into China has stagnated
and represents just 1% of all U.S. di-
rect investments abroad.
U.S. companies in China are draw-
ing back on their investment plans,
and this year’s decrease is even
greater than in 2009, when the
world was mired in a financial crisis.
In the present climate, China’s own
roadblocks impede further invest-
ment in areas such as services,
which could contribute most to eco-
nomic growth.
Nonetheless, China remains a
top-three investment priority for
most U.S. companies. And Ameri-
cans are willing to work on this re-
lationship, as demonstrated by ne-
gotiations on a U.S.-China Bilateral
Investment Treaty, a process that
began in 2008.
The U.S.-China BIT would likely
be China’s largest market-liberaliza-
tion exercise since China’s accession
to the WTO in 2001. While the basic
language has been agreed upon,
there are several issues unique to
China, such as the role of state-
Thursday, April 14, 2016 | A11
world. But unlike the president, Mr.
Trump thinks the country can’t af-
ford the cost. The president prefers
soft power.
In response to Mr. Trump, last
month 117 “members of the Repub-
lican national security community”
issued a scathing letter opposing
his nomination. The group, which
included former U.S. Homeland Se-
curity Secretary Michael Chertoff
and Robert Zoellick, a former dep-
uty secretary of state and World
Bank president, warned that if
elected Mr. Trump “would use the
authority of his office to act in
ways that make America less safe,
and which would diminish our
standing in the world.”
No matter what he says, he won’t
win over this group. They are too
far apart on too many issues. And
Mr. Trump made things worse when
he said that his chief adviser on for-
eign and defense issues is himself.
But he may at least be able to alle-
viate some concerns.
In interviews, Mr. Trump has dis-
missed NATO as ineffective and out-
dated, and he insisted that Amer-
ica’s allies don’t pay their share for
defense. He has been advised to
walk back his comment about NATO.
He would also be wise to spell out
how he would strengthen America’s
military and how much more its
NATO partners and Asian allies
should pay for theirs.
The overtures to conservatives
are crucial to the Trump campaign.
His “pivot” will have to be genuine,
his speeches credible. It’s all up to
the unpredictable Mr. Trump.
Mr. Barnes, executive editor of
the Weekly Standard, is a Fox News
commentator.
inspire Democrats not already com-
mitted to her. She is cautious and
self-controlled, not a risk-taker. By
her own admission, she is not a nat-
ural politician. Contradicting Mario
Cuomo’s famous maxim, she cam-
paigns in prose.
On the other hand, few have ever
questioned her intelligence or work
ethic. She understands how politics
and policy-making really work. She
believes that political leaders
should under-promise and over-
perform—an eminently defensible
thesis in this era of rock-bottom
public trust.
In most democracies, the head of
government is separate from the
head of state. In the U.S., they are
fused in a single office. America’s
presidents are called on to perform
both as prime ministers and as sym-
bols of the nation. Rarely are they
equally skilled at both tasks.
Hillary Clinton has the qualities
of a first-rate prime minister. At a
time when the American people are
yearning for an end to political dys-
function and a return to govern-
ment that works effectively on their
behalf, what she offers will probably
be enough to prevail in November.
owned enterprises, data localization
and intellectual property protec-
tions, that need to be addressed.
The “negative list” of exceptions
must also be kept to a minimum for
the treaty to be worthwhile. But the
benefits in terms of improving the
transparency and fairness of the
regulatory environment that a high-
quality agreement could bring are
immense.
Finally, innovation is an area of
the Chinese economy with much
room for improvement. Policies
such as “Made in China 2025,”
aimed at upgrading China from a
manufacturer of quantity to one of
quality, put innovation at the fore-
front. Yet many of these pilot pro-
grams exclude the U.S. companies
best suited to helping China move
up the value chain.
Many foreign companies struggle
to bring innovative products to
China due to domestic standards
that do not conform with the inter-
national business community. Inde-
pendent or duplicate standards
keep China isolated from the global
economy, and take the country a
step back from the strides it made
over the past 30 years. China
should consider U.S. companies as
valuable partners for innovating in
the international arena.
We, too, believe that a hard
landing can be avoided. But China
cannot afford to disengage from
the rest of the world. The benefits
of international cooperation have
been immense for China, and those
in power should appreciate that
there is still much more that can be
achieved by working with their
long-term partners from around
the globe.
Mr. Zimmerman is the chairman of
the American Chamber of Commerce
in the People’s Republic of China.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Thursday, April 14, 2016 THE WALL STREET JOURNAL.

WEATHER & CROSSWORD

Brides Welcome the Digital Wedding Crashers

BY ELIZABETH HOLMES What was once a voyeuristic
jaunt has become a fact-finding
Morgan Pitts adored Kahlana TOP ROW, FROM LEFT: FRED MARIGAUX; SHAUN JAMES COX (2); BOTTOM ROW: SHAWN CONNELL/CHRISTIAN OTH STUDIO (2); RACHEL CROUCH mission as she plans her own wed-
Barfield’s wedding to Dwayne ding, set for this July. She now
Brown. She loved the venue checks her wedding venue’s geotag
(Brooklyn Botanic Garden), the regularly to get ideas. Wedding
groom’s tuxedo (Tom Ford) and planners and vendors also use their
was charmed by the place cards clients’ hashtags for their own pub-
(personalized bottles of Coca- licity.
Cola). Nearly 50% of couples use a
The 25-year-old Ms. Pitts did personalized wedding hashtag, ac-
not attend the festivities. She fol- cording to the 2015 Newlywed Sur-
lowed along via social media, vey from WeddingWire. With the
thanks to the couple’s wedding growing crowds, coming up with a
hashtag: #BrooklynBrowns. “It unique hashtag that is yours and
wasn’t like I stumbled upon it, I only yours can be, well, #compli-
was watching for it,” says Ms. #nellandteddy
# ll d dd Nell Diamond married Teddy cated. WeddingWire and a smat-
Pitts, who works in fashion e-com- Wasserman in a ceremony at the Hôtel du Cap Eden Roc in France. She tering of others have created
merce. Her review of the celebra- planned a three-day event with many ‘photographable activities.’ hashtag generators. Users plug in
tion from afar: “It was a dream.” the name of the bride and the
Meet the digital wedding crash- groom, along with other details
ers. In a Sunday morning ritual, like the location and date, to get a
people are poring over strangers’ dozen or more possibilities.
wedding photos on Instagram. Wedding hashtag etiquette
Brides and grooms make it easy by frowns on anything that is too
choosing a distinctive hashtag, of- long—lest you run the risk of a
ten using a combination of their typo—and rewards those that are
names, the location and the date clever. A good hashtag can help
of their nuptials. Anyone can click guests to get in the spirit, encour-
on that hashtag and see a gallery aging them to post early and of-
of photos that is much more inti- ten.
mate and detailed than a newspa- For her wedding to Zach Vella
per wedding announcement. last fall, Michelle Campbell Mason
It is the latest iteration of the used the hashtag #WeVellaInLove.
decades-old tradition of ogling “I love puns,” says the jewelry de-
over the union of others. Some #brooklynbrowns
#b kl b Kahlana Barfield Brown married signer, who thought of it herself.
wedding hashtag enthusiasts use it Dwayne Brown at the Brooklyn Botanic Garden. She asked guests to post There are 299 posts with the
as a way to fantasize about the photos of themselves. She put up her favorites of her and the groom later. hashtag on Instagram, document-
princess-perfect day, a digital tool ing the couple’s festivities in a cas-
of sorts to harvest ideas for their tle in Ireland.
own place settings or bridal bou- far acquaintance’s friend from col- wedding day, she checked Insta- great,” the 27-year-old says she Guests at the wedding of Ms.
quets. But for most, it is simply a lege to stalk,” she tweeted. But her gram and was thrilled to see a told someone once. Barfield Brown, of the #Brooklyn-
chance to be a fly on the wall at favorites are those who are “ob- group playing tennis, she says. Ms. Diamond, who recently Browns, received a gold envelope
events that are increasingly—and scurely famous,” like New York so- Ms. Diamond’s hashtag soon launched the home goods company with a small card asking them to
meticulously—staged for social cialites. caught on outside of the grounds Hill House Home, still checks the use the designated hashtag but not
media. Nell Diamond, the daughter of of the Hotel du Cap-Eden-Roc. hashtag on occasion, when she’s to post pictures of the bride and
“I don’t even know these peo- former Barclays chief Bob Dia- Scores of non-wedding guests feeling nostalgic. (A friend of her groom. Mr. Brown isn't active on
ple, I just think it’s fun,” says mond, wed Teddy Wasserman in a “liked” and commented on the husband’s thought the hashtag re- social media and Ms. Barfield
Emma Silvers, a 19-year-old stu- lavish ceremony in the Côte d’Azur photos, with some reposting them sults were a bit too polished, so, Brown considers herself a private
dent at Drexel University in Phila- of France in the fall of 2014. Using on their own accounts. “The Inter- much to her chagrin, he teased her person, so the couple had reserva-
delphia. the hashtag #nellandteddy, the net is in Love With Nell Diamond’s by posting a photo of Ms. Dia- tions about oversharing.
To start down the wedding couple and their attractive friends Gorgeous Wedding Photos,” read a mond’s hand with a piece of pizza Ms. Barfield Brown, a fashion
hashtag rabbit hole, Ms. Silvers chronicled the three-day affair, in- headline on Harper’s Bazaar’s web- and the caption, “#nellandteddy and beauty editor at large at In-
recommends clicking on the mag- cluding a cliff-side diving board site. just eating pizza.”) Style, later posted a picture of her-
nifying glass search button at the into the sea, the bride’s ceremony “It’s the biggest compliment,” Jackie Johnson, an actor who self and her groom with the
bottom of the Instagram app, gown with its 12-foot train, and says Ms. Diamond, adding that she lives in Los Angeles, checks her In- hashtag from the reception photo
which takes you to a page with the dramatic fireworks show that is a wedding hashtag watcher her- stagram feed periodically on Sat- booth, along with a professional
photos based, in part, on people capped off the evening. self. “I’m not ashamed. I won’t urday nights to follow a wedding. shot. Since her wedding last Octo-
you already follow. “All I wanted to do was see my apologize,” she laughed. Should “You want to see what people are ber, several people have ap-
Ms. Silvers looks for people she friends having fun at my wedding,” she meet someone in person wearing, what they are up to,” she proached her and said things like,
might somehow be connected to, says Ms. Diamond, adding that whose wedding she has seen on says. Ms. Johnson will click on the “I searched your wedding hashtag
like a friend of a friend. “All I need there were many “photographable Instagram, Ms. Diamond is quick geotag of the location and check and ‘Oh my god, your wedding!’”
on this beautiful Sunday is a bagel activities.” During her five-hour to compliment: “Loved your wed- for pictures from the festivities Ms. Barfield Brown says she found
and a wedding hashtag of a very hair and makeup session on her ding, your second dress was that aren’t properly hashtagged. it “so sweet” and a bit “crazy.”

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
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BUSINESS & TECH.
Shoppers Flock to Apps
Change in buying habits shakes up retailers TECHNOLOGY | B3
© 2016 Dow Jones & Company. All Rights Reserved.
Exxon
Fires Back
On Probe
Of Climate
Exxon Mobil Corp. went to
court Wednesday to challenge
a government investigation of
whether the company con-
spired to cover up its under-
standing of climate change, a
By Amy Harder,
Devlin Barrett
and Bradley Olson
sign the energy company is
gearing up for a drawn-out le-
gal battle with environmental-
ists and officials on the politi-
cally charged issue.
The company filed court
papers in Texas seeking to
block a subpoena issued in
March by the attorney general
of the U.S. Virgin Islands, one
of several government officials
pursuing Exxon. Wednesday’s
filing argues that the sub-
poena is an unwarranted fish-
ing expedition into Exxon’s in-
ternal records that violates its
constitutional rights.
“The chilling effect of this
inquiry, which discriminates
based on viewpoint to target
one side of an ongoing policy
debate, strikes at protected
speech at the core of the First
Amendment,” the filing says.
Exxon also dismisses the
notion that there is any sug-
gestion of a crime, saying At-
torney General Claude Earl
Walker “issued the subpoena
without the reasonable suspi-
cion required by law and
based on an ulterior motive to
silence those who express
views on climate change with
which they disagree.”
It is a sign Exxon is
gearing up for a long
battle with
environmentalists.
A request for comment to
the U.S. Virgin Islands’ attor-
ney general’s office wasn’t im-
mediately returned.
In the subpoena, the U.S.
Virgin Islands told Exxon it
could be violating two state
laws, by purportedly obtaining
money under false pretenses
and conspiring to do so.
Both sides see this as a piv-
otal moment in a growing
campaign by environmental-
ists to deploy a legal strategy
used against tobacco compa-
nies in the 1990s by arguing
that oil companies have long
hidden what they know about
climate change. Tobacco firms’
finances and credibility were
badly damaged by lawsuits ac-
cusing them of hiding the
truth about their products.
A key meeting in the new
push unfolded in January be-
hind closed doors at a Man-
hattan office building. The ses-
sion brought together about a
Please see CLIMATE page B2
Changes to U.S. Tax Rules Ripple Widely Coal-Mining Giant
BY RICHARD RUBIN
The Treasury Department’s
new corporate rules will reach
far beyond the few companies
that moved their legal ad-
dresses to low-tax countries,
forcing many firms based in
the U.S. to change their inter-
nal financing strategies and
tax planning.
Corporate tax lawyers, who
have spent the past week try-
ing to understand one of the
Obama administration’s most
far-reaching tax regulations,
say the rules cast aside de-
cades of precedents and force
corporations to alter routine
cash-management techniques.
The rules would also end a
strategy used by companies
such as Illinois Tool Works
Inc. to repatriate foreign prof-
its without paying U.S. taxes.
Tax lawyers were surprised
U.S. Proposes Theranos Sanctions
BY JOHN CARREYROU
AND CHRISTOPHER WEAVER
U.S. federal health regula-
tors have proposed to ban
Theranos Inc. founder Eliza-
beth Holmes from the blood-
testing business for at least
two years after concluding that
the company failed to fix what
regulators have called major
problems at its laboratory in
California.
In a letter dated March 18,
the Centers for Medicare and
Harry Potter Conjures Parks’ Comeback
Wizarding World is
boosting attendance,
revenue at Universal
Studios’ theme parks
BY BEN FRITZ
LOS ANGELES—For most
of their history, Universal
Studios’ theme parks have
been the misunderstood
“stepchildren” of a succession
of corporate parents, accord-
ing to NBCUniversal Vice
Chairman Ron Meyer. Now
Harry Potter is conjuring a
magical restoration.
“It was a good business but
we couldn’t get anybody to in-
vest in it,” said Mr. Meyer. As
a result, Universal’s theme
parks—two in Orlando and one
each in Los Angeles, Japan
and Singapore—have long
struggled as a distant No. 2 to
Walt Disney Co.
That has particularly been
true in Los Angeles, where
Universal Studios Hollywood
has over the past two decades
attempted to grow from a
back-lot studio tour into a full-
fledged theme park as attrac-
tive as Disneyland Resort in
nearby Anaheim.
The comeback attempt cul-
minated last week with the
opening of the Wizarding
World of Harry Potter at Uni-
versal Studios Hollywood. The
company now has themed
lands based on the boy wizard
in all but one of its five
parks—anchoring its business
on what some consider the
biggest pop culture hit of the
century. The one exception is
in Singapore, where Universal
licenses its name to a local op-
erator.
Like the others, the new
Wizarding World in Los Ange-
les is centered on Hogwarts
Castle and features two major
rides, a choir of magical stu-
dents and croaking frogs, and
shops selling butterbeer and
$47 magic wands.
The Wizarding World,
based on J.K. Rowling’s books
and Warner Bros.’ movies
has already cast a spell on
Universal’s theme-parks busi-
ness. Since 2009, the year be-
fore the first one opened, an-
nual attendance at the
company’s parks has more
than doubled to 43 million in
at how many transactions may
be affected by the rules, which
address the line between in-
ternal company debt and eq-
uity.
“The breadth and scope of
the regs are quite a bit beyond
New York-based Pfizer abandoned its bid to merge with Allergan.
THE WALL STREET JOURNAL.
Medicaid Services said it plans user-friendliness and quick re-
to revoke the California lab’s
federal license and prohibit its
owners, including Ms. Holmes
sults.
The letter hasn’t been re-
leased to the public, but a copy
and Theranos’s president,
Sunny Balwani, from owning or
running any other lab for at
was reviewed by The Wall
Street Journal.
Under federal law, Theranos
least two years. That would in- had 10 days to give CMS evi-
clude the company’s only other dence of why the sanctions
lab, located in Arizona. shouldn’t be imposed. The
The two labs generate most company has responded, and
of Theranos’s revenue and are CMS is reviewing the response,
at the core of its strategy to according to a person familiar
revolutionize the blood-testing with the matter.
industry with new technology, If the sanctions are im-
The Wizarding World of Harry Potter that opened recently at Universal Studios Hollywood is centered on Hogwarts Castle.
total. has invested more liberally.
Annual revenue grew 109% The conglomerate spent $2
between 2010 and 2015 to billion on theme-park capital
$3.34 billion, and operating expenditures between 2013
cash flow increased 148% to and 2015, more than double
$1.46 billion. the prior three years.
At Disney’s theme parks, In addition to a second Pot-
which remain a far larger ter land in Orlando and new
business than Universal’s, rev- ones in Japan and Hollywood,
enue grew 50% during the Comcast has funded new at-
comparable period to $16.16 tractions based on the Trans-
billion, and operating income formers and the Walking Dead,
rose 130% to $3.03 billion. licensed from other compa-
Each Harry Potter land nies, and Universal’s own Fast
costs a little more than $250 and Furious and Minions. With
million to build, said people sister film studio Universal
familiar with the matter. When Pictures performing at record
the first one opened in 2010, box-office levels recently,
then-Universal owner General more rides based on movies
Electric Co. had the parks are in development, said Mr.
business fund it out of its own Williams.
cash flow, said Tom Williams, Comcast last year acquired
chief executive of Universal 51% of Universal Studios
Parks and Resorts. Japan, previously a licensed
Comcast Corp. which ac- park, for $1.5 billion and hopes
quired NBCUniversal in 2010, Please see POTTER page B2
what anyone expected,” said
Jason Bazar, a partner at
considered the commercial
considerations.”
Mayer Brown LLP in New Treasury released two sets
York, who advises companies of rules April 4. The first put
on cross-border transactions. into regulatory language the
“They’ve assumed the worst in anti-inversion notices the gov-
certain transactions and not ernment issued in 2014 and
2015 and added a crackdown
on “serial inverters” like Al-
lergan PLC that are the prod-
uct of multiple inversions. In
an inversion, a U.S. company
takes a foreign address, typi-
cally through a merger with a
smaller firm. The serial-in-
verter provision helped doom
MARK LENNIHAN/ASSOCIATED PRESS
Pfizer Inc.’s attempt to merge
with Allergan, a deal that
would have put the combined
company’s address in Ireland.
The second package would
have longer-lasting effects. It
limits earnings stripping, the
post-inversion technique used
to load up U.S. subsidiaries
Please see TAX page B4
INSIDE:
MONEY &
INVESTING
U.K. Targets
Banks’ Marketing
FINANCE | B5
Thursday, April 14, 2016 | B1
posed, some would take effect
within eight days. Others
would take longer, including
revoking the California lab’s li-
cense, which could occur in 60
days.
Theranos could appeal to an
administrative law judge and
then a departmental appeals
board. If Theranos were to ap-
peal, the lab would keep its li-
cense pending the outcome of
the appeal process. The pro-
posed ban on Ms. Holmes and
Mr. Balwani would take effect
Alchemy
Universal’s parks are not as popular
as Disney’s, but their operating
margins are nearly double.
By fiscal year:
$15 billion
10
5
0
2010 2011 2012
Universal opened Harry Potter theme parks in 2010, 2014 and 2016.
Source: the companies
Files for Bankruptcy
BY JOHN W. MILLER
AND MATT JARZEMSKY
Peabody Energy Corp., the
largest U.S. coal company, be-
came the latest to file for
bankruptcy Wednesday, under-
scoring the fraying future of
corporate coal mining in
America.
The bankruptcy of the St.
Louis-based company came af-
ter similar filings by Arch Coal
Inc., Alpha Natural Resources,
Inc., Patriot Coal Corp. and
Walter Energy, Inc., all of
whom recently sought chapter
11 protection.
Chief Executive Glenn Kellow
called the current coal market
“historically challenged” and
said the filing was “an in-court
solution to Peabody’s substan-
tial debt burden.”
at the same time as the lab’s li-
cense revocation and would be
subject to the same appeals
process.
The appeals process could
take months, and such appeals
rarely succeed. A list of appeals
decisions on the agency’s web-
site shows that the agency
didn’t lose a single such case
from 2001 to the end of 2010.
In response to questions
from the Journal about the let-
ter, Theranos spokeswoman
Please see BAN page B2
VALERIE MACON/AGENCE FRANCE-PRESSE/GETTY IMAGES
Operating
cash flow
Operating
income
Total
revenue
Universal Disney
2013 2014 2015
THE WALL STREET JOURNAL.
No large publicly listed U.S.
coal miner has been spared by
the forces crushing the coal in-
dustry, which include new envi-
ronmental regulations, the de-
cline of steel production, and
the conversion of coal-fired
power plants to natural gas,
which has become a cheap and
abundant source of fuel thanks
to the shale boom.
Peabody’s bankruptcy sets
the stage for a potentially bit-
ter fight among creditors for its
assets, which include massive
open-pit complexes in Wyo-
ming and Australia and under-
ground mines in Illinois.
America may never again
see a coal company as big as
Peabody. Founded in 1883 by
Francis Peabody with $100, a
wagon and two mules, accord-
Please see COAL page B2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Thursday, April 14, 2016
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A
Airbus Group...............B3
Aldi..............................B8
Alibaba Group.............B3
Alpha Natural
Resources..................B1
Amazon.com...............A8
Ant Financial Services
Group.........................B3
Arch Coal.....................B1
Aurelius Capital
Management.............B2
B Illinois Tool Works......B1
Baidu ........................... B3
Bank of America.........A1
Bank of New York
Mellon.......................A1
British American
Tobacco ..................... B4
Brooklyn Botanic
Garden .................... A12
C was unlikely to hit current
Citigroup ..................... A1
Comcast.......................B1
ContextLogic...............B3
D-E
Delphi Automotive ..... B4
Dewmobile .................. B3
Elliott Management ... B2
INDEX TO PEOPLE
B F
Balwani, Sunny...........B1
Basse, Dan..................B7
Blocher, Christoph......B8
Brodsky, Mark.............B2
C Huang Zhen.................B3
Cammarata, Barbara .. B2
Capehart, Tom.............B7
D L
Dearie, John................A2
Dimon, James........A2,B7
POTTER
Continued from the prior page
to eventually buy the rest
from financial firms including
Goldman Sachs Group Inc.,
said Mr. Williams. Comcast
will soon start construction on
a joint-venture theme park in
Beijing, likely to open around
2020.
The Beijing park will launch
with its own Harry Potter
land, said a person with
knowledge of the project
plans.
The expansion comes as
Disney has been investing
heavily in parks itself. In addi-
tion to a $5.5 billion theme-
park opening in Shanghai this
June, the company is adding a
new Frozen attraction opening
at Epcot Center later this year,
COAL
Continued from the prior page
ing to the company’s corporate
history, Peabody grew into a
juggernaut, producing coal for
customers in 25 countries and
employing 7,600 people.
But its decline has been pre-
cipitous in recent years. In
2011, Peabody’s value on the
stock market briefly touched
$20 billion. It is now worth $38
million.
Peabody expects a bank-
ruptcy-court fight between
lenders and bondholders over
which of its mines secured
lenders can lay claim to, ac-
cording to people familiar with
the matter.
Bondholders including El-
liott Management Corp. and
Aurelius Capital Management
LP are expected to argue that
Peabody’s debt agreements sig-
nificantly reduce lenders’
claims on mines and other as-
sets, leaving more value for
bondholders, the people said.
The firms are known for in-
vesting in distressed debt and a
willingness to engage in legal
battles to protect their invest-
ments.
Elliott and Aurelius, which
were founded respectively by
billionaire Paul Singer and for-
mer Elliott Management port-
folio manager Mark Brodsky,
are poised to make big profits
on a decade-plus legal fight
with Argentina over defaulted
sovereign bonds.
Many of the creditors ex-
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THE WALL STREET JOURNAL.
BUSINESS NEWS
Exxon Mobil................B1
F
Fosun Group................B5
Peabody Energy..........B1
Petroleos de
Venezuela.................A5
Pfizer...........................B1
Tesco Cautious on Profit Volkswagen
Boss Accepts
G BY SAABIRA CHAUDHURI
Bonus Cut
Philip Morris
General Electric .......... B1 International.............B4
General Motors...........B4 Premier Foods.............B3 LONDON—Tesco PLC re-
Godfrey Phillips India.B4 R ported a small rise in adjusted
Goldman Sachs
Reiss Holdings............B8 profit for its fiscal year as the BY WILLIAM BOSTON
Group...................A1,B2 British supermarket giant
Goldman Sachs Group B8 S
Sidley Austin .............. B2
logged stronger sales in the BERLIN—Volkswagen AG
I U.K. but signaled that future Chairman Hans Dieter Pötsch
Smithfield Foods ........ B7
State Street................A1 profitability would be capped agreed to a sharp cut in his
SIMON DAWSON/BLOOMBERG NEWS
ITC ............................... B4
T by investment. 2015 bonus, paving the way for
J-L On Wednesday, shares fell a broader agreement among
Tesco......................B2,B8
J.P. Morgan 7.8% to end at 181 pence in top executives over bonus cuts
Theranos......................B1
Chase..............A1,B5,B7 London trading as investors in light of the company’s emis-
Time Warner...............B2
Lidl...............................B8
Los Angeles Times.....B2 U reacted to the cautious profit sions-cheating crisis.
outlook after Chief Executive Volkswagen said on
M Universal Studios.......B1
V Dave Lewis indicated Tesco Wednesday that the deal
Macarthur Coal...........B2
would be approved at a super-
MarryU ........................ B3 VST Industries............B4
Mayer Brown .............. B1 consensus profit figures. visory board meeting on April
W
McCormick...................B3 The otherwise mostly in- CEO Dave Lewis says Tesco’s focus on investment could cap profit. 22, when the company’s direc-
Walgreens Boots
Meituan.......................B3 line results signaled there were tors are also expected to re-
Alliance.....................B2
ModCloth.....................B3
Walter Energy.............B1
some green shoots emerging of lower-priced “Farm” brands brands was “probably the view a report on the emissions
Morgan Stanley.....A1,B8 as Tesco recovers from a tu- in a bid to compete directly most significant” he has made scandal from U.S. law firm
Warburg Pincus .......... B8
P Warner Bros..........B1,B2 multuous period in which its with discounters Lidl and Aldi. so far, but declined to specify Jones Day.
Patriot Coal.................B1 Wells Fargo.................A1 reputation was tarnished by an “It was the first year of how much had been spent. The board of directors also
accounting scandal, property transformation,” Mr. Lewis Revenue, excluding value- will review Volkswagen’s 2015
values at its biggest stores
tumbled, and the grocer ceded
market share to rivals.
told reporters. “We think we
have stabilized the business,
we were in a difficult place 16
added taxes, slipped to £54.43
billion from £56.93 billion a
year earlier.
financial results the same day.
The company’s report may in-
clude any additional charges to
Lewis, Dave.................B2 For the year ended Feb. 27, months ago.” Mr. Lewis has been selling fund potential fines and com-
Fu Yonggang ............... B3 M Tesco’s operating profit ex- However he warned that for certain noncore assets as he pensation linked to its emis-
G McDermott, Tracey.....B8 cluding one-time items—a fig- Tesco to achieve market esti- continues to focus more on the sions scandal. The full earn-
Gelos, Gaston ............. B5 P ure closely watched by inves- mates of a trading profit of company’s key U.K. market. ings report is set for April 28.
H tors—came to £944 million £1.25 billion for its current fis- Tesco earlier this week said The agreement to cut man-
Pinto, Daniel...............B7
Prestage, John............B7 ($1.35 billion), up 1.1% from a cal year would be “a substan- it had agreed to sell an 8.6% agement bonuses follows days
I S year earlier. Tesco had guided tial, substantial achievement,” stake in Singapore e-com- of wrangling between the com-
Ingle, Greg...................B2 Singer, Paul.................B2 to a trading profit of £940 signaling that the grocer is fo- merce platform Lazada Group pany’s senior management,
W million to £950 million. cused on investment, which SA to Alibaba Group Holding core shareholders and labor
Lake, Marianne...........B7 Woolard, Mr. Lewis who became would affect profitability, es- Ltd. for $129 million, and re- representatives. The state of
Lei, Hermann .............. B8 Christopher...............B5 Tesco’s CEO in 2014, has pecially in the first half of the cently announced it was clos- Lower Saxony, which holds
moved to cut costs, shed non- year. ing its health business Nutri- 20% of Volkswagen’s voting
core assets and simplify “We are needing to invest in Centre. capital, and the IG Metall trade
and recently began construc-
tion on Star Wars lands in
Anaheim and Orlando.
Tesco’s range and store opera-
tions. A former Unilever PLC
executive whose background is
our business at a time in the
cycle when the market is par-
ticularly challenging,” he said.
On Wednesday, Mr. Lewis
declined to respond to specu-
lation that the company could
union pushed the company’s
management to accept a
sweeping cut in bonuses.
A Disney spokeswoman in building brands, Mr. Lewis Mr. Lewis said Tesco’s in- sell its gardening center or —Hendrik Varnholt
said, “For 60 years Disney has recently unveiled a new range vestment in the new Farm coffee shop businesses. contributed to this article.
led the industry in creating
immersive theme-park experi-
ences and we continue to raise
the bar during one of the larg-
est expansions in Disney Parks
BAN machines, including its Edison
devices, not ”the fundamental
integrity of the technologies
“This list may be used to ad-
vise the laboratory’s clients of
the nature of its non-compli-
One of those tests, a blood-
coagulation test known as pro-
thrombin time, measures how
history.” Continued from the prior page themselves.” ance and the nature and effec- long it takes blood to clot and
Between 2009, the year be- Brooke Buchanan said the gov- The company’s most urgent tive date of any sanctions im- is often used by doctors to de-
fore the first Wizarding World ernment hasn’t yet imposed challenge is to persuade gov- posed against the laboratory,” termine which dosage of the
opened, and 2014, the most re- sanctions on the company’s lab ernment officials not to impose federal officials wrote in the blood thinner warfarin to give
cent year for which data is in Newark, Calif. the crippling penalties detailed letter. patients.
available, attendance at Uni- “Due to the comprehensive in the 45-page letter. The The proposed penalties are Wrong prothrombin time re-
versal’s Islands of Adventure nature of the corrective mea- agency completed an inspec- among the most severe in sults could cause doctors to
park in Orlando grew 76% to sures we’ve taken over the past tion of the California lab in No- CMS’s power, said Barbara prescribe too little or too much
8.14 million, according to the several months, which has vember and found five major Cammarata, a lawyer at Sidley warfarin. Too much of the
Themed Entertainment Associ- been affirmed by several ex- categories of infractions that Austin LLP who advises clini- drug, also known by its brand
ation. perts, we are hopeful that CMS violate the federal law govern- cal labs on regulatory issues. name Coumadin, can cause fa-
Universal Studios Holly- won’t impose sanctions,” she ing clinical labs. “They’re in a lot of trouble,” tal bleeding, while too little can
wood drew 6.82 million people added. “But if they do, we will In February, Theranos sub- she said. leave patients vulnerable to
in 2014 and that number is work with CMS to address all mitted a correction plan to ad- Last year, the agency re- clots and strokes, according to
likely to grow significantly. of their concerns.” medical experts.
Last week, Theranos an- Prothrombin time is a hema-
nounced the recruitment of tology test. In January, CMS
pected to vie for control of Pea-
body’s assets bought their debt
at steep discounts, according to
“nationally respected labora-
tory and medical experts” to
its scientific and medical advi-
told Theranos that its hematol-
ogy-testing practices placed
patients in “immediate jeop-
people familiar with the matter. sory board. The company said ardy.” In the March 18 letter,
The company’s bonds and loans the eight-member panel would the agency said the company’s
have tumbled in recent years “work alongside Theranos’ plan failed to adequately cor-
along with coal prices. A $1 bil- leadership and internal teams rect those deficient practices.
lion series of bonds Peabody in various areas, including ad- As a result, the agency pro-
sold just last March recently vising Theranos regarding the posed to bar Theranos’s lab in
traded for 7 cents on the dollar, full integration of its technol- California from doing any he-
according to MarketAxess, indi- ogy into routine clinical prac- matology testing, regardless of
cating that some investors that tice, and publication and pre- whether it appeals the sanc-
bought the debt when it was is- sentation in scientific journals tions, according to the letter.
sued later sold at a steep loss. and at scientific meetings.” The company has said it
JEFF CHIU/ASSOCIATED PRESS
Peabody said Wednesday it Theranos was valued at $9 doesn’t believe any patients
had obtained $800 million in billion in a funding round in were affected.
emergency financing, arranged 2014 and the majority stake of The Arizona lab wasn’t part
by Citigroup Inc., and has Ms. Holmes at more than half of the inspection and continues
enough cash to keep running that. During the past six to run a variety of tests on
mines and delivering coal to months, though, Theranos has samples drawn from patients
customers. Citigroup didn’t re- faced questions about the pro- at 40 Theranos wellness cen-
spond to requests for comment. prietary blood-testing devices Theranos founder Elizabeth Holmes faces a possible U.S. ban. ters at Walgreens Boots Alli-
Peabody last month said it had it invented, code-named Edi- ance Inc. drugstores.
delayed interest-rate payments son, the accuracy of patient dress the problems, but federal voked the licenses of about two In addition, CMS said it
on two loans and warned it test results and its lab prac- officials concluded it was insuf- dozen clinical labs out of the didn’t find some of the exhibits
may not have sufficient liquid- tices. ficient, according to the March thousands it oversees across and tables Theranos referred to
ity to sustain operations, warn- The Journal reported in Oc- 18 letter. CMS declined to com- the U.S. in its plan, according to the let-
ing of a possible chapter 11 fil- tober that former employees ment. Greg Ingle, chief executive ter. And Theranos widened the
ing. had doubts about the accuracy The letter detailed six pro- of Clinical Lab Consulting variation ranges it deemed ac-
Peabody has now lost money and reliability of the Edison posed sanctions, including re- LLC, a firm that audits labs, ceptable for certain blood tests
in nine straight quarters and in devices. CMS inspectors found voking the California lab’s fed- said it “is incredibly rare to without giving the agency any
2015 posted a $2 billion deficit. that some tests run on those eral license and barring it from see” the government seek to justification for the change, the
The company also has been machines and traditional de- the Medicare program. License take away the license of “a letter said.
weighed down by its ill-timed vices routinely missed Thera- revocation would result in Ms. highly capitalized, large opera- CMS officials usually release
acquisition of Australia’s Mac- nos’s own accuracy require- Holmes and Mr. Balwani being tion” such as Theranos. Com- sanctions letters to the public
arthur Coal Ltd. for $5.1 billion ments. barred from owning or operat- pany records showed that the soon after sending them to lab
in 2011. Prices have been de- Ms. Buchanan said last ing any lab for at least two California lab ran about owners. With Theranos, the
clining ever since. month that Theranos “made years, according to the copy re- 890,000 tests a year. agency has held off because the
Things are likely to get mistakes in the past in the viewed by the Journal. Officials found that Thera- company requested redactions
worse before they get better. Newark” lab but has “dedicated CMS also proposed to fine nos failed to adequately correct that it said are necessary to
By 2020, demand for U.S. coal every resource to remedy those Theranos $10,000 a day and 43 of 45 deficiencies identified protect its trade secrets, ac-
is expected to fall to 20% less failures” since becoming aware said it wants the company to by inspectors last year. The cording to people familiar with
than what U.S. mines produce, of the problems. submit the names and ad- failures included not providing the matter. The agency hasn’t
according to McKinsey. She also said that most of dresses of all doctors and pa- evidence that Theranos sent decided whether to grant the
—Alex MacDonald the deficiencies related to how tients who used the lab’s ser- corrected reports to patients redaction requests, the people
contributed to this article. Theranos used various testing vices since January 2014. who got flawed test results. said.
CLIMATE they see as the inadequacy of
recent climate deals.
Their hope is to encourage
lic, they say, while fossil fuels
are fundamental to the world
economy.
the heirs of John D. Rockefel-
ler, the founder of Exxon’s
forebear, Standard Oil.
Continued from the prior page state attorneys general and In Wednesday’s filing, The Rockefeller Family
dozen people, including Kenny the U.S. Justice Department to Exxon’s lawyers say the com- Fund has signaled it will help
Bruno, a veteran of environ- launch investigations and law- pany has confirmed for more fund the campaign through its
mental campaigns, and Bill suits that ultimately will than a decade that it sees the existing backing of 350.org,
McKibben, founder of 350.org, change Exxon’s behavior, force risks of climate change, and though it hasn’t provided a
activists who helped lead the it to pay big damages and that it has publicly advocated figure.
successful fight to block the drive public attention to cli- for a carbon tax as the best Wednesday’s filing is
Keystone XL pipeline. mate change. way to regulate carbon emis- Exxon’s first legal salvo in what
The new campaign’s goals “It’s about helping the sions. could be a long war because at
include “to establish in pub- larger public understand the A key part of the activists’ least four state attorneys gen-
lic’s mind that Exxon is a cor- urgencies of finding climate strategy is to seek documents eral have launched investiga-
Businesses For Sale. rupt institution that has solutions,” said Lee Wasser- that show otherwise: that tions and a dozen others have
pushed humanity (and all cre- man, director of the Rockefel- Exxon, despite knowing the signaled they might.
Advertise in The Mart. ation) toward climate chaos ler Family Fund, which hosted dangers of climate change, has None has been as aggres-
and grave harm,” according to the January meeting. “It’s not sought to challenge the scien- sive as New York Attorney
Call +44 (0) 207 572 2123 an agenda of the meeting really about Exxon.” tific consensus. Such revela- General Eric Schneiderman,
viewed by The Wall Street Exxon and its supporters tions would help “delegitimize who subpoenaed Exxon in No-
Journal. dismiss the comparison with [Exxon] as a political actor,” vember seeking information
This new legal strategy tobacco. Cigarettes are a the January agenda said. about the company’s research
stems in part from environ- harmful, addictive product In a twist, the initiative is on climate change over several
mentalists’ frustration at what used by a portion of the pub- set to be bankrolled partly by decades.
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.
Millennials Are Shaking Up Tech Cultures
S
hortly after joining on-
line dating company
MarryU Inc. last Sep-
tember, Fu Yonggang clashed
with founder and Chief Exec-
utive Huang Zhen at a prod-
uct meeting. Mr. Huang sug-
gested when a user clicks on
the “chat” button on another
user’s profile page, the sys-
tem would send an auto-
mated greeting to that user.
Mr. Fu thought
the function
could make the
user who initi-
ated the con-
versa-
CHINA tion look insinc
CIRCUIT ere, undermin-
LI YUAN ing his or her
chance to get a
response. Their
argument escalated into
shouting and table pounding.
The two men have argued
like that at least a dozen
times since 26-year-old Mr.
Fu came on board, according
to both of them.
Mr. Huang, a 38-year-old
serial tech entrepreneur in
Hangzhou, says he found Mr.
Fu too blunt and stubborn in
the beginning but had
learned to appreciate his can-
dor and passion. He put
the younger man in charge of
project management, and
gave him several pay raises.
“I’ve stopped thinking of
myself as someone who gives
order,” says Mr. Huang, add-
Shoppers Are Flocking to Apps—and Retailers React
BY GREG BENSINGER
Hana Pugh, a 29-year-old
event planner and new mother,
buys most of her household
items and baby goods online.
But she doesn’t use her com-
puter to shop. Instead, Ms.
Pugh taps away at her iPhone.
“It’s quicker to pull out my
phone and click ‘buy’ than to
log on to my computer,” said
Ms. Pugh, of Bowie, Md., who
relies on Amazon.com Inc.’s
app for essentials such as dia-
pers and wipes.
Shopping on a small screen
used to be a pain. But as con-
sumers spend more of their
days glued to smartphones, re-
tailers are getting savvier with
apps that ease browsing, offer
rewards, suggest the right
products and simplify the pur-
chase to one click.
The so-called appification of
shopping promises to radically
transform the retail industry by
creating new shopping habits,
reshaping sales tactics and
carving out winners and losers.
Instead of placing one big
order from a computer, people
increasingly are making smaller
purchases in short bursts
throughout the day on their
phones, a phenomenon retailers
call “snacking.”
Mobile sales are booming,
especially compared with sales
gains from desktop computers.
Last year, U.S. sales from
mobile devices jumped 56% to
$49.2 billion, doubling the pre-
vious year’s growth, according
to comScore. Desktop sales still
dwarf mobile, reaching $256.1
billion last year, but annual
Alibaba Targets Food Delivery
BY KANE WU
Chinese e-commerce giant
Alibaba Group Holding Ltd.,
together with its financial affili-
ate, is placing a $1.25 billion bet
on food-delivery app Ele.me,
stepping up the battle to enable
Chinese consumers to arrange
services through mobile phones.
The move to back the app—
whose Chinese name means,
“Are you hungry?”—comes af-
ter Alibaba reached a deal ear-
lier this year to sell its stake
in Meituan-Dianping, China’s
largest online provider of
movie ticketing, restaurant
bookings and other on-de-
mand services. Ele.me com-
petes with Meituan-Dianping
and Chinese search company
Baidu Inc.’s Nuomi platform.
Alibaba will invest $900 mil-
lion in Shanghai-based Ele.me
and financial affiliate Ant Fi-
nancial Services Group will
add $350 million, according to
an Ant Financial spokeswoman.
Alibaba also signed an
agreement with Ele.me under
which its own online food-ser-
vices platform, Koubei, will co-
operate with Ele.me.
TECHNOLOGY
Younger workers are forcing companies to change their attitudes.
ing that he recently fired a are almost all only children,
new employee who turned due to China’s one-child pol-
out to be too much of a yes- icy, and they are the first
person. group born after the govern-
Mr. Fu says he did feel ment’s bloody 1989 clamp-
pressure in those arguments down on the Tiananmen
but he had to speak up when Square protest movement.
he felt he understood an is- They’re the first to grow up
sue better than Mr. Huang. when Internet access was
Millennials—generally de- widely available.
fined as people born in the Post-90s people grew up
1980s and 90s—are shaking much more comfortable than
up corporate cultures in the their parents’ generation,
U.S. and other countries. In which suffered poverty and
China, given its rapid societal strict social controls. They
changes in the past several tend to be more open-
decades, the generational di- minded, rebellious, individu-
vides are even wider. alistic and willing to chal-
The cohort in China that lenge authority than previous
is spurring the most change generations, says Eric Fish,
is called the “Post-90s” gen- author of the book “China’s
eration, describing people Millennials: The Want Gener-
born in or after 1990. They ation.”
growth slowed to 8.1% from
12.5%. Path to Purchase
The retailers that are suc- Apps have the edge over mobile
ceeding are training customers sites when it comes to how
to think of their smartphones shoppers select and
like an all-day impulse aisle.
purchase items.
Apps are able to capture data
available on handsets and push App Mobile browser
consumers to buy when they Products viewed per user
have a spare moment, whether
in line for a morning coffee, or, 5.7
as in Ms. Pugh’s case, nursing
her child. Percentage added to basket
But merchants say many 24%
shoppers on phones still shy 13%
away from buying big-ticket
items such as sofas, preferring Percentage of transactions
54%
larger photos, expanded re-
views and product descriptions, 44%
as well as price comparisons Note: Includes sites that have over 25% of
transactions on mobile, 10% of which are
available on a desktop com- on mobile apps.
puter. Source: Criteo
And retailers have to be THE WALL STREET JOURNAL.
careful not to seem invasive.
Amazon’s shoe retailer, Zap- demand,” said Andrew Lips-
pos.com, is testing technology man, a comScore vice presi-
that highlights different prod- dent, who has studied mobile
ucts based on a phone’s operat- shopping. “They can create an
ing system. Target Corp. impulsive buying moment at
pushes coupons to customers any point in the day because
who have the app open in its they are with you all the time,
stores. Fashion retailer Mod- right in your pocket.”
Cloth Inc. suggests some prod- Selling merchandise on
ucts based on a customer’s lo- smartphones still poses chal-
cation. lenges. The ease of buying sin-
Amazon’s dominance on the gle items instead of building a
Web extends to mobile, and the shopping cart can drive up re-
online retailer has the top- tailers’ shipping costs. And con-
ranked app, according to Apple. sumers are more likely to win-
Among the top-ranked apps on dow shop for products but not
both Apple and Android devices necessarily buy them.
are two, young mobile-centric People still make most of
marketplaces, OfferUp Inc. and their online transactions on
ContextLogic Inc.’s Wish, desktop computers.
which last year were valued at Ryan McIntyre, chief mar-
$800 million and $3 billion, re- keting officer of men’s fashion
spectively, by investors. retailer JackThreads Inc., said
“Mobile devices are driving the average cart is about $5
Meituan-Dianping, formed
by the merger of two rival
startups last year, raised $3.3
billion in January, marking the
largest private-fundraising
round globally for a venture-
capital-backed startup.
In the round, which valued it
at more than $18 billion,
Meituan-Dianping raised capital
ALY SONG/REUTERS
from investors including Ali-
baba’s chief rival, Tencent Hold-
ings Ltd.
Many startups have burned
out in the battle to attract us-
An Ele.me courier in Shanghai. ers with heavy discounts and
subsidies. But Alibaba and Ten-
Alibaba and Ant Financial cent have deep pockets and
pledged last year to each in- supporting services such as
vest three billion yuan ($464.2 maps, data and payments plat-
million) in Koubei, whose name forms that could give them an
translates as “word-of-mouth edge over other competitors.
reputation.” Alibaba’s executives have
Ele.me couldn’t be reached said the company’s dominance
for comment on Wednesday. in e-commerce can translate to
China’s Internet companies success in the local-services
are fighting for position in the market, pointing to the hun-
fiercely competitive market dreds of millions of users of
for smartphone applications its shopping app, Taobao, and
connecting users with brick- affiliated payments business,
and-mortar services such as Alipay. The company also has
taxi rides, food deliveries, res- a mapping arm and other as-
taurant bookings and movie sets that can support such a
ticketing. business, they say.
He says the contrast is
sharp, even with Chinese
born in the 1980s, given how
rapidly living standards im-
proved in the ’90s and access
to technology increased.
Someone born in 1995 en-
tered a Chinese economy
more than twice its size in
1985, for example. As for their
YOU SIXING/XINHUA/ZUMA PRESS
parents’ generation, “It’s an
entire world apart,” he says.
Chinese companies gener-
ally have had strict hierarchi-
cal structures and cultures in
which bosses are rarely chal-
lenged and professional suc-
cess largely depends on exe-
cuting orders. Openly
confronting the boss the way
Mr. Fu did would be unthink-
able to older Chinese workers.
B
UTnow some older tech
managers are realizing
that the traditional ap-
proach doesn’t work for their
younger employees, who are
eager to be heard and value
personal fulfillment more
than superiors’ praises.
According to a 2014 sur-
vey of 160 employees at 22
tech startups in China, con-
ducted by venture-capital
firm China’s Innovation
Works, post-90s employees
are driven much more
by user satisfaction and per-
sonal development than peo-
ple five or 10 years older.
A parallel survey by the
same firm of 30 startup CEOs
22
Amazon has the top-ranked app, according to Apple. Retailers are
getting savvier with apps that are easy for customers to use.
higher on his company’s web-
site than its app. But he says
customers spend about 10%
more on average on mobile de-
vices in a given six-month pe-
riod.
Mobile devices also drive
Web sales: Nearly 40% of desk-
top transactions in the fourth
quarter took place after a cus-
tomer visited the retailer’s app
or mobile site, according to
consulting firm Criteo.
Olivia Bryant, a 19-year-old
Starbucks barista in Bakers-
field, Calif., said she spends up
to two hours a day shopping on
her iPhone through apps such
as marketplace Etsy Inc. and
fashion retailer Poshmark Inc.
“It’s much simpler to shop
on my phone,” she said. “There
aren’t a lot of distractions.”
The average U.S. consumer
last year spent 3 hours and 5
Business
Watch
AIRBUS
Emirates Airline
Buys More A380s
Emirates Airline on Wednes-
day said it would buy two more
Airbus Group SE A380 super-
jumbos, a day after the Euro-
pean plane maker announced
the order as one from an undis-
closed customer.
Emirates Airline, the world’s
largest international carrier by
traffic, said the additional air-
craft will be delivered in the
fourth quarter of next year. The
purchase has a list-price value of
$865.2 million, though airlines
often get steep discounts.
—Robert Wall
REISS
Private-Equity Firm
Buys Stake in Retailer
Warburg Pincus LLC, a New
York-based private-equity firm
with more than $40 billion un-
der management, said it has
* Thursday, April 14, 2016 | B3
@wsjd | wsjd.com
found that they consider “I have the responsibility
younger employees both an- to stop Frank from having
gels and monsters. unrealistic ideas about our
Such workers can be a users,” says Cui Jianxiong,
force for disruptive innova- Zapya’s 25-year-old iOS
tion, the CEOs said, but also product manager. “I com-
pose big management chal- plain so much about our
lenges because they are re- product and user interface
luctant to work over- that Frank nicknamed me
time, place more emphasis ‘sharp tongue.’ ”
on work-life balance, and Tech executives like Mr.
have difficulty sustaining en- Wang, who spent 15 years in
thusiasm for work. the U.S. and whose family
Tech companies are still lives there, say that
adapting to get the most out while they appreciate
of these employees. post-90s employees’ creativ-
Immediately after found- ity and openness, they find
ing Dewmobile Inc. in Beijing some to be unreliable. They
in 2012, Frank Wang started switch jobs frequently, and it
hiring post-90s interns be- isn’t uncommon for them to
cause his company’s primary not show up for job inter-
product, Zapya, is a private views—or for work, even af-
file-sharing app for users be- ter signing offer letters.
tween 13 and 24 years old. But while Mr. Wang found
He needed their input to that these young employees
make the product a success. often are reluctant to work
Now 60% of the com- as hard as his generation,
pany’s 110 employees are they’re more than willing to
post-90s people, and Mr. spend time on projects where
Wang, who calls himself they feel they have owner-
a post-60s, has developed ship.
close relationships with Serena Zhang, who
many of them after over- started as an intern Web
coming some shocks. writer at the company in
His young employ- 2012, refused to work over-
ees aren’t afraid to tell him time until after she got her
and other older colleagues— wish to work on an interac-
including graduates of top tive-design project.
universities like Tsinghua “I worked until 2 a.m. ev-
and Stanford, with years of ery day on that first project,”
experience working in Silicon says Ms. Zhang, now a prod-
Valley—that their product uct manager. “It kind of felt
ideas stink. like my baby.”
user’s device to judge a cus-
tomer’s possible buying power.
“Our data shows that the more
expensive device you have, the
more you might spend,” said
Tophatter CEO Ashvin Kumar.
JASON REDMOND/AGENCE FRANCE-PRESSE/GETTY IMAGE
“Millions of Amazon custom-
ers shop exclusively on a mo-
bile device all year,” said an
Amazon spokeswoman.
Retailers may be most ex-
cited to cater results based on a
customer’s location, whether it
is knowing a user has entered
their store or is vacationing in
warmer climes.
“If you’re in Australia, we
might serve you swimwear
when it’s winter in the North-
ern Hemisphere,” said Matt Ka-
ness, CEO of San Francisco
fashion retailer ModCloth,
which has about 1.2 million us-
minutes a day using apps, com- ers.
pared with 51 minutes surfing EBay Inc. will highlight gen-
the mobile Web, according to erators to customers shopping
eMarketer. Such devotion to in areas affected by a big
apps isn’t lost on retailers. Tar- storm, said Hal Lawton, the
get has shifted resources and company’s North America se-
staff away from Web develop- nior vice president.
ment to its app—which it hopes Other retailers such as Wal-
to make central to all of its dig- Mart Stores Inc. and Nord-
ital design. strom Inc. have explored ways
“With smartphones we’re to tie in mobile shopping with
able to reach you all the time” stores. Customers could check
through texts or lock-screen in to a store through the app,
messages, known as push noti- providing salespeople with
fications, said Wish CEO Peter their purchase history, even en-
Szulczewski. crypted payment information,
The San Francisco startup for a quicker and more person-
has created an experience that alized shopping experience.
mimics the mall, with a seem- But the main catch for apps
ingly endless inventory to scroll may be the impulsive shoppers.
through and bargain-basement “On bar nights, we see drunk
prices. shopping, which is very inter-
Some apps, such as those esting,” said Alan Tisch, CEO of
from Zappos and online auction fashion app Spring Inc. “Maybe
site Tophatter Inc., identify a there’s an opportunity there.”
agreed to buy a majority stake MCCORMICK
in Reiss Holdings, valuing the
British fashion retailer at £230
Spice Maker Drops
million ($328 million).
Reiss was founded in 1971
Bid for Premier Foods
U.S. spice and herb company
by David Reiss, who will keep a McCormick and Co. Inc. has
minority stake in the business walked away from making an of-
and stay on as chairman and fer for British food manufacturer
chief executive, Warburg Pincus Premier Foods PLC.
said in a statement. The Maryland-based company
Reiss, which operates in 160 on Wednesday said, having com-
locations in 15 countries, had pleted due diligence on Premier
sales of £146 million in the 12 Foods, it wouldn’t be able to
months to Jan. 31. propose an offer that would be
Warburg Pincus said it plans recommended by Premier’s
to expand the company globally, board and deliver appropriate re-
particularly in North America, turns for McCormick sharehold-
Asia and Australia. ers.
—Simon Clark —Tapan Panchal
LUKAS SCHULZE/DPA/ZUMA PRESS
Emirates Airline will buy two Airbus A380 super jumbos.
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 | Thursday, April 14, 2016
Delphi Prevails in U.S. Tax Battle
BY JEFF BENNETT
Delphi Automotive PLC
won an appeal with the Inter-
nal Revenue Service related
to the agency’s 2014 claim
that the auto-parts supplier
should be treated as a U.S.
corporation for income tax
purposes even after it reincor-
porated in the U.K.
The decision, disclosed on
Wednesday by Delphi during a
broader financial presentation,
is a blow to the Obama admin-
istration, which has looked to
slow a trend where companies
move legal addresses to low-
tax companies. Delphi origi-
nally was founded in Troy,
Mich., in 1999 after being spun
off from General Motors Co.
But it was reestablished as a
Cigarette Makers Halt Output in India
BY PREETIKA RANA
NEW DELHI—Tobacco com-
panies in India halted cigarette
production amid government
regulations requiring larger
and more graphic health warn-
ings on packages.
The decision represents a
sharp escalation in the conflict
between the industry and In-
dian authorities over rules
that require 85% of a pack to
be covered with pictorial pub-
lic-health messages that show
diseased lungs and other prob-
lems caused by smoking.
ITC Ltd., VST Industries
Ltd. and Godfrey Phillips In-
dia Ltd. said they paused man-
ufacturing on April 1 due to
confusion over the new re-
quirements. British American
Tobacco PLC owns roughly a
third of ITC and VST, while
Philip Morris International
Inc. owns a quarter of Godfrey
Phillips India.
Antismoking activists said
the move was an attempt to
put pressure on regulators by
raising the economic stakes.
The companies employ thou-
sands of workers and buy to-
bacco from millions of farm-
ers. Cigarette sales also are an
Clarity. So you can jump straight to it.
With a streamlined dashboard, quick-read market indexes and
a seamless device-to-device experience, the new MarketWatch
gives you easy access to critical data wherever you are.
Explore now at MarketWatch.com
new company in Gillingham,
U.K., after emerging from
bankruptcy in 2009.
Shares of Delphi were
ahead 5.6% at $76.42 in after-
noon trading in New York on
Wednesday.
“We are satisfied that the
IRS appeals process worked as
intended and reached the cor-
rect ruling,” the company said
in a statement. Delphi also of-
fered a bullish sales outlook
for the next two years, pro-
jecting a 33% increase in reve-
nue by 2018 amid growth in
Asia and increasing demand
for automotive software.
Analysts don’t expect any
financial impact from the IRS’s
decision, but it is viewed as a
victory for a company that
continues to look for cost cuts.
Cigarette companies have objected to new labeling requirements.
important source of tax reve-
nue. It is unclear if the halt led
to worker furloughs.
A Health Ministry spokes-
woman said changes to the
new regulations weren’t being
considered.
“The rule is very clear,” said
a senior Health Ministry offi-
cial, who declined to be
named. “If they don’t want to
produce, let them not pro-
duce.”
Governments world-wide
have ordered changes to ciga-
Take Your Investments
Wherever Life Takes You
BUSINESS NEWS
The IRS initially told Delphi in law didn’t apply to the com-
the summer of 2015 that it pany and therefore no adjust-
would be classified as a U.S. ments for the tax years needed
company for federal tax pur- to be made.
poses and would have to pay Once a sprawling conglom-
taxes retroactive until Oct. 6, erate making a range of com-
2009. ponents for automobiles, Del-
The IRS contended that Del- phi has narrowed its focus to
phi, which continues to have fewer areas and now is consid-
its top executives based in ered among the leading sup-
Troy, had acquired certain as- pliers of in autonomous-vehi-
sets of the old Delphi during cle parts, automotive
bankruptcy so it should be electrification and safety gear.
treated like a U.S. company. It booked $15.2 billion in reve-
The move came amid a push nue last year, but expects that
by the Obama administration figure to grow to $20 billion
to combat corporate tax inver- by 2018.
sions it considers unfair. The Nearly 50% of its new busi-
parts supplier immediately ness will come from Asian cus-
contested the conclusions. tomers, and nearly another
Delphi said it received word third will be from customers
on April 8 that the IRS Office in the Americas, the company
of Appeals had determined the said on Wednesday.
In India, where tobacco-re-
lated illnesses kill nearly a mil-
lion people a year, the govern-
ment first ordered pictorial
warnings in 2009. The warn-
ings had to cover 40% of the
front of a cigarette pack.
In late 2014, the Health
Ministry changed the rules to
require tobacco makers to
cover 85% of their packs—
front and back—with such
SHAILESH ANDRADE/REUTERS
warnings. The government de-
layed the implementation until
April 1 of this year, pending a
parliamentary study.
The tobacco industry took
the government to court, filing
at least half a dozen lawsuits
challenging the rules. The in-
dustry argued that the en-
rette packaging in an effort to hanced warnings would de-
discourage smoking. These stroy the livelihoods of people
range from mandating grisly connected to tobacco sales and
images on warning labels to would encourage smuggling.
barring manufacturers from The Karnataka High Court,
using their own logos. where the suits were filed, said
The tobacco industry has this year it didn’t have the
fought back fiercely. Philip power to strike down the
Morris mounted a costly, health regulations or impose a
yearslong—and ultimately un- stay. The cases are pending.
successful—legal battle against The production halt hasn’t
Australia’s so-called plain- resulted in any shortages. All
packaging rule, which prohib- three firms say they have ade-
its the use of brand imagery, quate stockpiles for now but
colors and logos. declined to elaborate.
THE WALL STREET JOURNAL.
TAX
Continued from page B1
with debt and push profits to
low-tax countries. But it is
much bigger than that.
The rules are of particular
interest to foreign companies
with significant U.S. opera-
tions, such as Nestlé SA, which
expressed concerns about the
regulations last week. Nestlé,
which said it doesn’t engage in
earnings stripping, said Tues-
day it will monitor the regula-
tions. It said it worries the
rules could affect foreign-
based groups’ investments and
jobs in the U.S.
When final, the regulations
will affect any debt issued on
or after April 4, so tax lawyers
are urging clients to examine
all existing transactions
among subsidiaries, including
cases where current loans
must be renewed or undergo
minor changes that could
cause the government to treat
them as newly issued.
The rules require documen-
tation of loans, describe trans-
actions that would be consid-
ered equity investments,
establish principles for assess-
ing debt instruments and let
the Internal Revenue Service
bifurcate financial instruments
into part-debt and part-equity.
They generally apply only
to debt among the legal enti-
ties inside a single company,
not bank loans or other bor-
rowing, but even that limited
change will transform multi-
national tax planning.
The rules were written un-
der the 47-year-old Section
385 of the tax code, which
gives Treasury wide authority
to distinguish debt and equity.
That is often a tricky distinc-
tion to make, and companies
exploit it to extract all
the benefits of debt, including
interest deductions in the U.S.
and tax-free repatriation of
foreign profits.
“We’re not really focused
on cash management here,” a
senior Treasury official said
Tuesday. “We’re really focused
on extraordinary amounts of
debt being loaded onto com-
panies in a short period of
time.”
The government, which
says it plans to issue a final
©2016 Dow Jones & Co. Inc. All rights reserved. 6DJ3355
rule “swiftly,” is accepting
comments through July 7.
Considering the magnitude of
the issue and the likely com-
plexity of the comments, a fi-
nal rule could take still longer.
Tax lawyers are preparing
to pepper the Treasury with
their concerns, setting up a
fight in the administration’s
waning months as the govern-
ment tries to finish the rules
before a new president takes
over.
“There will be a lot of
gnashing of the teeth by prac-
titioners. This approach of
Treasury’s is completely
novel,” said Steve Rosenthal, a
senior fellow at the Tax Policy
Center who urged the govern-
ment to curb earnings strip-
ping.
The Treasury official said
the rules are designed to avoid
“inadvertent side effects.”
Treasury invited comments on
whether special cash rules are
needed.
The new tax rules
will be subject to
the Congressional
Review Act.
“I don’t see any of these
April 4 regulations affecting
day-to-day cash management,”
said Tom Deas, chairman of
the National Association of
Corporate Treasurers, and for-
mer treasurer of FMC Corp. He
said the rules underscore the
U.S. government’s desire to
keep loans between company
subsidiaries at arms length
and not abuse the tax system.
The rules will be subject to
the Congressional Review Act,
meaning the next Congress and
a Republican president could
repeal them early next year.
“It’s kind of a brave new
world when for decades we’ve
all been used to following the
facts and circumstances” in
each instance, said Mitch
Thompson, a partner at Squire
Patton Boggs, who advises
companies on mergers. “We’re
going to be seeing more, as
the comments come out, more
of the unintended conse-
quences in various sectors.”
—Vipal Monga
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
BLOOMBERG NEWS,
© 2016 Dow Jones & Company. All Rights Reserved.
As of 4 p.m. ET EUR/GBP 0.7937 g 0.53%
U.S. Permits Argentine Debt Sale
BY JULIE WERNAU
A ruling on Wednesday by a
U.S. appeals court cleared the
way for Argentina to pay its
debts and return to interna-
tional capital markets for the
first time in more than 15
years.
A three-judge panel af-
firmed a U.S. District Court
decision to lift an injunction
Flowing In
U.S. corn imports are surging despite bumper domestic harvests and
depressed prices, as meat producers seek cheap foreign-grown grain.
U.S. corn imports
150 million bushels
100
50
0 0
2005- ’07- ’09-
’06 ’08 ’10
Awash in Corn, U.S. Imports More
BY JESSE NEWMAN
AND JACOB BUNGE
There is something unusual
going on in the U.S. corn mar-
ket.
Even as record harvests
have left the U.S. awash in
corn, imports of the crucial an-
imal feed are surging. It is
happening because moves in
currencies, ocean-shipping
fees and railroad rates have
combined to produce an unex-
pected result: Bringing in corn
from places like Brazil and Ar-
gentina can be cheaper for
poultry and livestock produc-
ers in the Southeast U.S. than
buying it from the Midwest.
China Calm Won’t Last
It has been a calm couple
of months in China’s finan-
cial markets. That is unlikely
to last, and the turmoil is
more likely than ever to spill
over into the world’s still-
fragile financial system.
Until last summer, most of
the world didn’t care much
about China’s markets or
banks. What mattered a lot
was how
much its fac-
tories pro-
duced and
how much
copper or
UNHEDGED iron ore it im-
KEN BROWN ported.
That
changed in
August when Beijing botched
a currency devaluation. That
was followed in January by a
stock-market selloff that rip-
pled across the globe.
“We are likely to see
much more of that,” said
Gaston Gelos, who oversaw
the International Monetary
Fund’s Global Financial Sta-
bility Analysis Report, which
came out last week. The IMF
expects China’s connections
to the global financial sys-
tem to grow substantially in
the coming years.
What is most worrisome
MARKETS DIGEST B6 | WEDNESDAY’S MARKETS B7 | FINANCE WATCH B8
Two Convicted in Swiss
Bank-Secrets Case
CENTRAL BANKS | B8
YEN/DLR ¥109.21 À 0.61% GOLD 1246.80 g 1.00%
that had prevented the South
American nation from widely
borrowing because of its fail-
ure to pay holdout bondhold-
ers after a 2001 default on
more than $80 billion of debt.
The judges affirmed the
lower court’s decision from
the bench, without waiting to
produce a written decision,
following nearly two hours of
pleas from lawyers on behalf
U.S. corn production
15 billion bushels
10
Projection
50 million
bushels
5
’11- ’13- ’15- 2005- ’07- ’09-
’12 ’14 ’16 ’06 ’08 ’10
Wade Byrd sees the phe-
nomenon in his own backyard.
Increasingly, the trucks that
rumble past his Clarkton, N.C.,
farm to nearby hog producers
are carrying corn from thou-
sands of miles away in South
America rather than U.S. oper-
ations like his.
“It’s put a bad taste in
growers’ mouths,” said Mr.
Byrd, 72 years old, who raises
corn, soybeans and peanuts on
1,200 acres. “We’ve got grain
running out of our ears in the
U.S., and seeing this grain dis-
place ours, to me, that’s just
mind-boggling.”
Imports remain a very small
part of the market in the U.S.,
is investors’ short memories
of the havoc China played on
the world’s markets. The
idea that China is still an en-
gine of growth, and that
there are big profits to made
there, is dangerous for inves-
tors.
During the recent calm in
Chinese markets, the country
expanded its influence on
the global financial system
via deal-making and the
opening of its huge domestic
bond market. Investors have
also grown interested again
in China’s wild stock market.
$96.7 B
Amount Chinese companies
have committed to spend this
year on overseas acquisitions.
Meanwhile, China’s crucial
economic-reform program
has lagged behind, making it
increasingly likely the coun-
try will struggle with more
financial upheaval, in partic-
ular with its currency.
On the deals front, Chi-
nese companies have already
committed to spending $96.7
billion this year on overseas
acquisitions, just behind last
THE WALL STREET JOURNAL.
of hundreds of remaining
bondholders who have yet to
settle with Argentina and who
say the nation hasn’t given
them the same opportunity to
negotiate as it has larger
hedge funds.
Ending the injunction, the
bondholders argued, would re-
move the incentive for Argen-
tina to pay about $2 billion in
unsettled claims that remain.
Projection
13.6 billion
bushels
’11- ’13- ’15-
’12 ’14 ’16
the world’s largest exporter of
corn. Still, the notable surge is
a telling indicator of how the
commodity bust and strong
dollar have distorted prevail-
ing patterns of commerce.
The U.S. Agriculture Depart-
ment on Tuesday projected
that buyers would import 50
million bushels of the grain
this season, up 56% from last
season, even as U.S. bins swell
with grain. U.S. buyers haven’t
imported that much corn since
2012-2013, when a severe
drought sliced domestic pro-
duction, sending futures prices
to records.
Farmers like Mr. Byrd say
cheap overseas corn flowing
year’s total of $106.9 billion.
For a while, the biggest deal
was an ill-fated attempt by a
Chinese provincial car in-
surer turned acquisition ma-
chine to buy Starwood Ho-
tels & Resorts Worldwide
Inc.
There isn’t much risk to a
Chinese company buying a
hotel chain. But Anbang In-
surance Group Co. has
snapped up insurers, which
can cause more than a bad
night’s sleep if things go
wrong.
One stumbling block on
the Starwood deal was lack
of transparency about An-
bang’s finances, and rating
firms have expressed the
same concerns.
Anbang last week picked
up a Korean insurer and in
November agreed to buy Fi-
delity & Guaranty Life, one
of the biggest sellers of fixed
indexed annuities in the U.S.,
for $1.57 billion.
Anbang replaced Fosun
Group as China’s overseas
buyer of the moment. Fosun
stepped back from deal mak-
ing this year after a $10 bil-
lion, two-year buying spree,
in part because its chairman
disappeared briefly for ques-
Please see BROWN page B7
Tesco Serving Up Better
Nutrition for Investors
HEARD ON THE STREET | B8
OIL 41.76 g 0.97%
The court said the decision
to lift the injunction is condi-
tional on U.S. District Judge
Thomas Griesa determining
that Argentina has made good
on its promises to pay those
who have settled and removed
all necessary legal obstacles.
Without the clearance by
the U.S. appeals court, inter-
national investors would have
avoided buying any bonds the
into the region from nearby
ports is depressing some local
grain prices when farm in-
comes are already projected to
be at their lowest level in more
than a decade.
The rise in imports follows
a multiyear boom in American
agriculture during which Mid-
western farmers ramped up
production to satisfy burgeon-
ing demand from a growing
biofuels industry at home and
increasingly wealthy popula-
tions in emerging markets.
The rest of the world fol-
lowed suit. Brazil, the second-
largest corn exporter behind
the U.S., is on track this season
Please see CORN page B7
Thursday, April 14, 2016 | B5
3-MONTH LIBOR 0.62835%
country would have tried to
sell. Moreover, Argentine leg-
islators have said the nation
couldn’t settle with any hold-
ers of the defaulted bonds
without the U.S. court ruling.
Following years of stale-
mate with bondholders who
had refused two exchange of-
fers, Argentina’s recently
elected President Mauricio
Please see RETURN page B7
J.P. Morgan Profit
Takes Trading Hit
BY EMILY GLAZER
AND PETER RUDEGEAIR
J.P. Morgan Chase & Co.
said its first-quarter profit fell
6.7%, but the decline in trading
wasn’t as sharp as many ana-
lysts feared.
Bank stocks rose Wednes-
day after J.P. Morgan reported
a profit of $5.52 billion, or
$1.35 a share, that topped the
$1.26 a share expected by ana-
lysts. Shares of the bank, the
largest in the country by as-
sets, rose 4.5% in late-after-
noon trading.
Investors also looked be-
yond the disclosure by regula-
tors Wednesday morning that
J.P. Morgan and four other
large banks would need to re-
configure plans for how they
would go through a potential
bankruptcy. That decision
U.K. Targets Banks
On Marketing of IPOs
BY MAX COLCHESTER
LONDON—A U.K. regulator
proposed plans on Wednesday
to shake up the way invest-
ment banks market initial pub-
lic offerings to clients as part
of a wider effort to clamp
down on what it called anti-
competitive practices in the
industry.
The Financial Conduct Au-
thority outlined a number of
potential measures that in-
clude making sure more infor-
mation is made available to
IPO investors from indepen-
dent sources, ensuring that in-
vestment banks don’t allocate
shares disproportionately to
preferred clients and rethink-
ing the way that investment-
AFP/GETTY IMAGES
10-YR TREAS À 6/32 yield 1.760%
JUAN MABROMATA/AGENCE FRANCE-PRESSE/GETTY IMAGES
President Mauricio Macri
could eventually lead to higher
capital requirements or other
sanctions.
While J.P. Morgan’s earnings
provided some better news to a
beaten-down sector, bank
shares are still about 10% lower
on the year in the face of nu-
merous headwinds, including
trading, energy-market strug-
gles and still-low interest rates.
Revenue fell 3.4% to $23.24
billion. On an adjusted basis,
revenue declined to $24.08 bil-
lion, exceeding analysts’ esti-
mates of $23.4 billion.
Tough market conditions in
the first quarter pushed J.P.
Morgan’s revenue from stock
and bond trading lower,
helped shrink investment-
banking fees by one-fourth as
companies held back from is-
suing securities, and led to a
Please see BANK page B7
bank league tables are calcu-
lated.
“Our study shows that
many investment- and corpo-
rate-banking clients are get-
ting a service they want, but
we have also identified some
areas where improvements
could be made,” said Christo-
pher Woolard, director of
strategy and competition at
the FCA.
For instance, smaller cus-
tomers sometimes feel the
need to reward an investment
bank by booking extra transac-
tions through it in return for
broking or merger advice, the
Please see RULES page B8
 Heard on the Street: Clearing
up the IPO confusion............ B8
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B6 | Thursday, April 14, 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
16381.22 s 452.43, or 2.84% Year-to-date t 13.94% 343.06 s 8.42, or 2.52% Year-to-date t 6.22% 2082.42 s 20.70, or 1.00% Trailing P/E ratio * 23.62 20.47
High, low, open and close for each 52-wk high/low20868.03 14952.61 High, low, open and close for each 52-wk high/low 415.18 302.59 High, low, open and close for each P/E estimate * 17.41 17.53
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 2.20 1.99
All-time high: 2130.82, 05/21/15

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

65-day moving average Session high
18800 375 2100
DOWN UP

t
Session open Close

Close Open 18000 65-day moving average 360 2050

t

Session low
17200 345 2000

16400 330 1950

15600 315 65-day moving average 1900

14800 300 1850

Bars measure the point change from session's open

14000 285 1800
Jan. Feb. Mar. Apr. Jan. Feb. Mar. Apr. Jan. Feb. Mar. Apr.

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 2357.30 40.87 1.76 2033.03 • 2643.78 0.9 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1666.08 29.14 1.78 1471.88 • 1956.39 –2.9 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 844.91 14.03 1.69 691.21 • 1067.74 6.4 3.250 Australia 2 1.925 117.5 115.0 107.8 125.3 1.888 2.034 1.786
4.250 10 2.531 77.0 70.0 70.4 41.9 2.477 2.688 2.351
Americas DJ Americas 500.52 5.55 1.12 433.38 • 525.25 2.7
3.500 Belgium 2 -121.6 -117.0 -132.7 -71.7 -0.432 -0.371 -0.185
-0.466
Brazil Sao Paulo Bovespa 53190.69 1188.82 2.29 37046.07 • 58574.79 22.7
0.800 10 0.381 -138.1 -136.0 -145.5 -160.0 0.416 0.529 0.332
Canada S&P/TSX Comp 13668.93 87.51 0.64 11531.22 • 15524.75 5.1
4.250 France 2 -0.454 -120.5 -118.7 -135.2 -70.7 -0.449 -0.397 -0.175
Mexico IPC All-Share 45406.73 316.06 0.70 39256.58 • 46307.61 5.7
0.500 10 0.475 -128.7 -125.9 -144.3 -149.5 0.517 0.541 0.437
Chile Santiago IPSA 3143.35 2.82 0.09 2730.24 • 3361.36 6.8
0.500 Germany 2 -0.514 -126.5 -124.9 -141.6 -80.0 -0.510 -0.461 -0.268
U.S. DJIA 17908.28 187.03 1.06 15370.33 • 18351.36 2.8
0.500 10 0.130 -163.1 -160.6 -171.4 -177.3 0.170 0.270 0.159
Nasdaq Composite 4947.42 75.33 1.55 4209.76 • 5231.94 –1.2
4.500 Italy 2 0.018 -73.2 -71.1 -99.3 -44.5 0.027 -0.037 0.088
S&P 500 2082.42 20.70 1.00 1810.10 • 2134.72 1.9
2.000 10 1.309 -45.2 -39.9 -65.2 -68.9 1.377 1.333 1.243
CBOE Volatility 13.88 –0.97 –6.53 10.88 • 53.29 –23.8
0.100 Japan 2 -0.241 -99.2 -99.2 -111.7 -52.4 -0.253 -0.162 0.009
EMEA Stoxx Europe 600 343.06 8.42 2.52 303.58 • 414.06 –6.2 0.100 10 -0.085 -184.7 -187.2 -199.5 -158.9 -0.096 -0.011 0.343
Stoxx Europe 50 2856.05 80.82 2.91 2556.96 • 3602.76 –7.9 0.500 Netherlands 2 -0.503 -125.3 -120.6 -140.5 -74.2 -0.467 -0.449 -0.210
Austria ATX 2293.92 42.75 1.90 1929.73 • 2695.57 –4.3 0.250 10 0.225 -153.6 -151.3 -160.5 -169.7 0.263 0.379 0.235
Belgium Bel-20 3437.85 67.16 1.99 3117.61 • 3903.65 –7.1 4.350 Portugal 2 0.334 -41.6 -32.2 -69.5 -52.9 0.417 0.261 0.003
France CAC 40 4490.31 144.40 3.32 3892.46 • 5283.71 –3.2 2.875 10 3.041 127.9 148.5 77.0 -25.5 3.262 2.754 1.677
Germany DAX 10026.10 264.63 2.71 8699.29 • 12326.14 –6.7 4.500 Spain 2 -0.012 -76.2 -73.7 -97.5 -46.3 0.002 -0.019 0.070
Greece ATG 548.83 –4.60 –0.83 420.82 • 857.92 –13.1 1.950 10 1.476 -28.5 -23.8 -50.2 -67.7 1.538 1.482 1.255
Hungary BUX 26412.03 384.89 1.48 20452.90 • 26650.44 10.4 4.250 Sweden 2 -0.438 -118.8 -118.3 -155.4 -84.9 -0.445 -0.599 -0.317
Israel Tel Aviv 1467.11 18.81 1.30 1383.34 • 1728.89 –4.0 1.000 10 0.800 -96.2 -98.3 -136.9 -160.1 0.794 0.615 0.331
Italy FTSE MIB 18165.59 720.79 4.13 15773.00 • 24157.39 –15.2 1.250 U.K. 2 0.434 -31.7 -28.8 -39.2 3.6 0.451 0.564 0.568
Netherlands AEX 450.09 10.59 2.41 378.53 • 510.55 1.9 2.000 10 1.425 -33.6 -33.2 -40.8 -31.5 1.444 1.577 1.617
Poland WIG 48124.56 773.34 1.63 41747.01 • 57460.44 3.6 0.875 U.S. 2 0.750 ... ... ... ... 0.739 0.955 0.532
Russia RTS Index 922.50 11.43 1.25 607.14 • 1092.52 21.9 1.625 10 1.761 ... ... ... ... 1.776 1.984 1.932
Spain IBEX 35 8820.70 274.40 3.21 7746.30 • 11815.60 –7.6
Sweden SX All Share 490.12 7.20 1.49 432.78 • 564.90 –3.0 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 7934.46 145.68 1.87 7425.05 • 9537.90 –10.0 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 52938.24 878.48 1.69 45975.78 • 55355.12 4.4 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 4/12/2016
Turkey BIST 100 85696.67 1976.87 2.36 68230.47 • 88651.88 19.5
One-Day Change Year Year
U.K. FTSE 100 6362.89 120.50 1.93 5499.51 • 7122.74 1.9 Commodity Exchange Last price Net Percentage high low
377.25 11.75 3.21% 383.25 351.25
Asia-Pacific DJ Asia-Pacific TSM 1371.52 22.64 1.68 1188.42 • 1621.10 –1.3 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 965.75 21.00 2.22 966.25 862.00
Australia S&P/ASX 200 5054.70 79.10 1.59 4765.30 • 5982.70 –4.6
Wheat (cents/bu.)
CBOT
CBOT 468.00 9.25 2.02 499.00 449.50
China Shanghai Composite 3066.64 42.99 1.42 2655.66 • 5166.35 –13.4
Live cattle (cents/lb.) CME 121.325 -1.525 -1.24% 131.350 118.775
Hong Kong Hang Seng 21158.71 654.27 3.19 18319.58 • 28442.75 –3.4
Cocoa ($/ton) ICE-US 2,946 -17 -0.57 3,211 2,746
India S&P BSE Sensex 25626.75 481.16 1.91 22951.83 • 28799.69 –1.9
Coffee (cents/lb.) ICE-US 123.90 -2.40 -1.90 138.20 115.35
Japan Nikkei Stock Avg 16381.22 452.43 2.84 14952.61 • 20868.03 –13.9
Sugar (cents/lb.) ICE-US 14.31 -0.03 -0.21 16.63 12.68
Singapore Straits Times 2890.41 75.76 2.69 2532.70 • 3539.95 0.3
Cotton (cents/lb.) ICE-US 61.42 0.51 0.84 64.92 54.33
South Korea Kospi 1981.32 … Closed 1829.81 • 2173.41 1.0 Robusta coffee ($/ton) ICE-EU 1517.00 -42.00 -2.69 1,570.00 1,342.00
Taiwan Weighted 8652.08 120.90 1.42 7410.34 • 9973.12 3.8
Copper ($/lb.) COMEX 2.1690 0.0220 1.02 2.3235 1.9440
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1243.90 -17.00 -1.35 1,287.80 1,063.00
Silver ($/troy oz.) COMEX 16.245 0.023 0.14 16.345 13.760
Currencies London close on April 13 Aluminum ($/mt)* LME 1,525.50 19.00 1.26 1,588.50 1,451.50
Tin ($/mt)* LME 16,880.00 -95.00 -0.56 17,500.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 4,700.00 59.00 1.27 5,070.50 4,320.50
10% Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,700.00 3.00 0.18 1,888.00 1,598.00
8
Europe Zinc ($/mt)* LME 1,805.00 47.00 2.67 1,866.00 1,467.00
6 s
Euro Bulgaria lev 0.5767 1.7341 –3.7 Nickel ($/mt)* LME 8,685.00 80.00 0.93 9,400.00 7,750.00
4
Croatia kuna 0.1511 6.619 –5.6 Rubber (Y.01/ton) TCE 190.10 -3.20 -1.66 192.80 175.10
2
s
Yen
Euro zone euro 1.1284 0.8862 –3.7
0 Palm oil (MYR/mt) MDEX 2658.00 20.00 0.76 2,793.00 2,419.00
Czech Rep. koruna-b 0.0417 23.957 –3.7
–2 s Denmark krone 0.1516 6.5964 –4.0 Crude oil ($/bbl.) NYMEX 42.87 -0.63 -1.45 43.69 30.79
–4 WSJ Dollar index 0.003631 275.43 –5.2
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.2656 -0.0103 -0.81 1.2907 0.8950
–6 Iceland krona 0.008051 124.21 –4.6
–8 RBOB gasoline ($/gal.) NYMEX 1.5290 -0.0053 -0.35 1.5782 1.1488
Norway krone 0.1214 8.2363 –6.9
0.2629 3.8040 –3.0
Natural gas ($/mmBtu) NYMEX 2.117 0.034 1.63 2.5930 1.8440
2015 2016 Poland zloty
Russia ruble-d 0.01509 66.255 –7.9 Brent crude ($/bbl.) ICE-EU 44.11 -0.58 -1.30 44.94 29.31
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1228 8.1419 –3.6 Gas oil ($/ton) ICE-EU 375.25 -0.75 -0.20 384.00 266.50
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0357 0.9655 –3.6
Turkey lira 0.3513 2.8467 –2.4 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1289 7.7563 0.1
Ukraine hryvnia 0.0392 25.5085 6.3
Argentina peso-a 0.0698 14.3355 10.8
India rupee
Indonesia rupiah
0.0150
0.0000759
66.5467
13175
0.5
–4.8
U.K. pound 1.4218 0.7033 3.6 Cross rates London close on Apr 13
Brazil real 0.2823 3.5418 –10.6 Middle East/Africa
Japan yen 0.009157 109.21 –9.2
Canada dollar 0.7815 1.2796 –7.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002973 336.38 –0.7 Bahrain dinar 2.6521 0.3771 –0.01
Chile peso 0.001495 668.70 –5.6 Australia 1.3062 1.8574 1.3532 0.0120 0.1684 1.4738 1.0209 ...
Macau pataca 0.1252 7.9862 –0.2 Egypt pound-a 0.1126 8.8784 13.4
Colombia peso 0.0003328 3005.22 –5.3 Canada 1.2796 1.8193 1.3250 0.0117 0.1650 1.4436 ... 0.9795
Malaysia ringgit-c 0.2576 3.8821 –9.8 Israel shekel 0.2648 3.7760 –3.0
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6919 1.4453 –1.2 Kuwait dinar 3.3138 0.3018 –0.6 Euro 0.8862 1.2601 0.9179 0.0081 0.1142 ... 0.6926 0.6785
Mexico peso-a 0.0572 17.4847 1.6
Pakistan rupee 0.0096 104.700 –0.2 Oman sul rial 2.5972 0.3850 0.02 Hong Kong 7.7563 11.0278 8.0342 0.0710 ... 8.7530 6.0617 5.9366
Peru sol 0.3062 3.2660 –4.3
Philippines peso 0.0217 46.068 –1.7 Qatar rial 0.2746 3.642 –0.03 Japan 109.2080 155.2800 113.1200 ... 14.0800 123.2100 85.3544 83.6000
Uruguay peso-e 0.0322 31.060 3.8
Singapore dollar 0.7395 1.3523 –4.7 Saudi Arabia riyal 0.2667 3.7502 –0.1 0.9655 1.3728 ... 0.0088 0.1245 1.0895 0.7547 0.7390
Venezuela bolivar 0.100150 9.99 58.4 Switzerland
South Korea won 0.0008719 1146.92 –2.5 South Africa rand 0.0686 14.5683 –5.9
U.K. 0.7033 ... 0.7284 0.0064 0.0907 0.7937 0.5497 0.5384
Asia-Pacific Sri Lanka rupee 0.0068781 145.39 0.8 Close Net Chg % Chg YTD % Chg
0.7656 1.3062 –4.8 Taiwan dollar 0.03090 32.364 U.S. ... 1.4218 1.0357 0.0092 0.1289 1.1284 0.7815 0.7656
Australia dollar –1.7 WSJ Dollar Index 86.33 0.52 0.61 –4.26
China yuan 0.1544 6.4786 –0.2 Thailand baht 0.02855 35.030 –2.8 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 0.43275% 0.18040% ¥ TakedaPharm 4502 5233.00 1.49 -13.72 £ RioTinto RIO 2245.00 7.60 13.41 Last: 129.84 s 2.92, or 2.30% YTD t 4.7%
Three month 0.62835 0.27435 Asia Titans HK$ TencentHoldings 0700 164.50 2.81 7.73 CHF RocheHldgctf ROG 245.40 0.62 -11.22
50–day 140
Six month 0.89915 0.40140 HK$ AIAGroup 1299 44.60 2.65 -4.29 ¥ TokioMarineHldg 8766 3641.00 5.08 -22.73 £ RoyDtchShell A RDSA 1801.00 2.39 18.02
One year 1.21755 0.69265 ¥ AstellasPharma 4503 1481.00 2.95 -14.47 ¥ ToyotaMtr 7203 5623.00 2.52 -24.91 € SAP SAP 69.38 1.36 -5.45
moving average 130
Euro Libor AU$ AustNZBk ANZ 23.34 2.19 -16.43 AU$ Wesfarmers WES 39.80 0.68 -4.35 € Sanofi SAN 76.00 2.36 -3.31 t
120
One month -0.33914% -0.04143% AU$ BHP BHP 17.92 6.04 0.34 AU$ WestpacBanking WBC 29.94 2.78 -10.79 € SchneiderElectric SU 55.92 4.15 6.39
Three month -0.26000 0.00500 HK$ BankofChina 3988 3.21 3.55 -7.23 AU$ Woolworths WOW 20.99 1.21 -14.33 € Siemens SIE 92.20 2.66 2.58 High 110
Six month -0.14857 0.06071 HK$ CKHutchison 0001 99.20 1.64 -4.98 € Telefonica TEF 9.53 1.55 -6.94 100
One year -0.02671 0.18214 HK$ CNOOC 0883 9.72 6.23 20.45 Stoxx 50 € Total FP 42.56 3.99 4.18
Close
Low 90
Euribor ¥ Canon 7751 3227.00 1.93 -12.19 CHF ABB ABBN 19.07 1.06 6.18 CHF UBSGroup UBSG 15.36 4.63 -21.31
One month -0.34200% -0.02900% ¥ CentralJapanRwy 9022 18865 -0.24 -12.66 € AXA CS 22.05 6.47 -12.58 € Unilever UNA 40.41 1.72 0.76 15 22 29 5 12 19 26 4 11 18 25 1 8
Three month -0.24900 0.00400 HK$ ChinaConstructnBk 0939 5.05 2.23 -4.90 € AirLiquide AI 101.20 3.42 -2.36 £ Unilever ULVR 3263.50 0.74 11.52 Feb. Mar. Apr.
Six month -0.13800 0.07200 HK$ ChinaLifeInsurance 2628 19.16 4.93 -23.67 € Allianz ALV 146.70 3.24 -10.30 £ VodafoneGroup VOD 226.80 0.13 2.62
One year -0.01300 0.18000 HK$ ChinaMobile 0941 88.45 2.91 1.09 € Anheuser Busch ABI 108.50 2.17 -5.16 CHF ZurichInsurance ZURN 209.00 2.90 -19.12
Yen Libor AU$ CmwlthBkAust CBA 73.73 2.09 -13.80 £ AstraZeneca AZN 4099.50 1.05 -11.20
DJIA Stoxx 50
One month 0.22643% 0.24143% ¥ EastJapanRailway 9020 9639.00 0.77 -15.82 € BASF BAS 66.92 3.22 -5.37
18235 1.90 -13.50 62.16 2.44 -10.63 Last: 2856.05 s 80.82, or 2.91% YTD t 7.9%
Three month 0.55603 0.38946 ¥ Fanuc 6954 € BNP Paribas BNP 45.27 6.36 -13.34 $ AmericanExpress AXP
Six month 0.88446 0.54071 ¥ Hitachi 6501 503.90 3.34 -27.13 £ BT Group BT.A 444.60 0.06 -5.75 $ Apple AAPL 112.03 1.44 6.43 3150
One year 1.27731 0.84039 TW$ Hon Hai Precisn 2317 83.70 2.07 3.59 € BancoBilVizAr BBVA 5.84 6.11 -12.52 $ Boeing BA 131.14 1.29 -9.30
¥ HondaMotor 7267 3008.00 2.68 -23.07 € BancoSantander SAN 4.06 7.58 -10.97 $ Caterpillar CAT 79.13 3.98 16.44 3000
Offer
KRW HyundaiMtr 005380 148500 1.71 -0.34 £ Barclays BARC 166.80 7.16 -23.80 $ Chevron CVX 97.60 0.09 8.49 2850
Eurodollars
HK$ Ind&Comml 1398 4.32 4.10 -7.69 € Bayer BAYN 105.40 2.78 -8.98 $ CiscoSystems CSCO 28.23 2.13 3.96
One month 0.4500% 0.3500%
46.05
2700
Three month 0.6500 0.5500
¥ JapanTobacco 2914 4729.00 2.67 5.77 £ BP BP. 365.45 2.38 3.23 $ CocaCola KO -1.30 7.18
¥ KDDI 9433 3081.00 3.89 -2.31 £ BritishAmTob BATS 4186.50 0.46 11.02 $ Disney DIS 99.47 2.17 -5.34 2550
Six month 0.9000 0.8000
¥ Mitsubishi 8058 1920.00 4.18 -5.33 CHF FinRichemont CFR 64.60 5.99 -10.40 $ DuPont DD 64.79 0.75 -2.72 2400
One year 1.2500 1.1500
¥ MitsuUFJFin 8306 528.00 4.41 -30.26 CHF CreditSuisse CSGN 14.51 8.12 -33.10 $ ExxonMobil XOM 84.85 0.59 8.85
Latest 52 wks ago
1318.50 2.69 -8.79 $ GenElec GE 30.98 0.57 -0.53 15 22 29 5 12 19 26 4 11 18 24 1 8
¥ Mitsui 8031 € Daimler DAI 63.50 3.59 -18.15
Feb. Mar. Apr.
Prime rates ¥ Mizuho Fin 8411 166.50 2.78 -31.62 € Deutsche Bank DBK 15.37 9.91 -31.79 $ GoldmanSachs GS 159.77 3.54 -11.35
U.S. 3.50% 3.25% ¥ NTTDoCoMo 9437 2649.00 0.93 6.64 € DeutscheTelekom DTE 15.51 1.24 -7.07 $ HomeDepot HD 133.86 -0.39 1.22
Canada 2.70 2.85 AU$ NatAustBnk NAB 26.09 2.07 -13.61 £ Diageo DGE 1921.50 0.92 3.50 $ Intel INTC 32.12 0.82 -6.76
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥ NipponStl&SmtmoMtl 5401 2295.50
4837.00
3.87
2.81
-4.99
0.02
€ ENI ENI 13.48 4.01 -2.32 $
$
IBM
JPMorganChase
IBM
JPM
151.19
61.80
1.05 9.86
4.25 -6.41
Dow Jones Industrial Average P/E: 18
¥ NipponTeleg 9432 £ GlaxoSmithKline GSK 1489.00 0.68 8.45
Policy rates ¥ NissanMotor 7201 1016.50 3.39 -20.55 £ HSBC Hldgs HSBA 448.10 6.67 -16.43 $ JohnsJohns JNJ 109.86 0.24 6.95 Last: 17908.28 s 187.03, or 1.06% YTD s 2.8%
ECB 0.00% 0.05% ¥ NomuraHldgs 8604 489.30 1.62 -27.95 € INGGroep INGA 10.90 5.21 -12.41 $ McDonalds MCD 126.89 -0.56 7.41
$ Merck MRK 55.98 1.16 5.98 18000
Britain 0.50 0.50 ¥ Panasonic 6752 959.00 3.31 -22.69 £ ImperialBrands IMB 3745.50 -1.15 4.43
Switzerland 0.50 0.50 HK$ PetroChina 0857 5.33 7.24 4.72 € IntesaSanpaolo ISP 2.42 8.31 -21.50
$ Microsoft MSFT 55.36 1.30 -0.22 17400
Australia 2.00 2.25 HK$ PingAnInsofChina 2318 37.55 6.07 -12.47 € LVMHMoetHennessy MC 154.55 4.21 6.66
$ NikeClB NKE 59.57 1.74 -4.69
16800
U.S. discount 1.00 0.75 $ RelianceIndsGDR RIGD 31.70 1.12 3.59 £ LloydsBankingGroup LLOY 69.00 3.54 -5.57
$ Pfizer PFE 32.53 1.78 0.77
Fed-funds target 0.25 0.00 47.38 4.52 5.97 $ Procter&Gamble PG 82.48 -0.42 3.87 16200
AU$ RioTinto RIO € LOreal OR 157.65 2.04 1.51
Call money 2.25 2.00 KRW SamsungElectronics 005930 1275000 0.71 1.19 £ NationalGrid NG. 998.50 0.46 6.51
$ 3M MMM 168.61 0.35 11.93 15600
4670.00 2.43 -15.86 $ TravelersCos TRV 115.94 0.65 2.73
Overnight repurchase rates ¥ Seven&I Hldgs 3382 CHF Nestle NESN 71.20 1.50 -4.49 15000
5878.00 2.40 -4.25 $ UnitedTech UTX 104.63 1.50 8.91
U.S. 0.43% 0.22% ¥ SoftBankGroup 9984 CHF Novartis NOVN 72.55 1.11 -16.42
3450.00 4.58 -25.10 $ UnitedHealthGroup UNH 127.78 0.77 8.62 15 22 29 5 12 19 26 4 11 18 24 1 8
Euro zone n.a. n.a. ¥ Sumitomo Mitsui 8316 DKK NovoNordiskB NOVO-B 367.50 0.91 -8.10
96.55 1.85 2.99 $ VISAClA V 79.77 1.59 2.86 Feb. Mar. Apr.
HK$ SunHngKaiPrp 0016 £ Prudential PRU 1404.00 4.39 -8.30
Sources: WSJ Market Data Group, SIX 161.50 1.89 12.94
$ Verizon VZ 51.28 -1.28 10.96 Note: Price-to-earnings ratios are for trailing 12 months
TW$ TaiwanSemiMfg 2330 £ ReckittBenckiser RB. 6845.00 0.75 8.98
Financial Information, Tullett $ WalMart WMT 69.17 0.54 12.84 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL. Thursday, April 14, 2016 | B7

MONEY & INVESTING

Banks Lead U.S. Stocks to Gains RETURN

Continued from page B5
BY SAUMYA VAISHAMPAYAN ing to data from S&P Dow Macri this year reached deals
AND RIVA GOLD Jones Indices. with about 90% of the coun-
The S&P 500 advanced 1% try’s remaining creditors to
The beleaguered banking Wednesday, and the Nasdaq settle the matter, pending the
sector surged Wednesday, Composite rose 1.6%. court’s decision.
pushing the Dow industrials to Shares of CSX were among The nation has been mar-
their highest levels this year. big gainers, rising more than keting a bond offering ex-
The blue-chip index ad- 4% in late trading after the pected next week of between
vanced 1.1% to 17908.28, put- company’s quarterly earnings $10 billion and $15 billion to
ting it within striking distance matched lowered expectations. make good on those payments.
of the 18000 level it hasn’t hit Revenues fell 14% partly on a In addition, Argentine legisla-
since July. 5% decline in volume. tors have voted to remove le-
WEDNESDAY’S That is a In commodity markets, U.S. gal obstacles launched under
MARKETS sharp turn- crude oil fell 41 cents, or 1%, prior presidents that had
around to $41.76 a barrel, a day after barred the nation from negoti-
from Feb- settling at its highest level ating with the remaining cred-
ruary, when the Dow closed at since November amid specula- itors.

LUKE SHARRETT/BLOOMBERG NEWS

a two-year low. tion about a potential agree- In February, Mr. Macri’s ad-
The Dow is now roughly 2% ment on a production freeze at ministration reached a $4.65
away from its record-high a meeting of producers in billion deal with a group of
close of 18312.39 set in May. Doha on Sunday. holdout hedge funds led by El-
European stocks extended Gold futures for April deliv- liott Management Corp. that
their win streak to four ses- ery fell $12.60, or 1%, to helped persuade the U.S.
sions, after stronger-than-ex- $1,246.80 a troy ounce. courts to remove the injunc-
pected Chinese export data in- Oil-related companies rose tion. The hedge funds have
dicated global economic in Europe. Tullow Oil climbed spent more than a decade bat-
growth may not be as weak as Shares of CSX were among big gainers, rising more than 4% in late trading. 11%, Total added 4%, and Sta- tling Argentina for payment.
feared. toil gained 3%. Under the agreement, if the
The Stoxx Europe 600 index Morgan shares jumped 4.4% in into its third month. ters of the companies in the Treasury prices rose, with hedge funds aren’t paid by
jumped 2.5% to end at 343.06. late trading, and the KBW “Expectations are lowered, S&P 500’s financial sector, ac- the 10-year yield falling to Thursday, they can walk away
Eurozone shares also got a Nasdaq Bank Index of large and then they are met. That’s cording to FactSet. Low inter- 1.760% from 1.781% on Tues- from the deal. Attorneys for
lift as the euro fell against the U.S. commercial lenders ad- a short-term game in my est rates, regulation and expo- day. those hedge funds told the
dollar, trading at $1.1285 vanced 3.8%, paring the in- mind,” said Anwiti Bahuguna, sure to the troubled energy Chinese exports expanded panel of judges on Wednesday,
Wednesday afternoon in New dex’s 2016 decline to roughly senior portfolio manager at sector have cast a shadow in March for the first time in however, that they were will-
York from $1.1388 late Tues- 9%. Columbia Threadneedle In- over bank shares this year, nine months, data from the ing to wait for the bond issue
day. The bank-fueled gains re- vestments, which oversees making the financial sector General Administration of Cus- expected next week rather
Eurozone industrial output flect one issue the broader $472 billion. For stocks to the worst performer in the toms showed, helping soothe than unwind the deal.
fell more than expected in market faces as it climbs. Pro- rally over the longer run, it S&P 500. concerns about the world’s The money would be wired
February, data from the Euro- jections for first-quarter earn- would take more-optimistic “You don’t need financials second-largest economy. directly from banks leading
pean Union’s statistics agency ings are bleak, so results that corporate guidance, including to lead a bull market, but for But global growth concerns the country’s bond deal to the
showed, but remained on track beat expectations could propel a sense of when companies ex- the market to go up a bit, they linger. The International Mon- hedge funds without reaching
to post a first-quarter gain. stocks. pect their earnings to rise, as have to be at least OK,” said etary Fund cut its outlook for Argentina, attorneys said.
In the U.S., better-than-ex- But even if earnings clear a well as better economic data, John Manley, chief equity the world economy on Tues- Argentine officials have
pected earnings from J.P. lowered bar, the results are she said. strategist at Wells Fargo day. been meeting with investors in
Morgan Chase, the largest expected to be far from rosy, Heading into earnings sea- Funds Management. The fi- Japan’s Nikkei Stock Aver- New York, London, Washing-
U.S. bank by assets, ignited which could create headwinds son, analysts cut their expec- nancial sector is the second- age ended 2.8% higher as the ton and Los Angeles this week
gains in financial shares. J.P. for a rally that is stretching tations for almost three-quar- largest in the S&P 500, accord- dollar rose against the yen. to market the bonds.

CORN doubled in the first two

months of this year versus
year-ago levels. Argentine
grain imports rose 122% dur-
Continued from page B5 ing that time, after the coun-
to harvest its second-largest try’s newly elected govern-
corn crop on record, as is Ar- ment lifted currency controls
gentina. in December—sparking a de-
Exporters in Argentina were cline in the peso—and elimi-
offering corn at a roughly 6% nated export taxes on agricul-
discount to U.S. supplies ear- tural commodities including
lier this year, and Brazilian corn.
corn was cheaper than its U.S. “It’s crazy that we’re able to
counterpart for much of last bring in corn from South
year. America a lot of times cheaper DAVE KETTERING/ASSOCIATED PRESS

A divergence in shipping than U.S. corn, but it’s only be-

costs has further amplified the cause rail rates are so ridicu-
appeal of overseas grain. lously high,” said John Pre-
Weak demand coupled with stage, senior vice president at
a growing number of new sea- Prestage Farms, a hog and tur-
faring vessels has pushed key producer in Clinton, N.C.
down ocean freight rates, ac- Tom Capehart, an agricul-
cording to grain traders. But tural economist at the USDA,
rates for U.S. railroads, the said corn imports may slow.
main mode of cross-country U.S. growers have been hoard- Midwestern U.S. farmers have grown more corn to satisfy demand from abroad and from the biofuels industry at home.
transport for U.S. grain, have ing corn in storage bins across
remained stubbornly high, the Farm Belt, reluctant to corn traded in Chicago. also helped prompt an in- raises and sells about 16 mil- relative cost of ocean freight
they say. market their crops at low But Brazilian corn is grow- crease in U.S. exports. lion hogs annually, in 2002 and domestic rail freight.” But
In April, it could cost about prices, but many will soon ing less competitive now as But U.S. grain likely will opened an import terminal in Smithfield prefers to buy U.S.
80 cents to $1.50 a bushel to have to increase sales to make shrinking supplies and a re- struggle to remain competitive Wilmington, N.C., that enables grain “whenever possible,” she
ship corn from west to east in way for this year’s harvest, bound in that country’s cur- on the global market, accord- the company and other live- added.
the U.S. by rail, while per- which could cause imports to rency have boosted prices for ing to analysts. Farmers in stock producers to ship in for- Of the growing competition
bushel costs to ship corn from subside. the grain. Brazil and Argentina often can eign-grown grain. to U.S. corn, Dan Basse, presi-
South America to the U.S. re- Global trends also can shift. Recently, the economics ha- produce corn more cheaply A spokeswoman said Smith- dent of Chicago commodities
cently have ranged from about Last year, abundant supplies ven’t favored importing grain. than domestic growers. field’s grain imports “have in- firm AgResource Co., said, “It’s
35 cents to 50 cents. and a tumbling real sent corn U.S. corn prices fell to a nearly Smithfield, Va.-based creased over the past year, due a structural problem, and it’s
Corn imports more than prices in Brazil 10% below U.S. three-year low in March, which Smithfield Foods Inc., which to currency valuations and the not going away anytime soon.”

BANK BROWN when given the chance.

There will likely be plenty
more to buy: The Chinese
bond market has grown 22%
Even without the markets,
the global financial system is
heavily exposed to China via
the banks. Bank lending into
Continued from page B5 Continued from page B5 a year for the past five China grew five times from
5% decline in assets the bank tioning by Chinese authori- years, according to the IMF. 2010 to 2015 to $1 trillion,
manages for clients. ties. The opening of the bond according to the IMF.
As oil prices traded below His disappearance market comes after China With that much exposure,
$40 a barrel, the struggles knocked down the prices of has allowed foreigners to turmoil in the Chinese econ-
faced by clients in energy and Fosun’s bonds and stock, and buy its stocks and trade its omy could cause big losses
other commodity-intensive in- Fosun terminated two for- currency, though always on at the world’s banks. Big
KEVIN WOLF/ASSOCIATED PRESS

dustries compounded the chal- eign deals soon after. Beijing’s terms. banks have a unique talent
lenges in capital-markets busi- It isn’t hard to imagine in- Both of those markets for spreading contagion.
nesses. vestors losing confidence in were opened as part of Then there’s the yuan.
The bank set aside $1.82 a financial firm whose execu- China’s efforts to liberalize When the Chinese currency
billion in the first quarter to tives have disappeared into its capital markets. China is was appreciating, investors
cover loans that could poten- government custody. opening its bond market for piled into yuan-denominated
tially turn bad, nearly twice For years, China’s domes- a different reason: to get for- bonds and businesses in-
what it set aside a year earlier. tic stock, bond and currency eigners to help deal with its creasingly used the yuan for
That increase was primarily CEO James Dimon said U.S. consumer-credit trends are favorable. markets have been largely huge debt load. trade. That ended when the
driven by downgrades to loans closed to foreign investors, That is the problem with yuan tumbled.
in the bank’s oil, gas, metals a profit of $587 million, up agree with them. providing a global firewall China getting more deeply China knows it needs to
and mining portfolios. from $502 million. “It’s in everyone’s best in- that protected the rest of the involved in the global finan- keep its economy growing,
Profit at J.P. Morgan’s cor- The bank recorded no mate- terest to end the debate on world from China’s ups and cial system. but so far the only way that
porate and investment bank rial legal costs for the first too-big-to-fail,” she said. downs. In China, stability and po- has worked is by borrowing
was $1.98 billion, a 22% drop quarter, which hadn’t hap- The New York bank’s profit- That too is eroding. China litical goals have long over- more. That poses risks to the
from $2.54 billion a year ear- pened in two years. J.P. Mor- ability has suffered of late is opening its $6.7 trillion shadowed financial realities. bond market, to companies
lier. gan has paid out billions of largely because of tougher bond market—the world’s China wants to spread the that have invested abroad
The company’s commercial dollars in settlements in re- capital requirements. J.P. Mor- third-largest—as it tries to risk of its markets to the and to banks that have lent
bank earned $496 million, a cent years, but Chief Executive gan has responded by cutting spread the risk from its world. in China.
17% fall from $598 million. James Dimon recently wrote in costs and assets in an effort to credit binge. But its markets aren’t One solution to boost
Trading revenue fell 11% to his annual shareholder letter reduce a regulatory burden While credit ratings and truly markets as we under- growth would be to devalue
$5.17 billion from $5.81 billion. that many legal and regulatory that increases as a bank grows bankruptcy protection are stand them—they are but an- the yuan. If Beijing decides
Daniel Pinto, head of the issues that J.P. Morgan and the larger. not to be relied on in China, other political tool to be another devaluation is
corporate and investment banking industry have faced Return on equity, a measure many yield-seeking Western used by the central govern- China’s best hope, expect a
bank, said in mid-February are beginning to dissipate. of profitability, was 9% in the investors say they will buy ment. rerun of last summer.
that trading was already down Still, the announcement first quarter, compared with
20% in the quarter because of that the Federal Reserve and 11% a year earlier. J.P. Morgan
debt and equity capital-mar-
kets activity.
Federal Deposit Insurance
Corp. had taken issue with J.P.
has faced more-forceful ques-
tions from analysts, investors
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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B8 | Thursday, April 14, 2016
Email: heard@wsj.com
Tesco Could Be a Hidden Bargain
Tesco’s full-year results
were the financial equivalent
of oatmeal—dull but whole-
some.
Investors hoping for a
more sugary confection to
break years of fast sent the
shares down sharply Wed-
nesday. But this could mean
a buying opportunity for
those with patience.
The market’s appetite
started building—and the
share price started rising—in
January, when Britain’s larg-
est grocer reported 1.3% like-
for-like sales growth in its
home market for the all-im-
portant Christmas period.
This may not sound like
much, but it was the best fig-
ure for five years. At 0.9%,
like-for-like growth in the
whole fourth quarter through
February suggests the posi-
tive trend continues—albeit
at a less festive pace.
Growth in the interna-
tional business, which ac-
counts for about one-third of
profits, also is accelerating.
Like-for-like sales rose 4.1%
in Eastern Europe, where the
company has restructured its
four national operations un-
Getting the Right Information to Clear Up IPO Confusion
U.K. company officers
have pronounced themselves
generally happy with invest-
ment-banking services.
These are grown-up profes-
sionals who shouldn’t be in
their jobs if they aren’t capa-
ble of looking after the inter-
ests of their firms and inves-
tors.
The hundreds of pages of
analysis on competition in
investment banking from the
U.K.’s Financial Conduct Au-
thority can thus be safely
trashed.
The shock disclosures that
league tables are marketing
tools with limited value or
that balance-sheet banks use
cheap lending to try to
win investment-banking
Two Convicted in Bank-Secrets Case RULES
BY JOHN REVILL
ZURICH—A Swiss politician
and a former bank IT em-
ployee were convicted of
breaching Switzerland’s strict
banking secrecy rules by hand-
ing over information that trig-
gered the resignation of the
country’s most senior central
banker four years ago.
The bank worker was fined
1,350 Swiss francs ($1,413),
with that fine suspended for
two years. The politician, Her-
mann Lei of the Swiss People’s
Party, or SVP, was fined 40,800
francs, also suspended for two
years. Prosecutors had sought
a one-year jail sentence for the
bank worker and a fine of
19,800 francs for the politician.
The decision on Wednesday
by judges at Zurich district
court brings toward conclusion
a 4½-year saga that rocked
Switzerland and reverberated
through global central banks
more broadly.
Philipp Hildebrand resigned
as chairman of the Swiss Na-
tional Bank in January 2012
after his personal bank records
were leaked to the Swiss me-
dia.
The records showed a cur-
rency trade valued at more
than $500,000 by his then-
wife on Aug. 15, 2011, days be-
fore the Swiss central bank in-
tervened in currency markets
Finance
Watch
WARBURG PINCUS
Firm Takes a Stake
In British Retailer
Warburg Pincus LLC, a New
York-based private-equity firm
with more than $40 billion un-
der management, said it has
agreed to buy a majority stake
in Reiss Holdings, valuing the
British fashion retailer at £230
million ($328 million).
Reiss was founded in 1971 by
HEARD ON THE STREET
Margin Call
Tesco’s forward price/earnings
multiples
25 times
20
15
10
5
0
2013 ’14 ’15
Sources: FactSet; Reuters (photo)
THE WALL STREET JOURNAL.
der one roof and used the
cost savings to cut prices.
Some key numbers did fall
short of expectations: Pretax
profits were hit by noncash
interest charges, for exam-
ple, and banking profits suf-
fered from regulation. But
what really disappointed the
market was the outlook
statement. This referred to a
“challenging, deflationary
and uncertain” market and
hinted that the profit margin
wouldn’t continue to im-
Top Sellers
Bank revenue from initial public
offerings in the U.K.
$800 million
600
400
200
0
2006 ’08 ’10 ’12 ’14
Source: Dealogic
THE WALL STREET JOURNAL.
business will surprise no
one. The regulator hardly
needs to ride to the rescue
of Goldman Sachs or Mor-
gan Stanley on the latter
point.
A more interesting area is
A leak of records triggered the resignation of Swiss central-bank chief Philipp Hildebrand in 2012.
to weaken the franc in the
summer of 2011.
Less than one month later,
the SNB set a ceiling on how
high the franc could trade
against the euro.
The controversy not only
triggered the resignation of
Mr. Hildebrand—who had
overseen the SNB’s strategy
during the financial crisis and
was a rising star in global pol-
icy-making circles—but also
involved politicians who were
accused of violating Switzer-
land’s banking secrecy laws.
David Reiss, who will keep a mi-
nority stake in the business and
stay on as chairman and chief
executive, Warburg Pincus said.
Reiss operates in 160 locations
in 15 countries and had sales of
£146 million in the 12 months to
Jan. 31.
Warburg Pincus said it plans
to expand the company globally,
particularly in North America,
Asia and Australia.
—Simon Clark
FCA
Acting CEO Will
Leave U.K. Regulator
Tracey McDermott, acting
chief executive of the U.K.’s Fi-
nancial Conduct Authority, is set
to depart from the regulator
FINANCIAL ANALYSIS & COMMENTARY
’16
A Tesco Extra in Woolwich,
southeast London
prove on a straight-line path.
This is crucial because
Tesco’s shares trade on a re-
covery multiple of about 21
times forward earnings, ac-
cording to FactSet, a big pre-
mium to other retailers. This
is justifiable, even cheap, if
you believe the company’s
operating margin can bounce
back within your investment
time frame. Last year’s pat-
tern—a U.K. margin of 0.8%
in the first half, 1.6% in the
second—suggests rapid prog-
the FCA’s views on initial
public offerings and particu-
larly on the dissemination of
information about companies
looking to list.
Cozy arrangements mean
only analysts from banks in-
volved in IPOs get to meet
management and publish re-
search. Also, final prospec-
tuses aren’t made public un-
’16 til the last minute. Both
things hand float sponsors
too much control in the mar-
keting process.
There may be cases in
which companies decide ulti-
mately not to list and thus
would want their financial
details to remain private. But
this seems a small price to
pay to ensure that when
MONEY & INVESTING
The former IT specialist at
Bank Sarasin was accused of
giving the details of the cur-
rency transactions to Mr. Lei, a
politician in the right-wing
Swiss People’s Party, who al-
legedly discussed the informa-
tion with a senior politician
before it reached the media.
Among those politicians im-
plicated was Christoph
Blocher, vice president of the
SVP and a former member of
Switzerland’s cabinet. His
home and office were searched
by Zurich state prosecutors in-
when its new permanent head
starts on July 1.
Ms. McDermott, a former di-
rector of enforcement and finan-
cial crime for the FCA, held the
role of acting head of the mar-
kets regulator following the de-
parture of Martin Wheatley in
September 2015. She had been
considered a strong candidate
for the permanent position.
It was announced in January
that she had withdrawn her can-
didacy but would remain as act-
ing head until a new CEO was in
the post.
A spokeswoman for the FCA
said it was Ms. McDermott’s
personal decision to leave and
that she didn’t have any imme-
diate plans.
—Darren Lazarus
THE WALL STREET JOURNAL.
OVERHEARD
ress as like-for-like growth U.S. companies’ overseas
has returned. But now man-
agement is asking for time.
The core problem for
operations probably won’t
face as challenging an envi-
ronment this year as last. But
Tesco is the ultracompetitive that isn’t saying much.
U.K. grocery market. This The International Mone-
has fragmented over the tary Fund on Tuesday again
past half-decade as consum- cut growth forecasts, saying
ers have started using a it now expects global gross
greater variety of shops, domestic product to gain
most notably the German 3.2%. That is just over last
discounters Aldi and Lidl, year’s 3.1%, the worst since
but also upmarket grocers, 2009, when global GDP
online companies and conve- slipped 0.05%. But the IMF
nience stores of all kinds. figures are adjusted for infla-
Tesco, the ultimate one- tion and the purchasing
stop shop, is winning back power of countries’ curren-
some customers with lower cies. At a time of low infla-
prices and better service, but tion and dollar strength, that
its position remains fragile. makes a big difference. Put
There is no doubting the GDP figures into U.S. dollars,
stormy trading conditions in and don’t adjust for inflation
the U.K. grocery market. Yet and the IMF expects global
Tesco is almost twice as GDP to grow just 1.1% this
large as any other U.K. su- year after falling 6% in 2015—
permarket chain, and the worst year on record.
should—eventually—be able Much of last year’s weak-
to use that scale to make a ness came outside the U.S.
market-leading margin. The Excluding the U.S., nominal
company’s new management global GDP fell 8.7%. This
team is finally showing it year, the IMF expects 0.4%
can win back shoppers while growth. But investors should
improving margins. Winning remember IMF estimates are
back investors is then but a often too high.
small step.—Stephen Wilmot
trading in a newly listed problem arises if favorable
company begins, the stock allocations beget financial
enters a well-informed mar- advantage either through too
ket where early investors much control of stock—cor-
aren’t able to unduly benefit nering a market—or through
from a quick flip. knowing more than the
That also plays to an- smaller guy who hasn’t been
other point: the regula- part of the process but still
tor wants to examine IPO al- wants to own the stock or
locations to ensure that bond.
favored clients don’t get too Sponsors of stock or bond
much special treatment deals have a duty to ensure
when it comes to deciding that their work leads to a
who gets shares. This is an functional market and that
issue that also has been insiders or early investors
raised elsewhere about bond don’t get to exploit any ad-
allocations. vantage in a sale. Informa-
The problem here is tion as the FCA recognizes is
surely not that regular trans- the answer.
actional relationships beget Beyond that, all’s fair in
more transactions—that is a love and listings.
fact of all business life. The —Paul J. Davies
should do with it,” said Viktor
Györffy, an attorney for the
former bank employee. “He
was seeking legal advice and
didn’t do it for personal gain,”
he said, citing the lightness of
the sentence imposed by the
court. A spokeswoman for
Sarasin declined to comment.
“I do not agree with the
court’s decision and will prob-
ably appeal against it,” Mr. Lei
said.
Mr. Hildebrand, who was
KRISZTIAN BOCSI/BLOOMBERG NEWS
cleared of any wrongdoing fol-
lowing three separate investi-
gations, has since become a
London-based vice chairman of
BlackRock Inc. He declined to
comment through a BlackRock
spokesman.
Mr. Hildebrand, 52 years
old, had spent more than nine
years at the Swiss National
Bank before stepping down,
vestigating the affair. the last two as chairman.
Mr. Blocher, who is credited In that role, he stirred the
with transforming the SVP antipathy of some Swiss politi-
into the strongest force in cians, including Mr. Blocher,
Swiss politics, hasn’t been ac- who thought the central
cused of any wrongdoing. banker was too high profile,
“Both men came to me to ask while the interventions to
for advice,” Mr. Blocher said in weaken the currency put the
an interview last week. “The bank at risk of racking up
motives of the two men need large losses.
to be looked at. I believe they He was succeeded by
acted with the most honorable Thomas Jordan, who remains
intentions.” SNB chairman. In January
“My client found this infor- 2015, the SNB abandoned the
mation and went to Mr. Lei to ceiling it had set on the franc’s
get his advice on what he value against the euro.
IMF whose profits don’t cover their
A Warning on Debt interest payments, a problem
that could trigger bank losses
In Emerging World
Debt burdens of big compa-
equal to 7% of gross domestic
product if the issue isn’t ad-
nies in China and other emerg- dressed, the IMF said.
ing markets could spread trouble “Despite progress on eco-
across borders and weigh on the nomic rebalancing, corporate
global financial system, the In- health in China is declining due
ternational Monetary Fund to slowing growth and lower
warned. profitability,” said José Viñals,
The ballooning debt of giant the IMF’s top financial counselor.
firms in fast-growing economies Meanwhile, in Brazil and Rus-
is of particular concern because sia, national champions have
of companies’ close ties to been hit by falling commodity
banks in those countries, as well prices and economic contrac-
as the national governments tions. “The sharp fall in com-
that are likely to be on the hook modity prices has exacerbated
to bail them out. both corporate and sovereign
In China, $1.3 trillion of corpo- vulnerabilities, keeping economic
rate loans, or one-seventh of the and financial risks elevated,” Mr.
total, are owed by companies Viñals said. —William Mauldin
WSJ.com/Heard
Stocks and
Bonds See
Wider Gap
The relationship between
bonds and stocks in a world
distorted by central-bank
policy is a complicated one.
Nevertheless, the perfor-
mance of the two asset
classes this year is beginning
to raise some questions.
For the first six weeks of
the year, stocks fell and
bonds rallied as risk aversion
mounted. By Feb. 11, the S&P
500 was down 10.5%, while
U.S. Treasurys were up 3.7%;
long-dated U.S. bonds matur-
ing in 25 years or more were
up a whopping 10.75%, ac-
cording to Barclays indexes.
But that marked the low
for stocks. The S&P 500 has
gained 13.9% since then, and
is back in positive territory
for the year. Yet bonds still
are close to their highs:
Treasurys as a whole are up
3.3% while long-dated bonds
are still up 9.1%. Ten-year
Treasury yields are 0.5 per-
centage point lower than at
the start of the year. The
disconnect is clear.
True, there has been a
further wave of central-bank
action, most notably from
the European Central Bank.
Eurozone bond yields are
close to their lows, poten-
tially acting as an anchor for
U.S. bond yields. And the
Federal Reserve appears in
no hurry to raise rates.
The balance between
stocks and bonds is discon-
certing—although it is hard
to tell who is right and who
is wrong. Bond yields look
remarkably low, but betting
against them staying low has
burned investors several
times now; risk appetite re-
mains fragile. On the other
hand, inflation isn’t quite as
quiescent as investors might
be hoping, a particular con-
cern for long-dated bonds.
Markets sometimes make
everyone happy. But it does-
n’t last. —Richard Barley
Continued from page B5
FCA said. One idea to counter
this: lower barriers of entry
for nonuniversal banks into
the market. This could be done
by banning the use of con-
tracts that restrict clients’
choice of investment banks on
future transactions.
Listing new companies is a
particular area of focus. In-
vestment banks that work on
new listings often have a near
monopoly on information. The
problems include a typical 14-
day lag between when banks
supporting an IPO publish re-
search on the company and
when the approved prospectus
comes out, the FCA said. It
suggested the prospectus
should come out first.
The FCA questioned
the use of
investment-banking
league tables.
One solution the FCA pro-
posed is that analysts at banks
that aren’t working on the IPO
should also have access to top
management at the business
that is being floated. Banks
should also be able to show
they aren’t just allocating
shares to their top clients, it
said.
The FCA questioned the use
of investment-banking league
tables that are often used by
banks to market their abilities
to clients. Often these tables
are misleading because they
include money-losing deals the
banks undertake to boost their
rankings. The FCA wants the
tables to be more reliable. One
idea is to make banks declare
which deals lost money.
The regulator said it may
investigate “reciprocity” be-
tween banks. This is when a
bank hands another a mandate
based on how much business
the other bank will push its
way.
The review has sparked
much hand-wringing in Lon-
don among banks that claim
the market is already highly
competitive. A final report is
expected this summer.