For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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The Next American
Conservative Movement
REVIEW | A9
DJIA 17897.46 g 0.16%
What’s
News
Business & Finance
M ajor oil producers
failed to reach a deal
to freeze crude output in
the face of falling oil prices
at a meeting in Doha. A1
 A glut of gas coming onto
world markets is handing
pricing power to buyers. B5
 Emerging-market bank-
ers are bracing for renewed
financial volatility as they
await the Fed’s next move. A1
 Rate cuts by developing
countries have helped
boost emerging markets. B5
 The Dow is nearing a
record high after a bank
rally last week lifted the
industrials to 17897.46. B5
 Mideast airlines have
been hurt by the drop in oil
prices as corporate travel
by energy firms declines. B1
 T. Rowe Price marked
down the value of most of
its stakes in private tech
companies last quarter. B3
 Goodrich filed for bank-
ruptcy protection as the
crude slump claimed another
oil and gas producer. B4
 Chinese investors are de-
manding money back from
Kualilu as a crisis rocks
China’s “shadow banks.” B5
 Leading Brazilian firms
are selling assets on the
cheap amid an economic
and political meltdown. B7
 Disney’s “Jungle Book”
opened to strong world-wide
gross of $239.7 million. B2
World-Wide
 European officials worry
about weak counterterror-
ism links after the failure to
break up the network be-
hind the Paris attacks be-
fore it struck Brussels. A1
 A Russian fighter inter-
cepted a U.S. Air Force plane
over the Baltic Sea. Moscow
and Washington disputed
accounts of the incident. A3
 The pope’s decision to
bring some refugees to Rome
was among the most provoc-
ative yet by a pontiff who has
stressed migrants’ rights. A3
 A quake in Ecuador killed
hundreds and destroyed
homes, bridges and roads. A6
 Temblors in Japan’s
Kyushu area have displaced
thousands of people. A6
 The EU pressed Iran to
use its influence with Syria
to help advance peace talks
that resumed Friday. A3
 Presidential front-run-
ners from both parties are
viewed unfavorably by U.S.
voters, a new poll found. A7
Brussels Attacks
Inside Expose Breakdowns
EUROPE FILE A2
Greek Risk
Hangs Over U.K.
Vote on EU
CONTENTS
Business & Tech. B1-4
Crossword.............. A14
Europe File............... A2
Heard on Street.... B8
Markets Digest..... B6
Masterpiece.......... A14
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Ecuador Mobilizes Rescue Efforts in Aftermath of Earthquake
DOLORES OCHOA/ASSOCIATED PRESS
GRIEVING: People near the ruins of houses on Sunday in Pedernales, one of the towns most affected by Saturday’s quake, which
destroyed buildings, bridges and roads and left hundreds dead. As rescue work continued, the toll was expected to increase. A6
Bankers Brace for Fed Move
Patience on rates
gives emerging
markets breathing
room, for now
BY DAVID HARRISON
WASHINGTON—The Fed-
eral Reserve’s latest show of
patience bought many emerg-
ing-market economies some
breathing room. But worries
are already rising that it
Pope Welcomes Refugees to Rome
FILIPPO MONTEFORTE/PRESS POOL/REUTERS
TOUCHDOWN: Three Syrian families totaling 12 members landed
in Rome on Saturday after Pope Francis decided to bring migrants
back with him from Lesbos following a visit to a refugee camp. A3
BY JULIAN E. BARNES
AND STEPHEN FIDLER
BRUSSELS—The failure to
break up the network respon-
sible for the Paris attacks be-
fore it struck Brussels has
Money & Inv..... B5-8 raised urgent questions in Eu-
Opinion.............. A12-13
Review.................. A9-11
ropean capitals about the weak
Technology............... B3 coordination among their
U.S. News.................. A7 counterterrorism authorities.
Weather................... A14 The problems are long-
World News....... A2-6
standing: security agencies
that jealously guard their se-
crets and sources, even some-
times from other agencies in
their own country, and a lack
of information-sharing be-
tween police and intelligence
services.
Across the Continent,
smaller European nations have
had struggles similar to Bel-
gium, where intelligence agen-
MONDAY, APRIL 18, 2016 ~ VOL. XXXIV NO. 54
STOXX 600 342.79 g 0.35%
won’t be enough to cushion
them from the next jump in
interest rates.
Emerging-market finance
ministers and central bankers,
who gathered in Washington
in recent days for the Interna-
tional Monetary Fund’s spring
meetings, said they were brac-
ing themselves for renewed fi-
nancial volatility. Economists
expect another move from the
Fed in mid-June.
“It’s going to happen and
the emerging economies
cies have suffered budget cuts
from successive governments.
In Brussels, said Alain
Winants, the former head of
Belgium’s State Security Ser-
vice, there is “a lack of an in-
telligence culture,” adding,
“James Bond could never be a
Belgian.”
Mr. Winants argues that bi-
laterally, European intelligence
services are sharing critical in-
formation with Belgium. But
European Union and U.S. offi-
cials say they believe far more
must be done to break down
walls between various intelli-
gence agencies and law en-
forcement.
Belgian Prime Minister
Charles Michel has repeatedly
called for a European version
of the Central Intelligence
Please see TERROR page A3
Europe Can’t
Rely on Germany
To Save It
OPINION | A12
WSJ.com EUROPE EDITION
OIL 40.36 g 2.75% GOLD 1233.10 À 0.66% EURO 1.1303 À 0.30% DLR ¥108.73 g 0.62%
Meeting
Fails to
Achieve
A Freeze
On Crude
DOHA, Qatar—Oil produc-
ers that supply nearly half of
the world’s output failed to
reach a deal on Sunday to
freeze crude output in the face
of falling oil prices.
By Benoit Faucon,
Summer Said
and Bill Spindle
The much-anticipated meet-
ing of Organization of the Pe-
troleum Exporting Countries
members and other major oil
producers, such as Russia,
started a day of negotiations
over a possible freeze with
what participants described as
a draft deal.
But the meeting quickly
turned to sniping and confu-
sion, after Saudi Arabia’s dele-
gation appeared to step back
from any agreement without
participation by geopolitical
rival Iran.
Ahead of the meeting, dele-
gates circulated a draft accord
should be prepared,” Mexican ing markets toward safer that called for freezing output
Finance Minister Luis Videga- shores. at January levels until Oct. 1, to
ray said in an interview. After months of market un- gauge its effect on prices. The
“We’ve prepared ourselves but rest, the Fed last month freeze, first suggested in Febru-
still it’s going to have an im- scaled back its projections to ary, was intended to limit global
pact.” only two rate increases this supply and bolster prices.
The Fed in December raised year, citing risks from “global The draft, reviewed by The
its interest-rate target by a economic and financial devel- Wall Street Journal, called for
quarter percentage point, its opments.” That calmed inves- a monitoring committee com-
first move in seven years, and tors and sent many back into prising members of OPEC and
indicated plans for four more emerging economies. other countries that would be
increases this year. The action Please see FED page A2 Please see OIL page A2
contributed to global financial
volatility and sparked out-  Lower rates boost returns in  Natural-gas glut gives buyers
flows of money from emerg- emerging markets ................. B5 more power................................. B5
IN BRAZIL, TWO TAINTED
LEADERS FACE OFF
Lawmaker seeking vote on President Dilma Rousseff is under indictment
BY JOHN LYONS porters that day.
Mr. Cunha was poised to make history by
BRASÍLIA—Eduardo Cunha, leader of the bringing the impeachment vote against Bra-
lower house of Brazil’s congress, had a hec- zil’s president to a floor vote Sunday. If it
tic day on Dec. 15. Federal police raided his passes by two-thirds, she faces a trial in the
home around 6 a.m. seeking evidence he had Senate. Ms. Rousseff would be the second
received kickbacks in a wide-ranging embez- president impeached since Brazil’s 1985 re-
zlement scandal relating to the state oil turn to democracy, deepening political un-
company Petrobras. certainty in a country that also faces a se-
Hours later he was in congress, impecca- vere economic contraction.
bly dressed in a blue suit, vowing to move All the while, Mr. Cunha’s own legal battles
forward with his top legislative issue, a mo- continue. Brazil’s attorney general brought
tion to impeach Brazilian President Dilma charges of corruption and money-laundering
Rousseff for allegedly using accounting against him last summer, adding new allega-
tricks to mask deficits. Please see BRAZIL page A8
“I wake up at 6 a.m. My door is always
open. I have no problem with this,” Mr.  Some investors are snapping up assets as big
Cunha, a talkative former radio host, told re- Brazilian companies try to cut debt................... B7
Nothing Says ‘I Love You’ Like a Rodeo
i i i
In Madagascar, savika bull riders win dating game
BY PATRICK MCGROARTY Madagascar like hanging on to they impress young female fans
IMADY, Madagascar—Nirina
a snorting, bucking bull. That’s while they are at it. (Women
the object of savika, a bull-rid- riders weren’t seen in Imady.)
Toto slunk across the muddy
ring and leapt aboard his un-
ing sport dating to the 18th “It’s so risky!” said 18-year-
century whose name means old Herysoa Wahangy, wide-
suspecting adversary, 1,000
pounds of hoof and horn, with
“embrace” in the local Mala- eyed as she watched Mr. Toto
gasy language. shimmy up the
a lumpy flour-sack hump. Savika is a fixture wooden railings
For 10 seconds, the bull of the dating scene away from a dis-
crashed to and fro across the here in the high hills agreeable bull’s long
40-foot pen while Mr. Toto of this tropical island curved horns. Other
clung on. With a decisive off Africa’s eastern cowboys weren’t so
heave, the bull threw Mr. Toto coast. Wrestlers and lucky and ended up
free, and the crowd of hun- the young women with gashes on their
dreds jammed shoulder to they are courting legs and torsos that
shoulder above the sunken en- agree there are few Savika bull rider required treatment
closure cheered. better ways to dazzle at a nearby clinic.
“I’m trying to be one of the a potential partner than with a During the biggest savika ro-
best,” Mr. Toto said before re- few seconds of bovine bravery. deos, dozens of men gather for
turning to wrestle three more Unlike American bull riders, their turn being tossed around
bulls during a daylong tourna- who climb on while the animal by hulking brown, white and
ment in a verdant mountain is penned in, savika wrestlers speckled cattle. Their sparring
pasture. “It’s a good way to start from the ground—bare- partners, bulls of the zebu
impress girls. I hope I find one foot. They use stealth and breed common across Asia and
today.” strength to grab and hold on to parts of Africa, boast a lopsided
Nothing says “I love you” in the bull’s high hump. Hopefully, Please see SAVIKA page A8
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 | Monday, April 18, 2016
Greek Risk Hangs Over British Vote on EU
EUROPE FILE
SIMON NIXON
WASHINGTON—With two
months to go until Britain’s
referendum on whether to
leave the European Union,
the bloc is determined to get
its house in order. Nothing
must be allowed to happen
between now and June 23
that might boost the cam-
paign for a British exit, or
“Brexit”—an outcome that
the International Monetary
Fund last week predicted
would trig-
ger a “severe
regional and
global
shock.”
The first
step in this
cleanup operation was last
month’s EU-Turkey deal, an
arrangement that for now, at
least, has mostly stopped the
flow of new migrants into
the EU, defusing a crisis that
was proving a gift to the Br-
exit campaign. But the next
item of unfinished business
is Greece’s latest standoff
with its international credi-
tors over its bailout program,
which if left unresolved
threatens to reach boiling
point when a bond redemp-
tion falls due in June—just as
Britons go to vote.
Despite efforts to break
OIL
Continued from Page One
charged with ensuring compli-
ance.
Ryadh had publicly signaled
it wouldn’t consider a freeze
without Iran. Saudi Crown
Prince Mohammed bin Salman,
the country’s top economic of-
ficial, repeated that view over
the weekend, in an interview
with Bloomberg News pub-
lished Saturday.
That tone contrasted with
the kingdom’s delegation here,
led by longtime Saudi Oil Min-
ister Ali al-Naimi. He landed in
Doha on Saturday and declined
to comment ahead of the meet-
ing. But people familiar with
the Saudi delegation’s thinking
said Riyadh was willing to sign
a deal despite what they de-
scribed as political statements
from Prince Salman.
Later Sunday, Mr. Naimi’s
delegation changed its tune and
insisted on Iranian participa-
tion after all, two delegates fa-
miliar with the matter said. The
switch was “surprising and
contradicts what they have
been saying for the last few
days,” according to one Persian
Gulf oil official in Doha familiar
with the new stance.
Going into the meeting the
key sticking point had always
been Iran. It was also uncer-
FED
Continued from Page One
“At the beginning of the
year there was this sentiment
that the Fed was going to
push forward no matter
what,” said Mr. Videgaray.
“They are data-dependent and
part of the data they look at is
the global economy and that
became very clear in February.
That put a lot of people at
ease.”
In Mexico, the early-year
volatility in financial flows,
combined with low oil prices,
pushed the Mexican peso to
record lows against the dollar
in February. That prompted a
rare coordinated move from
the government announcing
spending cuts worth 0.7% of
gross domestic product com-
bined with a surprise rate in-
crease by the central bank.
The peso has stabilized since
then and inflation has re-
mained within the central
bank’s target.
Still, Mr. Videgaray said he
remained wary of the next Fed
move. “The most important
threat that we are facing is
the high volatility and fragil-
ity of financial flows,” he said.
Raghuram Rajan, head of
the Reserve Bank of India,
said the Fed’s pause has
“helped take a little bit of
pressure off.” Now, he said in
an interview, the question is
the impasse on the sidelines
of the IMF’s spring meetings
in Washington last week, the
Greek bailout negotiations
continue to run into the
same stumbling blocks that
have paralyzed the country
for much of the past two
years. Germany and its
Northern European allies say
they won’t lend more money
to Greece unless the IMF
agrees to lend, too. But the
IMF won’t lend unless Ath-
ens commits to tough re-
forms and Germany agrees
to allow Greece substantial
debt relief, which neither
wants to do. No one has yet
found a way through what
one EU official calls this “tri-
angle of mistrust.”
G
reece’s European cred-
itors and the IMF did
at least agree on one
thing in Washington: how to
resolve their differences
over the targets for the next
phase of the Greek program.
Under the deal struck last
summer, Greece is supposed
to deliver a budget surplus
before interest costs of 3.5%
of gross domestic product in
2018. The European Commis-
sion believes that to reach
this target, Greece needs to
deliver further austerity
measures this year equiva-
lent to 3% of GDP. The IMF,
which takes a more pessi-
mistic view of the damage
inflicted by last year’s stand-
off, believes that it will re-
quire extra austerity mea-
sures equivalent to 4.5% of
GDP to hit the target, which
it argued was unrealistic.
Saudi Oil Minister Ali al-Naimi, front row center, arriving at a meeting of oil producers in Doha, Qatar, on Sunday.
tain whether any deal would
be considered strong enough
to convince energy markets
that producers were serious
about reining in production
“are other countries capable
of using the time well, or are
the problems beyond their ac-
tions?”
“Whether we’re simply re-
inflating asset prices only to
see them fall down the line
hinges on whether…this time
is spent doing good things:
getting investment back, get-
ting growth on a more sus-
tainable basis,” he said.
One of the main worries
across the developing world is
a drying up of credit. After
years of expanding lending,
Raghuram Rajan, governor of the Reserve Bank of India, speaking
at the World Bank headquarters in Washington on Sunday.
WORLD NEWS
Greek leader Alexis Tsipras, at a meeting in Athens this month, faces a new standoff with creditors.
The IMF had instead been essary to deliver these tar-
arguing for a lower budget gets—measures IMF insists
surplus target of 1.5% of must be “credible.” If the
GDP, which would have re- 3.5% target isn’t met, Ger-
quired extra austerity mea- many won’t agree to debt re-
sures of only 2.5% of GDP, lief, and without a guarantee
according to its calculations. of debt relief, the IMF can’t
The compromise is about join the bailout. But the
as brutal as it could be for IMF’s definition of credible
Greece. Both sides have will create major political
agreed to stick by the origi- problems for Greece’s left-
nal 3.5% target and to use wing government. It has
the commission’s forecasts made clear it won’t accept
as the baseline. But Greece continued reliance on the
will be required to commit “soak the rich” approach to
to—and possibly legislate— the public finances pursued
the extra austerity needed to by successive Greek govern-
make up any shortfall, ments that it argues have
should the IMF’s more become self-defeating.
gloomy assessment prove
A
more accurate. lthough Greece has
What happens next de- made a remarkable
pends on Athens. It must fiscal adjustment
now agree the measures nec- since the crisis, this has
and bolstering prices. frame and transparent en-
Analysts have said that par- forcement—to convince inves-
ticipants needed to communi- tors and oil traders around the
cate a specific deal—agreeing world that a freeze could
on an output ceiling, time work.
the cycle has now turned and
credit is pulling back, said J.P.
Morgan Chase & Co. econo-
mist Joseph Lupton.
governments toward costly
bailouts. The IMF estimates
such firms owe about $650
billion in corporate debt,
“The big question is how roughly 12% of all the emerg-
much damage is that going to ing-market corporate debt in
do as we move through this the fund’s sample.
cycle,” he said. “History has Some countries have
been varied, but largely un- worked aggressively to read-
kind to a large leverage un- just economies. Indonesia, for
wind.” instance, has sought to in-
Particularly vulnerable are crease infrastructure invest-
emerging-market firms whose ment to boost growth. It also
earnings are already insuffi- managed to cut interest rates
cient to cover their interest without sparking a significant
payments, potentially pushing weakening of the currency,
giving the economy more
room to expand.
Other countries have had
more trouble. Brazil saw its
currency fall to record lows
against the dollar last year, in
part because the government
built up one of the world’s
largest fiscal deficits. Efforts
to improve the economy have
been thwarted by a political
crisis that threatens to take
down President Dilma Rouss-
eff.
SHAWN THEW/EUROPEAN PRESSPHOTO AGENCY
Brazilian central banker Al-
exandre Tombini, in a state-
ment to the IMF’s policy com-
mittee, acknowledged “the
current political environment”
as an important constraint.
Beyond Brazil, Mr. Tombini
noted the more favorable en-
vironment in global markets
of late due to the Fed’s “reas-
sessment” and other actions
in China. But he said “this
calmness may not be stable”
with the Fed’s outlook still di-
THE WALL STREET JOURNAL.
cial fabric of the country is
being wrecked by excessive
cuts to spending on vital
public services including es-
sential equipment for
schools and hospitals and
maintaining infrastructure.
The IMF has long insisted
that the only way credibly to
SIMELA PANTZARTZI/EUROPEAN PRESSPHOTO AGENCY
strengthen Greece’s public
finances now is to broaden
the tax base and cut pension
spending. It is hard to see
how it could now credibly
back down.
T
he carrot for Athens is
that if it signs up to
these measures, the
country should receive its
long-promised debt relief,
paving the way for the nor-
malization of financial con-
ditions, including eligibility
for the European Central
been largely delivered by pil- Bank government bond-buy-
ing new taxes on the same ing program and access to
narrow base while cutting cheaper ECB bank funding
back on discretionary expen- facilities.
diture to protect public-sec- But as things stand, the
tor jobs and wages and wel- IMF and Berlin are far apart
fare entitlements. both on what is a long-term
Remarkably, 55% of realistic budget target for
Greeks are exempt from in- Greece—which will deter-
come tax, compared with 2% mine the amount of debt re-
of Portuguese and 5% of lief that is necessary—and
Irish, according to the IMF. the timing of any debt re-
Meanwhile the Greek pen- duction.
sion system costs Athens the Can the triangle of mis-
equivalent of 10% of GDP ev- trust be broken, paving the
ery year, far more than any way for a deal in May? Only
other country in Europe. if Athens and Berlin are will-
The IMF argues this is ing to give ground. Both will
unsustainable: Tax-collection need to sacrifice consider-
rates have gone down as pu- able political capital. The al-
nitive taxes on higher earn- ternative is that Europe finds
ers have fueled tax evasion itself again debating Grexit,
and capital flight. Mean- even as it faces the very real
while, the economic and so- possibility of Brexit.
cash-strapped producers out
of the market, making a for-
mal freeze less important.
The U.S. Energy Informa-
tion Administration said in its
short-term outlook last week
that U.S. crude production fell
by 90,000 barrels a day in
March from February. The
agency lowered its U.S. output
forecast for 2016 to 8.6 million
barrels a day and 8 million
barrels a day in 2017. That is
off from a multidecade peak of
9.4 million barrels a day last
year.
Energy Aspects, a London-
based energy consultancy, re-
cently revised its estimates for
global, non-OPEC production
declines this year to 700,000
barrels a day from 200,000 to
300,000 in earlier forecasts. It
expects demand to begin out-
stripping supply—and drawing
down on swollen crude stock-
JON GAMBRELL/ASSOCIATED PRESS
piles—globally starting in
June.
Iran, which was recently re-
leased from international
sanctions that had restricted
its oil exports, has said it
plans to increase production
until it achieves the 4 million
barrels a day it was pumping
before the sanctions. It cur-
rently produces 3.1 million
The longer-term market im- barrels a day. Market observ-
pact of the failure to freeze ers say the increase in produc-
production could be blunted tion has proceeded slowly and
by the reality that low prices it will take years to achieve
are already pushing many the goal.
verging from its struggling
counterparts in Europe and
Japan.
One silver lining for emerg-
ers abroad and offered some
confidence the U.S. won’t for-
get them as it slowly tightens
monetary policy.
ing-market officials: For now, “They certainly are paying
Fed officials seem attuned to more attention and talking
their concerns. Chairwoman about paying more attention,
Janet Yellen has repeatedly which I think is a very wel-
emphasized the state of the come step,” Mr. Rajan said.
global economy would influ-
ence the central bank’s future THE WALL STREET JOURNAL.
rate decisions. Europe Edition ISSN 0921-99
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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.
Pope’sMigrantAirliftCameatLastMinute
Pontiff says he didn’t
pick refugees by
religion; Families apply
for asylum in Italy
BY DEBORAH BALL
ROME—About a week be-
fore Pope Francis’ one-day trip
to Lesbos, the Greek island
that has borne the brunt of
Europe’s refugee crisis, a Vati-
can official approached him
with an idea to bring a group
of migrants stranded in Greece
back to Rome with him.
“It was an inspiration…that
I immediately accepted,” re-
called the pope during a news
conference on the flight back
from Lesbos on Saturday. The
three families of Syrian refu-
gees, a dozen people alto-
gether, sat in the front of the
Alitalia chartered flight—the
private area where the pope
and his entourage travel dur-
ing papal flights.
The move—in the face of a
new European Union policy to
deport any migrants arriving
illegally in Greece back to Tur-
key—was among the most pro-
vocative yet from a pope who
has placed migrants’ rights at
the center of his papacy.
The pope’s last-minute de-
cision to bring migrants back
with him from Lesbos set dip-
lomats from Italy, Greece and
the Vatican scrambling to find
an appropriate group of refu-
gees. In particular, they had to
be among the 50,000 migrants
Russian Fighter Intercepts U.S. Jet EU Presses Iran to Use
A U.S. Air Force reconnais-
sance plane was intercepted
by a Russian fighter plane
over the Baltic Sea last week
in what American officials
said on Sunday was an unsafe
and unprofessional manner.
By Julian E. Barnes
in Brussels
and Nathan Hodge
in Moscow
Russian officials disputed
the account, saying they were
responding to an unidentified
target approaching their bor-
der at high speed.
The Russian fighter came
within 50 feet of the Air Force
plane, executing a barrel roll
over the plane from its left
side to the right, said U.S. Eu-
ropean Command officials, a
maneuver the American offi-
cials said was unsafe.
The incident occurred on
Thursday, just days after Rus-
sian aircraft buzzed the USS
Donald Cook, in another sign
that the Russian military is
using increasingly aggressive
tactics in the Baltic Sea to de-
ter U.S. ships.
European Command offi-
cials said they are protesting
both incidents to the Russian
government through diplo-
matic channels.
But a Russian military
spokesman, Maj. Gen. Igor Ko-
nashenkov, said reports of a
dangerous approach by
TERROR
Continued from Page One
Agency. But that proposal and
another for a European-style
Federal Bureau of Investigation
have been opposed by the U.K.,
France and Germany—the na-
tions with the best intelli-
gence-gathering capabilities.
“Nothing happened even af-
ter the attacks because most of
the countries are of the opin-
ion that intelligence and police
are a national matter for na-
tional security,” said Herman
Mattijs, a professor at the Uni-
versity of Ghent.
Intelligence agencies worry
that their sources and methods
may be exposed by overshar-
ing, and often seek to manage
relationships bilaterally.
“Culturally intelligence ser-
vices are quite conservative,
for good reason,” said a former
senior European intelligence
officer. “Sources are very diffi-
cult to obtain and very easy to
lose.”
Authorities are also con-
cerned that mixing intelligence
and law-enforcement informa-
tion could lead to mistrials and
procedural errors.
Countries like Germany and
the Netherlands, said another
former senior intelligence offi-
The Syrian refugee families, here at the Sant’Egidio community in Rome, arrived Saturday after flying with the pope from Greece.
now stranded in Greece fol-
lowing the March 20 migrant
deal struck between the EU
and Turkey. And they had to
be particularly vulnerable.
All of the dozen refugees
who came to Rome are Mus-
lim. “I didn’t make a religious
choice between Christians and
Muslims,” the pope said.
“These three families had
their documents in order.
Russian Sukhoi Su-24 planes buzz the USS Donald Cook recently.
the Su-27 were “not true,”
saying the Russian aircraft
had scrambled in response to
“an unidentified aerial target
heading to the Russian state
border at high speed.”
According to the Russian
account, the Russian warplane
identified the incoming air-
craft as an RC-135, and the
U.S. plane then reversed
course and flew away from
the Russian border.
“The flight of the Russian
aircraft was carried out in the
strict accordance with the in-
ternational rules of the air-
space usage; no emergency
situations emerged,” Gen. Ko-
nashenkov said.
The U.S. has been increas-
ing operations in the Baltic
Sea, worried about increased
cial, are worried that mixing
databases could mean intelli-
gence information ends up be-
ing used in court.
“They are very neuralgic
about the idea of intelligence
having any role to play” in
criminal trials, the former offi-
cial said.
Still, current and former of-
ficials said the threat has en-
couraged more openness to
sharing—if it can be done effi-
ciently and with proper pro-
tections.
The push for better cooper-
ation was reinvigorated after
the January 2015 Charlie
Hebdo attacks in Paris spurred
an effort to better track sus-
pected terrorists moving in
and out of Europe.
Gilles Kerchove, the EU’s
counterterrorism adviser, said
he is pushing for a single Euro-
pean database fed with both
intelligence and law-enforce-
ment information.
“When you are confronted
not with dozens but hundreds
or thousands of Europeans
who have gone to Syria and
Iraq,” he said, “you want to be
systematic at the border. You
want to have a database with
all the information available.
And this is not the case” now.
Europol, the region’s law-
enforcement coordinating
body, includes the 28 EU mem-
WORLD NEWS
There were, for example, two grants’ arrival in Rome, sup-
Christian families who didn’t. porters brought the families
This is not a privilege. All 12 red roses. Half of the dozen
of them are children of God.” Syrians are children and all
The Vatican enlisted the three of the families’ homes
help of Catholic charity were bombed during the war
Sant’Egidio. The people cho- in Syria that has sent waves of
sen “couldn’t believe it,” said refugees seeking to reach Eu-
Daniela Pompei, the Sant’Egi- rope. “They remained (in
dio official who assisted the Syria) as long as they could,”
effort, in an interview with Ms. Pompei said. “When their
Italian television. Upon the mi- homes were bombed their
calate tensions between coun-
tries.”
On Friday, before the inter-
cept was made public, Alexan-
der Grushko, Russia’s ambas-
sador to NATO, said in a
round-table discussion with
reporters in Brussels that the
U.S. and its allies were under-
taking an unjustified military
buildup in the Baltic region.
U.S. NAVY/ASSOCIATED PRESS
He said that the incident
with the USS Donald Cook oc-
curred about 45 miles from
Russia’s military bases in Kali-
ningrad and that American
planes and ships were ap-
proaching too close to Russian
territory.
“These incidents are taking
Russian submarine activity place very close to Russian
and a military buildup in Rus- waters,” Mr. Grushko said.
sia’s Kaliningrad exclave, “The main question is not
where Russia is positioning who has the right to fly or
longer-range surface-to-air who has the right to enter wa-
missiles. ters. But the basic issue is,
Lt. Col. David Westover, a Why is [the North Atlantic
spokesman for European Com- Treaty Organization] so active
mand, said the aircraft, an near Russian borders and Rus-
RC-135, was flying on a rou- sian military bases?”
tine route in international air A year ago, in a similar in-
space on Thursday when the cident, the Pentagon lodged a
incident occurred. protest with Russia over what
“This unsafe and unprofes- it called the unsafe intercep-
sional air intercept has the tion of a U.S. reconnaissance
potential to cause serious aircraft in the Baltic Sea.
harm and injury to all air- In that case, the U.S.
crews involved,” Col. Westo- RC-135 was flying north of Po-
ver said in a statement. land over the Baltic Sea when
“More importantly, the un- it was approached by a Rus-
safe and unprofessional ac- sian Su-27 fighter at high
tions of a single pilot have the speed, according to U.S. offi-
potential to unnecessarily es- cials.
bers and 10 partners including
the U.S. It already holds major
police databases.
In an interview in January,
various intelligence agencies,
police forces and prosecutors
to share what they know.
“How do we get them to
Europol director Rob Wain- stop stove-piping? How do we
wright said the agency was encourage more continuity and
working “to offer a confiden- conversation,” one U.S. official
tial and highly protected asked. “If they can’t pull them-
bridge across the very sub- selves together now, they are
stantial police databases that never going to be able to do
we hold…to the exclusive envi- it.”
ronment of the intelligence Prodded by Mr. Kerchove,
services.” several European countries, in-
cluding the Netherlands, Fin-
Intelligence agencies land and France have created
centers that bring together
often seek to manage law-enforcement and intelli-
their relationships gence agencies, European offi-
cials said.
on a bilateral basis. But current and former offi-
cials said the efforts have
varying degrees of effective-
There were also potential ness. While the U.K.’s intelli-
technological solutions that gence services have strong re-
would allow intelligence ser- cord of coordination and
vices to flag information to sharing with Scotland Yard,
law enforcement while pro- France has had to undertake a
tecting sources, he said. “Dif- new push in January to make
ferent countries are more for- its cross-agency cooperation
ward-looking than others, but more effective.
we have seen a kind of mini- In recent months, U.S. offi-
sea change since Paris,” he cials and investigators have
said. been meeting in Belgium,
U.S. and European officials France and the Netherlands to
also say that in many cases the examine how to prod European
same problem that bedeviled countries to synthesize their
Washington before the Sept. information better and do
11, 2001, terror attacks is at more to share it, in an effort to
play in European countries: avoid future failures to con-
“stove-piping,” or the failure of nect the dots.
Monday, April 18, 2016 | A3
Nour, fled their home in Zaba-
dani, an area outside Damas-
cus, with their 2-year-old son.
Another couple, Ramy and
Subila, who are both in their
50s and respectively a teacher
and a tailor, came from Deir
Azzor, an area occupied by Is-
lamic State, and arrived in
Greece with their three chil-
dren. The third couple, named
Osama and Wafa, come from
Damascus and brought two
children with them, including
a son who stopped speaking
for a time following the
trauma of the war and their
escape.
All three families applied
for asylum in Italy upon their
arrival on Saturday with the
ALESSANDRA TARANTINO/ASSOCIATED PRESS
pope, said Rinaldo Piazzoni, a
spokesman for Sant’Egidio.
Last year, the pope called
for all Catholic parishes to
take in a migrant family. The
Vatican took in two families
last fall.
Italian President Sergio
Mattarella praised the move
Saturday, saying that he hoped
the gesture could “shake the
soul of Europe and the inter-
national community to its
homes, they decided to leave.” depths.”
One family includes a child But not everyone welcomed
who is disabled. the pope’s gesture. Matteo Sal-
Sant’Egidio will host the vini, head of the anti-immi-
families initially, after which grant Northern League party
the Vatican will take responsi- criticized the pontiff.
bility for them. The Vatican “I’d like to recall that there
will support them financially. are poor people just outside
All three families arrived in the Vatican,” he said. “But it’s
Greece by boat in the past two less chic (to help them) be-
months. One couple, both en- cause you don’t have to take a
gineers and named Hasan and plane to pick them up.”
Influence in Syria Talks
The European Union this sisted his government wants
weekend pressed Iran’s lead- the political talks to succeed
ers to use their influence with and said Iran had set no “red
Syria’s ruling regime to help line” that would block Mr.
advance the country’s peace Assad’s eventual departure.
talks after the fragile negotia- “Everybody should get this
tions resumed in Geneva. message….They need to be se-
rious. They need to try and
end the conflict in Syria
By Laurence Norman
in Tehran, Iran, and rather than to try and score
Sam Dagher in Geneva geopolitical points,” he said.
Russia’s recent announce-
United Nations-mediated ment that it was scaling back
discussions between the Syr- its bombing campaign in Syria
ian government of President heightened Iran’s role as a
Bashar al-Assad and the oppo- major military and political
sition on some kind of politi- partner for the Assad regime.
cal transition appeared to Iran has long been involved
make little progress on Friday. directly and indirectly in the
Opposition leaders accused Syrian conflict, including
the Assad regime of using the through proxies like Hezbol-
diplomacy to buy time for mil- lah.
itary gains. For the EU, the fighting in
In Tehran on Saturday, EU Syria has triggered a multifac-
foreign policy-chief Federica eted crisis. In addition to
Mogherini used her discus- causing instability in the re-
sions with Iranian Foreign gion, the conflict has spurred
Minister Javad Zarif and Na- large-scale migration into Eu-
tional Security Chief Ali rope. Extremists linked to Is-
Shamkhani to press Iran to lamic State have launched at-
push Damascus into a political tacks in European capitals.
process that could end in fun- Ms. Mogherini, who played
damental constitutional a significant role in helping
changes and free elections af- complete the Iranian nuclear
ter five years of bloodshed. talks, was also supposed to
“Iran has not only a lot of meet Saturday with Ali Akbar
influence in Damascus still Velayati, a top adviser to
but also a deep knowledge of Iran’s Supreme Leader Ali
the regime that can help the Khamenei. The meeting had to
international community to be scrapped at the last minute
find formulas that could be because of the early return of
useful to have a political pro- President Hassan Rouhani
cess that is successful,” Ms. from a summit in Turkey, EU
Mogherini told a small group
of journalists on Saturday
evening.
“Because now, as Staffan de
officials said.
The EU has focused on fa-
cilitating humanitarian assis-
tance in Syria and working its
Mistura restarts the talks in contacts with Iran and other
Geneva, we will have to see regional players to nudge
serious engagement and seri- talks forward.
ous steps from both parties The central dilemma in the
and I believe that Iran can en- Geneva talks is how to handle
courage the regime delegation a political transition. The re-
to engage seriously.” gime has signaled it is open to
Mr. de Mistura is the U.N.’s the creation of a unity govern-
special envoy for Syria. Talks ment with elements of the op-
are expected to resume Mon- position under Mr. Assad.
day. The parties have yet to
meet face-to-face since the
The opposition wants Mr.
Assad to depart or be stripped
latest diplomatic effort began of powers and for a new in-
in January.
On Saturday, Mr. Zarif in-
terim government to lead the
transition.
EBRAHIIM NOROOZI/ASSOCIATED PRESS
Iran’s Foreign Minister Javad Zarif at a news conference Saturday
with European Union foreign-policy chief Federica Mogherini.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A4 | Monday, April 18, 2016
‘Brexit’ Jobs Impact Could Ripple Across EU
London
W
hen in London this
week, President Ba-
rack Obama looks
set to add to calls for Britain
to stay in the European
Union. Among those of simi-
lar mind: Large numbers of
job seekers elsewhere in Eu-
rope.
THE The U.K.
OUTLOOK economy has
JASON been a power-
DOUGLAS house for job
creation as the
EU struggled
to recover from the financial
crisis, churning out work not
only for its own citizens, but
also for hundreds of thou-
sands of others across the
28-member bloc, from Polish
nurses to Spanish engineers.
Economists say this influx
has helped power British
economic growth, but it has
added to anxiety here over
the role of immigration as
Britons debate whether to
stay in the EU or go it alone
as the world’s fifth largest
economy. A referendum over
whether to remain in the EU
is set for June 23.
Much of the stay-or-go
debate has focused on what
“Brexit” would mean for the
U.K. Increasingly, though, the
focus has turned to the
broader potential fallout for
the rest of Europe.
The International Mone-
China Starts Planning
For 1.8 Million Jobless
BY MARK MAGNIER
BEIJING—China etched in
details of plans to help workers
laid off from the bloated coal
and steel industries, saying as-
sistance would include career
counseling, early retirement
and help in starting businesses,
among other measures.
New guidelines released by
seven Chinese ministries over
the weekend build on previ-
ously announced commitments
to restructure the coal and
steel industries, whose excess
production is dragging on the
economy, and to take care of
an estimated 1.8 million work-
ers who will be displaced. The
new measures place priority on
finding jobs and cushioning the
transition to reduce the unem-
ployment that the authoritar-
ian government sees as a
threat to social stability.
“Proper placement of work-
ers is the key to working to re-
solve excess capacity,” said the
document issued by the labor
ministry, the top economic
planning agency and others. It
urged local governments to
“take timely measures to re-
solve conflicts” and to “avoid
ignoring the issue.”
Unlike a far-reaching re-
structuring of state industries
two decades ago, Beijing is tak-
ing a cautious approach this
time around, prompting some
Chinese Official Says Trump Policies Would Diminish U.S.
BY BOB DAVIS
AND LINGLING WEI
WASHINGTON—Chinese Fi-
nance Minister Lou Jiwei
called GOP presidential front-
runner Donald Trump an “ir-
rational type” and said the
U.S. “wouldn’t be entitled to
world leadership” if it fol-
lowed Mr. Trump’s proposed
trade policies toward China.
Mr. Trump has advocated
imposing up to 45% tariffs on
China as a way to force it to
change its trade policies. Mr.
Lou, known in China for his
bluff outspokenness, said in an
interview with The Wall Street
Journal that such a tariff would
violate World Trade Organiza-
tion rules. Under those condi-
tions, he said, the U.S. wouldn’t
be entitled to its position as the
world’s major power.
Mr. Lou is correct on the
trade rules, according to Jef-
frey Schott, a trade economist
at the Peterson Institute for
International Economics, a
think tank backing free trade.
“Almost any across-the-
board tariff increase would vi-
olate U.S. obligations under
the WTO,” he said.
In a statement from his cam-
paign, Mr. Trump charged that
China was “in total violation of
WTO regulations” and that the
U.S. “has incompetently al-
lowed them to get away with
this” and has failed to impose
tary Fund warned last week
of “severe” regional and
even global damage if the
U.K. quits the EU.
Economists say Brexit
could upset trade in Europe,
disrupt investment and leave
a hole in the EU’s budget
that other countries would
need to fill.
The ultimate cost would
depend largely on whatever
deal Europe’s second-largest
economy might reach with
the EU over the terms of the
U.K.’s departure.
Brexit “is not just a U.K.
issue,” said David Owen,
chief European financial
economist at investment
bank Jefferies Group Inc. in
London. “It would impact
the rest of the EU.”
F
or ordinary Europeans,
the economic effects of
Brexit may be felt
most in the workplace, espe-
cially if a departure ruptured
one of Europe’s best con-
duits for steady employment.
The U.K. boasts one of
the region’s most alluring la-
bor markets; a combination
of the English language,
which many Europeans mas-
ter at school; flexible labor
laws that make it easy to get
hired; and big cities such as
London that host global em-
ployers.
Britain’s jobs market has
economists to caution that the
protracted pace may make the
situation worse. Government
data released Friday showed
economic growth slowing
slightly in the first quarter,
buoyed by new loans, debt and
investment in real estate and
factories—methods that are
likely to lengthen the transi-
tion to a more consumer-
driven society from one driven
by investment and manufactur-
ing.
Western-style “restructur-
ing is not on the horizon here,”
said ING Groep economist Tim
Condon. “Rebalancing, forget
that. That’s for another day.”
Government plans call for
reducing some 10% to 15% of
the excess capacity in the steel
and coal sectors over the next
several years. That is less than
half the portion analysts say is
needed to bring supply closer
in line with demand. And steel
and coal are only two of nu-
merous other industries
plagued by overcapacity that
haven’t been addressed.
The large number of minis-
tries that signed off on the
plan dated April 7 but released
more than a week later under-
scores the sensitivity, impor-
tance and breadth of resources
China is devoting to the unem-
ployment problem.
—Olivia Geng
contributed to this article.
“equal or greater taxes and tar-
iffs” on China. If he is elected
president, Mr. Trump said,
China “will learn to deal fairly
and justly or we will not deal at
all” with Beijing.
In a Trump presidency, he
added, “all trade and other
agreements will be totally and
completely renegotiated” so
the U.S. will become a “benefi-
ciary of trade, and we will no
longer be thought of as fools.”
Asked about the tough talk
Lou Jiwei, center, at a Group of 20 news conference on Friday in Washington
HK JP KO ML SI IN UK
WORLD NEWS
The English Work Channel
The U.K. has posted strong job growth since the financial crisis, with much of that gain going to workers
from other countries. A U.K. exit from the European Union, up for a vote in June, could sever that flow.
Change in employment
since 3Q 2008
6% U.K.
s6.2%
4
2 new restrictions on immigra-
0 Sweden
–2 EU
t1.0%
–4 Euro-
zone
–6 t2.3%
2008 ’10 ’15
boomed while the wider EU
economy, especially the 19-
nation eurozone at its core,
has struggled. The EU’s offi-
cial statistics agency says
the number of people work-
ing in all 28 states of the EU
is still roughly three million
short of the precrisis peak of
225 million reached in late
2008, a consequence of the
global financial crisis but
also the sovereign-debt trou-
bles that blunted the recov-
ery.
That’s despite an im-
provement in labor-force
participation and recent
growth spurts in some of the
countries hardest-hit by the
Beijing’s Reforms Lower Anxiety
BY IAN TALLEY
AND LINGLING WEI
WASHINGTON—The world’s
financial leaders started the
year worried about China’s de-
celerating economy dragging
the world into another major
crisis. Now, they are breathing
a small sigh of relief.
Finance ministers, central
bankers and other top officials
meeting here in recent days
said Beijing’s efforts to stabi-
lize its economy have tempo-
rarily eased global fears tied
to the world’s No. 2 economy.
“There was not the same
level of anxiety,” said Interna-
tional Monetary Fund Manag-
ing Director Christine Lagarde.
Still, IMF officials warned
that Beijing may again be rely-
ing too heavily on credit to
boost its slowing economy,
buying time now at the ex-
pense of future growth and
potentially creating other
problems down the road.
Uncertainty about China
helped trigger a series of
global market squalls over the
past year, and forced econo-
mists to downgrade their
global forecasts. Finance
chiefs have repeatedly sought
assurances that Beijing’s lead-
ers would get a firmer grip on
their economy.
In meetings of the IMF and
World Bank through Sunday in
Washington, officials lauded Bei-
jing’s recent efforts and pointed
on China in the presidential
campaign, from both Demo-
crats and Republicans, Mr. Lou
said Americans needed to rec-
ognize the U.S. and China “are
mutually dependent on each
other” and both have a lot to
lose in any economic confron-
tation. “Our economic cycles
are intertwined,” he said. “We
have more in common than
sets us apart.”
Mr. Lou also said he under-
stood that rhetoric in a presi-
FR MN PR
Change in employment in the U.K. by country of origin
since 3Q 2008
0 50% 100% 150% 200% 250%
Greece
Spain
Italy
Belgium
Netherlands
Portugal
France
Sources: Eurostat; U.K. Labor Force survey
Germany THE WALL STREET JOURNAL.
continent’s woes, such as ing 1.6 million jobs to take
Ireland and Spain. its workforce to 41 million.
Roughly half of those new
I
n the U.S., by contrast, jobs in the U.K. have gone to
total employment sur- European citizens, according
passed its precrisis peak to the U.K.’s official statistics
of 138.4 million in May 2014 agency. The number of EU
and now stands at 143.7 mil- citizens working in Britain
lion. has risen by two-thirds since
The U.K., which stands 2008, to 2.1 million. Many
outside the 19-nation euro- are migrants from Eastern
zone and so was spared the Europe drawn by higher
worst of the region’s debt wages, but thousands more
crises, has added 1.8 million have arrived here because
jobs since its prerecession they struggled to find work
employment peak, taking the at home.
total number in work to 31 With the EU still strug-
million. Only Germany, the gling to recover its vim, a
EU’s largest economy, has British departure from the
had comparable growth, add- bloc could complicate the re-
Ms. Lagarde spoke Saturday in Washington after the IMF meetings.
to a calming of global markets. economy.”
“There’s a lot more comfort “There was a broad sense
now in the ability of China to that the policies announced are
keep demand at a certain level important, and there’s a broad
that would foster growth,” hope that those policies will be
Mexico’s Finance Minister Luis implemented effectively and
Videgaray said in an interview. quickly,” Mr. Lew said.
U.S. Treasury Secretary Ja- In an interview, Chinese Fi-
cob Lew said a new set of poli- nance Minister Lou Jiwei de-
cies unveiled by China’s Na- fended China’s efforts, saying
tional People’s Congress last the country has made progress
month “addressed some of the in correcting “big distortions”
core issues, including the very in its economic system. He
significant challenge of dealing pointed to measures aimed at
with excess capacity in their reining in off-budget borrowing
dential campaign gets heated and caught the eyes of many.”
and often doesn’t reflect the In daily briefings, the foreign
policies an incoming adminis- ministry declines to answer
tration would adopt. With a questions about the New York
new administration, he said, businessman or other U.S.
“U.S.-China ties should be presidential candidates.
more or less as they are now.” China this year leads the
Mr. Lou is the most senior Group of 20, whose finance
Chinese official to comment ministers met on Friday dur-
on Mr. Trump. In March, Chi- ing the International Monetary
nese Premier Li Keqiang was Fund’s spring meetings in
asked about the U.S. election— Washington. Many partici-
though not Mr. Trump specifi- pants welcomed signs of stabi-
cally—and said it was “lively lization in the Chinese econ-
omy. But they raised concerns
that authorities there haven’t
been carrying out economic
overhauls as fast as necessary,
potentially leading to other
problems down the road.
Mr. Lou, who co-chaired the
G-20 meeting of finance minis-
ters, urged patience from the
rest of the world. “In China,
there are big distortions in our
economic system,” he said.
The Chinese finance minis-
ter urged the U.S. to increase
its public and private invest-
ment as a way to improve the
U.S. economy and make a con-
tribution to global economic
growth. He argued China had
YIN BOGU/XINHUA/ZUMA PRESS
done its part in 2009 during
the global financial crisis by
putting in place a large stimu-
lus program. That spending,
he argued, helped buck up
global growth.
“China’s efforts helped the
world,” he said. “Now the U.S.
needs to do more to help the
THE WALL STREET JOURNAL.
gion’s efforts to bring down
unemployment in the years
ahead. It’s unclear what ar-
rangements would be put in
place to allow EU workers to
join the U.K. labor force, but
the U.K. isn’t entirely comfort-
able with its labor market’s
pull.
If it left the EU, it would all
but certainly seek to impose
tion to bring down the num-
ber of European workers ar-
riving on its shores.
Already, Prime Minister
David Cameron has re-
stricted new arrivals’ access
to British welfare benefits,
part of a government effort
to curb immigration to sat-
isfy voters.
Unease over immigration
is one of the driving forces
behind anti-EU sentiment in
Britain, with campaigners for
Brexit arguing the U.K. can
secure its borders only if it
leaves the EU.
That prospect unsettles
EU workers already here.
Christine Box, 33 years
old, a human resources ad-
viser originally from Ger-
many who has been in the
U.K. since 2006, said she and
her husband would think
again about staying if the
U.K. votes to leave the EU.
“Brexit is going to be a
big decision maker for me,”
she said.
by local governments, attempts
to cut red tape for businesses,
and steps to give the market a
bigger say in pricing agricul-
tural and other products.
“When the outside world
looks at China, they often think
reforms are not proceeding as
fast as expected,” Mr. Lou said.
“But they don’t know that dis-
tortions are entrenched in our
economic system.”
The IMF recently upgraded
China’s growth forecast for
this year by 0.2 percentage
point to 6.5% as a strengthen-
ing service sector compen-
sated for a downturn in manu-
facturing. But the IMF said
JOSHUA ROBERTS/REUTERS
Beijing’s plans to boost output
and overhaul its economy
aren’t sufficient to address
long-term growth concerns.
IMF officials acknowledged
much of Beijing’s stimulus
would likely take the form of
more credit growth, particu-
larly support for inefficient
sectors. They said the IMF is
more concerned about the
quality of growth rather than
the quantity.
“The medium-term risk of
ever-rising credit and invest-
ment can also increase,” said
Changyong Rhee, head of the
fund’s Asia department.
The IMF estimates that
nearly $1.3 trillion in Chinese
corporate debt alone is at risk
of creating bank losses, a prob-
lem that could trigger losses
equal to 7% of economic output.
world” through increased in-
vestment. He said he has been
lobbying the U.S. to take such
action, “but we haven’t seen
much progress.”
He urged the U.S. to move
more briskly in deregulation—
the same advice the U.S. has
been giving China for years—
and cited burdensome rules
holding back construction
projects in the U.S.
Treasury Secretary Jacob
Lew said the U.S. government
has long played an important
role in bolstering the domestic
and global economy. “When
the government needed to
step in during the [global fi-
nancial] crisis, we stepped in,”
he told reporters Friday.
“When it was time to step out,
we stepped out. Some could
argue we should have stayed
in a little bit longer, it should
have been a little bit bigger or
a little bit smaller. But basi-
cally we used all of the tools.”
The G-20 issued a joint
statement urging greater use
of fiscal measures, alongside
monetary policy and underly-
ing economic overhauls, to
boost world growth. The coun-
tries also forswore protection-
ism and the use of foreign-ex-
change policy “for competitive
purposes.” The G-20 has urged
such policies for years. The
leaders of the G-20 will meet
in September in Hangzhou,
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
THE WALL STREET JOURNAL. Monday, April 18, 2016 | A5
 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 | Monday, April 18, 2016
Ecuador Struck by Deadly Earthquake
The quake hit coastal
towns hard and
destroyed buildings,
bridges and roads.
BY RYAN DUBE
Residents of several coastal
towns in Ecuador scrambled to
free survivors trapped in the
rubble of collapsed buildings
after the country’s strongest
earthquake in decades killed
hundreds and destroyed
homes, bridges and roads.
President Rafael Correa said
at least 233 people died in the
magnitude 7.8 quake, the stron-
gest in Ecuador since 1979. An
additional 1,557 people were
injured, he said.
The quake hit at about 7
p.m. local time on Saturday.
Television images showed resi-
dents in the hardest-hit areas
sifting through rubble trying to
rescue trapped family mem-
bers.
The situation was particu-
larly “grave” in the coastal
towns of Portoviejo and Peder-
nales, a popular tourist spot,
Mr. Correa said. “The entire
country has been mobilized,”
he said Sunday on his Twitter
account.
The number of fatalities was
expected to increase, said Di-
ego Castellanos, a spokesman
for the Red Cross in Ecuador.
In Pedernales, which has about
50,000 residents, about 80% of
homes were destroyed or in
Ex-Detainee Recounts
North Korea Jail Term
BY JONATHAN CHENG
SEOUL—Several months af-
ter North Korea sentenced
Kenneth Bae to 15 years of
hard labor on charges of try-
ing to overthrow its govern-
ment, the Korean-American
missionary got an unexpected
White House visit.
During the five-minute
meeting in 2013, which hasn’t
previously been made public,
the visitor said he was an en-
voy of President Barack
Obama and that the adminis-
tration had made Mr. Bae’s
case a top priority.
The man, accompanied by a
doctor, also hugged Mr. Bae as
he left, returning minutes later
to take a photo of the prisoner
to show his family. Mr. Bae
says his family never saw the
photo and it was another year
until he was released, after a
visit to the North Korean capi-
tal, Pyongyang, by U.S. Direc-
tor of National Intelligence
James Clapper.
The White House confirmed
the visit, describing it as a hu-
manitarian mission that
Pyongyang allowed so U.S. of-
ficials could assess Mr. Bae’s
health. An administration offi-
cial confirmed the anecdote
about the photograph, but
didn’t elaborate.
The visit, which took place
at a Pyongyang hospital where
Mr. Bae had been temporarily
transferred due to his poor
health, is described in his
memoir “Not Forgotten,”
which was seen by The Wall
Street Journal ahead of its
May 3 publication. While the
visit lifted Mr. Bae’s spirits he
wrote that it “also crushed my
hopes of a quick release.”
The account by Mr. Bae,
whose two-year confinement in
North Korea remains the longest
known detainment for a U.S. citi-
zen since the Korean War, offers
KYODO/REUTERS
Korean-American Kenneth Bae in Pyongyang in 2014.
The quake sent residents searching for people who may be trapped in the rubble; a fallen building in the coastal town of Portoviejo.
bad condition. He said that
40% of the larger buildings col-
lapsed.
“I don’t want to think that
there are going to be thou-
sands [of deaths], but we be-
lieve that it is going to in-
crease basically because they
haven’t been able to get into
the collapsed buildings yet,” he
said.
The earthquake rattled the
country late Saturday, raising
initial concerns about a tsu-
clues as to what other American
prisoners there may face.
North Korea is now holding
two other U.S. citizens: Otto
Warmbier, a college student
who received a 15-year sentence
for “hostile acts” against North
Korea after he admitted stealing
a propaganda poster from his
hotel; and Kim Dong-chul, who
was detained for “committing
hideous hostile acts and espio-
nage” against the government.
The U.S. State Department
hasn’t confirmed Mr. Kim’s case,
but North Korea has and he has
appeared in a CNN interview.
The account also sheds
light on the motivations driv-
ing Pyongyang, which has de-
tained foreigners with increas-
ing regularity amid an uptick
in tensions and a rise in tour-
ism and humanitarian aid to
the isolated country.
Mr. Bae, a missionary, was
arrested in late 2012 after au-
thorities at a border crossing
with China discovered mate-
rial preaching against the
North Korean government on
his computer hard drive. He
acknowledges this.
During a private meeting
with his North Korean prosecu-
tor before the trial in April
2013, Mr. Bae was told to make
a full confession so that the
U.S. government would free
him, he recounts in his memoir.
“It does not matter what
happens during the trial,” Mr.
Bae describes the prosecutor
telling him. “The important
thing is what comes after the
trial and how your govern-
ment responds to it.”
Other U.S. citizens who have
received long sentences have
later spoken of a vacuum of in-
formation, humane if spartan
treatment, and hefty fines for
their prolonged stays—which
Mr. Bae corroborates.
—Carol E. Lee in Washington
contributed to this article.
WORLD NEWS
nami in Ecuador and neighbor-
ing Peru. The U.S. Geological
Survey said that the quake’s
epicenter was about 17 miles
southeast of Muisne, a coastal
city located in northwestern
Ecuador.
The quake was felt as far
away as the capital Quito, lo-
cated in the Andes about 106
miles east of the epicenter.
Elena Seiffert, an American
who has lived in Ecuador for
the past two months, was in
Japan Temblors Displace Thousands
BY JUN HONGO
AND YOKO KUBOTA
TOKYO—Tens of thousands
of people on Japan’s southern
island of Kyushu were living in
temporary shelters and com-
panies including Toyota Mo-
tor Corp. were forced to cur-
tail production after two
earthquakes that killed doz-
ens.
A total of 41 people were
confirmed dead in Kumamoto
prefecture, the epicenter of a
magnitude 6.5 quake on
Thursday night and a magni-
tude 7.3 quake 28 hours later
early on Saturday. About
110,000 people were taking
refuge at temporary shelters
there as of Sunday afternoon,
a Kumamoto prefecture
spokesman said.
There have been 444 no-
ticeable earthquakes in the
Kyushu area since Thursday
night, according to the Japan
Meteorological Agency. The
rain could induce landslides in
areas where soil was loosened
by the quakes, the agency said.
The series of quakes has
hampered efforts by compa-
nies to assess the damage and
get operations in Kumamoto
back on track.
Toyota said it would gradu-
ally halt vehicle production
this week at most of its plants
in Japan because of a shortage
of components following the
Kumamoto quakes. A produc-
tion halt will continue at its
car plant in Fukuoka prefec-
ture where Lexus vehicles are
made. Some major plants in
central Japan including the
Tsutsumi plant, where Toyota
makes the Prius, will stop pro-
duction from Tuesday to Sat-
urday, the company said.
“We found damaged walls,
broken windows and assembly
equipment out of position” at
two Kyushu factories, said a
spokesman at Toyota supplier
Aisin Seiki Co., which makes
World
Watch
UNITED KINGDOM
Police Say Airliner
May Have Hit Drone
A British Airways flight Sun-
day appears to have collided
with a drone on a flight bound
for London’s busy Heathrow Air-
port in what may be the first
such incident involving a major
airline.
The flight from Geneva,
Switzerland, to Heathrow, Eu-
rope’s busiest hub, is believed
to have struck a drone, the Lon-
don Metropolitan Police said in
a statement. The plane landed
safely following the incident,
which occurred around 12:50
her 11th floor apartment in
Quito when the quake struck.
“The building was swaying
back and forth for what felt
like a really long time,” she
said. “Things were falling
down, including paint chips
and small pieces of the ceiling
which made it feel like the
building could fall.”
In Guayaquil, Ecuador’s larg-
est city and home to its biggest
port, a bridge collapsed, crush-
ing one person, while media
Rescue workers searched for missing people in Japan’s Kumamoto prefecture on Sunday.
door and engine parts. Em-
ployees began assessing dam-
age Sunday and it was unclear
when the factories could re-
start, but the company said it
would increase production at
other factories in Japan and
other countries to minimize
the impact.
Other auto makers includ-
ing Honda Motor Co. and Nis-
san Motor Co. have also
halted operations at factories
in the area following the
earthquakes.
Sony Corp. was assessing
damage at a plant in Kuma-
moto where image sensors for
smartphones including Apple
Inc.’s iPhones are manufac-
tured. “Cracks were found in
the factory’s walls and win-
dows were broken,” a com-
pany spokesman said, adding
that employees had been sent
home as large aftershocks con-
tinued. “The plant doesn’t look
like it can restart in a day or
two,” he said.
“There are no signs that
seismic activity is settling
down,” Gen Aoki, an official at
p.m. local time.
The incident comes at a time
of rising concern about drone
misuse near commercial airlines.
British Airways said its engi-
neers inspected the Airbus
Group SE A320 airliner, found no
damage, and cleared the plane
to continue operating.
None of the 132 passengers
and five crew on board the Brit-
ish Airways plane were hurt, an
airline spokesman said.
Flight safety authorities have
become increasingly anxious
that the use of drones is becom-
ing a hazard for aviation. The
U.S. Federal Aviation Administra-
tion last month said “reports of
unmanned aircraft have in-
creased dramatically since 2014.”
The agency recorded more than
1,400 reports last year of drones
coming close to planes.
Pilots flying into busy hubs
such as New York’s John F. Ken-
nedy International Airport and
La Guardia have reported drone
THE WALL STREET JOURNAL.
concern their homes were un-
safe as aftershocks continued
through the night. The coun-
try’s Geophysical Institute said
it reported 154 aftershocks by
early Sunday.
“It isn’t just a building that
collapsed, but an entire city
collapsed,” Gabriel Alcivar, the
mayor of Pedernales, told the
Teleamazonas television sta-
tion late Saturday. He said that
much of the town was flat-
tened and people were trapped
under the rubble.
JUAN CEVALLOS/AGENCE FRANCE-PRESSE/GETTY IMAGES
“We are witnessing an enor-
mous catastrophe,” Mr. Alcivar
added. “People are trapped...and
we can’t do anything.”
Vice President Jorge Glas
said the government declared a
state of emergency and put the
country’s health system on
maximum alert. Mr. Glas, who
traveled to some of the hard-
est-hit areas early Sunday, said
that 10,000 soldiers and 3,500
police were deployed to the
most affected zones to main-
tain public order and assist in
the rescue. He said at a news
images showed the roof of a conference early Sunday that
shopping mall had fallen in. officials were able to reinstall
Jennifer Zambrano, a recep- electricity in some areas where
tionist at a hotel in Guayaquil, the quake caused a blackout.
said she was in her home cook- The government also said
ing when the quake hit, forcing that it has $300 million in
her and a cousin to evacuate. emergency funds to support its
“My cousin was in shock, reconstruction efforts.
she didn’t move, didn’t do any- Latin American and Euro-
thing, so I pulled her and we pean governments expressed
went to a soccer field that is support for Ecuador.
near my house,” she said. Canadian Foreign Minister
After the quake, many resi- Stéphane Dion said two Cana-
dents slept outside because of dians died in the quake.
KIMIMASA MAYAMA/EUROPEAN PRESSPHOTO AGENCY
the Japan Meteorological formation Authority of Japan.
Agency, said at a news confer- Television footage also
ence. He warned that signifi- showed destroyed houses in
cant aftershocks could con- the town of Mashiki, one of
tinue for at least a week. the areas hit hard by Thurs-
About half of the 41 people day’s temblor. Dozens of peo-
who died in the quakes were ple formed lines at schools in
crushed to death inside col- Kumamoto to receive food
lapsed dwellings, according to supplies delivered by the
Kumamoto prefecture. Tokai country’s Self-Defense Forces.
University said three of its Prime Minister Shinzo Abe
students died after apartment told reporters that the govern-
buildings in the village of Mi- ment would coordinate with
namiaso collapsed. There are the U.S. military, which has of-
about 1,000 students studying fered to transport relief sup-
at the university’s nearby Aso plies to the area. The govern-
campus, a university spokes- ment is scheduled to send in
man said, but officials haven’t 25,000 Self-Defense Forces
been able to confirm the personnel to the area by Mon-
safety of all of them yet. day.
Kumamoto prefecture said The Kumamoto airport re-
11 people were unaccounted mained closed Sunday and all
for in the prefecture, all of flights were canceled. Kyushu
them in Minamiaso, a rural Railway Co. said its bullet-
area where most dwellings are train service on the island re-
small. Searches continued for mained halted. Kyushu Elec-
the missing. tric Power Co. said two
Saturday’s earthquake nuclear-power reactors in Kyu-
caused an observation point in shu continued to operate nor-
the village to shift more than 3 mally after the quake. It said
feet toward the southwest, ac- 51,800 homes were without
cording to the Geospatial In- power as of 6 p.m. Sunday.
sightings near the airfields. In ognize reality,” he said at the
2014, the FAA said a remotely
controlled aircraft came so close
meeting’s opening. “Whatever is
beyond the border, the boundary
to a 50-seat regional jet the pi-
lot reported to air-traffic control
itself will not change.”
The international community
“he was sure he had collided doesn’t recognize Israeli sover-
with it.” eignty over the Golan Heights,
—Robert Wall and as in the Palestinian territo-
ries, considers settlement-build-
GOLAN HEIGHTS ing there illegal.
Mr. Netanyahu said he had
Netanyahu Says Israel spoken by phone Saturday with
Won’t Return Land U.S. Secretary of State John
Israeli Prime Minister Benja- Kerry to offer Israeli support for
min Netanyahu held a cabinet the U.N.-mediated talks as long
meeting in the Golan Heights for as their outcome doesn’t
the first time on Sunday, declar- threaten Israel. A U.S. Embassy
ing that Israel would never re- spokesman declined to comment.
turn the territory to Syria. Western officials recognize
As another round of peace the Golan Heights’s elevated po-
talks aimed at resolving the five- sition as strategically advanta-
year Syrian conflict continued in geous to Israel’s security as it
Geneva, Mr. Netanyahu said it overlooks Israeli towns and vil-
was time the international com- lages. Israel captured the terri-
munity recognized the Golan tory from Syria in the 1967
Heights as part of Israel. Arab-Israeli war, and formally
“The time has come for the annexed it in 1981.
international community to rec- —Rory Jones
 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. Monday, April 18, 2016 | A7

U.S. NEWS
Poll: Candidates Unfavorable Views
More voters hold negative views of Hillary Clinton, Ted Cruz and
Donald Trump than positive ones.
VotersDon’tWantConventionPick
Republican voters overwhelm- Mr. Trump has been accusing

Are Unpopular
BY JANET HOOK
Both parties’ presidential
frontrunners are growing in-
creasingly unpopular, a new
Wall Street Journal/NBC News
poll finds, with Hillary Clinton
showing an especially steep
decline over the last month.
Among voters in both par-
ties, 56% hold a negative view
of Mrs. Clinton and 32% hold a
positive view. That 24-point
gap is almost twice as wide as
in a Journal/NBC poll last
month, when 51% viewed her
negatively and 38% positively,
a 13-point gap.
GOP frontrunner Donald
Trump continues to be the
candidate viewed most nega-
tively, with 65% of registered
voters viewing him unfavor-
ably and 24% favorably, a 41-
point difference. Unlike with
Mrs. Clinton, those numbers
have not changed much over
the last month.
Sen. Ted Cruz of Texas, Mr.
Trump’s nearest competitor,
has an image problem of his
own. Nearly half of voters see
him in a negative light, while
26% view him positively.
The candidate with the
least baggage is Ohio Gov.
John Kasich, who also is the
least well known. Some 31% of
registered voters view him fa-
vorably and 19% view him un-
favorably; 31% are neutral, and
19% don’t know him or aren’t
sure.
Sen. Bernie Sanders, Mrs.
ingly reject the idea of GOP con- the GOP of having “rigged” the
Public image of candidates, among registered voters vention delegates’ choosing a system for selecting convention
Positive feelings minus negative feelings presidential nominee who hasn’t delegates to shortchange him.
run in the 2016 primaries, a new Mr. Cruz’s campaign said dele-
20 20
Wall Street Journal/NBC News gate rules should have been
10 10 Kasich poll found. known to all candidates.
Sanders +12 Asked about possible scenar- If no one comes to the con-
0 +9 pct. pts. 0 ios at this summer’s Republican vention with a delegate majority
National Convention, 71% of GOP in hand, the WSJ/NBC poll found
–10 –10 primary voters said it would be the voters want the convention
–20 –20 unacceptable for the party to se- to rely more on the will of the
Cruz lect a nominee from outside the Republican electorate than on
Clinton
–30 -24 –30 -23 ranks of the candidates who the judgment of the delegates.
have run in primaries and cau- Barring a delegate majority,
–40 –40 cuses. That illustrates stiff resis- the poll found, some 62% of the
Trump
-41 tance to the idea, floated by voters believe the convention
–50 –50
some in the party, that the con- should nominate the person who
2015 2016 2015 2016 vention could pick a “white won the most votes in the pri-
Source: WSJ/NBC survey of 1,000 registered knight’’ nominee as an alterna- maries. The poll found that 54%
voters, April 10-14, 2016 THE WALL STREET JOURNAL. tive to front-runner Donald of the voters said it would be
Trump and his chief rival, Texas unacceptable if Mr. Trump ar-
Clinton’s primary foe, also has The survey of 1,000 regis- Sen. Ted Cruz. Such a scenario rived at the convention with the
more fans than detractors: tered voters was taken April could arise only if neither Mr. most delegates but short of the
45% of voters viewed him pos- 10-14 and had a margin of er- Trump nor Mr. Cruz secures the required 1,237 and the conven-
itively and 36% view him neg- ror of plus or minus 3.1 per- 1,237 delegates needed to win tion nominated someone else.
atively. centage points. the nomination. —Janet Hook

Construction Unions’
Grip Starts to Ease
BY LAURA KUSISTO
New York’s construction
unions are suffering big losses
in market share, as one of the
country’s last strongholds for
organized labor has started
cracking.
The city’s largest construc-
tion firms are declining to re-
new collective bargaining
agreements with unions, open-
ing the door for more nonunion
workers and sending the clear-
est signal yet that once-mighty
construction trade groups are
losing their grip on private-sec-
tor construction work.
At least half a dozen of New
York’s largest firms, including
major players such as Tishman
Construction, Turner Construc-
tion Co. and Plaza Construction,
in recent months have declined
to sign agreements promising
to use only union labor on ev-
erything from high-rise residen-
tial projects to retail, hospital,
office and hotel construction,
according to people familiar
with the matter.
The moves allow the compa-
nies to begin using nonunion
workers, who tend to accept
lower wages and benefits and
are subject to fewer restric-
tions, on projects across the
city.
“We like being a union con-
tractor,” said Ralph Esposito,
president of Lend Lease, the
fifth-largest contractor in New
York. “The problem is that
there’s a cheaper alternative
out there and a large portion of
the market has shifted to that
model.”
Other cities are seeing a
pullback from union labor as
well. In Chicago, labor leaders
say they have lost market share
in the single-family residential
market and are concerned non-
union firms could encroach
more on large apartment and
office-construction projects.
New York City’s construction
unions have been among the
last bastions of strength for or-
ganized labor, which peaked in
influence during the 1950s with
a market share of about 35% of
the private sector U.S. labor
MARK ABRAMSON FOR THE WALL STREET JOURNAL
force, according to Jake Rosen-
feld, a sociologist at Washing-
ton University in St. Louis.
The construction industry
was even more heavily domi-
nated by unions, with more
than half of construction work-
ers carrying memberships in
the 1950s. The unions remained
powerful during the next three
Equity investment totals have
decades in cities such as New
York, Boston and Chicago
thanks in part to the complexity
reached $66 trillion worldwide.
of high-rise construction and a
favorable political climate. As
recently as the 1980s, New York
developers said virtually all res- In the U.S. alone, equity markets have grown more than 180%
idential projects built in the city since 2009. With that much at stake – for individuals as well as
used union labor exclusively. institutions – mutual funds, retirement funds and endowment
But in the last decade that
share has shriveled. According funds need a way to manage the risks of stock market fluctuations.
to a 2014 analysis by Locker As- CME Group gives investment professionals the tools they need to
sociates, a consulting firm to
address market exposure. This is how the financial industry can
unions, about 30% of mid- and
high-rise residential and hotel offer investors the right balance between risk and reward. This is
projects used unionized con- how the world advances. Learn more at cmegroup.com/finance.
crete workers exclusively, or
just over half in terms of square
footage.
While unions have lost a sig-
nificant share of private-sector
residential work, they remain
dominant in the construction of
public sector projects, as well as
hospitals and university build-
ings, union leaders say. Resi-
dential construction spending
hit around $15 billion in 2015,
the New York Building Congress
estimates, while spending on
public works reached nearly $13
billion.
In most cases, construction
firms aren’t eschewing union
workers altogether, but rather
are using a mixture of union
and nonunion laborers known
as “open shop.” In New York,
developers say that using solely
union workers increases costs
by about 20% to 30% compared
with open-shop arrangements.
A study in January by the Inde-
pendent Budget Office, a non-
partisan city research agency,
found that paying union wages
on affordable-housing develop-
ments increased costs by 23%.
Unions say their members
continue to perform work that
is safer and faster than their
competitors, and many develop-
ers agree.

New York construction unions say they work safer and faster.

The Vermont senator brushed

U.S.
Watch
DEMOCRATIC PRIMARY
Sanders Calls Vatican
Visit ‘Very Moving’
Democratic presidential candi-
date Bernie Sanders called his
weekend trip to the Vatican a
“very moving experience” and
dismissed suggestions that his
invitation to an academic confer-
ence there had been a sign of
support from Rome.
aside comments that Vice Presi-
dent Joe Biden made Friday in
which Mr. Biden expressed skep-
ticism that the conference invi-
tation implied that Pope Francis
might somehow be endorsing
Mr. Sanders’s economic agenda.
Mr. Sanders, in an interview
on CNN on Sunday morning, re-
sponded, “I’m in no way sug-
gesting the pope is embracing
my policies.”
Pope Francis met Mr. Sanders
on Saturday, but the pontiff
played down the brief encounter,
telling reporters he had simply CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
shaken Mr. Sanders’s hand out Copyright © 2016 CME Group. All rights reserved.
of politeness when he saw him
in the foyer of his residence.
—Nick Timiraos
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A8 | Monday, April 18, 2016
BRAZIL
Continued from Page One
tions a month ago. Swiss au-
thorities have closed four bank
accounts they say were his. The
attorney general says bribe
money was used to pay Cunha
family credit-card bills, includ-
ing $156,000 in the six months
through January 2015.
Mr. Cunha has denied any
wrongdoing. He has said the
Swiss accounts weren’t his,
and any money he spent was
earned legally. He declined to
be interviewed.
The sweeping Petrobras
scandal, in which businessmen
and politicians stand accused
of diverting oil-company
money to themselves and po-
litical parties, with 84 convic-
tions so far, has spurred hopes
that a country long beset by
corruption may be turning an
ethical corner. That the legis-
lator overseeing impeachment
is also facing charges suggests
how difficult that will be, in a
country where the roots of
corruption are deep.
Ms. Rousseff has said she
did nothing wrong. Her aides
contend Mr. Cunha supported
impeachment to divert atten-
tion from himself. They note
that after months of bottling
up impeachment motions, Mr.
Cunha decided to move one
forward just hours after Ms.
Rousseff’s party said it would
no longer vote to protect him
from prosecution.
A poll this month showed
61% of Brazilians think Ms.
Rousseff should be removed
from office; 77% think Mr.
Cunha should be.
According to a nonprofit
called Transparência Brasil,
60% of Brazil’s federal legisla-
tors have been convicted or
are under investigation, for
crimes ranging from corrup-
tion to electoral fraud to as-
sault. The president of the
Senate, Renan Calheiros, is a
focus of numerous lines of in-
vestigation in connection with
the Petrobras scandal; he de-
nies any involvement. Ex-Pres-
ident Luiz Inácio Lula da Silva
is also under investigation,
suspected of being the real
owner of a ranch and a beach-
front apartment registered to
third parties, which he denies.
Many Brazilians are caught
between satisfaction at seeing
leaders held accountable and
despair that so much of the po-
litical class is implicated.
“I want Dilma gone, but that
won’t change everything. Do
you know why? The person next
in line after her is terrible, and
the person after him is worse,
and so on,” said Thiago Vieira, a
young financial analyst who
stood in a sea of protesters
chanting “Dilma Out!” in São
Paulo on March 13.
SAVIKA
Continued from Page One
hump that a wrestler grips dur-
ing the bucking and bouncing.
“It’s a pure expression of
pleasure,” said Zakamady Raja-
onah, a spiritual guide in Imady,
a region of rice paddies and
misty peaks where savika tour-
naments are often held to cele-
brate births, marriages and
other milestones. “The wrestler
wins and the bull wins, equally.”
The sport’s keepers say sa-
vika dates to the reign of Andri-
anampoinimerina, the 18th-cen-
tury ruler of a kingdom on
Madagascar’s hilly central pla-
teau. That moniker is an abbre-
viation for Andrianampoin-
imerinandriantsimitoviaminan
driampanjaka, a 53-letter name
that roughly translates as “the
beloved prince in the heart of
Imerina, who surpassed the
reigning prince.”
Tongue-twisting surnames
are just one of the idiosyncra-
sies of this exotic island where
90% of the plants, reptiles and
mammals, such as the famed
monkey-like lemurs, exist no-
where else. Some officials and
entrepreneurs want to make sa-
vika as synonymous with their
country to outsiders as those
ring-tailed primates.
“Savika is a treasure of Mad-
agascar’s vibrant culture,” said
Jean Claude, director-general of
Madagascar’s sports ministry.
He said officials are taking an
inventory of other traditional
sports and pursuing “win-win
partnerships” with businesses
that might want to build them
into a bigger draw for Malagas-
ies and foreign tourists.
An hour down rutted dirt
roads from Imady, businessman
Georges Rakotoson has built a
10,000 seat stadium in Ambosi-
tra to host the savika shows he
holds several times a year. Over
Eduardo Cunha, an indicted Brazilian legislator, set a floor vote on impeaching President Rousseff.
The impeachment charge
against Ms. Rousseff doesn’t
involve Petrobras. The motion
alleges she violated federal
budget laws by using loans
from state-owned banks to
mask the size of the govern-
ment’s budget deficit.
An electoral court, however,
is investigating whether Ms.
Rousseff’s 2014 re-election
campaign was funded partly
with kickbacks from the Petro-
bras scandal. She says it
wasn’t. Public support for Ms.
Rousseff’s ouster has surged
as the corruption allegations
have widened and the econ-
omy tanked. Many blame Ms.
Rousseff for allowing corrup-
tion to flourish, noting she
was the Petrobras chairwoman
while much of the scandal un-
folded. She says she was un-
aware of any illegal activities.
Ms. Rousseff’s replacement if
she were removed would be
Vice President Michel Temer
from Mr. Cunha’s PMDB party,
which shared power with the
president’s Workers’ Party be-
fore splitting off in March. Mr.
Temer is included in the elec-
toral court investigation of
whether bribe money funded
Ms. Rousseff’s 2014 campaign;
he denies that it was. Mr. Temer
stepped down as leader of the
PMDB this month after a Su-
preme Court justice made a pre-
liminary ruling that any im-
peachment of Ms. Rousseff
must consider him, too.
Mr. Temer’s successor as
party chief, Sen. Romero Jucá,
is under investigation in con-
nection with the Petrobras
scandal. He denies having any-
thing to do with it.
“My God in heaven, this is
our alternative leadership?”
said Supreme Court Justice
Luis Roberto Barroso on March
31 in a meeting with law stu-
dents that he didn’t know was
A savika tournament in rural Madagascar last month. Riders grab on to the zebu bull’s hump and try to hang on. The bull-riding sport dates to the 18th century.
the recent Easter holidays, Mr.
Rakotoson staged his biggest
savika tournament ever, includ-
ing a performance by a Mala-
gasy pop star called Stephanie.
“We’re uniting savika and
showmanship,” Mr. Rakotoson
said. His spectacles are safer
and slicker, he said, than the
rollicking all-day tournaments
held in the mountains above.
The best riders win about $10,
more than three times the re-
ward they reap in Imady.
But traditionalists aren’t
sure they want to stray too far
beyond their home turf. They
definitely don’t want their
sport mimicking its American
FROM PAGE ONE
being recorded. “The problem
with our politics at this mo-
ment is the lack of alternatives.
There is nowhere to run.”
Third in line to the presi-
dency is Mr. Cunha, 57 years
old. An economist by training,
he broke into politics campaign-
ing for Fernando Collor, who
won the presidency in 1989 and
named Mr. Cunha to run Rio de
Janeiro’s phone company. Mr.
Collor was impeached for cor-
ruption in 1992.
A religious conservative, Mr.
Cunha began hosting a radio
show decrying abortion and
same-sex marriage. He often ex-
claimed, “The people deserve
respect!” In 2003, he won a seat
in the lower house of congress
with Evangelical support.
Ms. Rousseff could
become the second
president impeached
in Brazil.
His backers there describe
Mr. Cunha as a dusk-to-dawn
negotiator, often using an iPad
or cellphone to send What’s
App messages to a network of
allies. His knack for raising
funds and delivering votes
won him support among doz-
ens of lawmakers in several
parties, analysts say.
In February 2015, he be-
came president of the lower
house, called the Chamber of
Deputies. By then, the Petro-
bras scandal was claiming
prominent businesspeople,
and voters were calling for Ms.
Rousseff’s removal.
Mr. Cunha appeared invinci-
ble. Brazilian news magazines
compared him to Frank Under-
wood, the scheming politician
played by Kevin Spacey in the
drama “House of Cards.”
counterpart, which they dis-
miss as sanitized.
“Very sad,” said Razafindra-
miango Rasolotafika, Imady’s
deputy mayor and a former
wrestler. Of U.S. contests that
can earn a bull rider hundreds
of thousands of dollars for stay-
ing aloft just eight seconds, he
said: “It’s very commercial.”
Instead, the 60-year-old,
who is also the high-school
philosophy teacher (favorite
thinkers: Socrates and Kant),
wants visitors to experience
savika in beautiful but impov-
erished Imady.
“Savika is for the good of
the people who live here every
THE WALL STREET JOURNAL.
gators Mr. Cunha had received
a $5 million cut of the bribe
paid in the oil-platform con-
tracts, which was paid mostly
to a Petrobras executive and a
money launderer, according to
the indictment. It said the bro-
ker, Julio Camargo, described a
meeting he said he had with
Mr. Cunha to discuss the
scheme at an office in the Leb-
lon district of Rio de Janeiro.
Mr. Cunha summoned Mr.
Camargo’s defense attorney be-
fore a congressional commis-
sion. The attorney, Beatriz Catta
Preta, never appeared. She told
a television journalist she had
received “veiled threats.” She
dropped Mr. Camargo as a cli-
ent and closed her law practice.
IGO ESTRELA/GETTY IMAGES
“After everything that’s
happening, and to ensure the
safety of my family, of my
children, I decided to end my
career in the law,” she said in
a TV interview. Ms. Catta
Preta couldn’t be reached for
comment. Mr. Camargo’s new
lawyer didn’t return a message
In March 2015, however, the left with his assistant.
Supreme Court gave the attor- The following month, August
ney general the go-ahead to in- 2015, Brazil’s attorney general’s
vestigate Mr. Cunha and dozens office brought its charges
of other politicians. Mr. Cunha against Mr. Cunha. According to
made an hourlong speech in the charges, the bribe arrange-
congress calling the investiga- ment hit a snag in 2011, stop-
tion a joke. Legislators ap- ping the payments, which were
plauded loudly. meant to come in installments.
By August, the attorney gen- Mr. Cunha responded by start-
eral had brought charges ing a congressional corruption
against Mr. Cunha, alleging that investigation of Samsung Heavy
from his position in congress, Industries’ contracts, the charg-
he pressured executives for ing document said, and as a re-
bribes in exchange for amend- sult of this pressure tactic, the
ments favorable to their busi- remaining bribe installments
nesses. He has denied that. were paid.
The main charges related to The document said that at a
the Petrobras matter, which time when Mr. Cunha’s annual
many call Brazil’s biggest ever income was around $120,000,
corruption scandal. The oil he took his wife and daughters
company has acknowledged for a New Year’s 2013 trip to
losses of $17 billion from it, in- Miami—staying at the five-star
cluding from embezzlement and Perry Hotel, spending around
money-losing projects. $1,000-a-pop dining at places
The indictment alleged that like Joe’s Stone Crab, and run-
in 2006, Mr. Cunha helped or- ning up a credit-card bill of
chestrate a $40 million bribe $42,000 in nine days.
in exchange for two contracts In February 2015, he flew to
to build floating oil platforms France and spent $8,000 at a
for Petrobras. The charges menswear boutique and $16,000
said a broker who represented at the Plaza Athénée hotel, an-
South Korean shipbuilder other charging document said.
Samsung Heavy Industries and Mr. Cunha has denied re-
its partners paid the bribe out ceiving any kickbacks or
of a huge fee he charged his bribes. Samsung Heavy Indus-
clients. The broker opened a tries, which hasn’t been
running tab for Mr. Cunha at a charged, didn’t respond to re-
business-jet charter firm, the quests to comment.
charges said. Though Brazilians facing
Mr. Cunha began opening such charges normally would
Swiss bank accounts under be arrested, Mr. Cunha hasn’t
various names, such as “Tri- been. An immunity provision in
umph,” the Brazilian charging Brazil’s constitution says law-
documents said. They said in- makers can be arrested only if
vestigators have traced oil congress or the Supreme Court
money to these accounts, in- sanctions the move.
cluding a kickback from an ex- Another provision says they
ecutive appointed to Petrobras can be tried only by the coun-
by the PMDB. try’s Supreme Court. Together,
The broker who represented the rules shield legislators from
Samsung Heavy Industries be- most prosecutions. The bulk of
came a cooperating witness in the seven-dozen Petrobras con-
July 2015, according to Brazil- victions have been against busi-
ian prosecutors. He told investi- nesspeople, not politicians.
day alongside these bulls,” he struck up a relationship with a
said, gesturing to the beer and savika wrestler who caught her
stew stalls catering to the rev- eye. “Just don’t tell my dad,”
elers who flocked to watch she added with a laugh.
their champions in Imady. U.S. rodeo stars also draw
Mr. Rasolotafika’s 27-year- their share of besotted fans,
old daughter Patricia made the but savika wrestlers say for
six-hour journey from the cap- them it isn’t about notches on
ital, Antananarivo, to watch their trophy belt buckles, it’s
the tournament that pitted Mr. about making a love match.
Toto and other grapplers Mr. Toto said he had hoped his
against more than 50 ornery feats in the ring would help
bulls. She underscored how him woo a neighbor from a
the sport kicks up a different nearby farm.
kind of excitement. As he prepared to fling him-
“It’s a way to date, to meet a self atop his first bull, the MC
boy. All young people are here,” blared a recent hit called “Boss
said the graduate student, who of the Bull” over the generator-
is single. She said she once powered sound system.
Last fall, critics of Mr. Cunha
in congress attacked his immu-
nity through an inquiry by an
ethics commission. The legisla-
tor in charge was Fausto Pinato.
On the night of Nov. 12, accord-
ing to a police report filed by
Mr. Pinato and his chauffeur,
two motorcyclists approached
the driver and said, “Ask your
boss whether he wants to go to
heaven or whether it is better to
collaborate with the situation.
He has a beautiful daughter, a
beautiful wife, a nice brother…”
A spokesman for Mr. Pinato
said he doesn’t know who
threatened him and isn’t ac-
cusing Mr. Cunha, who says he
had no involvement. Mr.
Pinato is no longer on the eth-
ics commission because he
changed parties.
On Dec. 2, the leader of Ms.
Rousseff’s party in the lower
house of congress announced
the party would vote to strip
Mr. Cunha of his immunity
from prosecution.
Later the same day, Mr.
Cunha said he was moving for-
ward with impeachment pro-
ceedings against Ms. Rousseff.
In the previous months, Mr.
Cunha had blocked 27 motions
for impeachment. Asked by re-
porters whether the Rousseff
party’s position against him
had prompted his switch, he
said no, his switch on impeach-
ment was a technical decision
based on the large number of
motions reaching his desk.
Brazil’s attorney general
this year asked the Supreme
Court to lift Mr. Cunha’s im-
munity. The court hasn’t ruled.
What the court did do, in
March, was to accept charges
the attorney general filed last
summer. That made Mr. Cunha
officially a defendant. He still
has immunity from arrest.
The lead prosecutor in the
Petrobras case, Deltan Dallag-
nol, calls for an overhaul of
rules such as legislators’ immu-
nity. He says corruption runs so
deep that even the dozens of
convictions in the Petrobras in-
vestigation won’t root it out.
“If we want a country with-
out corruption and impunity,
we have to alter the institu-
tions,” he said at a conference.
Mr. Cunha’s first political pa-
tron, ex-President Collor, re-
turned to government 15 years
after his impeachment. He was
elected to the Senate and put in
charge of an ethics committee.
Last year, federal police be-
gan investigating Mr. Collor in
connection with the Petrobras
scandal. Raiding his home,
they found a Lamborghini, a
Porsche and a Ferrari. His
spokesman says he is innocent.
The attorney general
brought charges, which the Su-
preme Court, so far, hasn’t ac-
cepted. In the Senate, Mr. Col-
lor will be among those voting
on Ms. Rousseff’s impeachment,
if it passes the lower house.
NAMRATA SINGH FOR THE WALL STREET JOURNAL
“Boss of the bull, boss of
the bull—women love him!”
the singer crooned over gal-
loping guitars and bass as on-
lookers sang along.
Mr. Toto cocked back his
straw hat and jumped aboard.
Like the best savika practitio-
ners, he locked his legs in a scis-
sor grip around the bull’s front
left limb, to narrow the distance
the beast could spin and leap.
When Mr. Toto tumbled off,
he learned his crush hadn’t
shown up to watch. But after
his fourth ride, Ms. Wahangy,
a former flame, pulled him
aside. “She said she was im-
pressed,” he said.
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A Texas case How a librarian

points to hard in Timbuktu
truths about race saved priceless
and capital books from
punishment al Qaeda
A11 A11

BOOKS | CULTURE | SCIENCE | COMMERCE | HUMOR | POLITICS | LANGUAGE | TECHNOLOGY | ART | IDEAS
© 2016 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Monday, April 18, 2016 | A9

The
Conservative Movement
Next
ILLUSTRATION BY TIM O’BRIEN

Trump’s demagoguery looks back with nostalgia to an America that no longer exists.
To revitalize the Republican Party, conservatives need to offer
bottom-up solutions that match today’s diverse, dynamic social reality.
BY YUVAL LEVIN
THE AMERICAN RIGHT IS IN CRISIS. This year’s pres-
idential race, however it turns out, has revealed deep
fissures in the Republican coalition. A third to a half
of Republican voters in state after state have given
their backing to Donald Trump, a divisive demagogue
whose case for himself has essentially nothing to do
with conservatism. The rest of the party has been left
baffled—wondering what has happened to the Repub-
licans and where American politics might be headed.
To answer those questions, we need to see that
they are not one and the same. The Trump phenome-
non can help us to grasp what has happened but not
what is coming next. Mr. Trump marks not the begin-
ning of a new phase in American politics but the end
of an old one—the exhaustion of a mid-20th-century
model of national politics that can no longer meet the
needs of 21st-century America. Mr. Trump disgorges
an angry aggregation of failures and complaints, but
he offers no solutions and no way forward.
Understanding the roots and appeal of his message
can help us to understand how our politics has
changed in recent decades. More important, it can
help us to see what the constructive next phase of the
American right could look like—a decentralizing con-
© 2016 Dow Jones & Co., Inc. All rights reserved. 6DJ3654
servatism of bottom-up solutions for our increasingly
fragmented society.
Mr. Trump’s core message is often labeled as popu-
list, but it would be better described as mournful or
nostalgic. A populist argues that the people are being
oppressed by the powerful. But Mr. Trump claims not
that our elites or the “establishment” are too strong
but that they are too weak—indeed, that the people
who hold power and privilege in our leading institu-
A decentralized politics
for an increasingly
fragmented country.
tions are pathetic losers and that, therefore, nothing
in America works the way it used to and our country
“doesn’t win anymore.”
This contention taps into a powerful, widely shared
sense that the U.S. has lost ground—that we have
fallen far and fast from a peak that many can still re-
member. Both Democrats and Republicans often ap-
peal to such a sense of loss. For Democrats, the peak
came in the 1960s, when cultural liberalization seemed
to coexist with a highly regulated economy. For Re-
publicans, it came in the 1980s, when economic liber-
alization was accompanied by a resurgence of national
pride and a renewed emphasis on family values. By
now, American politics is largely organized around
these related modes of nostalgia, and the two parties
address voters as if it were always 1965 or 1981.
Much of Mr. Trump’s appeal has to do with his even
vaguer nostalgic message. He mentions no specific
peak to recover and offers little in the way of a policy
agenda; he just harks back to a lost American great-
ness and says that he alone can recapture it by revers-
ing globalization, immigration and other modern
trends. And in the process, by impugning Mexicans,
Muslims and women, he embraces the ethnic or cul-
tural animosities of some of those who most resent
the ways America has changed. He has taken the logic
of our nostalgic politics to its absurd conclusion.
In its less cartoonish forms, today’s nostalgia is un-
derstandable. The America that our exhausted, wistful
Please turn to the next page
Mr. Levin is the editor of National Affairs and the
Hertog Fellow at the Ethics and Public Policy Center.
This essay is adapted from “The Fractured Republic:
Renewing America’s Social Contract in the Age of
Individualism,” to be published in May by Basic Books.

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A10 | Monday, April 18, 2016
MIND & MATTER:
MELVIN KONNER
A Mammoth’s Tale
Of Human Courage
And Ingenuity
PICTURE YOURSELF in a Si-
berian wasteland 45,000 years
ago. Your very presence will
someday impress archaeolo-
gists: They had thought your
kind—their kind, too—were
nowhere near that far north that long ago.
You are there because you and your fam-
ily—moved by the usual rumble in your bel-
lies and growing human numbers to the
south—have been following one of the larg-
est land mammals, the woolly mammoth, as
its own population explosion presses into
the Arctic circle.
Protected from most predators, the mam-
moths are doing so well that their herds
must range farther for food. So you, under
pressure from human competition, range
farther for your food: them. One is in front
of you now. Not the biggest you’ve seen, but
he’s taller than you and weighs tons. You’d
rather be nowhere near him, but you, your
brother, cousins and friends form an uneven
oval around the giant.
He’s scared, angry and dangerous. But you
don’t think of breaking and running because
(aside from your own hunger) it would be the
ultimate betrayal of these other men. You
owe them a lot. You can’t be shamed in their
eyes. You stand your ground.
Why credit this account of a prehistoric
event? Because of a remarkable paper, pub-
lished in the journal Science in January, by
a group of Russian scientists led by Vladi-
mir Pitulko. They studied the carcass of
this colossus and figured out how he met
his end. His injuries—those that killed him
and those after death—could only have
been inflicted by men.
Think of wild dogs attacking some large
animal. They are no threat individually, but
they are deadly together. The men who fol-
lowed that mammoth across the tundra had
no razor teeth or ripping claws, but some-
thing better: tried and true tools that they
wielded masterfully.
The hairy titan’s bones tell the story. He
was around 15 years old and in good shape
but not as wily as an older bull. The humans
surrounding him were smaller but much
smarter and better armed.
Spears breached his rib cage in several
places, sinking through skin and muscle,
scoring the bone on
their way to vital
Russian organs. Three
scientists pierced his left
scapula, at the
reimagine height of a human
a Siberian shoulder, entering
hunt, hard on a down-
ward path after
45,000 they were thrown.
years ago. The spears were
seeking his heart,
and the men throw-
ing them would
make the tosses of a first-rate quarterback
look weak and sloppy.
The last of their talents was to finish off
the goliath after he fell at their feet, still full
of rage and strength. One of them thrust a
bone- or ivory-pointed spear into the mam-
moth’s cheek. He wouldn’t have been aiming
there but at the arteries feeding the trunk,
as modern elephant hunters, like the forag-
ers of the African tropical forest, still do.
Surprisingly, the point didn’t break off.
How do we know all of this? Because the
Russian scientists deployed tools of their
own—CT scans to peer into bones and or-
gans, radiocarbon dating to establish the
time frame, stratigraphy to analyze and or-
der the soil and rock layers where the fos-
sils were found—in that same clever old hu-
man way. Like their prehistoric forbears,
they reasoned through the problem, devel-
oped a strategy and cooperated to nab their
quarry.
The men got all they could from the
beast. Damage to a tusk shows that they
sliced from it slim, sharp knives and scrap-
ing tools of the hardest ivory. Other evi-
dence suggests that the men took the
tongue as a delicacy or for some ritual,
though they left the penis behind.
I lived long enough with modern hunter-
gatherers to have a feel for this sort of hunt.
I used to believe that the role of hunting had
been exaggerated, that early humans were
scavengers, mostly vegetarian. Granted, dif-
ferent patterns evolved in different times
PETER OUMANSKI
and places. But this too is our legacy: a band
of men subduing a huge threatening beast to
feed their families. Brilliant, skillful and
bold.
THE WALL STREET JOURNAL.
REVIEW
A New Right for a New America
Continued from the prior page out American society, rather than hoping that Washington will
politics so misses, the nation as it first emerged from the Greatget things right, conservatives can bring to public policy the
Depression and World War II and evolved from there, was (at kind of dispersed, incremental, bottom-up approach to progress
least for its white citizens) exceptionally unified and cohesive.that increasingly pervades every other part of American life
It had an extraordinary confidence in large institutions—in the while reviving community and civil society to combat disloca-
ability of big government, big labor and big business to work to-tion and isolation.
gether to meet national needs. Its cultural life was dominated In health care, for instance, the old progressive approach has
by a broad traditionalist moral consensus that celebrated two- been to centralize decision-making so that consolidated exper-
parent families with children born into wedlock and frowned on tise could direct our immense health-care system more effi-
divorce and abortion. And in the wake of a world war in which ciently. Obamacare, like Medicare and Medicaid before it, em-
most potential competitors had burned each other’s productive bodies this approach—and demonstrates its failings. The new
capacities to the ground, the U.S. utterly dominated the global conservative approach would liberate insurers and providers
economy, offering opportunity to workers of all stripes. to offer many different models of coverage and care, empower
But almost immediately after the war, that consolidated na- consumers to choose (including through financial assistance to
tion began a long process of unwinding and fragmenting. Dur- those unable to afford insurance) and let their choices matter—
ing the 1950s, ’60s and ’70s, the culture liberalized, the econ- making the system more efficient from the bottom up.
omy was deregulated to keep up with rising competitors, and Or consider primary and secondary education, where the old
an exceptional midcentury elite consensus in politics gave way progressive model was the universal public-school system—of-
to renewed divisions. In time, this fracturing of consensus grew fering one product to all and administering it in as centralized
from diffusion into polarization—of political views, economic a way as public opinion would permit. The new conservative
opportunities, incomes, family patterns and ways of life. We approach would instead direct its resources to let parents make
have grown less conformist but more fragmented, more diverse choices for their children and allow the education system to
but less unified, more dynamic but less secure. take shape around their priorities and preferences.
All this has meant many gains for America: in national pros- As these examples suggest, such a bottom-up approach has
perity, personal liberty, cultural diversity, racial inclusion, tech-
long been championed by conservatives in some arenas, albeit
nological innovation and more meaningful options and choices with limited success against an entrenched progressive welfare
in every realm of life. But it has also meant a loss of faith in state. But as the old progressive model exhausts itself, a new
institutions, a loss of social order and structure, a loss of cul-
conservative approach can make its case more boldly—both in
tural cohesion, a loss of security and stability for many work- familiar arenas and in new ones, from welfare to higher educa-
ers, and a loss of political and moral consensus. Those losses tion to local public administration and more.
have piled up in ways that to some Americans now often seem A welfare system that could better address the problems of
to overwhelm the gains and have made 21st-century American those left behind by the global economy or mired in intergener-
politics distinctly backward-looking and morose. ational poverty wouldn’t be a one-size-fits-all bureaucratic re-
Conservatives and liberals stress different facets of these gime. Rather, it would empower local problem-solvers to mix
changes. Liberals treasure the social liberation and growing cul-resources, advice, experience and moral leadership in a con-
tural diversity of the past half-century but lament the economic tinuing process of bottom-up experimentation. State and city
dislocation, the loss of social solidarity and the rise in inequality.
welfare agencies will bring different tools to bear than reli-
Conservatives celebrate the economic liberalization and dyna- gious charities, local employers or community groups—and all
mism but lament the social instability, moral disorder, cultural should be allowed to try. That is what you do when you don’t
breakdown and weakening of fundamental institutions and tradi- have all the answers.
tions. Part of Mr. Trump’s appeal has been that he basically la- A higher-education system geared to a 21st-century America
ments it all—and thus unites the anxieties of wouldn’t reinforce a cycle of rising tuition
those who see no real upside for themselves in and declining value with inflationary federal
the evolution of modern America. A politics loans. Instead, it would open up accreditation
But a politics of angry lamentation, whatever
visceral appeal it may have, cannot look for-
of angry to allow for more options, let students and
parents have more information about out-
ward. America cannot afford a competition of lamentation comes and offer aid to the needy that re-
barren nostalgias. We need a politics that builds
on our strengths to address our weaknesses.
cannot look warded high value, not high prices. Some
schools (like Purdue University) are experi-
The greatest challenges that America now forward. menting with new models of aid, and some
confronts are the logical conclusions of the states (like Texas) are leading the way toward
path of individualism and fracture, dissolution lower-cost degrees. Conservatives should
and liberation that we have traveled since the make it easier for others to follow.
middle of the last century. And the greatest resources at our dis- The work of government more broadly—especially at the
posal for tackling those challenges are the products of our having
state and local levels, where most government happens—should
traveled this path too. We face the problems of a fractured re- abandon the model of the centralized, technocratic industrial
public, and the solutions we pursue will need to call upon the economy in favor of today’s decentralized, consumer-driven,
strengths of a decentralized, diffuse, diverse, dynamic nation. postindustrial economy, using public resources to encourage
For all the GOP’s troubles, it will actually be easier for con-
constructive experimentation with public services rather than
servatives than for liberals to see their way toward such a for- to impose tired dogmas from above. Some forward-thinking
ward-looking politics. For one thing, conservatives can much state and local leaders, like Indiana Gov. Mike Pence and San
more clearly see the bankruptcy of a nostalgic politics. Many Diego Mayor Kevin Faulconer, offer useful models of how com-
liberals still cling complacently to the anachronism of social petition between private and public service providers can im-
democracy as their vision of the future. prove both.
Conservatives, especially after this year of pandemonium, Such a modernized conservatism would also have much to
can hardly be so smug about their own inherited agenda. But offer to our troubled cultural debates. In an increasingly frac-
if conservatives can look past their own nostalgia, they will be tured society, moral traditionalists should emphasize building
well positioned to grasp the appeal of a politics of decentral- cohesive and attractive subcultures, rather than struggling for
ization and diffusion, and thus to offer solutions suited to the dominance of the increasingly weakened institutions of the
society America has become. mainstream culture. While some national political battles, es-
Some traditional conservative priorities—especially an em- pecially about religious liberty, will remain essential to pre-
phasis on economic growth—remain vital to any such forward- serve the space for moral traditionalism to thrive, social con-
looking politics. But that can only be a start. Beyond growth, servatives must increasingly focus on how best to fill that
a modernized conservative policy agenda would seek to use the space in their own communities. That is how a traditionalist
very diversity and fragmentation of 21st-century America to moral minority can thrive in a diverse America—by offering it-
meet its challenges. By empowering problem-solvers through- self not as a path back to an old consensus that no longer ex-
ists but as an attractive, vibrant al-
ternative to the demoralizing chaos
of the permissive society.
Indeed, the revival of the mediat-
ing institutions of community life is
essential to a modernizing conserva-
tism. These institutions—from fami-
lies to churches to civic and frater-
nal associations and labor and
business groups—can help balance
dynamism with cohesion and let cit-
izens live out their freedom in prac-
tice. They can keep our diversity
from devolving into atomism or dan-
gerous cultural, racial and ethnic
Balkanization. And they can help us
to use our multiplicity to address
our modern challenges.
In the crisis of this election
year, the right has been brought
face-to-face with the bankruptcy
of its version of nostalgic politics.
The conservatism that follows Mr.
Trump will need to confront the
genuine public concerns into
which he has tapped, about trade,
downward social mobility and di-
minished opportunity. But conser-
vatives will need to offer an ap-
proach far more constructive than
Mr. Trump’s vulgar and abusive
demagoguery.
Conservatives may not feel it
just now, but they are actually
equipped to take on that challenge,
once they see it clearly. The right’s
decentralizing mind-set, disposi-
tion toward community and innate
PICTORIAL PARADE/ARCHIVE PHOTOS/GETTY IMAGES
skepticism of technocratic govern-
ment will serve them well—and
leave them far better equipped to
address America’s modern prob-
lems than liberals who have yet to
confront the exhaustion of their
own political vision.
For the right, Mr. Trump marks
the disastrous end of an era. But
beyond the crisis that he embodies
beckons the prospect of a revital-
ized conservatism and a revitalized
WORKERS leaving a Boeing factory that produces B-52 bombers, Seattle, circa 1955. America.
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PER-ANDERS PETTERSSON/LIAISON/GETTY IMAGES
Death Row’s
Race Problem
Capital punishment falls
hardest on Southern blacks
BY DAVID OSHINSKY
TIME MAY BE running out for Duane Buck, a
death-row inmate in Texas since 1997. Next week
the U.S. Supreme Court will consider whether to
hear Mr. Buck’s latest—and likely last—appeal.
His argument largely rests on the use of damag-
ing racial speculation during the sentencing
phase of his trial. Mr. Buck’s supporters claim he
is being executed because he is black. That is a
stretch, given the facts of his crime, but his case
does present a substantial challenge to the death
penalty as it has been applied historically.
There is no disputing Mr. Buck’s guilt, though
the more gruesome details have been airbrushed
from the briefs and petitions now propelling his
THE LIBRARIAN WHO SAVED TIMBUKTU’S BOOKS FROM AL QAEDA
BY JOSHUA HAMMER
FOR CUSTODIANS of the ancient heritage of
the Middle East and North Africa, the recent
rise of Islamist extremist groups has posed a
dire challenge. Since its seizure of the historic
Iraqi city of Mosul in early 2014, Islamic State
has pillaged and demolished mosques, shrines,
churches and other sacred sites across the re-
gion. The group continues to launch “cultural
cleansing” operations from Tikrit to Tripoli.
In this grim procession, there have been oc-
casional victories for culture over extremism,
like the recapture last month of the ancient Syr-
ian city of Palmyra, which may now be restored
to something of its previous glory. A less famil-
iar case of cultural rescue features an unlikely
hero: a 51-year-old book collector and librarian
named Abdel Kader Haidara in the fabled city of
Timbuktu, in the West African country of Mali.
The story begins in April 2012, when Mr. Hai-
dara returned home from a business trip to
learn that the weak Malian army had collapsed
and that nearly 1,000 Islamist fighters from one
of al Qaeda’s African affiliates, al Qaeda in the
Islamic Maghreb, had occupied his city. He en-
countered looters, gunfire and black flags flying
from government buildings, and he feared that
the city’s dozens of libraries and repositories—
home to hundreds of thousands of rare Arabic
manuscripts—would be pillaged.
The prizes in Mr. Haidara’s own private col-
lection, housed in his Mamma Haidara Com-
memorative Library, include a tiny, irregularly
shaped Quran from the 12th century, written on
parchment made from the dried skin of a fish
and glittering with illuminated blue Arabic let-
ters and droplets of gold. His collection also
boasts many secular volumes: manuscripts
about astronomy, poetry, mathematics, occult
REVIEW
appeal. Twenty-one years ago, Mr. Buck forced
his way into the home of Debra Gardner, an ex-
girlfriend, and began shooting. Within minutes,
two people (both black) were dead, and another
(also black) was critically wounded. Ms. Gard-
ner’s 13-year-old daughter jumped on Mr. Buck’s
back to stop him, screaming, “Duane, don’t
shoot, don’t kill my mama,” while Ms. Gardner
pleaded for mercy from her knees. In the police
car, Mr. Buck joked about the killings, telling one
officer, “The b— got what she deserved.”
An execution seemed likely. Mr. Buck’s
rampage involved a double murder; one of the
victims was a mother; he had a previous con-
viction for cocaine; and he showed no re-
morse. Most important, the crime occurred in
Harris County, Texas.
Since 1976, when the Supreme Court rein-
stated capital punishment following a short mor-
atorium, 537 of the 1,434 executions in the U.S.
AMI VITALE/PANOS
ABDEL KADER HAIDARA with ancient family-owned manuscripts, Timbuktu, Mali, 2007.
sciences and medicine, such as a 254-page vol-
ume on surgery and elixirs derived from birds,
lizards and plants, written in Timbuktu in 1684.
“Many of the manuscripts show that Islam is a
religion of tolerance,” he told me.
Mr. Haidara knew that many of the works in
the city’s repositories were ancient examples of
the reasoned discourse and intellectual inquiry
that the jihadists, with their intolerance and rigid
views of Islam, wanted to destroy. The manu-
scripts, he thought, would inevitably become a
target.
A few days after the jihadist occupation be-
gan, Mr. Haidara, who worked full time as a
book restorer, archivist and fundraiser, met with
his colleagues at the office of the Timbuktu li-
PRISON GUARDS lock
up a death-row inmate
in Huntsville, Texas, on
April 14, 1997.
have occurred in Texas. Harris
County, home to greater Hous-
ton, has accounted for 126 of
them—24% of Texas’ total. (The
total for Travis County, home to
more liberal Austin, is six.)
Were Harris County a state, it
would rank second, behind only
Texas itself, in the number of
executed offenders. Its prosecu-
tors have been well-versed in
managing capital cases and
well-funded in guiding them to
completion.
The jury deciding Mr. Buck’s
case quickly found him guilty.
But trouble arose in the sen-
tencing phase. In 1976, the Su-
preme Court had fretted over,
but let stand, a section of the
Texas death-penalty statute that
requires jurors to determine
whether the defendant is likely
to “commit acts of violence con-
stituting a continuing threat to
society.” In short, it asks jurors
to speculate about someone’s
future conduct in a decision in-
volving life and death.
Psychologist Walter Quijano,
an expert witness called by the
defense, testified that Mr. Buck
was a model prisoner who had
committed a crime of passion
that he was unlikely to repeat.
But Dr. Quijano’s written assess-
ment contained “statistical fac-
tors” defining Mr. Buck’s behav-
ior, and one of these was race.
Being black, he thought, in-
creased the “probability” of vio-
lent behavior in the future.
During cross-examination,
the prosecution focused on this
part of Dr. Quijano’s report, ask-
ing him if it was correct that
“the race factor, black, increases
the future dangerousness for
various complicated reasons.”
Dr. Quijano answered “yes.”
Dr. Quijano couldn’t be
reached to comment. In 2013, he
told CNN, “They pick that one piece of testimony
and twist it and make it look like race causes peo-
ple to commit crimes, which is stupid.”
Some believe that Dr. Quijano was simply
stating an unfortunate truth. Black-on-black vio-
lent crime is epidemic in met-
ropolitan areas, including
Harris County, where the ho- Did racism
micide rate is 3.1 per 100,000
inhabitants for whites, and
taint the
16.6 per 100,000 for blacks. It sentencing of
is no surprise, therefore, that
blacks comprise 43% of the
a Texas
death-row inmates in Texas, murderer?
while making up barely 12% of
the state’s population.
But there is a deeper, more
troubling racial dimension to such cases. Accord-
ing to data from the Death Penalty Information
Center, 72% of the nation’s executions since 1976
have occurred in the 11 former slaveholding
states of the Old Confederacy, where lynchings
and executions were routinely employed as
methods of racial control. Between the end of
the Civil War in 1865 and 1976, 87% of those exe-
cuted in Mississippi were African-Americans, a
figure slightly above the overall Southern aver-
brary association, which he had formed 15 years
earlier. “I think we need to take out the manu-
scripts from the big buildings and disperse them
around the city to family houses,” he told them,
as he recalled the conversation for me two years
later. “We don’t want them finding the collec-
tions of manuscripts and stealing them or de-
stroying them.”
Months earlier, the Ford Foundation office in
Lagos, Nigeria, had given Mr. Haidara a $12,000
grant to study English at Oxford in the fall and
winter of 2012. The money had been wired to a
savings account. He emailed the foundation and
asked for authorization to reallocate the funds
to protect the manuscripts from the hands of
Timbuktu’s occupiers. The money was released
Monday, April 18, 2016 | A11
age of 80%. Most Southerners put to death for a
nonlethal crime in those years were blacks ac-
cused of robbing or sexually assaulting a white.
Historians of the era have found a long record of
trumped-up rape cases, like the one portrayed in
the novel “To Kill a Mockingbird.”
A few years ago, the NAACP’s Legal Defense
Fund hired criminologist Ray Paternoster to
study the impact of race on death-penalty prose-
cutions in Harris County during the 1990s, when
Mr. Buck’s trial occurred. He found that prosecu-
tors were three times more likely to seek the
death penalty for blacks than for whites under
similar circumstances. What he didn’t consider—
because it had no direct bearing on Mr. Buck’s
case—is perhaps the key factor in death-penalty
cases: the race of the victim.
Previous studies have shown that defendants
are far more likely to be prosecuted for capital
murder and sentenced to death when the victim
is white. In places like Harris County, this still
holds true. According to the Texas Department
of Criminal Justice, the majority of African-
Americans from Harris County on death row
were convicted of killing a white, despite the
high number of black-on-black homicides in the
Houston area. (Indeed, Mr. Buck himself was of-
fered a plea deal of life in prison for his double-
murder, but he refused.) Equally important, ev-
ery white awaiting execution from Harris County
was convicted of killing another white. Here are
signs that white lives do matter more than black
lives, at least in capital cases.
Change may be coming. Texas currently
houses 246 death-row inmates, but the pipeline
that supplies them appears to be closing. In
1999, Texas juries sent 48 defendants to death
row; in 2015, they sent just three—none of them
African-American and none from Harris County.
Many reasons have been given for this shift—
the enormous cost of death-penalty cases, the
racial imbalance, the stories of innocent men re-
moved from death row. But the best explanation
may be the law passed in 2005 that offers the
option of life in prison without parole. Increas-
ingly, Texas juries are taking advantage of it, re-
gardless of the prosecutor’s recommendation.
What about Duane Buck? In 2000, Texas
Attorney General John Cornyn (now a U.S.
senator) identified a half-dozen other capital
cases in which Dr. Quijano testified about the
dangers posed by minority defendants, noting
that it was “inappropriate to allow race to be
considered as a factor in our criminal justice
system.” Five of the six defendants received
new sentencing hearings; all were resen-
tenced to death. But the state’s next attorney
general, Greg Abbott (now governor), op-
posed a similar hearing for Mr. Buck on the
grounds that Dr. Quijano had been a witness
for the defense. Thus, “Buck’s constitutional
rights were not violated because Buck himself
presented the testimony
about which he now com-
plains.”
Even if granted a new
hearing, Mr. Buck likely will
be executed. But to deny him
a chance, given the inflam-
matory content of Dr. Qui-
jano’s words and the dis-
tressing racial history of
capital punishment, would be
a mistake. It is now up to the
Supreme Court to see the larger picture, beyond
the technicalities of who testified for whom, while
nudging justice forward along the way.
Prof. Oshinsky is a member of the history de-
partment at New York University and the di-
rector of Medical Humanities at NYU Langone
Medical Center. His book “Polio: An American
Story” won the 2006 Pulitzer Prize for history.
in three days. Mr. Haidara recruited his nephew,
and they reached out to archivists, secretaries,
Timbuktu tour guides and a half-dozen of Mr.
Haidara’s relatives.
The result was a heist worthy of “Ocean’s
Eleven.” They bought metal and wooden trunks
at a rate of between 50 and 80 a day, made
more containers out of oil barrels and located
safe houses around the city and beyond. They
organized a small army of packers who worked
silently in the dark and arranged for the trunks
to be carried by donkey to their hiding places.
Over the course of eight months, the opera-
tion came to involve hundreds of packers, driv-
ers and couriers. They smuggled the manu-
scripts out of Timbuktu by road and by river,
past jihadist checkpoints and, in government
territory, suspicious Malian troops. By the time
French troops invaded the north in January
2013, the radicals had managed to destroy only
4,000 of Timbuktu’s nearly 400,000 ancient
manuscripts. “If we hadn’t acted,” Mr. Haidara
told me later, “I’m almost 100% certain that
many, many others would have been burned.”
Mr. Haidara was especially proud of rescuing
one manuscript: a crumbling volume about con-
flict resolution between the kingdoms of Borno
and Sokoto in what is now Nigeria, the work of a
Sufi holy warrior and intellectual who had briefly
ruled Timbuktu in the mid-19th century. This
man, Mr. Haidara argued, was a jihadist in the
original and best sense of the word: one who
struggles against evil ideas, desires and anger in
himself and subjugates them to reason and obedi-
ence to God’s commands. It was, he thought, a
fitting rebuke to all that the militants stood for.
Mr. Hammer is a former Newsweek foreign
correspondent and the author, most recently,
of “The Bad-Ass Librarians of Timbuktu,” to
be published Tuesday by Simon & Schuster.
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A12 | Monday, April 18, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK Bernie Gives CEOs a Spine
Verizon CEO Lowell Mc- hobble smaller competitors. Who will
Germany Can’t Save You Adam is receiving ho-
sannas for his takedown
stand up for free markets? “Not I.”
True, trade groups are often to be

I
t’s a ritual: Gather some economists in money for Keynesian projects they don’t last week of Bernie found in the trenches of Congress, fight-
a room and sooner or later they’ll start want, for the benefit of those same neigh- Sanders, in which he ing the worst regulations or bills, maybe
rapped the presidential even running a TV ad or two. But trade
demanding that Germany spend more to bors. Fiscal rectitude is popular in Germany,
revive global growth. So it and the pledge to restore POTOMAC candidate’s views on groups are also convenient places for
corporate America as CEOs to hide their policy efforts, a way
was again in Washington last Berlin needs tax cuts budget balance was an im- WATCH
“uninformed,” “con- of outsourcing the dirty job.
week, as the semiannual portant component of Chan- By Kimberley
meeting of the International
for growth, not more cellor Angela Merkel’s plat- A. Strassel
temptible” and Who was the last prominent CEO to
“wrong.” He’d even go on an extended public riff about the
Monetary Fund became the Keynesian spending. form when she ran for re- more praiseworthy had evils of Dodd-Frank, or the ridiculous-
latest venue to criticize Ber- election in 2013. he also applied those words to the “Not ness of the “equal pay” debate, or the
lin’s fiscal responsibility. Germany does have fiscal I” business community that helped cre- nonsense that is Obama energy policy?
Economists and non-German politicians room to stimulate its economy, but the IMF ate this moment. “Not I, not I, not I.”
are incensed that the eurozone’s leading and other critics have it backward. Berlin’s Mr. McAdam is right that Mr. Sanders These companies play the 55-45
economy is sticking to its plans to balance its surpluses since 2014 are a sign that its tax is wrong. American businesses aren’t game, dividing their political giving
immoral. They create jobs, prosperity, nearly equally between the party that
budget by 2020, and to reduce government burden is too high and is limiting the econ-
investment and tax revenue. They are supports their free-market interests and
debt as a share of the economy to below 60% omy’s growth potential.. the essence and the requirement of a de- the party that routinely refers them to
in line with eurozone rules. With government The finance ministry estimates govern- mocracy. Far from immoral, U.S. capital- the Justice Department. Some firms—
debt already falling to an estimated 68.5% of ment will collect more than 44% of total eco- ism is the wonder and envy of the world. particularly in finance—believe it is bet-
GDP this year from more than 80% in 2010, nomic output in taxes each year for the fore- The greater wonder is that it remains so, ter to try to buy off the enemy with con-
and its budget in surplus, these critics want seeable future. Taxes on labor are the third- despite the pusillanimous behavior of its tributions (beat us only gently, please)
Germany to ramp up Keynesian spending to highest in Europe behind Belgium and most prominent representatives. than to draw criticism for supporting a
save everyone else. Austria. Out of every euro an employer pays It has been many years since corpo- free-market candidate.
“Countries with fiscal to employ an unmarried worker, 49.4 cents rate America could claim to have a spine,
space should do more to bol- go to the tax man, according to a new OECD though its retreat into nervelessness has
ster growth, particularly report. Germany exceeds the OECD average accelerated over the past decade. We’ve A few firms are finally
reached a moment at which Mr. Sanders,
where risks of low growth in income tax and employer and employee so- Hillary Clinton and Elizabeth Warren can standing up to defend
and low inflation have mate- cial contributions. Its corporate-tax rate of daily tar companies as the villains of the themselves from the
rialized,” the IMF said. nearly 30% is well above the EU average of world and receive applause from voters
“Higher infrastructure in- around 22% and the OECD average of 25%, ac- both left and right. When asked time left’s nonstop attacks.
vestment in Germany would cording to KPMG. and again who among them would stand
benefit the country itself and Fiscal stimulus should focus on allowing up for the American way, they mumbled
have positive economic spill- German companies and households to keep “Not I.” So today Mr. Sanders and Mrs. Clinton
overs on neighboring coun- more of their money. Domestic consumption This is the corporate America (Alcoa, routinely call for the jailing of executives.
tries that undertake signifi- Angela Merkel already is taking over for exports as an en- Duke Energy, Pacific Gas and Electric, Bernie pitches single-payer health care as
cant consolidation.” gine of Germany’s growth, which at around General Electric) that rushed to curry fa- a fix to ObamaCare. Hillary calls for ex-
vor with the green left, forming the Cli- panding paid vacation and maternity
The theory is that if Germany embarks on 1.5% is strong by European standards. This
mate Action Partnership in 2007 in leave. Both candidates want to double
a public-works spending spree to goose do- boost has happened as falling global energy hopes of rigging any coming carbon caps regulations on Wall Street, hike taxes,
mestic demand, booming imports will help its prices increase household inflation-adjusted in its favor. It’s the corporate America raise the minimum wage, increase union
neighbors export their way out of their fiscal earnings. (Exelon, Nike, Apple) that folded like an payoffs and make energy unaffordable.
and slow-growth holes. In this telling, the eu- Tax-rate cuts would build on that trend. accordion when the Chamber of Com- They brand companies that do business
rozone’s rules capping annual deficits at 3% So would abandoning Berlin’s ruinously ex- merce questioned President Obama’s overseas as traitors and sellouts.
of GDP are a guideline, not a limit. pensive energy policy, which saddles house- plan to impose a climate program by EPA Mr. McAdam is now speaking out. He
This is a recipe for blowing up the euro- holds with hundreds of billions of euros in fiat. It’s the corporate America (Google, follows General Electric CEO Jeffrey Im-
zone. High-saving Germans already are chaf- higher taxes and steeper energy bills—and Facebook, eBay) that ditched the free- melt, who recently refuted Mr. Sanders’s
ing as the European Central Bank’s monetary causes tens of thousands of job losses—in market American Legislative Exchange assertion that companies are “destroy-
policy shifts the burden of eurozone eco- pursuit of a futile conversion to renewable Council when that group came under fire ing the moral fabric of this country.”
from environmental activists. Who will Exxon Mobil last week filed in state
nomic adjustments onto Germany. Germans electricity.
stand up for low-cost energy, or consum- court a forceful rejoinder to the state at-
also have lent considerable taxpayer support Such tax cuts are proven growth-boosters, ers, or principle? “Not I.” torneys general who are pursuing the
to prop up the euro. This includes contribu- while the multiplier from public-works It’s the corporate America (Pfizer, the bogus claim that the oil company sup-
tions to, and explicit backing for debt issued binges remains a figment of the Keynesian American Medical Association, America’s pressed climate science.
by, the European Stability Mechanism that imagination. German voters are smart Health Insurance Plans) that sold out This is all positive movement, though
has bailed out euro members, and implicit enough to realize that bridges to nowhere health care to the Obama administration, it comes only at extreme moments. The
support for the risks of the ECB’s bond-pur- aren’t the secret to growth, and maybe it’s each company and trade organization usual business behavior is to sit quiet,
chase program. time for the rest of the world to stop insult- hoping to cut its own special deal. It’s the while expecting the free-market activists
Now Germans face demands to spend their ing their intelligence. Solyndras and Fisker Automotives and and congressmen to step up and defend
A123 Systems that sucked up stimulus them in proxy fights, or Congress, or the
money and left taxpayers with the bill. public sphere.
Veterans Days It’s the Boeings and Caterpillars that in-
sist on subsidies from the Export-Import
Businesses have long justified this by
noting that capitalism is rooted in self-in-

E
Bank. It’s the car companies that folded terest, and that corporations are simply
arl Warren once said that he read the Jagr led his Florida Panthers in scoring this to higher mileage standards, the Internet pursuing that interest when they dodge
sports section of his newspaper first year and is now competing in the National companies that folded to net neutrality, fights or engage in crony capitalism. But
because it recorded man’s accomplish- Hockey League playoffs. Equally impressive, he the agribusinesses that finagled expen- there’s short-term self-interest and long-
ments, whereas the front is helping to revive interest in sive ethanol mandates, and the big retail- term self-interest. The long-term is now
page reported only failures. Aging athletes provide the mullet hairstyle that ers that push for Internet taxation to here, in the form of Bernie Sanders.
That was certainly true dur- an inspiring respite earned him such esteem
ing his tenure as Chief Jus- among hockey fans of the
tice of the U.S. Supreme from our dreary politics. early 1990s.
Court, and it’s true in the In Major League Baseball, The Climate Crowd
Obama-Trump era of polar- 42-year-olds Bartolo Colon of
ized politics. Fortunately, Americans can turn the New York Mets and Ichiro Suzuki of the Mi-
their eyes to an inspiring group of aging pro- ami Marlins are still productive players and
Ignores a Fraud
fessional athletes. fierce competitors. Green activists, some peer-reviewed articles, toxicologist Ed-
Last week, Kobe Bryant of the Los Angeles And Peyton Manning of the Denver Broncos masquerading as at- ward Calabrese of the University of Mas-
Lakers retired after 20 seasons in the National won a second Super Bowl in February. He re- torneys general of New sachusetts Amherst shows how a cabal
Basketball Association, but not before scoring tired last month only weeks before turning 40. York and California, of radiation geneticists in the 1940s doc-
60 points in his final game, including the game- Not since last year’s mania over the dad bod want to prosecute tored their results, and even a Nobel
winning shot. have middle-aged guys had such reason for Exxon as a climate her- Prize acceptance speech, to exaggerate
etic. Its sin? Saying the health risk from low-level radiation
In professional hockey, 44-year-old Jaromir simple, nonpolitical optimism. BUSINESS
impeccably true things exposure. At the time, Hermann Muller,
WORLD
about climate science: their leader, was militating against
By Holman W.
The Yen Flashes Danger Jenkins, Jr.
The range of uncer-
tainty is high. Climate
above-ground atomic-bomb testing. “I
think he got his beliefs and his science

T
models are not the cli- confused, and he couldn’t admit that the
he strong Japanese yen is puzzling in- rates into negative territory, it has limited mate, and show themselves to be unreli- science was unresolved,” Mr. Calabrese
vestors and policy makers alike. The scope to do so without destabilizing the fi- able guides to future warming. There is told a UMass publication.
currency has gained 12.8% in value nancial system. Bank of Japan Policy Board a cost-benefit test that policy must pass, Data developed to show high-dose ef-
since Dec. 1, hitting 17-month Member Sayuri Shirai also and it doesn’t. fect on fruit flies, Muller claimed, showed
highs in recent days, as the Negative interest rates confirmed that the BOJ will The AG case is a spinoff of “investiga- a proportional low-dose effect. Thus was
stock market has fallen. run out of bonds to buy in tive” journalism by the Los Angeles Times born LNT—the “linear no-threshold”
That’s despite the Bank of
appear to have the middle of 2018, so more and Inside Climate News, which we now model of radiation risk that has become
backfired on Japan. learn was directly underwritten by cli- the world’s go-to standard for nuclear
Japan’s Jan. 29 announce- quantitative easing is also mate activists at the Rockefeller Brothers safety, source of repeated and unfulfilled
ment of negative interest not an option. BOJ Governor Fund and Rockefeller Family Fund. forecasts of thousands of cancer deaths
rates on some reserves. Haruhiko Kuroda has fired “It’s about helping the larger public from Chernobyl or Fukushima.
Data suggest this is no fluke. Recent sur- his last bazooka. understand the urgencies of finding cli- LNT is why nuclear plants shoulder ar-
veys show that Japan’s companies and its Japanese households were also unsettled mate solutions. It’s not really about tificially huge costs, not to protect against
consumers are losing confidence in the econ- by negative interest rates. Eight days before Exxon,” explained a Rockefeller official accidents but to protect against trivial
omy and they expect already minuscule infla- the announcement, Mr. Kuroda testified in about a January meeting to coordinate emissions. Coal-plants, which don’t have
tion to fall. the Diet that he was not considering the un- the legal and journalistic attack. to meet U.S. Nuclear Regulatory Commis-
Deflationary expectations can become a orthodox policy. He may have wanted to use The journalists involved in this trav- sion rules, actually put out thorium and
self-fulfilling prophecy, as the expected real the element of surprise to maximize the ef- esty are of the dumber sort—confused uranium far in excess of what nuclear
about what science is. But their clotted- plants are allowed to emit.
return on yen-denominated assets rises, even fect on the markets, but to ordinary Japanese
ness comes at a poignant moment. Dr. Carol Marcus, of the UCLA medi-
if the nominal return remains minimal. That the sudden reversal looked panicky. Honest greens have always said nu- cal school, and two other nuclear-
encourages more savings, creating a vicious Japanese have responded by hoarding clear power is indispensable for achiev- medicine specialists last year petitioned
cycle. In other words, Japan is still stuck in more cash at home, which protects them ing big carbon reduction. James Hansen, the NRC to re-evaluate its standards.
a deflation trap, and Prime Minister Shinzo against negative rates and bank failures. the former NASA scientist who has been Now the Environmental Protection
Abe’s reliance on monetary policy to get out Sales of safes have rocketed, and the Finance chaining himself to fences since the first Agency and several green groups have
hasn’t worked. Ministry announced that it will print 17% Bush administration, was in Illinois ear- filed defenses of LNT, which since the
The BOJ’s negative interest rate experi- more of the highest-denomination banknote lier this month lobbying against closure 1950s has been adopted not only as
ment also shows how attempts to manipulate this year. One economist estimates cash of a nuclear plant. Ditto activist Michael Washington’s unscientific model of radi-
expectations can backfire. In principle, a stored at home grew by $46 billion over the Shellenberger. We might also include ation risk, but as the EPA’s unscientific
lower return on savings should spur compa- past year to a total of $367 billion. Bill McKibben, the Bernie Sanders of the model of chemical risk.
climate movement and shouter of Exxon It shouldn’t be overlooked that, for
nies to invest, consumers to spend and inves- More than three years after Prime Minis-
accusations, who told journalist William these green groups and the EPA, nuclear
tors to seek higher returns abroad. For a few ter Abe promised to conquer deflation, Japan Tucker four years ago, “If I came out in is also anathema because it competes
days afterward, the stock market rallied and is back where it started, but deeper in debt. favor of nuclear, it would split this with solar and wind.
the yen weakened in expectation that this Former IMF Chief Economist Olivier movement in half.” Science seldom fares well in high-
would be the case. But then a backlash took Blanchard recently warned that, with an ag- Nuclear, unlike solar, is one low-carbon stakes political controversies, but it’s bi-
hold. ing population, at some point Japan’s govern- energy technology that has zero chance zarre to watch green campaigners attack
Bank stocks took an immediate hit, as it ment will have to attract foreign bond buyers without strong government support, yet anybody who questions their thinly
became clear their profits will be hurt by the with higher yields. is left out of renewables mandates. It’s based climate predictions, then attack
negative rates. Companies and households Japan’s experience is the ultimate cau- the one noncarbon energy source that anybody who questions the thinly based
simply don’t want to borrow, so banks have tionary tale of what happens when leaders has actually been shrinking, losing science that keeps down our best car-
ground to coal and natural gas. bon-free energy choice.
no choice but to accumulate more reserves rely on monetary policy and government
What keeps nuclear costs high? Why An environmental reporter with an
and pay the penalty. They are already vulner- spending to goose an overregulated and has the U.S. experience of spiraling nu- ounce of independence would actually
able as the profit margin on lending is mini- overtaxed economy. Mr. Abe promised pro- clear construction costs not been matched be doing his or her green friends a favor.
mal, so if they seek out riskier investments growth reforms but he has delivered too lit- in South Korea, where normal learning Pushing the greenies to confront their
it could lead to losses. tle. Without the new opportunities to invest has reduced the cost of construction? nuclear contradictions is probably the
Investors quickly realized that although that deregulation would bring, Japan will not The answer increasingly appears to best possible way right now of making
the Bank of Japan said it could further push escape deflation. be a real scientific fraud. In a series of progress on the climate conundrum.
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.
A New Approach to International Aid
By Bill Gates
M
ore people are living
longer and living better
than at any time in his-
tory. In the past 25
years alone, child mor-
tality has declined by more than half.
The proportion of people suffering
from hunger has been cut almost as
much. And countries like China and
South Korea—once major recipients
of development aid—have emerged
as global economic powers.
When 70% of the world’s
poorest people live in
nations defined as middle
income, it’s time for change.
But some trends now threaten to
slow this progress. In Europe, the ref-
ugee crisis and domestic security con-
cerns are creating economic pressures
that may lead wealthy governments to
reduce their support for the poorest
countries. In Africa and Latin Amer-
ica, nations that have relied on ex-
ports of natural resources are reeling
from the drop in commodity prices,
which in turn is reducing their ability
to deliver essential services.
Development aid can’t by itself
make poor countries grow. That
comes primarily from the hard work
of citizens, governments and the
private economy. But well-focused
support enables developing coun-
tries to do a few really important
things better: provide basic health
By Donald J. Trump
O
n Saturday, April 9, Colorado
had an “election” without vot-
ers. Delegates were chosen on
behalf of a presidential nominee, yet
the people of Colorado were not able
to cast their ballots to say which
nominee they preferred.
A planned vote had been canceled.
And one million Republicans in Colo-
rado were sidelined.
In recent days, something all too
predictable has happened: Politicians
furiously defended the system.
“These are the rules,” we were told
over and over again. If the “rules”
can be used to block Coloradans
from voting on whether they want
better trade deals, or stronger bor-
ders, or an end to special-interest
vote-buying in Congress—well, that’s
just the system and we should
embrace it.
How has the ‘system’ been
working out for you and
your family? No wonder
voters demand change.
Let me ask Americans a question:
How has the “system” been working
out for you and your family?
I, for one, am not interested in de-
fending a system that for decades
has served the interest of political
parties at the expense of the people.
Members of the club—the consul-
tants, the pollsters, the politicians,
the pundits and the special inter-
ests—grow rich and powerful while
the American people grow poorer
and more isolated.
No one forced anyone to cancel
the vote in Colorado. Political insid-
ers made a choice to cancel it. And it
was the wrong choice.
Responsible leaders should be
shocked by the idea that party offi-
cials can simply cancel elections in
America if they don’t like what the
voters may decide.
The only antidote to decades of
ruinous rule by a small handful of
elites is a bold infusion of popular
will. On every major issue affecting
this country, the people are right and
the governing elite are wrong. The
elites are wrong on taxes, on the size
of government, on trade, on immi-
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Monday, April 18, 2016 | A13
OPINION
care, increase access to education, strengthen the efficiency, effective-
and help subsistence farmers im- ness and transparency of tax sys-
prove crop yields. tems in poor countries.
Yet the way that the current It can be done. Rwanda—through
global aid system measures poverty a combination of legislation, stronger
could deal a setback to countries administration and more effective
and people on the cusp of escaping taxpayer registration and compli-
it. When the system was established ance—increased revenues by about
after World War II, major donor 50% between 2001 and 2013, the
AGENCE FRANCE-PRESSE/GETTY IMAGE
countries like the U.S. and inter- Organization for Economic Coopera-
national financial institutions such tion and Development found.
as the World Bank viewed poor I’ve long been an advocate of de-
countries and poor people as synon- velopment aid because I’ve seen the
ymous. It made sense to use a na- impact it can have. I’m also a realist
tion’s “average income” as the main who understands that even the
factor in deciding which ones quali- wealthiest countries face political
fied for aid. and fiscal constraints that will limit
Over time, however, a new map of their aid in the near term.
poverty has emerged. Today, more The global community must do
than 70% of the world’s poorest peo- Women line up for food in February at Dikwa Camp in northeastern Nigeria. more to address the deep humanitar-
ple—those living on less than $1.90 ian crisis caused by the Syrian war
per day—live in countries defined as expectancy, literacy, and maternal gibility requirements to account for and other devastating conflicts. But
middle income, according to the and child mortality. health, education, and agricultural it must do so in a way that doesn’t
World Bank. Once countries cross the Most good governments would productivity, adapting the aid sys- cut the most effective aid now going
threshold from low-income to middle- agree that a nation’s access to devel- tem to address the needs of the to the poorest countries. This in-
income status, the grants and below- opment aid should taper off as it poorest where they are, as well as cludes critical support provided by
market loans that have helped them becomes better able to stand on its making the transition away from aid the World Bank’s International Devel-
rise often come to an end. Countries own. But if countries with high more gradual. opment Association; the African De-
with huge pockets of poverty like levels of inequality and extreme Developing countries must also velopment Fund; and the Global Fund
Ghana, India, Nigeria, Pakistan and poverty lose aid too soon, good gov- find creative ways to increase gov- to Fight AIDS, Tuberculosis and Ma-
Vietnam could lose as much as 40% of ernments trying to do the right ernment revenue. Even the poorest laria. Each deserves the multiyear
their development assistance in the thing could find it even harder to nations today fund the large majority funding it is seeking this year.
next few years, a study sponsored by address basic development needs of essential services like health care These institutions also need
our foundation found. and build a sustainable foundation and education. But many don’t have support for their efforts to adapt to
For example, the average income of economic growth. the expertise and resources to raise the new geography of poverty. With
in Nigeria is nearly twice what it is This weekend, at the spring meet- more money through broad-based innovative thinking, we can ensure
for sub-Saharan Africa as a whole. ings of the World Bank Group and and effective tax collection. that emerging countries with large
Yet, more than half of Nigerians still the International Monetary Fund in One effort backed by the U.S., the remaining pockets of poverty aren’t
live in extreme poverty. And although Washington, adapting the aid system U.K., Germany and more than 30 set back by outdated aid policies.
Nigeria has a higher average income to account for shifting patterns of other countries will double the tech- And we can lay the foundation for
than countries like Ghana and Viet- poverty was a topic of discussion. nical support to poor countries, more growth in the coming decades.
nam, World Bank data indicate it I’m optimistic that aid experts will helping them increase tax collection
ranks lower across a range of human embrace some fresh ideas now circu- and domestic revenues. This mini- Mr. Gates is co-chairman of the
development indicators such as life lating. These include broadening eli- mal cost could significantly Bill & Melinda Gates Foundation.
Let Me Ask Americans a Question
gration, on foreign policy. closely with the chairman of the Re- private club than about securing triotic Colorado citizens who have
Why should we trust the people publican National Committee and their country. banded together in protest. Let us
who have made every wrong decision top GOP officials to reform our elec- My campaign will, of course, bat- make Colorado a rallying cry on
to substitute their will for America’s tion policies. Together, we will re- tle for every last delegate. We will behalf of all the forgotten people
will in this presidential election? store the faith—and the franchise— work within the system that exists whose desperate pleas have for
Here, I part ways with Sen. Ted of the American people. now, while fighting to have it re- decades fallen on the deaf ears and
Cruz. We must leave no doubt that vot- formed in the future. But we will do closed eyes of our rulers in Wash-
Mr. Cruz has toured the country ers, not donors, choose the nominee. it the right way. My campaign will ington, D.C.
bragging about his voterless victory How have we gotten to the point seek maximum transparency, maxi- The political insiders have had
in Colorado. For a man who styles where politicians defend a rigged mum representation and maximum their way for a long time. Let 2016
himself as a warrior against the es- delegate-selection process with more voter participation. be remembered as the year the
tablishment (you wouldn’t know it passion than they have ever de- We will run a campaign based on American people finally got theirs.
from his list of donors and endors- fended America’s borders? empowering voters, not sidelining
ers), you’d think he would be Perhaps it is because politicians them. Mr. Trump is a candidate for the
demanding a vote for Coloradans. care more about securing their Let us take inspiration from pa- Republican presidential nomination.
Instead, Mr. Cruz is celebrating their
disenfranchisement.
Likewise, Mr. Cruz loudly boasts
every time party insiders disenfran-
chise voters in a congressional dis-
trict by appointing delegates who
will vote the opposite of the ex-
pressed will of the people who live in
that district.
That’s because Mr. Cruz has no
democratic path to the nomination.
He has been mathematically elimi-
nated by the voters.
While I am self-funding, Mr. Cruz
rakes in millions from special inter-
ests. Yet despite his financial advan-
tage, Mr. Cruz has won only three
primaries outside his home state
and trails me by two million votes—
a gap that will soon explode even
wider. Mr. Cruz loses when people
actually get to cast ballots. Voter
disenfranchisement is not merely
part of the Cruz strategy—it is the
Cruz strategy.
The great irony of this campaign
is that the “Washington cartel” that
Mr. Cruz rails against is the very
group he is relying upon in his voter-
nullification scheme.
My campaign strategy is to win
with the voters. Ted Cruz’s campaign
strategy is to win despite them.
What we are seeing now is not a
proper use of the rules, but a
flagrant abuse of the rules. Delegates
are supposed to reflect the decisions
of voters, but the system is being
rigged by party operatives with
“double-agent” delegates who reject
the decision of voters.
The American people can have no
faith in such a system. It must be
reformed.
Just as I have said that I will
reform our unfair trade, immigra-
tion and economic policies that
have also been rigged against
Americans, so too will I work
Robert Thomson
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A14 | Monday, April 18, 2016 THE WALL STREET JOURNAL.

WEATHER & CROSSWORD

MASTERPIECE: ‘THE ROMAN REVOLUTION’ (1939), BY RONALD SYME

A SHORT STEP TO
DICTATORSHIP
BY JOSEPH EPSTEIN
IN HIS STUDY of the Roman histo-
rian Sallust (86-35 B.C.), Ronald
Syme writes that “historians are se-
lective, dramatic, impressionistic.”
Later in the same work he notes that
“systems and doctrines decay or os-
sify, whereas poetry and drama live
on, also style and narrative.” These
words apply to Syme himself, a man
generally considered the greatest
modern historian of Rome. Syme
wrote biographies of Sallust and
Tacitus and much else, but his repu-
tation rests on “The Roman Revolu-
tion.” Published in 1939 when the
specter of fascism clouded Europe, it
was soon recognized as the magnifi-
cent book it is.
Syme (1903-1989) was a New Zea-
lander who studied at and settled in
Oxford. His specialty was
prosopography, or the
study of collective biog-
writes: “The Roman constitution
was a screen and a sham.” Of
the idealism of the Republic, he
notes: “Liberty and law are high-
sounding words. They will often
be rendered, on a cool estimate,
as privilege and vested interest.”
No cooler estimator existed than
Syme. “The career of Pompeius,”
he writes, “opened in fraud and
violence. It was prosecuted, in
war and peace, through illegality
and treachery.”
Once the Triumvirs—Julius
Caesar, Pompeius, Lepidus—were
in ascendance, the Roman Repub-
lic’s day was done. “From a tri-
umvirate it was but a short step
to a dictatorship,” Syme writes.
Julius Caesar, who emerged as
dictator, before his assassination
adopted Octavianus, whom Syme
regularly refers to as
“Caesar’s heir.” Octa-
Written vianus would subse-

raphies to find common
characteristics of histori-
cal social classes or
groups. This was invalu-
able for “The Roman
Revolution,” which is a
compelling account of
the decline of the Roman
oligarchy in favor of a principate, or
monarchy, quietly but implacably put
in place by Augustus, the first of the
Roman emperors. If historians had
Rolodexes, none could be more com-
plete than Syme’s on the Romans in
the last years of the Republic. “In
any age in the history of the Roman
Republic,” he notes, “about twenty or
thirty men, drawn from a dozen
dominant families, hold a monopoly
of office and power.” An intramural,
nearly incestuous, affair was Roman
political life; consider alone Servilia,
“Cato’s half-sister, Brutus’s mother,
Caesar’s mistress.”
A man who sees beneath every
surface, demolishing all pretenses,
Syme, early in his great book,
quently become Au-
under the gustus, who, after his
cloud of victories over Cae-
fascism sar’s assassins and
later Marcus Anto-
nius, ruled for 40 years.
Augustus, Syme writes,
possessed “an inborn
and Roman distrust of theory, and
an acute sense of the difference be-
tween words and facts.”
Syme was a master of the brief
character sketch, not infrequently
followed by a sharp observation. The
mixture of good and evil in the same
people fascinated him. After toting
up Marcus Antonius’ many flaws, he
writes that “a blameless life is not
the whole of virtue, and inflexible
rectitude may prove a menace to the
Commonwealth.” Cicero, he says,
“had lent his eloquence to all politi-
cal causes in turn, was sincere in one
thing only, loyalty to the established
order. His past career showed that
he could not be depended on for ac-
tion or statesmanship.”
Augustus succeeded owing to his
ambition and cunning, and to his
awareness that, after long years of
civil war, Romans were willing to sur-
render liberty for peace and concord.
Concord meant rule by one man—
monarchy—whose worst feature,
along with the loss of liberty, “was the
growth of servility and adulation.”
Unsurpassed in his erudition, re-
lentless in his perspicacity, Syme
combined these merits with a histor-
ical style in the tradition of Thucyd-
ides, Sallust, Tacitus and Gibbon,
great disillusionists all. The interjec-
tion of the short, deadly sentence is
among the hallmarks of this style.
“Two days of diplomacy divided the
Roman world,” is but one example
from Syme. The murder of Cicero
“disgraced the Triumvirs and en-
riched literature with an immortal
theme” is another. Accounting for
the rise of Octavianus, he writes:
“Accident blended with design.”
With a single sentence he fills in
long spans of time. “From first to
last the dynasty of the Julii and the
Claudii ran true to form, despotic
and murderous.” He writes of Anto-
nius and Cleopatra in Egypt that
they “spent nearly a year after the
disaster [of the battle of Actium] in
the last revels, the last illusory
plans, and the last despondency be-
fore death.” He specializes in the
risky yet authoritative generaliza-
tion: “Lacking any perception of the
dogma of progress—for it had not
yet been invented—the Romans re-
garded novelty with distrust and
aversion.” Sometimes this style
turns aphoristic: “Politics can be
controlled but not abolished, ambi-
RYAN INZANA
tion curbed but not crushed.” Again:
“It is not enough to acquire power
and wealth; men wish to appear vir-
tuous and to feel virtuous.”
Toward the close of “The Roman
Revolution” Syme writes: “To ex-
plain the fall of the Roman Republic,
historians invoke a variety of con-
verging forces or movements, politi-
cal, social and economic, where an-
tiquity was prone to see only the
ambition and agency of individuals.”
As with all historical masterpieces,
one comes away from “The Roman
Republic” feeling unblinkered and
intellectually rejuvenated.
Mr. Epstein is the author, most re-
cently, of “Frozen in Time, Twenty
Stories” (Taylor Trade Publishing)
and “Wind Sprints, Shorter Es-
says” (Axios Press).

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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sco 17 18 19 jet refueling pitched
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Dublin
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Berlin
li 23 24 25
Amsterdam
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25 26 27 28 29 30 minimums
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Vienna
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comics
Paris Munich
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Budapest
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say
Bucharest
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52 53 54 55 56
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Solve this puzzle online and discuss it at WSJ.com/Puzzles.
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 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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BUSINESS & TECH.
Oil Slump Hits Goodrich
BENJAMIN SKLAR FOR WSJ
Producer joins others that filed for bankruptcy BUSINESS NEWS | B4
© 2016 Dow Jones & Company. All Rights Reserved.
JEFF CHIU/ASSOCIATED PRESS
Coca-Cola is using savings to boost soda marketing to help sales.
Coke’s Cost Cuts
Win Back Investors
BY MIKE ESTERL
I
nvestors are taking up
Coca-Cola Co. once
again.
Even as they brace for an-
other year of shrinking reve-
nue and sluggish earnings
from the beverage giant, a
growing number are encour-
aged by an accelerated re-
structuring
THE WEEK that many saw
AHEAD as overdue.
Wall Street
analysts ex-
pect the maker of Coca-Cola,
Minute Maid juice and
Dasani water to report on
Wednesday a first-quarter
profit of 44 cents a share,
down from 48 cents a share
a year earlier. Revenue is
seen dropping 4% to $10.28
billion, according to a Thom-
son Reuters survey.
Coke estimated in Febru-
ary that divestments and
weakening foreign currencies
would cut into 2016 revenue
by 8 to 9 percentage points
and into profit by 12 to 13
points. Rocky economies in
emerging markets and slow-
ing consumption of soda, the
company’s main product,
also aren’t helping.
More investors are
encouraged by
Coke’s accelerated
restructuring.
Coke shares underper-
formed the broader stock
market in recent years. But
they are 7% higher this year,
outpacing the 2% gain in the
S&P 500 index, and reached
a 52-week high this past
week.
Investors are betting
Coke’s overhaul would start
paying off in 2017 or 2018 as
the company sheds capital-
intensive assets, raises prices
and prepares a leadership
transition. RBC Capital Mar-
kets last month tapped Coke
as its favorite megacap stock
among consumer staples.
Fanning optimism, Coke
said in February it would sell
its North American manufac-
turing and distribution as-
sets by the end of next year
Mideast Airlines Hit a Rough Patch
BY ROBERT WALL
The Mideast’s fast-growing
airlines, long a thorn in the side
of legacy U.S. and European
carriers, are hitting a rare patch
of turbulence, thanks to low oil
prices.
Today’s energy rout has
been great for global airlines,
whose fuel bills typically are
among their biggest costs.
Profits for the global industry
nearly doubled in 2015, to a re-
cord $33 billion from a year
earlier, thanks mostly to lower
fuel costs, according to the In-
ternational Air Transport As-
sociation, a global trade body.
Delta Air Lines Inc., for exam-
ple, says it expects to save $3
billion on fuel costs this year
alone.
But not every big carrier is
as big a winner. Dubai’s Emir-
to focus on its more-profit-
able concentrate business. It
estimates that move, coupled
with bottling divestments in
other parts of the world,
would cut revenue by
roughly a third but improve
operating margins by half.
The Atlanta-based com-
pany is expected to give an
update Wednesday about di-
vestments and its $3 billion
cost-cutting program, includ-
ing so-called zero-based bud-
geting, as it tries to return to
high-single-digit earnings
growth after missing revenue
or profit targets the past
three years.
In early signs of a turn-
around, its beverage volumes
rose 3% in the second half of
2015, up from 1% growth in
the first half. The gain was
fueled mainly by its faster-
growing still beverages and
increased distribution of
Monster Beverage Corp. after
Coke bought a large minority
stake in the energy-drink
maker. Coke also is using
savings to boost soda mar-
keting to try to jump-start
sales. Last year the company
posted its strongest results
in three years in the U.S.,
where it has offset declining
soda consumption with
higher prices and steered
consumers to smaller pack-
ages that cost more per
ounce.
The improvement in the
U.S. appears to have spilled
into 2016. The company’s do-
mestic soda sales rose about
1% in the first quarter in dol-
lar terms, compared with a
2.5% decline at chief rival
PepsiCo Inc., according to
Susquehanna Financial Group
estimates.
PepsiCo, which reports its
first-quarter results Monday,
is less reliant on soda be-
cause of its large snack busi-
ness and noncarbonated
drinks.
There also is speculation
inside Coke that Chief Execu-
tive Muhtar Kent could an-
nounce succession plans this
year after promoting Europe
chief James Quincey to com-
pany president last August.
The appointment created
a clear No. 2 for the first
time since Mr. Kent, who is
Please see COKE page B2
A decline in corporate travelers in the energy sector is hurting carriers.
ates Airline, Abu Dhabi’s Eti-
had Airways and Qatar Air-
ways all count on corporate
travel in and out of the Mideast
for a big chunk of their pre-
mium-seat bookings. And those
THE WALL STREET JOURNAL.
Chinese Look Beyond Masks
Chinese consumers bought 4.4 million air-purification devices last year to help reduce the high rate of fine particulate matter in the air.
More demand for air for 190 yuan ($29), so much
that she bought five more for
purification is spurring her friends, though she admit-
Chinese companies to ted the nose-to-arm apparatus
does turn heads on the street.
launch new products China’s economic slowdown
has meant slightly better air
BY ALYSSA ABKOWITZ across much of the country in
the past year. Still, a greater
BEIJING—Some pollution- awareness of air quality among
weary Chinese consumers the general population is spur-
have moved beyond stocking ring Chinese companies to
up on home air purifiers and bring new products to the
strap-on face masks and are market. The devices are aimed
switching to second-genera- at reducing levels of PM2.5—
tion gadgets in their quest to fine-particulate matter that
breathe cleaner air. penetrates deep into the lungs
Li Lingling, who lives in the and is especially hazardous to
central Chinese city of Chang- human health.
sha, recently bought a snorkel- In a survey from market re-
like device from Broad Group’s search firm Mintel last year, of
Lung-Pro line, an armband air 3,000 Internet users aged 20 to
filter that feeds purified air to 49, about 83% of respondents
a mask via a breathing tube. said they owned face masks. Of
“The 3M mask suffocates those surveyed, 61% said they
me if I wear it too long,” Ms. were “very concerned” about
Li said about one of the more PM2.5. And, the number of air
popular types of masks avail- purifiers sold in China nearly
able in China. She liked the quadrupled between 2010 and
Mini Lung-Pro, which retails 2015 to 4.4 million units, ac-
U.K. Grocers Farm Out Food Lines
BY SAABIRA CHAUDHURI retailer, last week showed off
some its 76 new food lines,
LONDON—The U.K.’s gro- branded with names like
cery chains are battling it out Woodside Farms, Willow
down on the farm. Farms and Redmere Farms.
Seeking a leg up in a hotly Most of the lines are directly
competitive market, tradi- comparable to those found at
tional chains are highlighting discounters.
the farms that supply them— Analysts and reporters at-
or making up farms just for tending Tesco’s full-year re-
branding—as they take on ag- sults briefing at the London
gressive discounters such as Stock Exchange filed past dis-
Germany’s Lidl and Aldi. plays filled with chickens,
Tesco PLC, Britain’s largest plums, tomatoes and packages
around the Persian Gulf as
transfer hubs for long-haul
flights between Asia and Eu-
rope. They spent lavishly on
new planes, and benefited from
infrastructure spending by their
oil-rich governments.
BENOIT DOPPAGNE/BELGA/ZUMA PRESS
Just like the rest of the in-
dustry, they are now saving lots
of money on fuel. But low oil
prices are acting as a “a double-
edged sword,” said Tim Clark,
president of Emirates, now the
world’s largest by international
traffic. Speaking to reporters at
an aviation conference in Berlin
last month, he said bookings
from companies involved in the
energy sector—Emirates’ most
bookings are down sharply, ex- important corporate custom-
ecutives say, amid the oil-price ers—virtually disappeared with
collapse. the collapse in crude.
Those airlines have posted “There is a drop in premium
blistering growth over the past yield because of the conserva-
decade, using their airports Please see MIDEAST page B4
INSIDE:
MONEY &
INVESTING
Clearing the Air
Sales of air purifiers have nearly
quadrupled in China over the last
five years.
5 million units
4 tel research analyst.
3
2 nology is based on ionization,
1 air, and data mining, which
0
2010 ’11 ’12 ’13 ’14
Source: Euromonitor International
THE WALL STREET JOURNAL.
cording to market-data pro-
vider Euromonitor.
Now, “the concept and mar-
ket for wearable devices has
become quite popular,” says
Neil Wang, managing director
at consulting firm Frost & Sulli-
of beef. Tesco, which created
the products with suppliers to
hit certain price and quality
metrics, says they are about
20% cheaper than discounters’
similar offerings.
But Tesco has stirred up
controversy in the U.K. for ty-
ing the lines to seven fictitious
farms. Critics say the British-
sounding monikers obscure
the fact that the products
come from a variety of farms,
including ones overseas.
Mitsubishi’s Rise Points
To Japan’s Weakness
BY ERIC PFANNER
AND ATSUKO FUKASE
TOKYO—They’re building
Japan’s tallest skyscraper,
manufacturing its first com-
mercial jetliner and trying to
sell stealth submarines to Aus-
tralia for some $38 billion.
The companies of the Mit-
subishi group are capitalizing
on the big projects that Prime
Minister Shinzo Abe hopes will
restore national pride. The
prominence of the nearly 150-
year-old group points to the
stability of Japan’s corporate
titans and their ability to steer
through wars, financial crises
and technological change.
At the same time, the con-
centration of capital and talent
in a single set of companies
U.S. Stocks Near
Record Highs
MARKETS | B5
Monday, April 18, 2016 | B1
WANG ZHAO/AGENCE FRANCE-PRESSE/GETTY IMAGES
van. There is little independent
research on how well the new
antipollution offerings work.
“[Consumers] focus most
on if a product works, and are
willing to pay a bit more if the
product is really proven to be
effective,” said Lindi Li, a Min-
Startup Beijing Zhongqing
Technologies Co.’s CoClean
looks like an amulet. Its manu-
facturer says the device’s tech-
which reduces particles in the
combines user information and
locations to give CoClean users
diagnostics on a larger scale.
’15 The result is a 1 cubic meter
breathing space with PM2.5
levels reduced by as much as
99%, according to Zhao Fei, an
environmental scientist who
worked with his fellow Tsin-
ghua University alums and an
engineering professor at the
University of California, Los
Angeles, to create the CoClean.
Please see AIR page B2
Blueberries under the
Rosedene Farms brand come
from Spain, for example, while
apples under the same brand
hail from South Africa.
Chief Executive Dave Lewis,
a former Unilever PLC mar-
keting executive, explained the
names as a tactical move. He
said Tesco decided to launch
them after analyzing why cus-
tomers were going elsewhere.
“I’m not shy about the fact
Please see FARM page B2
underscores the difficulty the
premier faces in generating dy-
namic, modern businesses ca-
pable of getting Japan’s econ-
omy growing again.
Two decades into the digital
era, Japan is struggling to gener-
ate new champions that would
create high-paying jobs in Inter-
net services and health care.
Fewer than three in 10 of Japan’s
top 300 companies have been
created since the 1960s, a study
last year by the Organization for
Economic Cooperation and De-
velopment found, compared with
nearly eight in 10 for the U.S.
Mr. Abe recognized the prob-
lem on a visit to Stanford Uni-
versity last year, when he said
his country needs to “capture
the dynamism of Silicon Valley
Please see JAPAN 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 | Monday, April 18, 2016 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS NEWS

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

A-C
Activision Blizzard......B3
Aisin Seiki...................A6
Aldi..............................B1
Amazon.com ............... B5
Angang Steel..............B3
Apollo Global
Management.............B4
Apple...........................A6
Bank of America.........B7
Beijing Zhongqing
Technologies.............B1
Carlyle Group..............B7
Citigroup................A2,B7
Coca-Cola.....................B1
D-F
Delta Air Lines ........... B1
Deutsche Bank............B3
Goodrich Petroleum....B4
Greybull Capital..........B3
Honda Motor...............A6
Infosys.........................B3
J-L
Jefferies......................B4
John Lewis
Partnership...............B2
J.P. Morgan Chase......B7
J Sainsbury.................B2
Kellogg.........................B2
Konami Holdings ........ B3
Kyushu Electric
Power........................A6
Lidl...............................B1
Lions Gate
Entertainment..........B2
M-N
MAST Capital
Petrobras...............A1,B7
Petroliam Nasional.....B5
Plaza Athénée ............ A8
Polycom.......................B3
Qatar Airways.............B1
‘The Jungle Book’ Roars
BY BEN FRITZ
Qihoo 360 Technology B7
Royal Dutch Shell..B5,B7
It appears that the only
S-U thing audiences like as much
Shanghai Kuailu as a Disney animated film is a
Investment Group....B5
live-action remake.
Sony ............................ A6 Accelerating a string of hits
Take-Two Interactive for Walt Disney Co. in an un-
Software...................B3
usual niche, a new version of
Target..........................B4
“The Jungle Book” opened this
Tata Consultancy
Services.....................B3 weekend, bringing in a very
Tesco............................B1 strong $103.6 million in the
Time Warner...............B2 U.S. and Canada, according to

WALT DISNEY/EVERETT COLLECTION

Dropbox.......................B3
Electronic Arts............B3
Elliott Management ... B3
Emirates Airline ......... B1
Energy & Exploration
Partners....................B4
Energy XXI..................B4
Etihad Airways...........B1
Franklin Advisors........B4
G-I
General Mills...............B2
Gilead Sciences...........B8
Management.............B4
McGraw Hill Financial B3
Metro-Goldwyn-
Mayer........................B2
Mitel Networks...........B3
Mitsubishi...................B1
Netflix.........................B5
New Gulf Resources...B4
Nissan Motor..............A6
P-R
Peabody Energy..........A2
Penn Capital
Management.............B4
Toyota Motor..............A6
T. Rowe Price Group...B3
Unilever.......................B1
V-X
Vale..............................B7
Venoco.........................B4
Wal-Mart Stores.........B2
Walt Disney................B2
Wells Fargo.................B7
Morrison
Supermarkets...........B2
XIO Group....................B3
studio estimates.
That is more than the com-
pany’s other recent live-action
remakes, such as “Cinderella”
and “Maleficent,” which is
based on “Sleeping Beauty,”
but behind the $116 million
opening of “Alice in Wonder-
land” in 2010.
“The Jungle Book,” which ‘The Jungle Book,’ starring newcomer Neel Sethi, has earned a world-wide gross of $239.7 million.
started playing a week earlier
in some foreign countries, success, such movies have be- ers, Bill Murray, Idris Elba and of distribution.
brought in $136.1 million over- come a focus for the com- Scarlett Johansson. With no other major family

INDEX TO PEOPLE seas, earning a world-wide

gross of $239.7 million. It has
performed particularly well in
pany’s Walt Disney Pictures la-
bel, whose other recent
releases include disappoint-
Other studios have tried to
remake classic fairy tales, in-
cluding Time Warner Inc.-
movies opening for the next
few weeks, “The Jungle Book”
appears well-positioned to ride
A F-G R China, where it fetched $50.3 ments such as “The Finest owned Warner Bros., which had positive word-of-mouth to
Adams, Gina Martin...B5 Farage, Nigel...............B5 Ren, Zhiwei.................B5 million. In India, where the Hours” and “Tomorrowland.” a recent flop “Pan.” But Disney strong grosses in the weeks to
B Goldfajn, Ilan .............. B8 S film is set, it collected $20.1 Remakes of animated fairy appears to have a unique ad- come.
Barnes, Matthew........B2 H Shi Jianxiang .............. B7 million. tales are helping to give Walt vantage because it made so A pair of low-budget movies
Benzies, Leslie............B3 Hollis, Dave.................B2 Spath, Terri.................B5 That is a very strong start Disney Pictures a brand iden- many of the animated originals. also made their debut over the
Brody, Adrien..............B7 K T for the 3-D movie, which cost tity akin to the company’s “The Jungle Book” received weekend. “Barbershop: The
C Thomas, Rupert..........B2
Kakimi, Yuji.................B7 about $175 million to make. other labels, such as Lucasfilm overwhelmingly positive re- Next Cut,” starring Ice Cube,
Cappelleri, Frank.........B5 Kerschner, Ed..............B8 U Disney already has a sequel in and Marvel Studios. views and an average audience opened to $20.2 million. That
Cheng, Ekin.................B7 Kojima, Hideo ............. B3
Corbeau, Anne-SophieB7 Kuijs, Louis ................. B8
Upadhyay, Nishant ..... B8 the early stages of develop- Like “Cinderella,” “The Jun- grade of A, according to mar- is less than the opening week-
Usman, Khalid.............B4 ment. gle Book” repeats most of the ket-research firm CinemaScore. end gross for “Barbershop 2” in
D L-M
Dissaux, Claire............B8 V The Disney studio has sev- same story as its animated The movie succeeded by 2004, when average ticket
Lewis, Dave.................B1
E Vail, John .................... B5 eral other live-action remakes predecessor, but has been drawing children during the prices were 26% lower.
Li Lin ........................... B7
Ellenberger, Donald .... B5 McCarthy, David ......... B2 X of its animated classics in the modernized by giving the day and adults at night. Ac- The movie was produced by
Espinosa, John............B8 McFarlane, John..........B5 Xu Qi ........................... B7 works, including “Beauty and characters more complexity cording to exit polls, 49% of Metro-Goldwyn-Mayer Inc.
the Beast,” “Dumbo” and a and amplifying the drama. ticket buyers were families, and and Warner Bros.’ New Line
spinoff focused on Tinkerbell Directed by Jon Favreau, 43% paid extra to see the Cinema label and released by
from “Peter Pan.” the movie stars Neel Sethi, a movie in 3-D. Warner.
A sequel to “Alice in Won- young newcomer, as the pro- “I don’t know that I’ve ever Lions Gate Entertainment
derland” is scheduled for re- tagonist Mowgli, who plays seen a movie that was so bal- Corp.’s “Criminal,” starring
lease in May. against computer-animated anced,” said Dave Hollis, Dis- Kevin Costner, opened to a
Because of their consistent animals voiced by, among oth- ney’s executive vice president weak $5.86 million.

JAPAN and financial strength can en-

sure that lagging members sur-
vive and, in some cases, put off
tough decisions. Several group
Continued from the prior page companies stepped in with a $4
LI LINGLING
excel at reading the direction of
the official winds. Under Mr.
Abe, that has meant a stress on
industries that can boost
COKE
Japan’s exports of industrial Continued from the prior page

and bring it to Japan.” He
added, “The companies that
can’t adapt need to withdraw
Li Lingling wears the Mini Lung-Pro during her daily commute. themselves from the market.”
Change has come slowly in
billion bailout in 2004 when
Mitsubishi Motors Corp. ran
into financial trouble after a se-
ries of safety scandals, a move
that has helped keep Japan’s
goods. A group spokesman de- 63 years old, became CEO in
clined to comment. 2008. Some company observ-
The latest example is in ers say Mr. Quincey would ac-
Australia, where Mitsubishi celerate Coke’s diversification
Heavy Industries Ltd. is the drive.

AIR about half the time it takes for

an ordinary air purifier to do
the job. An Ecovacs spokes-
woman said about 1,000 units
part because of the nation’s la-
bor market, in which many uni-
versity graduates enter compa-
nies with lifetime-employment
auto industry crowded with
midsize manufacturers.
In general, Japan’s largest
companies face little threat of
lead company in a Japanese al-
liance that is vying with com-
petitors from France and Ger-
many to build submarines for
A lot still could go wrong.
Earlier this month the Interna-
tional Monetary Fund cut its
global economic growth out-
Continued from the prior page have sold so far. jobs that they are loathe to give being elbowed aside by local the Australian navy. look for the fourth time in a
It can be worn on a necklace With the average cost of an up. Moreover, Japan’s long-slug- upstarts. Only three publicly Shunichi Miyanaga, Mitsub- year. That is a bad omen for
or be pinned to a shirt collar. air purifier at more than $300, gish economy tends to perpetu- traded companies went bank- ishi Heavy’s chief executive, Coke, which generates the bulk
“The best distance from your antipollution products are still ate its ills by discouraging risky rupt in 2015, according to says that if Japan gets the of its profit abroad.
nose is 20 to 30 centimeters,” a niche market in China. Ana- ventures, prompting the Bank of Teikoku Databank—less than deal, his company can channel Coke’s core business also
said Mr. Zhao, who is 31 years lysts say upper-middle-class ur- Japan recently to introduce neg- 0.1% of the total—compared to investment to Australia from remains under threat after a
old. He said Beijing Zhongqing banites are the primary buyers. ative interest rates to spur more dozens every year in the U.S. other Mitsubishi companies World Health Organization re-
Technologies has shipped more Antipollution innovation aggressive lending. and business partners. “We port in January recommended
than 5,000 CoCleans since hasn’t been limited to just “It isn’t necessarily Mitsubi- can be a very efficient media- that governments consider
launching in October and has protection. Beijing residents shi’s fault, but it does sort of
Two decades into tor,” he said in an interview. special taxes on sugary drinks
raised about 10 million yuan in Liam Bates and Jessica Lam, suck out the oxygen,” says Wil- the digital era, Japan Mitsubishi Heavy also is the amid rising obesity and diabe-
two rounds of funding from who are married, created the liam Saito, a U.S. entrepreneur majority investor in Japan’s tes rates.
Chinese venture capitalists. Origins Laser Egg—a portable who advises the Japanese gov-
is struggling to create first commercial jetliner, called The U.K. said last month it
The 799-yuan device comes air-quality measuring device— ernment on tech policy. new champions. the Mitsubishi Regional Jet. plans to begin taxing such
with a charging station that to determine how clean the air In businesses ranging from The 70-seat to 90-seat passen- drinks in 2018, and several
doubles as a laser-based PM2.5 in their home was—not what a banking to brewing, the two ger plane is set to join U.S., Jap- other countries, including In-
monitor. “I wouldn’t say this re- government reading station dozen or so core companies in While bankruptcies aren’t anese and other airline fleets dia and South Africa, have
places a mask,” Mr. Zhao said. said from miles away. the Mitsubishi group have com- good in themselves, their near during the next few years. been weighing similar moves.
“Our goal is to be a supplemen- Mr. Bates said some pollution bined annual sales of some $500 absence suggests that in Japan Mr. Miyanaga said the links The company also could
tary system to giant devices.” sensors on e-commerce sites billion—roughly twice the figure there are few emergent compa- between Mitsubishi companies easily stumble in its restruc-
Mr. Wang said many tradi- that claim to measure PM2.5 for Toyota Motor Corp., Japan’s nies with new technologies are sometimes overstated, cit- turing push. If that happens,
tional manufacturers also are simply measure dust or the biggest company by revenue. driving out established players. ing his firm’s power-generat- though, many investors believe
moving into the second-gener- transparency of air. The Origins The Mitsubishi firms are tech- That makes it hard for Japan ing equipment partnership Coke could become a ripe take-
ation antipollution market. egg uses a laser that together nically independent, and there is to keep up with nimbler econo- with a company outside the over target. There already is
Broad Group, which makes with a photo sensor determines no single Mitsubishi holding mies, says Ulrike Schaede, pro- group—Hitachi Ltd. industry speculation that beer
the wearable Lung-Pro, is a the size and concentration of company. Rather, the firms are fessor of Japanese business at Mitsubishi companies “share company Anheuser-Busch In-
large air-conditioner manufac- particles in the air. linked more loosely by cross- the University of California, San a kind of business ethics,” he Bev SA could try to buy Coke
turer known as the provider of In seconds, it spits out an shareholding and traditional ties. Diego. “In order to compete to- said. “If we find a very good op- in a few years after digesting
air purifiers in Zhongnanhai, air-quality reading that can be A committee representing group day, you don’t need insurance, portunity to cooperate or work its planned acquisition of rival
the Beijing compound that is calculated according to both of- companies controls the use of you need innovation and profits.” together…the tie or the working brewer SABMiller PLC.
home to China’s top leaders. ficial U.S. and Chinese stan- the Mitsubishi name and its Analysts and Mitsubishi em- manner is a little bit stronger
Some of the new wave of dards, which vary on what lev- three-diamond logo. ployees say the group thrives in because of this kind of shared The Week Ahead looks at
devices aren’t wearable. Eco- els of PM2.5 are considered Mitsubishi’s group structure part because its company heads business ethics and brand.” coming corporate events.
vacs, a Hong Kong-based ro- healthy. The 499-yuan product
botics firm, introduced the At- is sold in Apple Inc. outlets
mobot A630, an air-
purification robot, in October
with a price of 6,999 yuan. It
works like the Roomba robot
across China and in foreign gro-
cery stores and shops in Beijing.
Mr. Bates, a former docu-
mentary filmmaker, said “tens
FARM paign to tell shoppers it is the
lowest-priced supermarket in
the U.K. despite recent price
cuts by Morrisons.
vacuum cleaner and can be of thousands” of laser eggs Continued from the prior page “We think it is important to
connected to a smartphone. have sold so far. that all good marketing will make it clear to shoppers that
DYLAN THOMAS FOR THE WALL STREET JOURNAL

The company says the At- —Chen Chang always polarize,” Mr. Lewis any challenge to our price-
mobot can purify a home in contributed to this article. said Wednesday. “We’ve been leadership position will not
very open about the fact that succeed,” said Matthew
this is creation—we’re creat- Barnes, Aldi’s U.K. CEO.
ing and launching these Not all of British retail’s
brands.” farms are fictional. High-end
He said Tesco’s investment supermarket chain Waitrose
in the new farm brands was on Friday began streaming live
“probably the most signifi- footage in train stations across
EXTRACT OF "CALL FOR EXPRESSION OF INTEREST" cant” he has made so far. He the country from a farm it
warned that further invest- owns in Hampshire. Passersby
Following the appointment by Autostrade per l'Italia S.p.A. ("ASPI"),
Roland Berger S.r.l. ("Advisor") intends to start the competitive procedures ments likely would cap profit- will be greeted with footage of
described in the table below, which provides, for each autonomous ability in the near future. A Tesco store in England. Tesco has unveiled 76 new food lines. beehives, rapeseed and more
competitive procedure, the following information: (i) the lot number, (ii) the “Using ‘farm’ creates an im- from dawn to dusk.
name of the motorway service station, (iii) the type of service to be age of freshness and prove- Lidl’s brands include Birch- on produce packages that Waitrose also is airing a se-
provided and (iv) the expiry of the contract to be awarded. nance,” said HSBC analyst Da- wood Farm and Strathvale shoppers can scan using ries of television ads starting
Lot
Motorway Service Station
Type of
Expiry vid McCarthy. “The objective Farm. smartphones to learn more on Friday featuring its dairy
Number service of this fresh-food range is to The British efforts are part about the food’s provenance. and egg farms, based on foot-
Agogna Est - A26 - Km 154 + 800 - Unitary remove a reason customers of a global trend among super- Aldi and Lidl now have a age shot the same day. It is at-
486 31.12.2025
Dir.Nord Food-driven might go to a discounter.” market chains and food mak- combined market share of taching a camera to the collar
Agogna Ovest - A26 - Km 154 + 800 - Unitary Indeed, Tesco’s move is di- ers as customers increasingly 10.4% in Great Britain, up from of one of its cows to shoot
487 31.12.2025
Dir.Sud Food-driven rectly aimed at Lidl and Aldi. seek food that appears fresh, 8% two years ago. Over that some of the footage.
They have been steadily steal- lacks artificial ingredients and period, the “big four” super- Waitrose, owned by John
Interested applicants to one or more of the above-mentioned competitive
ing market share from their is locally sourced. markets—Tesco, Wal-Mart’s Lewis Partnership, said it
procedures can obtain, as of April 15th, 2016, a complete version of the
call, which contains the rules for application, by visiting the website larger rivals for years—and In the U.S., the websites of ASDA, J Sainsbury PLC and aimed to let customers see
www.rbadvisory.com or by contacting the Advisor directly at the e-mail have an array of made-up farm companies such as Kellogg Co. Wm. Morrison Supermarkets firsthand where their food
address info@pec.rbadvisory.com. Applications must be received by the brand names of their own. and General Mills Inc. tout PLC—along with Waitrose, comes from. “Rather than tell-
Advisor at via Melchiorre Gioia, 8 – 20124 Milan (Italy), by 12:00 PM of Aldi sells meat and fresh pro- the names and profiles of have seen their combined mar- ing customers what we do,
May 6th, 2016. No obligation arises by the publication of this extract
towards the interested applicants which have no right to claim against ASPI
duce in the U.K. under a brand farmers who grow wheat and ket share drop to 76.3% from we’ve decided to show them in
and/or the Advisor. The English version is provided for convenience called Ashfield Farm, similar oats for their cereals. Wal- 78.6%. an open and honest way,” said
purpose only. to its U.S. brands Friendly Mart Stores Inc.’s Sam’s Club In February, Aldi launched Rupert Thomas, Waitrose’s
Farms and Appleton Farms. unit has begun putting codes a nationwide advertising cam- marketing director.
 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. Monday, April 18, 2016 | B3

TECHNOLOGY @wsjd | wsjd.com

T. Rowe Cuts Values

Of Its Tech Stakes
BY ROLFE WINKLER
T. Rowe Price Group Inc.
marked down in the first quar-
ter most of its investments in
private technology companies,
including Uber Technologies
Inc. and Dropbox Inc., deepen-
ing Silicon Valley’s woes as
mutual funds pull back on
their startup bets.
The Baltimore-based firm
disclosed the valuation esti-
mates in a quarterly report for
“In determining fair values for
our private investments, we
continued to follow our long-
established process of consid-
ering a variety of company-
specific and market-based
factors.”
Representatives for Fidelity,
BlackRock and Wellington
didn’t return requests for
comment.
A surprising markdown was
Uber, which T. Rowe cut by
6%. That is just the second

ROCKSTAR GAMES/ASSOCIATED PRESS

holdings in its various mutual
funds as of March 31. These
reports are closely watched by
tech startups and their inves-
tors because they provide a
window into how big money
managers value private stocks.
Several mutual-fund firms,
including Fidelity Invest-
ments, BlackRock Inc. and
funds advised by Wellington
time one of the ride-sharing
company’s six mutual-fund in-
vestors has cut its valuation,
according to The Wall Street
Journal’s Startup Stock
Tracker, which keeps tabs on
valuations posted by mutual
funds for startups valued at
over $1 billion.
Other markdowns include
apartment-rental site Airbnb The publisher of ‘Grand Theft Auto V,’ pictured above, and other games in the series is in a dispute over a profit-sharing arrangement.
Inc., down 6%, and home-decor

‘Grand Theft Auto’Legal Fight

site Houzz Inc., down 12%.
Altogether, T. Rowe cut the
JOHN G. MABANGLO/EUROPEAN PRESSPHOTO AGENCY

values of its stakes in 12 com-

Uber was marked down.
Management Co., began
marking down the values of
their stakes in the fall amid a
global economic slump.
These funds had invested
billions of dollars into startups
hoping for a big payday
through the initial public of-
fering market, which has yet
to greet a single tech company
this year.
T. Rowe’s biggest first-
quarter markdowns of compa-
nies valued at $1 billion or
more include enterprise-soft-
ware company Cloudera Inc.,
whose valuation was cut 37%;
database-software firm Mon-
goDB Inc., down 23%; and
note-taking software firm
Evernote Inc., down 21%.
“The first quarter was an
extremely volatile period for
global equity markets,” said a
spokesman for T. Rowe Price.
panies valued at $1 billion or
more, and marked up four.
Among the 17 stakes that T.
Rowe holds in private tech
companies valued at greater
than $1 billion, it now carries
seven of them below its pur-
chase price, a sign that many
of its early bets in high-flying
companies aren’t panning out.
The most notable is storage
firm Dropbox, which T. Rowe
reduced 16% in the quarter
and which the firm now values
13% below the price it paid in
May of 2012.
The Journal’s analysis
shows that for 16 startups
backed by mutual funds, at
least one of those funds now
value its investment at less
than what it paid for the
shares.
There are no hard rules for
how mutual funds mark their
private tech shares, but each
typically uses a mix of the
startup’s financial information,
the market values of publicly
traded rivals, and the prices
previously paid for the
startup’s shares.
Mutual funds often disagree
on the per-share price of the
same company, such as shared
office-space company We-
Work Technologies Inc.,
which T. Rowe marks at $37.64
a share while other fund firms
put it at $50.19.
BY SARAH E. NEEDLEMAN
A legal battle is spotlight-
ing an unusual profit-sharing
arrangement between a for-
mer lead developer for “Grand
Theft Auto” and the company
that publishes the hit video-
game franchise.
Leslie Benzies, former pres-
ident of a division at Rockstar
Games, the studio behind
“Grand Theft Auto,” is suing
the parent company, Take-
Two Interactive Software
Inc., saying it owes him more
than $150 million in unpaid
royalties.
The suit, filed last week in
New York state court, contests
the terms of Mr. Benzies’s de-
parture from Rockstar. It also
names the game studio, as
well as two brothers who co-
founded it and currently serve
as executive producer and
vice president of creative.
Take-Two filed a counter
suit in federal court in New
York alleging breach of con-
tract and saying Mr. Benzies
doesn’t have the right to chal-
lenge it over royalty pay-
ments.
The legal tussle shows how
the $100 billion videogame in-
dustry—much like the busi-
nesses of movies and music—
is susceptible to clashes
between powerful publishers
and celebrity-like employees
considered instrumental to
the product.
Japan’s Konami Holdings
Corp., for example, recently
grappled with a messy parting
of ways with Hideo Kojima, a
chief creator of the successful
“Metal Gear” franchise who is
popular with fans.
When publishers such as
Electronic Arts Inc. and Ac-
tivision Blizzard Inc. buy de-
veloper studios, they fre-
quently get involved in key
decisions about story lines
and design. Rockstar, how-
ever, has operated largely in-
dependent of Take-Two in
managing “Grand Theft Auto.”
Several “ Grand Theft
Auto” games have been pub-
lished since the first in 1997,
including a sequel created un-
der Mr. Benzies’s watch that
generated more than $1 billion
in sales in its first three days
in September 2013.
Mr. Benzies joined Rockstar
in 1999, a year after the studio
was acquired by Take-Two.
The 45-year-old became in-
creasingly important to the
“Grand Theft Auto” team,
overseeing design, coding,
narrative and other elements
of several games in the series,
according to his complaint.
The complaint also says
Take-Two owes Mr. Benzies
royalties under a financial
agreement the company made
in December 2008 with key
members of the “Grand Theft
Auto” team.
Take-Two, which is based
in New York, declined to com-
ment on the suits or the
profit-sharing arrangement.
Under the deal, Take-Two
agreed to share profits with
key Rockstar employees, in-
cluding Mr. Benzies. It has a
separate royalty deal with an-
other of its studios, 2K.
Take-Two doesn’t break out
earnings for the units and has
never disclosed the formula it
uses to divide profits, but it
discloses how much it pays in
total royalties. For the nine
months ended Dec. 31, it was
$256.1 million.
The 2008 deal was atypical
at the time and still is today,
said Michael Pachter, an ana-
lyst at Wedbush Securities.
“Public companies don’t give
away that much profit to em-
ployees,” he said. Still, the
move was a smart way to re-
tain top talent, he said.
In a research note pub-
lished after the deal was an-
nounced, Mr. Pachter esti-
mated Take-Two was setting
aside 30% to 40% of Rock-
star’s profits for the studio’s
key employees.
Today, he thinks the figure
is closer to 30%.
Mr. Benzies’s complaint
says one of the Rockstar
founders “encouraged” him to
go on a six-month sabbatical
in September 2014—a “well-
earned rest period.”
He was denied entry when
he tried returning to work the
following April, the complaint
alleges.
The parties tried to settle
the matter in mediation but
couldn’t come to an agree-
ment.
Mr. Benzies is seeking profits
distributed during his sabbatical
and money his attorney at
Locke Lord LLP says he would
have received through the re-
mainder of his contract ending
June 30, 2018. He is also ques-
tioning whether he received an
adequate share of profits going
back to the 2008 deal.
Take-Two in its countersuit
said: “Nowhere does the Roy-
alty Plan provide that Benzies
is entitled to parity or, indeed,
to any minimum royalty allo-
cation, either before or after
the termination.”

Business
Watch
MONARCH
Airline’s Owner
Mulls Possible Sale
Greybull Capital, the owner
of British airline Monarch Group
is considering strategic options
for the carrier including a poten-
tial sale.
Greybull Capital acquired
Monarch, based at London’s Lu-
ton Airport to the northwest of
the British capital, in 2014 after
years of losses. A deep restruc-
turing program and the sharp
drop in fuel costs have helped
return the airline to profit.
“The continued success of the
Monarch Group has generated
inbound interest and Deutsche
Bank is continuing to work with
us to evaluate both inbound and
outbound opportunities,” the air-
line said in a written statement,
signalling a willingness to con-
sider acquisitions.
Greybull injected roughly £125
million ($178 million) into Mon-
arch as part of the airline’s turn-
around.
The carrier said in December
that it had recorded an operat-
ing profit in the financial year
ended Oct. 31.
—Robert Wall
J.D. POWER
McGraw Hill to Sell
Auto-Ratings Firm
McGraw Hill Financial Inc.
has agreed to sell J.D. Power,
known for its ratings on auto
makers and other industries, for
$1.1 billion to investment firm
XIO Group.
In October, McGraw Hill said
it would explore alternatives for
J.D. Power. At the time, people
familiar with the matter said it
could attract a valuation of
around $1 billion.
XIO Group, whose operations
include London, Hong Kong and
Shanghai offices, said the deal is
its first for a U.S.-based com-
pany. In October, XIO bought
Nasdaq-listed Israeli medical-la-
ser company Lumenis Ltd. for
about $510 million.
The J.D. Power deal is sched-
uled to close during the third
quarter.
—Josh Beckerman
TATA CONSULTANCY SERVICES
Outsourcer to Appeal New Bookings Boost
Infringement Case Latest Profit 16%
India’s biggest outsourcer by
revenue, Tata Consultancy Ser-
vices Ltd., said it would appeal
an intellectual-property infringe-
ment case after a U.S. federal
court jury ordered it to pay
nearly $1 billion in damages.
Epic Systems Corp., a pri-
vately held medical-software
company, alleged TCS illicitly
downloaded materials from Epic
and used them to develop a
competing software product, ac-
cording to court documents.
TCS said in a written state-
ment Saturday that it “did not
misuse or derive any benefit
from downloaded documents,”
and that the company “plans to
defend its position vigorously in
appeals to higher courts.”
The jury told TCS to pay
$940 million in damages.
A U.S.-based Epic spokesman
on Sunday declined to comment
on TCS’s statements.
—Newley Purnell
INFOSYS
Infosys Ltd. on Friday re-
ported a 16% rise in its fiscal
fourth-quarter net profit, driven
by new bookings.
India’s second-largest soft-
ware exporter by sales said
profit for the three months
ended March 31 stood at 35.97
billion rupees ($539.6 million),
compared with 30.97 billion ru-
pees a year earlier.
That was slightly lower than
the 36.79 billion rupees consen-
sus forecast of analysts sur-
veyed by Thomson Reuters. Rev-
enue increased 23% to 165.5
billion rupees.
“The momentum of large deal
wins continued this quarter and
bookings were strong,” said
Chief Operating Officer U. B.
Pravin Rao.
—Newley Purnell
Mitel Plans to Acquire
Polycom for $2 Billion
BY ANNE STEELE based in Mitel’s home of Ot-
tawa, and have about 7,700 em-
Mitel Networks Corp. ployees globally. It will operate
agreed to acquire Polycom under the Mitel name but main-
Inc. in a nearly $2 billion cash- tain the Polycom brand.
and-stock deal pushed by El- Under the deal, Polycom
liott Management Corp. to stockholders will receive $3.12
spur consolidation in the tele- in cash and 1.31 Mitel shares
com-equipment industry. for each Polycom share.
The activist investor in Oc- Mitel Chief Executive Richard
tober disclosed a 6.6% stake in McBee, who will retain his role,
Polycom and a 9.6% stake in said the deal had been on the
Mitel and urged the two com- Canadian company’s radar for
panies—which sell videocon- three years and, although Poly-
ferencing equipment and other com shareholders are expected
hardware to businesses—to to have about a 60% stake in the
explore a merger. new company, “it had always
The new company will be been Mitel acquiring Polycom.”
EXTRACT OF "CALL FOR EXPRESSION OF INTEREST"
Following the appointment by Autostrade per l'Italia S.p.A. ("ASPI"), Roland
Berger S.r.l. ("Advisor") intends to start the competitive procedures described in
the table below, which provides, for each autonomous competitive procedure,
the following information: (i) the lot number, (ii) the name of the motorway
service station, (iii) the type of service to be provided and (iv) the expiry of the
contract to be awarded

ANGANG STEEL
Lot Type of
Fall in Steel Prices Number Motorway Service Station
service
Expiry

To Hurt Net Profit 478

Badia Al Pino Ovest - A1 - km 362+300 -
Dir. Sud
Food 31.12.2028
Angang Steel Co. said Thurs-
day that it expects to record a Casilina Ovest - A1 - Km 658+800 - Dir.
479 Food 31.12.2028
Sud
net loss of 615 million yuan
Castel Bentivoglio Ovest - A13 - Km
(US$95.4 million) for the three 480
11+700 - Dir. Sud
Food 31.12.2028
months ended in March because
481 Conero Est - A14 - Km 239+000 - Dir. Nord Food 31.12.2029
of a decline in the price of steel.
Although there was a slight 482 Lario Ovest - A9 - Km 27+600 - Dir. Sud Food 31.12.2029
rise in the price of steel during 483 Peretola Sud - A11 - Km 3+000 - Dir. Est Food 31.12.2028
this period, it was still lower
than this time last year, the 484 Stura Ovest - A26 - Km 25+500 – Dir.Sud Food 31.12.2029

Hong Kong-listed company said. 485 Teano Est – A1 – Km 708+400 – Dir. Nord Food 31.12.2028
Lower fuel prices, cost-cutting
measures and improved effi- Interested applicants to one or more of the above-mentioned competitive
th
procedures can obtain, as of April 15 , 2016, a complete version of the call,
ASMAA WAGUIH/REUTERS

ciency weren’t enough to make

up the loss from the steel-price
decline.
The company booked a net
profit of 19 million yuan for the
corresponding period a year ear-
lier.
Monarch Airlines owner Greybull Capital injected roughly $178 million into the British airline. —Anjie Zheng
which contains the rules for application, by visiting the website
www.rbadvisory.com or by contacting the Advisor directly at the e-mail
address info@pec.rbadvisory.com. Applications must be received by the
Advisor at via Melchiorre Gioia, 8 – 20124 Milan (Italy), by 12:00 PM of May 6th,
2016. No obligation arises by the publication of this extract towards the
interested applicants which have no right to claim against ASPI and/or the
Advisor. The English version is provided for convenience purpose only.
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 | Monday, April 18, 2016
Oil Slump Claims Another Producer
BY STEPHANIE GLEASON
Goodrich Petroleum Corp.
filed for chapter 11 bankruptcy
Friday with investment firms
slated to pick up the pieces, as
yet another company sought
court protection amid the
shakeout in the oil and gas in-
dustry.
Goodrich, an oil and gas
producer which struggled to
cut its debt as crude prices
tumbled, has a deal in place
that would erase $400 million
in debt from its books through
a swap with a group of inves-
tors that own bonds the com-
pany issued last year. The
Goodrich bondholders, who in-
clude Franklin Advisors Inc.,
Penn Capital Management
and Jefferies LLC, have agreed
to forgive $175 million in debt
in exchange for ownership of
the company. The deal is part
of a larger bankruptcy-exit plan
that would pay off or carry
over $40 million of higher-
ranking senior bank debt and
wipe out $224 million in unse-
cured bonds.
Goodrich’s bankruptcy deal
mirrors those proposed re-
cently by other struggling oil
producers as the energy slump
transforms a U.S. industry once
dominated by Texas oil men
MIDEAST
Continued from page B1
tive budgeting of major multi-
nationals, due to the drop in the
oil price,” Qatar Airways Chief
Executive Akbar Al Baker told
reporters at the same confer-
ence. “When you have a drop in
the oil price, you also have a
drop in business travel,” he
said.
The government of oil-rich
Oman is cutting costs across
the board, including curbing
premium travel, said Paul
Gregorowitsch, the CEO of
state-owned carrier Oman Air.
The airline is trying to offset
the loss of regional business
travel with lower-margin
“transfer” traffic, connecting
destinations in Europe, Asia
Victims of Low Oil Prices
Goodrich Petroleum has joined the growing list of energy companies
that have filed for bankruptcy protection since the beginning of 2015.
Top oil and gas producers in North America by amount of debt
Samson Resources
Energy XXI
Sabine Oil & Gas
Quicksilver Resources
Swift Energy
Energy & Exploration Partners
Magnum Hunter Resources
Milagro Oil & Gas
Venoco
New Gulf Resources
Goodrich Petroleum
ERG Resources
$0
TOTAL DEBT IN BILLIONS*
*Secured and unsecured Source: Haynes and Boone
into one controlled by financial
firms from across the nation.
Falling oil prices have roiled
the industry since the summer
of 2014. Since that time, about
60 North American oil and gas
companies have filed for bank-
ruptcy, involving nearly $20
billion in debt, according to the
law firm Haynes & Boone.
On Thursday, Houston’s En-
ergy XXI Ltd. filed for bank-
ruptcy to complete a debt-for-
equity swap with a group of
bondholders that includes Oak-
and Africa through its hub in
Muscat. Etihad didn’t respond
to requests for comment.
How hard are lower oil
prices hitting the Mideast carri-
ers? It’s difficult to tell since
they are all government owned
and most disclose few details
about costs and revenue. Be-
cause they aren’t traded pub-
licly, they also aren’t covered
extensively by airline-industry
analysts.
Mr. Clark said Emirates’ top-
line revenue for the financial
year ending March 31 was still
likely to be “good,” though he
didn’t disclose numbers. IATA
figures Mideast airlines racked
up overall profit of $1.4 billion,
up 55% from the prior year. As
impressive as that sounds,
lower oil prices helped U.S. air-
lines, along with those in Can-
  
BUSINESS NEWS
$1 $2 $3 $4
THE WALL STREET JOURNAL.
tree Capital Management.
Denver-based Venoco Inc.
filed for bankruptcy last month
after striking a deal with
Apollo Global Management
and MAST Capital Manage-
ment that will erase nearly $1
billion in debt. Energy & Ex-
ploration Partners Inc. and
New Gulf Resources LLC are
among other energy companies
that have brokered similar
deals.
The rising number of debt-
for-equity swaps is due to lend-
ada, book $19.4 billion in profit,
up 73%, in 2015. In Europe,
profit doubled, to $6.9 billion.
For Western executives who
have long accused the Mideast
carriers of benefiting from what
they say are hidden subsidies
from their government owners,
the shift is a welcome one.
As oil revenue plummets in
the region, governments have
been cutting budgets drasti-
cally. That could threaten in-
dustry investment, including
airports and road links, critical
to their growth. Mideast carri-
ers deny benefiting unfairly
from government assistance.
“The drop in fuel prices,
which is absolutely significant,
creates a different economic en-
vironment for these states re-
garding their airlines,” Air
France-KLM SA Chief Executive
ers’ unwillingness to accept the
fire-sale prices that potential
buyers are offering for oil as-
sets, according to Ian Peck,
head of Haynes & Boone’s
bankruptcy practice. Although
some oil traders believe crude
prices have bottomed out, oth-
ers are striking a more cau-
tious note.
The question, Mr. Peck says,
is “are these new owners—the
banks and bondholders—will-
ing to hold the equity as long
as it takes? Or will they need
to liquidate their positions?”
For Houston-based Goodrich
Petroleum, Friday’s bankruptcy
filing caps a yearlong effort to
reduce leverage and raise li-
quidity to weather low prices.
Last March, the company
embarked on several money-
raising efforts, including the is-
suance of a fresh series of
bonds worth $100 million to its
now owners-to-be. It also
raised $47.5 million from the
sale of now-worthless common
stock.
In September, the company
pulled in another $110 million
through an asset sale.
In the fall, Goodrich sought
to cut its debt with two bond
exchanges. The first, on unse-
cured bonds, exchanged $72.1
million in 2032 bonds for $36
Alexandre de Juniac said.
So far, there haven’t been
signs of retrenchment. Qatar
Air’s Mr. Al Baker said expan-
sion of his airline’s new airport
hub in Doha was proceeding as
planned to more than double
capacity before year-end.
Airlines from outside the re-
gion are feeling some of the
same pinch. In the U.S., the pain
is principally centered on Hous-
ton, where capacity growth has
slowed markedly, according to
Khalid Usman, a principal at
consultancy Oliver Wyman. Ca-
pacity in Houston is up 0.6%,
compared with 4.5% growth for
U.S. airports overall. Yield, a
measure of ticket revenue, fell
6.3% in the third quarter in the
U.S. as airlines passed along
some of their fuel-cost savings.
But Houston ticket yields fell
THE WALL STREET JOURNAL.
million in new 2032 bonds.
The second, on the junior
bonds that are being converted
to equity, exchanged $158.2
million in 2019 bonds for $75
million in junior bonds.
As the energy slump contin-
ued into the new year with U.S.
benchmark West Texas Inter-
mediate dipping below $30 a
barrel in February, Goodrich
needed a further reduction of
its debt. It sought to shell out
more preferred shares and
launched another bond ex-
change.
It also opened negotiations
with junior bondholders re-
garding an exchange of their
debt and went to stockholders
for authorization to issue 400
million more shares of common
stock. This time, however, the
out-of-court refinancing at-
tempts failed.
Goodrich opted to skip many
interest payments on its bonds
in March, setting the clock
ticking on reaching a deal with
investors. The clock ran out
Thursday, but by then it had
the framework of its deal with
bondholders, which it plans to
implement in bankruptcy court.
—Alex MacDonald, Jacqueline
Palank, Corrie Driebusch
and Ryan Dezember
contributed to this article.
11.9%, Mr. Usman said, citing
the latest available U.S. govern-
ment data. United Continental
Holdings Inc., the largest opera-
tor in Houston, has suffered a
20% drop in business from en-
ergy clients, and last week said
it would keep capacity flat or
even reduce it this year after
originally planning to boost fly-
ing at the hub by up to 3% in
2016.
European airlines also have
had to adjust. British Airways
parent International Consoli-
dated Airlines Group SA last
year trimmed capacity on
flights to Houston after unit
revenues declined sharply. KLM
is suspending its Dallas flights
this summer from its Amster-
dam hub and reducing its Hous-
ton service to one flight a day
from two.
TARGET
Style in the Marimekko range.
Target’s Sale
Draws Muted
Response
BY KHADEEJA SAFDAR
Target Corp. held its an-
nual designer sale Sunday, but
this year’s collaboration with
Finland’s Marimekko failed to
spark the excitement of previ-
ous collections when frenzied
shoppers cleaned out stores
and crashed Target’s website.
More than 200 discounted
Marimekko items, from $20
bikini tops to $65 hammocks,
went on sale early Sunday
morning and at midday most
of the items were still avail-
able on Target’s site. In other
years, customers have shown
up in droves at the crack of
dawn to shop Target’s limited-
edition merchandise. Target’s
website last year was over-
whelmed with traffic and store
shelves were emptied shortly
after opening with discounted
dresses and items from luxury
brand Lilly Pulitzer.
“The purchase urgency was
less than it was with the Lilly
Pulitzer collection in the very
early morning hours, but we
won’t have an accurate read
until later,” a Target spokes-
man said. “We don’t intend for
these to sell out in a day.”
The limited collaborations
with designers have helped
the world’s second-largest dis-
count retailer keep its cheap-
chic appeal and draw in
wealthier customers. The re-
tailer says the events are less
about sales and more about
generating buzz.








 
 


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B4B | Monday, April 18, 2016 THE WALL STREET JOURNAL.

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Brazilian Assets on the
Block—on the Cheap
INVESTING | B7
© 2016 Dow Jones & Company. All Rights Reserved.
As of 4 p.m. ET Friday EUR/GBP 0.7945 g 0.19%
U.S. Stocks Near Records
Major indexes have been close before and fallen back, as growth and earnings remain weak
BY SAUMYA VAISHAMPAYAN
AND MIN ZENG
After the Dow Jones Indus-
trial Average kicked off 2016
with its worst-ever five-day
start to a year, the blue-chip
index is flirting
ABREAST with its all-time
OF THE high.
MARKET The momen-
tum of the re-
cent rally, which
has sent the Dow up 14% from
the year’s low in February,
could carry major U.S. indexes
to fresh records. The outlook
for stocks in coming months
TOMOHIRO OHSUMI/BLOOMBERG NEWS
A liquefied-natural-gas tanker, photographed in January, is berthed at a Tokyo Electric Power gas-fired thermal power plant in Japan.
Gas Glut Hands Power
Over Pricing to Buyers
BY DAN STRUMPF
AND ROBB M. STEWART
PERTH, Australia—As gas
exporters from the U.S. to
Australia ramp up their out-
put, the gulf between buyers
and sellers over prices for the
energy source is widening.
A growing glut of exported
natural gas coming onto world
markets is handing pricing
power to buyers such as
power utilities. They are ques-
tioning the long-held industry
Netflix Fans Ignore Plot Twists Bankers Hushed on EU Exit
BY STEVEN RUSSOLILLO
Slowing growth, rising
costs and increasing competi-
tion: That is usually a recipe
for trouble on Wall Street.
Then there is Netflix Inc.
The video-streaming ser-
vice’s meteoric stock rise has
defied logic, thanks to its
growing popularity and origi-
nal program-
AHEAD ming. That has
OF THE overshadowed
TAPE the steep rise in
the cost of do-
ing business and
slowing U.S. subscriber
growth. More channels are
going direct-to-consumer
through the Internet and ri-
vals such as Hulu and Ama-
zon.com’s Prime Instant
Video are ramping up spend-
ing on originals of their own.
Netflix’s stock has surged
more than 300% in three
years, repeatedly proving
naysayers wrong on the ride
higher. But with shares waf-
fling in volatile fashion in re-
cent months, doubts about
the rally’s sustainability con-
tinue to grow. Ahead of Mon-
day’s earnings report, the
skepticism might be war-
ranted.
MARKETS DIGEST B6 | FINANCE WATCH B8
YEN/DLR ¥108.73 g 0.62% GOLD 1233.10 À 0.66%
has improved since the Fed-
eral Reserve in March signaled
a more cautious path for rais-
ing interest rates this year.
But while the record is
within reach, the index has
also been there several times
before and hasn’t vaulted the
hurdle, partly because global
growth remains sluggish and
the outlook for corporate
earnings is grim. Another po-
tential obstacle emerged Sun-
day as delegates from major
oil-producing countries failed
to reach an agreement to
freeze crude-oil output, at a
meeting in Doha, Qatar. Com-
practice of contracting long-
term gas supply deals linked
to oil prices, pushing instead
for shorter and more flexible
deals that reflect the world’s
excess supply and currently
low market prices.
That is bad news for pro-
ducers, from oil majors like
Royal Dutch Shell PLC to
state-owned behemoths like
Malaysia’s Petroliam Nasional
Bhd., known as Petronas. Such
companies have plowed bil-
lions into massive and com-
Cash Burn
Netflix’s net operating cash flow
$400 million
200
0 And as its latest price in-
–200
–400
–600
–800
2009 ’10 ’11 ’12 ’13 ’14 ’15
Source: FactSet
THE WALL STREET JOURNAL.
Analysts expect earnings of
3 cents a share, down from 5
cents a year earlier. Revenue
is estimated to have increased
25% to $1.97 billion. Over the
past five years, Netflix has
consistently exceeded expec-
tations, yet shares have
moved up or down by at least
10% following more than half
of those reports.
Much of the attention is
now focused on Netflix’s over-
seas opportunities. In January,
Netflix said it had expanded
to an additional 130 countries,
tripling its global reach.
Still, investors shouldn’t
THE WALL STREET JOURNAL.
modity-linked shares have re-
bounded along with oil prices
since mid-February, largely
based on hopes for a deal.
The Dow made a series of
attempts at a record late last
year, following the first 10%
pullback since 2011 in August.
One run brought the Dow
within 2.2% of its record of
18312.39, which it set May 19.
The index is now back in fa-
miliar territory. Banks led a
rally last week as lackluster re-
sults from some of the biggest
U.S. lenders beat expectations,
lifting the Dow to 17897.46. The
index is 2.3% below its closing
plex plants that chill gas into
liquid form for export by sea,
and now need prices to stay
high to ensure an adequate re-
turn on their investments.
While companies recognize
the need to accept different
ways of pricing their gas, they
argue gas buyers are being un-
realistic about how much they
will need to pay.
“Markets evolve…I don’t
need to be proscriptive in
what that pricing mechanism
Please see LNG page B7
lose sight of Netflix’s slowing
domestic subscriber growth.
Netflix expects a net 1.75 mil-
lion new U.S. subscribers in
the first quarter, lower than
the 2.28 million added a year
earlier.
crease takes shape, analysts
project higher churn rates,
particularly as grandfathered
pricing comes to an end.
Slower growth and higher
U.S. churn matters as domes-
tic subscribers may remain
more profitable than interna-
tional ones.
Meanwhile, streaming con-
tent obligations hit $10.9 bil-
lion in the fourth quarter, the
third consecutive quarter
these costs exceeded $10 bil-
lion. They were lower by
about one-third two years
ago. And Netflix’s net operat-
ing cash flow turned negative
last year for the first time
since 2000.
Fetching more than 200
times projected earnings for
the next 12 months, the stock
trades more on faith than
fundamentals. The product is
great, but this stock isn’t
worth bingeing on.
Email: tape@wsj.com
China’s Recovery
Lacks Staying Power
HEARD ON THE STREET | B8
OIL 40.36 g 2.75%
high, and the S&P 500 is 2.4%
from its record close of
2130.82, set May 21.
“The question is how much
further the equity market can
rally” given the extent and
speed of its rebound over the
past two months, said John
Vail, chief global strategist at
Nikko Asset Management,
which had $153.7 billion in as-
sets under management at the
end of December.
There are several signs that
U.S. indexes could manage to
surpass the records this time,
analysts say.
Please see DOW page B8
Fizzling Out
The price of liquefied natural gas
in Asia has collapsed.
Average monthly LNG price
$20 per million BTUs
15
10
5 fices over the past week to de-
April: $4.46
0
2010 ’11 ’12 ’13 ’14 ’15 ’16
Source: Platts
THE WALL STREET JOURNAL.
BY MAX COLCHESTER
Banks in the U.K. have a
message for employees: Don’t
mention the “Brexit.”
Starting Friday, the referen-
dum over whether the U.K.
should stay in the European
Union was officially under way.
Companies not registered as
official campaigners can be
slapped with fines, or face
criminal punishment, if they
break strict spending limits of
£10,000, or about $14,000, pro-
moting their views.
Across London, bank-com-
pliance teams have scrambled
into action. Bank-research de-
partments have clamped down
on staff making notes that ana-
lyze a Brexit—a British exit
from the EU—available to jour-
nalists. Several are asking
speakers at events to read out
a disclosure stating the bank
isn’t taking sides in the refer-
endum, before making a speech
or doing a question-and-an-
swer session.
One big U.S. bank is consid-
ering whether to invite extra
politicians to dinners to ensure
both sides of the debate are
represented.
“It is important that we do
not facilitate campaign activity
3-MONTH LIBOR 0.63310%
Making a Run
The Dow Jones Industrial Average is back near its all-time record
and many U.S. stocks are hitting fresh one-year highs.
Dow's performance since its
record close
20000
May 19, 2015
18312.39
19000
17897.46
18000
17000
16000
15000
2015 ’16
*Twenty-day moving average
Source: WSJ Market Data Group
Emerging Markets
Get Surprise Lift
BY CAROLYN CUI
A wave of interest-rate
cuts by emerging-market coun-
tries is helping extend a sharp
rally in their stock and bond
markets, delivering inves-
tors returns that few had fore-
cast heading into 2016.
During the past month,
central banks in India, Indone-
sia, Turkey, Hungary and Tai-
wan have lowered rates in a
bid to counter soft economic
growth.
Analysts say more develop-
ing nations may follow in com-
ing months, likely adding fuel
to a two-month-long surge
that has taken the MSCI
Emerging Markets stock index
up 6.6% for the year, reversing
China’s Shadow Woes
BY JAMES T. AREDDY
SHANGHAI—A crisis rocking
a loosely regulated lending net-
work is underlining the risks of
a financing boom that has
channeled Chinese household
money into Hollywood movies
and Wall Street deals.
Droves of teary-eyed inves-
tors from around China have
descended on Shanghai Kuailu
Investment Group’s swanky of-
mand their money back after
the firm halted redemptions on
wealth-management products
for the roughly 250,000 clients
of the firm and three affiliates.
The uncertainty around in-
vestments handled by Kuailu
that advocates voting one way
or another,” said Barclays
Chairman John McFarlane in a
recent note to employees.
U.K. law states that an or-
ganization can spend as much
as £10,000 promoting its views
on the referendum; the same
limit applies to individuals. Af-
ter that it must register as a
campaigner. No banks have
done so. The lockdown is in
place until June 23, the day of
the vote.
Early on, many
banks came out in
favor of the U.K.
staying in the bloc.
According to the rules, of-
fering Brexit advice to clients
is fine. So are research reports.
But “if you promote the report
more widely, for example on
your website or to the media,
this suggests that your inten-
tion is to influence the wider
voting public,” the U.K.’s Elec-
toral Commission’s guidance
says. Any research that com-
pares two outcomes or uses
positive or negative language
“makes the spending more
ZHANG NAN/XINHUA/ZUMA PRESS
Monday, April 18, 2016 | B5
10-YR TREAS À 8/32 yield 1.753%
Number of stocks on the
NYSE hitting a 52-week high*
250
Friday 200
150
100
50
0
2015 ’16
THE WALL STREET JOURNAL.
a double-digit decline. The
S&P 500 is up 1.8%.
On Thursday, Singapore’s
central bank surprised markets
by easing its currency policy.
The city-state uses exchange
rates to guide its monetary pol-
icy instead of interest rates.
The Straits Times index, its
stock-market benchmark, rose
0.8%, while the Singaporean
dollar weakened 1% against the
U.S. dollar.
The gains underscore the
far-flung impact of the U.S.
Federal Reserve’s decision this
year to slow the pace of ex-
pected short-term interest-
rate increases, along with the
greater sensitivity of emerg-
ing-market economies to stim-
Please see RATES page B8
could force a re-evaluation of a
financing trend that has be-
come widespread, in the latest
knock to a financial system
damaged by months of stock-
market turmoil and a slowing
economy.
Kuailu is one of thousands of
finance companies in a universe
of Chinese “shadow banks” that
funnel investors’ funds to busi-
nesses and individuals, often
with an assurance of high re-
turns. Moody’s Investors Ser-
vice estimated credit extended
by nonbank financing compa-
nies in China stood at $370 bil-
lion in mid-2015. Many Chinese
refer to the diverse industry
using English: “P2P,” as in peer-
Please see CHINA page B7
likely to fall within the spend-
ing rules,” the guidance adds.
Fearing the ramifications for
their businesses, many banks
came out in favor of the U.K.
staying in the EU. Being able to
publish research outlining the
potential economic hit the U.K.
would sustain from Brexit is a
major weapon in banks’ lobby-
ing arsenal. Their early efforts
made them the focus of pro-Br-
exit campaigners’ ire.
“This is all about the big
banks and the establishment
protecting their interests,” U.K.
Independence Party leader Ni-
gel Farage said in a statement
early last week.
On Thursday, Lloyds Bank-
ing Group PLC beat the dead-
line, announcing that its board
had concluded that “the refer-
endum and a vote to leave the
EU are likely to cause economic
uncertainty and potential vola-
tility in the short term.”
Delivering news and insight
on finance and markets
from London
Download on the App Store
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B6 | Monday, April 18, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST Data as of Friday, April 15, 2016

Nikkei 225 Index STOXX 600 Index S&P 500 Index 4 p.m. New York time
Last Year ago
16848.03 t 63.02, or 0.37% Year-to-date t 11.48% 342.79 t 1.20, or 0.35% Year-to-date t 6.29% 2080.73 t 2.05, or 0.10% Trailing P/E ratio * 24.15 20.87
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 412.42 303.58 High, low, open and close for each P/E estimate * 18.50 17.61
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 2.19 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 360 2100
DOWN UP
Session open t Close 65-day moving average

Close Open 18000 350 2050

t

Session low
17200 340 2000

16400 330 1950

15600 320 65-day moving average 1900

14800 310 1850

Bars measure the point change from session's open

14000 300 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 2367.41 –0.24 –0.01 2047.44 • 2639.52 1.3 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1682.11 –0.82 –0.05 1491.52 • 1950.85 –2.0 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 846.70 1.25 0.15 688.52 • 1066.71 6.6 3.250 Australia 2 1.999 126.5 119.3 105.8 123.4 1.967 2.030 1.734
4.250 10 2.571 81.9 74.0 70.8 40.4 2.534 2.679 2.293
Americas DJ Americas 499.92 –0.37 –0.07 433.35 • 524.44 2.6
3.500 Belgium 2 -121.5 -123.3 -133.9 -68.9 -0.458 -0.367 -0.189
-0.481
Brazil Sao Paulo Bovespa 53227.74 816.72 1.56 37497.48 • 58051.61 22.8
0.800 10 0.384 -136.8 -137.5 -140.5 -162.6 0.419 0.566 0.264
Canada S&P/TSX Comp 13637.20 –31.09 –0.23 11843.11 • 15412.60 4.8
4.250 France 2 -0.469 -120.2 -121.1 -138.3 -67.7 -0.437 -0.411 -0.177
Mexico IPC All-Share 45536.52 132.98 0.29 40265.37 • 46191.51 6.0
0.500 10 0.481 -127.1 -128.4 -138.1 -153.0 0.510 0.590 0.359
Chile Santiago IPSA 3147.18 9.13 0.29 2759.77 • 3359.04 6.9
0.500 Germany 2 -0.513 -124.6 -127.8 -142.1 -76.5 -0.504 -0.449 -0.265
U.S. DJIA 17897.46 –28.97 –0.16 15660.18 • 18312.39 2.7
0.500 10 0.131 -162.1 -162.2 -165.2 -178.0 0.172 0.319 0.109
Nasdaq Composite 4938.22 –7.67 –0.16 4266.84 • 5218.86 –1.4
4.500 Italy 2 0.017 -71.6 -74.2 -95.8 -40.9 0.032 0.014 0.091
S&P 500 2080.73 –2.05 –0.10 1829.08 • 2130.82 1.8
2.000 10 1.350 -40.2 -44.1 -59.4 -64.8 1.353 1.377 1.242
CBOE Volatility 13.62 –0.10 –0.73 11.95 • 40.74 –25.2
0.100 Japan 2 -0.250 -98.4 -102.8 -112.3 -49.0 -0.254 -0.151 0.010
EMEA Stoxx Europe 600 342.79 –1.20 –0.35 303.58 • 412.42 –6.3 0.100 10 -0.111 -186.3 -188.4 -199.2 -156.3 -0.090 -0.022 0.326
Stoxx Europe 50 2867.73 –5.07 –0.18 2566.26 • 3580.45 –7.5 0.500 Netherlands 2 -0.538 -127.1 -127.7 -141.5 -71.6 -0.503 -0.443 -0.216
Austria ATX 2303.65 –14.40 –0.62 1957.05 • 2681.44 –3.9 0.250 10 0.226 -152.6 -153.7 -155.7 -171.7 0.257 0.414 0.172
Belgium Bel-20 3458.50 0.60 0.02 3130.76 • 3849.12 –6.5 4.350 Portugal 2 0.277 -45.7 -42.0 -66.1 -50.3 0.354 0.311 -0.003
France CAC 40 4495.17 –16.34 –0.36 3896.71 • 5268.91 –3.1 2.875 10 2.984 123.2 127.8 82.2 -18.6 3.072 2.793 1.703
Germany DAX 10051.57 –42.08 –0.42 8752.87 • 12039.16 –6.4 4.500 Spain 2 -0.038 -77.1 -78.2 -94.8 -43.3 -0.007 0.024 0.067
Greece ATG 574.73 26.63 4.86 440.88 • 851.81 –9.0 1.950 10 1.497 -25.5 -29.5 -45.7 -61.9 1.499 1.514 1.270
Hungary BUX 27142.26 215.65 0.80 20610.76 • 27142.26 13.5 4.250 Sweden 2 -0.431 -116.4 -119.1 -159.1 -83.9 -0.417 -0.619 -0.339
Israel Tel Aviv 1474.23 … Closed 1383.34 • 1723.56 –3.6 1.000 10 0.792 -96.0 -97.3 -132.2 -161.9 0.821 0.649 0.271
Italy FTSE MIB 18257.35 –71.74 –0.39 15773.00 • 24031.19 –14.8 1.250 U.K. 2 0.422 -31.2 -31.0 -43.2 7.0 0.464 0.541 0.570
Netherlands AEX 450.59 –0.45 –0.10 382.61 • 509.24 2.0 2.000 10 1.417 -33.5 -34.0 -43.3 -30.4 1.454 1.538 1.585
Poland WIG 48095.43 –189.78 –0.39 42152.70 • 57379.45 3.5 0.875 U.S. 2 0.734 ... ... ... ... 0.774 0.972 0.500
Russia RTS Index 905.10 –9.24 –1.01 628.41 • 1082.21 19.6 1.625 10 1.752 ... ... ... ... 1.794 1.971 1.889
Spain IBEX 35 8850.90 –10.60 –0.12 7746.30 • 11640.20 –7.3
Sweden SX All Share 486.49 –1.14 –0.23 435.21 • 564.90 –3.7 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8014.60 –6.40 –0.08 7496.62 • 9526.79 –9.1 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 53038.91 190.91 0.36 46282.02 • 55188.34 4.6 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 4/14/2016
Turkey BIST 100 85573.25 –211.70 –0.25 68567.89 • 88651.88 19.3
One-Day Change Year Year
U.K. FTSE 100 6343.75 –21.35 –0.34 5536.97 • 7103.98 1.6 Commodity Exchange Last price Net Percentage high low
380.75 2.75 0.73% 384.00 351.25
Asia-Pacific DJ Asia-Pacific TSM 1393.40 0.62 0.04 1190.45 • 1619.39 0.3 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 963.00 6.75 0.71 968.00 862.00
Australia S&P/ASX 200 5157.50 38.90 0.76 4765.30 • 5982.70 –2.6
Wheat (cents/bu.)
CBOT
CBOT 467.25 0.50 0.11 499.00 449.50
China Shanghai Composite 3078.12 –4.24 –0.14 2655.66 • 5166.35 –13.0
Live cattle (cents/lb.) CME 122.025 0.275 0.23 131.350 118.775
Hong Kong Hang Seng 21316.47 –21.34 –0.10 18319.58 • 28442.75 –2.7
Cocoa ($/ton) ICE-US 2,979 -9 -0.30% 3,211 2,746
India S&P BSE Sensex 25626.75 … Closed 22951.83 • 28799.69 –1.9
Coffee (cents/lb.) ICE-US 124.75 -0.35 -0.28 138.20 115.35
Japan Nikkei Stock Avg 16848.03 –63.02 –0.37 14952.61 • 20868.03 –11.5
Sugar (cents/lb.) ICE-US 15.20 0.83 5.78 16.63 12.68
Singapore Straits Times 2923.94 10.01 0.34 2532.70 • 3525.19 1.4
Cotton (cents/lb.) ICE-US 59.93 -0.92 -1.51 64.92 54.33
South Korea Kospi 2014.71 –1.22 –0.06 1829.81 • 2173.41 2.7 Robusta coffee ($/ton) ICE-EU 1551.00 -1.00 -0.06 1,597.00 1,372.00
Taiwan Weighted 8700.39 32.68 0.38 7410.34 • 9973.12 4.3
Copper ($/lb.) COMEX 2.1600 -0.0195 -0.89 2.3290 1.9580
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1235.20 8.70 0.71 1,287.80 1,063.00
Silver ($/troy oz.) COMEX 16.270 0.097 0.60 16.395 13.760
Currencies London close on April 15 Aluminum ($/mt)* LME 1,562.50 12.00 0.77 1,588.50 1,451.50
Tin ($/mt)* LME 17,175.00 120.00 0.70 17,500.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Fri YTDchg Copper ($/mt)* LME 4,815.00 -5.00 -0.10 5,070.50 4,320.50
10% Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,750.00 21.00 1.21 1,888.00 1,598.00
8
Europe Zinc ($/mt)* LME 1,880.00 18.00 0.97 1,880.00 1,467.00
6 Euro WSJ Dollar index
0.5774 1.7318 –3.8 8,920.00 -55.00 9,400.00 7,750.00
s
Bulgaria lev Nickel ($/mt)* LME -0.61
s
4
Croatia kuna 0.1506 6.638 –5.3 Rubber (Y.01/ton) TCE 188.10 -2.20 -1.16 192.80 175.10
2
Euro zone euro 1.1303 0.8848 –3.9
0 Palm oil (MYR/mt) MDEX 2641.00 -15.00 -0.56 2,780.00 2,405.00
Czech Rep. koruna-b 0.0418 23.915 –3.9
–2 Denmark krone 0.1519 6.5837 –4.2 Crude oil ($/bbl.) NYMEX 41.67 -1.00 -2.34 43.69 30.79
–4 s Yen
Hungary forint 0.003639 274.83 –5.4 NY Harbor ULSD ($/gal.) NYMEX 1.2474 -0.0164 -1.30 1.2983 0.9161
–6 Iceland krona 0.008054 124.16 –4.6
–8 RBOB gasoline ($/gal.) NYMEX 1.4856 -0.0356 -2.34 1.5723 1.1528
Norway krone 0.1216 8.2268 –7.0
0.2632 3.7994 –3.2
Natural gas ($/mmBtu) NYMEX 2.003 -0.060 -2.91 2.5930 1.8440
2015 2016 Poland zloty
Russia ruble-d 0.01505 66.442 –7.6 Brent crude ($/bbl.) ICE-EU 43.04 -0.76 -1.74 44.90 30.02
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1232 8.1198 –3.9 Gas oil ($/ton) ICE-EU 368.25 -8.50 -2.26 384.00 266.50
Fri Fri
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0351 0.9661 –3.6
Turkey lira 0.3503 2.8545 –2.2 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1289 7.7551 0.1
Ukraine hryvnia 0.0391 25.5825 6.6
Argentina peso-a 0.0699 14.3080 10.6
India rupee
Indonesia rupiah
0.0150
0.0000758
66.5018
13199
0.4
–4.6
U.K. pound 1.4224 0.7030 3.6 Cross rates London close on Apr 15
Brazil real 0.2829 3.5354 –10.7 Middle East/Africa
Japan yen 0.009198 108.73 –9.6
Canada dollar 0.7779 1.2855 –7.1 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002969 336.85 –0.6 Bahrain dinar 2.6526 0.3770 –0.03
Chile peso 0.001499 666.90 –5.9 Australia 1.2958 1.8432 1.3414 0.0119 0.1671 1.4643 1.0079 ...
Macau pataca 0.1253 7.9839 –0.2 Egypt pound-a 0.1127 8.8756 13.4
Colombia peso 0.0003337 2997.01 –5.6 Canada 1.2855 1.8284 1.3305 0.0118 0.1658 1.4529 ... 0.9922
Malaysia ringgit-c 0.2563 3.9013 –9.3 Israel shekel 0.2650 3.7734 –3.1
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6915 1.4461 –1.2 Kuwait dinar 3.3145 0.3017 –0.6 Euro 0.8848 1.2586 0.9157 0.0081 0.1141 ... 0.6883 0.6828
Mexico peso-a 0.0570 17.5581 2.1
Pakistan rupee 0.0096 104.700 –0.2 Oman sul rial 2.5976 0.3850 0.003 Hong Kong 7.7551 11.0306 8.0262 0.0713 ... 8.7650 6.0329 5.9845
Peru sol 0.3059 3.2691 –4.3
Philippines peso 0.0217 46.122 –1.6 Qatar rial 0.2745 3.643 unch Japan 108.7250 154.6600 112.5500 ... 14.0200 122.9000 84.5883 83.9100
Uruguay peso-e 0.0323 30.980 3.6
Singapore dollar 0.7369 1.3570 –4.3 Saudi Arabia riyal 0.2666 3.7505 –0.1 0.9661 1.3742 ... 0.0089 0.1246 1.0921 0.7516 0.7457
Venezuela bolivar 0.100125 9.99 58.4 Switzerland
South Korea won 0.0008724 1146.27 –2.5 South Africa rand 0.0685 14.5903 –5.7
U.K. 0.7030 ... 0.7277 0.0065 0.0906 0.7945 0.5469 0.5425
Asia-Pacific Sri Lanka rupee 0.0068376 146.25 1.4 Close Net Chg % Chg YTD % Chg
0.7717 1.2958 –5.6 Taiwan dollar 0.03092 32.337 U.S. ... 1.4224 1.0351 0.0092 0.1289 1.1303 0.7779 0.7717
Australia dollar –1.8 WSJ Dollar Index 86.19 –0.25 –0.29 –4.41
China yuan 0.1544 6.4765 –0.3 Thailand baht 0.02856 35.010 –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 0.43625% 0.18025% ¥ TakedaPharm 4502 5427.00 0.13 -10.52 £ RioTinto RIO 2230.50 -0.54 12.68 Last: 132.85 t 0.02, or 0.01% YTD t 2.5%
Three month 0.63310 0.27575 Asia Titans HK$ TencentHoldings 0700 165.30 0.18 8.25 CHF RocheHldgctf ROG 248.10 ... -10.24
140
Six month 0.90190 0.40290 HK$ AIAGroup 1299 44.95 -1.64 -3.54 ¥ TokioMarineHldg 8766 3761.00 -1.16 -20.18 £ RoyDtchShell A RDSA 1814.00 -0.19 18.87 50–day
One year 1.22125 0.68465 ¥ AstellasPharma 4503 1541.50 0.95 -10.97 ¥ ToyotaMtr 7203 5740.00 -1.14 -23.34 € SAP SAP 69.70 -0.37 -5.01 moving average 130
Euro Libor AU$ AustNZBk ANZ 23.85 0.34 -14.61 AU$ Wesfarmers WES 41.62 2.16 0.02 € Sanofi SAN 77.45 0.19 -1.46 t
120
One month -0.34300% -0.04786% AU$ BHP BHP 19.28 2.17 7.95 AU$ WestpacBanking WBC 30.90 0.55 -7.93 € SchneiderElectric SU 56.38 -0.37 7.27
Three month -0.26500 -0.00500 HK$ BankofChina 3988 3.24 ... -6.36 AU$ Woolworths WOW 22.19 1.46 -9.43 € Siemens SIE 92.77 -0.29 3.22 High 110
Six month -0.15143 0.05929 HK$ CKHutchison 0001 99.30 0.30 -4.89 € Telefonica TEF 9.63 0.69 -5.86 100
One year -0.02886 0.18071 HK$ CNOOC 0883 9.73 0.62 20.57 Stoxx 50 € Total FP 42.55 -0.63 4.13
Close
Low 90
Euribor ¥ Canon 7751 3298.00 -0.81 -10.26 CHF ABB ABBN 19.27 0.21 7.29 CHF UBSGroup UBSG 15.51 -0.13 -20.54
One month -0.34200% -0.03300% ¥ CentralJapanRwy 9022 20195 1.10 -6.50 € AXA CS 22.14 0.54 -12.23 € Unilever UNA 40.37 -0.30 0.66 22 29 5 12 19 26 4 11 18 25 1 8 15
Three month -0.24900 0.00100 HK$ ChinaConstructnBk 0939 5.07 -0.20 -4.52 € AirLiquide AI 101.65 0.35 -1.93 £ Unilever ULVR 3279.50 -0.15 12.06 Feb. Mar. Apr.
Six month -0.14000 0.06800 HK$ ChinaLifeInsurance 2628 19.74 ... -21.35 € Allianz ALV 147.55 0.14 -9.78 £ VodafoneGroup VOD 229.75 1.30 3.96
One year -0.01100 0.17700 HK$ ChinaMobile 0941 89.85 0.06 2.69 € Anheuser Busch ABI 112.10 1.77 -2.01 CHF ZurichInsurance ZURN 210.60 -0.33 -18.50
Yen Libor AU$ CmwlthBkAust CBA 75.00 0.39 -12.31 £ AstraZeneca AZN 4146.50 0.13 -10.18
DJIA Stoxx 50
One month 0.22857% 0.23929% ¥ EastJapanRailway 9020 9996.00 -0.14 -12.70 € BASF BAS 68.26 0.13 -3.48
18505 -2.63 -12.22 62.14 -0.59 -10.65 Last: 2867.73 t 5.07, or 0.18% YTD t 7.5%
Three month 0.54750 0.38571 ¥ Fanuc 6954 € BNP Paribas BNP 45.16 -1.10 -13.54 $ AmericanExpress AXP
Six month 0.88143 0.54071 ¥ Hitachi 6501 520.30 -0.44 -24.76 £ BT Group BT.A 444.00 -0.55 -5.87 $ Apple AAPL 109.85 -2.01 4.36 3150
One year 1.27875 0.84143 TW$ Hon Hai Precisn 2317 82.90 0.61 2.60 € BancoBilVizAr BBVA 5.92 0.36 -11.20 $ Boeing BA 131.13 0.21 -9.31
¥ HondaMotor 7267 3035.00 -1.01 -22.38 € BancoSantander SAN 4.06 -0.78 -10.99 $ Caterpillar CAT 79.17 0.15 16.49 3000
Offer
KRW HyundaiMtr 005380 151500 -0.33 1.68 £ Barclays BARC 166.90 -1.24 -23.76 $ Chevron CVX 97.23 -0.77 8.08 2850
Eurodollars
HK$ Ind&Comml 1398 4.35 0.46 -7.05 € Bayer BAYN 105.70 -0.05 -8.72 $ CiscoSystems CSCO 27.90 -1.24 2.74
One month 0.4500% 0.3500%
46.10
2700
Three month 0.6500 0.5500
¥ JapanTobacco 2914 4768.00 -0.27 6.64 £ BP BP. 355.95 -0.73 0.55 $ CocaCola KO 0.59 7.31
¥ KDDI 9433 3168.00 -0.69 0.44 £ BritishAmTob BATS 4232.00 0.52 12.22 $ Disney DIS 98.59 -0.04 -6.18 2550
Six month 0.9000 0.8000
¥ Mitsubishi 8058 1984.50 -0.50 -2.14 CHF FinRichemont CFR 64.65 0.31 -10.33 $ DuPont DD 65.27 0.14 -2.00 2400
One year 1.2500 1.1500
¥ MitsuUFJFin 8306 533.80 -1.73 -29.49 CHF CreditSuisse CSGN 14.42 -0.76 -33.52 $ ExxonMobil XOM 84.97 -0.54 9.01
Latest 52 wks ago
1336.50 31.03 0.03 -0.39 22 29 5 12 19 26 4 11 18 24 1 8 15
¥ Mitsui 8031 -0.63 -7.54 € Daimler DAI 62.51 -2.11 -19.43 $ GenElec GE
Prime rates 166.90 158.52 -1.49 -12.05 Feb. Mar. Apr.
¥ Mizuho Fin 8411 -2.57 -31.46 € Deutsche Bank DBK 15.35 -0.42 -31.85 $ GoldmanSachs GS
U.S. 3.50% 3.25% ¥ NTTDoCoMo 9437 2730.50 -0.64 9.92 € DeutscheTelekom DTE 15.68 0.45 -6.08 $ HomeDepot HD 135.01 0.48 2.09
Canada 2.70 2.85 AU$ NatAustBnk NAB 26.76 0.11 -11.39 £ Diageo DGE 1933.00 0.21 4.12 $ Intel INTC 31.46 -1.07 -8.68
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥ NipponStl&SmtmoMtl 5401 2382.50 -0.75 -1.39 € ENI ENI 13.54 -1.31 -1.88 $ IBM IBM 151.72
61.87
0.37 10.25
-1.15 -6.30
Dow Jones Industrial Average P/E: 18
¥ NipponTeleg 9432 5007.00 0.36 3.54 £ GlaxoSmithKline GSK 1506.00 0.27 9.69 $ JPMorganChase JPM
Policy rates ¥ NissanMotor 7201 1019.50 -2.16 -20.32 £ HSBC Hldgs HSBA 450.50 -0.11 -15.98 $ JohnsJohns JNJ 110.18 0.31 7.26 Last: 17897.46 t 28.97, or 0.16% YTD s 2.7%
ECB 0.00% 0.05% ¥ NomuraHldgs 8604 507.90 -0.72 -25.21 € INGGroep INGA 11.07 0.23 -11.08 $ McDonalds MCD 127.78 0.21 8.16
$ Merck MRK 56.14 -0.55 6.29 18000
Britain 0.50 0.50 ¥ Panasonic 6752 997.60 -0.14 -19.58 £ ImperialBrands IMB 3743.00 0.24 4.36
Switzerland 0.50 0.50 HK$ PetroChina 0857 5.33 -0.19 4.72 € IntesaSanpaolo ISP 2.45 0.49 -20.73
$ Microsoft MSFT 55.65 0.52 0.31 17400
Australia 2.00 2.25 HK$ PingAnInsofChina 2318 37.85 -1.05 -11.77 € LVMHMoetHennessy MC 152.40 -0.72 5.18
$ NikeClB NKE 59.50 0.02 -4.80
16800
U.S. discount 1.00 0.75 $ RelianceIndsGDR RIGD 31.95 0.16 4.41 £ LloydsBankingGroup LLOY 68.20 -0.87 -6.66
$ Pfizer PFE 32.50 -0.46 0.68
Fed-funds target 0.25 0.00 48.20 -0.82 7.81 $ Procter&Gamble PG 82.30 0.35 3.64 16200
AU$ RioTinto RIO € LOreal OR 158.65 -0.60 2.16
Call money 2.25 2.00 KRW SamsungElectronics 005930 1300000 ... 3.17 £ NationalGrid NG. 1000.50 -0.15 6.72
$ 3M MMM 168.78 0.37 12.04 15600
4798.00 -0.33 -13.55 $ TravelersCos TRV 116.23 0.75 2.99
Overnight repurchase rates ¥ Seven&I Hldgs 3382 CHF Nestle NESN 72.70 0.14 -2.48 15000
6015.00 0.69 -2.02 $ UnitedTech UTX 104.57 -0.11 8.85
U.S. 0.43% 0.25% ¥ SoftBankGroup 9984 CHF Novartis NOVN 73.15 -0.27 -15.73
3516.00 -1.24 -23.66 $ UnitedHealthGroup UNH 127.33 -0.51 8.24 22 29 5 12 19 26 4 11 18 24 1 8 15
Euro zone n.a. n.a. ¥ Sumitomo Mitsui 8316 DKK NovoNordiskB NOVO-B 367.80 0.05 -8.03
97.60 0.41 4.11 $ VISAClA V 80.08 -0.31 3.26 Feb. Mar. Apr.
HK$ SunHngKaiPrp 0016 £ Prudential PRU 1395.00 -1.31 -8.88
Sources: WSJ Market Data Group, SIX 159.50 -1.24 11.54
$ Verizon VZ 51.35 -0.02 11.10 Note: Price-to-earnings ratios are for trailing 12 months
TW$ TaiwanSemiMfg 2330 £ ReckittBenckiser RB. 6735.00 -0.63 7.23
Financial Information, Tullett $ WalMart WMT 69.06 0.38 12.66 Sources: WSJ Market Data Group; Birinyi Associates
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Brazilian Assets on Block—on the Cheap
Some of the country’s
most prominent
businesses are
scrambling to divest
BY JEFFREY T. LEWIS
AND ROGERIO JELMAYER
SÃO PAULO—For investors
flush with cash—and calm—
Brazil’s beatdown assets are
looking attractive.
Some of the country’s most
prominent businesses, including
oil company Petróleo Brasile-
iro SA and iron-mining giant
Vale SA, are selling assets at
the cheapest in years amid an
economic and political melt-
down.
These and other Brazilian
companies are scrambling to
cut debt through divestment.
Petrobras and Vale alone are
looking to dump as much as
$20 billion in assets, making
Brazil enticing for investors
with the right risk profile.
“Private-equity investors see
a country that’s good for long-
term investment,” said Fer-
nando Borges, managing direc-
tor and co-head of private-
equity firm the Carlyle Group
in Brazil and South America.
“Brazil is a big country, which a
big young population and a big
middle class…now could be a
good time to get in.”
Vale, the world’s biggest
iron-ore producer by revenue,
has been hit by the drop in the
price of the commodity. The
mining company said in Febru-
ary it would consider selling
CHINA
Continued from page B5
to-peer lending, though that
business of matching small
lenders and borrowers is just
one segment of operations at
Kuailu.
Kuailu isn’t the first such
lender to leave investors hang-
ing amid recent collapses in the
sector. What is distinctive is
how its problems are exposing
an international dimension to
the industry, which bankers
said is common but little un-
derstood.
The Shanghai firm invested
in at least 20 feature films, in-
cluding the coming release of
“The Bombing” starring Bruce
Willis, according to the com-
pany. Client money holds a slice
of a $9 billion deal to privatize
New York Stock Exchange-listed
Chinese Internet-security com-
pany Qihoo 360 Technology
Co., company marketing docu-
ments show.
A crisis-management spe-
cialist that Kuailu’s founding
chairman this month put in
charge of sorting through $1.5
billion in liabilities told The
Wall Street Journal it wasn’t a
Ponzi scheme, a fear some in-
vestors have raised with the
company.
“No cash flow. That’s the is-
sue,” said Xu Qi, who estimated
that assets cover about 90% of
what is owed to investors, but
that most of it is tied up in in-
vestments or projects that can’t
be quickly converted to cash.
Companies like Kuailu got
their start in peer-to-peer lend-
ing, initially a modest effort to
supply money to Chinese
households and entrepreneurs
that was endorsed by top gov-
ernment officials as a way to
power new streams of con-
sumer activity.
But crowdsourced lending
has quickly expanded and now
powers financing across China,
from wedding loans to land
speculation. Like banks, but
with less regulation, such lend-
ers compete aggressively for
deposits, often via online plat-
forms. Many attract money
faster than they can thoroughly
research investments, accord-
ing to analysts.
The turmoil around Kuailu
JAMES T. AREDDY/THE WALL STREET JOURNAL
Shanghai Kuailu customers apply for repayment of investments.
even core assets to cut the $25
billion in debt it had at the end
of 2015 to $15 billion within 18
months. That is on top of an ex-
isting program to sell $4 billion
to $5.5 billion of noncore as-
sets.
Petrobras, which has been
hobbled by an epic corruption
scandal and the steep decline in
the price of oil, has said it
wants to divest itself of $15 bil-
lion in assets by the end of
2016, and an additional $42 bil-
lion by the end of 2018 in an ef-
fort to cut its huge debt.
The company has put its Ar-
gentine unit on the block, along
with some power-distribution
operations, part of a natural-
gas distribution business and
various less-prized oil fields,
among other assets. The broad
range of assets for sale is even
attracting some local rivals in
better financial shape than the
oil company.
“Petrobras has interesting
assets that we’re going to take
a look at,” said Rubens Ometto,
chairman of Cosan SA, a Brazil-
ian producer of sugar and etha-
nol. He cited natural gas as an
area where his company has in-
terest. Brazil has the world’s
biggest fleet of cars that can
run on either gasoline or etha-
nol, and Cosan has a joint ven-
ture with Royal Dutch Shell
that distributes both fuels
around the country.
But it isn’t just big compa-
nies that are being forced to
sell. Brazil’s economy con-
tracted by 3.8% in 2015 and is
expected to shrink at about the
same pace this year.
follows the collapse in recent
weeks of shadow lenders in
other cities and emerged just
as Shanghai authorities shut a
peer-to-peer lending network,
according to China’s official
Xinhua news agency.
Many of Kuailu’s investment
products promise high returns
and redemption after a few
months, according to company
contracts reviewed by the Jour-
nal, but investors said few un-
derstood that the company’s
success hinged on long-term
projects. The mismatch made
Kuailu’s business model funda-
mentally flawed, said Mr. Xu.
In Hollywood, the firm’s
now-absent founder and former
chairman, Shi Jianxiang, culti-
vated relationships with celeb-
rities such as Mike Tyson and
Sylvester Stallone, according to
people who know Mr. Shi and
images on the company web-
site. Mr. Xu termed Hollywood
Mr. Shi’s “personal desire.”
The firm pushed its products
by bundling them with tickets
to movie screenings, vacation
vouchers and galas, offering big
spenders the chance to hobnob
with film stars such as Oscar-
winner Adrien Brody, according
to investors and the firm’s pub-
lications.
Its Wall Street links are
newer and not as deep, accord-
ing to marketing materials re-
viewed by the Journal, which
show how Kuailu put money
into a strategy built around
Chinese companies delisting
from U.S. exchanges to relaunch
on domestic markets. Company
documents said the Qihoo deal
could return up to 415% on in-
vestments that started above
$155,000.
Kuailu investors are now
gathering daily at its offices to
complain that they were conned
by sales agents who played up
the potential for high returns
on funds peddled by Kuailu and
its affiliate brands, including
Jinlu, Hongqiao and Intraday,
also known as Dangtian, while
playing down the difficulty of
profiting on some deals.
Mr. Xu, who said he has no
financial stake in Kuailu, said
the group was careless in valu-
ing assets and likely skirted
fund-registration rules meant
to protect investors from fraud.
He said the nationwide sales
network under several different
MONEY & INVESTING
Petrobas, hobbled by a corruption scandal, wants to divest $15 billion in assets by the end of 2016.
The downturn has resulted
in a surge of companies seeking
bankruptcy protection. In the
first quarter alone, 409 Brazil-
ian companies sought relief,
more than double the figure a
year earlier, according to Serasa
Experian.
Companies in financial dis-
tress are natural takeover tar-
gets. Brazilian investment
banks are seeing a lot of inter-
est from international investors
looking for potential mergers
and acquisitions in Brazil, and
brands—the headquarters of
Jinlu and Dangtian are a floor
apart—was designed to make
the firm look smaller than it is.
A Shanghai government
spokeswoman declined to an-
swer questions about regula-
tory oversight of Kuailu or the
impact of its troubles. Mr. Xu
said he is in daily contact with
local financial regulators.
On Tuesday, about 500 in-
vestors squeezed into a Kuailu
ballroom to seek answers. Mr.
Xu said few of them could ex-
pect any money before July;
the firm’s official statements
extend the repayment timeline
to March 2018.
Business-registration filings
show Mr. Shi founded Kuailu as
an offshoot of a state-owned
wire maker in 2003. Last year,
Mr. Shi’s net worth was put at
$750 million by Shanghai
wealth-tracking firm Hurun Re-
port. He is now hospitalized
with a serious heart condition
in Hong Kong, according to Mr.
Xu.
Mr. Xu said Kuailu’s cash-
flow problems worsened in
March after government regu-
lators alleged movie houses
fraudulently inflated box-office
receipts for “Ip Man 3,” a mar-
tial-arts movie starring Mr. Ty-
son and funded in part by fi-
nancial products sold through
Kuailu’s network.
Mr. Xu said Kuailu’s well-
known association to the film
hurt its reputation and
prompted its banks to cancel
credit lines in March.
Later in the month, a signal
from China’s central govern-
ment that it had shelved plans
for a new stock-trading plat-
form in Shanghai meant an-
other setback for Kuailu, which
had marketed the new board as
a route for its investors to
profit on the Qihoo privatiza-
tion.
Qihoo, which recently won
U.S. shareholder approval to
take itself private in the first
step of its homecoming plan,
didn’t respond to questions. Mr.
Xu said Kuailu’s portion is frac-
tional and shouldn’t affect the
privatization.
Last week, investor Li Lin
pushed her way into the execu-
tive offices of Kuailu’s Dangtian
affiliate and kicked a door
marked “chairman.” The 32-
year-old Ms. Li, who is five
months pregnant, shouted that
she wanted her money back
and brandished contracts that
showed she made deposits of
about $39,000.
Ms. Li said she began invest-
ing with Kuailu after its sales-
people visited her apartment
toting a portable credit-card
reader and concert tickets as
gifts, including for a show with
Hong Kong heartthrob Ekin
Cheng.
“There is a Chinese saying:
Gifts blind the eyes,” Ms. Li
said. “After receiving these free
tickets, I felt somehow obliged
to buy their products.”
—Yifan Xie in Shanghai and
Lilian Lin in Beijing
contributed to this article.
Monday, April 18, 2016 | B7
lot of volatility in the next two
years.”
The volatility stems from
several factors. There is the Op-
eration Car Wash corruption in-
vestigation centered on Petro-
bras, which is weighing heavily
on the nation’s important petro-
leum and construction sectors.
The economy is foundering,
suffering its biggest contraction
in 35 years in 2015.
And the impeachment effort
against leftist President Dilma
Rousseff is a process that mar-
kets have cheered, but which is
unlikely to lead to a quick eco-
nomic turnaround.
While regime change is in
the air, the government’s legacy
of meddling in key sectors of
DADO GALDIERI/BLOOMBERG NEWS
Brazil’s economy has some in-
vestors still waiting on the
sidelines to take the measure of
a possible post-Rousseff gov-
ernment.
A good example is Brazil’s
ailing electricity sector. Retail
price controls implemented un-
der Ms. Rousseff battered en-
ergy distributors and discour-
aged some generators from
activity is likely to accelerate Investors looking for quick making additional investments.
through the end of the year, ac- gains should take heed. Even at Those controls have been
cording to Alberto Fernandes, today’s knockdown prices, lifted but investors remain
vice president of Itau BBA, the many Brazilian assets could wary. On Wednesday, Brazil’s
investment-banking arm of gi- take years to turn a profit given government tried to auction 24
ant bank Itau Unibanco Hold- the current turmoil. concession contracts for trans-
ings. “Brazil is for investors who mission lines; it received bids
The volume of M&A opera- are looking for a return in a ho- on only 14.
tions in Brazil totaled 109 bil- rizon of 10 years,” said Martin Government interference has
lion reais ($30.9 billion) last Escobari, director of Latin created serious doubts about
year, down from 192.7 billion America operations of U.S.- the stability of Brazil’s regula-
reais in 2014, according to Bra- based private-equity firm Gen- tory framework, said Alexan-
zilian Association of Financial eral Atlantic. “You have to have dre Furtado, an analyst at
and Capital Market Institutions, the capacity to get through this Lopes Filho & Associados in Rio
or Anbima. period, because there will be a de Janeiro,.
Banks Add to Cash on Hand
BY MICHAEL RAPOPORT ergy-industry borrowers that
TIMOTHY A. CLARY/AGENCE FRANCE-PRESSE/GETTY IMAGES
are prompting the banks to set
It took a huge slump in the aside more reserves to guard
energy industry to make it hap- against oil-and-gas loans going
pen, but big banks are finally bad.
adding to their rainy-day funds The energy problems out-
again. weighed continued improve-
The U.S.’s big national banks ments in credit quality among
added a total of $777 million to other types of loans, such as
their reserves for soured loans home mortgages, that other-
in the first quarter. That is up wise would have prompted the
from the $296 million they banks to continue releasing re-
added in the fourth quarter of serves.
2015 and marks a sharp break J.P. Morgan, for instance,
with the years before that. added $529 million to its
Before late 2015, the banks wholesale reserves in the first
had released funds from their Citigroup is among three big quarter because of oil-and-gas
reserves every quarter since U.S. banks to build up reserves. loans. Wells Fargo said its loan-
2009—$795 million in releases loss allowance for its oil-and-
in last year’s first quarter, for Banks “build” loan-loss re- gas portfolio increased by $504
instance. serves when they add new million during the quarter.
Three of the big four na- provisions to their reserves More reserve increases are
tional banks—J.P. Morgan for soured loans to a greater possible in the quarters to
Chase & Co., Citigroup Inc. and extent than they write off bad come, the banks said, especially
Wells Fargo & Co.—indicated loans as uncollectable, freeing if oil prices remain low.
they had built up their reserves up the reserves associated “My assumption is that
in the first quarter. Only Bank with them. A “release” is the we’re going to be talking about
of America Corp. still released opposite—charge-offs out- this all year,” said John
reserves, and it released only weigh new provisions. Shrewsberry, Wells Fargo’s
$71 million during the quarter, The new reserve increases chief financial officer, on the
its smallest quarterly release in are driven largely by worsening bank’s earnings conference
its six years of doing so. credit conditions among en- call Thursday.
LNG futures closed Friday at $1.90
a mmBTU, down 28% from a
year earlier.
“Asia has always been re-
The U.S.’s rise as an ex-
porter is a further reason the
oil peg may wither, because
sales from there tend to be
Continued from page B5 garded as a bottomless pit, benchmarked to gas prices at
might be, but it will have to be but now seems set to con- Henry Hub, a delivery point in
sufficient to underpin new de- found expectations,” said Louisiana.
velopment,” said John Watson, Anne-Sophie Corbeau, a fellow Already, sales of LNG on the
chief executive of Chevron at King Abdullah Petroleum spot market and via short-
Corp., which spearheaded the Studies and Research Center term contracts lasting less
$54 billion Gorgon LNG proj- in Riyadh. than four years had risen to
ect in western Australia, For sure, global trade in 29% of trade in 2014 from
which has just produced its LNG still is expected to grow 5.4% in 2000, and are likely to
first gas. “Right now custom- to as much as 420 million grow further, Ms. Corbeau
ers and buyers aren’t in that metric tons a year by 2020, up said.
space,” Mr. Watson said at a to 40% higher than in 2014, “People are understandably
major industry conference in Ms. Corbeau said. About 40% more cost conscious and ex-
Perth last week. of the new LNG export capac- pecting the price of LNG to re-
Much of the world’s new ity will come from the U.S. flect more adequately what is
supply of liquefied natural gas, The problem is that de- going on in the marketplace,”
usually known as LNG, had mand isn’t keeping pace: The said Yuji Kakimi, president of
been projected to flow LNG market has been oversup- fuel procurement at JERA Co.,
through Asia, where many plied since late 2014. That is a joint-venture between two
countries are looking to shift expected to continue: The big Japanese utilities that has
power generation away from global gas market could be left emerged as the world’s largest
heavily polluting fuels like with 70 million tons in uncon- buyer of LNG. He said JERA
coal. But appetite in this re- tracted supply by 2021, ana- now plans to buy LNG using
gion hasn’t grown as strongly lysts at Wood Mackenzie now contracts of varying length,
as expected as economies in estimate. That is enough to and move away from using oil
China and elsewhere cool. supply South Korea, China and as a pricing reference.
The average spot price for India for a year. LNG producers, though,
LNG slumped by 39% in Asia Buyers also argue linking prefer long-term purchase
in the past year to $4.460 per gas contracts to oil prices is agreements—sometimes last-
million British thermal units outdated, given the differing ing 20 years or more—to lock
in April, according to price re- dynamics in each market: Gas in revenue in order to secure
porting agency Platts. In the is used far more for power funding for their expensive
U.S., front-month natural-gas generation than oil. production facilities.
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B8 | Monday, April 18, 2016 THE WALL STREET JOURNAL.

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

China’s Recovery Is Lacking Legs OVERHEARD Car Market

China’s economy may have
stabilized for now, thanks to
gobs of new debt and a re-
flating property bubble. Dip-
ping into that old bag of
tricks, however, seems likely
to dredge up the same old
problems.
Official data showed
growth in China’s gross do-
mestic product slowed to
6.7% in the first quarter from
a year earlier. As expected,
that is the slowest in years,
but underlying data showed
activity picked up toward the
end of the quarter.
Home buyers, for instance,
continued to splash out for
new property, with residen-
tial sales rising 54% in the
first quarter from a year ear-
lier. That has emboldened
developers to start to build
again. Housing starts rose
16% in the first quarter, after
falling 15% last year. That au-
gurs well for employment
and demand for raw materi-
als.
But it is hard to see
China’s property market—
which in past years gener-
ated directly and indirectly
up to a third of all economic
activity—returning to its
Isn’t Wholly
Driving all this activity: Investors in retailers often
Building Up
China's housing sales and new
easy money. Real interest
rates have fallen. And nomi-
nal GDP grew faster than real
cheer share repurchases as
signs of management confi-
dence. But companies may
About Speed
housing starts, monthly change
from previous year GDP for the first time in five have less-optimistic reasons The European car market
quarters, which in theory for buying back stock. continues to race ahead, with
80% makes servicing debt easier. Citigroup analysts found registrations up 8.2% in the
60 Housing sales What should trouble in- 38 of 50 retail and apparel first quarter. But focusing on
Housing starts vestors is that while China’s companies they cover repur- car sales may miss the point.
AGENCE FRANCE-PRESSE/GETTY IMAGES
40 economic activity is ticking chased shares in fiscal 2015. The French volume car man-
20 up, debt is piling up faster. The bank set out to deter- ufacturers are trying to put
The stock of total financing mine how bullish that is for their days as adolescent
0 in the economy, including future performance, looking speed fiends behind them.
–20 bond issuance as part of a lo- at buybacks across the group About 1.7 million new cars
cal-government bailout pro- since 2011. It focused on in- were sold in the European
–40 gram, rose 15.8% in March stances of companies repur- Union in March, the crucial
2014 ’15 ’16 from a year earlier, the fast- chasing 5% or more of out- peak month. That was 6%
Source: CEIC est rate since mid-2014. With standing shares within a year. more than in March 2015,
THE WALL STREET JOURNAL. A construction site in Beijing. nominal GDP growing 7.2%, Of 71 instances, on average, fueled by catch-up growth in
Beijing’s plans to deleverage the stocks underperformed Italy and France. First-quar-
past glory. Much of the re- ford Economics, so unless the economy continue to be the S&P Retail Index by more ter sales in the former were
covery in prices and activity the boom spreads, the im- overwhelmed by the need to than 10 percentage points in a full 21% ahead of last year.
has been in China’s so-called pact on the broader economy support growth. the year following the repur- The European market as a
tier-one cities—the four larg- will remain muted. China bulls will be pleased chase, Citi found. whole is decelerating, follow-
est ones—and regulators China’s old-economy sec- by the data, hoping that a The stocks underper- ing growth of 9.3% last year.
there are already clamping tors also seem to have awo- proper recovery is at hand. formed the index in the year But it remains much stronger
down to prevent things from ken somewhat from their Those hopes may prove short following the repurchases in than most analysts and man-
getting out of hand. slumber. Industrial produc- lived. 44 of 71 instances, outper- ufacturers had forecast.
In the rest of China, the tion grew 6.8% in March, the The more the recovery is forming only 27 times. Consumer sentiment is re-
property recovery is far fastest in nine months. fueled by debt and property, That suggests companies covering from the eurozone
more subdued, and invento- Fixed-asset investment, the more concerned Beijing may buy back stock to cush- crisis of 2011-2012. But this
ries of unsold apartments re- spending on things like fac- will be that it is pushing the ion earnings per share the is also a market driven by
main substantial. Around tories and infrastructure, gas too hard and will have to following year. Instead of ap- cheap debt and cheap oil,
95% of real-estate sales occur grew 11.2%, much faster than ease off sooner than people plauding buybacks, investors both of which look around
outside of those top four cit- the 6.8% low it hit in Decem- think. should question their motive. cyclical lows. Low valuations
ies, notes Louis Kuijs of Ox- ber. —Alex Frangos for car manufacturers reflect
market worries that trading
conditions can’t get much

A Big Slowdown for Biotech Stocks Doesn’t Have to Last better.

Slowing growth has
cooled valuations of large
biotech stocks. That could
pave the way for a rebound.
Starting this week, the five
biggest U.S. biotech compa-
nies by market value are ex-
pected to report aggregate
first-quarter sales growth of
9.2% from a year earlier, ac-
cording to analysts’ esti-
mates. On the other hand, an-
alysts expect the five largest
U.S. pharma companies to in-
crease their top line by 5.5%.
Granted, biotech compa-
nies—firms that traditionally
develop drugs derived from
living cells rather than those
derived from chemicals—
tend to grow at a faster rate
These worries are proba-
bly premature. In the West-
than big pharma. But their peak in July 2015. Since that growth profile, along with a ern European market, first-
pace has slackened. A year peak, the sector is down by reduction in the pace of key Resetting quarter registrations were
ago, big biotech companies one-quarter while pharma is patent expirations. Index performance over past year still below their level for ev-
increased revenue at a 29% off about 15%. Yet valuations between ery year between 1998 and
year-over-year clip, while And the line between the the two areas have been 20% 2008—and a full 8.4% below
NYSE Arca
sales at big pharma compa- growth profiles of the two coming more in line. The Pharmaceutical Index the most recent 2006 peak.
nies dipped slightly. types of companies is blur- biotech index fetches 23 0 With more car sales funded
That happened as biotech ring. Biotech has slowed in times forward earnings, by debt, and little sign of up-
companies benefited from part because products like down from more than 30 –20 ward pressure on European
scientific breakthroughs, Gilead Sciences’ hepatitis C times last summer. While Nasdaq
rates, a gradual slowdown
which helped push shares drugs generated such ex- that is still at a premium to Biotechnology Index looks more likely than a sud-
–40
into overdrive. Pharma com- traordinary growth in the the pharma index at 15 den reversal.
panies were hampered by old first place. times, the biotech index is 2015 ’16 The irony is that near-
blockbuster treatments los- And insurers’ concerns loaded with smaller, unprof- Source: FactSet death experiences during the
ing patent protection. over the prices of new, ex- itable companies. THE WALL STREET JOURNAL. eurozone crisis forced most
The result: The Nasdaq pensive drugs have resulted At a more reasonable val- European volume car manu-
Biotechnology Index outper- in slow launches for poten- uation, biotech has greater ing out this year could again facturers to focus on mar-
formed the NYSE Arca Phar- tial blockbusters. potential to surprise. Slow reinvigorate biotech growth. gins rather than volumes.
maceutical Index by 260 per- Meanwhile, several major product launches don’t nec- Biotech investors may find Auto investors shouldn’t
centage points over the five acquisitions completed last essarily doom new drugs. a lower bar is easier to clear. get too hung up about sales
years to the biotech index’s year flatter the pharma And new clinical data com- —Charley Grant statistics. —Stephen Wilmot

MONEY & INVESTING

RATES as slumping manufacturing

Continued from page B5
ulus, while easing policies in
rich countries are showing
limited impact, with interest
rates below zero in some
output and heavy debt loads
haven’t changed significantly
in recent months, while valua-
creasing,” said Claire Dissaux,
an economist at Millennium
Global.
Easier policy is boosting na-
easier policy will provide the
tonic for some emerging mar-
kets that have missed the rally,
such as India, down 2% this
tions have risen substan- tions viewed by investors as year. Last week, the Reserve
tially, potentially limiting the vulnerable to outflows and Bank of India slashed 0.25 per-
scope of further gains. economic turmoil. Turkey’s centage point off its policy
When the Fed eventually central bank lowered its over- rate, the first cut in six
decides to raise rates, that night lending rate in late months, to encourage spend-
SAM KANG LI/BLOOMBERG NEWS

places. In comparison, the av-
erage policy rate in emerging
countries is 5.8%, according to
J.P. Morgan Chase & Co.
“Stimulative monetary poli-
cies are unambiguously posi-
tive” in places where rates are
higher, said Ed Kerschner, vice
chairman at Emerging Global
Advisors LLC, a New York-
based investment manager
with $890 million of assets un-
der management.
The gains are delivering the
latest surprise to investors and
policy makers who were brac-
ing at the outset of 2016 for a
continuation of the losses seen
in recent years, driven in part
by expectations for steadily
tightening Fed policy.
At the same time, many in-
vestors are skeptical about
how long the rally will last.
Economic fundamentals such
move could slow or even stop March, a shift that surprised ing.
any emerging-market rally, es- many observers as the coun- To be sure, some countries
pecially if it causes the dollar try’s inflation rate was still are still expected to raise rates,
to strengthen. above the central bank’s tar- such as Nigeria and South Af-
“I do think much of this get. Turkey’s stock market is rica, where inflation remains
year’s performance [in local up almost 20% this year. high.
bonds] is in the past,” said Some investors expect Rus- But there is talk of rate cut-
Nishant Upadhyay, head of sia to start easing soon, as ting even in Brazil, which has
global emerging markets debt Singapore eased its currency policy on Thursday. well. At its latest meeting in been roiled in recent years by
at HSBC Global Asset Manage- March, Russia’s central bank inflation and political turmoil.
ment, adding that these bonds ary, the higher yields offered Analysts at J.P. Morgan kept its policy rate on hold at Brazil’s inflation rate slowed
may get some support if the in emerging countries began Chase & Co. have recently di- 11%, although the country’s lat- to 9.4% in March, down from
Fed remains accommodative. to draw in investor funds. aled back their expectations est inflation reading has the peak of 10.7% in January,
The Fed raised its overnight Portfolio flows to emerging for the average policy rate in dropped to 7.3%—the lowest in thanks to a stronger real and
bank-lending target in Decem- markets surged to a 21-month developing nations to 5.56% two years. Russian shares are falling import prices. A partial
ber for the first time in nine high of $37 billion in March, for the end of this year, down up 8% this year. recovery in the exchange rate,
years, prompting nations from according to the Institute of from the 5.75% projection in John Espinosa, head of which fell by one-third against
Mexico to South Africa to International Finance. December. Market prices sug- global sovereign and emerg- the dollar last year, has “made
tighten policy in sympathy, Meanwhile, the improved gest more rate cuts are on the ing-markets fixed income re- room for a looser monetary-
seeking to reduce the risk of risk appetite in global financial way in Russia, Poland, South search at TIAA Global Asset policy stance,” said Ilan Gold-
damaging “hot money” out- markets has buoyed the cur- Korea and Malaysia, according Management, which oversees fajn, chief economist at Itaú
flows in exchange for likely rencies in many emerging mar- to data compiled by Société $861 billion of assets, said the BBA. The Brazilian stock mar-
weakening growth. kets, giving policy makers Générale SA. firm likes ruble-denominated ket has notched some of the
But as a global rally in risk- room to cut rates without fear- “The extent of the monetary bonds. biggest gains among emerging
ier assets took hold in Febru- ing sharp increases in inflation. easing cycle is probably in- Some investors are hoping markets this year, rising 23%.

DOW vor. Shares of smaller compa-

nies, which tend to have fewer
sources of income that can
the trend in place, that’s pow-
erful,” said Frank Cappelleri,
executive director of institu-
“We probably do need to get
[upbeat guidance] to justify
the market pushing to new
Finance
firm MongoDB Inc., down 23%;
and note-taking software firm
Evernote Inc., down 21%.

Continued from page B5

The gains have been broad.
The number of advancing
stocks compared with the
number of declining stocks on
the New York Stock Exchange
has risen during the past two
months and is higher than it
was last May, according to the
WSJ Market Data Group. The
number of stocks on the NYSE
hitting a 52-week high has
also increased this year. Both
indicators show that more
stocks are participating in the
rally rather than just a few big
gainers.
The closer U.S. stocks get to
record levels, the stronger the
pressure on investors who
have been holding a negative
view on stocks to "throw in
the towel and join the rally,”
said Donald Ellenberger, head
of multisector strategies at
Federated Investors, which
had $361 billion in assets un-
der management at the end of
March.
Riskier bets have gained fa-
offset each other in times of
stress, have rallied along with
tional equities at broker Insti-
net LLC.
their larger peers. The Russell Sentiment has become
2000, the benchmark for more positive than earlier this
small-company shares, has year, when investors were
surged 19% since Feb. 11, out- tossing around the possibility
pacing the roughly 14% ad- of a U.S. recession. The most
vances in the S&P 500 and recent American Association
Dow industrials. of Individual Investors survey,
dated Thursday, showed
27.85% of investors were bull-
The S&P’s trailing ish, up from 17.9% on Jan. 14.
P/E ratio is 18.4, But investors are far from
euphoric. The current level of
higher than its 10- bullishness, by this gauge, is
year average of 15.8. below the average of 38.57%
since the start of the survey in
1987 and significantly lower
Similarly, junk bonds, which than the roughly 50% level hit
have a greater chance of de- at the start of 2015.
fault than high-grade corpo- Earnings projections and
rate bonds, have rallied. The stock valuations, both power-
iShares iBoxx $ High Yield ful drivers of the market, are
Corporate Bond exchange- deterring some investors.
traded fund, the biggest junk- “Expectations for [first-
bond ETF, has gained 9.1% quarter earnings] are very low
since Feb. 11. and easily beaten, but can only
“None of those indicators go so far to improve the out-
are going to tell you exactly look for stocks,” said Gina
what’s going on, but when you Martin Adams, equity strate-
have more of them confirming gist at Wells Fargo Securities.
highs.”
The S&P 500 has a trailing Watch A surprising markdown was
Uber, which T. Rowe cut by 6%.
price/earnings ratio of 18.4, T. Rowe reduced its valuation of
higher than its 10-year average Dropbox by 16% in the quarter,
of 15.8, according to FactSet. putting the valuation 13% below
Ahead of the first-quarter re- the price it paid in May of 2012.
porting season, earnings at T. ROWE PRICE “The first quarter was an ex-
S&P 500 companies were fore- tremely volatile period for global
cast to decline 8.5% from a
Firm Cuts Valuations equity markets,” said a spokes-
year earlier, according to ana- For Uber, Dropbox man for T. Rowe Price.
lysts polled by FactSet. T. Rowe Price Group Inc. —Rolfe Winkler
Terri Spath, chief invest- marked down most of its invest-
ment officer at Sierra Invest- ments in private technology MAN GROUP
ment Management, which companies during the first quar-
oversees $2.3 billion, is put- ter, including Uber Technologies
More Cash Arrives
ting money to work in high- Inc. and Dropbox Inc.. In First Quarter
yield and emerging-market The Baltimore-based firm dis- Man Group, one of the
bonds, rather than stocks. closed the valuation estimates in world’s biggest hedge-fund man-
Another factor making in- a quarterly report for holdings in agers, reported higher inflows of
vestors cautious: Despite the its various mutual funds as of cash from clients during a
strong run-up in equity prices March 31. These reports are choppy first quarter for invest-
since mid-February, prices of closely watched by tech startups ment firms, led by its computer-
havens such as U.S. govern- because they provide a window driven funds.
ment debt continue to remain into how big money managers The London-based firm
stubbornly high. The yield on value private stocks. posted $500 million of new cli-
the benchmark 10-year Trea- T. Rowe’s biggest first-quarter ent money, compared with with-
sury note was 1.753% on Fri- markdowns of companies valued drawals of $1.3 billion a year ear-
day, less than 0.4 percentage at $1 billion or more include en- lier, although it sustained $700
point from its record closing terprise-software company million of investment losses dur-
low set in the summer of 2012. Cloudera Inc., whose valuation ing the period.
Yields fall as prices rise. was cut 37%; database-software —Laurence Fletcher