For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.

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WEDNESDAY, DECEMBER 28, 2016 ~ VOL. XLI NO. 84 WSJ.com ASIA EDITION
As of 12 p.m. ET DJIA 19952.45 0.09% NIKKEI 19403.06 0.03% STOXX 600 360.48 0.14% BRENT 55.92 1.38% GOLD 1138.10 0.55% EURO 1.0458 0.04% DLR 117.51 0.37%

Soldiers Stand Guard as Ex-Police Are Tried in Turkey Frontier

Whats Markets
News Turn In
Business & Finance
A Bad Year
T oshibas turnaround
plan is clouded by cost
overruns at U.S. nuclear
BY CAROLYN CUI

reactors it is building that A stock index tracking

are likely to force a write- some of the worlds riskiest,
down of as much as sev- potentially fastest-growing
eral billion dollars. A1 investments has missed this
years global rally, the latest
 Irelands data-protection
sign of the upheaval reorder-
chief is setting the pace
ing financial markets.
for EU monitoring of
AFP PHOTO/OZAN KOSEOZAN KOSE/AFP/GETTY IMAGES

The MSCI Frontier Mar-

global tech giants, includ-
kets Index of 22 small stock
ing Facebook and its
markets including Pakistan
WhatsApp chat service. B1
and Nigeria had risen 1.1%
 Southeast Asia has this year as of Dec. 22, in-
emerged as a new battle- cluding price changes and
ground for Chinas inter- dividend payments. That lags
net companies. B1 far behind the Dow Jones In-
dustrial Averages 17.4% total
 Monte dei Paschi faces
return for 2016 to date, and
a larger-than-expected
the 8.4% gain in the MSCI
capital shortfall of $9.19
Emerging Markets index of
billion, the ECB says. B1
larger developing nations.
 Some Chinese firms are Though investors are
moving headquarters to CRACKDOWN CONTINUES: Twenty-nine Turkish former police officers went on trial accused of aiding a failed military coup in July. It warned that it is subject to
poorer parts of the coun- was the first trial in Istanbul over the attempt. More than 40,000 people have been arrested for alleged involvement. considerable volatility, the
try, taking advantage of a frontier-markets index hasnt
new rule on IPOs. B1 gained or lost 1% in a day

Trump Picks Contrarians

since June 28, the longest
 Global turbulence and
such streak since the second
uncertainty will likely
half of 2012.
make life tougher than
The poor performance and
ever for CEOs in 2017. B5
placid trading underscore the
 Chinese institutional tough environment that fron-
investors are shunning His cabinet choices and istration as he tries to mold tions backed a trade deal ne- with contrarian viewpoints. In tier markets face at a time of
U.S. trophy properties in his own sweeping campaign gotiated by President Barack 2008, Mr. Obama selected two slowing global trade, tepid
favor of midtier ones. B9 advisers hold divergent themes into specific policies Obama with Asian nations, of his rivals for the Demo- economic growth and in-
 Big banks could find views; policy clashes for governing. which Mr. Trump opposed and cratic nominationHillary creasingly nationalist politics
The president-elects pick has vowed to abandon. Clinton as secretary of state that could limit capital
U.S. deregulation comes could be the result for budget director, Rep. Mick His choice for the State De- and Tom Vilsack as agriculture movement.
with stricter borrowing lim-
Mulvaney (R., S.C.), has op- partment, Rex Tillerson, has secretarydespite differences Gains in the Dow and the
its as conservatives push
BY DAMIAN PALETTA posed raising the debt ceiling, said he believes science proves displayed on the campaign MSCI Emerging Markets in-
for tougher capital rules. B7
but Mr. Trump has proposed climate change is being caused trail. Mr. Obama already had dex after sharp early 2016
Donald Trump has assem- steep tax cuts and large in- in part by human behavior, tapped another rival, Joe Bi- declines suggest investors
World-Wide bled a cabinet and senior staff creases in defense and infra- something Mr. Trump in the den, as his running mate. have recovered their appetite
with divergent views on such structure spending that many past has called a hoax. However, Mr. Trump will be for risk. But the lagging per-
issues as the deficit, trade, cli- economists believe will cause Former White House offi- surrounded by a plethora of formance of the frontier in-
 Public outrage in China mate change and Russia, pos- the deficit to grow. cials said incoming adminis- divergent voices from the out- dex shows that tolerance
flared up over prosecu- ing a challenge for his admin- Several of his cabinet selec- trations often have to grapple Please see CABINET page A7 Please see INDEX page A2
tors decision to drop
criminal charges over the
death of a researcher in
A Memorial on the Black Sea
police custody in May. A3
 Xi Jinping is moving to
XIS POWER GRAB PUTS
block a potential succes-
sor, showing he intends to
remain in power after his
term ends in 2022. A1
HIM AT CHINAS APEX
 Trump picked Thomas
Bossert as chief adviser on
VASILY MAXIMOV/AFP/GETTY IMAGES

homeland security, giving

The president appears to be seeking to extend his rule beyond 2022
him elevated status with
the White House. A7 BY JEREMY PAGE AND LINGLING WEI charge of the economy, the armed forces and
 The president-elects most other levers of power, overturning a col-
cabinet and senior staff BEIJINGChinas Communist Party elite lective-leadership system introduced to protect
hold divergent views on was craving a firm hand on the tiller when it against one-man rule after the death of Mao
the deficit, trade, climate chose Xi Jinping for the nations top job in Zedong in 1976.
change and Russia. A1 2012. Over the previous decade, President Hu Shattering old taboos, Mr. Xi has targeted
Jintaos power-sharing approach had led to party elders and their kin in an antigraft cru-
 Russian divers recov-
A woman lights a candle next to a portrait of Elizaveta Glinka, a policy drift, factional strife and corruption. sade, demanded fealty from all 89 million
ered the flight-data re-
charity activist who died in Sundays Russian plane crash. A4 The partys power brokers got what they party members, and honed a paternalistic pub-
corder from Sundays
wantedand then some. lic image as Xi Dada, or Big Papa Xi.
plane crash in the Black
Four years on, Mr. Xi has taken personal Please see CHINA page A8
Sea that killed 92. A4
 Mexican legislators are
taking small steps to de-
criminalize marijuana, fol-
Holidays and Horror Films INSIDE Toshiba Anticipates
lowing the U.S. lead. A5
Have Something in Common
 More Americans are re-
tiring to foreign lands as
they look to stretch their
i i i Nuclear Write-down
retirement income. A6
Tales of Terror and Tales of Tinsel BY TAKASHI MOCHIZUKI of the write-down.
Toshiba Chief Executive Sa-
 Colombian aviation offi- Share Writers. Producers, Actors TOKYOToshiba Corp. said toshi Tsunakawa became the
cials blamed human error in cost overruns at U.S. nuclear latest boss of the company to
the November crash that reactors it is building were bow before the cameras after
killed 71, including most of a
Brazilian soccer team. A5
BY ERICH SCHWARTZEL old Hollywood screenwriters
other credits include The Sins
CHINESE TRY likely to force a write-down of
as much as several billion dol-
the 2015 scandal, which led to
a clean sweep of top manage-
LOS ANGELESFlesh for of Dracula, Broadcasting PLAIN-VANILLA lars, clouding its turnaround ment after the company ac-
CONTENTS
Business & Fin.. B1-5
Markets Digest..... B8
Opinion.............. A10-11
the Inferno, a cinematic goref- Christmas, They Stole the
est about a pack of demonic Popes Blood! and A Christ-
U.S. ASSETS plan after a 2015 accounting
scandal.
knowledged it had padded its
financial results for years.
Crossword.............. A12 Property Report... B9
Finance & Mkts..... B6-10 Technology............... B3 nuns, has little in common with mas in Vermont. The warning, which sent I apologize to sharehold-
Heard on Street. B10 U.S. News............. A6-7 A Christmas Reunion, a Yule- The work makes him par- PROPERTY REPORT, B9 the companys stock down 12% ers, business partners and all
Life & Arts......... A9,12 Weather................... A12 tide romance about a Madison ticularly busy during two spe- in Tokyo trading, came just as stakeholders for the trouble
Management.......... B5 World News........ A2-5
Avenue executive who inherits a cific windowsthe run-up to the Japanese conglomerate we have caused, Mr. Tsu-
China: RMB28.00; Hong Kong: HK$23.00;
Indonesia: Rp25,000 (incl PPN);
small-town bakery. The one ex- Halloween and the Christmas seemed to have turned a cor- nakawa said in a news confer-
Japan: Yen620 (incl JCT); Korea: Won4,000; ception is the season. ner, thanks to an upswing in ence at the companys Tokyo
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
movies writer, Im only its semiconductor business. headquarters.
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 073/10/2016; SK. MENPEN R.I. NO: 01/ Michael Varrati, popular in Octo- Toshiba executives said Westinghouse is working on
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998 who specializes in ber and Decem- Tuesday the company was several nuclear-reactor proj-
two very different ber, he said. looking at emergency steps to ects, including two in Georgia
kinds of cult Behind the raise funds, including bor- for power utility Southern Co.
filmshorror
movies and
dozens of feel-
good holiday
A TALE rowing from its main banks.
They said they couldnt rule
Westinghouse said in January
that it had completed the ac-
Christmas movies. movies that OF TWO out the possibility that quisition of CB&I Stone &

s Copyright 2016 Dow Jones &

Tales of ter-
ror and tales of
spring up on ca-
ble each winter
TOLKIENS Toshibas U.S. nuclear-power
subsidiary, Westinghouse
Webster Inc., a U.S. company
that had been working with
Company. All Rights Reserved
tinsel, he said. Silent Night, Deadly Please see Electric Co., would fall into Westinghouse on the projects,
The 34-year- Night is a cult classic. SCARY page A8 LIFE & ARTS, A9 negative net worth as a result Please see TOSHIBA page A2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Wednesday, December 28, 2016 THE WALL STREET JOURNAL.

WORLD NEWS

As China Pivots, Trump Risks Fighting Old War

By contrast, countering
techno-nationalism is far
more complex, not least be-
cause so much of it is clan-
destine, says Scott Kennedy,
an expert on Chinese indus-
trial policy at the Center for
CHINAS WORLD Strategic and International
ANDREW BROWNE Studies. It features hidden
Buy China procurement
practices by Chinese state-
SHANGHAITo see the owned enterprises and state-
potential pitfalls in Donald backed funds masquerading
Trumps emerging policy on as private equity to buy for-
Beijing, look no further eign technology companies.
than Death by China, a Mr. Kennedy thinks the
book by the president- U.S. and Europe should for-
elects pick to help revive tify their investment review
U.S. manufacturing. procedures on Chinaand
Peter Navarro, the Har- coordinate their efforts.
vard-trained economist des- Derek Scissors, the chief
ignated to economist of the China Beige
head the new Book, advocates more tar-
White House geted measures to change
National Chinese behavior, such as
Trade Coun- blacklisting Chinese compa-

cil, calls it a
survival
guide against the planets
most efficient assassin.
He cites Chinas perils:
faulty products from toxic
toddler overalls and flam-
ing pajamas to arsenic-
laden vitamins and self-im-
molating boom boxes. And
China, he writes, is killing
Beijing is trying to shift to cleaner, smarter manufacturing, such as making electric vehicles, shown above in Beijing.
truth; Chinese mercantilism
undoubtedly fueled surging
KIM KYUNG-HOON/REUTERS
nies that have stolen U.S. in-
tellectual property. He
doubts that banning Chinese
state firms from acquiring
U.S. companiesan idea Mr.
Navarro supportswould
help much. The government
could simply order private
companies that acquire U.S.
China is fixed on the fu- Studies found them in semi- tional corporations. technology to hand it over.
ture. It is already shedding official documents else- The key choice is not what

millions of U.S. jobs with
products mass produced in
pollution-spewing sweatshops
using slave labor.
Mr. Navarro also issues a
call to arms. To counter this
onslaught, Washington must
punish China for manipulating
its currencyBeijings prime
weapon of job destruction
and the reason for massive
U.S. trade deficits. Consumers
exports that were partly re-
sponsible for devastating U.S.
Rust Belt communities. Yet it
is also hyperbolic and out-of-
date, reflecting a way of
thinking about China that in-
creases the likelihood for
backward-looking and over-
blown remedies like the 45%
tariffs on Chinese exports Mr.
Trump has threatened.
I
sunset industries it captured where: 80% of renewable en- nstead of trying to turn firms to ban, but what tech-
from the U.S. and promoting ergy equipment, 70% of back the tide of Chinese nologies to seal off, he says.
cleaner, smarter manufactur- industrial robots, 40% of mo- exports, the Trump team These are tough dilem-
ing from 3-D printing to avi- bile phone chips. would be better off moving mas. Starting a trade war
ation and electric vehicles. And Beijing is backing the to reverse this latest itera- will complicate them further.
Under a plan called Made in program with abundant fi- tion of techno-nationalism, Most likely, it would trigger
China 2025, China aims to nancing, much of it ear- which is already squeezing retaliation and encourage
replace foreign products in marked for Chinese pur- Western information tech- even higher barriers to U.S.
these and other high-tech chases of U.S. and European nology companies out of investment.
fields with locally produced technology companies. China. Its fixation with clos- China isnt the Dickensian
onesand then export them To be sure, state-led in- ing the trade gap as a way of sweatshop portrayed in
to the world. dustrial plans have a long restoring the jobs of a by- Death by China. Rather, its

must shun Chinese products
to weaken Beijing commer-
cially and militarily, he writes.
Every Wal-Mart dollar
spent on Chinese imports
represents a down payment
on our own unemployment as
well as additional financing
for a rapidly arming China.
Like most caricatures, the
book contains elements of
W
orse, such protec-
tionist measures
will do little to ad-
dress the next China shock:
Beijings efforts to seize the
technologies that will drive
American prosperity in the
21st century and provide fu-
ture jobs.
Chances are they will ex-
acerbate the problem.
The playbook is familiar: history of failure. Innovation gone era is quixotic; some a key engine of global growth
China first welcomes foreign works bottom-up not top- economists think that Mr. whose middle classes and
companies to build manufac- down. But the Mercator Trumps stimulus measures businesses increasingly de-
turing ecosystems, and once study concludes that Beijing may actually end up expand- mand high-tech products and
it has forced them to dis- will succeed in nurturing a ing the deficit by boosting sophisticated services that
gorge their technology, vanguard of internationally the dollar, making U.S. ex- Western industrial economies
squeezes them out. The blue- competitive companies and ports more expensive. are so adept at supplying.
print doesnt set explicit that Made in China 2025 Erecting tariff barriers In the long run, the solu-
2025 localization targets, but will challenge the economic might play well with Mr. tion is to insist on more
a recent study by Germanys primacy of the current lead- Trumps blue-collar base open Chinese markets, not to
Mercator Institute for China ing economies and interna- looking for easy wins. close American ones.

TOSHIBA the company, which makes ev-

Continued from Page One
from Netherlands-based Chi-
cago Bridge & Iron Co.
Mamoru Hatazawa, who
heads Toshibas nuclear-plant
operating unit, said Toshiba and
Westinghouse discovered unex-
pected inefficiencies in the labor
erything from elevators to
electronic devices. Already,
Toshiba took a 260 billion
($2.2 billion) impairment
charge in its last fiscal year
when it downgraded the book
value of Westinghouse.
sion among investors about
The stock fell by 12%
lion in net profit for the year
ending March 2017.
The chip business is volatile
and requires continuous large
investments to keep up with
industry leader Samsung Elec-
tronics Co. Tuesdays disclo-
sure is likely to raise discus-
whether it makes sense to
have two volatile and capital-
intensive unitssemiconduc-
KAZUHIRO NOGI/AGENCE FRANCE-PRESSE/GETTY IMAGES

force of the acquired company.
That and other factors are driv-
ing up costs, he said.
Mr. Tsunakawa, the chief
executive, said write-downs
would reach hundreds of bil-
lions of yen, or a few billion
dollars. Toshiba said it would
report the exact amount in
February when it releases its
latest quarterly results.
Analysts said further write-
downs were possible and ex-
pressed fears about the nu-
clear business weighing down
as news from the firm
raised doubts about
its turnaround plan.
Recently, demand from cus-
tomers including Chinese
smartphone makers has
helped Toshibas core semi-
conductor unit boost profits.
Before news of the nuclear
write-down, the company said
it anticipated earning 145 bil-
tors and nuclear reactorsin
the same company.
Toshiba executives have of-
ten said the nuclear business
has a bright future and will re-
main a core unit despite the
global trend away from nuclear
power after the Fukushima Dai-
ichi accident in Japan in 2011.
The company is pursuing proj-
ects in India and elsewhere.
Asked whether the big
write-down had changed his
view of the nuclear business,
Mr. Tsunakawa said no. Chief Executive Satoshi Tsunakawa bowed at the beginning of a Toshiba news conference Tuesday.

INDEX developing markets.

Continued from Page One
goes only so far, reflecting
the idiosyncratic risks of de-
veloping nations as well as
individual countries eco-
nomic challenges.
Right now, youre at the
nascent stage of potentially a
recovery of the globe, and
those countries wont re-
cover until late in the cycle,
said Laura Geritz, chief exec-
utive of Rondure Global Advi-
sors, a boutique asset man-
ager with a focus on
At a time when the dollar
is rallying and commodities
are booming, frontier mar-
kets are held back by their
heavy weighting in banks and
other financial shares.
Among the top five countries
in the frontier index, econo-
mies in Argentina and Nige-
ria are expected to contract
in 2016, while Pakistan, Ku-
wait and Morocco are ex-
pected to post subpar growth
relative to the past decade.
Disappointed by the mar-
kets performance, investors
pulled $840 million in 2016
from frontier-market funds
through Dec. 21, according to
EPFR Global.
Dramatic currency swings
in 2016 in Nigeria and Egypt
emerging counterparts. Over
the past year, frontier equi-
ties traded at around a
20% discount to emerging
also caused foreign investors stocks based on valuations,
to shudder. The Global X the largest gap since 2009,
MSCI Nigeria ETF is down according to MSCI.
39% so far this year. The Af- Many frontier economies
rican nations decision to de- are still expected to grow
value its currency by nearly much faster than their coun-
40% and adopt restrictions terparts in the developed or
on dollar exports left inves- emerging worlds. Demo-
tors with hefty losses. graphics in places like Ban-
Some managers say the gladesh, Vietnam and Mo-
frontier indexs underperfor- rocco are favorable, likely
mance has created a buying pointing to growth in many
opportunity in many stocks. consumer-driven sectors. At
Frontier stocks are relatively the same time, energy-ex-
cheap compared with their porting countries such as Ni-
geria and Kuwait are under
pressure to reform their
economies in the face of oil
prices that are expected to
stay low.
Dubai-based Duet FIM
Partners Ltd., one of the
largest frontier-market man-
agers with $1.35 billion of as-
sets, likes companies that
can establish themselves as
local retail industries mod-
ernize. One of their picks is
Olympic Industries Ltd., the
largest biscuit maker in Ban-
gladesh. The company has
been rapidly expanding its
production lines to churn out
SUNDAY ALAMBA/ASSOCIATED PRESS
Partners, which has posted
an annualized return of 8.9%
as of mid-December, accord-
ing to an investor in the
Global Advisors chief execu-
tive. Once the dollar weak-
ens, itll be a quick move in
those markets, she said.
fund.
The Harding Loevner THE WALL STREET JOURNAL.
Frontier Emerging Markets Dow Jones Publishing Company (Asia)
Fund has 4.4% of its assets 25/F, Central Plaza, 18 Harbour Road,
Hong Kong
invested in Safaricom, Tel: 852 2573 7121 Fax 852 2834 5291
Kenyas largest mobile net-
Paul Beckett, Asia Editor
work operator, according to Troy McCullough, Senior News Editor, Asia
portfolio manager Pradipta David Holland, News Editor, Asia
Darren Everson, International Editions Editor
Chakrabortty. Backed by a
40% investment and the Hugo Restall, Editorial Page Editor
management team from Mark Rogers, Advertising Sales
Vodafone Group PLC, the Jacky Lo, Circulation Sales
Jacquelyn Drozdoff, Communications
company has built the widest Simon Wan, Technology
network coverage and the Jonathan Wright,
widest distribution reach in Managing Director Asia & Publisher
Kenya, helping it generate Advertising through Dow Jones Advertising
46% growth in its mobile Sales: Hong Kong: 852-2831 2504; Singapore:
data revenue in the first half 65-6415 4300; Tokyo: 81-3 6269-2701;
Frankfurt: 49 69 29725390; London: 44 207
of the current fiscal year. 842 9600; Paris: 33 1 40 17 17 01; New York:
When you have these 1-212 659 2176.
Or email: Mark.Rogers@wsj.com
markets where valuations
have been cheap and under- Printers: Hong Kong: Euron Limited, 2/F., Block 1,
Tai Ping Industrial Centre, 57 Ting Kok Road, Tai
lying fundamentals havent Po, Hong Kong; Indonesia: PT Gramedia Printing
Group, Jalan Palmerah Selatan 22-28, Jakarta
changed, its easier for you to 10270; Japan: The Mainichi Newspapers Co., Ltd.,
buy them, he said. The fund 1-1-1 Hitotsubashi, Chiyoda-ku, Tokyo, 100-8051;
Korea: JoongAng Ilbo. 100 Seosomun-ro, Jung-gu,
is up 1.2% year to date. Seoul, 100-814. Publisher/ Printer: Song, Pil-Ho;
Yet many investors expect Malaysia:Dasar Cetak (M) Sdn Bhd, Lot 2, Jalan
Sepana 15/3, Off Persiaran Selangor, Seksyen 15,
frontier markets to rebound 40200 Shah Alam, Selangor. (ROC No: 048885)6;
Singapore: Singapore Press Holdings Limited, 82
only after a long and steady Genting Lane Media Centre Singapore 349567
recovery in developed and
Trademarks appearing herein are used under
emerging countries. license from Dow Jones & Co.
Its just a patience game, 2015 Dow Jones & Company. All rights reserved.
USPS 337-350; ISSN 0377-9920
said Ms. Geritz, the Rondure

premium cookies for which NEED ASSISTANCE WITH

locals are willing to pay top
dollar. In the third quarter
earnings grew more than
20% over the same period
last year.
If youre picking the right
companies, their stories are
real growth, said Matthew
Currency swings in Nigeria and Egypt have concerned investors. Above, shoppers in Lagos. Vogel, chief strategist at FIM
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THE WALL STREET JOURNAL.
Death in China Spurs Furor Tata Power Struggle
Public criticism builds
over decision to drop
charges after man
dies in police custody
BY CHUN HAN WONG
BEIJINGChinese prosecu-
torss decision to drop crimi-
nal charges over the death of a
researcher in police custody
has sparked public outrage
an unusual display of middle-
class anger over perceived
lack of official accountability.
Criticism has been building
since Beijing prosecutors an-
KIM KYUNG-HOON/REUTERS
nounced Friday that they
wouldnt pursue negligence
charges against five police of-
ficers despite finding that
their actions had contributed
to the death of 29-year-old Lei
Yang in early May.
A number of prominent ac-
ademics, lawyers and busi-
nessmen have publicly taken
the prosecutors to task, say-
ing the decision undermines
the rule of law. A petition
started by alumni from the
university Mr. Lei attended
has attracted more than 1,500
signatures decrying the out-
come. Some high-profile law-
yers expressed willingness to
represent Mr. Leis family in
potential lawsuits against the
five officers.
Though discussions of the
decision were heavily censored
on social mediaand searches
for Mr. Leis name blocked
two censorship-tracking web-
sites, Weiboscope and Free
Weibo, logged hundreds of de-
leted posts on the Weibo mi-
croblogging platform. Accord-
ing to Weiboscope, censorship
on Weibo rose to a three-
month high in the two days af-
ter the decision.
If this case allows the
powerful to tighten their bind
on the masses, then everyone
will be bound, not just Lei
Yang himself, Zhao Yu, a
Chinese writer, wrote in a
Weibo post that has since
been censored.
CHINATOPIX/ASSOCIATED PRESS
President Xi Jinping addressed an internet conference in Chinas Zhejiang province in November.
Chinas Internet Strategy
Puts Emphasis on Security
BY EVA DOU
BEIJINGChinas internet
regulator issued the countrys
first cyber strategy, empha-
sizing the necessity of secur-
ing critical infrastructure and
the governments right to
control cyberspace in Chinese
territory.
The strategic framework re-
leased Tuesday by the Cyber-
space Administration of China
offers few fresh initiatives but
summarizes goals enumerated
in a cybersecurity law and
other regulations adopted over
the past year.
A guiding concept is inter-
net sovereigntywhich the
document defines as Chinas
right to police the internet
within its borders and partici-
pate in managing international
cyberspace.
Under the cyber plan,
equipment suppliers for a
range of industries will be
subject to security reviews to
ensure adequate defenses
against hackers. In addition to
the finance, energy, telecoms
and other critical sectors men-
tioned in the cybersecurity
law, the document lists educa-
Protests among the middle class, like this one staged in Tianjin in August, are rare in China.
Neither the prosecutors
office nor the Beijing police
responded to queries. The five
officers couldnt be reached
to comment. Weibo Corp.
didnt respond to a request to
comment.
The barrage of criticism
amounts to a rare sustained
burst of public anger by
Chinas burgeoning middle
class. Though avid users of so-
cial media, white-collar pro-
fessionals seldom respond col-
lectively to government
missteps or social problems.
In recent years they have
shied away from criticizing
crackdowns on civil liberties
lawyers and activists.
The death of Mr. Lei, a re-
searcher at a state-backed en-
vironmental group with a de-
gree from the prestigious
Renmin University in Beijing,
however, has reinforced mid-
dle-class concerns that higher
incomes and better education
offer little protection from a
justice system that often ig-
nores its laws.
In its account, police said
Mr. Lei, a Beijing resident, was
caught by plainclothes officers
tion, medicine and scientific
research as among the fields
subject to the reviews.
The strategy is likely to re-
new concern among Western
governments and businesses
about Chinas censorship and
industrial policies that use se-
curity concerns to favor local
companies.
The proposed security re-
views have been particularly
controversial in recent years,
as Beijing has moved to
tighten control over informa-
tion networks. Western trade
Beijings cyber plan
is likely to stoke
censorship concerns
in the West.
groups said China may use
the security reviews to dis-
criminate against foreign
companies and force them to
transfer proprietary technol-
ogy. Chinas Cyberspace Ad-
ministration has said they
would apply to domestic and
WORLD NEWS
during a prostitution raid at a
foot-massage parlor and sud-
denly became unconscious af-
ter failed attempts to resist
arrest and escape.
His death set off a social-
media firestorm. Prosecutors
later launched an investigation
into police conduct and said
Mr. Lei choked to death on his
vomit, citing an autopsy re-
port. In their decision, prose-
cutors said the officers ex-
ceeded reasonable limits in
trying to subdue Mr. Lei and
that their actions contributed
to his death and amounted to
criminal negligence.
Even so, the prosecutors
declined to press charges.
They also faulted Mr. Lei for
resisting arrest.
More than 1,500 of Mr. Leis
fellow alumni from Renmin
University have signed an
open letter criticizing the Bei-
jing prosecutors for suicidally
besmirching the rule of law
and damaging public trust in
the course of justice.
Legal experts said decisions
in publicly or politically diffi-
cult cases are usually made by
Communist Party committees.
foreign suppliers equally; its
strategy document vowed to
protect internet security
while maintaining openness
to foreign parties.
The strategic framework
said China would use eco-
nomic, legal, diplomatic and
military means to protect its
information security, though it
didn't elaborate. Cyberspace
is the new territory of a coun-
trys sovereignty, the docu-
ment said.
Unlike the U.S. national cy-
berspace strategy in 2011
which reserved the right to re-
spond to cyberattacks with
traditional military force,
Chinas strategy is more fo-
cused on domestic political
priorities, said Fang Xingdong,
founder of internet think tank
ChinaLabs. He cited political
security and cultural security,
a catchphrase for domestic
criticisms of the government.
These challenges are ac-
tually different from the ones
facing the U.S., so Americans
have trouble understanding
it or finding it acceptable,
said Mr. Fang.
Yang Jie
contributed to this article.
In Mr. Leis case, they said, the
findings appeared tailored to
avoid antagonizing the police,
the partys front-line enforcers
of social stability.
While prosecutors in many
democratic jurisdictions typi-
cally bring similar cases to
trial and leave the ultimate
decision of guilt or innocence
to the court, the police in
China often exercise influence
over judicial processes in sen-
sitive cases, said Jerome Co-
hen, a China legal scholar at
New York University.
A number of prominent
Chinese lawyers have ex-
pressed disquiet. Some have
agreed to represent Mr. Leis
family should they decide to
file suits against the five po-
lice officers, according to two
of the lawyers, Li Xiaolin and
Duan Wanjin.
Mr. Leis family didnt re-
spond to a query sent to their
verified Weibo account. Chen
Youxi, a lawyer assisting Mr.
Leis family, said Mr. Leis fam-
ily would continue seeking le-
gal redress.
Kersten Zhang
contributed to this article.
Wednesday, December 28, 2016 | A3
Splits Indias Parsis
BY ERIC BELLMAN
MUMBAIA battle to con-
trol Indias largest global con-
glomerate, the Tata Group, is
convulsing the powerful ethnic
Parsi community, whose club
of billionaires has played an
outsize role in the nations
economic evolution.
The Tata Groupwhich
sells more than $100 billion a
year of everything from Jag-
uar Land Rovers to Tetley Tea
to rooms at the famed Pierre
Hotel in New Yorkis engaged
in an unusual public spat be-
tween its ousted chairman and
his retired predecessor.
Both men hail from Indias
Parsi communitya group of
about 60,000 people de-
scended from a non-Muslim
minority who fled Iran centu-
ries ago. The Tata Group was
founded by a Parsi and run by
his heirs for more than a cen-
tury.
The stakes are big not only
for the ethnic group, but also
for the country at large. Parsi
business familiesTata Group
in particularhave long been
at the forefront of Indian in-
dustry and innovation.
The community embraces
Tatas global charity network
work, its generous treatment
of employees and its interna-
tional outlook as embodying
their values and identity. The
boardroom battle has pained
and embarrassed some Parsi
leaders.
This kind of dragging the
community through the mud,
just wasnt done in Parsi
companies said Jehangir Patel,
editor of Parsiana, a commu-
nity magazine. It is becoming
more corporate like any global
company.
The fight began in October
when the group holding com-
panyTata Sons Ltd.pushed sented among the rich and fa-
out Cyrus Mistry as chairman
after the board said it had lost
confidence in his ability to
lead. The prior chairman, Ra-
tan Tata, who had picked Mr.
Mistry to succeed him, came
out of retirement to serve as
interim chairman until a suc-
cessor could be found.
But Mr. Mistry has refused
to go quietly, claiming the old
guard kicked him out because
it worried about his moves to
cut costs and improve gover-
nance. At first he refused to
step down from his positions
at group companies. Last
week, he quit six of the largest
Tata company boards and has
taken his fight to the courts.
The Tata battle involves
three of the Parsi communitys
biggest families. Mr. Tata is
the great-grandson of the Tata
Group founder. Mr. Mistry is
the son of Pallonji Mistry, In-
dias richest Parsi with assets
valued at more than $13 bil-
lion, according to Forbes mag-
azine. And Nusli Wadia, a for-
mer Tata director and pillar of
the Parsi community, was
squeezed out of his long rela-
tionship with the Tata Group
after he sided with Mr. Mistry.
Members of the community
also are worried over the pos-
sible appointment of a non-
Parsi to lead the group, which
would mark the end of an era.
Tata is revered in the commu-
nity. When Ratan Tata ap-
peared at a recent event cele-
brating Parsi culture, he got a
10-minute standing ovation.
Parsis arrived in India in
the 10th century after Islamic
rulers persecuted them in Per-
sia, modern-day Iran. Rather
than trying to win converts or
assimilating, Parsis formed
self-contained communities
that effectively barred inter-
marriage. During British rule,
they showed a knack for com-
merce, some prospering from
the opium trade with China.
Today, they are well repre-
mous. The conductor Zubin
Mehta and Freddie Mercury of
the rock band Queen were also
Parsis.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Wednesday, December 28, 2016
Berlin Reflects on Tragedy
Following attack on
Christmas market,
Germans reconsider
the limits of charity
BY ANTON TROIANOVSKI
AND CHRISTOPHER ALESSI
BERLINGermanys Chris-
tian tradition emphasizes
Nchstenliebe: loving thy
neighbor. But as the country
celebrated a somber Christmas
after the shock of last weeks
terror attack in Berlin, some
were considering the limits of
German compassion in a dan-
gerous world.
Police say a Tunisian man
who arrived amid a flood of
migrants into Germany in 2015
drove a truck into a crowd at a
Christmas market in the capi-
tal on Dec. 19, leaving 12 peo-
ple dead. The suspected assail-
ant was killed by Italian police
near Milan after an interna-
tional manhunt.
Germanys mainly ceremo-
MAURIZIO GAMBARINI/DPA/ZUMA PRESS
Concrete barriers set up by the police on Pariser Platz in front of the Brandenburg Gate in Berlin as security concerns have grown.
Crime and Terror: Familiar Mix for Europe Jihadists
BY VALENTINA POP
BERLIN The 24-year-old
Tunisian migrant suspected of
killing 12 people in an attack
in Berlin last week typified a
new wave of young jihadists in
Europe who mix drug dealing
and other illegal activities
with Islamist terror.
Anis Amri, who was killed
in a shootout with Italian po-
lice in Milan on Friday after
days on the run, peddled co-
caine in a hip neighborhood of
the German capital, while be-
coming increasingly radical-
ized and declaring his alle-
giance to Islamic State.
ARGENTINA
Finance Minister
Removed in Shake-Up
Argentinas Finance Minister
Alfonso Prat-Gay was forced out
of his post on Monday as the
economy struggles to rebound a
year after President Mauricio
Macri took office and introduced a
series of market-friendly reforms.
Mr. Macri asked his finance
minister to resign after deciding
to restructure the ministry, split-
ting it into a Finance Ministry
and a Treasury Ministry, Cabinet
Chief Marcos Pea said in a
news conference.The surprise
resignation of Mr. Prat-Gay, a
former J.P. Morgan Chase & Co
executive who is well-respected
on Wall Street, comes as the
governments policies have failed
to boost economic activity, re-
sulting in growing pressure on
Mr. Macri over stubbornly high
inflation and unemployment.
Some union leaders have called
for policy changes and have
threatened to call strikes.
Inflation is forecast to rise to
around 40% in 2016, while the
economy is expected to contract
by 2%, according to the Interna-
tional Monetary Fund. In 2015,
Argentinas economy grew 1.2%,
nial president, Joachim Gauck,
said in a Christmas speech
that migration policy must be
debated, as well as whether
we need to do more in the fu-
ture to provide for the security
of citizens. But he cautioned:
One does not need to reject
and expel others in order to
preserve and live ones own
way of life.
The Catholic archbishop of
Berlin, Heiner Koch, also
sounded a cautionary note. Per-
haps we focused too much on
the radiant image of humanity,
on the good, he said in an inter-
view broadcast Sunday. Now in
the last year, or perhaps also in
recent years, we have seen: No,
there is also evil.
Catholic and Protestant reli-
gious organizations have been
some of the most outspoken
supporters of a generous ap-
proach to accepting refugees, a
view shaped by the countrys
own history of war and dis-
placement.
Terror is prompting soul-
searching about how values of
It is a pattern that has be-
come increasingly common.
Two brothers involved in the
November 2015 attacks in
Paris sold hashish from a bar
in the Belgian capital, Brus-
sels. OneSalah Abdeslam,
the main surviving suspect in
that assaultserved time in
prison for breaking into a ga-
rage. The other had repeated
brushes with the law for
theft, drugs and weapons
possession.
You have a crossover be-
tween criminals and extrem-
ists, said Magnus Ranstorp, a
counterterrorism expert at the
Swedish Defense University.
the IMF said. Luis Caputo, who
worked under Mr. Prat-Gay as fi-
nance secretary and was in-
volved in talks to end a credit
dispute with U.S. hedge funds
this year, will take over as fi-
nance minister, Mr. Pea said.
Mr. Caputo will oversee the pub-
lic debt, state financing and the
PLAY SHOWER: Young men were sprayed by an elephant in Sauhara, Chitwan, Nepal on Tuesday,
HK JP KO ML SI
WORLD NEWS
charity and individual human
dignity should translate into
policy.
Germany allows most peo-
ple who have reached the bor-
der to enter and apply for asy-
lum. Even if they lack papers,
they are provided food and
pocket money and allowed to
come and go from their shelter
while the monthslong applica-
tion process drags on.
Chancellor Angela Merkel
has promised to speed depor-
tations of those whose asylum
pleas are denied and has nego-
tiated with governments in the
Middle East and Africa to pre-
vent migrants from heading to
Europe in the first place.
But her policy that every
asylum claim should be pro-
cessed individually, and that
there should be no limit to the
number of asylum-seekers Ger-
many takes in, hasnt changed.
On Friday, Ms. Merkel, fac-
ing a re-election battle next
year, promised to analyze what
went wrong leading up to the
attack and to consider changes
They are just as at ease with
selling drugs, petty crime and
dabbling in extremism.
Part of the problem is a rel-
atively lax attitude toward
regular criminals who in Eu-
rope often serve reduced sen-
tences as authorities seek to
unclog overcrowded prisons
that can become breeding
grounds for future jihadists.
Two of the suicide bombers
in attacks at a Brussels metro
stop and at the citys main air-
port this yearKhalid el-
Bakraoui and his elder brother,
Ibrahimhad been released
from prison after serving just
half of their sentences for
WORLD WATCH
budget. Nicolas Dujovne, an
economist at the Buenos Aires-
based think tank Fundacin Pen-
sar, will lead the Treasury Minis-
try, where he will focus on micro
and macroeconomic policies, aim-
ing to increase consumption and
reduce the fiscal deficit.
Ryan Dube
IN UK FR MN PR THE WALL STREET JOURNAL.
to her migrant and security
policy.
Ms. Merkels stance, and the
considerable support it has re-
ceived from mainstream reli-
gious leaders, has drawn criti-
cism from opponents. Frauke
Petry, co-head of the upstart
and increasingly popular Alter-
native for Germany party, said
this year that some church lead-
ers appear to be speaking out
more for Muslims than their
own fellow believers.
In the wealthy port city of
Hamburg, elementary-school
teacher Sabine Weber, 60, said Workers move a plane part pulled from the Black Sea near Sochi.
she has had good experiences
with refugee children in her
classroom. But she described
the German churches position
Russian Divers Recover
on refugees as hypocritical.
God doesnt want me to be a
hypocrite, she said. God wants
Crashed Jets Black Box
me to tell the truth. Germany BY OLGA RAZUMOVSKAYA
cant take in 80 million people.
Many Germans, however, MOSCOWRescue workers
say that they are undaunted by recovered the flight-data re-
the attack and that their coun- corder from the Russian mili-
try still has an obligation to tary aircraft that crashed into
take in refugees. the Black Sea, Russias Defense
Ministry said.
The ministry said one of the
planes so-called black boxes
was found early Tuesday a mile
from the shore. The data re-
corder was transported to a
military research facility near
Moscow, where experts started
to decipher it, Transportation
Minister Maxim Sokolov said in
televised comments.
The Tu-154 passenger plane
belonging to the Russian mili-
tary crashed minutes after take-
off from the southern Russian
city of Sochi, killing all 92 peo-
ple on board.
More than 60 members of
the Alexandrov Ensemble, a
popular army performing group
that was flying to Syria to en-
tertain Russian troops, were
killed in the crash. Journalists,
military personnel and a re-
nowned Russian doctor and phi-
lanthropist were also on board.
Along with the a cockpit
voice recorder, the flight-data
recorder could offer the best
chance of determining why the
plane crashed. On Monday, both
the transportation minister and
the Federal Security Service,
the FSB, ruled out a terrorist
attack as the likely cause.
The FSB said the plane was
under strict military control
during a refueling stop in Sochi
before takeoff.
While officials havent deter-
mined the cause of the crash,
armed robbery and carjacking. fire to a refugee shelter. His
Islamic State in its propa- family said the experience
ganda magazine said the two made him more religious. Af-
brothers were key logisti- ter his release and arrival in
cians of the Paris and Brus- Germany, authorities discov-
sels attacks, and became radi- ered links between him and a
calized in jail. radical cleric. But German po-
Amri also spent four years lice and intelligence services
behind bars in Italy for setting were stretched too thin and
failed to gather enough evi-
dence to keep Amri in custody
and prevent the attack. The
Suspect in Berlin story of perpetrators in the
attack had peddled Brussels and Paris attacks is
similar.
cocaine in a hip In France, a parliamentary
neighborhood. inquiry into the terrorist at-
tacks in January and Novem-
ber 2015 concluded that all the
CHINA charged time for the countrys
leadership.
Central Bank Names The move on Tuesday fol-
New Deputy Chief lowed recent shuffling at Chinas
regulatory bodies, including the
China named Yin Yong to be November ouster of its reformist
deputy governor of the Peoples finance minister, who was suc-
Bank of China, promoting him ceeded by a low-profile bureaucrat.
from assistant governor at a Chinas State Council, or the
cabinet, revealed Mr. Yins promo-
tion in a statement posted to its
website.
The central bank lists six dep-
uty governors and three assistant
governors on its website. Mr. Yin
had a nearly two-decade stint at
the State Administration of For-
eign Exchange, Chinas forex regu-
lator, before being selected to be
an assistant governor at the cen-
tral bank in August 2015, accord-
ing to the PBOC website.
Policy analysts say Mr. Yins ex-
NARAYAN MAHARJAN/PACIFIC PRESS/ZUMA PRESS
perience in helping manage Chinas
foreign-exchange reserves could
serve him well in his stepped-up
role at the central bank. The PBOC
is facing various challenges, includ-
ing a depreciating yuan and U.S.
President-elect Donald Trumps
threats that he will label China a
currency manipulator.
He will succeed Guo Qingping,
who became vice central governor
at the central bank in February
2015
Pei Li
RUSSIAN EMERGENCY SITUATIONS MINISTRY/ASSOCIATED PRESS
they are looking into whether it
was related to the condition of
the plane or the quality of the
fuel, or whether there was a pi-
lot error or foreign objects were
caught in the engine.
Russias main investigative
body has obtained video tapes
of the landing and taxiing of the
Tu-154 plane in Sochi before its
departure for Syria, and others
showing the passengers clearing
border control, spokeswoman
Svetlana Petrenko told Interfax
news agency. The committee
has questioned witnesses of the
crash and taken fuel samples
from the tanker truck that
fueled the plane, she said.
Official pronouncements ap-
pear in part to have been di-
rected to assuage public con-
cern about the possibility of a
terrorist attack similar to the
one that downed a Russian pas-
senger jet in October 2015 over
Egypt, killing all 224 on board.
Islamic States Egyptian branch,
Sinai Province, claimed respon-
sibility for that crash, and re-
leased a photo showing an im-
provised explosive device it said
it smuggled onto the plane.
As of Tuesday, 12 bodies had
been recovered, with the body
of one passenger being identi-
fied by relatives, the Defense
Ministry said. The military said
45 ships, 12 planes, five helicop-
ters and drones, and 192 divers
were taking part in the recovery
effort.
Divers have found parts of
the fuselage, fragments of the
engine and other parts, the De-
fense Ministry said.
Nathan Hodge
contributed to this article.
extremists involved in the at-
tacks had been previously
flagged to authoritiessome
with prior convictions, others
under judicial surveillance.
But a series of communica-
tion blunders between frag-
mented intelligence, police and
prison authorities allowed the
suspects to slip under the ra-
dar and conceal their plot. A
legislative probe in Belgium is
gathering testimonies pointing
to similar conclusions.
Germanys federal system,
with fragmented police and
intelligence forces, also
showed its limitations in the
Amri case.
JAPAN
Consumer Prices Fall
For Ninth Month
Japanese consumer prices fell
for a ninth consecutive month in
November, reflecting the still-
fragile state of the economy.
The core consumer-price in-
dex fell 0.4% from a year earlier
in November, after slipping at
the same rate in the previous
month, according to data re-
leased Tuesday by the Ministry
of Internal Affairs and Communi-
cations.
The index excludes fresh
food prices. The reading com-
pared with a 0.4% fall forecast
by economists polled by the
Nikkei. The core index has been
in negative territory since
March. Household spending fell
1.5% on year in November, ad-
justed for price changes, accord-
ing to other data released Tues-
day by the Internal Affairs
Ministry.
It marked the ninth consecu-
tive monthly decline. Consump-
tion accounts for 60% of Japans
economy. The unemployment
rate rose to 3.1% in November
from the previous months 3.0%,
according to the ministry.
Takashi Nakamichi
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.
Mexico Moves Toward Legal Marijuana
Votes in several U.S.
states to allow use of
the drug spur similar
efforts in Mexico
BY DUDLEY ALTHAUS
AND SANTIAGO PREZ
MEXICO CITYAs legal
marijuana use spreads rapidly
across the U.S., Mexican legis-
lators are taking small steps to
decriminalize pot in a country
where the war on drugs has
killed more than 100,000 peo-
ple over the past decade.
The rising disparity in drug
legislation is stoking a debate
in Mexico over the effective-
ness of its governments pro-
tracted battle against powerful
drug cartels when an ever-
spreading sweep of the U.S. is
giving up the fight.
Voters in California, Massa-
chusetts, Nevada and Maine
approved legal recreational
marijuana on Nov. 8. Medicinal
use of cannabis was also ap-
proved in Arkansas, Florida
and North Dakota. In all, some
21% of the U.S. population can
have legal access to recre-
ational or medical marijuana.
Mexicos Senate on Dec. 13
legalized the cultivation of
marijuana for pharmaceutical
and scientific purposes, but it
didnt address calls to allow
recreational use.
We are going backwards
compared to California and
other places, said Armando
Santacruz, a Mexico City busi-
nessman who was one of four
plaintiffs to win a Supreme
Court judgment last year for
permission to grow and con-
sume marijuana.
The courts ruling was lim-
ited to just Mr. Santacruz and
his fellow plaintiffs. Since
then, more than 350 people
have submitted petitions to
cultivate or consume mari-
juana for personal use to the
federal agency that regulates
Colombia Plane Crash Report Details Fatal Miscues
BY KEJAL VYAS
BOGOT, ColombiaPilots
of the doomed LaMia charter
plane knew its engines were
shutting down several minutes
before the crash that killed 71
people, but failed to notify air-
traffic controllers until it was
too late, officials said.
Investigators from Colom-
bias Civil Aviation Authority
said the pilots didnt report a
total electric failure without
fuel until two minutes before
the plane crashed at 145 miles
an hour into a hill outside Me-
delln, Colombia, on Nov. 28.
While the crew had asked for
priority landing, they didnt in-
dicate imminent danger, and in-
vestigators said the pilots spoke
with controllers in a com-
pletely normal manner.
There was no technical
failure, only human and mana-
gerial error, Freddy Bonilla,
Brazils Cash-Strapped Governments Sell Off Assets
BY MARLA DICKERSON
AND LUCIANA MAGALHAES
SO PAULOBrazils reces- Workers Party ran the coun-
sion, having decimated tax
revenue, is now fueling one of
the biggest privatization
binges in years.
Federal concessions for
highways, power plants, air-
ports and railways are on the
block. Officials are selling off
public gimcracks acquired in
happier times as they struggle
to cover basics like pensions.
In So Paulo, the nations
biggest city, the new mayor
wants to unload the An-
hembi Sambadrome, site of
the Carnival parade. A city-
owned raceway and a cavern-
ous convention center are also
expected to go up for sale.
The southern state of Rio
Grande do Sul is seeking pri-
vate-sector managers to take
over its public zoo in its capi-
tal, Porte Alegre, whose at-
tractions include giant rodents
known as capybaras and a lion
named Jernimo.
Privatization isnt new to
Latin America. Deals surged in
the 1980s and 1990s with the
rise of economic liberalism.
Those years saw Brazil bust
up its government telecom
monopoly, privatize mining gi-
ant Vale and turn aircraft
maker Embraer into a publicly
traded company.
U.S. Border Patrol agents, shown near the Mexico border in April, confiscated more than 750 tons of Mexican cannabis in fiscal 2015.
controlled substances. The
agency said Dec. 16 that it
wont approve any applica-
tions for recreational use.
One problem, experts say, is
the resilience of organized
crime groups. Even as cultiva-
tion booms in California and
elsewhere across the U.S.,
Mexican criminal gangs con-
tinue to be the primary for-
eign suppliers of the drug to
American consumers.
Though less potent than
U.S. pot, the Mexican variety
maintains its consumer appeal
because of its far lower price.
While gangs have long since
diversified into more-lucrative
South American cocaine and
Mexican-produced heroin and
There was no technical failure, only human and managerial error,
Freddy Bonilla, head of the investigation, said Monday.
head of the investigation for
Colombias Civil Aviation Au-
thority, said in the first official
report since the accident.
The 28-day investigation
found the Avro RJ85 aircraft
left Bolivia nearly 1,000 pounds
Brazils recent political shift
has rebooted that process after
a 13-year hiatus in which the
spooked some foreign inves-
try. The August ouster of left-
ist President Dilma Rousseff
and recent municipal elections
brought a number of right-
leaning officials to power.
Leading the charge is Presi-
dent Michel Temer, who is
touting private investment to
jump-start the economy.
Concessions for power
plants, highways,
airports and railways
are on the block.
In addition to infrastructure
concessions, his administra-
tion backed recent legislation
opening Brazils oil sector
wider to foreign players, as
well as an asset divestment
plan at debt-burdened Petr-
leo Brasileiro SA, the state-run
oil giant known as Petrobras.
The government cant do
everything, Mr. Temer said in
September, shortly after as-
suming the presidency from
his impeached predecessor
Ms. Rousseff. She was ousted
for trying to hide the disas-
trous state of the nations fi-
Wednesday, December 28, 2016 | A5
WORLD NEWS
Up in Smoke
As marijuana legalization and
cultivation spreads in the U.S.,
seizures at the U.S. border are
steadily declining
2.5 million pounds
2.0
1.5
1.0
0.5
0
FY 2011 12 13 14 15
Note: Fiscal year ends Sept. 30
Source: U.S. Customs and Border Protection
THE WALL STREET JOURNAL.
western Mexicos so-called
Golden Triangle, rugged
mountains home to the power-
ful Sinaloa Cartel, led by
Joaqun El Chapo Guzmn
GREGORY BULL/ASSOCIATED PRESS
until his latest arrest early
this year.
Mexican troops and police
seized more than 450 tons of
pot in the past year and eradi-
cated some 6,000 acres of the
crop, according to the govern-
ment. Farther north, the U.S.
Border Patrol confiscated
more than 750 tons of Mexi-
can cannabis across the border
amphetamines, marijuana con- use could eventually shut out Marijuana legalization cre- in the fiscal year 2015, accord-
tinues to provide a steady rev- Mexicos pot exports. As prices ates an invisible wall for Mex- ing to official statistics.
enue stream, according to U.S. decrease, what you are earn- icos drug exporters, Sen. Gil While medical use of mari-
and Mexican law enforcement. ing per kilo is not worth the Zuarth said. Facing rising juana has gained support
Rather than drive the gangs risk, said Alejandro Hope, a stocks, they could dump the among a majority of Mexi-
from the business, the legal- public-security expert who product in domestic markets cans, opinion polls show that
ization of marijuana cultiva- was previously a senior ana- or diversify into other crimi- decriminalized recreational
tion and use could hand them lyst at Cisen, Mexicos civilian nal activities. use remains widely unpopular.
the keys to a lucrative and le- intelligence agency. At the A gradual legalization in Broader legalization proposals
gitimate market for the drug. moment that it becomes un- Mexico would reflect policies are unlikely to advance in
Mexican drug gangs are ex- profitable, there will be a col- elsewhere, he added, and Congress anytime soon, says
pected to maintain a dominant lapse. We are not far away would provide time for institu- Ral Benitez Manaut, a na-
influence over the wholesale from that. tions to adapt and the impact tional-security expert at Mex-
import and distribution of Under such a scenario, to be assessed. icos National Autonomous
marijuana and other narcotics Mexico could be vulnerable to Marijuana cultivation, along University.
in the U.S. in the near term, collateral damage, said Ro- with fields of opium poppies You might see that debate
the DEA said in its annual Na- berto Gil Zuarth, a senator and laboratories to produce taking place in two or three
tional Drug Threat Assessment from the conservative National methamphetamine, sustains years, but its likely to be on a
in November. Action Party who led legisla- communities throughout state-by-state basis and in ar-
But legal U.S. cultivation tive discussions over mari- swaths of Mexico. Prime pro- eas with a liberal electorate,
growing apace with legalized juana regulations. ducing areas include north- like Mexico City, he added.
said. The flight crew was con- was arrested this month in Bo- and they tell me about an
scious of the fuel limits and livia on manslaughter charges. emergency, Ms. Molina said.
that they did not adequately The pilot and his co-pilot There were 71 victims, but it
have what was needed, Mr. Bo- discussed the possibility of was too close. They were prac-
LEONARDO MUNOZ/EUROPEAN PRESSPHOTO AGENCY
nilla said, adding that head- landing to refuel in the Colom- tically on top of the other air-
winds may have caused the bian capital or in Leticia but de- craft. It could have been
plane to use more fuel. cided to continue 45 minutes worse, she said.
Bolivian officials shouldnt northwest toward Medelln, Mr. Colombian civil aviation of-
have allowed the flight to take Bonilla said, citing audio re- ficials declined to speculate
off, Mr. Bonilla said. cordings of the crews commu- why the pilots decided not to
There was no response from nications recovered from the make a stop or report their
Bolivia, whose investigators last planes black box. low-fuel status earlier. Investi-
week blamed the accident on Yaneth Molina, the air-traffic gators say a potential refuel-
miscues by the airline and the controller in Jose Maria Cor- ing stop for the jet, which was
pilot. The airport authority had dova International Airport, de- crossing over Colombia at
earlier filed a criminal com- scribed the harrowing final night, could have been Cobija.
plaint against one of its officials minutes in an interview Mon- However, that airport lacks
for allowing the plane to depart day with Colombias Caracol runway lights after dark and
despite the incomplete flight Radio. The LaMia flight, she the flight was already behind
plan. The official, Celia Castedo, said, never alerted them of any schedule.
overweight and flew above is seeking asylum in Brazil. major problems before sud- The flights operators also
30,000 feet, though the plane Bolivia and Colombia have denly beginning an unauthor- had a strong incentive not to
isnt designed to travel above suspended LaMias operating li- ized descent for landing, look- declare a fuel emergency be-
28,000 feet, Mr. Bonilla said. censes. Pilot Miguel Quiroga, ing to cut in front of three cause it would have led to
In addition, the 1,839-mile who died in the crash, was a co- other planes that were sched- sanctions that could have
trip was near the aircrafts limit owner of the airline along with uled to land before. grounded the company, poten-
for a tank of fuel, the official Gustavo Vargas Gamboa, who Thats when I called them tially putting it out of business.
nances, charges she denied.
A vast corruption scandal
centered on Petrobras has
tors on Brazil. Pricing will also
be key, said Thomaz Favaro,
a So Paulo analyst with the
Control Risks consulting firm.
He said some of his multina-
tional clients are eyeing up-
coming concessions for air-
ports in the cities of Porto
Alegre, Salvador, Florianpolis
YASUYOSHI CHIBA/AGENCE FRANCE-PRESSE-GETTY IMAGES
and Fortaleza. Mr. Favaro said
they have shown little interest
in the railways, considering
them not lucrative enough.
Critics of Brazils privatiza-
tion, meanwhile, say the pub-
lic is getting shortchanged,
with many assets fetching
pennies on the dollar.
Still, even places with a
history of government-led de-
velopment are embracing pri-
vatization out of necessity.
Bahia state, in the impover-
ished northeast, is trying to
sell an unprofitable food com- The incoming So Paulo mayor wants to sell the Anhembi Sambadrome, site of the Carnival parade.
pany whose major holding is a
supermarket chain called
Cesto do Povo, or the Peoples Budget Deficit the end of November, compared GDP in the period, from 2.23%
Basket. with 8.83% through the end of in October.
[It] never profited, said Grew in November October, the countrys central Brazils gross debt rose to
Marco Cohim, the companys bank said Tuesday. 70.5% of GDP in the 12 months
president, who pegs losses at The primary budget balance, through the end of November,
one billion reais ($306 million) SO PAULOBrazils gov- which excludes interest pay- compared with 70.3% of GDP in
since 2007. It was kind of il- ernment deficit widened to ments and is a measure of the the period through the end of
logical for the state to provide 9.28% of gross domestic prod- governments ability to reduce October.
resources to a network of su- uct in the 12 months through its debt, increased to 2.50% of Jeffrey T. Lewis
permarkets.
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 | Wednesday, December 28, 2016
Bankruptcy an Option for Student Debt
Some borrowers find
way to get around
rules that have made
this route difficult
BY SARAH CHANEY
Borrowers are beginning to
win battles to erase some stu-
dent loans in bankruptcy court,
overcoming stiff obstacles that
have generally blocked that
path except in extreme cases of
financial hardship.
Since March, several bank-
ruptcy courts have allowed
borrowers to cancel private
student loans with a new legal
argument that relies on vague
wording about the legal defini-
tion of a student loan.
Bankruptcy law says that,
without proving extreme hard-
ship, a borrower cant dis-
charge a loan made for an ed-
ucational benefit. This
language has opened a window
to cancel loans for students
who argue their loans fall out-
side this category of debt. Such
reasoning has been applied to
loans obtained to attend
schools without accreditation
or to study for a bar exam.
The argument applies only
to a slice of the private stu-
ECONOMY
Survey: Consumers
Are More Confident
Americans grew more opti-
mistic about the economy in De-
cember, a sign that the postelec-
tion bump in confidence
continues.
The Conference Board said
Tuesday its index of consumer
confidence rose to 113.7 in De-
cember up from a revised 109.4
in November. Lynn Franco, direc-
tor of economic indicators at the
Conference Board said the surge
in optimism was most pro-
nounced in older consumers.
Read it in print, on the WSJ app
or at wsj.com/innovationparadox.
Some who owe on student loans are arguing that their debt wasnt made for an education benefit.
dent-loan market, which makes
up less than 10% of the more
than $1.3 trillion in outstand-
ing student debt. The federal
government dominates the stu-
dent-loan market and isnt as
vulnerable in bankruptcy pro-
ceedings.
For years bankruptcy wasnt
a realistic way for Americans
The outlook for the labor
market also rose, with 21% say-
ing they expected more jobs in
the months ahead, up from 16.1%
a month earlier. Consumers also
said they expected to see their
incomes increase.
But consumers assessment
of current economic conditions
weakened over the month. The
share of those saying business
conditions were good dipped
slightly to 29.2% while the share
of those saying they were bad
rose to 17.3% from 15.2%.
Economists follow confidence
indicators because upbeat con-
sumers are more likely to in-
crease personal spending, which
A puzzling slump in innovation is slowing global
economic growth. A ve-part series explains why
and looks at new efforts to push the frontiers of
U.S. NEWS
to get help with student-loan
debt. Now, lawsuits that offer a
gateway to debt cancellation
are popping up all over the
country, said Austin Smith, a
consumer-bankruptcy lawyer
who has led the charge in
courts.
Although no one keeps sta-
tistics on how often such cases
U.S. WATCH
makes up most of the U.S. econ-
omy.
A separate confidence mea-
sure, released by the University
of Michigan on Dec. 23, found
that Americans are more confi-
dent in the economy than at any
point in nearly 13 years.
David Harrison
DEMOGRAPHICS
More Americans
Retiring Outside U.S.
More Americans, looking for a
way to stretch their retirement
income. are retiring outside the
U.S.
T H E I N N O VAT I O N PA R A D O X
Reinventing
the big idea.
science, technology and medicine.
THE WALL STREET JOURNAL.
more people and bankruptcy
lawyers get informed there are
provisions in the bankruptcy
code to manage student loans.
The argument worked for
Lesley Campbell, 37, who in
2014 filed for bankruptcy and
later was able to discharge the
unpaid portion of a $15,000
loan she took out from Citi-
bank to study for a bar exam.
Judge Carla Craig of the
CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL
U.S. Bankruptcy Court in
Brooklyn, N.Y., ruled that loan
debt for bar exams is akin to
consumer debt and doesnt fall
into the category of a student
loan that sticks with a bor-
rower in bankruptcy.
In April, Judge Robert E.
Grossman ruled in favor of Lo-
relei Decena, who borrowed
$161,592 to attend St. Christo-
pher Iba Mar Diop College of
Medicine in Senegal.
The school falsely repre-
sented to her that it was li-
censed and accredited, pro-
arise, bankruptcy experts say viding her with a loan
they expect the number of stu- application from Citizens Bank
dent-loan-related lawsuits to that reflected a code for an ac-
climb as the amount of stu- credited institution, court pa-
dent-loan debt increases. pers state. Because the school
Bankruptcies in and of was in fact unaccredited, ac-
themselves are on the decline, cording to court papers, Ms.
said D.J. Rausa, a San Diego Decena, 43, was ineligible to
consumer-bankruptcy lawyer. sit for medical-board exams in
That may change if more and multiple states. Theres no ed-
The number of American retir- WEATHER
ees living abroad rose 17% be-
tween 2010 and 2015. The Social Digging Out After
Security Administration says there Christmas Day Storm
are just under 400,000 American
retirees living elsewhere. Countries The furious winter storm that
chosen most often: Canada, Japan, swept into the northern Great
Mexico, Germany and the United Plains on Christmas Day weak-
Kingdom. ened Tuesday, but thousands re-
Not speaking the language or mained without power in the Da-
knowing the culture may be a kotas and Michigan.
hurdle for retirees moving to an- High winds and drifting snow
other country. Accessing health continued to make travel hazard-
care also can be a challenge. ous in the Dakotas, even as vast
Olivia S. Mitchell, director of stretches of highways that had
the Pension Research Council, been closed reopened to traffic.
says Medicare isnt available to The no-travel warnings issued
those outside the U.S. Christmas Day for much of
Associated Press North Dakota had largely expired
Sponsored by
2016 Dow Jones & Co., Inc. All rights reserved. 6DJ4295
ucational benefit in this case
because she couldnt have a li-
cense that she could use, said
Darren Aronow, Ms. Decenas
lawyer.
St. Christopher referred re-
quests for comment to a New
York lawyer, who didnt re-
spond to multiple requests for
comment.
Citizens Bank appealed
Judge Grossmans ruling, and a
district court recently sent the
case back to bankruptcy court,
finding that the bank wasnt
properly notified of the law-
suit. A spokeswoman for Citi-
zens Bank declined to com-
ment.
Lauren Baez, 31 years old,
who took out private and fed-
eral loans to attend a visual-
arts school in 2008, also ar-
gued that she should be able to
cancel her private debt without
needing to prove extreme fi-
nancial hardship. Her gross
salary of $45,000 as a retail
employee wont cover the re-
payment costs, she says.
If I was forced to pay back
all my student loans at this
moment in time, I wouldnt
have enough money to pay my
rent, Ms. Baez said. Im mak-
ing more money than I ever
have before, but I still cant af-
ford to make these payments.
by Tuesday, although the Na-
tional Weather Service warned
that drifting snow still blocked
some roads.
Interstate 94, which had been
closed for days in North Dakota,
reopened Tuesday, as did Inter-
state 90 in South Dakota.
The Minot International Air-
port, which was closed due to
whiteout conditions, reopened
Tuesday. Winds gusting 40 mph
to 50 mph also led to delays and
cancellations at Minneapolis-St.
Paul International Airport on
Monday, but the airport returned
to full operations Tuesday with
just a handful of delays.
Associated Press
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. Wednesday, December 28, 2016 | A7

U.S. NEWS

Cybersecurity Pick Named Home Prices Surged

Thomas Bossert also lished in the Washington
Times last year, Mr. Bossert
to be Trumps adviser wrote that the use of military
on homeland security force by the Bush administra-
tion in Iraq and Afghanistan
and counterterrorism was and remains just,
though he added that, How
BY PETER NICHOLAS the war in Iraq was prose-
cuted is clearly ripe for review
WASHINGTONPresident- and regret.
elect Donald Trump said he is It wasnt clear how much
naming Thomas P. Bossert, a the structure of the presi-
veteran of Republican Presi- dents National Security Coun-
dent George W. Bushs admin- cil will change.
Again Before Election
BY LAURA KUSISTO
Home prices went up
sharply in October, as the mar-
ket showed no signs of slow-
ing after setting a record a
month earlier.
The S&P CoreLogic Case-
Shiller Indices, which covers
the entire nation, rose 5.6% in
the 12 months ended in Octo-
ber, up from the 5.4% increase
reported in September.
election in November.
Higher mortgage rates tend
to put a damper on price
growth because they drive up
the monthly cost of a mort-
gage. That combined with the
fact prices have risen faster
than incomes could pose chal-
lenges to the market next year.
Mortgage interest rates
rose in November and are ex-
pected to rise further as home
prices continue to outpace

ANDREW HARNIK/ASSOCIATED PRESS

istration, as his chief adviser
on homeland security, coun-
terterrorism and cybersecurity
matters and is giving him ele-
vated status within the White
House bureaucracy.
In a statement Tuesday, Mr.
Trumps transition team said
Mr. Bossert will be an assis-
tant to the president on a par
with the incoming national-se-
curity adviser, Michael Flynn.
In the role carved out by
the Trump transition team,
Mr. Bossert will enjoy inde-
pendent status, reflecting the
importance of a mission so
closely tied to the nations se-
curity, the statement said.
Mr. Bossert, in a brief in-
terview Tuesday morning,
said: Its a humbling thing be-
Donald Trump praised Thomas Bosserts depth of knowledge.
cause of the awesomeness of
the jobI mean that in an
awe-filled way.
Mr. Bossert, 41 years old,
served as a deputy homeland
security adviser to Mr. Bush.
He now runs a private consult-
ing business.
Tom brings enormous
depth and breadth of knowl-
edge and experience to pro-
An Obama administration
official said in the current
configuration of the NSC,
Homeland Security adviser
Lisa Monaco is chairwoman of
the Homeland Security Council
Principals Committee, while
national-security adviser Su-
san Rice is chairwoman of the
National Security Council
Principals Committee. It
tecting the homeland to sounds like they have a similar
our senior White House team, setup, the official said.
Mr. Trump said in the transi- Ms. Monacos title is assis-
tion teams statement. He has tant to the president for home-
a handle on the complexity of land security and counterter-
homeland security, counterter- rorism and deputy national-
rorism, and cybersecurity security adviser. Ms. Rices is
challenges. He will be an in- assistant to the president and
valuable asset to our adminis- national-security adviser.
tration. Felicia Schwartz
In an opinion piece pub- contributed to this article.
The 10-city index gained
4.3%, up from 4.2% in Septem-
ber. The 20-city index gained
5.1% year over year, up
slightly from a 5% increase in
September.
The hottest markets in the
country remain concentrated
in the Northwest, as many
buyers priced out of the Sili-
con Valley area flee to second-
ary tech hubs. Seattle reported
a 10.7% increase, Portland re-
ported a 10.3% year-over-year
gain, and Denver had an 8.3%
increase in home prices.
Case-Shiller offers a lagging
indicator of the housing mar-
ket. Octobers numbers dont
reflect the sharp increase in
mortgage rates that began fol-
lowing the U.S. presidential
gains in wages and personal
income, said David Blitzer,
managing director at S&P Dow
Jones Indices. Home prices
cannot rise faster than in-
comes and inflation indefi-
nitely.
Month-over-month prices
the U.S. Index rose 0.2% in Oc-
tober before seasonal adjust-
ment. The 10-city remained
unchanged, and the 20-city in-
dex increased 0.1% in October
from September.
After seasonal adjustment,
the national index rose 0.9%
month over month. The 10-city
index and the 20-city index
each rose 0.6%.
After seasonal adjustment,
all 20 cities saw prices rise in
October.

Adults Without Degrees Are Lured Back to College

BY MELISSA KORN
Adults across Tennessee are
being blasted with a message
on television, radio and high-
way billboards: Finish what you
started.
State education officials have
spent $1 million in the past year
to advertise their Tennessee Re-
connect program, an initiative
aimed at bringing college
dropouts back to school. Public
and private institutions are
mining student records and
reaching out to people who
have made it more than halfway
to graduation. Churches and job
centers are also promoting the
program.
U.S. have some college credits
but no associate or bachelors
degree, according to a George-
town University Center on Edu-
cation and the Workforce analy-
sis of census data. Yet by 2020,
the center projects, 35% of job
openings will require at least a
bachelors degree, up from 32%
in 2010. States are desperate to
lure those employers that need
high-skilledand well-paid
workers.
A 2013 report from the left-
leaning Economic Policy Insti-
tute found that median wages
hovered around $15 an hour in
states where 30% or less of
working adults had bachelors
degrees. For states where more
estimating that three-quarters
of his colleagues with the same
title have degrees.
Mr. McBride says giving up
his nights and weekends hasnt
been easy. But free education?
I cant believe anyone would
turn that down, he said.
Yet many are, especially
as nontraditional educational
programs gain steam.
Since February, the Indiana
Commission for Higher Educa-
tion has sent 270,000 emails
and 125,000 postcardsand
made 30,000 phone callsto
adults who left school without a
degree in the past 10 years and
now reside in the state. It aims
for 60% of adult residents to
NICOLE CRAINE FOR THE WALL STREET JOURNAL

Were doing everything, all
at once, said Mike Krause, ex-
ecutive director of the Tennes-
see Higher Education Commis-
sion, which aims to boost the
share of Tennessee adults with
college degrees to 55% by 2025
from 38% today. It takes a very
diverse approach to move the
needle. Mr. Krause added that
the state should start seeing en-
rollment results in the spring.
Tennessee is among a num-
ber of states seeking to boost
the ranks of college graduates
and improve local economies.
After enticing more people
through the high-school-to-col-
lege pipeline with better coun-
seling and financial aid, theyre
now turning to former students
as the best bet for prospective
students.
Last month, Mississippis
public universities announced
plans for Complete 2 Compete,
a program encouraging adults
to return to school for a de-
gree. Iowa, North and South
Dakota and cities including Al-
buquerque, N.M., and Louisville,
Ky., also have been pursuing
so-called comeback programs,
and often include financial in-
centives like grants and credit
for work experience to mini-
mize the financial sting.
The stakes for failing to pro-
duce an educated workforce are
getting higher. Nearly 37 mil-
lion working adults around the
than 40% had bachelors de-
grees, median hourly wages
were $19 to $20, an annual dif-
ference of $10,000 for full-time
employees.
State programs offer
financial and other
aid to encourage
dropouts to finish
Bryan McBride, a 39-year-
old insurance-account manager
from the Nashville area, took
the college plunge again with
help from Tennessee Reconnect
after finding information about
the program online.
Guided by phone calls with
an adviser, he signed up for on-
line classes at Columbia State
Community College this fall and
is close to earning an associate
degree in business administra-
tion. His tuition costs are fully
covered by state grants and
scholarships.
Mr. McBride spent about two
years at Middle Tennessee State
University in the mid-1990s,
had a family, switched from
working part time to full time
at an insurance office, and
never found time to go back, he
says. But now Ive tapped out
what I can do at work, he says,
have postsecondary credentials
by 2025.
By early December, 9,000 of
those targeted by Indianas You
Can. Go Back. campaign have
re-enrolled in school, and about
22,000 people10 times the
typical numberhave applied
for a $1,000 grant earmarked
for adult students. The state
hopes to get 200,000
adults back to college through
the $300,000 campaign. Bryan McBride, from the Nashville area, took the college plunge again with help from a state
There is a chance that state program called Tennessee Reconnect.
officials arent factoring in the
large numbers of adults who
hold vocational certificates or Why People Dont never followed through to actu- South Bend, Ind., knows he has
alternative credentials, which ally get the degree. They tracked hit a career ceiling without a de-
often lead to jobs that pay bet- Return for Degrees down and awarded sheepskins gree.
ter than those for associate-de- to about 4,500 individuals. Mr. Dixon, 43 years old,
gree holders, earnings data But once adults are asked to spent two years in college in the
show. As state officials try to lure crack open books or spend early 1990s. He dropped out af-
Caleb Francis left Indiana adults with some academic money on tuition, completion ter landing on academic proba-
University-Purdue University credits but no degree back to rates plummet. Of the 20,105 in- tion at Indiana State University
Indianapolis after three semes- college, theyre getting a lesson dividuals Project Win-Win identi- and jobs in the manufacturing
ters. Now 23 and working as a on what works and what fied as being nearly done with sector were plentiful enough
software developer at a startup doesnt. their degrees, just about 1,700 that he didnt feel any urgency
in Indianapolis, he isnt sure re- Programs that require drop- had returned to school by late to return.
turning to campus would help outs to simply sign a form or 2013. Adults who were still Though his salary is solid for
his career. pay a nominal graduation fee short on math credits were the the area, in the $60,000 range,
Mr. Francis landed a job soon have had the most success, say least likely to return. Mr. Dixon says he is extremely
after completing a three-month individuals who run and fund Life gets in the way for a concerned about his prospects
coding boot camp at Iron Yard, the efforts. lot of these individuals, says Ja- 10 or 20 years down the line,
a chain of coding schools, earn- Project Win-Win, a founda- mie Merisotis, president and with most peers holding degrees.
ing a starting salary in the tion-backed experiment that ran CEO of Lumina Foundation, But for now, he says, he
$40,000-to-$50,000 range. from 2009 to 2013, helped 61 which supports increased educa- would rather spend time with
Thats definitely something schools in nine states mine their tional attainment. It is challeng- his familyincluding one child
you can live on here, he said, student data to find 6,733 peo- ing to re-engage people. currently in collegethan study
adding that he was employed ple who had accumulated Jon Dixon, director of quality for himself.
six months before his original enough credits for a degree but for a manufacturing company in Melissa Korn
college graduation date.

CABINET nounced views on specific pol- trade rules. cessful, whether its in govern-
BILL CLARK/CONGRESSIONAL QUARTERLY/NEWSCOM/ZUMA PRESS

Continued from Page One
set. Thomas Barrack, a long-
time Trump friend and chair-
man of the inaugural
committee, said the president-
elect manages with an open
door policy, where aides de-
bate the merits of proposals
while Mr. Trump curates the
information and makes a final
decision.
Yet many decisions made
by the federal government
dont reach the presidential
level, providing vast, indepen-
dent powers to the far-flung
bureaucracies run by the cabi-
net secretaries and their depu-
ties. Monitoring one poten-
tially rogue agency could be
challenging for any new ad-
ministration, and Mr. Trump
may need to keep an eye on
several of them to ensure they
promote policies in line with
his promises and not the pref-
erences of his appointees.
Much could depend on how
the president-elect can estab-
lish a chain of command, par-
icy issues.
It is the other advisers, par-
ticularly members of his cabi-
net, where Mr. Trump could
see the biggest differences of
opinions.
This is a great, unan-
swered question, said David
Axelrod, who was a top ad-
viser to Mr. Obama. It seems
that Trump does not come to
this with a well-developed phi-
losophy so much as a well-
conceived marketing strategy.
Many of his incoming advis-
ers who have the most diver-
Rep. Mick Mulvaney has opposed raising the U.S. debt ceiling. gent opinions are those with
government or corporate ex-
ticularly given the horizontal When a president has firm perience. Wilbur Ross, his se-
structure of senior staff ap- ideas, such as build a wall, cre- lection for commerce secre-
pointments he has put in place ate jobs in America through en- tary; Iowa Gov. Terry
so far. ergy independence and cut Branstad, who has been
No one is a carbon copy of taxes, its a lot easier for the tapped to become ambassador
the commander-in-chief, said advisers to salute and carry out to China; and his selection for
Ari Fleischer, who served as the presidents orders. defense secretary, retired Gen.
press secretary in the George Mr. Trumps senior White James Mattis, have all spoken
W. Bush administration. The House staff includes several of favorably of the Obama admin-
key in the dynamic is the his campaign aides, such as istrations proposed trade deal
strength of the president and strategist Steve Bannon and with Asian countries, called
his ability to lead. If a president counselor Kellyanne Conway, the Trans-Pacific Partnership.
doesnt have strong ideas about both of whom are tapped into Mr. Trump has promised to
what to do, the advisers play a his base of populist supporters end this trade deal as part of
much more influential role. but have taken less pro- his initiative to redraw U.S.
His pick to lead the Envi-
ronmental Protection Agency,
Oklahoma Attorney General
Scott Pruitt, has called a fed-
eral policy that forces in-
creased use of ethanol and
other biofuels into the U.S.
fuel supply unworkable and
backed a 2013 lawsuit chal-
lenging the measure.
But, before the first cau-
cuses during his early Republi-
can primary fights, Mr. Trump
told Iowans supporting the
ethanol mandate he was with
you 100%. Trump transition
officials and senior aides have
suggested that the president-
elects viewpoint on the etha-
nol mandate hasnt changed.
Senior Trump transition of-
ficials have said the incoming
cabinet and White House team
will set aside their differences
and work to implement Mr.
Trumps agenda. Gen. Mattis
and Mr. Tillerson declined to
comment. Mr. Mulvaney and
Mr. Pruitt didnt respond to
requests to comment.
What President-elect
Trump is looking for, are peo-
ple that have been very suc-
ment, business, academics, or
other facets of society, to im-
plement his agenda, incoming
White House press secretary
Sean Spicer told reporters
during a recent briefing call.
And its his agenda thats be-
ing implemented, not some-
body elses.
That approach, however, is
already being tested.
On the campaign trail, Mr.
Trump focused on toughening
the militarys treatment of
suspected terrorists, and he
said he would bring back wa-
terboarding and implement
tactics that he said were even
more extreme.
But he recently told the
New York Times that he
broached these issues with
Gen. Mattis, and Mr. Trumps
pick to head the Pentagon said
he never found it useful. The
president-elect said he was
surprised by the answer,
though he didnt say whether
he had changed his mind on
how he would address the
subject as president.
Peter Nicholas
contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A8 | Wednesday, December 28, 2016
SCARY
Continued from Page One
is a fraternity of writers, pro-
ducers, directors and actors
who moonlight in skin-crawl-
ing scares. Frightening takes
on the Christmas season such
as Silent Night, Deadly Night
have become cult classics. The
Christmastime schmaltz,
nonetheless, comes naturally,
they say, since both genres ad-
here to strict narrative formu-
las, are produced on slim bud-
gets and carry the support of
obsessive fans seeking a ca-
thartic endingwhether thats
salvation or survival.
Theyre flip sides of the
same coin, writer and direc-
tor Ron Oliver said of the two
genres.
Fans of Mr. Olivers recent
My Christmas Dream, about
a department-store manager
determined to build a mind-
blowing holiday display, may
be surprised to learn he got
his start in 1987 with Hello
Mary Lou: Prom Night II,
about an undead prom queen
who returns to claim her
CHINA
Continued from Page One
Now, as he nears the end of
his first five-year term, many
party insiders say Mr. Xi is try-
ing to block promotion of a po-
tential successor next year, sug-
gesting he wants to remain in
office after his second term ex-
pires in 2022, when he would
be 69 years old.
Mr. Xi, who is president,
party chief and military com-
mander, wants to keep going
after 2022 and to explore a
leadership structure just like
the Putin model, says one
party official who meets regu-
larly with top leaders. Several
others with access to party
leaders and their relatives say
similar things. The govern-
ments main press office de-
clined to comment for this arti-
cle, and Mr. Xi couldnt be
reached for comment.
Mr. Xis efforts to secure
greater authority may help en-
sure political stability in the
short run, as an era-defining
economic boom starts to falter.
But they risk upending conven-
tions developed since Maos
death to allow flexibility in gov-
ernment and ensure a regular
and orderly transition of power.
Concern is rising among
Chinas elite that the nation is
shifting toward a rigid form of
autocracy ill-suited to managing
a complex economy. Chinas ar-
ray of challenges includes wean-
ing the economy off debt-fueled
stimulus spending, breaking up
state monopolies and cleaning
up the environment.
His dilemma is that he cant
get things done without power,
says Huang Jing, an expert on
Chinese politics at the National
University of Singapore. He
feels the need to centralize, but
then he risks undermining these
institutions designed to prevent
a very powerful leader becom-
ing a dictator.
Mr. Xis supporters say he
still faces resistance within the
party, and needs to modernize
leadership structures to con-
front the slowing economy and
a hostile West.
At a meeting of 348 party
leaders in October that granted
Mr. Xi another titlecore be appointed to the Standing
leaderhe railed against indis-
cipline and warned of senior of-
ficials who lusted for power,
feigned compliance and formed
factions and gangs.
Since then, many party mem-
bers have signed written
pledges of absolute loyalty. In
a speech in October, the party
chief of Henan province, Xie Fu-
zhan, hailed Mr. Xi as a great
leaderwords usually reserved
for Mao.
Hours before Donald Trumps
election victory, China officially
launched its own convoluted
process for selecting a new na-
tional leadership team, to be
unveiled at a twice-a-decade
party congress next fall. Up to
five of the seven members of
the Politburo Standing Commit-
tee, Chinas top leadership body,
are due to retire.
Only Mr. Xi and Premier Li
Keqiang would remain if the
party observes the precedent,
established in 2002, that lead-
ers over age 67 step down.
Replacements usually are
chosen by outgoing and retired
Standing Committee members.
The custom since 2007 has
been that two of those selected
are young enough to succeed
the party chief when he com-
crown.
Theres a comfort factor
with horror and Christmas,
he said. You know what
youre going to get. Its kind of
like McDonalds.
Bob Clark, who directed the
1983 classic A Christmas
Story, about a boy who
yearns for a Red Ryder BB gun
under the tree, had previously
helmed the fan-favorite Black
Christmas, about a group of
sorority sisters terrorized by a
serial killer.
When he began working on
Christmas movies about a de-
cade ago, Mr. Oliver found
writing in ways that would de-
light audiences wasnt much
different from terrorizing
them. To build tension, every
scene should end with a ques-
tion mark, he said. Except
the final scene, which ends
with a kiss or a murder.
Audiences of both genres
are discerning, said director
David DeCoteau, and must be
pulled in by the first two min-
utes.
In his 2016 feature A Hus-
band for Christmas, about a
graphic designer who finds
love at work, he opened with a
Chinas President Xi Jinping waits in the Great Hall of the People to greet a visiting foreign dignitary.
pletes his second term.
Shortly before China began
formal preparations for the con-
gress, senior party official Deng
Maosheng cast those conven-
tions into doubt by saying at a
news conference that the idea
of an age limit for top leaders
was a popular saying that
isnt trustworthy.
Some party insiders say they
believe Mr. Xi is trying to pack
the new Standing Committee
with allies and to hinder others
from elevating favorites. They
say he wants his anticorruption
chief, Wang Qishan, to keep his
seat despite already being 68,
and possibly to take over as
premier. Messrs. Wang and Li
couldnt be reached for com-
ment.
There is even talk within the
party of shrinking, downgrading
or scrapping the Standing Com-
mittee and adopting a more
presidential system like Rus-
sias, in which Vladimir Putin,
now in his third term, has broad
executive authority and could
serve until 2024.
Succession talk
Recent internal discussions
suggest that no successor will
lieves in top-down decision-
Committee next year, says the
party official who meets regu-
larly with top leaders. Mr. Xi is
very forceful about preventing
the elders from interfering too
much, he says.
Some of those ideas may be
bargaining positions to bolster
Mr. Xis hand in the negotia-
tions that precede the congress.
Some believe that his rivals
may yet thwart his ambitions,
or that he could change direc-
tion in his second term. With no
overt signs of resistance, how-
ever, there is a sense among
many who meet or monitor
Chinas leaders that it could be
the start of a new era of hard
authoritarianism.
Chinas strongest leaders
needed at least 20 years to
achieve results. Xi Jinping will
be the same, says one retired
senior official who has regular
access to party leaders. Mao
built the nation. Deng Xiaoping
made it rich. Were now in the
Xi era, which will make it
strong.
Mr. Xis goal appears to be to
remodel the party as a disci-
plined organization, loyal to
him personally, and to reassert
its role as the dominant force in
society and the economy. He be-
FROM PAGE ONE
flash-forward that alludes to a
happy relationship. That re-
ally teases the audience. In
another 2016 feature of his,
Sorority Slaughterhouse, he
opened with the suicide of an
adulterous university dean,
whose blood splatter causes a
toy to become a killer clown
doll that murders coeds. Its
a taste of whats to come, he
said.
A Husband for Christmas
and Sorority Slaughterhouse
both star Eric Roberts as a de-
sign-firm executive and the
homicidal college administra-
tor, respectively. Hes very
versatile, said Mr. DeCoteau.
For companies that produce
both kinds of movies, there is
little difference when it comes
to the balance sheet. Produc-
tions for each are made inex-
pensively, and the genres
travel well, Hollywood par-
lance that means they can be
sold relatively easily for over-
seas distribution.
Production companies are
working overtime to keep up
with demand. Horror has al-
ways filled the catalogs of
streaming services and on-de-
mand providers, and the bevy
IN DEPTJ
The Great Reshufe
China is preparing for a shake-up of its top leadership at a ve-yearly
Communist Party congress in late 2017 that will mark the beginning
of Xi Jinpings second term in ofce.
Expected to retire Purged for corruption
POLITBURO STANDING COMMITTEE TOTAL MEMBERS: 7
Expected to retire: 4 to 5
Xi Li Wang
Jinping, Keqiang, Qishan,
age 63 61 68
POLITBURO TOTAL MEMBERS: 25
Includes Standing Committee plus top two generals, heads of major party
departments and leaders of major provinces and cities
Expected to retire: 10 to 11
CENTRAL COMMITTEE TOTAL MEMBERS: 376
Includes Politburo plus state
industry chiefs, provincial leaders
and senior generals
Expected to retire: about 208
Purged for corruption: about 20
Source: staff reports
THE WALL STREET JOURNAL.
making by a small circle of ad-
visers, who now govern through
a dozen or so committees Mr. Xi
heads, party insiders say.
His reputation within the
party is as a micromanager who
frequently makes notes on the
many documents crossing his
desk. One of his committees, the
Central Leading Group for Com-
prehensively Deepening Re-
forms, has issued 96 edicts this
year, up from 65 last year and
37 the year before.
Mr. Xi has won popular sup-
port by fighting corruption and
mobilizing the military to en-
force territorial claims and pro-
tect Chinese interests world-
wide, while boosting his global
stature with a One Belt One
Road plan for infrastructure
links between East and West.
He is using big data to estab-
lish new means of control, in-
cluding a social credit system
to monitor and rate citizens fi-
nancial and other activities by
2020.
In other areas, recentralizing
power hasnt helped. After
pledging to allow the market a
decisive role in 2013, his gov-
ernment mishandled a stock-
market crash and currency de-
valuation last year, and this
of cable channels airing
Christmas movies are posting
record ratings this year. Since
launching its Countdown to
Christmas programming on
Oct. 28, the Hallmark Channel
said it has been the most-
watched cable network among
women ages 25 to 54.
Thats been a boon to ac-
tors such as Nelson Wong, a
Vancouver thespian who ap-
peared in seven Christmas
Audiences of both
genres are discerning,
said director David
DeCoteau.
movies over the past few
years, lightening up a rsum
that had featured thrillers and
horror gigs.
He recently portrayed a
doctor in both genres. In the
bloodfest American Mary, he
played Dr. Black, a medical
professional who enjoys prac-
ticing macabre experiments on
patients. In Every Christmas
Expected to remain Uncertain
Zhang Yu Liu Zhang
Dejiang, Zhengsheng, Yunshan, Gaoli,
70 71 69 70
year he began advocating a
stronger role for the state in the
economy, directly contradicting
signals from Premier Li.
Efforts to curb state spend-
ing and high debt levels appear
to many economists to have
been trumped by Mr. Xis goal
of doubling gross domestic
product between 2010 and
2020.
With property prices and
capital outflows ballooning, the
prospect of bolder overhauls
dimmed in November with the
dismissal of reformist finance
minister Lou Jiwei.
Mr. Xis emphasis on obedi-
ence and austerity has
prompted many officials to
leave government while others
simply pass along orders or
avoid taking initiative, accord-
ing to many who work in or
deal with the government.
Bureaucrats are inundated
with official documents and
study sessions related to Mr.
Xis many campaigns, including
a recent one directing them to
read, deliver presentations and
do written tests on a book of his
speeches.
A judge in a large Chinese
city says he resigned this year
because of rules that required
him to hand in his passport, re-
THE WALL STREET JOURNAL.
Has a Story, his character, Dr.
Kenny Kwan, is an expert in
Christmas-tree ornaments who
helps a Scrooge-like news an-
Christmas.
Another cardinal rule has
emerged. The channels want
snow, snow, snow, said Sam
chor find a new appreciation Irvin, a veteran of both genres.
for the holiday. While directing Im Not
Im usually either the side- Ready for Christmas, about a
kick or the evil minion, he young girl who asks Santa
said. Claus to make her Scrooge-like
Both genres are supported aunt tell the truth, Mr. Irvin
by audiences who track each covered a Salt Lake City set in
release, whether in Fangoria September with white foam
magazine, a periodical pro- also used at airports to soften
claiming to be the first in a planes hard landing. The
fright since 1979, or on a foam looks the part, but tends
website called Its a Wonder- to melt after 15 minutes in the
ful Movie, which calls itself heat.
your ticket to Christmas Its much easier to shoot a
movies on TV! Fans feel an grisly horror scene these days
intense kinship with their pre- because most of the blood is
ferred genre, establishing now computer generated. Its
rules they dont like to see been very freeing to say,
broken, say writers who hop Were going to add the blood
between the two. later, he said.
Horror-movie rulesknow- Soon after finishing another
ing a character is doomed the holiday feature, Christmas
minute he says, Ill be right Land, Mr. Irvin directed The
backwere subverted by Wrong House, a Lifetime
1996s Scream, which toyed movie about a family that
with audience expectations of moves into a new home and
the genre. Christmas-movie finds theyre being stalked by
viewers have little tolerance a homicidal maniac.
for such irony, said Mr. It premiered the day after
Varrati. Movie Christmas has Christmas. Counter-program-
to be the best version of ming, said Mr. Irvin.
ging. Labor costs, social unrest,
local-government debt and en-
vironmental problems were ris-
ing, undermining the partys
main claim to legitimacythat
it delivered political stability
and ever increasing prosperity.
Some in the party felt the
diffusion of power had gone too
far.
Mr. Xi, the son of a revolu-
tionary hero purged by Mao but
later rehabilitated, had no cohe-
sive power base. His appoint-
ment was largely engineered by
former President Jiang Zemin.
Premier Li was known to have
been Mr. Hus first choice as his
successor.
Still, Mr. Xi had a powerful
ally in Mr. Wang, a friend for
several decades who was now
ED JONES/AFP/GETTY IMAGES
anticorruption chief. Together,
they used the Bo scandal as jus-
tification to launch an anticor-
ruption campaign that targeted
potential threats to Mr. Xis au-
thority as well as a real problem
for the party.
President Hus chief of staff,
one of his most senior generals
port on his family life and at- and his domestic security chief,
tend political meetings at which Zhou Yongkang, as well as many
superiors would read out offi- lower-level officials associated
cial documents, already pub- with them were convicted of
lished in state media, often for corruption. That curbed the in-
two hours at a time. fluence of networks centered
around Mr. Xis two predeces-
sors.
Stifling debate He antagonized many people
A campaign against dissent along the way. So many groups
and Western influence in media, have been targeted now, it could
arts, education and law is sti- be dangerous for him to retire
fling creative thought and open in 2022, says Zhang Lifan, a
debate, according to some peo- Beijing-based political commen-
ple working in those areas. tator. Thats also why he wants
Liberal economist Mao Yushi, Wang Qishan to stay.
88, who advocates scrapping Fear of corruption investiga-
the state sector, says he re- tors prevents overt challenges,
cently was warned by a party but passive resistance within
official to resign from the inde- the party is widespread, and as
pendent Unirule Institute of Mr. Xi accumulates power he
Economics that he co-founded assumes more responsibility for
in 1993. He says the institutes failure, party insiders say. He
Chinese donors fear official ret- has limited numbers of people
ribution and its foreign spon- he can truly trust, these people
sors face a new law restricting say. His power is undisputed,
foreign funding. yet fragile, they say.
He says he is still optimistic The anticorruption campaign
for China, but only after Xi Jin- has morphed into a drive to en-
ping. force discipline, increasingly de-
China has vacillated between fined as implementing Mr. Xis
one-man and collective rule for decisions.
a century. Even Mao Zedong ini- At a meeting in October, the
tially shared control with other Central Committee approved
revolutionaries after the 1949 Mr. Xis status as core
Communist takeover, before en- leadera title never conferred
forcing his dominance and on Mr. Hu. The takeaway for
plunging China into two de- party members who discussed
cades of chaos that killed tens the development at subsequent
of millions. Deng Xiaoping, his meetings was that Mr. Xi had
successor who launched Chinas the final say on all issues, in-
economic liberalization, devel- cluding next years reshuffle.
oped rules for sharing and ced- Li Zhanshu, head of the
ing power. partys powerful General Office,
There is a limit to anyones urged officials in a November
knowledge, experience and en- newspaper editorial to rally
ergy, Mr. Deng said in a 1980 around Mr. Xi as the most
speech often cited by critics of prestigious, the most influential
Mr. Xi, who now has at least 12 and the most experienced
titles. Mr. Deng tried to remove party leader.
the party from day-to-day gov- Some party members expect
ernment, delegating power to Mr. Li, one of Mr. Xis closest al-
ministries and local authorities. lies, to take the anticorruption
job on the Standing Committee
next year, with Mr. Wang be-
Hus Example coming premier instead of retir-
Hu Jintao, who ruled begin- ing. That would tighten Mr. Xis
ning in 2002, was Chinas first hold on power until 2022 and
leader to give up all of his set a precedent for him staying
postsparty head, president on after that.
and military chiefafter 10 There is a constitutional two-
years in office. term limit on the presidency.
By 2012, the party was in cri- There also are party rules say-
sis. Corruption and party in- ing no leading official can stay
fighting had been exposed by a in the same post longer than 10
scandal involving Bo Xilai, a Po- years, or at the same level of
litburo member ultimately jailed the party for more than 15.
for abusing power after his wife Some party insiders say the
was convicted of murdering a latter rules don't apply to the
British businessman. Standing Committee. Others be-
An economic growth model lieve Mr. Xi could change the
driven by exports and infra- rules, or switch roles, as Mr. Pu-
structure investment was flag- tin did in 2008.
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. Wednesday, December 28, 2016 | A9

LIFE&ARTS

MY RIDE | A.J. Baime

The Most
Memorable
Vehicles
Of 2016

EVERY WEEK, The Wall Street Journal
publishes a column that shines a spotlight
on a love affair between a human being and
a vehicle of some kind. This years columns
have highlighted no shortage of passion and
eccentricity, from a Corvette-powered su-
percar constructed out of wood and glue to
Babe Ruths old Lincoln:
Woodwork Wonder on Wheels 
Ive wanted to design and build my own car since
I was a kid, Joe Harmon said. The Mooresville,
N.C., industrial designer did exactly that, only he
built the Harmon Splinters extraordinary body out
of wood and glue. He estimates that it took
20,000 hours, over many years. The worlds only
wooden supercar, as Mr. Harmon calls it, is pow-
ered by a modified Corvette engine.
A Living Classic 
The 1955 Mercedes-Benz Gullwing is one of the
most prized collector cars of them all. Cooper
Weeks, a retired TWA airline captain from Kansas
City, Mo., bought his for $6,000 over 50 years
ago. Mr. Weeks still takes the car out every
month, to get the RPM up, he says. Just like
for old people. Keeps it running.
The Happiest Teardrop
Las Vegas-based Victoria Hogan has put her pas-
sion on wheels, literally. Her pop-up wedding com-
pany, Flora Pop, employs a trailer she built with all
the fixings for actual weddings, and she is licensed
to officiate. The trailerbased on a classic 1950s
Teardrop traileris a traveling altar. So far, Ms. Ho-
gan estimates, it has hosted over 325 weddings.
Dont Mess With This Geo
If you have never heard the term outlaw street-
FROM TOP: DHANRAJ EMANUEL FOR THE WALL STREET JOURNAL (3); JASON TRACY FOR THE WALL STREET JOURNAL
car, Gerard Pfeffer can educate you. A sheet
metal worker from St. Louis, Mr. Pfeffer and a
now-deceased partner took a humble 1989 Geo
Metro and turned it into a drag racing machine
for the street. Since Mr. Pfeffers story appeared,
he has been fine-tuning the car, prepping the Geo
for actual drag strip runs.
A Second Chance at Speed
Racing fans know the name Wayne Rainey. The
Carmel Valley, Calif. resident is a three-time Grand
Prix motorcycling world champion, who became par-
alyzed following a racing accident in Italy in 1993.
Mr. Rainey showed off the 140-mph super kart that
put his racing ambitions back on track. Competi-
tively, the kart gave me my life back, he said.
The Who Scooter
Nightclub impresario Tony Cochrane collects
movie memorabilia. In 2008, he spent 36,000
pounds (about $45,000) on his piece de resis-
tance: the actual 1967 Lambretta scooter used in
the filming of The Whos screen version of the
rock opera Quadrophenia. Fans still make pil-
grimages to Cochranes home in Dundee, Scotland, his first hit in 1970 about a car: Vehicle. Success Home in the Ranger
to see the thing. has enabled him to buy his dream machines: a Claire Hummel, a jewelry designer from Half
1955 Chevrolet Bel Air and a 1958 Chevy Cor- Moon Bay, Calif., inherited a humble 2000 Ford
Pride of the Babe vette. Mr. Peterik hasn't purchased any new cars Ranger pickup from her grandfather and turned it
Back in 1947, Ford Motor Company gave Babe since his column ran. Just taking care of the old into her own traveling home and workshop, with
Ruth a luxurious new Lincoln Continental painted ones, he says. jewelry-making and repair equipment, textiles she
New York Yankee blue. Today, Lonnie Shelton, a has collected, memorabilia from her childhood and
semi-retired maker of gas compressors from So Much Cadillac more. I create a lot of statement pieces, she
Pampa, Tex., owns this Lincoln. Now Shelton uses I love these cars, said Heidi Lynn Ferguson, a said, and my truck is its own statement piece.
the car to raise money for charity. The Babe corporate flight attendant from West Palm
would approve. Beach, Fla., of her two Cadillacs. Ms. Ferguson Contact A.J. Baime at facebook.com/ajbaime.
bought these two Caddysa 1969 DeVille and a
Chevy Survivors 1976 Eldoradofor a total of $1,500. (She has
Singer/songwriter Jim Peterik of Burr Ridge, Ill., since sold the black one.) Theyre great expres- More Online
who co-wrote the Rocky III theme song Eye of sions of my personality: Im a little bit country, a  To see more images of the most memorable
the Tiger while in the band Survivor, dreamed up little rock n roll. vehicles of 2016, go to WSJ.com/Life

NEW FICTION

A TALE OF TWO TOLKIENS

The grandson of the writer of The Lord of the Rings recognizes his famous relative
BY ELLEN GAMERMAN
THE HERO in Simon Tolkiens
new novel bears some resemblance
to the authors grandfather, J.R.R.
Tolkien. Both were orphaned, won
scholarships to the University of
Oxford, fell in love before leaving
Britain to fight in World War I and
bore witness to the horrors of the
Battle of the Somme.
I needed to talk about my grand-
father and I needed to tie things
into that. At the same time, in a
certain sense, I was using him in
order to get away from him.
The authors fifth novel, due out
in the U.S. on Jan. 24, follows Lon-
doner Adam Raine from the city
slums to a coal-mining town to a
lush country house to the trenches
in France. After his mother is
killed in a labor protest, young
desolate domains in The Lord of
the Ringsand the no mans land
on the Western Front.
Marketers of the book are target-
ing readers rarely grouped together.
Publisher Nan A. Talese/Doubleday
is positioning the book, with its
rags-to-riches back story, as a
choice for fans of Downton Ab-
bey. In fact, Mr. Tolkien said he
watched the series while writing
the novel and used it for period de-
JEFF CLARK FOR THE WALL STREET JOURNAL

No Mans Land marks the first
time Mr. Tolkien has acknowledged
the creator of The Hobbit and
The Lord of the Rings in his fic-
tion. J.R.R. Tolkiens presence has
hovered over his grandsons life,
delaying his belief in himself as a
writer but helping promote what
he produced.
Mr. Tolkien, a 57-year-old former
London-based criminal justice bar-
rister who began writing courtroom
dramas and thrillers in his 40s, said
with this novel he feels a more
comfortable literary connection to
his grandfather. The book allowed
him to address his world-famous
ancestor but still tell his own story.
Lets just be brutally honest, I
think its been a mixed bag of
emotions that I carried with me
through my life, Mr. Tolkien said.
Adam moves north, where he is
taken in by a wealthy mine owner
before war breaks out.
When J.R.R. Tolkien enlisted in
the British Army, he took his gas
mask, tin hat and rifle and headed
to France. His poem The Lonely
Isle, about the boat trip from Eng-
land to Calais as a new soldier, hints
at his initial isolation (O lonely,
sparkling isle, farewell!). In 1916,
the British Army lieutenant served
as a battalion signal officer on the
Somme. He left the front after a few
months, sick with trench fever, an
illness transmitted by lice. Over the
course of the war, poor health re-
peatedly kept him from combat.
Some see echoes of World War I
in J.R.R. Tolkiens fantasy novels.
Simon Tolkien described similarities
between Mordor and Isengard
tail. At the same time, the publisher
is tapping into J.R.R. Tolkiens base
with a giveaway of No Mans
Land and The Hobbit tied to the
80th anniversary of the novels
original publication. The book re-
ceived generally warm reviews after
it came out this summer in the U.K.
Simon Tolkien was 14 years old
when J.R.R. Tolkien died. He re-
called visiting his grandparents of-
ten after his parents divorced, as Writer Simon Tolkien, seen this month in Santa Barbara, Calif, where he lives.
an only child traveling alone by
train to their favorite seaside ho- rector Peter Jackson turned J.R.R. father of two, who emigrated to the
tel. His affectionate grandfather Tolkien into a big-screen phenome- U.S. about eight years ago, is mar-
walked along the beach and non. Suddenly, he said, he felt a ried to an American. The at-times
skipped stones with him, or the drive to create something meaning- paralyzing spell cast by Mr. Tol-
two played word games in the ho- ful of his own. He wrote two books kiens genius relative does not
tel sitting room. in the U.K. and another three in the seem to extend to his own children,
Like his grandfather, Simon Tol- U.S. I feel vastly more free as a ages 14 and 26. I think its less vis-
kien attended Oxford. He didnt person and more comfortable in my ceral to them, he said. They live
write a word of fiction until film di- own skin in America, he said. The in a different world.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A10 | Wednesday, December 28, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK Obamas Fitting Finish
Barack Obamas deci- clear negotiations with Iran. It was de-
A Friend for Trump in Asia sion to abstain from,
and therefore allow,
ceptive about the terms of the deal. It
continues to be deceptive about the

S
hinzo Abes visit Tuesday to Pearl Harbor clines. The 1.4% increase announced last week, last weeks vote to cen- fundamental aim of the agreement,
is a symbol of reconciliation, and the Jap- to a record 5.1 trillion yen ($44 billion), will sure Israel at the U.N. which has less to do with curbing Irans
Security Council is a nuclear ambitions than with aligning
anese Prime Ministers gesture was made fund new missile defenses developed with the
fitting capstone for Washingtons interests with Tehrans.
especially dramatic by the U.S. and help Japan meet its GLOBAL
whats left of his for- Now the administration is likely being
stakes of U.S.-Japan relations Shinzo Abes Japan is goal of fielding 22 submarines VIEW
eign policy. Strategic deceptive about last weeks U.N. vote,
today. Seventy-five years after by 2021, from 17 today. Tokyo By Bret
Pearl Harbor, as North Koreas
Americas most vital also increased its separate Stephens
half-measures, under- claiming it did not promote, craft or or-
handed tactics and chestrate a resolution that treats the
nuclear arsenal and Chinas re- security partner. coast guard budget by 12%, to moralizing gestures Jewish Quarter of Jerusalems Old City as
visionist ambitions threaten nearly $2 billion. have been the presidents style from the a settlement in illegally occupied terri-
the Pacific, Japan is Americas Tokyo spends another $1.7 beginning. Israelis arent the only peo- tory. Yet in November, John Kerry had a
most important security partner. billion annually on the 54,000 U.S. troops ple to feel betrayed by the results. long talk on the subject with the foreign
Of the five U.S. treaty allies in the Asia-Pa- based in Japan. Thats about half the local cost, Also betrayed: Iranians, whose 2009 minister of New Zealand, one of the reso-
cific, Japan has by far the largest economy, the and it would cost the U.S. more to bring the Green Revolution in heroic protest of a lutions sponsors.
stolen election Mr. Obama conspicu- One of the closed-door discussions
most capable military and the most strategic- troops home. Then theres the nearly $18 bil-
ously failed to endorse for fear of of- between United States Secretary of
minded political leadership. By going to Pearl lion Tokyo has committed toward some of the fending the ruling theocracy. State John Kerry and the New Zealand
Harbor, Mr. Abe is able to bookend President largest U.S. military construction projects in Iraqis, who were assured of a diplo- government today was a potential reso-
Obamas recent visit to Hiroshima and highlight the Pacific, including new facilities in southern matic surge to consolidate the gains of lution by the United Nations Security
Japans value to Donald Trump, who as a candi- Japan (near the Senkaku Islands and Taiwan), the military surge, but who ceased to be Council on a two-state solution for the
date sometimes talked as if Japan is a free-rider and even on the U.S. island of Guam. of any interest to Mr. Obama the mo-
on U.S. security guarantees. The Japanese Augmenting all this is Mr. Abes energetic re- ment U.S. troops were withdrawn, and
leader knows he has a good story to tell. gional diplomacy. His friendship with Indian only concerned him again when ISIS In the list of low points in
Since taking office in 2012 Mr. Abe has Prime Minister Narendra Modi has deepened neared the gates of Baghdad. U.S. foreign policy, the
steadily strengthened Japans ability to defend strategic ties between Asias strongest demo- Syrians, whose initially peaceful up-
itself and help the U.S. advance shared interests. cratic powers. His agreement to settle World rising against anti-American dictator betrayal of Israel ranks high.
Bashar Assad Mr. Obama refused to em-
Last year he braved raucous street protests and War II disputes with South Korea paved the way brace, and whose initially moderate-led
tussles on the Diet floor to deliver a constitu- for unprecedented cooperation among the U.S., uprising Mr. Obama failed to support, Israel-Palestine conflict, the New Zea-
tional reinterpretation allowing Japan to engage Japan and South Korea on missile defense and and whose sarin- and chlorine-gassed land Herald reported last month. It is
in collective self-defense. This means the Jap- other issues. His outreach to Southeast Asia has children Mr. Obama refused to rescue, a conversation we are engaged in
anese military can use force to protect the U.S. aided economic and military modernization in his own red lines notwithstanding. deeply and weve spent some time talk-
and other friendly nations from attack, even if states vulnerable to Chinese coercion, and he Ukrainians, who gave up their nu- ing to Secretary Kerry about where the
Japan itself isnt targeted. even maintains good relations with firebrand clear weapons in 1994 with formal U.S. U.S. might go on this, the paper
Thus its no longer true that Japan could sit Philippine leader Rodrigo Duterte. assurances that their existing borders added, quoting Foreign Minister Murray
home and watch Sony television if the U.S. Theres more, from Mr. Abes affection for Tai- would be guaranteed, only to see Mr. McCully.
were attacked, as Mr. Trump charged on the wan to his willingness to open Japans long-pro- Obama refuse to supply them with de- The Israelis claim to have more evi-
fensive weapons when Vladimir Putin dence along these lines. If so, it means
campaign trail. Japanese forces can now shoot tected industries to foreign competition. Wher-
invaded their territory 20 years later. the administration no longer bothers to
down North Korean missiles heading for U.S. ever the U.S. has strategic goals in Asia, Japan Pro-American Arab leaders, who ex- lie convincingly.
targets. Japans navy, which is larger than Brit- is increasingly willing and able to help. pected better than to be given ultima- Even this might be excusable, if Mr.
ains, now backs up any U.S. ship that may face Kudos to Mr. Abe for highlighting this in dra- tums from Washington to step down, Obama at least had the courage of his
Chinese mischief in Asian waters. matic fashion, as with last years address to and who didnt anticipate the adminis- mistaken convictions, or if his decep-
Japan still spends too little on defense Congress and now at Pearl Harbor. The apparent trations tilt toward the Muslim Broth- tion were in the service of a worthier
about 1% of gross domestic product, as it has warmth of his meeting with President-elect erhood as a legitimate political opposi- end. Instead, we have the spectacle of
for decadesbut Mr. Abe has delivered five Trump last month was an encouraging sign for tion, and toward Tehran as a the U.S. government hiding behind the
straight annual increases after a decade of de- peace and prosperity in Asia. responsible negotiating partner. skirts of the foreign minister of New
Most betrayed: Americans. Zealandalong with eminent co-spon-
Mr. Obama promised a responsible sors, Venezuela, Malaysia and Senegal
Indonesias Bad Political Turn end to the war in Iraq. We are again
fighting in Iraq. He promised victory in
in order to embarrass and endanger a
democratic ally in a forum where that

T
Afghanistan. The Taliban are winning. ally is already isolated and bullied. In
he conviction rate for blasphemy in In- Purnama attracted 500,000. He promised a reset with Russia. We are the catalog of low points in American
donesia is 100%, and thats bad news for That shift in public opinion led to a political enemies again. He promised the contain- diplomacy, this one ranks high.
Basuki Tjahaja Purnama. The talented realignment. Mr. Widodo stood on stage with Is- ment of Iran. We are witnessing its as- After the Carter administration
Jakarta Governor faces up to lamic Defenders Front leader cendancy in Iraq, Syria, Lebanon and Ye- pulled a similar stunt against Israel at
five years in prison after a The opposition enlists Rizieq Shihab to thank the men. He promised a world free of the Security Council in December 1980,
court decided Tuesday that crowd for remaining peaceful. nuclear weapons. We are stumbling into the Washington Post published an edi-
prosecutors have a credible
Islamists against a The signal was unmistakable: another age of nuclear proliferation. He torial that does the paper honor today.
case against him for making reformist President. The President was throwing his promised al Qaeda on a path to defeat. It cannot be denied, the editors
lighthearted comments about former deputy under the bus to Jihad has never been so rampant and wrote, that there is a pack and that it
deadly. hounds Israel shamelessly and that this
the Quran. A conviction will ensure his own survival. These are the results. They would be makes it very serious when the United
deprive Jakarta of an able administrator and re- Mr. Widodo accuses political actors of or- easier to forgive if they hadnt so often States joins it. The editorial was titled
former, but the bigger damage is to Indonesias chestrating the rallies and media campaigns, been reached by disingenuous and dis- Joining the Jackals.
religious and ethnic harmony. which were beyond the capabilities of the rela- honorable means. Unlike Mr. Carter, Mr. Obama hasnt
After Mr. Purnama made his supposedly of- tively small Islamist groups. Its clear he meant The administration was deceptive joined the jackals. He has merely
fending comments in September, Islamist former President Susil Bambang Yudhoyono about the motives for the 2012 Beng- opened the door wide to them, whether
groups misquoted him to stoke outrage against and failed presidential candidate Prabowo Sub- hazi attack. It was deceptive about Sgt. at the U.N. or in the skies over Syria or
the Governor, who is Christian and ethnic Chi- ianto, both retired generals. They deny being Bowe Bergdahls service record, and the in the killing fields in Ukraine. The
nese. They held a 150,000-person hate rally on involved. considerations that led it to exchange United States abstains: What a fitting
Nov. 4 after which rioters burned cars and But the two leaders have a strong interest in five Taliban leaders for his freedom. It finish to this ruinous presidency.
was deceptive about when it began nu- Write bstephens@wsj.com.
looted shops. defeating Mr. Purnama, since their parties are
President Joko Widodo, Mr. Purnamas ally, fielding candidates in the gubernatorial race, in-
bowed to the Islamist pressure and opened a cluding Mr. Yudhoyonos son. If one of them
blasphemy investigation. At that point it wins, he will be in a good position to challenge
looked like Mr. Purnama would still be Mr. Widodo for the Presidency in 2019.
The Only Way to Drain
cleared. Most religious experts consulted by Mr. Widodo is a skilled politician, and public
the police said there was no case against him. support for democracy remains strong. But even
But then the Islamic Defenders Front (FPI) if he survives and wins re-election, the powerful
The Swamp for Good
and other extremist groups used traditional sectarian forces his enemies are unleashing will By George Ball half right: The mosquitoes that thrive in

D
and online media to convince moderate and live on. This poses a threat to Indonesias secu-
middle-class Muslims that their faith was un- lar political system and to the open economy the onald Trumps pledge to drain
the swamp in Washington has
der attack. A Dec. 2 prayer rally against Mr. President is trying to build.
led observers into the weeds.
Some say Mr. Trumps methods will
standing water spread malaria and yel-
low fever.
So how do you drain a swamp? Start
by digging deep trenches through it.
These should be graded outward and

Baracks Last Bank Bash only deepen the muck. We certainly

cannot drain the swamp by feeding pork
downward from the swamps wettest ar-
eas. Then lay drainage tilesnowa-

T
to the alligators, wrote one GOP sena- days large sections of plastic pipe are
he Obama Justice Department is pull- have to present other banks as victims. torapparently not realizing that alli- usedin the trenches.
ing up to the ATM for one last with- For the purposes of extracting cash from gators mostly live in marshes, not Done correctly, the fix is permanent.
drawal from banks. Having blamed U.S. Barclays, guess who the government is now swamps. Buildings stop sinking. The dry land
financial firms for the 2008 calling a victim? Yes, Citi- Others suggest the whole effort is a changes the types of plants that grow
mortgage crisis and squeezed Former villains are now bank. waste of time. When you drain the no more roots being drowned in water. In
them for more than $100 bil- swamp, tweeted John Podhoretz of Washington, D.C., many quaint channels
victims in a final round ciate For those who dont appre-
Commentary, doesnt it just rain and still direct water from congested areas
lion in settlements, the feds the humor in this Belt- then theres another swamp? No, the into rivers. So do the ditches all across
are now gashing foreign of official larceny. way scam, recall that two swamp doesnt come backat least not the country along rural roads next to
banks. Cases against such un- years ago the feds used Firrea if you drain it right. farmers corn, soybean or vegetable
sympathetic targets are sure to claim that during the run- America used to be literally swamped fields.
to please progressives, but dont expect the up to the same financial crisis the banks par- with swamps, which covered large areas If President-elect Trump wants to
feds to prove any of these cases in court. ent Citigroup was the villain that had misled that are now occupied by cities and dispel the miasma hanging about, he
Last week Credit Suisse agreed to fork over investors in mortgage-backed securities. Jus- towns. Much of the Midwest was shallow needs, more than anything, a strategic
more than $5 billion and Deutsche Bank agreed tice extracted a $7 billion settlement from Citi. swampland, left by the recession of the plan. What to drain and how to do it?
to pay more than $7 billion. Barclays refused In announcing that deal, then Attorney Gen- glaciers thousands of years ago. Swamps What needs are most essential and
to settle and was sued by Justice on Thursday. eral Eric Holder called Citis conduct egre- were everywhere, especially near rivers, which solutions most virtuous? Any
lakes and oceans. farmer or gardener facing a swampy
Good for Barclays. gious. Mr. Holder said the bank had contrib-
Early Americans drained these property knows that without a good
Heres hoping the British bank takes its case uted mightily to the financial crisis that swamps to acquire civilizations most es- plan, you are, in a word, sunk.
to trial, because Justices complaint is a 198- devastated our economy and spoke of shat- sential resource: tillable land with friable
page flight from logic. The governments law- tered lives allegedly caused by the villainous soil. Without it, settlers were condemned Mr. Ball, the chairman and CEO of W.
suit accuses Barclays of defrauding investors firm. But that was so 2014. to eke out a subsistence living. But by Atlee Burpee Company, is a past presi-
who bought its mortgage-backed securities in Now we are asked to believe that this mas- draining swamps, they could uncover dent of the American Horticultural Soci-
the years leading up to the financial crisis. The termind of an international plot to defraud land soaked for thousands of years by ety.
allegation is that the bank didnt disclose how investors was simultaneously taken in by a deposits of minerals and organic debris.
bad the underlying loans were. But the govern- nearly identical plot cooked up by a rival Once opened to sun and air, it provided
ment acknowledges in its complaint that Bar- rogue organization. Amazing. Will Citi now some of the worlds richest farmland. Pepper ...
Hello to agriculture, to a sound rural
clays was also an investor in most of the secu- get some of its $7 billion back to reflect its
economy, to well-fed towns and cities.
And Salt
rities at issue, and that it was often buying new victim status?
Soviet Premier Nikita Khrushchev ad- THE WALL STREET JOURNAL
some of the riskiest slices of the deal. Was Bar- Theres more. The government says Bar- mired my native Midwestern soil when
clays defrauding itself? clays had many other institutional victims, he visited Iowa in 1959, likening it to the
The suit goes downhill from there. The stat- such as Fannie Mae and Freddie Mac. Even the earth in Soviet Russia. Because both
ute of limitations has run out for bringing a partisan Financial Crisis Inquiry Commission, continents were covered in glaciers for
typical case under securities law. But the gov- created by the 2009 Pelosi Congress and millions of years, the land is still trying
ernment is still able to sue Barclays under the chaired by a former state Democratic Party to work out where to put all the melted
Financial Institutions Reform, Recovery, and chairman, had to acknowledge the destruction water. Meanwhile, it has produced in-
Enforcement Act of 1989 (Firrea). caused by these reckless kings of leverage. credible soil fertility. Notwithstanding
Prosecutors like this law because it requires But lately the government finds them more trite dismissals from the chattering
class, it is hard to find a more powerful,
a low burden of proof and can result in huge useful as alleged victims when suing other
life-giving injunction than, Drain the
penalties. The catch, since Firrea was created firms. swamp!
to punish savings-and-loan executives, is that The worst financial abuses are these last- The other problem with swamps is
it can only be used against those who have al- minute bank raids by the Obama Department that they breed death. Our ancestors
legedly harmed a federally insured financial in- of Justice. Repairing this agency and its repu- thought that miasmathe misty, va- Well, Im not completely vegan,
stitution. So instead of presenting mom-and- tation begins with an end to evidence-free porous stenches that waft from swamp- but I dont eat anything that was
pop investors who lost money, prosecutors money grabs against unpopular defendants. landcaused fatal diseases. They were cute when it was alive.
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.
The Politics Behind Abes Pearl Harbor Visit
By Michael Auslin
P
rime Minister Shinzo Abe
is not the first Japanese
leader to go to Pearl Har-
bor since Dec. 7, 1941. But
during his visit there Tues-
day with President Obama, he will do
what none of his predecessors has
contemplated: publicly acknowledge
Japans past aggression. This is part
of a larger strategy to ensure his
countrys future security in a more
dangerous Asia. Mr. Abes trip is
aimed as much at President-elect
Donald Trump as it is a valedictory
to his relationship with Mr. Obama.
The Japanese leader knows
he will need the U.S. to help
restrain China, as other
traditional allies go wobbly.
No one should underestimate the
symbolism of Mr. Abes pilgrimage.
Japans first major postwar premier,
Shigeru Yoshida, made a private visit
to Pearl Harbor in 1951 on his way
back from signing the San Francisco
Peace Treaty. Now, Mr. Abe will pay
his official respects in the global
spotlight.
The visit is as much about dealing
with looming challenges as atoning
By John Bolton
L
ast Friday, on the eve of Ha-
nukkah and Christmas, Barack
Obama stabbed Israel in the
front. The departing president re-
fused to veto United Nations Secu-
rity Council Resolution 2334a
measure ostensibly about Israeli
settlement policy, but clearly in-
tended to tip the peace process to-
ward the Palestinians. Its adoption
wasnt pretty. But, sadly, it was pre-
dictable.
Mr. Obamas refusal to use Wash-
ingtons veto was more than a
graceless parting gesture. Its conse-
quences pose major challenges for
American interests. President-elect
Donald Trump should echo Ambas-
sador Daniel Patrick Moynihans de-
fiant and ringing 1975 response to
the U.N.s Zionism is racism reso-
lution: that America does not ac-
knowledge, it will not abide by, it
will never acquiesce in this infa-
mous act.
Mr. Obama argues that Resolution
2334 continues a bipartisan Ameri-
can policy toward the Middle East. It
does precisely the opposite. The
White House has abandoned any
pretense that the actual parties to
the conflict must resolve their dif-
ferences. Instead, the president has
essentially endorsed the Palestinian
politico-legal narrative about terri-
tory formerly under League of Na-
tions mandate, but not already un-
der Israeli control after the 1948-49
The Midnight Push to Empty Out Guantanamo
By Ed Royce
W
ith less than a month re-
maining in office, President
Obama is racing to free 19
more detainees from the terrorist
prison at Guantanamo Bay. If history
is any guide, this means that danger-
ous jihadists will be released to
countries ill-equipped to handle
them.
While many wondered whether
Mr. Obama would fulfill his 2008
campaign promise to close Gitmo by
breaking a bipartisan law barring
him from bringing detainees to the
U.S., the House Foreign Affairs Com-
mittee has remained focused on the
presidents push to empty out the
prison through reckless transfers to
other countries.
We began our investigation two
years ago, after the White House re-
leased six hardened terrorists to Uru-
guay. The administration had repeat-
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for what happened three-quarters of
a century ago. Since returning to
power at the end of 2012, Mr. Abe
has steadily transformed Japans se-
curity policies, shedding some of the
restrictions imposed on Tokyo by
Gen. Douglas MacArthur during the
U.S. occupation. These controversial
moves, which allow Japan to engage
in collective self-defense with other
nations, have been paralleled by
steady, if modest, increases in the
countrys defense budget, and by the
forging of new security relationships
in Asia and beyond.
Just as dramatically, to ensure that
he carries through his plans, Mr. Abes
ruling Liberal Democratic Party
changed longstanding rules to allow
him to stand for a third term. This
means that, barring unforeseen cir-
cumstances, hell be in office through
2021. He will likely be the only Japa-
nese leader whom Mr. Trump encoun-
ters during his first term. Mr. Abe
hopes to have as strong relations with
Americas new president as he has had
with the current one.
After suffering through three one-
year Japanese premiers in a row, Mr.
Obama has now had four years of
working with Mr. Abe. Despite differ-
ent political ideologies, they deep-
ened an alliance that already was be-
coming more important due to
worsening relations with China and
the continuing North Korean nuclear
challenge.
Obamas Parting Betrayal of Israel
war of independence.
Resolution 2334 implicitly repeals
the iconic Resolution 242, which af-
firmed, in the wake of the 1967 Six-
Day War, that all affected nations,
obviously including Israel, had a
right to live in peace within secure
and recognized boundaries free from
threats or acts of force. It provided
further that Israel should withdraw
from territories occupied in the re-
cent conflictbut did not require
withdrawal from the or all terri-
tories, thereby countenancing less-
than-total withdrawal. In this way
Resolution 242 embodied the land
for peace theory central to Amer-
icas policy in the Middle East ever
since.
By contrast, Resolution 2334 re-
fuses to recognize any changes to
the [1967] lines, including those
with regard to Jerusalem, other than
those agreed by the parties through
negotiations. This language effec-
tively defines Israels borders, even
while superficially affirming direct
talks. Chatter about Israeli-Palestin-
ian negotiations is nothing but a
truism, equally applicable to the U.S.
and Canada, or to any nations re-
solving trivial border disputes.
There can be no land for
peacewith Israel retroceding ter-
ritory in exchange for peace, as in
the 1979 Camp David agreement
with Egyptif the land is not legiti-
mately Israels to give up in the first
place. Anti-Israel imagineers have
used this linguistic jujitsu as their
edly promised Congress that it
transfers detainees to foreign coun-
tries only after securing specific as-
surances about how those countries
will reduce threats. Meanwhile, the
administration wrote Uruguays presi-
dent that none of the detainees had
ever been involved in facilitating or
conducting terrorism. Both Congress
and the Uruguayan government were
misled.
Uruguay proved to be a terrorist
haven. Under Uruguayan law, its gov-
ernment was prohibited from moni-
toring, surveilling or imposing travel
restrictions on the former detainees
because of the refugee status it
gave them. Not surprisingly, one of
these individualsa trained al Qaeda
document forgersoon went miss-
ing, fleeing abroad.
The case in Uruguay was not iso-
lated. The White House has repeat-
edly released detainees to countries
it knew lacked the intent and capa-
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OPINION
Japanese Prime Minister Shinzo Abe arriving in Honolulu.
Their working relationship al-
lowed Mr. Obama to visit Hiroshima
earlier this year, the first sitting
U.S. president to do so. While offer-
ing no apology, Mr. Obama stressed
the importance of the U.S.-Japan re-
lationship and the necessity of
avoiding the mistakes of the past.
Mr. Abes visit to Pearl Harbor book-
ends the Hiroshima visit, formally
closing the books on the events that
began and ended World War II in
the Pacific. It is a mark of their rela-
tionship and Mr. Abes media savvy
that he will likely be the last foreign
central tactic since 1967, trying to
create facts on the ground in the
U.N.s corridors rather than by actu-
ally negotiating with Israel. Mr.
Obama has given them an indefinite
hall pass.
The Trump administration could
veto future Security Council mea-
sures that extend Resolution 2334
(e.g., purportedly recognizing a Pal-
estinian state). Mr. Trump could also
veto efforts to implement Resolution
in which the search for Middle East
Trump must ensure there
are consequences for
supporting U.N. Security
Council Resolution 2334.
2334 (e.g., the sanctions for what it
calls Israels blatant violation under
international law). Still, there are
significant dangers. Other U.N. bod-
ies, such as the General Assembly
and the numerous specialized agen-
cies where America has no veto, can
carry Resolution 2334 forward.
Even more perilous is that indi-
vidual nations or the European
Union can legislate their own sanc-
tions under Resolution 2334s provi-
sion that all States should distin-
guish in their relevant dealings
between Israels territory and the
territories occupied since 1967. This
is a hunting license to ostracize Is-
rael from the international economic
bility to keep the detainees from re-
turning to terrorism.
The results have been deadly. At a
March hearing, the administrations
special envoys for Guantanamo Bay
closure admitted for the first time
that as many as 12 former Gitmo de-
tainees have returned to the terror-
ist battlefield and killed Americans.
The list of countries to which they
had been released is classified.
In July the State Department
named a former detainee a specially
designated global terrorist after re-
ports of his involvement in the June
terror attack at Istanbuls Atatrk
Airport. He had been released to
Russia.
According to the office of the di-
rector of National Intelligence,
nearly one-third of the detainees
freed from Gitmo208 of the 693
detainees who were released under
Presidents Bush or Obamaare con-
firmed or suspected of returning to
terrorism.
Consider Tariq Al-Sawah, released
to Bosnia in January. Al-Sawah liter-
ally wrote the book on bomb-making
for al Qaeda. He reportedly was an
Notable & Quotable
From Simon Napier-Bells 2005
memoir Im Coming to Take You to
Lunch: A Fantastic Tale of Boys,
Booze, and How Wham! Were Sold to
China on the groups 1985 concert in
Beijing:
The concert was confirmed but
wed forgotten about the cost.
To do this concert we had to pay
for everythingfrom the hire of the
concert hall to the cost of printing
the ticketsyet we had to donate the
income from ticket sales to a Chinese
charity. There would be diplomatic
banquets to welcome the group and
Wednesday, December 28, 2016 | A11
ASSOCIATED PRESS
leader Mr. Obama meets while in
office.
More important, Mr. Abe is now
bridging to the Trump administration.
He was the first foreign leader to meet
Mr. Trump, flying to New York City
only a week after the election. He
hopes to convince Mr. Trump to re-
main engaged in the Pacific and to ac-
cept that the only way to deal with
common challenges is to work more
closely together. Economic issues,
such as a bilateral trade pact in place
of the Trans-Pacific Partnership, will
come up at some point.
system, exposing it and its citizens
to incalculable personal and finan-
cial risk.
Once in office, President Trump
should act urgently to mitigate or
reverse Resolution 2334s conse-
quences. Mr. Obama has made this
significantly harder by rendering
America complicit in assaulting Is-
rael. Nonetheless, handled properly,
there is an escape from both the cur-
rent danger zone and the wasteland
the Palestinians, the principal in-
peace has long wandered.
First, there must be consequences
for the adoption of Resolution 2334.
The Trump administration should
move to repeal the resolution, giving
the 14 countries that supported it a
chance to correct their error. Na-
tions that affirm their votes should
have their relations with Washing-
ton adjusted accordingly. In some
cases this might involve vigorous
diplomatic protests. But the main
perpetrators in particular should
face more tangible consequences.
As for the United Nations itself, if
this mistake is not fixed the U.S.
should withhold at least its assessed
contributions to the U.N.which
amount to about $3 billion annually
or 22%-25% of its total regular and
peacekeeping budgets. Meanwhile,
Washington should continue funding
specialized agencies such as the
World Health Organization and the
International Atomic Energy Agency,
if only to dissuade them from enter-
ing the Resolution 2334 swamp.
associate of Osama bin Laden who
had knowledge of the 9/11 attacks in
the U.S.
After receiving a tip that the
Obama administration was trying to
pay Al-Sawah $100,000, I sent two
staffers to Sarajevo in August and
Nearly a third of the 693
detainees who have been
released are believed to
have returned to terrorism.
October to look into this report.
They found that Bosnias limited se-
curity services are already being
overwhelmed as scores of Bosnian
fighters return from the war in
Syria, and mosques with radical for-
eign supporters grow in influence.
Making matters worse, the country
also has the worlds highest youth
unemployment rate.
This is the place where Al-Sawah
the bomb-maker was dropped in the
dead of January, with no coat, and in
facilities would be provided for the
worlds press. The Chinese would de-
cide how much to spend on all these
things but it was Wham! who would
foot the bill. On top of this there
would be the normal cost of taking a
major rock group and its equipment
to a country on the other side of the
world where nothing could be hired
locally. The entire trip had to be fi-
nanced by Wham! themselves. . . .
So we called Paul Russell, the new
managing director of CBS, Can we
borrow five hundred thousand dol-
lars, please? We need it by tomorrow
morning.
Japans role in the Pacific is likely
to increase as Mr. Trump finds that
Americas traditional allies in Asia
are less reliable. South Koreas new
president will probably come from
the countrys far left; Australia has
bowed out of freedom-of-navigation
operations in the South China Sea.
Meanwhile, Philippine President Ro-
drigo Duterte remains an unpredict-
able wild card who is drawing closer
to China. Mr. Abe is sure to stress
that Japan remains the one partner
Mr. Trump can rely on.
Such reliance will be needed as
Mr. Trump decides how far to chal-
lenge China. The president-elects
phone call with Taiwans leader, his
hard line on trade, and his linking of
economic and security issues pres-
ages a rockier period ahead for U.S.-
China ties. Mr. Trump may well be
asking Japan for more support, such
as increased maritime operations in
Asia.
Mr. Abe knows this, and even as
he offers prayers in Pearl Harbor for
those who died on that Sunday morn-
ing in 1941, he will be saying one for
the future strength of his relation-
ship with Americas new leader.
Mr. Auslin is the author of The
End of the Asian Century: War, Stag-
nation, and the Risks to the Worlds
Most Dynamic Region, forthcoming
in January from Yale University
Press.
Second, Mr. Trump should unam-
biguously reject Mr. Obamas view
that Resolution 2334 is justified to
save the two-state solution. That
goal, at best, has been on life-sup-
port for years. After Mr. Obamas
provocation, its life expectancy
might now be only until Jan. 20.
And good riddance. This dead-end
vision, by conjuring an imaginary
state with zero economic viability,
has harmed not only Israel but also
tended beneficiaries.
Far better to essay a three-state
solution, returning Gaza to Egypt
and giving those parts of the West
Bank that Israel is prepared to cede
to Jordan. By attaching Palestinian
lands to real economies (not a make-
believe one), average Palestinians
(not their political elite), will have a
true chance for a better future.
Other alternatives to the two-state
approach should also be considered.
Mr. Obama loves using the word
pivot for his ever-changing priori-
ties. It is now up to Mr. Trump to
pivot away from his predecessors
disastrous policies on Israel. Taking
up the challenge will be difficult, but
well worth the effort for America
and its friends world-wide.
Mr. Bolton is a senior fellow at the
American Enterprise Institute and au-
thor of Surrender Is Not an Option:
Defending America at the United Na-
tions and Abroad (Simon & Schuster,
2007).
poor health. Even if he could manage
to find legitimate employment, he
does not have legal status in Bosnia
to take it. The family member he was
released to is also unemployed and
struggling to make ends meet. Why
wouldnt he sell his terrorist skills?
As to the money, Bosnian officials
say that the State Department dis-
cussed, in multiple meetings, making
a direct payment to Al-Sawah of
$100,000. U.S. embassy staff deny
there was ever any agreement to pay
Al-Sawah, and maintain that no
funds have been sent to him directly
or indirectly. U.S. staff notes from
the meetings in question were con-
veniently shredded.
Administration stonewalling on
Gitmo releases is hardly new. The
White House refuses to provide the
transfer agreements that would de-
tail whatif anypromises and as-
sistance are being provided to coun-
tries accepting detainees. The
administration has routinely used
such classified notices to shield in-
formation about detainee releases
from public scrutiny. The American
people are often the last to learn
when these dangerous terrorists are
released.
On Jan. 20, we have an opportu-
nity to chart a better way. The
prison at Guantanamo Bay should
continue to serve as a secure, hu-
mane location for holding dangerous
terrorists. And it is an appropriate
location at which to detain and ques-
tion new high-value individuals cap-
tured in our continuing fight against
radical Islamist terrorism.
Mr. Obamas midnight push to
empty out Gitmo will not make
America safer. His administration
ought to use these final weeks to fix
its Al-Sawah mess in Bosnia respon-
sibly and quickly.
Mr. Royce is chairman of the
House Foreign Affairs Committee.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Wednesday, December 28, 2016 THE WALL STREET JOURNAL.

LIFE & ARTS

WORK & FAMILY | Sue Shellenbarger

Facing Up to the Worst Job Market

THE UNLUCKY COLLEGE class of ments in maternity leave and
2009 graduated into the worst job scheduling flexibility. Mr. Di-
market in decades. Many of its Napoli says the presentation
members have never caught up, changed Ms. Foxs trajectory in
and remain stuck in low-paying, the organization, positioning her
dead-end jobs. for advancement.
Katlin Fox, 29, represents a ray
of hope for people her age. A mem- The Implementation
ber of the University of Rhode Is- When Mr. DiNapoli was promoted
lands Class of 09, shed wanted to in 2014 to corporate chief operat-
join a marketing team doing cre- ing officer and general manager of
ative projects. Suffolks fast-growing Western op-
Instead, she took the only job erations, he says, I wanted my
she was offeredas an executive wing man with me for the move
assistant. to Los Angeles.
By taking on projects no one But when he offered Ms. Fox a
wanted and even turning down a promotion, to office manager
promotion, she has since skipped there, she turned it down.
two rungs on the career ladder and That was a huge moment for
landed a job in middle manage- me, Ms. Fox says. She had to have
ment. Heres how she did it: another bathroom-mirror chat
with herself to work up the cour-
The Problem age to say no.
Ms. Fox was swamped by tactical When she told Mr. DiNapoli her
details in her job as an executive new goal, to work in human re-
assistant, managing email and sources, he says, I recognized this
scheduling for Mark DiNapoli, a re- was the day wed been talking
gional executive at Boston-based about for several years, when she
Suffolk Construction Co. would move on.
She knew nothing about con- The company offered Ms. Fox a
struction. Her first visits to build- new West Coast human-resources
ing sites were daunting, she says. management job and she soon ac-
She often attended meetings with After college, Katlin Fox took on jobs cepted, netting a 13% raise and a
Mr. DiNapoli to help manage fol- at a construction company that no berth in middle management.
low-up tasks, but hesitated to one else wanted before landing a
speak. position as an HR specialist. Right, Ms. The Outcome
She knew shed need new skills Fox with her first boss, Mark DiNapoli. Ms. Fox calls her first months on
to move up. the new job a rude awakening. She
Mr. DiNapoli began inviting her realized she lacked needed skills
The Solution to share her insights in meetings. and took professional courses to

EMILY BERL FOR THE WALL STREET JOURNAL

Mr. DiNapoli knew Ms. Fox had He also asked her to run meetings fill the gap.
aspirations for something bigger, of a 20-member committee on She has grown comfortable on
he says. employee work-life benefits when construction sites, donning steel-
With Mr. DiNapolis help, she he wasnt able to attend. Mr. Di- toed boots and a hard hat to work
asked for new projects and took Napoli says he and his committee at field offices when needed. Her
whatever came her wayincluding co-chair, Chief People Officer Kim manager, Ed Cunningham, says,
some no one else wanted. She led Steimle Vaughan, decided to let Employees feel comfortable shar-
Suffolks drive to make the office Katlin run with it a little bit and ing things with her, and thats
more environmentally friendly, re- help them present the recommen- something you cant really coach
vised the companys operations dations to Suffolks executive someone to learn.
manuals and ran an employee-well- committee, including CEO John And she has started a womens
ness program. In the process, she Fish. network for Suffolks Los Angeles
set a new goal, to work in human When Ms. Fox arrived at the of- looked in the mirror in the presentation, Ms. Fox gave em- employees.
resources. fice early on the day of the presen- womens restroom and gave her- ployee focus-group and survey re- The company supports women
Noticing that Ms. Fox had re- tation to brief Mr. DiNapoli, he self a pep talk, saying, I can do sults and asked senior executives, who want to advance, she tells
ally high emotional intelli- broke the news. this. This is not the time to be What could you do to make colleagues, but you have to take
gencea keen sensitivity to oth- It was very, very intimidating, scared. things better? she says. The the initiative to find new opportu-
ers body language and emotions Ms. Fox says. As she prepared, she After Mr. DiNapoli opened the committees work led to improve- nities for yourself, too.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are todays noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 65 Gallic girlfriend 26 Group of wise
-10 guys?
-5 13 14 15 66 Corp. honchos
0 29 Baseballer
16 17 18 67 Instrument for
5 Bando
Beijing Orpheus
10 19 20 21 30 1963 role for Liz
Seoul 68 Quibbles
T ky
Tokyo 15
22 23 24 25 26 33 Dimwit
20 Down
New D
Delhi
h h gh
Shanghai 25 35 Hardly relaxed
Taipei
Ta p
27 28 29 30 31 1 Gallivant
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Karachi
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lk
Kolkata
32 33 34 35 2 Theyre not 37 Bud
35
Hong Kong
ong Kon company men
Hanoi 38 Liberates
Bangkok
Ban k k 36 37 38
Warm 3 Right away 39 Calls
Manila
NOCK-TEN 39 40 41 42 43 44 45 46 counterpart
Cold 4 Turn on the
Kuala
la LLumpur
p
Stationary 47 48 49 50 waterworks 40 Monotonous
Singapore
p
51 52 53 54 5 Like the Arctic 41 Fezs place
Showers
JJakarta
k 6 Big klutz
55 56 57 58 59 44 Crane-creating
Rain art
60 61 62
7 Play portions
T-storms 8 Breaking Bad 45 Two thumbs
63 64 65
product up!
Snow
66 67 68 9 The King of Pop, 46 Those to keep
Sydney
yd eyy Flurries in tabloids closer
b
Melbourne
Ice CRIME WAVE | By Debbie Ellerin 10 Welcomed at 48 Turn over
Global Forecasts City
Today
Hi Lo W
Tomorrow
Hi Lo W City
Today
Hi Lo W
Tomorrow
Hi Lo W
Across 22 Go to bat for 43 Builder of a the door 49 Veiled dancer
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 First of two somebody hanging nest 11 Cabbys query 52 Guru Granth
Geneva 6 -2 s 5 -2 pc Ottawa -7 -11 c -2 -5 sn
t...tstorms; r...rain; sf...snow flurries; sn...snow; i...ice Hanoi 22 12 s 23 13 s Paris 8 -2 pc 6 -3 pc choices 25 Surfing 47 Game akin to 12 Finalized Sahib followers
Havana 30 17 s 29 16 s Philadelphia 6 -1 pc 6 1 r equipment Crazy Eights
Today Tomorrow Hong Kong 17 13 c 16 15 c Phoenix 21 9 pc 23 12 pc
5 Porters head 14 Dull as 54 Gorilla skilled in
City Hi Lo W Hi Lo W Honolulu 27 21 sh 26 19 c Pittsburgh 4 0 pc 4 -3 c 9 Youre gonna 27 Yellow 48 Middling mark dishwater sign language
Amsterdam 7 -1 c 5 -1 pc Houston 26 19 c 19 6 pc Port-au-Prince 34 20 s 33 20 s Submarine
Portland, Ore. 7 1 c 7 3 r
need a bigger 50 Zac of 18 Brand sold at 56 And others,
Anchorage -2 -15 pc -5 -10 pc Istanbul 6 2 r 5 1 sn singer
Athens 10 1 s 7 3 c Jakarta 30 25 t 31 25 t Rio de Janeiro 36 25 s 35 26 s boat movie Neighbors PetSmart briefly
Atlanta 19 14 c 15 1 sh Johannesburg 24 15 t 24 14 t Riyadh 26 9 pc 24 11 s 13 Biggest Little 28 Deejays
Rome 14 3 s 12 0 s 51 Far from windy 20 Intentionally 57 With skill
Baghdad 16 4 s 16 7 pc Kansas City 9 -1 s 6 -5 s collection
Baltimore 7 -1 s 7 -1 r Las Vegas 13 5 s 15 6 s Salt Lake City 1 -8 c 0 -7 s City in the
53 Break lost 60 Chest muscle,
Bangkok 30 19 s 30 22 s Lima 26 20 c 27 20 pc San Diego 22 10 s 23 13 pc World 31 Skater Midori
23 Like Gala apples for short
Beijing 3 -13 s 1 -12 s London 7 1 s 8 1 pc San Francisco 14 7 s 15 7 s 55 Havent the
Berlin 6 2 c 5 -2 pc Los Angeles 24 11 s 24 13 pc San Juan 30 24 s 30 24 s
14 Shore up 32 Gets a glimpse
foggiest 24 Toddlers 61 Trireme tool
Bogota 20 8 r 20 8 pc Madrid 14 0 s 13 -1 pc Santiago 32 14 s 29 14 s 15 U.S. Open of
Boise -2 -11 pc -3 -13 pc Manila 32 25 pc 32 25 pc Santo Domingo 31 21 s 30 21 s
stadium name 58 ___ Gatos punishment 62 Solo in space
Boston 5 -1 s 5 0 sn Melbourne 30 23 t 29 20 sh Sao Paulo 33 21 t 33 21 s 34 Bad start?
Brussels 5 -1 c 5 -1 pc Mexico City 23 8 s 23 10 s Seattle 7 4 c 8 2 r 16 Oman man, 59 Rock in a band Previous Puzzles Solution
Buenos Aires 28 17 pc 29 18 s Miami 28 20 pc 29 18 pc Seoul 0 -6 pc 0 -9 s 35 Pretentious
most likely person 60 Compact A P E G T S A S H E S S
Cairo 18 11 s 18 9 pc Milan 9 0 s 7 -1 s Shanghai 8 0 c 8 2 pc M E N O R A H L E A F L E T
Calgary -1 -10 pc -2 -7 pc Minneapolis 1 -4 pc -1 -7 sf Singapore 31 24 c 31 24 c 17 Mountain pass container I N S MO K E L A J O L L A
Caracas 30 24 pc 30 24 pc Monterrey 26 14 pc 24 9 c Stockholm 1 -3 pc 5 3 c 36 Reject nowadays, AWE M E N L I L Y
Charlotte 17 8 pc 17 2 r Montreal -4 -10 pc -1 -3 sn Sydney 30 23 pc 37 24 pc 19 Precursors to and a hint to the 62 ___ but known... B I R T H D A Y C A K E S
B I C H E E D E L S
Chicago 6 -1 pc 2 -3 c Moscow -2 -5 c -3 -8 c Taipei 18 16 r 18 16 c texts puzzles theme
Dallas 25 8 c 14 2 pc Mumbai 33 16 pc 33 17 pc Tehran 11 1 r 13 4 s
63 Make a fine A J A R A C E A O R T A
R OMA N T I C D I N N E R S
Denver 7 -6 pc 7 -2 s Nashville 15 7 r 10 1 pc Tel Aviv 17 10 pc 17 10 pc 20 Identify on 39 Showy pageantry impression S U E D E L O G G R I P
Detroit 3 0 pc 3 -3 sf New Delhi 23 9 pc 23 10 pc Tokyo 9 3 s 12 3 pc Instagram, say 42 Andy Warhol 64 San Antonio
I C Y EW E S U P S
J A C K O L A N T E R N S
Dubai 27 19 s 27 19 s New Orleans 24 18 c 18 6 c Toronto 0 -3 pc 2 -4 sn J A V A MA R T R E
Dublin 9 4 s 9 7 s New York City 6 0 s 7 1 r Vancouver 5 2 r 6 1 r 21 Bartenders tool portrait subject landmark AMA L G AM T H E N I L E
Edinburgh 9 3 c 9 7 s Omaha 7 -2 pc 5 -6 s Washington, D.C. 9 2 s 9 1 r W I N S OM E C A N D L E S
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 7 1 c 6 -2 pc Orlando 28 17 pc 27 8 pc Zurich 4 -4 c 2 -4 pc S E T P A R U T A L O P

2016 Dow Jones & Co. Inc. All rights reserved. 6DJ4575

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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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BUSINESS & FINANCE
2016 Dow Jones & Company. All Rights Reserved.
Yen vs. Dollar 117.5140 0.37%
MPSs Financial Plight Worsens
BY DEBORAH BALL
MILANMonte dei Paschi
di Siena has a far bigger hole
in its balance sheet than previ-
ously calculated, according to
the European Central Bank,
significantly raising the
amount the Italian govern-
ment has to deploy to rescue
the troubled lender.
The ECB told Monte dei
Paschi that its capital shortfall
was 8.8 billion ($9.19 billion),
far higher than the 5 billion
expected when the Italian gov-
ernment organized a rescue of
the countrys No. 3 lender last
week. The higher amount re-
flects a serious decline in the
Japans
Struggle to
Lift Wages
Despite a slew of mone-
tary and fiscal maneuvers to
boost growth, Japanese pol-
icy makers are still caught in
a bind: The labor market is
tight but pay isnt growing.
The ultimate measure of
whether Japans efforts to
restart sus-
HEARD ON tainable
THE STREET growth is
ANJANI whether
TRIVEDI workers are
earning
moreand
spending more. Yet despite
three years of unorthodox
stimulus, Japans wage
growth remains slow.
Intricacies of Japans
economy continue to con-
found policy makers. Condi-
tions for higher wages are
ripe: The labor market is at
its tightest in years, meaning
each worker effectively has
almost two job offers and
higher bargaining power that
comes with it. The unem-
ployment rate is at its lowest
in two decades, and a
Trump-induced weak yen
should bolster corporate
earnings and bonuses.
Yet wage growth isnt
budging. Despite talk of an
aging population and shrink-
ing workforce, Japan has
managed to bring more
workers into its labor force.
This was long seen as a solu-
tion to Japans problems, but
may be complicating efforts.
Credit to Prime Minister
Shinzo Abe, female labor-
force participation has risen
to 67%, the portion of non-
regular or part-time employ-
ees has climbed and older
people are slowly coming
back to work, according to
Oxford Economics. These
workers, though, all have be-
low-average wages.
Japans economy has hit a
base paywall effectively, as
Nomura analysts call it. With
low economic growth, com-
panies arent sure they can
keep paying workers more
and trade unions would
rather keep low pay and sta-
ble jobs than have their com-
panies profits hit. Workers
arent trading up when it
comes to salaries in Japans
heavily regulated job market.
Meanwhile, policy incen-
tives remain muddled. While
more women are in the
workforce, a special spousal
tax deduction means women
predominantlycontinue
to be incentivized to work
fewer hours, so that they can
be eligible for the deduction.
A social-security policy
forces pension contributions
for workers putting in more
than 20 hours a week but has
deterred workers from put-
ting in more hours and has
lowered pay. But Japans la-
bor law makes concessions
for trade unions and employ-
ers to circumvent the legal
cap on working hours.
The Bank of Japan, in its
latest assessment, said the
economy is seeing a moder-
ate expansion, but consumer
price growth is likely to be
negative or zero. Until Japa-
nese policy makers take to
disentangling the labor mar-
ket, the everyday Japanese
wont be spending much.
TECHNOLOGY: IN AFRICA, A HOMEGROWN RIVAL TAKES ON NETFLIX B3
Hang Seng (21574.76) Closed
banks financial health during
the months in which Monte
dei Paschi and the Italian gov-
ernment have struggled to
find a solution to its problems.
Indeed, Monte dei Paschi
said the central bank warned
of a rapid deterioration of
its liquidity position over just
the past month. The bank has
seen large outflows of depos-
its as it struggled in recent
months to raise capital to
meet an end-of-year deadline
set by the ECB to shore up its
balance sheet.
The need to raise 5 billion
emerged from European stress
tests, released last summer,
which found that the banks
A New Front in Chinas Tech Wars Ireland
Chinese web firms
go head-to-head
in neighboring region;
challenges await
BY LIZA LIN
SINGAPOREA new battle-
ground is emerging for Chinas
internet companies: a fast-
growing market with almost
double the U.S. population.
As Beijing grapples with a
slowing economy, the coun-
trys top technology companies
are spending aggressively to
expand in Southeast Asia,
home to 620 million people.
The region is becoming an im-
portant growth area for Ali-
baba Group Holding Ltd.,
Tencent Holdings Ltd., ride-
hailing firm Didi Chuxing
Technology Co. and e-com-
merce company JD.com Inc.,
as they expand in online retail-
ing and mobile payments.
Alibaba and Tencent have
led deals with a combined
value of more than $1 billion
to advance their e-commerce,
logistics and social-network
businesses. Southeast Asia is
the third-largest region for
Chinas outbound tech mergers
and acquisitions this year, be-
hind Europe and North Amer-
ica, with $1.9 billion in deals,
compared with $193 million
DARREN WHITESIDE/REUTERS
last year, according to Dea-
logic. Industry executives say
Chinese tech investments are
likely to accelerate.
What we have learned in
China, we can apply the fastest
in Southeast Asia, Poshu Ye-
ung, vice president of Ten-
cents international business,
said in an interview. Every-
thing in Southeast Asia, partic-
ularly in Indonesia, you will
experience a pretty good
growth rate.
Southeast Asias $2.5 tril-
lion economy is attractive for
its growing incomes and rates
of smartphone ownership. Re-
search firm eMarketer projects
smartphone users in the six
Chinese Firms Travel for Faster IPOs
BY CHAO DENG
BEIJINGInternet finance
company Jiayuan Network
Co. recently moved its legal
domicile from the city of
Qingdao on Chinas east coast
nearly 1,860 miles west to
Lhasa on the Tibetan plateau.
One big reason: a chance at a
quicker stock listing.
Chinese companies often
have to wait several years for
their initial public offerings.
But after the September intro-
duction of a new rule to fast-
track IPOs in poor parts of the
country, some applications are
starting to speed through. In
struggling Lhasa, where dis-
posable income is roughly half
that of Shanghai, two compa-
niesa drugmaker and a
state-owned producer of ex-
plosiveshad their listings ap-
proved in a matter of months.
Now a number of Chinese
companies like Jiayuan Net-
work are moving their legal
headquarters to take advan-
tage of the rule. For example,
cashmere maker Dehong In-
ternational Cashmere Co.
said in October that it moved
its legal home to a county a
THE WALL STREET JOURNAL.
Gold 1138.10 0.55%
capital position would be se-
verely compromised in an eco-
nomic downturn. The ECB or-
dered Monte dei Paschi to
raise that amount as part of a
broader operation aimed at
unloading nearly 30 billion in
bad loans.
However, those stress tests
were based on the banks fi-
nancial situation at the end of
2015. Since then, Monte dei
Paschis financial health has
deteriorated further, as the Si-
ena-based bank attempted to
find a way to raise the neces-
sary capital from private in-
vestors. Meanwhile, the Italian
government was extremely re-
luctant to launch a rescue of
China's Internet Giants Battle in Southeast Asia
As growth slows at home, Chinese tech companies are ramping up their investments in the region.
TENCENT
Tencent invested in Garena
Interactive Holding,
a Singapore-based startup
valued at $3.75 billion.
Tencent says it is looking to
broaden its payment
network in Malaysia and
Indonesia.
Source: staff reports Photos: Bloomberg News (Tencent); Reuters
A Lazada warehouse in Jakarta, Indonesia. Chinas Alibaba acquired the online retailer in April.
largest regional economies will
exceed 257 million by 2020,
more than the 241.5 million us-
ers projected for the U.S.
Alibabas $1 billion acquisi-
tion of online retailer Lazada
Group in April gave the com-
pany instant access to six mar-
kets: Indonesia, Thailand,
Singapore, Malaysia, the Phil-
ippines and Vietnam. Lazada
Offerings From Poorer Parts
Coastal provinces Guangdong, Zhejiang and Jiangsu had
more than 100 IPO applicants each as of Dec. 22,
while 16 Chinese provinces have ve or fewer.
Number of IPOs
150
50
5 from the fast-track rule since
CHINA
Source: WSJ analysis of
China Securities Regulatory Commission data
THE WALL STREET JOURNAL.
few hours drive away, in the
remote and sparsely populated
province of Ningxia.
Securities regulators in
China keep tight control over
the IPO market, which has led
to a yearslong logjam of appli-
cations. The China Securities
WTI crude 53.85 1.57% 10-Year JGB yield 0.065%
the bank because any public
bailout requires private inves-
torsincluding tens of thou-
sands of mom-and-pop inves-
tors who bought Monte dei
Paschis bondsto suffer
losses.
Last week, the government
finally approved the creation
of a new 20 billion fund to
help support Italys struggling
banks, with the largest portion
set aside for Monte dei Paschi.
The new fund was expected
to cover about 3 billion of
the money Monte dei Paschi
needed, following 2 billion in
losses on the face value of
some junior bonds held by in-
stitutional investors. The ju-
ALIBABA
Alibaba bought Singapore-based
e-commerce rm Lazada Group
in April, expanding its regional
reach and gaining access to an
extensive logistics network to
deliver parcels across Southeast
Asia. Alibaba also invested in
Thailand's Ascend Money.
gave Alibaba access to a wide
logistics network to deliver
parcels ordered by Southeast
Asian consumers on Alibabas
Chinese platforms.
Singapore-based Lazada im-
proved its technology and lo-
gistics operations after send-
ing at least 100 of its
employees to Alibabas head-
quarters for knowledge-shar-
Beijing
J IAN G SU
ZHEJIANG
GUAN G DO N G
Regulatory Commission has
accelerated approvals since
the summer, but as of Dec. 22,
there were still 676 companies
waiting to have their IPO plans
approved, according to data
from the regulator.
As a result, Chinese compa-
Wednesday, December 28, 2016 | B1
10-Year Treasury yield 2.568%
nior bonds would take losses
in line with new European
Union rules covering bank res-
cues, which require that inves-
tors take at least some impact.
Now, given the larger capital
shortfall, the fund will likely
have to use 6.5 billion to help
Monte dei Paschi.
Early Tuesday, Italian regu-
lator Consob ordered Monte
dei Paschis shares to be sus-
pended until further notice in
light of the greater shortfall.
The shares were also sus-
pended on Friday after news
of the planned government
bailout.
Tom Fairless
contributed to this article.
DIDI CHUXING
Didi, a ride-hailing rm that
this year acquired Uber
Technologies' China unit,
invested in Singapore-based
Grab, another ride-hailing app.
Grab is valued at roughly
$3 billion.
THE WALL STREET JOURNAL.
ing expeditions, said Maximil-
ian Bittner, its chief executive.
Lazada also attracted several
international brands, such as
Unilever PLC and Mattel Inc.,
to open retail storefronts on
its website after introductions
by Alibaba.
Shenzhen-based Tencent
jumped in by investing in
Please see WEB page B3
nies have had to get creative.
Many have pursued backdoor
listings through already-public
firms that are heading over-
seas for IPOs.
The China Securities Regu-
latory Commission declined to
comment and didnt respond
to questions on how many
companies have benefited
it went into effect. The drug-
maker that got its IPO ap-
proved, Tibet AIM Pharma
Inc., has a project in Lhasa,
where it is legally registered
but keeps its production cen-
ter in Sichuan, a province al-
most 1,300 miles away.
Lawyers and analysts say
the rule, which is part of the
central governments broader
poverty-alleviation efforts,
may not be very effective. It
uses a list of 832 counties that
the government labels as poor,
based on criteria like income
per capita. The list was com-
piled in the 1980s and has
been updated just a few times
since.
The way the list was com-
piled has left some locations
out of play. Lanzhou, the capi-
Please see IPO page B2
Bigger Guns
Ireland is increasing spending on
its data-protection regulator, as
it takes on an outsized role in
Europe policing privacy issues.
8 million
6
4
2
0
2011 12 13 14 15 16* 17*
*Budgeted
Source: Ireland's Data Protection Commissioner
THE WALL STREET JOURNAL.
Privacy
CopSets
NewBeat
BY SAM SCHECHNER
DUBLINWhen chat service
WhatsApp last summer did an
about-face and started sharing
users personal information
with parent company Face-
book Inc., Irelands top pri-
vacy cop jumped into action.
Helen Dixon, Irelands data-
protection commissioner, acti-
vated a 10-person investiga-
tive unit she had created to
probe multinational tech
firms, and she pushed to coor-
dinate multiple probes across
Europe. She has since put both
Facebook and WhatsApp
through rounds of questioning
at her agencys new offices in
Dublin.
The case is one of the most
high-profile tests since the Eu-
ropean Union agreed on a new
law for regulating data-protec-
tion and privacy matters
across the continent, which
has long tilted toward stricter
rules than in the U.S.
While the law doesnt take
effect until 2018, it will even-
tually give tiny Ireland the au-
thority to hit companies with
big finesup to 4% of global
revenuefor violations. Other
EU countries will share the
same power, but Ms. Dixon
stands to take an outsize role
in the global debate over data-
protection and privacy issues
given the prominence of the
companies that have their Eu-
ropean headquarters in Ire-
landincluding giants like
Facebook, Apple Inc., Alphabet
Inc.s Google and Airbnb Inc.
We are effectively regulat-
ing the global rollout of the
products these companies pro-
pose, Ms. Dixon said in an in-
terview. The standards that
we set in Europe will influence
how data privacy is done
around the world.
That puts Ireland and its
data-protection chief in the
global spotlight. Ms. Dixon
two years ago took over an
agency that faced frequent ac-
cusations of industry bias. Ire-
land, after all, drew the
worlds tech darlings in part
because of its business-
friendly tax and governance
environment. Its tax treatment
of Apple is now the subject of
a policy tug of war between
Dublin and the EU.
Before Ms. Dixon took over,
Please see DIXON page B2
INSIDE
UNCERTAINTY
AHEAD FOR
CEOS
MANAGEMENT, B5
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 | Wednesday, December 28, 2016 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS NEWS

These indexes cite notable references to most parent companies and businesspeople
in todays edition. Articles on regional page inserts arent cited in these indexes.

A
Abercrombie & Fitch...B4
Alibaba Group.............B1
AlixPartners................B4
Amazon.com ............... B4
Amicus Therapeutics..B5
AMN Healthcare
Services.....................B5
Apache.........................B4
Apple...........................B3
B
F
Facebook......................B1
FedEx...........................B4
Fisher Custom HomesB9
G
Gansu Guofang Industry
& Trade (Group)........B2
Garena Interactive
Holding......................B3
Gilt Groupe Holdings..B4
Neiman Marcus Group
.....................................B4
Netflix.........................B3
Nomura Holdings........B7
Sing Hits Box-Office High Notes
BY ERICH SCHWARTZEL
Nordstrom...................B4
P Several new arrivals
Panasonic....................B4
couldnt knock Rogue One: A
Pioneer Natural Star Wars Story out of orbit
Resources..................B4
at the holiday box office.
R The Walt Disney Co. spinoff

ILLUMINATION ENTERTAINMENT/UNIVERSAL PICTURES/ASSOCIATED PRESS

Goldman Sachs Group Rakuten.......................B3 collected an estimated $96 mil-
Banco Bilbao Vizcaya ............................. B7,B10
Argentaria...............B10
S lion in the U.S. and Canada
GreenNovo
Banco Santander ...... B10 Six Flags Entertainment over the four-day weekend,
Environmental
Bank of America.......B10 Technology................B2 .....................................B5 bringing its two-week total to a
Barclays.......................B7 Skechers USA.............B5 hit $318 million. International
H SLM.............................B6
BB&T............................B7 grosses take the movies world-
Hudson's Bay..............B4 SolarCity......................B4
Boeing ....................... B10 wide total to $523.8 million.
C I Suffolk Construction A12 The strength of Rogue One
Chesapeake Energy .... B4 Illumination T helped the North American box
Chicago Bridge & Iron A2 Entertainment..........B2 Tencent Holdings...B1,B3 office pass the $11 billion mark
China Vanke................B9 J Tesla Motors...............B4 for 2016 on Monday, according
Citigroup..............B7,B10 J.C. Penney..................B4 Toshiba........................A1 to comScore, which is project-
Credit Suisse Group ... B7 J. Crew Group.............B4 U ing the industry to end the year
D JD.com.........................B1 Unilever.......................B1 at a record-setting $11.3 billion,
Dehong International Jiayuan Network ........ B1 United Parcel Service.B4 a 1.5% increase from 2015.
Cashmere..................B1 J.P. Morgan Chase W Of the new arrivals aimed at
Didi Chuxing Technology ........................ B6,B7,B10 Christmastime moviegoers, the
Walt Disney................B2
.....................................B1 JPMorgan Chase ............. animated comedy Sing per-
Westfield.....................B4
E N Westinghouse Electric formed the best. The latest fea-
Equilar.........................B5 Naspers.......................B3 .....................................A1 ture from Minions producer Sing, from Illumination Entertainment, stood out among new arrivals over the holiday weekend.
Illumination Entertainment

INDEX TO PEOPLE collected $56.1 million over the

A Flammer, Caroline.......B5
Allison, John...............B7
B G
Baer, Greg...................B7
Bannon, Steve ............ B7
Bansal, Pratima..........B5
Bo, Li...........................B2
C Hackland, Chloe..........B3
Calabria, Mark.............B7
Carpou, Nick................B2
Chenyang, Nie.............B2
Chew, James...............B7
Chubak, Steven...........B7
Clarke, Gary ................ B4
Cohn, Gary...................B7
D-F
Dixon, Helen................B1
Ervin, Wilson..............B7
Fox, Katlin.................A12
Gero, Malli .................. B5
Goldberg, Jason..........B7
Greenstein, Josh.........B2
H
Hatazawa, Mamoru....A2
Hensarling, Jeb...........B7
Hoenig, Thomas..........B7
L Thummel, Robert........B4
Liu, Richard.................B3
M van Dijk, Bob...............B3
Mnuchin, Steven.........B7
N Y
Nash, Nick...................B3
Nooyi, Indra.................B5
four-day weekend, and had a
six-day total of $76.7 million.
P Illumination has another
Peron, Matthew........B10 potential hit on its hands,
Pigott, Jason...............B4 coming five months after its
R previous release, The Secret
Life of Pets, collected $368
Reeves, Martin ........... B5 million in the U.S. and Canada.
Rissmiller, Don..........B10 Sing had a budget of about
S $75 million.
Its an excellent start,
Sobie, David................B4
said Nick Carpou, president of
Stevens, Alan ............. B4
domestic distribution at Com-
T
cast Corp.s Universal Pictures,
which distributes Illumination
V features.
Passengers, a space
VanErdewyk, Michael.B6
drama released by Sony
Corp.s Columbia Pictures and
starring Chris Pratt and Jenni-
Yeo, Michael................B3 fer Lawrence, came in a bit be-
Yeung, Poshu..............B1
low expectations with a six-
day gross of $30.4 million. But
the movie saw a surge in at-
tendance from Christmas Eve
to Christmas Day of about
164%, said Josh Greenstein,
Sonys president of world-wide
marketing and distribution. It
was an increase he attributed
to adults who spent the previ-
ous week preparing for the
holidays finally having the
time to head to the movies.
The Passengers opening
would normally be low given
its net budget of $110 million,
but the week between Christ-
mas and New Years often sees
grosses come in like a typical
weekend, thanks to vacations
from school and work. Movies
released over Christmas week-
end often perform much
stronger in subsequent weeks
than summer releases, which
can arrive with big numbers
before attendance falls.
Were just getting started,
said Mr. Greenstein.
Two new arrivals from
Twentieth Century Fox didnt
fare as well. Why Him?, a
family-relations comedy star-
ring Bryan Cranston and James
Franco, collected a healthy $16.7
million since opening Friday.
The studios videogame ad-
aptation Assassins Creed
disappointed with $22.5 mil-
lion over the six days, a paltry
showing for a movie that cost
$125 million to produce and ar-
rived with a built-in fan base.
Foxs parent company, 21st
Century Fox, and News Corp,
owner of The Wall Street Jour-
nal, share common ownership.
Fences, a film adaptation of
the August Wilson play starring
Denzel Washington and Viola
Davis and released by Viacom
Inc.s Paramount Pictures, col-
lected a soft $11.4 million over
the four-day weekend. The
drama is generating awards
buzz for its lead performers.
Several other awards con-
tenders hit theaters in limited
release, while one of the front-
runners for the Academy
Award for best picture, La La
Land, expanded to about 730
locations. The musical starring
Ryan Gosling and Emma Stone
has collected $17.6 million so
far.

Cancer Drugs Trials DIXON

Continued from the prior page
cross-border cases, and the
leader can be overruled. But
for now, in cases like Whats-
App, there is no formal lead
authority, and cross-border
Facebook in Europe pending
the outcome of the investiga-
tions opened in several coun-
tries.
There are skeptics of Ire-
said Johannes Caspar, privacy
commissioner in Hamburg,
Germany.
Ms. Dixon, who spent
nearly 11 years working for

On Hold After Deaths the privacy commissioner had

a single tiny office above a
small-town supermarket. She
collaboration is ad hoc.
For the moment, Ireland is
one among many, said Isa-
lands policing of corporate
practices. Irish data-protection
officials have long promoted
American corporations before
moving to the public sector in
2007, rejects the notion that
BY AUSTEN HUFFORD sulting in four deaths. has since doubled staff to 60 belle Falque-Pierrotin, Frances what they call an engaged ap- the agency has been a push-
Shares of Seattle Genetics with plans to reach nearly 100 privacy chief and the head of a proach to regulation. over through the years. She
Seattle Genetics Inc. said dropped 16% to $52.15 in mid- next year. Ireland boosted her pan-European advisory group Through frequent conversa- said that striking deals with
the U.S. Food and Drug Admin- day trading in New York. 2017 budget to 7.5 million comprising the blocs 28 data- tions with companies, they say companies to change practices
istration had placed several of The clinical holds were ini- ($7.8 million), up 58% from protection regulators. they foster compliance before sometimes does more to pro-
its early-stage cancer-drug tri- tiated to evaluate potential this year. In August, she The EU recently accused there is a violation that needs tect citizens than ending up in
als on hold after four patients risk of hepatotoxicity in pa- opened a new office in a reno- Facebook of making mislead- punishing. years of enforcement litiga-
died during treatment. tients who were treated with vated four-story townhouse in ing statements in 2014 when While corporate lawyers ap- tion.
The drug, vadastuximab ta- the drug and received stem- Dublinbut expects the team seeking approval to buy plaud the approach, some pri- Dara Murphy, Irelands
lirine, is being tested to treat cell transplants. Seattle Genet- to outgrow the space as early WhatsApp, which could lead to vacy activists have said it is data-protection minister, who
acute myeloid leukemia, a type ics said it was working dili- as next year. a fine of up to $179 million. still too cozy. When Facebook helps oversee the regulator,
of blood and bone-marrow gently with the FDA to Meanwhile, Ms. Dixon is in But in the privacy case under launched a new privacy policy says Ireland will prove un-
cancer. More than 300 pa- determine if there is a link. a wrestling match with other Ms. Dixons purview, any fines in 2015, several data-protec- flinching in applying the EUs
tients have been treated with One study has been halted, national data-protection agen- would be minimal under cur- tion authorities opened paral- new privacy law: It will be in
the drug so far. and two other studies have cies in the EU, many of which rent Irish law. She can send lel investigations into itbut the interest of our regulator
But the company said Tues- stopped new enrollment. want a say over the multina- cases directly to court with not Irish regulators. It is no here is that it become clear
day that six patients taking Seattle Genetics said other tionals squarely in her sights. the ceiling on fines set at secret that in the past we have quite quickly that the Irish in-
the drug have been identified ongoing trials of the drug, in- Under the new EU privacy law, 3,000far less than the 4% had different views on legal terpretation is as robust as
with hepatotoxicity, or chemi- cluding a late-stage, phase 3 a lead authority must consult of world-wide revenue that topics concerning Facebook, anyone elses.
cal-driven liver damage, re- trial, are continuing. with EU counterparts on major will become possible under EU
law in 2018.
ADVERTISEMENT More immediately, however,
Ireland could order Facebook
Legal Notices to change its behavior, which
combined with possible action
and fines by other EU regula-
NOTICE OF SALE BANKRUPTCIES tors would point to a tougher
enforcement ahead for compa-
JEAN CURRAN FOR THE WALL STREET JOURNAL

 
   
 !"# !  $! # %&&#  ' nies. We arent look to hang a
  
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istration locations should be cashmere maker, declined to to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
In Africa, Challenger to Netflix Ascends
ShowMax, a creation
of the South African
media giant Naspers,
caters to local viewers
BY ALEXANDRA WEXLER
JOHANNESBURGAfricas
biggest company is challenging
the worlds largest video-on-de-
mand service in the race to lure
African eyeballsand wallets.
South African media giant
Naspers Ltd. launched stream-
ing service ShowMax across
Africa last year, while sector
giant Netflix Inc. introduced
an African service in January.
Netflix may have blockbuster
original content such as Nar-
cos and Unbreakable Kimmy
Schmidt, but ShowMax, which
is available in 45 African coun-
tries and territories and 28 oth-
ers to serve the continents
diaspora, is hoping its more lo-
cal flavor will give it an edge.
Some of its popular local ti-
tles include: The Real
Househelps of Kawangware,
Auntie Boss! and Boer Soek
n Vrou, (Afrikaans for
Farmer Looks for a Woman).
Africans watch different
things, said Bob van Dijk,
chief executive of Naspers,
adding that many Africans
dont have credit cards and
they dont have bandwidth,
[so] we should be able to do
this better ourselves.
WEB
Continued from page B1
Garena Interactive Holding
Ltd., a Singapore-based
startup valued this year at
$3.75 billion. Garena entered e-
commerce last year through a
peer-to-peer marketplace app
called Shopee, whose built-in
payment, chat and delivery
services smooth transactions.
Shopee is going head-to-head
with Lazada in the same six
markets by allowing consum-
ers and small merchants to sell
products online.
2016 Dow Jones & Company. All Rights Reserved. 6E023
The scuffle for video-on-de-
mand customers here spotlights
the increasingly competitive
environment in which compa-
nies are attempting to lure Afri-
can consumers who have been
enriched and empowered by in-
ternet infrastructure upgrades
and higher wages.
ShowMax advertises heav-
ily, with billboards touting the
service lining the busiest com-
muter streets in Johannesburg.
Meanwhile, Netflixs African
service is pared down, with
popular shows such as The
Walking Dead unavailable and
only seasons one and two of
its original series Orange is
the New Black available, as
the rights were previously li-
censed to other television
channels in South Africa, in-
cluding Naspers-owned M-Net.
Netflix said last month it
would allow subscribers to
download shows and movies
to Apple and Android phones
and tablet computers, though
many of the streaming ser-
vices popular shows arent
available for offline viewing.
Subscribers to Show-
Max have had the option to
download content rather than
stream it since last year. That
allows users to tap networks at
places such as the office and
then enjoy shows later at home.
The ability to download is
the most important thing I
think, said Chloe Hackland,
who works in communications
Garena President Nick Nash
said Shopee is on track to ex-
ceed $2 billion in gross mer-
chandise volumea closely
watched metric for e-com-
merce companiesthis calen-
dar year and counts Indonesia,
Thailand and Vietnam among
its largest markets. Lazada
doesnt disclose its figure.
JD.comChinas second-
largest e-commerce provider,
behind Alibabaentered Indo-
nesias online sales market last
year and intends to use it as a
launchpad for the rest of the
region, its chief executive said
in an interview. Indonesia is
like Chinas market five years
TECHNOLOGY
Signs touting ShowMax at a Johannesburg shopping mall. The streaming service advertises heavily.
in Johannesburg. She binge-
watched three seasons of
Brooklyn Nine-Nine in one
week, and enjoys ShowMaxs
Afrikaans romantic comedy
films: [Netflix], they dont watched [TV] for like a
have downloads on everything.
With ShowMax, you can down-
load everything.
Ms. Hackland, 35 years old,
also likes that she can pur-
chase vouchers for subscrip-
tions to ShowMax through her
bank, and has given them to
friends as birthday gifts.
ShowMax costs 99 South Afri-
agothe population is big, the
e-commerce industry there is
not very mature yet and inter-
net users are growing rapidly,
said CEO Richard Liu.
Expansion in Southeast Asia
nonetheless comes with chal-
lenges. The region consists of
fragmented markets, each with
unique customer needs and
regulations. In Indonesia, for
example, competition is rife,
with strong local players such
as online marketplace Tokope-
dia. Intense local competition
has led JD.com, Lazada and
Shopee to dangle promotions
and coupons to attract more
buyers at the expense of prof-
can rand ($7.07) a month,
while Netflix costs between
$7.99 and $11.99 a month.
Once we watched Show- ers, with its direct-to-home
Max, we realized we hadnt
scribers, compared with a
month, she said. drop of 164,300 in the same
It isnt clear whether period last year as the conti-
Naspers can triumph over the
Netflix juggernaut, though Mr.
van Dijk concedes that the size
of the African middle class
limits the scale that a video- nesses performance and
on-demand service can
achieve here.
For the six months
itability.
Not all foreign competitors
have enjoyed smooth sailing.
Japanese e-commerce firm Ra-
kuten Inc. shut its online mar-
ketplaces in Southeast Asia
this year. Chinese companies
also have had to navigate po-
litical tension, and counter an
impression here that made-in-
China products are inferior.
With the boom in e-com-
merce, Alibaba and Tencent
are also competing to expand
their payment platformsAli-
pay and WeChat Payin
Southeast Asia. Alibaba has an
investment in Thai internet fi-
nance company Ascend Money,
For millennials
who want to
be millionaires
To learn more, visit
barronsnext.com
Wednesday, December 28, 2016 | B3
WSJ.com/Tech
The company transformed
from a local publisher to a me-
dia juggernaut valued at $60.9
billion after buying a stake in
Chinas Tencent Holdings Ltd.
in 2001.
Naspers still owns 34% of
the internet giant.
Netflix doesnt break out its
subscription figures for Africa,
though it beat expectations for
subscriber additions in the Sep-
tember quarter thanks in large
part to better-than-expected
performance in international
WALDO SWIEGERS/BLOOMBERG NEWS
markets.
Netflix, which is available in
more than 190 countries, had
more than 86 million subscrib-
ers globally as of Sept. 30. A
Netflix spokesman said the
streaming service carries a
wide range of global content,
but declined to comment fur-
ther on its African business.
Naspers says its knowledge
of the African consumer has
ended Sept. 30, Nasperss allowed it to tailor its services
video-entertainment business for local viewers.
reversed a decline in subscrib- The company has also de-
veloped a way to mitigate the
business adding 591,968 sub- high cost of data in Africa,
whichin contrast to the
U.S.is almost always capped
and paid for per mega-
nents consumers reeled from byte. ShowMax subscribers
the commodities crisis. can choose the quality of their
Naspers, which is secretive downloads to eke out more
about its more than 40 busi- content at a lower resolution,
something Netflix also intro-
plans, has yet to release any duced last month with a simi-
subscription figures lar two-tiered download op-
for ShowMax. tion.
which has an app that allows
Chinese tourists to make pay-
ments using Alipay at 20,000
merchants in cities such as
Didi, which counts Alibaba,
Tencent and Apple Inc. as in-
vestors, indirectly entered the
payments race through its in-
Bangkok and Chiang Mai. Ten- vestment in Grab, a Singapore-
centoperator of the WeChat based ride-sharing app. Grab
social-networking app, which raised money from investors
has more than 800 million us- including Didi in a $350 mil-
ersis looking to broaden its lion round of funding last year,
payment network in Malaysia and started a mobile wallet.
and Indonesia, Mr. Yeung said. Southeast Asia is one of
There isnt a dominant local the markets offering low
mobile-payment competitor in prices and high growth poten-
Southeast Asia and consumers tial, said Michael Yeo, re-
typically prefer to pay with search manager at IDC Finan-
cash. Ascend, Lazada and cial Insights, adding that it is
Garena have said they want to becoming more expensive to
fill the gap, and each offers a make acquisitions in China as
digital wallet. competition intensifies there.
Exclusive Launch Partner
 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 | Wednesday, December 28, 2016
Key Metric Probably
Wont Reflect Oil Rally
BY TATYANA SHUMSKY
AND ERIN AILWORTH
The recent run-up in crude
oil prices may offer a brighter
outlook for energy companies,
but a key accounting metric is
likely to show the sector isnt
out of the woods just yet.
As energy companies prepare
their annual reports, they will
be calculating a
CFO so-called stan-
JOURNAL dardized measure
of reserve value.
This dollar figure
acts as a basis for direct com-
parison among companies.
Oil prices have rallied 43%
this year, but oil-and-gas pro-
ducers including Apache Corp.,
Chesapeake Energy Corp. and
Pioneer Natural Resources
Co. are expected to report a
lower standardized measure in
2016 than 2015. That is be-
cause the Securities and Ex-
change Commission requires
companies to use historic
prices in the calculation.
The SEC price is the average
of physical oil prices on the
first day of the month of the
past 12 months. That average
for 2016 is down 15% from the
2015 figure. Theres going to
be a mismatch there between
accounting and reality, said
Robert Thummel, managing di-
rector and portfolio manager
at Tortoise Capital Advisors.
The disconnect comes at a
vulnerable time for the sector.
Oil prices plunged to a low of
$26.21 in February after ex-
ceeding more than $100 a bar-
rel in 2014. Depressed prices
triggered asset impairments,
losses and bankruptcies across
the energy industry.
Standardized-measure fig-
ures slumped in step with oil
prices. Apaches standardized
measure, for example, was
$10.6 billion in 2015, compared
with $31.7 billion in 2014, ac-
cording to company filings.
While prospects for the in-
dustry have recovered as
prices climbed back above $50
a barrel in recent months, in-
vestors remain cautious. The
profitability of reserves is a
primary concern. This disclo-
sure is going to be lower than
what they would like to por-
tray if they were using more
recent prices, said Alan Ste-
vens, assurance partner at
BDOs energy practice.
Finance executives in the
energy sector can choose be-
tween different accounting
methods to value their proved
developed reserves, as well as
different variables when esti-
RYAN DEZEMBER/THE WALL STREET JOURNAL
Pumpjacks operating near homes in Midland, Texas, in the
Permian Basin. Crude oil prices have rallied by 43% this year.
BUSINESS WATCH
PANASONIC
Investment Set
For Solar-Cell Plant
Panasonic Corp. expects to
invest more than 30 billion, or
over $250 million, in a Buffalo,
N.Y., plant that will make photo-
voltaic cells and modules for
Tesla Motors Inc., Panasonic said
Tuesday.
Tesla said in October that it
would work with Panasonic in
completing the Buffalo plant,
which originally was to be a So-
larCity Corp. manufacturing
plant. Tesla completed its acquisi-
tion of SolarCity in November.
Tesla said Tuesday that it is
reaffirming its commitment to
create more than 1,400 jobs in
Buffalo, including over 500 man-
ufacturing jobs. Teslas agree-
ment with Panasonic calls for the
Japanese company to cover capi-
tal costs in Buffalo, while Tesla
will make a long-term purchase
commitment from Panasonic.
In presentation materials, Pa-
nasonic said it expects its total
investment in the Buffalo plant
to exceed 30 billion. It said it
expected the plant to open in the
summer of 2017 and ramp up to
1 gigawatt of module production
by 2019.
Peter Landers
mating confirmed, yet unde-
veloped reserves, which can
result in vast differences.
By contrast, the SECs
standardized measure pro-
vides an annual snapshot that
is consistent across the in-
dustry. The metric requires
companies to estimate ex-
pected oil and gas sales from
their properties using historic
prices, subtract expected op-
erating and development
costs and taxes, and discount
those figures by 10%.
Its gospel because its the
SEC-required reporting num-
ber, but its not a complete
surprise when it comes out,
said Gary Clark, vice president
of investor relations at
Apache. Institutional investors
and analysts often seek guid-
ance on the direction of the
standardized measure
throughout the year, he said.
After the numbers are out,
investors sift for any outliers,
such as higher future develop-
ment costs at a time when the
company had said those costs
were falling, he said. They
will look at what you pro-
duced and what you sold, and
if at the end of the year youre
left with not as much as was
there, they will start to ask
questions.
Cost is the one input that
varies from company to com-
pany when calculating the
standardized measure. Devel-
opment costs and the success
of exploration efforts differ
substantially by region and
type of operation.
Chesapeake has seen its com-
pletion cost for wells in South
Texas cut nearly in half during
the past year or so. In the third
quarter, it cost the company
$246 per lateral foot to complete
a well, compared with $478 in
the second quarter of 2015.
The company is also doing
more work with fewer drilling
rigs. Today 10 rigs at Chesa-
peake drill as much lateral
footage as 35 rigs did in 2013,
Jason Pigott, Chesapeakes ex-
ecutive vice president of oper-
ations and technical services,
said at the companys analyst
day in October.
Drilling and completion
costs for wells fell by 35%
since the end of 2014 for Pio-
neer in some areas of the
Permian Shale in West Texas.
Such improvements have
helped break-even costs de-
crease in shale basins across
the U.S. by as much as $22 a
barrel, according to research
from energy-consulting firm
Wood Mackenzie.
CHINA
Industrial Profits
Rose in November
Earnings growth accelerated
in Chinas industrial sector in No-
vember, indicating that Beijing
could reach its annual economic
growth target, official data
showed Tuesday.
Industrial profits grew 14.5%
in November from a year ago,
faster than the 9.8% increase
posted in October, according to
the National Bureau of Statistics.
The acceleration of industrial
production and sales growth and
a surge in factory-gate prices
were the main drivers of the
growth, He Ping, an economist,
said in a statement accompany-
ing the data release. He also said
that contributions from the tele-
communication and petroleum-
refining sectors helped buoy
overall growth.
However, the economist
pointed out that the year-ago pe-
riods low base helped fuel last
months gain and that there was
still too much reliance on re-
bounding prices in refining and
steel industrials. He also said
most companies were struggling
with customers making late pay-
ments.
Pei Li
BUSINESS NEWS
Extra foot traffic is prompting retailers to add sales employees for January and provide coupons to tempt shoppers to keep buying.
Stores Brace for Returns,
And Even More Shopping
Opportunity is seized
Retail Return Rates
to make further sales; Shoppers return items bought online at a far higher rate*.
some merchants offer
Online purchases
spring goods early
BY SUZANNE KAPNER
As shoppers flock to stores
this week to return unwanted
holiday gifts, department
stores and other traditional
retailers have an opportunity
that pure e-commerce players
dont: Make another sale.
About 10% of holiday pur-
chases are returned, according
to the National Retail Federa-
tion, although the rate can be
triple for online orders. And the
vast majority of those goods
come back to brick-and-mortar
stores, regardless of where they
were purchased. At J.C. Penney
Co., for instance, more than
90% of online returns are
brought to a physical store.
That gives retailers with a
brick-and-mortar footprint the
chance to sell shoppers new
merchandise, which can offset
the high cost of returns and
help clear unsold inventory.
On average, retailers spend
about 8% of sales processing
returns, according to Inbound
Logistics, a trade publication.
In the past, shoppers typi-
cally visited stores after
Christmas to redeem gift cards
or hunt for even deeper dis-
counts. But the after-Christ-
mas rush is now also fueled by
Tips for Returning Online Gifts
BY NATHAN OLIVAREZ-GILES
Online shopping is expected
to set records this holiday sea-
son, with more people opting
to buy gifts from websites and
apps than ever before. But
while buying online is more
convenient, returning gifts of-
ten isnt. Those who wish to
return a present face a confus-
ing web of varying rules over
receipts, shipping costs and
even confidentialitycould
your online return inadver-
tently break the heart of a
loved one?
Fortunately, when it comes
time to return a dud gift that
came from a major online re-
tailereven ones with nation-
wide brick-and-mortar pres-
encethere are some tips to
follow that help make things
less hectic.
Wait until next year
Most major retailers offer
return windows ranging from
two weeks to a month. Over
the holidays, though, online
retailers have extended return
times for gifts. Apple Inc.,
which normally has a 14-day
return policy, is accepting re-
turns through Jan. 8 for items
bought as far back as Novem-
ber. Best Buy Co. is accepting
purchases made in November
and December through Jan. 15.
Amazon.com Inc., Jet.com Inc.
and Overstock.com Inc. are all
accepting gift returns through
Jan. 31. Wal-Mart Stores Inc.
has a 90-day return policy.
Keep those receipts
As usual, documentation
matters, whether you end up
mailing your gift back or tak-
ing it to a physical store.
Amazon and Wal-Mart re-
Return rates by category (Both online and in-store)
Auto parts
Housewares
Apparel
Footwear
Sporting goods
Beauty 5.2%
*October-November 2015 survey data.
Source: AlixPartners
a surge in returns brought on
by a shift to online shopping,
providing retailers with a rare
opportunity for higher foot
traffic at a time that it has
been on the decline.
More chains, including Ab-
ercrombie & Fitch Inc.s Hol-
lister chain and Neiman Mar-
cus Group Inc., are bringing in
spring goods early so they
have fresh merchandise with
which to tempt shoppers, ac-
cording to Craig Johnson, the
president of consulting firm
Customer Growth Partners.
Mr. Johnson estimates the
week after Christmas will ac-
count for about 14% of this
years holiday sales, roughly
on par with last year.
The NRF estimates that hol-
iday sales, excluding autos,
gasoline and restaurants, will
total $655.8 billion in Novem-
quire a gifts order number for
a return. Overstock requires
an invoice number or ship-
ment tracking number.
Apple and Best Buy require
either gift receipts or pur-
chase receipts.
No paper trail means no re-
turns almost everywhere.
Rules for packaging
If, as soon as you open your
gift, you know you dont want
it, keep the present in the box
and dont remove any tags.
Resist the calls to try it on
or show it off. If the item is
in its original packaging, you
will face less resistance during
the return process because the
item can essentially go back
into the store or on a ware-
house shelf.
As with every aspect of re-
turns, retailers vary on their
rules for packaging. Amazon,
the worlds largest online re-
tailer, doesnt accept returns if
items are taken out of their
original packaging.
Apple accepts returns with
opened packaging, unless it is
A U.S. post-office distribution center in California this month.
Some retailers offer to cover the cost of shipping for returns.
THE WALL STREET JOURNAL.
PETER J. SMITH FOR THE WALL STREET JOURNAL
purchase when they make an
in-store return.
For online-only retailers,
such as Amazon.com Inc., re-
About 30% turns tend to eat away at al-
ready-thin margins. Many
promise free return shipping
21.0% and then divert items to spe-
cial logistics companies that
12.3% collect, process and often re-
10.5% sell the unwanted gifts. Both
FedEx Corp. and United Par-
9.6% cel Service Inc. shift gears af-
9.3% ter Christmas and help retail-
ers with the surge in
postholiday returns.
The online flash sale site
THE WALL STREET JOURNAL. Gilt Groupe implemented a
new policy in February that al-
ber and December, meaning lows shoppers to return goods
that nearly $66 billion in to Saks Off Fifth stores follow-
goods will come back to retail- ing its acquisition by Saks par-
ers. ent Hudsons Bay Co. More
January had typically been than one-quarter of shoppers
a slow month in retailing, returning Gilt merchandise to
said David Bassuk, a managing a Saks Off Fifth store choose
director at the consulting firm to receive a Saks merchandise
AlixPartners. With the credit, according to Jonathan
heightened level of returns, Greller, president of Gilt and
retailers are planning for sales Saks Off Fifth.
they never could before. As a In an attempt to get shop-
result, Mr. Bassuk said retail- pers who buy online to return
ers are adding more staff to goods at the mall, Westfield
the sales floor in January and Corp. has joined with a com-
offering coupons and other in- pany called Happy Returns.
centives to get shoppers to The Venice, Calif., startup has
keep buying. installed return bars at two
About one-third of shop- Westfield malls in California
pers who visit a Penney store as well as four other U.S. malls
to make a return spend an ad- run by other operators.
ditional $60, according to the The malls who host our re-
company. A spokeswoman for turn bars get a steady stream
Kohls Corp. said about half of of traffic, said David Sobie, a
customers make an additional Happy Returns co-founder.
boxed software. Best Buy also cipient. Instead, recipients get
accepts returns with opened store credit in the form of gift
packaging, but it will deduct cards.
the cost of the packaging or While stores wont ex-
any missing items from your change gift cards for cash,
exchange. there are other options be-
yond using them or regifting.
Shipping could cost you If your nearby grocery store
Amazon and Apple offer has a Coinstar kiosk (normally
free shipping labels for re- used for turning loose change
turns via mail, but many re- into cash), you can trade in
tailers dont. Overstock will that gift card for cash, as long
deduct the cost of shipping as the gift card is worth at
from the amount of the item, least $20. Coinstar accepts gift
and give you what is left in cards from more than 150 re-
the form of a gift card. If you tailersbut not Amazon.
mail a gift back to Best Buy, Keep in mind that Coinstar
you will have to pay shipping takes a percentage ranging
yourselfthough you can al- from 15% to 40% depending on
ways take it back to a store. the gift card.
For Wal-Mart, that is your
only option: It doesnt accept It might be awkward
returns by mail. Jet.com, recently acquired
by Wal-Mart, only accepts re-
Expect credit, not cash turns that are initiated by
If the gift you received was the person who bought the
bought online, getting cash in item. That means you would
exchange for your returned have to ask whoever gave you
gift is unlikely. Apple, Micro- the gift to return it on your
soft Corp. and Best Buy will all behalf.
offer money back to the pur- (Jet.com will pay the cost
chaser, but not to the gift re- of shipping on returns, how-
ever, unless the gift giver
opted into a continuing
Jet.com promotion that lets
the purchaser forgo the free-
return policy in exchange for a
lower price.)
In the case of Amazon-
owned Zappos, there is a
slightly better scenario: If you
call the retailer and provide
JUSTIN SULLIVAN/GETTY IMAGES
the gift givers info, you can
return the gift yourself, but
Zappos will provide the refund
to the gift givers credit or
debit card.
The only way around this,
besides keeping the gift, is
swapping it out for something
of identical value. You cant
just get store credit.
 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.
WORKAROUND
MICHAEL NAGLE/BLOOMBERG NEWS
PepsiCo CEO Indra Nooyi.
CEOs Should Take
Long-Term View
Should corporate leaders fo-
cus on short-term gains or take
the long view?
Adherents of long-term man-
agement will find potent ammu-
nition in a new study from a pair
of management researchers who
conclude that myopic leaders are
hampering businesses by failing
to invest in innovation and risky
projects.
Whats more, they say that
switching to a long-term outlook
can improve a companys operat-
ing performance by several mea-
suresreturn on assets, operat-
ing profits, and sales growth
within two years.
Simply put, an increased long-
term orientation fosters innova-
tion and enhances market value,
said authors Caroline Flammer
of Boston Universitys Questrom
School of Business and Pratima
Bansal of the University of
Western Ontarios Ivey Business
School. Their paper, Does a
Long-Term Orientation Create
Value?, is slated to publish in a
coming issue of the Strategic
Management Journal.
To determine whether execu-
tives with a long view logged
better performance, researchers
identified 808 shareholder pro-
posals on long-term executive
compensation between 1997 and
2012, and examined the mea-
sures that passed by a small
margin of votes.
The executive compensation
proposals included awards of re-
stricted stock, restricted stock
options, and long-term incentive
plans. The researchers measured
the effects of approved propos-
als during the year of passage,
one year later, and then three
years after passage.
The authors set out to study
companies whose leaders had
made a clear break with short-
termism. So they zeroed in on
chief executives who may not
have seen the changes coming
in the form of narrowly passed
long-term incentive proposals.
The compensation adjust-
ments led chief executives to
pursue longer-term strategies.
Following the passage of long-
term incentives, the researchers
found that companies boosted
their efforts to innovate and
pursue riskier forward-looking
projects. More specifically, busi-
nesses increased their research
and development spending,
which led to surges in the num-
ber of patents they garnered.
The long-term view is exem-
plified by PepsiCo Inc. CEO Indra
Nooyi. Ms. Nooyi identified
health and wellness as one of
the companys biggest growth
opportunities when she became
chief executive in 2006.
She has boosted R&D spend-
ing and vowed to turn the
maker of sugary soft drinks into
a company where sales growth
of healthy products outpaces the
rest of the portfolio by 2025.
John Simons
BREXIT
& BEYOND
EUROPE IN FLUX
WSJ is your guide to the global impact of Britains vote
to leave the EU. Sign up for our newsletter to get insights
and analysis on the latest developments.
SIGN UP NOW AT WSJ.COM/BREXIT
2017: A Year of Uncertainty for CEOs
Business leaders face daunting challenges amid turbulence world-wide: How much can they trust projections?
BY JOANN S. LUBLIN
AND JOHN SIMONS
Heres a prediction for
2017: The job of chief execu-
tive is about to get tougher
than ever.
Uncertainty has been a
way of life for business lead-
ers since the last financial
crisis. But as U.S. president-
elect Donald J. Trump moves
into the White House pow-
ered by a largely unforeseen
wave of global revolt against
political elites, 2017 is go-
ing to be more volatile and
more complex than previous
years, predicted Michael D.
Watkins, a professor of lead-
ership and organizational
change at IMD Business
School in Switzerland.
The unprecedented turbu-
lence is seen in deep politi-
cal divisions in the U.S. and
abroad, uncertainty over the
strengthened U.S. dollar, the
faster pace of technological
change and looming global
problems such as mass im-
migration, terrorism and cli-
mate change.
In such a setting, chief ex-
ecutives often must decide
how much they trust projec-
tions. AMN Healthcare Ser-
vices Inc. CEO Susan Salka
said she doesnt pay atten-
tion to public policy predic-
tions coming out of Wash-
ington these days. Demand
for health services, she
noted, will continue to grow
regardless of whether the
new Trump administration
moves to repeal the Afford-
able Care Act.
Ms. Salka said she has
stepped up the pace at which
she and her team at the medi-
cal staffing and recruiting
firm make major strategic de-
cisions. In the past 18
months, for instance, AMN
expanded into executive
search and acquired three
search companiesafter
hearing from clients whose
high-level interim positions
Dozens of Boards Excluded Women for Years
BY JOANN S. LUBLIN
Glass ceilings are shattering
all overexcept in the board-
rooms of 76 U.S. public com-
panies that have had no fe-
male directors for the entire
past decade.
The protracted persistence
of all-male boards emerges
from an exclusive analysis for
The Wall Street Journal by
Equilar Inc. The governance re-
searchers tracked the 1,500
largest Russell 3000 concerns
without female board members
in any of the past 10 years.
Mostly small, these firms
often operate in male-domi-
nated industries such as en-
ergy. Some serve individual
consumers, including Skech-
ers USA Inc. and Six Flags
Entertainment Corp.
I expected to see fewer com-
panies with no female directors
since 2006, given the focus and
high level of scrutiny on gender
diversity in corporate board-
rooms over the past few years,
said Belen Gomez, Equilars di-
rector of research.
MANAGEMENT
John Crowley, CEO of Amicus Therapeutics, is concerned about possible changes in regulatory policy.
remained vacant for too long.
This has quickly become
an important service for
us.We are making more
swift decisions and being
comfortable with the fact
that we may not get every-
thing exactly right, she said.
John Crowley, CEO of Am-
icus Therapeutics Inc., is
also trying to embrace the
uncertainty, which he likens
to drug discovery, where al-
most everything we do
doesnt work, he said. Fail-
ure happens a lot.
The biotech company,
which specializes in treat-
ments for rare diseases, had
its first drug approved by
European regulators in May.
In anticipation of the ap-
proval, the company had
spent the previous 17
A survey of directors sug-
gests that ignorance about the
financial impact of board
women may explain their ab-
sence from so many businesses
for years. About 24% of men
compared with 89% of women
very much believe board di-
versity leads to improved
business performance, con-
cluded a survey of 884 public
company directors by PwC U.S.,
a professional-services firm.
Over the past five years,
U.S. companies that had at
least three female directors in
2011 have financially outper-
formed those that had no
board women in 2011, accord-
ing to MSCI, an investment re-
search firm. Its study, released
this month, looked at return
on equity and per-share earn-
ings for 580 such concerns be-
tween 2011 and 2016.
As advocacy groups and
public pension funds have
prodded boards to pick more
women, bigger businesses
have made the most progress.
Women held 20.6% of director-
ships at Fortune 500 compa-
months launching offices in
France, the Netherlands, It-
aly, Germany and Spain. It
established European head-
quarters in the U.K.and
then the Brexit vote took
Amicuss leaders by surprise.
After conferring with con-
sultants, Mr. Crowley ulti-
mately decided not to
change plans for marketing
the drug, which treats Fabry
disease, across Europe. But
the CEO said he worries
about changes in regulatory
policyespecially as it re-
lates to the U.S. presidential
campaign rhetoric around
drug pricing. Like other cor-
porate chiefs, he said hes
apprehensive about an envi-
ronment in which a tweet
can wipe out hundreds of
millions in market cap.
Women Directors
Share of Fortune 1000 board
seats lled by women.
20%
15
10
5 women since 2006, the
0
2011 12 13 14 15
Source: 2020 Women on Boards, based on
810 companies in the Fortune 1000 between
2011 and 2016.
THE WALL STREET JOURNAL.
nies this year, but just 16.7% of
seats at the rest of Fortune
1000 firms, reports 2020
Women on Boards. The group
aims to raise womens board
representation by 2020.
The campaign will now fo-
cus on getting those bottom
Wednesday, December 28, 2016 | B5
the United States.
E.V. Rick Goings, CEO of
Tupperware Brands Corp.
since 1997, said his employer
tries to find opportunity in
upheaval. For example, he
wants Tupperwarea busi-
ness long known for its color-
ful food-storage containers
to further sharpen its focus
on making products that
dont come from petroleum or
other commodities tied to the
U.S. dollar. The company,
which pays dividends in dol-
lars, has been hurt by the rise
of that currency.
Some chiefs are hitting
pause on big projects. Bloom
Energy Inc., a maker of com-
mercial electric-power genera-
tors, had planned to create at
BRYAN ANSELM FOR THE WALL STREET JOURNAL
least a thousand jobs in 2017,
mostly in project construction
and manufacturing, said its
CEO, KR Sridhar.
Unknowns about a Trump
presidency prompted Mr.
Sridhar to put the Sunny-
vale, Calif., firms job plans
on hold until he learns more
about the new administra-
tions interpretation of exist-
ing energy regulations.
Deferring plans is a clas-
sic way to react to an am-
The global rise of local biguous environment, said
populism, as evident by the Martin Reeves, senior part-
Brexit vote, is a concern for ner and managing director at
Kennametal Inc. chief Ronald Boston Consulting Group.
DeFeo. The company makes Youll see a lot of post-
cutting and drilling tools poned commitments, in the
used in oil-and-gas explora- coming year, he said. But he
tion and other industries. warns his executive clients
Mr. DeFeo, hired in Febru- that too much caution can
ary, said he has revamped lead to paralysis.
Kennametals management Other leaders are speed-
structure partly to create ing up, making decisions on
much stronger regional a shorter time frame.
leaders to better serve local At Danone SA, CEO Em-
markets. manuel Faber recently created
The face of what we mar- a beyond budget initiative
kethas to be less about our that replaces annual spending
global capability and more plans with flexible quarterly
about our local abilities to budgets. The system, informed
meet their needs, he said. by a five-quarter forecast, al-
We have to be more French lows the food conglomerate
in France, more German in to constantly adjust.
Germany, more Chinese in Nick Kostov
China and more American in contributed to this article.
companies up, said Malli on-pay votes about executive
Gero, its president. The group compensation since 2011. But a
lobbies firms without female woman may soon join the
directorsincluding 12 on board of the oil drilling com-
Equilars list. pany. With one of its seven
19.7% Among them is Weis Mar- members retiring next year, the
kets Inc., a food-store chain board has set a goal of identi-
with a five-man board. Judg- fying a qualified female direc-
ing our company based on the tor, said Julia Wright, Naborss
composition of our board general counsel.
overlooks the bigger picture, Six Flags offered a different
a Weis spokesman said. The rationale for its long dearth of
chain has promoted and hired female directors. The theme-
an increased number of park operator replaced its en-
tire board upon emerging
spokesman added. from bankruptcy in 2010. Add-
Several companies without ing a woman will be the high-
women directors since 2006 est priority when its seven di-
have faced criticism. At Skech- rectors choose their next
16
ers, which has nine male di- independent member, said
rectors, investors this year de- Nancy Krejsa, senior vice pres-
feated a shareholder proposal ident of investor relations.
about board diversity. The Another 13 companies with-
measure sought multiple out female directors as of
moves, including mandatory their 2016 annual meeting
consideration of gender and subsequently ended their
racial diversity in identifying drought, Equilar found. On
director candidates. Dec. 12, for instance, Inte-
Skechers didn't return calls grated Device Technology Inc.
for comment. announced the board appoint-
Nabors Industries Ltd. has ment of executive recruiter
lost five investor advisory say- Selena Loh LaCroix.
2016 Dow Jones & Co. Inc. All rights reserved. 6DJ3377
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 | Wednesday, December 28, 2016 THE WALL STREET JOURNAL.

FINANCE & MARKETS

CFPB Chief Is Under Fire The Student-Loan

In U.S., head of
financial oversight
Market Warms Up
agency faces BY ANNAMARIA ANDRIOTIS
Back to School
Republican pressure The nearly $1.4 trillion stu- The U.S. government's share of
dent-loan market in the U.S. is outstanding student debt has
BY YUKA HAYASHI expected to be far more hospi- moved higher.
table to private lenders under
WASHINGTONA battle is a Donald Trump administra- 93%
intensifying over the future of tion than during the past eight
92
Richard Cordray, the head of years.
MICHAEL REYNOLDS/EUROPEAN PRESSPHOTO AGENCY

the Consumer Financial Pro- Under President Barack 91

tection Bureau, as Republicans Obama, banks such as J.P.
search for past transgressions Morgan Chase & Co. and U.S. 90
that would allow President- Bancorpstudent-loan lenders
elect Donald Trump to fire until a few years agowere 89
him. largely sidelined. Origination
88
Mr. Cordray, a former Ohio of federally backed student
attorney general, is admired loans was transferred entirely 87
by consumer groups and dis- to the U.S. government, al-
liked by many GOP lawmakers ready the dominant force in 08 09 10 11 12 13 14 15 16
and financial-industry players the market. Note: 2016 data as of June 30. Prior years
as of Sept. 30.
for helping build the five-year- The move was designed to Source: MeasureOne (private loans);
old agency into an aggressive lower lending costs for the Education Department (federal loans)
financial regulator. government, which wanted to THE WALL STREET JOURNAL.
Republicans want Mr. Richard Cordray helped to make the Consumer Financial Protection Bureau an aggressive regulator. redirect savings to student
Cordray ousted and replaced grants and to offset costs asso- yet clear. But a lighter regula-
with someone who reflects ment that Mr. Cordray was Cordray for cause. through putting people in ciated with the Affordable tory touch could allow for
their views, but the 2010 confirmed by a bipartisan Republicans who believe he place who have a more free- Care Act. Regulatory scrutiny more private student lending,
Dodd-Frank financial-overhaul group of 66 senators to serve cant be fired point to a court market, less-regulatory per- of private lenders also intensi- or there could be a return of
law that created the CFPB a term until July 2018 and has case on the bureaus single-di- spective, said Thomas Pahl, a fied after the Consumer Finan- the lending program wiped out
states that the president may no plans to step down. Mr. rector structure. The case is former regulations attorney at cial Protection Bureau opened by the Obama administration.
only remove its director for Cordray declined to comment pending at the U.S. Court of the CFPB and Federal Trade in 2011. Another possibility: The fed-
inefficiency, neglect of duty for this article. Appeals for the District of Co- Commission who is now a Investors are betting this eral government could begin
or malfeasance in office. Mr. Trump and members of lumbia Circuit as the CFPB has partner at Arnall Golden Greg- will change. Shares of the larg- unloading student debt on its
The agencys critics are his transition team have said challenged an October deci- ory. Far less likely is some- est private student lender by balance sheet either by selling
now openly calling for Mr. they want to roll back postcri- sion by judges there who thing that would be done leg- origination volume, SLM loans to private lenders or en-
Cordrays removal and dis- sis financial regulations, but ruled the structure unconsti- islatively. Corp., or Sallie Mae, have led couraging the emergence of a
cussing potential faults he have been silent about the fu- tutional and granted the presi- The CFPBs proponents the charge since the Nov. 8, bond market for such debt.
may have committed during ture of the CFPB and its chief. dent the power to fire the di- have stepped up their counter- election, rising about 55%, Any of these opportunities
his tenure at the CFPBs Rep. Randy Neugebauer (R., rector at will. attack in recent days. compared with a 24% rise in could be a boon for student
helmso the incoming presi- Texas), who has led the attack Republican lawmakers have National civil-rights-group the KBW Nasdaq Bank index lending businesses at Sallie
dent can fire him for cause. on the CFPB at the House Fi- a long list of steps aimed at leaders last week applauded through Friday. Mae, Wells Fargo & Co., and
President Trump, its time nancial Services Committee, overhauling the CFPB, includ- Mr. Cordrays efforts to make Political risk has now been Discover Financial Services,
to say youre fired to Mr. said Mr. Trumps transition ing turning it into a commis- the CFPB an inclusive and di- removed, Sallie Mae CEO Ray- the three biggest private stu-
Cordray, wrote Thaya Brook team would study Mr. sion, giving Congress control verse place to work for agency mond Quinlan said at an in- dent lenders. They could also
Knight, associate director of Cordrays performance. over its budget and reducing staff. They said that any at- vestment conference Nov. 30. create an opening for more
financial-regulation studies at It hasnt been a real employee compensation by tempt to weaken the bureau We can now deal with the lenders to enter the market.
the libertarian Cato Institute. smooth ride over there, said changing its pay scale. Such and undermine its leadership facts as opposed to a night- Lenders began exiting the
One of the issues Mr. Mr. Neugebauer, who is seen steps are included in a broad would risk severe impacts on mare. private student-loan sector
Cordrays opponents are fo- as a candidate to succeed Mr. deregulation bill introduced our communitiesincluding The expectation is for some during the recession as delin-
cusing on: past allegations of Cordray as the next CFPB this year by Rep. Jeb Hensar- communities of color and low- change. The Republican Partys quencies spiked and the secu-
pay discrimination against chief, citing issues such as the ling (R., Texas), which the Re- income families who are most platform called for a return of ritization market for these
women and minority employ- alleged pay discrimination and publicans plan to repropose vulnerable to financial abuse. private lenders. The federal loans dried up. Others exited
ees at the CFPB and his al- the costs of renovating the next year in some form. Such Legal experts for Americans government should not be in after the federal lending pro-
leged failure to take appropri- agencys headquarters. steps would take time and for Financial Reform, a con- the business of originat- gram for private lenders
ate action. Republican The bureaus handling of al- would likely face tough oppo- sumer advocacy group that ing student loans, it said. In ended and regulatory scrutiny
lawmakers had criticized the leged racial discrimination in sition from Senate Democrats, calls for tougher Wall Street order to bring down college amped up. Several banks, in-
CFPB over the allegations in auto lending is another poten- including Sen. Elizabeth War- rules, warned against looking costs and give students access cluding Bank of America Corp.,
2014 and 2015. The agency has tial area of inquiry, Mr. Neuge- ren (D., Mass.) who helped to for causes to fire the CFPB to a multitude of financing op- Citigroup Inc., J.P. Morgan and
said it has taken steps to ad- bauer said. Someone is going create the CFPB. chief, saying courts have in tions, private-sector participa- U.S. Bank, have left since 2009,
dress employee complaints. to have to make a determina- Its more likely that the the past used their authority tion in student financing leaving a handful of large play-
Jen Howard, a CFPB tionif those are factors that new agenda and new approach to stop illegal removals of gov- should be restored. ers fighting over a small mar-
spokeswoman, said in a state- could be used to relieve Mr. are going to be effectuated ernment officials. How things will change isnt ket.

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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. Wednesday, December 28, 2016 | B7

FINANCE & MARKETS

U.S. Stocks Climb, Led by Tech Sector

BY NATASCHA DIVAC
AND AKANE OTANI
U.S. stocks rose Tuesday on
gains in technology shares.
The Dow Jones Industrial
Average was up 24 points, or
0.1%, to 19957 by around mid-
day in New
TUESDAYS York, led by a
MARKETS 1% jump in Ap-
ple. The S&P
500 gained
0.3%, and the tech-heavy Nas-
daq Composite rose 0.7%.
In Asia, markets were little
changed. Japans Nikkei Stock
Average ended less than 0.1%
higher, snapping a three-ses-
sion losing streak. But Toshiba
Corp. dropped 12% after the
company said cost overruns at
U.S. nuclear reactors it is
building were likely to force a
write-down of as much as sev-
eral billion dollars, clouding
its turnaround plan after an
accounting scandal last year.
South Koreas Kospi gained
0.2%, Singapores FTSE Straits
index rose 0.3% and the
Shanghai Composite Index fin-
ished 0.3% lower.
Markets in Australia, New
Zealand and Hong Kong were
closed for holidays.
U.S. trading volumes have
dwindled and stocks have
moved in a narrow range
around the holiday period.
Still, indexes have extended
their postelection rally and are
on track to close out the
month with their biggest De-
cember gains in years. The
Dow Jones Industrial Average
was up 4.3% for the month,
heading for its best December
since 2010.
Technology companies were
among the biggest gainers
Tuesday. The S&P 500 tech
sector rose 0.7%, led by
Nvidia, which added 6%. The
chip maker, whose shares are
on track to rise for a 10th con-
secutive session, is up about
250% for the year.
Meanwhile, dividend-heavy
sectors lagged behind broader
indexes. Utilities shares in the
S&P 500 fell 0.4%, while tele-
com shares fell 0.3%.
Elsewhere, the Stoxx Eu-
rope 600 rose 0.1%.
In Europe, bank shares
were among the worst per- it to a 14-year high.
formers on an otherwise quiet The dollar has strengthened Unwelcome Surprise
day. The Stoxx Europe 600 in recent weeks on bets of Toshiba shares sank 12% after
Banks Index fell 0.2% after the higher inflation and rising the rm said cost overruns in the
European Central Bank ex- rates, which make it more at- U.S. could cause an impairment
pressed new concerns about tractive to yield-seeking inves- charge of several billion dollars.
the future of ailing Italian tors.
lender Banca Monte dei Paschi On Tuesday, the WSJ Dollar 460 Lunch break
di Siena. Index, which measures the
Monte dei Paschi has a dollar against a basket of 16 440
much bigger hole in its bal- currencies, was up 0.2%. Tuesday
420
ance sheet than previously cal- Bonds, meanwhile, resumed 391.6
culated, the ECB said Monday, their postelection slide. 400
meaning the Italian govern- The yield on the 10-year
ment will have to ramp up the U.S. Treasury note edged 380
amount it will have to deploy higher to 2.567%, near a two-
to rescue the lender. Trading year high, from 2.542% Friday, 360
in the banks shares continued according to Tradeweb. Yields
to be suspended Tuesday. rise as prices fall. 9:30 a.m.* 11 1 p.m. 3
In currencies, the dollar Brent crude, the global Note: 400 = $3.41 *Local time
rose slightly, extending a post- benchmark, was up 1.4% at Source: Thomson Reuters
election rally that has brought $55.95 a barrel. THE WALL STREET JOURNAL.

Banking Overseers Embrace Walls Treasury Yields

BY JOHN CARNEY

The latest trend in policing

Rise as Investors
banks: Build a wall.
Financial regulators around
the world have increasingly
shied away from developing
Look to Auctions
globe-spanning rules in favor BY MIN ZENG decisions.
of shoring up the financial sys- Government-bond yields in
tems in their local purviews. Prices of U.S. Treasury the developed world have
This fragmentation could ac- bonds pulled back Tuesday as been rising after falling to
celerate when President-elect investors gird for the last their historic lows in the sum-
Donald Trump takes office in round of new government- mer.
January if his deregulatory debt offerings in 2016. The 10-year Treasury yield
agenda combines with his Higher stocks and crude-oil is up more than one percent-
America first approach to in- prices Tuesday reflected in- age point from its record low
ternational relations. vestors preference for riskier set in early July. The yield was
What would that mean for assets, also sapping demand headed for a second consecu-
FRAN COLLIN

big banks? The breakdown of
regulation by international
consensus may cause some
banks to reconsider the value
of their global footprints, slow
cross-border capital flows, in-
crease costs of compliance for
global banks and even make
the global financial system
more fragile, bank executives
say.
Last month, the European
Union proposed rules that
would require big foreign
banks like J.P. Morgan Chase
& Co. and Citigroup Inc. to
hold extra capital within EU
borders, a step that echoes a
recent U.S. rule for some large,
non-U.S. banks. Rules with
similar aims also have been
rolled out in Switzerland and
the U.K.
The regulatory goal on both
sides of the Atlantic is to en-
sure that if a banks parent
runs into trouble, there are
enough financial resources on
hand to support local opera-
tions. National regulators
have an interest in maintaining
stability in their territory,
HSBC Holdings PLC head of
regulatory policy James Chew
said at a recent banking con-
ference in New York. You
have to assume thats where
were going.
The proliferation of the new
rules, sometimes referred to as
ringfencing, demonstrate an
Credit Suisses Wilson Ervin, right, says new requirements could prevent needed shifts in capital.
increasing willingness of bank-
ing regulators to act indepen-
dently of each other to protect
the strength of their own fi-
nancial systems. That is a leap
from the years after the finan-
cial crisis, when regulators val-
ued a unified front as they at-
tempted to rebuild economies
and prevent the next crisis.
Some bankers express con-
cern that building new re-
gional requirements can be
costly, and potentially destabi-
lizing, if it prevents banks
from moving capital where it
is needed in a crisis.
If you dont allow the
firetrucks to move more than a
block from the fire house, you
dont allow them to effectively
do their job, Wilson Ervin, a
former chief risk officer at
Credit Suisse Group AG and
now vice chairman at the
Swiss bank, said at the same
conference as Mr. Chew.
And bankers expect the
emerging national trend is
likely to grow more pro-
nounced. Each country is be-
coming more protective and
more protectionist, Jordi
Gual, chairman of Spains larg-
est bank by domestic assets,
CaixaBank, said in a recent in-
terview.
He warned that a frag-
mented approach to regulation
could make cross-border fi-
nancing more difficult.
Ringfencing started gaining
momentum when Federal Re-
serve governor Daniel Tarullo
first proposed in a 2012
speech that the U.S. should re-
quire large European banks to
hold separate capital and li-
quidity in U.S. units. The Fed
officially adopted such re-
quirements two years later.
The move came after debt cri-
ses in Greece and other Euro-
pean countries pressured the
Continents banks.
Deutsche Bank AG, one of
the banks most affected by the
new U.S. rule, increased its
capital in the U.S. to $10.12 bil-
lion as of November from neg-
ative $5.6 billion at the end of
2011.
But it has criticized the U.S.
rule, and along with other Eu-
ropean banks has scaled back
parts of its U.S. business.
More recently, U.S. regula-
tors have encouraged the big-
gest U.S. banks to create their
own intermediate holding
companies that could provide
a flexible source of capital and
for haven bonds. tive year of gains, up from
The yield on the benchmark 2.273% at the end of 2015.
10-year Treasury note rose to The shift toward higher
2.567% late morning in New yields over the past few
York, near the highest level in months reflects rising expecta-
liquidity for subsidiaries in a more than two years, accord- tions among investors of
period of stress. J.P. Morgan, ing to Tradeweb, compared faster economic growth,
Bank of America Corp. and with 2.542% Friday. Yields rise higher inflation and poten-
Citigroup have each an- as bond prices fall. tially a faster pace of interest-
nounced plans to create these The bond market was shut rate increases by the Fed.
entities. Monday for the Christmas hol-
Europes regulators are con- iday.
cerned that the capital may The U.S. Treasury was
not be available to support the
operations in their territory,
according to people familiar
with the matter. The new rules
scheduled to sell $26 billion of
two-year notes at 1 p.m. Tues-
day, followed by a $34 billion
sale of five-year notes
2.567%
Yield on U.S. 10-year note, near
from the European Union Wednesday and a $28 billion the highest in two years
would address these concerns sale of seven-year notes
by forcing U.S. banks to hold Thursday. A $13 billion sale of
at least some of their capital two-year floating-rate notes is
in Europe. also scheduled for Wednesday. Selling in the bond market
U.S. regulators also have The auctions will be a test had intensified after the U.S.
pushed European counterparts of demand following the Fed- election in early November.
to be tougher judges of the as- eral Reserves interest-rate in- The prospect of expansive fis-
set quality of their banks. This crease two weeks ago. Yields cal policy from President-elect
approach has grated on regula- on short-term notes, such as Donald Trump in the coming
tors and bankers, including the two- and five-year notes, year has added to expectations
Deutsche Bank CEO John are highly sensitive to the of higher growth and inflation.
Cryan, who called on European Feds interest-rate policy. The Fed raised interest rates
regulators to start imple- Trading was thinner than for the first time this year two
menting rules that benefit Eu- normal due to the holiday sea- weeks ago and projected three
rope rather than some policy son, which may exaggerate rate increases for 2017, boost-
of global harmonization. part of the price moves, ana- ing expectations of higher
Some believe any new rules lysts said. bond yields.
from Europe could force U.S. Some traders said this con- All thee factors are not go-
banks to retreat to London, dition may also affect demand ing away and are likely to con-
which stands to have more in- for this weeks auctions as tinue to pressure bond yields
dependent rules after this some investors may stay on higher in 2017, said Praveen
years U.K. vote to leave the EU the sidelines and wait for the Korapaty, head of interest-rate
is implemented. new year to make investment strategy at Credit Suisse.

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China A-Share Fund Cls A AUD H OT
China A-Share Fund Cls A AUD UnH OT
China A-Share Fund Cls A CAD H OT
OT HKG
OT HKG
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12/22 AUD
12/22 AUD
12/22 CAD
11.80
11.00
10.93
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China A-Share Fund Cls A EUR H OT OT HKG 12/22 EUR 11.51 -9.2 -12.4 2.0
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victory and the calls for

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China A-Share Fund Cls A GBP H OT
China A-Share Fund Cls A GBP UnH OT
China A-Share Fund Cls A HKD H OT
China A-Share Fund Cls A HKD UnH OT
OT HKG
OT HKG
OT HKG
OT HKG
12/22 GBP
12/22 GBP
12/22 HKD
12/22 HKD
11.53
13.43
11.68
11.23
-5.9
8.1
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5.0
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-13.1
1.5
14.3
2.2
0.7
FUNDS
cans, it is far from given that ment China A-Share Fund Cls A NZD H OT
China A-Share Fund Cls A NZD UnH OT
OT HKG
OT HKG
12/22 NZD
12/22 NZD
11.61
10.07
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2.2
NS
the largest Wall Street banks world insist banks Mr. Hensarling has pro- China A-Share Fund Cls A RMB (CNH) OT
China A-Share Fund Cls A USD OT
OT HKG
OT HKG
12/22 CNH
12/22 USD
12.57
11.20
-5.1
-10.2
-7.8
-13.2
5.4
0.9
would benefit from their re- posed giving banks relief from
form efforts, said Mark Ca-
should maintain certain regulations if they
China A-Share Fund Cls A USD H OT
China Greenchip-A Units AS
OT HKG
EQ CYM
12/22 USD
12/22 HKD
11.63
50.33
-7.7
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-10.5
-5.0
2.1
-8.1
China Greenchip-A Units AUD H AS EQ CYM 12/22 AUD 8.49 -4.5 -4.5 -8.4
labria, a former adviser to higher capital levels. meet a 10% leverage ratio. China Greenchip-A Units CAD H AS
China Greenchip-A Units NZD H AS
EQ CYM
EQ CYM
12/22 CAD
12/22 NZD
8.27
8.72
-5.6
-3.5
-5.6
-3.5
-9.6
-7.3
Senate Banking Committee A higher leverage ratio China Greenchip-A Units USD AS EQ CYM 12/22 USD 8.32 -5.1 -5.1 -8.8
China Greenchip-A2 QDIs Units AS EQ CYM 12/22 HKD 9.17 -5.0 -5.0 -8.0
Chairman Richard Shelby (R. could be costly for banks. For GC Hi Yield Inc - Cls A MDIs GBP H OT OT CYM 12/22 GBP 9.61 15.0 15.4 NS
Ala.), and now a fellow at the the top five Wall Street firms, GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
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9.17
9.22
16.9
15.4
17.4
15.9
12.6
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free-market Cato Institute. Current rules require banks the extra equity required to GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 12/22 NZD 9.48 17.6 18.1 13.6
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GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 12/22 SGD 9.96 15.8 16.3 11.4
former Goldman Sachs Group tal requirements. One is a le- tio would reduce their average GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 12/22 USD 14.18 15.7 16.1 10.9
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GC Hi Yield Inc-ClsA MDIs EUR H OT OT CYM 12/22 EUR 10.03 14.0 14.4 NS
nomic teamGary Cohn, to equity as a proportion of total to roughly 7% by 2018, accord- Hi-Div Stk Cls A RMB H Acc OT OT HKG 12/22 CNH 9.89 0.8 0.9 0.3
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head the National Economic assets. It is designed to reduce ing to Steven Chubak, a bank Hi-Div Stk Cls A1 OT OT HKG 12/22 USD 70.85 -1.4 -1.5 -2.2
Council, and Steven Mnuchin, the chances a bank will fail by analyst at Nomura Holdings Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
12/22 AUD
12/22 CAD
8.71
8.78
-1.1
-2.4
-1.2
-2.5
-1.6
-3.0
for Treasury secretarymight acting as a constraint against Inc. Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 12/22 GBP 8.23 -3.1 -3.2 NS
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give Wall Street a powerful borrowing, or leverage. After Barclays PLC analyst Jason Hi-Div Stk Cls A2 MDIs OT OT HKG 12/22 USD 9.85 -1.5 -1.5 -2.2
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at least two candidates for the quired that big banks maintain gan Chase & Co. alone would Hi-Div Stk Cls A2 RMB UnH MDIs OT
Intel-China Converg Fund-A AUD H AS
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4.1
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4.6
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3.2
NS
job of Federal Reserve vice a leverage ratio of at least 5%. need an extra $107 billion of Intel-China Converg Fund-A CAD H AS EQ CYM 12/22 CAD 9.98 NS NS NS
Intel-China Converg Fund-A NZD H AS EQ CYM 12/22 NZD 10.11 NS NS NS
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VP Classic-A Units AS
EQ CYM
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most powerful bank regulatory vice chairman of the Federal from its current level. VP Classic-B Units AS EQ HKG 12/22 USD 113.72 -4.4 -4.5 -1.5
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B8 | Wednesday, December 28, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 12 p.m. New York time
Last Year ago
19403.06 s 6.42, or 0.03% Year-to-date s 1.94% 360.48 s 0.50, or 0.14% Year-to-date t 1.46% 2269.48 s 5.69, or 0.25% Trailing P/E ratio * 24.95 22.95
High, low, open and close for each 52-wk high/low 19494.53 14952.02 High, low, open and close for each 52-wk high/low 369.68 303.58 High, low, open and close for each P/E estimate * 19.04 17.47
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 2.07 2.14
All-time high: 2271.72, 12/13/16

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

19200 370 2260

Session high
DOWN UP
18600 360 2230
t

Session open Close

Close Open
t

65-day moving average

18000 350 65-day moving average 2200
Session low

17400 340 2170

16800 330 2140

65-day moving average 16200 320 2110

Bars measure the point change from session's open

15600 310 2080
Sept. Oct. Nov. Dec. Sept. Oct. Nov. Dec. Sept. Oct. Nov. Dec.

International Stock Indexes Data as of 12 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 12 p.m. ET
World The Global Dow 2535.71 1.11 0.04 2033.03 2570.92 8.5 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1672.53 0.26 0.02 1471.88 1956.39 2.5 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 844.71 2.26 0.27 691.21 1044.05 6.4 3.250 Australia 2 1.912 68.6 71.2 65.3 103.8 1.918 1.771 2.037
4.750 10 2.885 30.9 33.0 41.1 53.2 2.872 2.770 2.773
Americas DJ Americas 546.56 1.24 0.23 433.38 548.56 12.2
1.250 Belgium 2 -193.2 -191.1 -176.9 -130.3 -0.706 -0.651 -0.305
-0.706
Brazil Sao Paulo Bovespa 58795.71 175.46 0.30 37046.07 65291.06 35.6
1.000 10 0.584 -199.2 -195.7 -169.2 -128.0 0.584 0.667 0.962
Canada S&P/TSX Comp 15328.15 Closed 11531.22 15414.57 17.8
1.000 France 2 -0.691 -191.8 -189.7 -177.6 -128.2 -0.691 -0.657 -0.283
Mexico IPC All-Share 45242.26 252.68 0.56 39924.09 48956.06 5.3
0.250 10 0.730 -184.6 -181.1 -156.7 -125.2 0.730 0.792 0.990
Chile Santiago IPSA 3145.66 2.98 0.09 2730.24 3490.53 6.9
0.000 Germany 2 -0.790 -201.7 -199.6 -185.5 -132.7 -0.790 -0.737 -0.328
U.S. DJIA 19952.45 18.64 0.09 15450.56 19987.63 14.5
0.000 10 0.262 -231.5 -227.9 -211.6 -161.1 0.262 0.243 0.631
Nasdaq Composite 5491.19 28.50 0.52 4209.76 5512.37 9.7
0.250 Italy 2 -0.145 -137.1 -135.0 -101.1 -88.9 -0.145 0.107 0.109
S&P 500 2269.48 5.69 0.25 1810.10 2277.53 11.0
1.250 10 1.851 -72.5 -69.0 -25.8 -57.4 1.851 2.101 1.668
CBOE Volatility 11.95 0.51 4.46 10.93 32.09 34.4
0.100 Japan 2 -0.176 -140.2 -138.2 -126.0 -100.9 -0.176 -0.142 -0.010
EMEA Stoxx Europe 600 360.48 0.50 0.14 303.58 369.68 1.5 0.100 10 0.065 -251.1 -248.2 -232.1 -196.3 0.060 0.038 0.279
Stoxx Europe 50 3000.70 2.37 0.08 2556.96 3139.28 3.2 4.000 Netherlands 2 -0.735 -196.1 -194.0 -182.2 -135.6 -0.735 -0.703 -0.358
France CAC 40 4848.28 8.60 0.18 3892.46 4856.96 4.6 0.500 10 0.399 -217.8 -214.2 -194.2 -144.5 0.399 0.418 0.797
Germany DAX 11472.24 22.31 0.19 8699.29 11481.46 6.8 4.450 Portugal 2 0.172 -105.5 -103.4 -73.7 -86.5 0.172 0.381 0.133
Israel Tel Aviv 1475.53 13.73 0.94 1372.23 1535.96 3.5 2.875 10 3.786 120.9 124.5 123.3 29.3 3.786 3.592 2.535
Italy FTSE MIB 19390.83 45.81 0.24 15017.42 21705.71 9.5 0.250 Spain 2 -0.252 -147.9 -145.8 -122.1 -87.6 -0.252 -0.103 0.123
Netherlands AEX 483.58 0.72 0.15 378.53 484.21 9.5 1.300 10 1.402 -117.4 -113.9 -78.6 -39.3 1.402 1.573 1.849
Russia RTS Index 1135.79 11.14 0.99 607.14 1170.51 50.0 4.250 Sweden 2 -0.610 -183.7 -181.6 -179.9 -144.5 -0.610 -0.680 -0.447
Spain IBEX 35 9376.60 8.90 0.10 7579.80 9724.90 1.8 1.000 10 0.651 -192.6 -189.1 -183.3 -120.6 0.651 0.526 1.036
Switzerland Swiss Market 8259.45 26.81 0.33 7425.05 8908.50 6.3 1.250 U.K. 2 0.073 -115.4 -113.3 -99.3 -38.0 0.073 0.126 0.618
South Africa Johannesburg All Share 49400.56 Closed 45975.78 54704.22 2.6 2.000 10 1.231 -134.6 -133.9 -106.9 -32.0 1.203 1.290 1.922
Turkey BIST 100 76699.41 329.06 0.43 68230.47 86931.34 6.9 1.000 U.S. 2 1.227 ... ... ... ... 1.206 1.119 0.998
U.K. FTSE 100 7068.17 Closed 5499.51 7129.83 13.2 2.000 10 2.576 ... ... ... ... 2.541 2.359 2.242
Asia-Pacific DJ Asia-Pacific TSM 1412.63 0.28 0.02 1188.42 1499.93 1.6
Australia S&P/ASX 200 5627.90 Closed 4765.30 5643.90 6.3 Commodities Prices of futures contracts with the most open interest 12 p.m. New York time
China Shanghai Composite 3114.66 7.90 0.25 2655.66 3572.88 12.0 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 21574.76 Closed 18319.58 24099.70 1.5 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 12/26/2016
India S&P BSE Sensex 26213.44 406.34 1.57 22951.83 29045.28 0.4 One-Day Change Year Year
Indonesia Jakarta Composite 5102.95 75.25 1.50 4414.13 5472.32 11.1 Commodity Exchange Last price Net Percentage high low
352.75 7.00 2.02% 453.25 325.00
Japan Nikkei Stock Avg 19403.06 6.42 0.03 14952.02 19494.53 1.9 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 1014.25 16.75 1.68 1,135.50 875.75
Malaysia Kuala Lumpur Composite 1619.68 2.53 0.16 1600.92 1727.99 4.3
Wheat (cents/bu.)
CBOT
CBOT 409.25 15.75 4.00 569.00 393.00
New Zealand S&P/NZX 50 6877.00 Closed 5933.96 7571.11 8.7
Live cattle (cents/lb.) CME 115.950 -0.350 -0.30% 124.400 97.800
Pakistan KSE 100 46920.47 230.74 0.49 30564.50 47210.06 43.0
Cocoa ($/ton) ICE-US 2,249 -15 -0.66 3,186 2,144
Philippines PSEi 6658.20 94.53 1.44 6084.28 8102.30 4.2
Coffee (cents/lb.) ICE-US 133.90 -2.25 -1.65 179.55 121.80
Singapore Straits Times 2885.76 14.71 0.51 2532.70 2960.78 0.1
Sugar (cents/lb.) ICE-US 18.70 0.55 3.03 24.10 13.48
South Korea Kospi 2042.17 4.42 0.22 1835.28 2068.72 4.1
Cotton (cents/lb.) ICE-US 69.70 -0.17 -0.24 78.00 55.79
Taiwan Weighted 9109.27 1.27 0.01 7664.01 9392.68 9.2 Robusta coffee ($/ton) ICE-EU 2082.00 18.00 0.87 2,207.00 1,469.00
Thailand SET 1517.08 1.85 0.12 1224.83 1552.64 17.8
Copper ($/lb.) COMEX 2.5205 0.0415 1.67 2.7530 1.9780
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1137.00 3.40 0.30 1,387.10 1,076.60
Silver ($/troy oz.) COMEX 15.880 0.121 0.77 21.065 14.260
Currencies London close on Dec. 27 Aluminum ($/mt)* LME 1,718.50 -2.50 -0.15 1,779.00 1,451.50
Tin ($/mt)* LME 21,050.00 150.00 0.72 21,750.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Tue YTDchg Copper ($/mt)* LME 5,496.00 56.00 1.03 5,950.00 4,320.50
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,110.00 -5.50 -0.26 2,475.00 1,598.00
20%
s Europe Zinc ($/mt)* LME 2,602.00 30.00 1.17 2,911.00 1,467.00
Yen Bulgaria lev 0.5346 1.8705 3.9 Nickel ($/mt)* LME 10,640.00 35.00 0.33 11,770.00 7,750.00
10
s Croatia kuna 0.1385 7.221 3.0 Rubber (Y.01/ton) TCE 257.20 1.70 0.67 n.a. n.a.
Euro Euro zone euro 1.0458 0.9563 3.9
0 Palm oil (MYR/mt) MDEX 3130.00 70.00 2.29 3,202.00 2,204.00
Czech Rep. koruna-b 0.0387 25.843 3.8
Denmark krone 0.1406 7.1101 3.5 Crude oil ($/bbl.) NYMEX 53.96 0.94 1.77 55.44 35.10
10 sWSJ Dollar index
0.003391 294.94 1.5
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.7281 0.0474 2.82 1.7294 1.0860
Iceland krona 0.008813 113.47 12.8 RBOB gasoline ($/gal.) NYMEX 1.6783 0.0384 2.34 1.6788 1.0122
20 Norway krone 0.1148 8.7103 1.5
0.2373 4.2135 7.4
Natural gas ($/mmBtu) NYMEX 3.712 0.080 2.20 3.7410 2.4680
2016 Poland zloty
Russia ruble-d 0.01647 60.721 15.5 Brent crude ($/bbl.) ICE-EU 56.85 0.95 1.70 58.53 35.13
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1084 9.2271 9.2 Gas oil ($/ton) ICE-EU 506.25 18.25 3.74 507.00 325.00
Tue Tue
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 0.9725 1.0283 2.6
Turkey lira 0.2837 3.5247 20.8 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1289 7.7606 0.1
Ukraine hryvnia 0.0376 26.6250 11.0
Argentina peso-a 0.0644 15.5290 20.0
India rupee
Indonesia rupiah
0.0147
0.0000744
67.9960 2.7
13443 2.8
U.K. pound 1.2257 0.8159 20.2 Cross rates London close on Dec 27
Brazil real 0.3052 3.2766 17.3 Middle East/Africa
Japan yen 0.008510 117.51 2.3
Canada dollar 0.7378 1.3554 2.1 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002994 333.99 1.4 Bahrain dinar 2.6522 0.3771 0.01
Chile peso 0.001480 675.60 4.7 Australia 1.3908 1.7046 1.3526 0.0118 0.1792 1.4544 1.0260 ...
Macau pataca 0.1251 7.9934 0.1 Egypt pound-a 0.0532 18.8011 140.1
Colombia peso 0.0003341 2993.20 5.7 Canada 1.3554 1.6611 1.3180 0.0115 0.1746 1.4172 ... 0.9746
Malaysia ringgit-c 0.2233 4.4785 4.1 Israel shekel 0.2604 3.8399 1.4
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6891 1.4512 0.8 Kuwait dinar 3.2700 0.3058 0.8 Euro 0.9563 1.1722 0.9299 0.0081 0.1232 ... 0.7055 0.6876
Mexico peso-a 0.0483 20.7189 20.5
Pakistan rupee 0.0095 104.825 0.1 Oman sul rial 2.5972 0.3850 0.02 Hong Kong 7.7606 9.5121 7.5470 0.0660 ... 8.1156 5.7259 5.5806
Peru sol 0.2958 3.3810 1.0
Philippines peso 0.0201 49.752 6.2 Qatar rial 0.2746 3.642 0.03 Japan 117.5140 144.0300 114.2700 ... 15.1420 122.8800 86.7100 84.4900
Uruguay peso-e 0.0353 28.360 5.2
Singapore dollar 0.6898 1.4496 2.2 Saudi Arabia riyal 0.2665 3.7521 0.04 1.0283 1.2605 ... 0.0088 0.1325 1.0754 0.7587 0.7393
Venezuela bolivar 0.100050 10.00 58.5 Switzerland
South Korea won 0.0008273 1208.73 2.8 South Africa rand 0.0717 13.9387 9.9
U.K. 0.8159 ... 0.7933 0.0069 0.1051 0.8533 0.6020 0.5867
Asia-Pacific Sri Lanka rupee 0.0066845 149.60 3.7 Close Net Chg % Chg YTD % Chg
0.7190 1.3908 Taiwan dollar 0.03097 32.288 1.9 U.S. ... 1.2257 0.9725 0.0085 0.1289 1.0458 0.7378 0.7190
Australia dollar 1.3 WSJ Dollar Index 93.38 0.15 0.16 3.56
China yuan 0.1438 6.9525 7.1 Thailand baht 0.02776 36.020 0.03 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 12 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 0.76111% 0.42390% TakedaPharm 4502 4851.00 -0.08 -20.02 RoyDtchShell A RDSA 2213.50 ... 45.05 Last: 140.16 t 0.68, or 0.48% YTD s 2.9%
Three month 0.99706 0.60670 Asia Titans HK$ TencentHoldings 0700 179.70 -0.99 17.68 SAP SAP 82.35 0.41 12.22
Six month 1.31656 0.83340 HK$ AIAGroup 1299 43.95 -0.34 -5.69 TokioMarineHldg 8766 4859.00 -0.08 3.12 Sanofi SAN 76.22 0.47 -3.03 High 155
One year 1.68956 1.15950 65.42 0.41 24.47 50day
AstellasPharma 4503 1635.00 0.06 -5.57 ToyotaMtr 7203 6968.00 -0.33 -6.94 SchneiderElectric SU Close 150
Euro Libor AU$ AustNZBk ANZ 30.73 0.03 10.03 AU$ Wesfarmers WES 42.08 -0.78 1.13 Siemens SIE 115.80 0.48 28.84 Low moving average
145
One month -0.38000% -0.20429% AU$ BHP BHP 24.63 -2.03 37.91 AU$ WestpacBanking WBC 32.64 -0.12 -2.74 CHF Syngenta SYNN 409.10 0.25 4.28 t
Three month -0.33357 -0.12714 HK$ BankofChina 3988 3.35 -0.30 -3.18 AU$ Woolworths WOW 23.85 -0.54 -2.65 Telefonica TEF 8.83 -0.21 -12.88 140
Six month -0.22657 -0.03786 HK$ CKHutchison 0001 88.10 -0.73 -15.61 Total FP 48.38 0.03 21.99 135
One year -0.08557 0.05929 HK$ CNOOC 0883 9.57 -1.24 18.59 Stoxx 50 CHF UBSGroup UBSG 16.18 0.62 -17.11
130
Euribor AU$ CSL CSL 97.80 -0.40 -7.13 Unilever UNA 39.08 -0.15 -2.57
CHF ABB ABBN 21.66 0.05 20.60
One month -0.36900% -0.20200% Canon 7751 3416.00 -0.41 -7.05 Unilever ULVR 3272.50 0.34 11.82 30 7 14 21 28 4 11 18 25 2 9 16 23
ASMLHolding ASML 106.50 0.61 29.01
Three month -0.31800 -0.13200 CentralJapanRwy 9022 19485 -0.23 -9.79 Vinci DG 64.53 0.08 9.11 Oct. Nov. Dec.
AXA CS 24.16 0.48 -4.22
Six month -0.22000 -0.04200 HK$ ChinaConstructnBk 0939 5.62 3.12 5.84 VodafoneGroup VOD 200.55 0.40 -9.25
AirLiquide AI 105.40 0.19 1.69
One year -0.08100 0.05800 HK$ ChinaLifeInsurance 2628 20.05 ... -20.12 CHF ZurichInsurance ZURN 281.30 -0.07 8.86
156.85
Yen Libor HK$ ChinaMobile 0941 80.50 -0.49 -8.00


Allianz
AnheuserBuschInBev
ALV
ABI 99.49
-0.06 -4.10
0.41 -13.03 DJIA Stoxx 50
One month -0.03500% 0.05071% HK$ ChinaPetro&Chem 0386 5.48 -1.79 16.84 AstraZeneca AZN 4407.00 1.49 -4.54 Last: 3000.70 s 2.37, or 0.08% YTD t 3.2%
Three month -0.00979 0.07714 AU$ CmwlthBkAust CBA 82.50 -0.23 -3.54 BASF BAS 87.74 0.33 24.07
$ AmericanExpress AXP 74.97 0.01 7.80
Six month 0.02136 0.11786 EastJapanRailway 9020 10250 -0.10 -10.48 BNP Paribas BNP 60.68 -0.80 16.18
$ Apple AAPL 117.67 0.99 11.79 3000
One year 0.12943 0.22143 Fanuc 6954 20185 0.10 -4.25 BT Group BT.A 370.35 -0.16 -21.49
$ Boeing BA 157.03 -0.50 8.60
$ Caterpillar CAT 94.47 0.16 39.00 2940
Offer Bid Hitachi 6501 636.60 -0.38 -7.94 BancoBilVizAr BBVA 6.44 -0.25 -2.46
TW$ Hon Hai Precisn 2317 83.50 0.24 106.68 $ Chevron CVX 118.71 0.24 31.96 2880
Eurodollars BancoSantander SAN 4.95 -0.40 9.75
HondaMotor 7267 3497.00 0.06 -10.56 $ CiscoSystems CSCO 30.76 0.75 13.28
One month 0.8500% 0.7500% Barclays BARC 224.95 -0.90 2.76 2820
KRW HyundaiMtr 005380 144500 ... -3.02 $ Coca-Cola KO 41.62 0.05 -3.12
Three month 1.1000 1.0000 Bayer BAYN 98.72 0.22 -14.75
2760
HK$ Ind&Comml 1398 4.49 ... -4.06 $ Disney DIS 105.19 0.04 0.10
Six month 1.3000 1.2000 BP BP. 503.00 ... 42.09
$ DuPont DD 75.03 0.13 12.66
One year 1.6500 1.5500 JapanTobacco 2914 3922.00 -0.33 -12.28 BritishAmTob BATS 4558.00 0.25 20.87 2700
KDDI 2974.00 0.80 -5.71
$ ExxonMobil XOM 90.90 0.21 16.61
Latest 52 wks ago 9433 Daimler DAI 70.96 -0.10 -8.53 $ GeneralElec GE 31.96 0.27 2.62 30 7 14 21 28 4 11 18 25 2 9 16 23
Mitsubishi 8058 2521.00 -0.06 24.31 DeutscheTelekom DTE 16.19 0.43 -2.03 $ Oct. Nov. Dec.
Prime rates GoldmanSachs GS 242.35 0.57 34.47
MitsubishiElectric 6503 1609.00 -1.41 25.46 Diageo DGE 2097.00 0.60 12.95 $
U.S. 3.75% 3.50% HomeDepot HD 134.97 -0.06 2.06
MitsubishiUFJFin 8306 738.10 0.26 -2.51 ENI ENI 15.34 ... 11.16 $
Canada 2.70 2.70 Intel INTC 37.20 0.64 8.00
1629.00 0.28 12.69 1549.00
Japan
Hong Kong
1.475
5.00
1.475
5.00


Mitsui
Mizuho Fin
8031
8411 215.70 0.37 -11.42


GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 646.50
0.29 12.82 $
-1.33 20.57 $
IBM
JPMorganChase
IBM
JPM
167.35
86.93
0.38 21.60
-0.14 31.65
Dow Jones Industrial Average P/E: 22
NTTDoCoMo 9437 2660.50 -0.45 7.11 INGGroep INGA 13.54 -0.62 33.46 $ J&J JNJ 115.64 -0.27 12.58 Last: 19952.45 s 18.64, or 0.09% YTD s 14.5%
Policy rates
ECB 0.00% 0.05%
AU$ NatAustBnk NAB 30.65 -0.49 1.49 ImperialBrands IMB 3539.00 1.09 -1.32 $ McDonalds MCD 123.12 -0.02 4.22
Britain 0.25 0.50
NipponTeleg 9432 4927.00 -0.38 1.88 IntesaSanpaolo ISP 2.45 -0.33 -20.60 $ Merck MRK 59.97 0.69 13.54 19800
Switzerland 0.50 0.50
NissanMotor 7201 1198.50 0.33 -6.33 LVMHMoetHennessy MC 179.95 0.36 24.19 $ Microsoft MSFT 63.62 0.60 14.67
Panasonic 6752 1215.00 -0.65 -2.06 LloydsBankingGroup LLOY 63.80 -0.31 -12.69 $ Nike NKE 51.70 -0.41 -17.29
19250
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 38.40 -0.52 -10.49 LOreal OR 172.70 0.09 11.20 $ Pfizer PFE 32.52 0.12 0.74
U.S. discount 1.25 1.00 18700
Fed-funds target 0.50 0.25
$ RelianceIndsGDR RIGD 31.45 0.96 2.78 NationalGrid NG. 951.30 1.91 1.47 $ Procter&Gamble PG 84.52 -0.52 6.43
Call money 2.50 2.25
KRW SamsungElectronics 005930 1799000 0.06 42.78 CHF Nestle NESN 73.25 0.21 -1.74 $ 3M MMM 179.00 0.14 18.83 18150
Seven&I Hldgs 3382 4487.00 -0.55 -19.15 CHF Novartis NOVN 74.15 0.34 -14.57 $ Travelers TRV 121.71 -0.34 7.84
Overnight repurchase rates 17600
U.S. 0.55% 0.38%
SoftBankGroup 9984 7868.00 0.27 28.16 DKK NovoNordiskB NOVO-B 254.80 -0.08 -36.28 $ UnitedTech UTX 110.50 -0.14 15.02
Euro zone n.a. n.a.
Sony 6758 3324.00 -0.27 10.73 Prudential PRU 1605.00 0.06 4.83 $ UnitedHealth UNH 163.10 0.04 38.64 30 7 14 21 28 4 11 18 25 2 9 16 23
Sumitomo Mitsui 8316 4586.00 0.48 -0.43 ReckittBenckiser RB. 6811.00 -0.06 8.44 $ Visa V 78.42 0.35 1.12 Oct. Nov. Dec.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 97.25 -0.66 3.73 RioTinto RIO 3064.00 -0.55 54.79 $ Verizon VZ 53.49 -0.35 15.73 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 180.00 0.28 25.87 CHF RocheHldgctf ROG 233.50 0.56 -15.52 $ Wal-Mart WMT 69.61 0.10 13.56 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL.
Chinese Taste Plain-Vanilla U.S. Assets
Residential properties
like student housing,
senior-living centers
gain investors favor
BY ESTHER FUNG
Big institutional investors
from China have grabbed
headlines with flashy pur-
chases of luxury hotels and
condominiums in the U.S. in
recent years, sometimes at re-
cord prices.
Now they are starting to
shun trophy properties in fa-
vor of plain-vanilla assets that
cater to middle-class consum-
ers.
Among their favorites:
midtier residential properties,
student housing, senior-living
centers and skilled nursing
homes. Chinese investors also
are looking outside the glam-
our cities of New York, Los
Angeles and San Francisco to
smaller cities.
The moves show how the
voracious buying in recent
years that pushed up prices of
high-profile assets to record
levels is now prompting for-
eign investors to think more
strategically about the U.S.
market.
Nanjing-based developer
Landsea Group is building
homes in Dublin, Sunnyvale
and Walnut Creek in California
and in Weehawken, N.J. Ten of
Shenzhen-based China Vanke
Co.s 14 U.S. projects are fo-
cused on the middle-tier con-
dominium market, some of
them with rental units.
Landseas target markets
are first-time and move-up
home buyers, to whom it will
offer single-family and multi-
family homes for various
stages of the customers lives,
said John Ho, chief executive
The Land of a Thousand Teardowns
BY THERESA AGOVINO
Seven years ago, Rob Fisher
realized there was a huge dis-
connect between what home
buyers were looking for in
Northern Virginia and what
was available.
Single-story brick homes
with 2,000 square feet or less
that were more than 50 years
old were relatively plentiful.
The two-story modern resi-
dences with more than 3,500
square feet that young fami-
lies desired were in short sup-
ply.
A lot of the homes have
outlived their usefulness, said
Mr. Fisher, founder of Fisher
Custom Homes, which spe-
cializes in razing older houses
and replacing them with new
dwellings. My current buyer
wants to live in a convenient
area but they have greater af-
fluence and want bigger, more
state-of-the-art homes.
The teardown business in
Northern Virginia is booming.
Areas like McLean, Arlington
and Vienna are highly coveted
because of their proximity to
Washington, D.C., but a dearth
Portlands Office Market Moves Beyond Its Industrial Core
BY BRIAN LIBBY
PORTLAND, Ore.On a re-
cent afternoon at the Swift ad-
vertising agencys new offices
in this citys Slabtown district,
employees milled about an
open floor plan with cubicle-
free desks giving way to a spa-
cious common area boasting a
kitchen and sofas. Natural
light streamed into the
30,000-square-foot former
warehouse via arrays of new
skylights and glass walls.
The rehabbed building is
part of a wave of redevelop-
ment intended to lure tech and
creative companies to Port-
lands gritty industrial core.
The citys office market is
in transition. With unemploy-
ment at a 15-year low and the
nations third-lowest office va-
cancy rate in 2015, landlords
are getting more creative in
hopes of landing higher-pay-
ing tenants.
Manufacturing still contrib-
utes a higher percentage to
the Portland metropolitan
areas gross domestic product
than any other major U.S. city,
about 26%. With industrial va-
cancy at record lows, Portland
is trying to strike a balance
many cities have found elu-
sive: retaining central-city
Grand China Fund is investing in a joint venture to build a 166-unit student-housing project near the University of Texas-Austin.
officer of Landsea Holdings
Corp., the groups U.S. arm.
The firm is building projects
that will be sold primarily to
the domestic market.
While Vankes first invest-
ment in the U.S. in 2013 is a
joint venture with Tishman
Speyer to build the Lumina, a
luxury condominium project in
San Francisco, the firm said it
prefers to focus on building
homes where there is a con-
siderable buyer pool whose
demand is necessity-driven
and less volatile than the lux-
ury segment.
of vacant lots had stifled new
construction.
Over the past few years, the
land beneath older homes has
become more valuable than
the houses themselves. Build-
ers said it is easier, and not
much more expensive, to build
a new house than to renovate
and expand an outdated one.
Northern Virginia is a
pretty hot area for tear-
A dearth of vacant
lots had stifled new
construction in
Northern Virginia.
downs, said Robert Dietz, the
chief economist for the Na-
tional Association of Home
Builders, a Washington-based
trade group. There are al-
ready established, nice neigh-
borhoods with nice schools, so
theres incentive to replace
homes.
Last year, teardowns repre-
sented almost 8% of single
Manufacturing contributes about 26% to the Portland metropolitan areas gross domestic product.
manufacturing businesses
while diversifying these dis-
tricts with tech and creative
companies.
Its the business side of
gentrification, said Jerry
Johnson, a real-estate profes-
sor at Portland State Univer-
THE PROPERTY REPORT
These simple and enduring
principles have helped us fo-
cus away from the luxury mar-
ket and investor-centric proj-
ects that carry higher
potential risk, said Kai-yan
Lee, managing director of
Vanke Holdings USA.
Grand China Fund is invest-
ing in a joint venture to build
a 166-unit, 464-bed student-
housing project near the Uni-
versity of Texas-Austin. The
Beijing-based fund had in-
vested in 20 other housing-
rental projects in eight cities
around the country.
family housing starts, or about
55,000 homes, in the U.S., ac-
cording to the NAHB. Mr. Di-
etz said the association
doesnt have historical data
but that his conversations
with builders suggest the
numbers are growing, espe-
cially in long-established sub-
urbs with older housing stock
around cities such as New
York, Boston and Washington.
In all, there were 8,000
teardowns in the Northeast re-
gion last year, only 100 less
than in the much larger Mid-
west and 2,600 less than in
the even larger Western re-
gion of the country. That is
mainly because of the vast dif-
ference in the age of the hous-
ing stock. New York state has
the oldest housing stock with
a median age of 59 years,
while Massachusetts is second
oldest at 56 years, according
to the 2015 American Commu-
nity Survey by the U.S. Census
Bureau. Nevada has the youn-
gest housing stock, with a me-
dian age of 21. Virginia is in
the middle at 34 years.
Teardowns in Northern Vir-
ginia accelerated after the re-
sity and leader of the consult-
ing firm Johnson Economics.
A tech firm may have 175
square feet per employee
while a manufacturing firm
might be 500 square [feet] per
employee. People using their
spaces less intensively will be
Wednesday, December 28, 2016 | B9
GFF ARCHITECTS
Investing in student hous- believes this situation is tem-
ing is a strategy were taking porary.
in response to Americas over- The gateway cities in the
heating market. The profit U.S. still draw the biggest in-
margins may not be especially vestments from Chinese real-
high, but its very stable, said estate investors. But as air-
Zhang Mingeng, chairman of lines look to offer more direct
Grand China Fund. flights from China to other cit-
Mr. Zhang said that Austin ies such as Houston, Seattle
isnt a big city but has more and Atlanta, the shortened
than 10 universities and train- routes could propel further in-
ing institutes, with strong de- vestments.
mand for and insufficient sup- After seeing a rapid in-
ply of student housing. crease in wealth and insurance
He said Chinas capital con- premiums in recent years, Chi-
trols could prompt the fund to nese investors and insurers
slow its U.S. purchases, but say they need to diversify
cession, builders said. That
has drawn more competitors
to the market and pushed up
housing prices, making it
tougher to turn a profit. Build-
ers said the number of compa-
nies in the teardown segment
has grown from a handful to
anywhere between 30 and 40.
We often find ourselves in
bidding wars, said Rob Cap-
pellini, president and founder
of Evergreene Homes, a sub-
sidiary of his larger construc-
tion firm, Evergreene Cos.
Mr. Cappellini said that
having to pay higher prices for The teardown business in Northern Virginia is booming, including
the homes has cut into profit areas like McLean, Arlington and Vienna.
margins. He said the company
earns higher margins building Likewise, Mr. Fisher of
planned communities but has Fisher Custom Homes said he
no plans to abandon the tear- is adjusting his operations to
down business. cope with the more competi-
Its a steady stream of in- tive market. He rarely buys
come and there is demand, homes in McLean anymore be-
Mr. Cappellini said. He added cause the costs have become
that the company completed prohibitively expensive, with a
28 teardowns this year, up teardown costing as much as
from 21 in 2015 and 16 in 2014. $1 million, he said. Most of his
This year, teardowns ac- work is done in Vienna, where
counted for about 15% of the he says it is still possible to
companys revenue, a figure he purchase a home for between
estimates will grow to 20% in $550,000 and $750,000, raze it
2017. and build another that will sell
front district near downtown.
The redevelopment decision
came partly because the facil-
ity was becoming obsolete
unable to produce todays
larger bargesbut also be-
cause it is more profitable to
redevelop the longtime indus-
trial property, with high-den-
sity office and retail along a
public riverside greenway.
Its living here, working
here, having recreation and
having access to the river,
said Thomas W. Henneberry,
chief operating officer for the
planned Zidell Yards develop-
ment on the barge site, of the
companys vision.
Even so, City of Portland
leaders believe they will be
RALPH LAUER/ZUMA PRESS
able to retain the light-indus-
trial businesses located in
these enclaves even as they at-
tract more tech and creative
businesses.
In 2006, for example, the
city amended zoning in the
heretofore-industrial Central
Eastside to allow creative of-
displaced. fice space in a portion of the
Earlier this year, one of district. The newly rezoned
central city Portlands most land, located just across the
visible industrial businesses, Willamette River from down-
Zidell Marine Co., announced town Portland, proved so pop-
it would cease operations at ular that even during the re-
its waterfront barge-building cession demand increased by
facility in the South Water- roughly 5% to 8% annually.
their assets and are discover-
ing other, less conspicuous
ways to make money in real
estate.
Health-care real estate,
which isnt a major cash cow
for property developers in
China, is getting some atten-
tion from Chinese private-eq-
uity players and insurers.
These investors arent just
eyeing steady, long-term fi-
nancial returns from these as-
sets given the aging popula-
tion in the U.S. They also are
looking to gain expertise from
North America to bring back
to China, focusing initially on
services for seniors.
Cindat Capital Management
Ltd. and Union Life Insurance
Co. Ltd. are investing in a
$930 million joint venture
with health-care real-estate in-
vestment trust Welltower Inc.
in a portfolio of 11 senior
housing and 28 skilled-nursing
care assets. Cindat and Union
Life will own a 75% interest
and Welltower the remaining
25%.
Chinese insurers all be-
lieve there are strong syner-
gies between senior care and
their insurance policies, said
Allan He, senior partner at
Cindat Capital Management,
adding that getting investment
returns and management
know-how kills two birds
with one stone.
Toledo, Ohio-based Well-
tower said Chinese investors
took notice of its earlier-es-
tablished partnerships with
Canadian pension funds.
Chinese investors are also
looking abroad for opportuni-
ties to gain experience in and
strategic insights about se-
niors housing, with an eye to-
ward aging population growth
and future demand in China,
said Tom DeRosa, CEO of
Welltower.
BTW IMAGES
for $1.3 million to $2 million.
Roughly 60% of Mr. Fishers
business comes from tear-
downs he purchases while the
remainder stems from people
who have bought properties
they wanted razed, he said.
Right now, he is finishing two
homes and is slated to start
three more in the spring. He is
still looking around but is be-
ing very selective as the mar-
ket grows more competitive.
Im pretty conservative,
he said.
Troy Doss, a senior planner
for the city of Portland said,
We didnt see it knocking out
industrial uses.
Today, the city is expanding
allowances for creative office
space in its Central City 2035
plan, recently approved by
Portlands city council.
Rubbing elbows with indus-
trial businesses seems to have
an attraction for new-economy
companies. Even as Swift has
grown substantially over its
nine-year history, adding cli-
ents like Starbucks Corp., Nike
Inc. and Nestl SA while ne-
cessitating a series of moves
to accommodate more employ-
ees, co-founders Liz Valentine
and Alicia McVey always kept
the company in Slabtown.
Its got grit. Its not so
manicured, Ms. McVey said,
and that feels welcoming to a
fledgling company, which is
how we started.
Swifts headquarters, which
recently won an American In-
stitute of Architects award for
architects Beebe Skidmore,
was intended as a multitenant
speculative office project initi-
ated by local developer Proj-
ect. But the building was tai-
lored to the ad agencys needs
after it signed on early in the
redevelopment.
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
B10 | Wednesday, December 28, 2016
Surging Buybacks Fuel Stock Boom Financing
Cars May
Trump victory raises
prospects that tax
revamp will aid share
repurchases in 2017
BY CORRIE DRIEBUSCH
AND AARON KURILOFF
Corporate stock repur-
chases are on the upswing
once again, wrong-footing
skeptics who predicted 2016
would mark the beginning of
the end of a postcrisis spend-
ing spree.
Through Dec. 16, companies
this month have stepped up
buybacks by nearly two-thirds
over the same period last year,
according to Goldman Sachs
Group Inc. Boeing Co. this
month replaced an existing
buyback program with a new
$14 billion authorization.
The outlook for buybacks,
like so much else in financial
markets, has been upended by
the Nov. 8 election of Donald
Trump as president. After re-
purchases hit a record in 2015,
they had slowed this year.
Many analysts predict they
will decline next year, reflect-
ing soft corporate-earnings
growth and stretched stock
valuations.
But the election surprise
has raised the prospect that
tax cuts will put large sums in
corporate coffers, which in
turn will be deployed largely
in repurchases.
That money potentially
could include the profits that
U.S. companies stand to bring
back from overseas under a
widely expected repatriation-
tax holiday.
Goldman Sachs forecast
that S&P 500 companies will
repatriate $200 billion of their
$1 trillion in cash held over-
seas in 2017 and that $150 bil-
lion of those funds will be
spent on share repurchases.
That could provide further
support for major U.S. stock
indexes that have hit highs
this month.
Buybacks arent going any-
Email: heard@wsj.com
The Negative-Yield Story of 2016
The end of 2016 has been
dominated by a sharp rise in
global bond yields. But the
most remarkable develop-
ment of the yearthe wide-
spread emergence of nega-
tive bond yields even for
long-dated securitiesis
leaving a legacy that will
persist.
The total amount of global
fixed-income securities with
a negative yield has fallen
from its late September peak
of $13.3 trillionmore than
double the level of $5.6 tril-
lion at the start of 2016, data
from Bank of America Mer-
rill Lynch shows. But there
were still more than $10 tril-
lion of negative-yielding
bonds globally at the start of
December. German yields are
still negative out to 2024.
Indeed, some yields have
only fallen further as the
year has gone on. Two-year
German yields started the
year at minus-0.35%; they
fell to minus-0.8% in Decem-
ber, buoyed by tweaks to the
European Central Bank pur-
chase program and a hunger
for high-quality liquid collat-
eral ahead of year-end.
Biogen Gets a Holiday Gift With Surprise Drug Approval
Biogen investors got a
much-needed pleasant sur-
prise this holiday season.
The company announced
late last week it had received
approval from the Food and
Drug Administration for
Spinraza. The drug is the
first treatment for a rare
disease known as spinal
muscular atrophy, and the
FDA approved it for usage in
a broad range of patients.
The approval is welcome
news for shareholders and
incoming Chief Executive
Michel Vounatsos, and the
good news came early.
Analysts mostly didnt ex-
pect approval until the mid-
dle of next year. Biogen says
it will begin shipping the
Big Ticket
Repurchases have helped fuel the rise of U.S. stock indexes since the
nancial crisis, reecting the appeal of a practice that can reduce share
counts, boost per-share earnings and appease restive shareholders.
Many rms such as Boeing have emerged as major repurchasers.
Annual $4 trillion
market-value
change in the
S&P 500 3 support the auto industry.
S&P 500
companies' 2 600
buybacks
1
0 0
2009
Boeing stock price
$200
160
120
80
40
0 comes after China earlier this
2007 2008
Note: 2016 buyback data through third quarter; Boeing data on 2016 not yet available.
Sources: FactSet (market value); S&P Dow Jones Indices (buybacks); SEC Filings (Boeing); WSJ Market Data Group (S&P)
where, said Matthew Peron,
head of global equity at North-
ern Trust Asset Management.
Its just a question of will
they be dialed up through re-
patriation.
Repurchases have been a
major contributor to the
nearly eight-year stock rally.
From the start of 2009 to the
end of September 2016, com-
panies in the S&P 500 spent
more than $3.24 trillion repur-
chasing shares, according to
S&P Dow Jones Indices.
Both companies and inves-
tors often applaud share re-
purchases because the practice
drives up earnings per share
and often boosts stock prices.
But it is a controversial
HEARD ON THE STREET
Nadir
Lowest closing and most
recent yields on 10-year
government bonds Lowest
U.S.
U.K.
France
Germany
Japan
Switzerland
Sources: FactSet; Bloomberg News (photo)
THE WALL STREET JOURNAL.
But the real oddity of
2016 was negative yields for
long-dated securities, which
turned on their head as-
sumptions about the behav-
ior of fixed-income markets.
Germany and Japan got the
most attention as their 10-
year yields turned negative,
but that was far from the
most extreme: The yield on a
Swiss government bond ma-
turing in 2064 briefly turned
negative after the U.K. vote
to leave the European Union.
drug as soon as this week.
Other pharma companies
have rival drugs in clinical
development, so extending
any period of market exclu-
sivity is likely to help Spin-
razas financial performance.
Analysts at Leerink Part-
ners boosted their 2017
Spinraza revenue forecast to
$428 million from $92 mil-
lion. That would likely place
Spinraza among Biogens top
10 selling drugs.
Biogen owes a $60 million
milestone payment to devel-
opment partner Ionis Phar-
maceuticals, but Biogen gets
another sweetener: The FDA
awarded Biogen a pediatric
priority review voucher as a
result of the approval. That
MARKETS
10 11 12
2009 2010 2011 2012
practice in some quarters,
with skeptics contending that
repurchases serve to prop up
the market at a time of
stretched valuations and weak
corporate earnings.
Some analysts also worry
that firms spending money to
boost their share prices are
shortchanging U.S. economic
growth by scrimping on long-
term investment spending,
such as factories and other
capital projects.
The endgame to me is we
also want to see capital expen-
ditures and business spend-
ing, said Don Rissmiller, chief
economist at investment firm
Strategas. That would help
the real economy.
FINANCIAL ANALYSIS & COMMENTARY
Dec. 27
1.36%
2.57%
0.54%
1.20%
0.10%
0.73%
0.19%
0.26%
0.30%
0.06%
0.63%
0.09%
European Central Bank
headquarters in Frankfurt
That underlines just how
far the bond market went
into unknown territory in
2016. The lure of fixed in-
come lies in the word
fixedit is an asset de-
signed to provide a known
stream of cash flows. The
rally of the first half of 2016
that took long-dated yields
into negative territory
turned bonds into a pure ve-
hicle for speculation, as fu-
ture cash flows were already
accounted for in the pur-
can be used to expedite the
application process for a fu-
ture drug, or it can be sold.
Selling the voucher could
fetch $350 million or more.
The good news doesnt
erase the risks that Biogen
shareholders face. The com-
panys best-selling multiple
sclerosis Tecfidera faces new
competition and challenges
to key patents. Meanwhile,
the outcome for the com-
panys highest-reward pipe-
line asset, the Alzheimers
drug aducanumab, wont be
known for some time.
But for shareholders, the
early approval for Spinraza
should make waiting for
those results a little more
palatable. Charley Grant
13 14 15
Average repurchase
price by year
2013 2014 2015 2016
This year buybacks ap-
peared to be slowing a bit. In
the first three quarters of the
year, companies in the S&P
500 spent just over $400 bil-
lion on stock buybacks, down
from the $426 billion in the
same period last year, accord-
ing to S&P Dow Jones Indices.
For all of 2015, $572 billion
went to buybacks.
Apple Inc. is among the big-
gest spenders on buybacks,
and it is also one of the com-
panies that could benefit the
most from updated repatria-
tion policies.
The tech company has
bought back $31.1 billion in
stock over the 12 months that
ended in the third quarter, ac- the life insurers largest ever.
chase price. The price of the
Swiss 2064 bond topped
200% of face value at its
peak. With a coupon of 2%,
investors were asked to pay
more up front than the total
value of future coupon pay-
ments and the principal.
The bond market selloff of
the fourth quarter has made
the situation less extreme,
and higher headline inflation
in 2017 should mean long-
dated yields dont revisit
their lows. While the Federal
Reserve is talking of raising
rates further, sending U.S.
Treasury yields higher, other
central banks are stuck. The
ECBs deposit rate is at mi-
nus-0.4%, while the Bank of
Japan is aiming to keep its
10-year yield around zero.
That means swaths of
bonds will continue to carry
negative yields in 2017. The
selloff should have curbed
speculative urges to bet on
ever lower yields for bonds.
But continued distortions
from central-bank policy
means bond investors still
face extraordinary chal-
lenges.
Richard Barley
SCOTT EISEN/BLOOMBERG NEWS
Biogen said last week that it received FDA approval for Spinraza.
2000
S&P 500
16
Boeing buybacks, by year
Number of shares
2007 9,387,168
2008 7,566,972
2009 0 cars price from banks or other
2010 0
2011 0 the car price. The central bank
2012 0 said it will solicit comments
2013 7,570,153
2014 7,822,164
2015 5,292,358
THE WALL STREET JOURNAL.
cording to FactSet. It holds
more than $200 billion in cash
and other liquid investments
offshore.
Apples research-and-devel-
opment spending increased
25% in fiscal 2016 and 34% in
2015, according to corporate
filings.
The company called R&D
spending critical to its future
growth and competitive posi-
tion in the marketplace.
In November, MetLife Inc.
said that its board approved
$3 billion for share repur-
chases, an announcement that
came after it put its buyback
program on hold in early 2016.
This allocation to buybacks is
OVERHEARD
The election of Donald
Trump as U.S. president last
month led to heightened eco-
nomic fears in Mexico and a
record decline in the peso.
But American devotion to at
least one Mexican export ap-
pears only to have strength-
ened.
Dollar sales of tequila rose
by 13.9% year over year in
the month of November as
volume grew by 13.2%, ac-
cording to Cowen. That com-
pares with growth of 7.4%
and 5.1% for all distilled spir-
its.
Indeed, despite the anti-
Mexico rhetoric of Mr. Trump
and the risk of a trade war
and border wall, Mexicans
can take some comfort from
the rising popularity of their
signature spirit across the
border.
The only spirit to outpace
tequilas growth was Irish
whiskey: Sales of that liquor
sales climbed 19.4%.
It may be too much of a
stretch, however, to call that
outperformance a reaction to
President-elect Trumps Scot-
tish roots.
THE WALL STREET JOURNAL.
2200
1800
GetEasier
SHANGHAIChina is con-
1600 sidering lifting the current
80% limit on the amount of a
1400 car price that consumers can
1200
borrow to finance a purchase,
the central bank said Tuesday,
in a fresh move by Beijing to
1000
800 The Peoples Bank of China
said on its website that it and
the Chinese banking regulator
have moved to revise the auto-
400 finance regulation, including
200
making the loan-to-value ratio
more flexible. Exactly how
much a buyer can borrow will
be set based on broader eco-
nomic factors and consulta-
tions with the automotive in-
dustry, it added.
Under the current policy, in
place since 2004, consumers
can borrow up to 80% of a
financial institutions. For used
cars, the cap stands at 50% of
about the revised regulation in
the coming month.
The proposed relaxation
month decided to extend a tax
incentive for small-engine cars
into 2017, albeit at a smaller
scale, to ease concerns about
slowing demand in the worlds
largest car market.
The Ministry of Finance
said it will levy a 7.5% pur-
chase tax on vehicles with en-
gines up to 1.6 liters from Jan.
1, an increase from the current
rate of 5% but below the nor-
mal 10%.
Chinas auto market has
significantly rebounded since
the last quarter of 2015, when
the government rolled out the
tax break to resuscitate the
car industry. From January
through November this year,
Chinas new-car sales were at
21.7 million vehicles, up 16%
from the same period a year
earlier, when sales registered
5.9% growth. Rose Yu
WSJ.com/Heard
Trump Trade
Gives Banks
Pain in Spain
Donald Trumps U.S. elec-
tion victory has hurt some
European banks: Spanish
banks in particular have un-
derperformed due to worries
about the president-elects
attitude to trade and the
pain that will cause Mexico
and South America.
Shares of Santander
Group and BBVA have trail-
ed the Stoxx 600 Banks in-
dex and are way behind in-
vestment banks that rallied
on deregulation hopes.
For BBVA, President
Trump poses potential prob-
lems. The lender gets its big-
gest chunk of earnings from
Mexico, about 40% in the
first nine months of 2016,
which is the market most
threatened by the president-
elects stance against globali-
zation and immigration.
The peso has slid, making
Mexican earnings worth less,
while investment and loan
growth is expected to suffer
immediately. If Mexico loses
industry and exports, bad
loans will rise, too.
Santander relies less on
Mexico. Its big South Ameri-
can market is Brazil, which
contributes about one-fifth
of earnings. The country
could suffer if trade with the
U.S. declines, but it has been
recovering strongly and the
currency has been strength-
ening all year.
BBVA has another prob-
lem: Its other major market
outside Spain is Turkey,
where a coup attempt and
political crackdown have
spooked investors, leading to
a weak currency and higher
interest rates.
Pessimism about trade un-
der President Trump might
prove overdoneas might
optimism about investment-
bank freedoms to come. But
Santander looks like a safer
bet than BBVA.
Paul J. Davies