Download pdf - CEO Pay Fell Most Since '08 - Investire Oggi

FRIDAY - SUNDAY, APRIL 8 - 10, 2016 ~ VOL. XXXIV NO. 48 WSJ.com

CONTENTSArts & Ent............. A12Books...................... A7-9Business & Tech. B1-4Crossword.............. A12Heard on Street.... B8Mansion............ W9-15

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What’sNews

� Islamic State militants inSyria kidnapped over 300workers at a cement plantin an assault on a strategictown near Damascus. A1� Putin denied any “ele-ment of corruption” in re-ports that placed his closeassociates at the center ofoffshore transactions. A3� An Austrian banker quitand more details of a Nor-wegian scandal emerged,in the latest fallout fromthe “Panama Papers.” A3

� A founder of MossackFonseca, the law firm atthe center of the leak, de-fended its practices. A3�Cameron said he did ben-efit from an offshore fundset up by his late father. A3� 1MDB’s board offered toquit after a report foundbillions missing but didn’tmention Malaysia’s leader,who founded the fund. A4� Kerry and Bahrain’sforeign minister urged Iranto curb its provocative be-havior in the Mideast. A2� Saudi Arabia’s king ar-rived in Egypt for a rare visitto cement ties between thetwomajor Arab powers. A4� A fight among unionshas slowed the creation ofa U.S. super PAC to aidpro-labor Democrats. A5� Nearly all the suspectsin the Cologne sex assaultswere migrants and asylumseekers, officials said. A4

Median pay for CEOs ofthe top U.S. firms fell

3.8% last year to $10.8 mil-lion, the sharpest dropsince the financial crisis. A1�The head of Seven & i, theJapanese owner of 7-Eleven,said he would step down af-ter a clash with hedge-fundoperator Daniel Loeb. A1� France’s Numericablehas sold $5.19 billion indebt in the largest-yet saleof a single junk bond. B5�Allergan completed a li-censing deal to develop neu-rological drugs, just after itsdeal with Pfizer collapsed. B1�VW’s labor leaders ac-cused management of usingthe emissions scandal as anexcuse for job cuts. B1�Economists surveyedtrimmed their forecasts forU.S. job gains and economicgrowth in the year ahead. A5�M&S reported a 1.9% risein sales as food sales helpedoutweigh a slump in its homeand clothing division. B2�A secret technique usedto unlock a terrorist’s iPhonedoesn’t work on newer Ap-ple models, the FBI said. B3�Uber’s Chinese rival isclose to completing a fund-ing round that values thatfirm at over $25 billion. B3�A U.S. trade panel said itwould investigate the globalaluminum trade and its im-pact on the U.S. industry. B4

Business&Finance

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Golf HomesBy the SeaMANSION | W9

EUROPE EDITION

Dan NeilTesla’s ElectricExtravagance

OFF DUTY | W8

Putin Brushes Aside ‘Panama Papers’ Allegations

KLIMENTY

EVMIKHAIL/TASS/ZUMAPRESS

RESPONSE: Russian President Vladimir Putin, above at a media forum in St. Petersburg on Thursday, said there was no ‘element of corruption’in reports that placed his associates at the center of offshore transactions. Mr. Putin also said that he wasn’t mentioned personally. A3

with such a specific diet. Butwhen two children being raisedvegan enrolled four years ago,school director MariaGermerud-Sharp didn’t wantthem to feel left out at meals, so

she banned whatthey couldn’t have.

“One of the corevalues of the schoolis building commu-nity,” she said. “Weall eat together.”

This is a gentleplace where 92 chil-dren play barefoot tofeel a connection totheir environment

and the air often smells like pep-permint from aromatherapy.Classrooms have bowls of pinecones, seashells and rocks fortoys.

Please see VEGAN page A6

BEIRUT—Islamic State mili-tants kidnapped more than300 workers at a cementplant, part of a broader as-sault on a strategic town nearthe capital Damascus that ishome to major military and in-dustrial installations, Syrianstate media reported onThursday.

Al Badia Cement, whichowns the plant located nearthe town of al-Dumayr, toldthe Ministry of Industry thatits employees had been ab-ducted on Wednesday and thatit had lost all contact withthem, SANA news agency re-ported. Some of the employeeswere seen in an Islamic Stateconvoy heading east towardthe desert, the report said.

An official with Al Badiabased in Damascus andreached by telephone declinedto comment on the report.

U.K.-based opposition mon-itoring group the Syrian Ob-servatory for Human Rightslater said Islamic State kid-napped about 170 of the work-ers while the rest escaped.This couldn’t be independentlyconfirmed.

The push by Islamic Stateon al-Dumayr, about 25 milesnortheast of the capital, comesas the extremist group facespressure on many fronts fol-lowing a series of losses inIraq and Syria this year.

Fierce clashes broke out inand around the city on Thurs-day as the Syrian regime andits allies tried to repel the Is-

Please see SYRIA page A2

BY SAM DAGHER

MilitantsKidnapHundredsIn Syria

TOKYO—A convenience-store pioneer who built a To-kyo-based 7-Eleven empiresaid Thursday he would stepdown after losing a board-room clash that pitted himagainst U.S. hedge-fund opera-tor Daniel Loeb.

The resignation of To-shifumi Suzuki, the 83-year-old chairman and chief execu-tive of 7-Eleven’s parentcompany, Seven & i HoldingsCo., is a milestone for thebudding activist-shareholdermovement in Japan, whichhas drawn strength fromPrime Minister Shinzo Abe’scorporate-governance over-haul. Mr. Suzuki has con-trolled his company for de-cades and is one of Japan’smost prominent executives.

The battle between Mr. Su-zuki and Mr. Loeb centered onsuccession and corporatestrategy. Under Mr. Suzuki,Seven & i Holdings has aggres-sively acquired other retailersincluding department storesand a baby-goods chain, whileretaining the money-losingchain of big-box stores calledIto-Yokado that originallyformed the company’s core.

The company now calledSeven & i Holdings was longcentered on Ito-Yokado stores,which founder Masatoshi Itobuilt on a U.S. model sellinggroceries, clothes and house-hold items. Originally thatcompany operated 7-Elevenstores only in Japan.

In 1991, the Japanese com-pany known then as Ito-Yokado acquired the U.S. oper-ator of 7-Eleven stores. Today,the global 7-Eleven business is

Please see CLASH page A2

BY MEGUMI FUJIKAWAAND KOSAKU NARIOKA

7-ElevenChief LosesBoardroomShowdown

JERSEY CITY, N.J.—At theScandinavian School of JerseyCity, the children don’t havecupcakes at birthday parties, butthere is plenty offruit salad. Instead ofmeat, eggs and dairyfor the 1- to 6-year-olds, there is kalefrom the preschool’sgarden and cashewmilk made fromscratch.

This sought-afterschool in an increas-ingly hip city is un-usually committed to the goal ofgetting children to eat their veg-etables. The Scandi School, as itis called, is one of the few veganpreschools in the U.S.

The school didn’t start out

BY LESLIE BRODY

Parents Have No BeefWith This Preschool Menu

i i i

Jersey City vegan operation serves uptofu, squash risotto; rocks for toys

Vegan lentil soup

Compensation for the chiefexecutives of the biggest U.S.companies fell more sharplylast year than any year sincethe financial crisis, as weaker

corporate performance slowedcash bonuses and accountingrules pared back pensiongrowth.

Median pay for the CEOs ofnearly 300 large publiclytraded companies slipped 3.8%to $10.8 million last year from$11.2 million in 2014, a WallStreet Journal analysis of com-pensation data from MyLogIQfound. Half of those CEOs sawtotal pay either decline or riseby less than 1%—also theworst showing for S&P 500

chiefs since the 2008 crisis.“Increases in CEO pay have

taken a bit of a pause thisyear,” said John Roe, head ofadvisory services at ISS Corpo-rate Solutions. Where pay isrising, Mr. Roe noted, “it’s inthe places shareholders like tosee it coming from most: It’s inequity.”

The median rise in stock-based compensation—the big-gest component of most CEOpay packages—was about 7%.The median rise in cash pay,

including salary and annualbonus, was 2%, down from5.6% growth in 2014, the Jour-nal analysis found.

Many of the overall declinesin pay were driven by slowergrowth in CEO pension values,a year after pension increasesfor many top executivesswelled because of changes tothe actuarial assumptions un-derlying them.

Companies in the Journal’sanalysis generated a flat me-

Please see PAY page A5

BY THEO FRANCISAND JOANN S. LUBLIN

CEOPayFellMost Since ’08Median compensationfor S&P 500 bossesshrank to $10.8 millionfrom $11.2 million

REMAKING BASKETBALLTHEWARRIORS’ WAY

Team executives saw the 3-point line as a market inefficiency to exploit

Warriors star Stephen Currylast month in Oakland, Calif.

BENMARGOT/ASSOCIATE

DPRESS

curve flattened. It seemed that the sport hadfound its optimal ratio.

Then the Golden State Warriors came alongand blew that assumption to pieces.

The Warriors, the National Basketball Asso-ciation’s defending champion, now stand threewins from tying the league record of 72 in theregular season, set in 1996 by Michael Jor-dan’s Chicago Bulls. Much of the credit be-longs to the star guard Stephen Curry, who ishaving, by almost every measure, one of thebest seasons of any player in history.

But there is another tale to be told aboutthe Warriors. It involves a group of executives

Please see POINTS page A6

OAKLAND, Calif.—On every NBA court,about 24 feet from the basket, there is a thinstripe of colored paint. The flat-sided semicir-cle it forms is the boundary between shotsthat count for two points and shots that areworth three.

When the NBA added the lines in 1979, theplayers weren’t sure what to think. Theysniffed and pawed at them like cats with a newtoy. Only 3% of the shots they put up that sea-son were 3-pointers.

Over the next three decades, that numbercrept higher. When it reached 22%, the growth

BY BEN COHEN

Bangladeshi Students Rally

RISING TENSIONS: Students in Dhaka, Bangladesh’s capital,protested the speed of an investigation into a young woman’sdeath last month amid a surge in religious and political violence. A4

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ABDULLAH/EUROPEANPRESSPHOTO

AGENCY

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A2 | Friday - Sunday, April 8 - 10, 2016 THEWALL STREET JOURNAL.

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fully owned by Seven & i Hold-ings, and it has more than58,000 convenience stores inJapan, North America, Chinaand elsewhere.

Mr. Loeb has said Seven & iHoldings should shed the big-box stores and focus on conve-nience stores globally. And hepraised the head of the conve-nience-store business in Japan,Ryuichi Isaka, calling Mr. Isakaa natural candidate to succeedMr. Suzuki as the parent’s CEO.

A successor to Mr. Suzukiwasn’t immediately named. Acompany spokeswoman saidMr. Isaka wasn’t available tocomment.

Mr. Loeb has said that hisfund, Third Point LLC, ownshundreds of millions of dollarsin common shares of Seven & iHoldings. The investor hasmade a name for himself in re-cent years by challenging SonyCorp. to restructure unprofit-able units and urging indus-trial-robot maker Fanuc Corp.to raise dividends—with somesuccess in both cases.

The 7-Eleven dispute cameto a climax Thursday morning,when the Seven & i Holdingsboard met to consider a pro-posal backed by Mr. Suzuki tooust Mr. Isaka from his job.

ContinuedfromPageOne

CORRECTIONS �AMPLIFICATIONSReaders can alert The Wall StreetJournal to any errors in news

articles by [email protected].

TIKRIT, Iraq—If you dis-count the flattened govern-ment buildings and the sectar-ian graffiti daubed by Shiitemilitias on almost every wall,Tikrit looks almost like a nor-mal Iraqi city these days.

Merchants sell fresh toma-toes and onions at the market.Men sip sweet tea from smallglasses in kebab restaurants.

Reopenedshops displaytoys andcheap, Chi-nese-madeclothes. Thereis electricity,

mobile-phone services and, inmost cases, running water.Tikrit University, its campusonce used as a military base,has resumed its courses withmost of the 23,000 studentsback in attendance.

The hometown of formerdictator Saddam Hus-sein, Tikrit was one of

the three capitals of Iraq’s pre-dominantly Sunni provinces tofall to Islamic State. Liberateda year ago after 10 months un-der Islamic State’s bloody rule,Tikrit is now—despite resi-dents’ complaints about job-lessness, insecurity, and mili-tia abuses—held up by theIraqi government and its in-

YAROSLAV TROFIMOV

After ISIS, Iraqi City Slowly Regains Normalcy

ternational backers as a suc-cess story in the fight againstthe militant group.

After all, what is happeninghere may be the best-case sce-nario of what awaits Mosul,the only one of these threeprovincial capitals still in Is-lamic State’s hands, and otherareas under the group’s sway.

“Tikrit gives us hope. Ican’t wait for the time when I,too, can return to normal lifein my home area,” said NofalIbrahim, a student of Arabic atTikrit University. His home-town of Hawija, a two-hourdrive away, is still controlledby Islamic State.

Overwhelmingly SunniTikrit largely emptied out af-ter Islamic State seized it inJune 2014, massacring some1,500 Iraqi Shiite soldiers atthe Camp Speicher base justoutside. Many residents es-caped to the relative safety ofKurdish-controlled cities suchas Erbil in northern Iraq.

Unlike Ramadi, the thirdprovincial capital, Tikrit wasonly moderately damaged inthe months of fighting thatfollowed its occupation.Though many of Tikrit’s publicbuildings, then serving as Is-lamic State command centersand military positions, have

been destroyed by U.S. air-strikes, its residential areashave survived. According toprovincial officials, nearly 95%of Tikrit’s families have reset-tled in the city in recentmonths.

“What was really humiliat-ing was to be a refugee in Er-bil, and what people reallycare about now is that theyhave been able to return totheir homes,” said Nofal Ha-deed, an anesthesiologist atthe only one of Tikrit’s threehospitals that hadn’t beenbombed. “But I still have thisfear on my mind that I and myfamily may have to leave again

at any moment.”Ammar Abu Taher, who re-

cently reopened his small cur-rency-exchange and realtybusiness in central Tikrit, saidthat business was slow. “Thewealthy people are afraid andhave not come back yet,” hesaid. “There is no money andno jobs.”

His return permit, like thatof Mr. Hadeed’s, had to be vet-ted by the Shiite militias, offi-cially known as Popular Mobi-lization Forces, that helpedoust Islamic State and nowcontrol entrances to the city.

Based in Saddam’s formerriverside palace, the militias

aren’t as prominent as lastyear. But they still lay downthe law, even though theSunni-led provincial govern-ment in Tikrit has re-estab-lished its own police forces.

In recent months, therehave been numerous kidnap-pings and murders, some ofthem, according to Tikrit offi-cials, linked to members ofthese militias.

“Yes, the displaced familieshave returned. But now thereis a feeling that another occu-pation has begun,” complainedSalim al-Jabouri, the speakerof Iraq’s parliament and one ofthe country’s main Sunni poli-ticians.

Moeen al-Kadhimi, a seniorcommander with the Badr Shi-ite militia, said that accusa-tions against Popular Mobili-zation Forces “are made bythose who would have pre-ferred for [Islamic State] tostay in Tikrit.”

It is these forces thathelped restore normalcy, and itis because of their involvementthat Tikrit—unlike bombed-outRamadi—has been spared de-struction and could be repopu-lated, Mr. Kadhimi added.

For now, there are nosigns local resentmentsare going to turn violent.

The city, residents and localofficials say, is simply too trau-matized by the recent exodus.

“The most important thingis to deal with this situationpragmatically,” said AhmadAlkareem, the chairman of theprovincial council. “With time,the graffiti will be gone, thePopular Mobilization will begone, and the tensions willalso be gone.”

MIDDLE EAST CROSSROADS

Former Tikrit residents wishing to return lined up last month at a checkpoint operated by Shiite militias at an entrance to the city.

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lamic State offensive, whichbegan late Tuesday.

The assault appeared to bea response to setbacks to thenorth of al-Dumayr, where theextremist group in recentweeks has been dislodged fromthe ancient city of Palmyraand the town of Al-Qaraytain.

There was no immediatecomment from the Syrian mili-tary on the fighting in al-Du-mayr.

But the media arm of theIran-backed Lebanese militiaHezbollah, which has membersin the area fighting on the sideof the regime, said clashescontinued on the outskirts ofthe town and governmentforces have turned back at-tempts by Islamic State to takeover a power plant in the area.

At least 20 regime forces,including three officers, havebeen killed since the start ofthe Islamic State offensive,which began with coordinatedattacks, including suicide carbombings on checkpoints andmilitary bases around al-Du-mayr, according to the SyrianObservatory for Human Rights.

Islamic State on Wednesdayclaimed a suicide car bombertargeted a regime militaryconvoy coming out of al-Du-


mayr air base, killing morethan 50 people.

Regime forces are congre-gated on the outskirts of al-Dumayr, while the town properis controlled by rebels, mostnotably fighters of the Army ofIslam, one of the largest, rela-tively moderate groups in theDamascus area. Antigovern-ment activists said the SadiqBrigade, a group in al-Dumayrallied to Islamic State, partici-pated in the initial assault.

The regime responded with

more than 70 airstrikes on thetown and surrounding areas,resulting in the deaths of atleast 18 civilians on Wednes-day, the activists said.

Rebels inside al-Dumayrlater clashed with the SadiqBrigade to try to drive themout from town.

On a separate front, IslamicState on Thursday lost controlof the town of al-Raiee in north-ern Aleppo province, close tothe Turkish border, followingclashes with rebel groups

backed by Turkey and Westerngovernments, according to theLocal Coordination Councils, anumbrella body for oppositionactivists across Syria. This wasalso confirmed by the SyrianNational Council, one of theprincipal opposition bodies.

Activists posted on the In-ternet photographs and videofootage of rebel fighters insidethe town and at a complex ofgrain silos nearby. Their au-thenticity couldn’t be indepen-dently verified.

SYRIA

The vote was 7-6 in favor, withtwo abstentions. The motionfailed because it needed a ma-jority of the 15-member board.

Hours later, at a news con-ference, a sometimes emo-tional Mr. Suzuki said he wasstepping down. He described alengthy effort to get Mr. Isakato quit that ultimately failed.Mr. Suzuki said that in light ofthe turmoil, he no longer feltworthy of continuing in thetop roles. He has served asCEO and chairman of Seven &i Holdings since 2005.

Mr. Suzuki said the boardwould have to consider hissuccessor as part of a broadermanagement revamp.

Mr. Loeb said in a March 27letter to Seven & i Holdings’directors: “Mr. Isaka should berewarded—not demoted—forhis performance and commit-

ment to delivering results forshareholders.” In a March callwith reporters after the letterwas sent, Mr. Loeb said hewould be concerned if Mr. Su-zuki’s son, who serves as chiefinformation officer of Seven &i Holdings, received an edge inthe choice of a successor. “Thisis not a dynasty. This is a cor-poration.”

The elder Mr. Suzuki onThursday denied that hewanted his son as a successor.

In a statement Thursday,Mr. Loeb said that “we arepleased to see that the [Seven& i board’s] succession plan-ning will be based on meritand the best interests of share-holders.”

In Japan, conveniencestores are ubiquitous, selling awide variety of products suchas rice balls and toiletries.They have expanded into ser-vices, allowing customers topay utility bills and buy ticketsto concerts. Mr. Suzuki helpeddevelop the concept of flood-ing urban areas with smallstores, typically open 24 hours,and carefully managing inven-tory of the 2,000 or 3,000items people are most likely toneed.

The clash between Mr. Su-zuki and Mr. Loeb reflectsbroader changes in corporategovernance roiling Japanesebusiness. A corporate-gover-nance code pushed by the Abe

government, which took effectin June 2015, called on compa-nies to appoint outside direc-tors and pay more heed toshareholder concerns.

Akira Kiyota, CEO of thecompany that runs the TokyoStock Exchange, said in an in-terview that the board vote ofSeven & i Holdings was an ex-ample of outside directors’growing influence, an idea theexchange has helped promotein Japan. “Governance is work-ing,” he said.

While the trend is still at anearly stage, a number of activ-ist investors are getting in-volved in Japan, and outsideboard members are gaining agreater voice.

Singapore-based activist in-vestor Effissimo Capital Man-agement Pte Ltd. has beenbuilding up stakes in severalcompanies. It now owns 8.2%of Dai-ichi Life Insurance Co.,one of Japan’s largest insurers,and 30% of shipper KawasakiKisen Kaisha Ltd., according toregulatory filings by the inves-tor on Thursday.

Japan Tobacco Inc., one ofthe world’s largest cigarettemakers, has steadily raiseddividends and last year an-nounced a share buyback un-der pressure from the Chil-dren’s Investment Fund, aLondon-based activist hedgefund. Japan Tobacco share-holders, however, have repeat-

edly voted down the fund’sproposals for even higher divi-dends.

In January, outside boardmembers at Sharp Corp.helped nudge the Japaneseelectronics maker toward ahigher bid from Taiwan’s HonHai Precision Industry Co.when Sharp management wasleaning toward a takeover by aJapanese government-con-trolled fund, people familiarwith the talks have said. HonHai, also known as Foxconn,ultimately won the deal.

On Thursday, Seven & iHoldings posted results for itsfiscal year ended Feb. 29 thatshowed how the convenience-store business has come todominate its profit while thebig-box stores are struggling—a point stressed by Mr. Loeb.7-Eleven Japan reported oper-ating income of slightly morethan $2 billion, while Ito-Yokado posted an operatingloss $128 million.

Ito-Yokado founder Mr. Ito,91, remains honorary chairmanof Seven & i Holdings, al-though he is no longer on the

board. Mr. Suzuki’s camp saidit sought the founder’s ap-proval for Thursday’s boardmotion, but Mr. Ito refused togive it for reasons that weren’tclear. A spokeswoman said hewasn’t available to comment.

CLASH

Toshifumi Suzuki, on Thursday.

Devastation is left behind in towns like Al-Qaraytain that have been liberated from Islamic State.

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MANAMA, Bahrain—U.S.Secretary of State John Kerryand Bahrain’s foreign ministerurged Iran on Thursday tostop escalating its provoca-tive behavior across the Mid-dle East and pursue a moreconstructive foreign policythree months into the imple-mentation of the Iranian nu-clear deal.

The U.S., Bahrain and otherGulf Arab countries have ex-pressed increasing concernabout Iran’s continued missiletests, its weapons shipmentsto Houthi rebels in Yemen, andthe participation of its IslamicRevolutionary Guard Corpsand Hezbollah fighters in theSyrian war in support of theAssad regime.

The chief U.S. diplomat is inBahrain to consult with offi-cials from Bahrain and otherGulf Arab countries frustratedby Tehran’s policies.

Mr. Kerry is laying thegroundwork for meetings be-tween President Barack Obamaand Gulf Arab leaders in Ri-yadh this month.

Mr. Obama held a meetingin Washington last year with

Gulf Arab leaders and seniorofficials to pledge military aidand calm allies’ nerves aboutTehran as the nuclear dealneared completion.

On Thursday, about a yearafter Iran and six world pow-ers agreed on the parametersof the final nuclear accord, Mr.Kerry and his counterpart inManama, Sheik Khalid bin Ah-med Al Khalifa, told reportersafter a meeting Thursdaymorning that Tehran is fuelingconflicts across the region, in-cluding in Syria and Yemen.

“Today we are noticing twothings that we kind have ex-pected,” Mr. Al Khalifa said,outlining the views of Bahrainand the Gulf CooperationCouncil, a regional alliance ofsix Arab countries.

“The missile program ismoving forward with full sup-port of the leadership of theIslamic Republic and we areseeing the hegemonic inter-ventions through proxies inseveral parts of our regioncontinuing unabated,” headded.

Iran didn’t immediately re-spond to a request for com-ment on the criticism in Ma-nama.

BY FELICIA SCHWARTZ

Kerry, Bahrain ChideIran Over Provocation

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THEWALL STREET JOURNAL. Friday - Sunday, April 8 - 10, 2016 | A3

The building housing the law firm in Panama City, Panama.

armchair on the second floorof Mossack Fonseca’s offices inPanama City’s financial dis-trict, spoke just days aftersome 400 journalists fromdozens of countries simultane-ously released stories based onleaked documents from thefirm that showed how it cre-ated dummy companies andoffshore accounts where therich and powerful could se-cretly park their money.

Documents obtained by thegroup, the International Con-

sortium of Investigative Jour-nalists, showed that the firm’sclients included relatives fromthe high reaches of China’sgovernment to associates ofRussian President Vladimir Pu-tin to the money man for Syr-ian dictator Bashar al-Assad.

The trove of 11.5 million in-dividual files were fed to anewspaper in Munich thatthen shared it with ICIJ. TheWall Street Journal hasn’t in-dependently verified the docu-ments.

fund, Blairmore Holdings Inc.His spokeswoman said Mon-day the matter was private.Under pressure the next twodays, his office said the primeminister, his wife and childrendon’t currently benefit fromany offshore funds andwouldn’t in the future, butprovided no further details.

“Of course I did own stocksand shares in the past, quitenaturally because my fatherwas a stockbroker,” he said inThursday’s television inter-view. “We owned 5,000 unitsin Blairmore Investment Trust,which we sold in January2010. That was worth some-thing like £30,000,” or around$48,000 at the time.

He denied his father’s fundwas set up with the purpose ofavoiding tax. Rather, it was setup after foreign-exchange con-trols were relaxed so peoplewho wanted to invest in dol-lar-denominated shares andcompanies could do so, theprime minister said, addingthat it was reported to U.K.regulators and properly au-dited each year.

WORLD NEWS

Panama’s president, JuanCarlos Varela, on Wednesdaynight defended transparencyreforms the government en-acted last year and said themedia storm was casting anegative light on the country.

“The Panama Papers,” hesaid, “are not a problem of ourcountry but of many coun-tries.”

Mr. Varela said Panamawould form a commission ofnational and international ex-perts to evaluate the country’sregulations governing financialand legal services. Earlier thisweek, Panama’s attorney gen-eral said the office wouldlaunch an investigation intothe company.

Mr. Mossack and the headof legal affairs for his law firm,Sara Montenegro, said in thehourlong interview that theywelcomed further regulationsand scrutiny of their business.They noted, however, that theyhad yet to be contacted di-rectly by local authorities.

“At this point in time Iwould say there shouldn’t berepercussions,” Mr. Mossacksaid, “but I wouldn’t say thatthere won’t be any.”

PANAMA CITY, Panama—One of the founders of the lawfirm at the center of the “Pan-ama Papers” leak of secretdocuments on Wednesday de-fended his firm, Mossack Fon-seca, and said that he ex-pected few changes to hisbusiness model despite world-wide scrutiny.

In his first in-depth inter-view since reports of theleaked documents were pub-lished, Jürgen Mossack saidhis firm did nothing wrong byselling some 240,000 shellcompanies registered in low-or no-tax territories aroundthe world.

The law firm works throughintermediaries and can’t keeptrack of how the offshore enti-ties that it sells are used, hesaid.

“We’re not going to stop theservices and go plant bananasor something,” the 68-year-oldMr. Mossack said. “People domake mistakes. So do we, andso does our compliance de-partment. But that is not thenorm.”

Mr. Mossack, sitting in an

BY KEJAL VYAS

Co-Founder Defends Mossack Fonseca

MOSCOW—Russian Presi-dent Vladimir Putin said therewas no “element of corrup-tion” in reports that placed hisclose associates at the centerof offshore transactions.

Speaking on national televi-sion Thursday from a mediaforum in St. Petersburg, Mr.Putin said that he wasn’t men-tioned personally in the so-called Panama papers—leakedrecords from a Panamanianlaw firm that specializes inoffshore holding companies,according to the InternationalConsortium of InvestigativeJournalists—and accusedthose who released the infor-mation of trying to destabilizeRussia.

Allegations that Mr. Putin’sinner circle was involved inoffshore transactions worth atleast $2 billion have featuredprominently in media reports.

But while the reportscaused social discontent andhave led to investigations inthe West, the leaks wereplayed down in Russia and areunlikely to affect Mr. Putin’sstrong approval ratings. Rus-sian state media largely ig-nored them, instead focusingon Ukraine-related transac-tions divulged in the samedocuments.

The leaked informationplaces Sergei Roldugin, a cel-list and a childhood friend ofMr. Putin, at the center of anetwork of other businessmenand associates of the presi-dent.

“Here’s some friend of theRussian president, he didsomething, which probablyhas some corruption element,”Mr. Putin said. “What [ele-ment]? There is none.”

Mr. Putin added he was

proud of his friend, sayingthat Mr. Roldugin spent al-most all the money he makeson acquiring musical instru-ments for Russia.

“He is not only a musician,he’s an honored artist,” Mr.Putin said.

The Kremlin earlier thisweek dismissed allegationsstemming from the release ofthe papers as a propagandacampaign.

Russian newspaper NovayaGazeta, which participated inthe investigative project, cameunder bureaucratic scrutinyfollowing publication of thereport: Artyom Kiryanov, amember of Russia’s CivicChamber, asked Russian taxauthorities to inspect the pa-per to see if it had acceptedany foreign grants for the in-vestigation.

The Civic Chamber is a gov-ernment-sponsored civil-soci-ety group. Novaya Gazeta pub-lished comments made by Mr.Roldugin in which he said thathe couldn’t comment on thespecifics of the leaks, but thathe had been connected tosome of the businesses namedin the papers.

Nadezhda Prusenkova,spokeswoman for the newspa-per, said Mr. Kiryanov’s re-marks were a mere denuncia-tion. “This [statement] has notaffected our work so far in anyway,” she said.

Leonid Gozman, a demo-cratic activist who served as agovernment adviser in thepast, said Mr. Putin’s reactionto the allegations seemed tobe addressed to people outsideRussia.

“Those facts that become ashock in the West are per-ceived as normal in Russia, asthere is no feeling that all peo-ple are equal,” he said.

BY ANDREY OSTROUKH

Putin DismissesGraft AllegationsIn the Reports

OSLO—The latest falloutfrom the leak of the so-calledPanama Papers this week arethe resignation of the chair-man of a state-owned Austrianbank and revelation of moredetails of a corruption scandalat Norway’s Yara Interna-tional.

Michael Grahammer, chair-man of Hypo LandesbankVoralberg, stepped down fromhis post suddenly lateWednesday, citing pressurefrom the media over thebank’s alleged ties to offshorefinancial accounts.

The bank on Monday con-firmed media reports thatshowed it had ties to offshoreentities, including in Liechten-stein. Those reports werebased on a flurry of docu-ments allegedly leaked from aPanama-based hovllaw firmMossack Fonseca, which havebeen dubbed the Panama Pa-pers.

Mr. Grahammer, who hadserved as chairman since 2012,denied any wrongdoing.

Meanwhile, Norwegianchemical company Yara Inter-national said it had made “un-acceptable payments” to twoexecutives at a Russian-ownedphosphate producer, confirm-ing a report partly based onthe Panama Papers.

Yara, 36.21%-owned by theNorwegian state, confirmed onThursday a report by Norway’sAftenposten newspaper, basedpartly on the Panama Papers.

The acknowledgment byYara and the managementshuffle at Hypo Landesbankshow the repercussions of theleak of millions of documents

allegedly showing offshoreholdings of scores of publicfigures and commercial enti-ties across the world.

The prime minister of Ice-land resigned from his postearlier this week after the leakshowed his family had hold-ings in an offshore company.

In Austria, the HypoLandesbank said its financialdealings were subject to re-quirements from the country’sfinancial market watchdog,FMA, as well as the Austriancentral bank. In addition, thebank said it took into consid-eration the sanctions list ofthe U.S. Office of Foreign As-sets Control, although it isn’tdirectly applicable in Austria.

The bank also pledged toreview and present a summaryof its activities, but declinedto say when the review wouldbe made public.

In Norway, Yara said it hadmade “unacceptable pay-ments” to executives at Euro-chem Mineral & Chemical Co.,a producer of phosphates,without stating how much.

The Norwegian company,which was engulfed in a widercorruption investigation in2011, said police have knownabout the Eurochem paymentsfor years. “This informationhas been investigated by theNorwegian police,” a Yaraspokeswoman said.

The broader police investi-gation concluded in 2014 whenYara agreed to pay Norway’sbiggest-ever corporate fine of295 million Norwegian kroner($35.6 million) after admittingto paying bribes in Libya, In-dia and Russia.

In a related case, a group offormer Yara executives werelast year sentenced to prisonfor corruption, but have ap-pealed.

Yara said in addition toalerting the police about thepayments to Eurochem in2011, it had commissioned anexternal investigation by aNorwegian law firm that un-covered more than $15 millionin payments from a Yara sub-sidiary in Switzerland to peo-ple connected with suppliers

mainly in former Soviet Unioncountries, between 2006 and2010. The payments to the Eu-rochem executives were in-cluded in those $15 million,Yara said Thursday, addingthat it had refrained from us-ing Eurochem’s name at thetime because of the police in-vestigation.

Norwegian police confirmedthat it had been aware ofYara’s payments to Eurochemexecutives for years, but saidfurther investigation would berequired to establish whetherthe transactions amounted tobribery.

The payments hadn’t beenthoroughly investigated by thepolice because they went fromSwitzerland to Russia andlacked clear links to Norway, apolice spokeswoman said.

Eurochem wasn’t availableto comment. Aftenposten in itsreport said the company haddeclined to comment. The Zug,Switzerland-based fertilizercompany is controlled by Rus-sian businessman Andrey Mel-nichenko.

By Kjetil MalkenesHovland andMonicaHouston-Waesch

Panama Papers Hold SwayChairman of Austrianbank and a Norwegiancompany are latestcasualty of the leak

Iceland’s prime minister resigned on allegations in the papers. A successor, above, was named Thursday.

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LONDON—British PrimeMinister David Cameron saidThursday that he did benefitfrom an offshore fund set upby his late father, in responseto calls for more disclosureabout his family’s links to afund cited in the leaked filesof a Panamanian law firm.

Mr. Cameron told ITV Newshe previously had a stake inhis father’s trust but sold it in2010 before he became primeminister.

Mr. Cameron’s father, IanCameron, was named in theleaked documents from Pan-ama-based law firm MossackFonseca as having helped setup an offshore fund in theearly 1980s. The existence ofthe offshore fund became pub-licly known in 2012, but therenewed focus this week hasprompted politicians to pushMr. Cameron to detail the fullnature of the fund.

Until Thursday, Mr. Cam-eron had declined to disclosewhether he had ever benefitedfrom his father’s offshore

BY JENNY GROSS

Cameron Profited FromFather’s Offshore Fund

Dutch ‘No’ Vote on Ukraine Reverberates Across the ContinentThe fallout from the

Dutch vote rejecting the Eu-ropean Union’s trade and po-litical agreement withUkraine could have ramifica-tions for the entire bloc,even though it isn’t likely to

derail the ac-cord itself.

The “no”camp’s clearvictory in

Wednesday’s referendumfurther knocks the confi-dence of a 28-member blocalready besieged with eco-nomic, political and securitycrises, and could hamper itsefforts to reorient the for-mer Soviet republic ofUkraine toward the West.

More broadly, the resultcould provide a boost to theexit camp in the U.K., whichis holding a much bigger ref-erendum on EU membershipin June. It also is a blow to

Dutch Prime Minister MarkRutte, who is trailing theanti-EU and anti-immigrationParty of Freedom in mostopinion polls, with nationalelections due next year.

Party of Freedom leaderGeert Wilders echoed theviews of other anti-Brusselsfirebrands, calling the vote“the beginning of the end ofthe EU.”

On Thursday, Europe’sleaders were in damage-con-trol mode.

Mr. Rutte asked for timeto reach out to Dutch law-makers and regional part-ners before deciding on hisnext steps. “It is clear thatratification cannot just pro-ceed as if nothing has hap-pened,” the government said.

European officials inBrussels stressed the EU-Ukraine agreement remainedprovisionally in effect andpledged not to abandonUkraine.

Russia, which has longsought to scuttle the pact, saidthe vote represented a Euro-pean rejection of Ukraine’spro-Western political class.

The collateral damagefrom the vote could extendto Ukraine’s bid to win visa-free access for its 40 millioncitizens to the EU, one ofUkrainian President Petro Po-roshenko’s biggest priorities.That move needs backing byall EU governments, includ-ing from the Netherlands.

The vote could even com-plicate the EU’s deal withTurkey to help stem the con-tinent’s migration crisis.That deal is premised on theEU speeding work on Tur-key’s EU membership bidand, meanwhile, reaching avisa-free travel deal forTurks. Both are likely tospark opposition in theNetherlands.

Mr. Rutte has shown in re-cent years he’s willing to say

no to Brussels. His govern-ment was key to keeping Ro-mania and Bulgaria outsideEurope’s border-free travelzone, known as Schengen.

Yet the biggest falloutcould be on the U.K.’s June23 referendum.

U.K. Prime Minister DavidCameron brushed off sugges-tions the Dutch vote wouldboost the “Brexit” camp, say-

ing the issues were com-pletely different.

Yet UK IndependenceParty leader Nigel Farage,who is campaigning for aBritish exit, predicted thatthe Dutch vote may providethe “hors d’oeuvre” for theBritish “main course.”

Speaking in the Nether-lands this week before thevote, he said a Dutch “no”would encourage British vot-ers who dislike the EU butworry about Britain strikingout on its own.

“A no vote in this referen-dum will send a big messageto the British electorate thatwe are not alone in thinkingsomething has fundamen-tally gone wrong in the di-rection of the EuropeanUnion,” he said.

Amid such uncertainty, thefuture of the EU-Ukraine dealitself looks relatively secure.

All EU governmentsagreed in 2014 to provision-

ally apply their part of thedeal, pending formal ratifica-tion. The final hurdle was inthe Netherlands.

Brussels has no imminentdeadline for completing rati-fication.

One option, said JanTechau, director of CarnegieEurope, would be for EU lead-ers to attach a statement tothe accord asserting that itdoesn’t pave the way forUkraine to join the bloc—aconcern of some Dutch voters.

But reopening the accordcould delay ratification bytwo or three years, saidHylke Dijkstra, assistant pro-fessor of political science atthe Netherlands’ MaastrichtUniversity.

It would also give Russiamore time to try to block thedeal.

—Maarten van Tartwijkin Amsterdam and

Laura Mills in Moscowcontributed to this article.

UKIP leader Nigel Farage.

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WORLD NEWS

about two-thirds of the suspectswere from Morocco or Algeria—an indication they weren’t repre-sentative of the broader groupof recent refugees to Germany,of which Syrians make up thelargest contingent.

—Zeke Turner

VENEZUELA

Maduro Cuts WorkWeek to Save Power

Venezuelan President NicolásMaduro said the country’s work-ers will get Fridays off for theremainder of April and May inhis latest attempt to save poweramid a severe drought andgrowing energy crunch.

In a televised speechWednesday night, the presidentcalled on Venezuelans “to jointhis plan with discipline, withconscience and extreme collabo-ration.”

The Friday shutdowns comeafter Venezuela, which is alreadyin the throes of a deep eco-nomic crisis, closed offices for an

extra three days around Easterin a bid to save electricity.

Venezuela is largely depen-dent on hydroelectric power, andits supply has been hit hard bythe region’s drought. There arefrequent blackouts and darkneighborhoods have become in-creasingly prone to crime. Gasstations in parts of Venezuelaoperated only sporadically thisweek as sudden outages grew.

Critics say the Friday closuresare the latest sign of the Vene-zuelan leadership’s growing des-peration and will cause anotherdrag on growth.

—Sara Schaefer Muñoz

BANGLADESH

Student Killed AmidSurge in Violence

A Bangladeshi law studentwho expressed secular views on-line was hacked and shot todeath in the capital Dhaka onWednesday, as the country grap-ples with a surge in religiousand political violence.

way; so we could attributeblame on [the board] but ex-onerate the prime minister. Itmeans nothing,” said ZaidIbrahim, a former cabinet min-ister and leader in an allianceopposed to Mr. Najib.

In response to the report,which recommended that se-nior management face a crimi-nal investigation, 1MDB’sboard of directors offered itscollective resignation. “Theboard has successfully steered1MDB through a uniquely chal-lenging period and trusts that,with the release of the PAC re-port, a line has been drawn,”the board said in a statement.1MDB has said previously thatit has cooperated with author-ities and would continue to doso. On Thursday, the fundagain denied any wrongdoing.

The Wall Street Journal,citing Malaysian and global in-vestigations, has reported howinvestigators have found over$1 billion was transferred toMr. Najib’s personal bank ac-counts, the majority originat-

ing from 1MDB and moving viaa web of intermediary entities.

Mr. Najib has deniedwrongdoing or taking moneyfor personal gain. On Thurs-day, he said the report “identi-fied weaknesses in 1MDB’scapital structure and manage-ment. We will study and act

on the report’s recommenda-tions. We must ensure thatlessons are learned, and actionwill be taken if any evidenceof wrongdoing is found.”

Tony Pua, a member of thecommittee and the oppositionDemocratic Action Party, ac-knowledged the report had

shortcomings, but said “thereis more than sufficient damn-ing evidence to indict not onlythe entire top managementbut also the entire board of di-rectors.”

Hasan Arifin, the commit-tee’s head, said that “PAC callsupon the authorities to studythe report very carefully, andcarry out the necessary inves-tigations. The law must be ex-ercised if any wrongdoing isfound.”

The report said that afterreviewing findings from Ma-laysia’s auditor-general andexplanations from 1MDB, thecommittee “is of the view thatthere are certain constraintsand weaknesses at 1MDB’smanagement and board of di-rectors level.’’

“In particular, PAC is of theview that former 1MDB CEO,Shahrol Azral Ibrahim Halmi,needs to take responsibility ofthe weaknesses and con-straints,’’ the report said. “Assuch, the law enforcementagencies are being urged to

conduct investigation intoShahrol and the management.’’

Mr. Shahrol, who was chiefexecutive of 1MDB from 2009until early 2013, released astatement via state newsagency Bernama saying therewas no wrongdoing under hiswatch.

Critics of the fund havequestioned why the committeehasn’t focused more on Mr.Najib, who played a key role at1MDB, including firing audi-tors and authorizing transfersof hundreds of millions of dol-lars, according to board min-utes reviewed by the Journal.

“This is to be expectedsince the PAC cannot implicatethe elephant in the room, Mr.Najib,” said James Chin, headof the University of Tasma-nia’s Asia Institute. “On thesurface, it looks like the previ-ous management has beenpushed under the bus.”

—Celine Fernandezand Yantoultra Ngui

in Kuala Lumpurcontributed to this article.

A Malaysian state develop-ment fund’s board of directorsoffered to resign after a reportthat found billions of dollarswent missing but which madeno mention of Prime MinisterNajib Razak, who played a keyrole in the fund’s decisionsand has been the target ofcriticism over the scandal.

The findings of the parlia-ment’s Public Accounts Com-mittee, released Thursday,mark the first time a Malay-sian investigating body hasleveled fraud allegations at1Malaysia Development Bhd.,or 1MDB, which is the focus ofcorruption probes in Malaysiaand at least six other nations.

The report appeared to takepressure off Mr. Najib, whofounded 1MDB in 2009 andheads its separate board of ad-visers, prompting critics tosuggest the findings and thedirectors’ offer to resign weredesigned to shield the primeminister. “It’s all planned that

BY TOM WRIGHT

1MDB Report Spares Malaysia’s Najib

A report into the 1MDB scandal made no mention of Mr. Najib.

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GERMANY

Cologne Sex AssaultSuspects Identified

Nearly all of the suspects inthe mass sexual assaults andthefts that occurred in Cologneon New Year’s Eve were mi-grants and asylum seekers, localauthorities said Thursday in afinding that is likely to rekindledebate in Germany over how tohandle the record numbers offoreigners now in the country.

The finding, contained in apreliminary report by RalphJäger, interior minister of thestate of North-Rhine Westphalia,is the first official confirmationof police and victim testimoniesthat originally blamed the at-tacks on mainly Arab-lookingmen.

Out of 153 suspects involvedin the rampage outside Co-logne’s main train station onNew Year’s Eve, 97%, or 149,were foreigners, said the reportsubmitted to state parliament inDüsseldorf. Of those 149, 68were asylum seekers, 47 had an“unknown” visa status, and anadditional 18 were in Germanyillegally, according to the report.

The attacks in Cologne, a cityknown for its hospitality and col-orful Carnival celebrations,shocked the country and igniteda debate about the risks from il-legal immigration after aboutone million asylum seekers en-tered the country last year.

According to the report,

Nazimuddin Samad, a studentof Jagannath University insouthern Dhaka, was attackedby unidentified assailants not farfrom his campus on Wednesdaynight and was left bleeding onthe street, police said.

Mr. Samad died after he wastaken to a local hospital, accord-ing to police and doctors.

Bangladesh has experienced awave of religiously motivated vi-olence, including attacks againstforeigners, ethnic minorities andsecular bloggers and activists.Responsibility for most the at-tacks has been claimed by Isla-mist groups linked to IslamicState and al Qaeda.

Last year, at least four secu-lar bloggers and a publisherwere killed as well as an Italianaid worker and a Japanesefarmer.

—Syed Zain Al-Mahmood

VATICAN

Pope to MeetRefugees in Greece

Pope Francis will meet refu-gees on the Greek island of Les-bos next week, the Vatican saidThursday, confirming a visit thatpromises to plunge the pontiffdeeper into a heated Europeandebate over migration.

Hundreds of thousands ofrefugees, many fleeing conflict inNorth Africa and the MiddleEast, have arrived in Lesbosfrom Turkey in the past year.

The island is now on thefront line of a controversial EUprogram to deport illegal mi-grants from Greece and returnthem to Turkey. The Vatican hascriticized that plan and PopeFrancis has made support formigrants and refugees a priorityof his pontificate.

—Francis X. Rocca

CAIRO—With a few soap-opera roles to her name andno apparent history of politicalactivism, aspiring actress/singer Mirhan Hussein makesan unlikely frontwoman for thecampaign against police abusein Egypt.

But her allegations that po-lice beat and molested her anddrenched her in urine whileshe was detained last month,along with photos she postedon Facebook “for the truth tobe known,” became a cause cé-lèbre on TV talk shows, trig-gering some rare criticism ofthe police by normally pro-re-gime celebrities and mediapersonalities.

The Interior Ministry, whichoversees the police, didn’t re-spond to requests to commenton her allegations. It saidshortly after her March 1 de-tention that prosecutors wereinvestigating charges that shefirst refused to stop at a policecheckpoint, then assaulted of-ficers and had been drivingdrunk—charges she denied.

For a long time, police bru-tality was ignored by manyelite Egyptians, who consideredit a necessary evil to suppressIslamist political activists andthe country’s vast underclass.

But now high-profile casessuch as Ms. Hussein’s, along-side the killing of an Italianstudent whose body, accordingto Italian and Egyptian offi-cials, showed signs of torture,are pushing the issue into theopen. That has added to prob-

lems—like the ailing econ-omy—that are chipping away atPresident Abdel Fattah Al Sisi’sonce-unshakable support base.

His office referred requestsfor comment to the ForeignMinistry, which didn’t respond.

The malaise building inEgypt is reminiscent of 2011,when public rage over abuse ofpower, widespread povertyand a lack of political free-doms incited a mass revoltthat overthrew then-PresidentHosni Mubarak, according togovernment critics and politi-cal and human-rights activists.

“It is not a matter of anabusive, low-ranking police-man or officer. It is a matter ofa strategy in this apparatusthat wants to return” to oldways, said TV host Wael al-Ibrashi, once a stalwart loyal-ist who has recently taken tocriticizing the regime. “The re-turn they seek is through ter-rorizing people, wielding pis-tols, abuses and violations.”

In a television interview inFebruary, Mr. Sisi acknowl-edged “individual incidents” ofabuse and blamed the securityapparatus’s problems on “on-going turbulence” after yearsof unrest.

“Striking a balance betweenhuman rights and securitymeasures is a sensitive andcritical task that requires a lotof work from us and closer su-pervision,” he said, a thoughthe has reiterated on severaloccasions since.

He also has demandedharsher penalties for abusivepolicemen, including dismissalfrom the force and possible

prosecution, measures thatawait parliamentary approval.

Within months of over-throwing Egypt’s first demo-cratically elected president inJuly 2013, Mr. Sisi’s securityforces had shot dead morethan 1,000 protesters and im-prisoned tens of thousands ofmostly Islamist opponents, ac-cording to rights groups in-cluding Human Rights Watchand Amnesty International.

The military-led govern-ment said this was part of awar it waged on terrorism.

Last year, Egypt’s securityservices were responsible for

465 deaths, including 137 peo-ple in police custody, and morethan 640 cases of torture, ac-cording to the local human-rights group al-Nadeem Centerfor Rehabilitation of Victims ofViolence. The Interior Ministryhas repeatedly affirmed its re-spect to human rights, and de-nied any wrongdoings.

Much of that was largely ig-nored by Egyptian media andthe public.

That began to change onNov. 24, when a 47-year-oldunemployed man died in policecustody in the southern city ofLuxor. After the police offered

little explanation for his arrestor severely battered corpse,hundreds of young men pro-tested at a police station there.A criminal trial is now underway for nine policemen, in-cluding four officers, all ofwhom have pleaded not guilty.

Mr. Sisi appears to be feel-ing pressure. In his most recentspeech, the president beggedEgyptians to tune out thegrowing ranks of his critics.

If “you truly love Egypt, I’mtelling all Egyptians who arelistening to me: ‘Listen to mywords only,’ ” he said Feb. 24.“Only mine. I’m dead serious.

BY DAHLIA KHOLAIFAND MATT BRADLEY

Actress Riles Cairo With Police Abuse Charge

Masked Egyptian police patrolling the streets in the southern Cairo Giza district in January.

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Saudi Arabia’s King Salmanarrived in Egypt on Thursdayfor a rare foreign visit in-tended to cement the relation-ship between the two majorArab powers, as the kingdomcourts greater support fromits ally on regional securityamid tensions with Iran.

King Salman’s first officialtrip to Egypt is also intendedto show backing for EgyptianPresident Abdel Fattah Al Sisiand shore up his country’sstruggling economy. Mr. Sisigreeted the Saudi monarch atCairo’s international airport inthe afternoon, kicking offhigh-level talks.

The two countries are ex-pected to sign $22 billion indeals, including $20 billion tofinance Egypt’s petroleumneeds and a $1.5 billion pack-age to develop the Sinai re-gion, Egypt state media said.

King Salman’s visit to Egyptmarks the start of two weeksof crucial international diplo-macy for the leader of theArab world’s pre-eminentpower. President BarackObama is scheduled to travelto Saudi Arabia to attend asummit on April 21 of theSaudi-led bloc of Gulf Arab na-tions. Secretary of State JohnKerry held talks with officialsof one of those Gulf nations,Bahrain, on Thursday.

The trip to Egypt comes asSaudi Arabia’s Sunni Muslimmonarchy pursues a more ag-gressive foreign policy, assert-ing its leadership in the Mid-dle East and striving tocontain the influence of Iran,its Shiite rival for regionalpower.

A friendly and stable Egyptis a priority for the kingdom.Along with its Persian Gulf al-lies, the nation has poured bil-lions of dollars into the coun-try since Mr. Sisi came topower in a 2013 military coupand ousted Mohammed Morsiof the Muslim Brotherhood, amovement Saudi Arabia haslong opposed because it saw itas a political threat at home.

In return for aid, Riyadh ex-pects Mr. Sisi to increase sup-port for Saudi Arabia, aboveall on security matters, saidTheodore Karasik, a Gulf-based expert on regional geo-political affairs.

Relations between the tra-ditional allies hit snags lastyear over Egypt’s reluctance tocommit more military assetsto a Saudi led invasion in Ye-men, leading to fears in Cairothat the monarchy would stopthe aid payments that havebuttressed Egypt’s economyand Mr. Sisi’s rule.

Saudi Arabia “wants Egyptto be an active participant inregional security operations,most notably around the king-dom’s periphery and to play alarger role in the Islamic mili-tary alliance,” he said.

ByMargherita Stancatiin Dubai

and Tamer El-Ghobashyin Cairo

SaudiKingVisitsEgyptasNationsBoostTies

FRANKFURT—Top Euro-pean Central Bank officials onThursday underlined theirwillingness to launch freshstimulus to bolster the euro-zone’s weak economy, but theminutes of the bank’s latestpolicy meeting laid bare divi-sions over just how to do that.

ECB President Mario Draghisaid the central bank had noshortage of tools available todrive up stubbornly low infla-tion and would continue to do“whatever is needed.”

“The ECB does not surren-der to excessively low infla-tion,” Mr. Draghi wrote sepa-rately in the bank’s annualreport, which was publishedon Thursday. He warned thatthis year would be “no lesschallenging” than the last forthe central bank.

The eurozone’s inflationrate was minus 0.1% in March,far below the ECB’s target ofjust below 2%, according tothe European Union’s statisticsagency.

According to the minutes ofthe March meeting, publishedThursday, some ECB policymakers were concerned aboutpushing the date for hittingtheir inflation goal ever fur-ther into the future. They werein “broad agreement” over theneed for a “strong policy re-sponse,” but differencesemerged over which policymeasures to deploy.

BY TOM FAIRLESS

ECB Open toStimulus butSplit on How

BRUSSELS ATTACKS: Belgian authorities released fresh picturesof the suspected third attacker in last month’s airport bombingand appealed to the public for help in finding the man.

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PENTAGON

White House to BackMarine for Africa Post

The White House intends tonominate Marine Lt. Gen. ThomasWaldhauser to head U.S. AfricaCommand, installing a battle-tested commander at a time whenthe U.S. is confronting growing se-curity issues across the continent.

Defense Secretary Ash Carterrecommended Gen. Waldhauserfor the job in recent weeks andlearned this week that the WhiteHouse would move to nominatehim, U.S. officials said. The formalnomination by President BarackObama is expected to comewithin weeks, the officials said.

Gen. Waldhauser, who cur-rently serves on the Pentagon’sJoint Staff as the director forJoint Force Development, mustwin Senate confirmation. Gen.Waldhauser is a former MarineExpeditionary Unit commander.Among other assignments, heled forces in the early days ofthe Afghanistan war in 2001.

Gen. Waldhauser would leada combatant command that isquickly becoming the focus ofU.S. security policy. The numberof Islamic State fighters in Libyahas grown to as many as 5,000.Threats also are growing from alQaeda-affiliated groups as well

The Journal analysis usedCEO pay figures as publishedin company proxy statementsand annual reports under Se-curities and Exchange Com-mission disclosure rules. Itgenerally excluded CEOs whochanged jobs during the year.

Some big paychecks weren’treflected in the Journal analy-sis. Sundar Pichai, who in Oc-tober was appointed chief ex-ecutive of the Google online-search business, was paid$100.5 million in 2015, ofwhich $99.8 million consistedof restricted stock that vestsover two years. (Google co-founder Larry Page, by con-trast, earned $1 cash as CEO ofAlphabet Inc., the parent firm.)

Just 17 women ran compa-

Forecasters have cut GDP expectations. Above, Cox Manufacturing.

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as from the Boko Haram ex-tremist organization in Nigeria.

INDIANA

Groups Sue StateOver Abortion Law

Indiana is being sued by theAmerican Civil Liberties Unionand Planned Parenthood of Indi-ana and Kentucky over an abor-tion law recently signed by Gov.Mike Pence.

The lawsuit, filed Thursday inU.S. District Court, says the law isunconstitutional and challengesseveral provisions, including onethat bans abortions sought be-cause of genetic abnormalities andanother that mandates an abortedfetus be buried or cremated.

The suit seeks an injunction topause the law’s enforcement,which goes into effect July 1, untilthe case is resolved. The lawsuitsays the new law puts an “undueburden on women’s right tochoose an abortion,” since it bansthem in some circumstances, evenwhen the fetus won’t survive. Thesuit also says women have a rightto choose an abortion in the firsttrimester “for any reason.”

Mr. Pence’s deputy press secre-tary, Stephanie Hodgin, said in anemail that the Republican gover-nor “has every confidence this lawis constitutional. We will workwith the Attorney General to de-fend the law that enhances infor-mation expectant mothers receiveand enhances protection for theunborn,” Ms. Hodgin said.

State Sen. Travis Holdman, theRepublican who sponsored the bill,wouldn’t comment on the lawsuit.

—Associated Press

death of Supreme Court JusticeAntonin Scalia, which hasraised the possibility of a moreunion-friendly appointee suc-ceeding him on the high court.

As negotiations continue, agroup of unions that have en-dorsed Democratic presidentialfront-runner Hillary Clintonhave quietly begun meeting tocoordinate helping her close outthe primary election. But be-cause the AFL-CIO hasn’t foundconsensus among its leaders toendorse the former secretary ofstate, the Clinton backers areworking without the help of themain engine that typicallydrives such collaborations.

Bernie Sanders defeatedMrs.Clinton Tuesday in theWiscon-sin primary, ensuring the intra-party fight will continue.

Unions have been a potentforce in getting Democratselected even as their member-ship has sharply declined overdecades.While one in five work-ers were members of a union inthe early 1980s, last year justone in 11 were union members.

In the 2012 election, laborunions were responsible for$115 million of the donationsto pro-Democratic super PACs,according to the nonpartisanCenter for Responsive Politics.That amount was more thanany industry group, except forthe financial-services sector,which donated about $165 mil-lion, mostly to super PACsbacking Republicans.

Union leaders also seek topersuade their members to votefor Democrats via visits to theirhomes and personal phone calls.

Labor unions began talkingabout coordinating their elec-tion efforts when the SupremeCourt was considering a deci-sion that threatened to devas-tate the ability of unions tocollect dues from their public-sector members.

Though the death of JusticeScalia in February gave them areprieve in that case, laborleaders at the time weresearching for ways to find sav-ings and to spend money moreefficiently. One way to do sowas to combine their politicalspending into one account.

Officials said at the meetingin February that a new super

PAC would help limit the du-plication that exists when mul-tiple labor unions spendmoney on the same campaignat the same time.

Many of the roughly 50 la-bor unions that are part of theAFL-CIO were expected to par-ticipate, as well as several largelabor unions that aren’t mem-bers of the organization, suchas the Service Employees Inter-national Union and the Na-tional Education Association.

While the union leadersagreed that creating a superPAC was a good idea, divisionsemerged over how the entitywould be run. The SEIU andNEA, which rank as the topspenders on political campaignsin recent years, are reluctant toturn over their political fundsto a new political organizationwithout retaining enough con-trol over how the money wasgoing to be spent, according topeople familiar with the talks.

Meantime, midsize laborunions inside the AFL-CIOworry that handing overgreater control to the SEIUand NEA would reduce theirinfluence over the politicalspending, these people said.

Under the latest plan beingdiscussed, unions would be re-quired to contribute as muchas $5 million to get a seat onthe board. Entities that con-tribute smaller sums wouldhave less say over how themoney is allocated. Officialsalso are talking with other pro-Democratic interest groupsand individuals about contrib-uting money to the entity.

In a speech Wednesday atthe Pennsylvania AFL-CIO con-vention in Philadelphia, Mrs.Clinton said that as presidentshe would help unions “standup to those forces trying toweaken the labor movement.

“I need you to speak up andspeak out, to your friends andneighbors,” she said.

Mr. Sanders has said hewould work to strengthen thelabor movement. He helpedlead the fight against free-trade agreements and hasbacked a $15 federal minimumwage. Several unions have en-dorsed him, including the Na-tional Nurses United, the Com-munications Workers ofAmerica, a transit union and apostal group. But Mrs. Clintonhas won most union endorse-ments so far.

A big portion of the unionvote is concentrated in keypresidential battlegroundssuch as Ohio, Michigan, Illi-nois, Minnesota, Pennsylvania,Indiana and Wisconsin. Thosestates hold more than one-third of the electoral votesneeded to win the presidentialrace.

A fight among labor unionsover who would control a pro-posed $50 million super PAChas slowed the creation of aunified effort to boost thechances of labor-friendly Demo-crats winning the White Houseand control of Congress in theNovember election.

A senior political strategistfor unions first laid out the planin February before dozens ofunion presidents and other la-bor leaders at the winter meet-ing in San Diego of the execu-tive council of the AFL-CIO, thelargest U.S. union federation.

But the efforts have beendelayed since then, in partover disputes about whowould receive credit for thework done, according to peo-ple familiar with the talks.

The Wall Street Journalspoke with more than a dozenlabor officials, campaign strat-egists and others who de-scribed the organizing efforts.

Persuading union membersand their families to vote forDemocratic candidates could beparticularly challenging thisyear if the Republican presi-dential nominee is businessmanDonald Trump, who has drawnsupport from working-classwhite men and women, manyof whom are union members.

Mike Podhorzer, the AFL-CIO’s political director, wouldn’tcomment on the specifics of thetalks. When asked who hasagreed to participate, he said:“That hasn’t been resolved yet.”

Labor activists still havetime to settle their differences,and the motivation to do so islikely to rise as the race shiftsto the general election. Thestakes grew greater after the

BY BRODY MULLINSAND MELANIE TROTTMAN

Unions’ Super PAC StallsLabor-union members cheered for Democratic presidential candidate Hillary Clinton as she was introduced Monday in New York.

RICHARDDREW/A

SSOCIATE

DPRESS

A big part of the union vote is concentratedin key presidential battlegrounds.

dian total shareholder return—which includes reinvested divi-dends—during the year forwhich pay was reported, ac-cording to FactSet; it was 17%a year earlier.

The Journal analyzed CEOcompensation and perfor-mance data for S&P 500 com-panies that disclosed pay de-tails for their 2015 fiscal yearsbetween July 1, 2015, andMarch 31, 2016. Most of the re-maining companies in the in-dex are expected to file proxiesby early May. A new interac-tive graphic on the Journal’swebsite displays CEO pay andcompany performance data forS&P 500 companies.

Last year’s broad pay trendcan be seen at 3M Co., theMinnesota-based maker ofPost-it Notes and industrialabrasives. CEO Inge Thulin’spay declined 3.4% to $19.4 mil-lion, with his cash incentivepay falling 33% but equity payrising 25%. Total return for3M’s shareholders was minus5.8%. 3M didn’t respond to re-quests for comment.

Compensation for the top-paid CEOs didn’t always trackperformance for investors. To-tal pay for Philippe Dauman ofmedia conglomerate ViacomInc. rose 22% to $54.15 million,on bigger stock grants. Totalreturn for shareholders wasminus 42% during the sameperiod.

Continuedfromthepriorpage

A Viacom spokesman said$17 million of Mr. Dauman’scompensation came from a re-tention bonus he receivedwhen renewing his contractlast year. The bonus vests overseveral years, and much of Mr.Dauman’s pay is tied to thecompany’s share price, thespokesman said.

Pay for Honeywell Interna-tional Inc. CEO David Cote rose18% to $34.5 million thanks to$14.25 million in cash incen-tive payments, even as share-holder return was 5.8% at theindustrial conglomerate.

Honeywell said the com-pany beat its targets forgrowth in revenues and returnon investment over the pasttwo years, and that Mr. Cote’spay reflects performance for2014 as well as 2015. That in-centive compensation was re-ported in full for 2015, al-though he won’t receive halfthe amount until 2017, aspokesman said. “Adjusted toan annual basis, Mr. Cote’scompensation in 2015 declinedyear over year,” he said.

Some bosses had big paycuts on performance woes. Theco-CEOs of Chipotle MexicanGrill Inc., Monty Moran andSteve Ells, lost their bonuseslast year after a rash of illnessoutbreaks at its restaurantssickened customers and sentits share price tumbling. Totalpay for the two CEOs fell bymore than 50% each, to $13.5million for Mr. Moran and$13.8 million for Mr. Ells.

A Chipotle spokesman de-clined to comment.

nies in the group—about 6% ofthe total. All but two of thewomen made more than theS&P 500 median, and the high-est-paid of them, Oracle Corp.co-CEO Safra Catz, made $53.2million. (Mark Hurd, her fellowco-CEO, made about $1,500more than she did.)

An Oracle spokeswoman de-clined to comment.

Cash compensation contin-ued to account for about athird of total pay, while stockand options accounted forabout 60%, up slightly fromyears past. Perks accounted forabout 2% of pay, while pen-sions and above-market inter-est on deferred compensationconstituted about 6%, downfrom 13% in 2014.

Pension gains pushed CEOpay higher at many companiesin 2014 because of changes tothe standard assumptions—in-cluding life expectancy—usedto calculate today’s value forpensions that will be paidyears in the future.

For 2014, “pension disclo-sures were an anomaly be-cause of changes in the mor-tality tables as well asinterest-rate fluctuations,”said Mark Borges, a compensa-tion consultant with Compen-sia Inc.

Year-earlier pension gainswere also a significant factorin 2013—the previous timecompensation declined forCEOs of S&P 500 companies.Then, median compensationslipped 2.4% to $10.2 million,although equity pay rose 10.2%and cash pay rose 7.1%.

PAY$10.8 million

Compensation SlipMedian pay for CEOs ofcompanies in the S&P 500 index

THEWALL STREET JOURNAL.Source: MyLogIQ

Note: Data for 2014-15 are for 299 companiesthat disclosed compensation data betweenJuly 1, 2015, and March 31, 2016.

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dent answered every question.The average estimate of the

probability of a recession in thenext year slid to 19% in thismonth’s survey, down from 20%last month and 21% the monthbefore. Despite that decline, theodds remain nearly doubletheir level of last summer.

Nearly half of those polledsee the biggest risk to the econ-omy coming from overseas.Weakness in Europe and Japan,as well as a slowdown in China,have rattled financial markets.

Increasingly, these risksaren’t just economic, but polit-ical. Economists are unsurehow China will respond to itseconomic slowdown. They alsoare unsure about an unprece-dented move to negative inter-est rates being implementedby policy makers at the Bankof Japan and European CentralBank. And they are unsure ofthe ramifications if the U.K.votes to leave the eurozone.

Economists are worriedabout risk from the U.S. politi-cal system, too, where populistpresidential candidates havepledged dramatic overhauls ofU.S. policies toward trade andimmigration. A plurality ofeconomists last month saidthe election of businessmanDonald Trump or VermontSen. Bernie Sanders couldpose a significant risk to theeconomy next year.

The range of doubt andanxiety about these politicaloutcomes could cause consum-ers and businesses to pause.

“Global economic uncer-tainty and political uncer-tainty at home could stall theeconomy,” said Sean Snaith,director of the University ofCentral Florida’s Institute forEconomic Competitiveness.

Some tentative signs of thishave already emerged. Incomeshave been rising faster thanspending for three months asAmericans have increased theirsaving rate. U.S. businessesalso have seen profits decline.

“Declining earnings forbusinesses may cause sizablecutbacks in outlays—includingin hiring and firing,” said Al-len Sinai, chief economist atDecision Economics.

A rocky start to 2016 is tak-ing its toll on the outlook forU.S. economic and job growththis year.

While the stock market hasrecovered much of the groundlost earlier in the year, fore-casters in The Wall StreetJournal’s monthly survey ofeconomists trimmed their es-timates for employment gainsand economic growth as mar-ket volatility and signs of acautious consumer leave theeconomy stumbling.

The average forecast in thesurvey calls for growth ingross domestic product of 2.1%in the year ahead, down froman estimate of 2.4% last month.The markdown was most dra-matic for the start of the year:The economy likely grew at a1.3% annual pace in the firstquarter, down from an esti-mate of 2.1% a month ago.

Economists also trimmedtheir estimates for job growth.They expect a monthly averageof 185,000 jobs to be createdin the year ahead, fewer thanthe 190,000 estimated in lastmonth’s survey. That would bea slowdown from the paceover the past three months ofabout 210,000 jobs a month.

“Lackluster growth is a biggerrisk than a full recession,” saidLynn Reaser, an economist atPoint LomaNazareneUniversity.

Slow growth but no recessionhas been the story of the U.S.economy in recent years. It hasbeen nearly seven years sincethe economy emerged from thelongest and deepest recessionsince the Great Depression.While there has been no relapseinto recession, hopes for a pe-riod of strong growth have beendashed repeatedly.

The Wall Street Journal’ssurvey of academic, businessand financial economists hasshown an acceleration of reces-sion fears since last summer,but the panel reckons that therisk of recession is lower thanit was during the congressionaldebt-ceiling crisis in 2011 andEurope’s fiscal crisis in 2012.The Journal surveyed 69 econo-mists, though not every respon-

BY JOSH ZUMBRUN

Economists TrimGrowth Estimates

U.S. NEWS




FROM PAGE ONE

with limited experience, led bya Silicon Valley financier, thatbought a floundering franchisein 2010 and set out to fix it byraising a single question: Whatwould happen if you built a bas-ketball team by ignoring everyorthodoxy of building a basket-ball team?

The process took manytwists and turns, and there weretimes when it nearly failed. Butthe dominance the Warriorshave displayed this season canbe traced back to one of themost unusual ideas embracedby the data-loving executives:the notion that the NBA’s 3-point line was a market ineffi-ciency hiding in plain sight.

This season the Warriorshave sunk 1,025 3-pointers, byfar the most in NBA history. Notonly has Mr. Curry taken morethrees than any other player, heis making them at a rate of45.6%, higher than the NBA av-erage for all shots. He has shat-tered his own record for most3-pointers in a season by 34%.Moreover, distance seems tohave no significant effect on hisaccuracy. He is a better shooterfrom 30 to 40 feet than the av-erage NBA player is from 3 to 4.

The result is a basketballstyle no one has yet figured outhow to defeat.

“What’s really interesting issometimes in venture capitaland doing startups the wholeworld can be wrong,” said theteam’s primary owner, Joe La-cob, a longtime partner at Sili-con Valley venture-capital firmKleiner Perkins Caufield & Byers.“No one really executed a gameplan—a team-building architec-ture—around the 3-pointer.”

In 2010, the Warriors hadn’twon an NBA title since 1975.They played in a dumpy arenabeside an interstate and hadmade the playoffs just once inthe previous 15 years. The priorowner, Chris Cohan, wasloathed by many loyal fans.

Still, competition to buy theteam was fierce. To fend off theother finalist, Oracle Corp.founder Larry Ellison, Mr. Lacoband entertainment mogul PeterGuber paid $450 million, whichwas, at the time, the highestprice for a team in NBA history.

It wasn’t long before Mr. La-cob, 60, installed a basketballbrain trust akin to a board atone of his companies. Theteam’s executives are alwayscommunicating—a group textmessage hums on their phonesduring games—and every deci-sion brings vigorous debate. Butfrom the beginning, the War-riors brass placed an unusuallystrong emphasis on numbers.

The data dive yielded manyinsights, but the Warriors even-tually zeroed in on the 3-pointline. NBA players made roughlythe same percentage of shotsfrom 23 feet as they did from24. But because the 3-point lineran between them, the values of


POINTS

The offenses onMr. Chamberlain’steams in the 1960sand early 1970swere simple: Get theball to the 7-foot-1center, close to thebasket, in anyway possible.

Wilt ChamberlainABOVE THE RIM

Many ofMr. Abdul-Jabbar’spoints in the 1970sand 1980s came fromthe same shot: the skyhook. Mr. Abdul-Jabbarwas 7-foot-2, and noone in the NBA couldblock that shot.

Kareem Abdul-JabbarSKY HOOK

Mr. Jordan’s 1996Chicago Bulls notchedthe most wins ever in aseason. The 6-foot-6guard played in asystem, the triangleoffense, that could gethim good shots fromanywhere on the court.

Michael JordanTRIANGLE OFFENSE

The Golden StateWarriors, a teambuilt around the3-point shot,believe that anypossession endingin a 3-pointattempt by Mr.Curry is a good one.

Stephen CurryTHREE BALL

Basketball’s Greatest InnovatorsA handful of basketball players over the years dominated in such unique ways that they changedhow the game is played. Here are the signature moves of a few of the greatest.

Mike Sudal/THEWALL STREET JOURNAL.

reer. But it played a crucial rolein firming up another idea theteam was batting around. TheWarriors were dreaming aboutwhat would happen if they gaveMr. Curry a green light to takemore shots, and more crazyones, too—not off one foot, ex-actly, but from places on thefloor where nobody had everroutinely taken shots.

Mr. Curry had alreadyreached the point where hecould take as many as 10 threesin one game without anyone no-ticing. It didn’t matter if theshot was off one foot, from 5feet behind the 3-point line orthe popcorn stand in the con-course. His accuracy didn’t suf-fer much. Before every game, infact, Mr. Curry practices thesekinds of bombs by shootingfrom the half-court logo.

The team realized that anypossession that ended with a 3-point attempt by Mr. Curry wasworthwhile—and that theywould never discourage himfrom taking one. In this, theseason of Mr. Curry’s unleash-ing, the Warriors are shooting17% more threes than a seasonago. Mr. Curry is attemptingmore than 11 a game. No NBAteam had ever had a player at-tempt more than nine. Last sea-son he hit 286 threes. This sea-son he is on pace for about 400.

What amazes fans even moreis the location of those shots.NBA players shoot an averageof 28% from 27 feet or beyond.Most players don’t even takethem unless the shot clock isrunning out. Mr. Curry hastaken 253 such deep shots thisyear and made 47% of them.The result is that defendershave strayed even farther fromthe basket to guard him, open-ing even bigger spaces for histeammates.

“Stretching a defense makesit easier to score,” Mr. Myerssaid.

The success of the Warriorsthis season has turned Mr.Curry, who is 28 years old, intoone the NBA’s biggest stars. Hehas an everyman appeal be-cause he isn’t a giant.

His celebrity has raised theprofile of the 3-point shot. Thisyear, like the last four years,NBA teams are taking more 3-pointers than ever. They nowamount to 28.3% of total shots.College teams also hit anotherhigh in 3-pointers attemptedper game this season. Highschool teams have caught thebug, too.

Mr. Guber, the team’s co-owner, said other NBA teamswill try to emulate the War-riors’ original approach as theyattempt to end the team’s reign.

“Other teams will do it in adifferent way,” he said. “They’lltake chances and challenge theincumbent and come upwith an-other way to create the magic.”

For now, theWarriors have it.They turned the 3-point line intoa boundary in time. The kind ofstrategy that unfolded inside theline belonged to the game’s past.The future of basketball, theybelieved, lay behind the line—and Mr. Curry showed it wasfarther behind that line thaneven they imagined.

“I don’t know why it took solong,” Mr. Lacob said. “Youwould think in sports that thiswould’ve been tried a long timeago.”

those two shots were radicallydifferent. Shot attempts from23 feet had an average value of0.76 point, while 24-footerswere worth 1.09.

This, the Warriors con-cluded, was an opportunity. Bymoving back just a few inchesbefore shooting, a basketballplayer could improve his rate ofreturn by 43%.

Mr. Lacob wasn’t the onlyteam owner in sports to delveinto statistics—baseball hasbeen doing it for years—and theWarriors weren’t the first NBAteam to see the potential of the3-pointer. Starting in the 1990s,a string of teams with brutallyeffective defenses hadprompted teams like the Phoe-nix Suns and San Antonio Spursto search for different ways toscore, and that meant shootingmore 3-pointers. More recently,as the data improved, it becameclear that teams weren’t takingnearly enough of them.

The difference between theWarriors and everyone else waswhat the team decided to dowith this information.

For many years after JamesNaismith invented basketball in1891, the prevailing view wasthat the most important area ofthe court was near the basket.FromWilt Chamberlain’s finger-rolls in the 1960s to Kareem Ab-dul-Jabbar’s sky hooks in the1970s to Mr. Jordan’s soaringdunks in the 1990s, the NBAwas the dominion of playerswho owned the rim.

When the Warriors, undertheir previous owners, draftedMr. Curry in 2009, he wasn’t aprototypical NBA superstar.Though his father, Dell, hadplayed in the NBA, StephenCurry was so lightly recruitedout of high school that he hadattended tiny Davidson Collegenear his hometown of Charlotte,N.C. He only emerged as a tan-talizing NBA prospect after histeam made an improbable runto the regional finals of the2008 NCAA tournament.

Even after his first two sea-sons with Golden State, Mr.Curry wasn’t a sure thing. Still,

as the team’s new executivessettled on their plan to exploitthe 3-point line, they becameconvinced Mr. Curry would betheir centerpiece.

The first test of their com-mitment came in the form of acontroversial decision: tradingthe team’s leading scorer,Monta Ellis. Some believed Mr.Ellis was too similar to Mr.Curry and that he was costinghim shots. Others thought itwas crazy to banish the mostpopular player. At one point,just before the deal, Mr. Lacobtested the confidence of his bas-ketball executives by tellingthem he was getting cold feet.They defended their plan andpulled the trigger.

The week after the 2012trade, Mr. Lacob was booed byfans. The team finished thatseason with one of the NBA’sworst records.

Team buildingThe Warriors already were

building a team around Mr.Curry that would allow him totake more 3-pointers. The mostcritical step had come in the2011 draft when they selectedWashington State guard KlayThompson. He, too, was the sonof an NBA player and an excel-lent shooter. At 6-foot-7, he was4 inches taller than Mr. Curry.

The team believed Mr.Thompson’s shooting abilitywould make defenses too fright-ened to leave him alone, andthat would limit their ability todouble-team Mr. Curry. But be-cause he was tall, he could de-fend the other team’s bestguard and shoot over defenseswithout being blocked, whichcould help the Warriors com-pete against teams that hopedto use their size to contain Mr.Curry.

What made the move mostattractive was its novelty. Most3-point-shooting teams had onesuperb shooter surrounded by acollection of supporting players.

“Imagine if we could havetwo of those guys,” Kirk Lacob,the owner’s 27-year-old son and

the team’s assistant generalmanager, recalled thinking atthe time.

“It’s once in a lifetime,” saidJoe Lacob.

The day after Mr. Ellis wastraded, Mr. Thompson was in-serted into the starting lineup.After that, according to the gen-eral manager Bob Myers, whenthe team was drafting and sign-ing players, the strategy shiftedfrom wondering whether theycould play with Mr. Curry toasking: “Who can play withSteph and Klay?”

By the time the 2014-15 sea-son began, the Warriors hadpadded their roster with An-drew Bogut, a 7-foot center whoprotects the rim and shores uptheir defense; the position-defy-ing Draymond Green, the stealof the 2012 draft; and rangyguards Andre Iguodala andShaun Livingston, whom theyacquired in free agency. “Theycomplemented shooting,” Mr.Myers said, “even thoughthey’re not shooters.”

The Warriors then had achance to trade for one of theleague’s premier players, Min-nesota Timberwolves forwardKevin Love. The move wouldhave been a no-brainer for mostbasketball people. But the Tim-berwolves wanted a player inreturn whose departure wouldhave scuttled the Warriors’master plan. “They kept askingfor Klay, and we kept sayingno,” Mr. Lacob said. “Weweren’t going to trade Klay, andthey weren’t going to do a dealwithout Klay.”

The team doubled down onits 3-point plan by replacingcoach Mark Jackson with SteveKerr, a member of five NBAchampionship teams who hadretired with a 45.4% shootingrate on 3-pointers, the highestin league history. It was his firstNBA coaching job.

That season, with all thepieces in place, the Warriorsfielded five players between 6-foot-3 and 6-foot-8 who allwere threats to shoot 3-point-ers. This “small-ball” lineup—widely known as the “death

lineup” or, as Barack Obamacalled it, the “nuclear lineup”—helped the Warriors take 9%more 3-pointers as a team thanthe year before and make ahigher percentage than anyonein the league.

This combination of fre-quency and efficiency had a fas-cinating effect on opponents. Itforced them to spread out, ex-tending their defense all theway to the 3-point line insteadof packing the paint, leaving theWarriors with lots of openspace. Mr. Curry set a recordfor 3-point shots and wasnamed the league’s Most Valu-able Player. Mr. Thompsonmade the All-Star team. TheWarriors overcame the Cleve-land Cavaliers to win their firstNBA title in 40 years.

A step furtherThe tinkering could have

stopped there. The Warriorsclearly had hit on a winning for-mula. But then they beganthinking about an audaciousidea that would make themeven better.

The plan had started to takeshape in 2013, during a playoffgame against the Spurs, one ofthe NBA’s top teams. Mr. Currywas just then coming into hisown, showing signs that hecould be both dazzling anddeadly. During one possessionearly in the first quarter, Mr.Curry dribbled around a screenand found himself in a pocket ofopen space. Immediately, evenbefore he had time to set hisfeet, Mr. Curry pulled up andfired a 3-pointer.

Mr. Myers, the general man-ager who was in the arenawatching that night, couldn’tbelieve his eyes. As the ballswished through the net, heturned to the other Warriorsexecutives around him to con-firm what he had just seen. “Didhe just shoot that off one foot?”he asked. “Who shoots a threeoff one foot?”

The shotwas only one of doz-ens of stunners Mr. Curry hadmade during his young NBA ca-

‘No one really executed a game plan—a team-building architecture—around the 3-pointer,’ said Joe Lacob, the Warriors’ primary owner.

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mer au pair from Sweden,started the school five yearsago when she couldn’t findone she liked for her owndaughter. Many of its parentshave international back-grounds and embrace its devo-tion to unstructured play, cre-ativity and the outdoors.

Some resisted the veganmenu when it was announcedbut then converted as their chil-dren got used to it. “I com-plained about the kids not eat-ing,” said Chiara Opiparo, whosesons ages 2 and 4 attend. “That’swhen I started tasting the food

myself, and it was so amazing.”Other parents aren’t quite

there yet. As one mom put it,“Celery soup today for lunch?Chicken nuggets for dinner!”

The organic menu—with abare minimum of sugar andsalt—includes homemade rootvegetable gratin, butternutsquash risotto and broccolisalad. The chef on site bakesfresh bread every day.

Karen Jacobson-Sive, a self-described foodie whose sonattended, was attracted by the“cool factor.”

“They make their own al-

mondmilk,” she said. “It showsa level of dedication to the kids’well being that I would assumewould be seen in other parts ofthe way the school runs.”

Annual tuition is $18,500for full-time students. Everyyear the school hosts a “tast-ing” with a nutritionist to re-assure parents that their chil-dren get enough calories andnutrients. Many are omnivoresat home.

Some experts questionwhether purely vegan diets arehealthy for such young children.

“This is a very complicated

and emotionally charged is-sue,” said Sharon Akabas, anassociate director for educa-tion initiatives at ColumbiaUniversity’s Institute of Hu-man Nutrition. There are “a lotof feelings and too little data”about long-term effects. Dr.Akabas said parents need tomake sure vegan children aregetting enough iron, calciumand vitamins D and B12. Thenagain, she said, its studentsmight well be eating betterthan peers at places that pileon sugary juice and pretzels.

Children sitting down for

lunch at the Scandi School dis-played a range of sophisticationin their palates. Several servedthemselves from a heaping plateof spinach-mushroom lasagna.

Declan Molloy, 4, dumpedhis lasagna into his miso soupand mushed them together.“Yummy,” he said.

Children learn a lot fromtheir peers. Lucy Schapiro, whoasked for leftover miso soup ona recent day, picked up a whitecube from her bowl with her fin-gers and squished it.

“I don’t like these cheesethings,” she said.

“They’re not cheese,” said herclassmate, Aris Morales-Lun-dgren. “They’re tofu.”

Ms. Germerud-Sharp, a for-


VEGAN

ONLINESee videos andan interactivegraphic about theWarriors atwsj.com/PageOne.

WSJ.COM

VIDEOWatch a videoabout the ScandiSchool’s veganofferings atwsj.com/ahedvideo.

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PIRE OF Things”—a sweepinglyled history of humanity’s pas-for the possession of objects—bit like one of the early 20th-ury department stores thatk Trentmann writes about a fewred pages into his epic chroni-uch stores—which were likenede time to museums, so encyclo-c were their offerings—seemedt the entire world of objects onay. One store, Tietz in Berlin,hasized the point with an illu-ted globe on its roof. Withine meccas of material goods, ited, was all that could bemed of and desired.r. Trentmann’s narrative has aar abundance. Here are 16th-ury silver forks gathered by Flo-ne merchants in Europe’s firstn culture; 18th-century Indiano, which became so popular thatpean textile weavers had ited; 19th-century flush toilets,h were too advanced for thege system of Manchester, Eng-and 21st-century smartphones,h, in 2009, were used for emails% of American owners and justf Italian owners.re too are aisles of facts, eccen-and suggestive, ranging overnents, eras, languages. In Eng-in 1500, real wages were threes higher than they had been in

because the Black Death-49) had wiped out more than aof the working population. Inthe king of the African kingdomahomey made £250,000 fromng slaves (an astronomical sumapproximates £45 million in to-currency).late 19th-century Europe, foodped in price, but water becameexpensive. In 1954, only 7% tof French households had a re-rator or a washing machine. In

only 5% of German menged their underwear daily. At thef the 20th century, New Yorkerseight times as rich as they weree beginning of the century, buthousehold garbage weighed

tly less (the bulk of personalish used to be ash).all this is a little dizzying, that isof the point. The facts presentedmpire of Things” touch on theomy of slavery, the growth ofern commerce, the beginning ofn utility networks, the rapid eco-c change during postwar de-, and the shifting aspects of con-

ption and its consequences Mr

BY EDWARD ROTHSTEIN

The LongHistory of Retail TherapyConspicuous consumption is not a product of market capitalism, but a mark of civilization

Birkbeck College, University of Lon-don, is an authority in “consumerstudies” and wants to jolt the ac-cepted wisdom in his field.

Sometimes the sheer range of ex-amples on offer can make the bookseem more like an open-air marketthan a coherent presentation ofgoods. The first half is a chronologi-cal history of consumerism, guidedby extended case histories—about16th-century northern Italy, for ex-ample, or 20th-century Asia. Thesecond half is a series of issue-driven chapters examining themes,including the idea of credit, ethicalconsumerism, purchases made forthe home and the effects of capital-ism on religion. Mr. Trentmannkeeps a feeling of miscellany in play;he seems to deliberately avoid a con-ceptual system that might explorefundamental principles.

What gives the book coherence,instead, is its spirit of challenge anddissent. Early studies of what is nowcalled “material culture” like Fer-nand Braudel’s “The Structures ofEveryday Life” (1982), intent on anew form of history, paid close atten-tion to household and economicgoods but not to major historical andpolitical events.

This restricted perspective, Mr.Trentmann argues, became commonin the discipline and has led to manygeneralizations that don’t hold up. Inaddition, he suggests, the world of theconsumer has been too narrowly de-fined, focusing on private acquisitionand thus neglecting areas like publicspending, which is now running at arate of more than 20% of GDP in theworld’s wealthiest countries—“levelsunparalleled in every previous periodin human history.”

So a polemical edge accompaniesMr. Trentmann’s array of facts andobservations. You think that fren-zied acquisition is uniquely charac-teristic of modernity and Westerncapitalism? Think again: Mr. Trent-mann begins the first chapter citinga 60-year-old chronicler in 1808 be-moaning how rapidly the worldaround him has changed. Wealthymen parade around displayingfancy pocket watches. Ordinary citi-zens follow frivolous fashions andkeep animals as trendy pets. Butthis chronicler, Mr. Trentmann tellsus, “was not writing from Paris orLondon but from Yangzhou” inChina. In this case, the fancy petswere chickens from Canton and ratsfrom “the West.”

What about, then, the issue of“conspicuous consumption” definedin 1899 by Thorstein Veblen? Isn’t itcharacteristic of modern consumer-ism? Not at all, Mr. Trentmann says.One Chinese observer in the 1570scomplained about the “young dan-dies” who thought “silk gauze isn’t

embroideries” seeking the “look ofthe moment.”

In 15th-century Florence, the com-petitive display of luxury goods wasso extravagant that the Dominicanfriar and preacher Girolamo Savona-rola reacted with his notorious “bon-fire of the vanities,” sending musicalinstruments, books and tapestries upin flames—thereby illustrating an al-ternative form of consumption. InVenice during the next century, thesenate passed rules against luxuriousdisplay: One 1512 law said that nomore than six forks and six spoonscould be given as wedding presentsand banned gilded mirrors; a 1562law limited the desserts permitted atbanquets. In fact, Mr. Trentmannnotes, the imposition of sumptuarylaws regulating consumption accom-panied the growth of material possi-bility throughout Europe.

A larger perspective over timeshifts our understanding; so toodoes a vast geographic perspective.Mr. Trentmann surveys the eco-nomic impact of the slave trade notjust in the West but in Africa. Pre-imperial Africa, he points out, washardly a “traditional” society un-touched by materialism. During the18th century, imports in West Africarose 10-fold. Each African region de-veloped particular tastes in fashionand cloth. The end of the slave tradein 1807 led to the expansion of Afri-can exports of native products likepalm oil and gum. “Africans,” Mr.Trentmann writes, “did not need im-perial masters to teach them how tobecome consumers.”

As Mr. Trentmann chisels away atvarious claims and misconceptions, itbecomes a little more clear what hisoverall strategy is. Toward the begin-ning of the book he notes that “today,consumption is at the center of aheated public debate between two ri-val camps pointing their moral artil-lery at each other.” On one side are“progressive and social democraticcritics who attack the juggernaut ofshopping, advertising, branding andeasy credit for turning active, virtu-ous citizens into passive, bored con-sumers.” On the other are “championsof consumption, first and foremostclassical liberals who cherish freedomof choice as the bedrock of democ-racy and prosperity.”

Mr. Trentmann insists that he isnot out to “adjudicate a moral de-bate” or decide whether consump-tion is good or bad He is he says

cess and evolution of consumptionover the past five centuries.

Still, he seems more critically pre-occupied with the progressive vision,in part because it has shaped contem-porary ideas—and it is fraught witherrors. The progressive worldview, henotes, has a long and mixed pedigree.Plato described how luxuries wouldlead to the moral and physical disso-lution of a city. Avarice was “the rootof all evil,” according to the Christianapostle Paul. Dante sent usurers tohell’s seventh circle, pushed downinto burning sand by the stuffedmoneybags they carry.

In the modern period, Mr. Trent-mann finds similar ideas in theRomanticism of Rousseau, who be-lieved “the desire for things turnedfree men into slaves.” A centurylater, he suggests, Marx and otherswent much further, arguing that

capitalism and modern industryhad changed the ways in whichpeople relate to objects; things hadbecome defined solely by their eco-nomic value.

Other meanings and significancewere cloaked by this “modern fetish-ism.” The result, according to thisview, has been “disenchantment, in-equality and conflict” and a ragingconsumer culture caused by the ma-nipulation of material desire.

During the 1950s, Mr. Trentmannsuggests, this outlook became part ofpopular understanding, largelythrough a series of books: DavidRiesman’s “The Lonely Crowd”(1950), Vance Packard’s “The HiddenPersuaders” (1957) and, most impor-tant, John Kenneth Galbraith’s “TheAffluent Society” (1958).

Galbraith, Mr. Trentmann says,saw the U.S. as a society “wherepeople were driven to consume evermore to keep the engine of produc-tion running, at the expense of pub-lic welfare, the environment andtheir own happiness.” Galbraithwarned of the end of thrift and theimminence of “private opulence andpublic squalor.”

Mr. Trentmann accepts little ofthis, certainly not the idea that ob-jects were transformed into fetishis-tic economic artifacts during the late19th and early 20th centuries, whenthey in fact became weighted withbroader significance: Think only ofthe labors of collectors and the de-velopment of museums. And whileGalbraith’s view, which “has in-formed critics of ‘consumerism’

some acute observations, Mr. Tmann argues that much of his asis was simply wrong. Ameriwere saving more, not less, duthe postwar years: In 1957 thesonal savings rate was a phenom10%. Moreover, public spendingwith affluence and did not dethe way Galbraith’s model mhave suggested.

“Empire of Things” is bymeans a systematic rebuttal, buTrentmann’s approach throughoto present so much detail that wconvinced, at the least, that adeal of thinking about consumprequires re-examination.

Did consumer culture reallycourage passivity and an abanment of craft and skill? How tplain, then, that men spent routwice as much time on domchores and repairs in 1945 as 1A large amount of spending wtoward home craftsmanshipnew skills.

But isn’t it true that an addicto credit is a distinctive probleour time? Only if you ignore thEngland in 1700 every secondof a household left behind undebts at death. In 1925, Liverhad 1,380 registered moneylen

What about religion? Isn’t ging secularism a direct result opanding consumption? Not reMr. Trentmann says: EasternCentral Europe today are “notricher in things than under Comnism,” but there are “more Chribelievers.” Religion, he writessaturated with things.”

Is capitalism necessarily amNot at all: In Mr. Trentmann’s vihas been long accompanied bforts “to moralize the economy”purchase selectively or set up acott to encourage a particularcome. The most recent manifestof this impulse is “ethnical conerism,” like the fair-trade movemits products “assuring consuthat distant producers in the doping world receive a fair deatheir sweat and toil.” But this semay be the vaguest part of thebecause we never learn how “ness” is assessed or what effecmovement has had.

Despite the book’s scale, cosiveness is not one of its goals.pire of Things” is difficult, stimes elusive, yet almost alwilluminating. By the end recewisdom is weakened, thoughnever become quite sure what toin its place. But in an acadfield—studying consumption—can seem wary of its own specthat turns out to be a refreshingelty, like window shopping withaving to decide on a final purc

Mr Rothstein is the Journal’s

pire of Thingsank TrentmannLane, 862 pages, £30

AChinese observer in the 1570s complainedabout the ‘young dandies’ who lusted ‘for Suzhouembroideries’ and the ‘look of the moment.’

HEDRAL OF COMMERCE The art nouveau interior of the Galeries Lafayette department store, built in 1912 on the Boulevard Haussmann in Paris.

BOOKS‘Property is the embodiment of personality.’ —G.W.F. Hegel




BY CHRISTOPHER CARROLL

Kill ’Em and LeaveBy James McBrideW&N, 256 pages, £20

GIVE HIM A HAND Brown performing in 1979.

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WHEN HISTORIANS IN future de-cades ponder America’s wars in Viet-nam and Iraq, the name of Andrew J.Bacevich, a West Point graduate, re-tired Army colonel and professoremeritus at Boston University, willhave its own poignant chapter. Mr.Bacevich fought in Vietnam, and hisonly son, an Army first lieutenantnamed after him, was killed in Iraq.

But long before his son was killed,Mr. Bacevich had carved out a nicheas a fiery polemicist against not onlythe 2003 invasion of Iraq but thewhole logic of preventive, expedition-ary warfare. His son’s death in 2007inevitably added force to the elderBacevich’s judgments. He becamealmost mythic in antiwar circles as amilitary man whose family had paidthe ultimate price, and hawkish writ-ers who might otherwise have labeledhim an isolationist showed restraintand respect.

Actually, Mr. Bacevich may be lessa left-wing isolationist than an old-fashioned conservative scold whoharks back to the particularism ofthe late diplomat George F. Kennan.Particularism stands against univer-salism and the muscular projectionof America’s values abroad; it ac-cepts the world as it is, with all of itsintractable cultural and ideologicaldifferences, and is wary of entangle-ments. As someone who supportedthe Iraq war and then admitted tobeing wrong about it, I have learnedover time to respect—if not neces-

Mr. Carter, says Mr. Bacevich, wantedto trade “a shallow freedom for truefreedom and dependence for auton-omy.” But because the nation optedfor a shallow freedom based on con-sumption, America went on to fightunnecessary wars in the Middle East,mainly—and especially at the begin-ning—for oil.

This is not isolationism, a wordassociated with those opposed tofighting the Germans and Japanesein the years leading up to World WarII. But it is an extremely restrictiveview of American interests abroad inan ever more globalized world. Mr.Bacevich wants a foreign policy ofnear-absolute purity, and so he isalienated not only from the neocon-servative interventionism of theyounger Bush administration butalso from the “amoral machinations”of the Nixon and Ford administra-tions. Here he is less like GeorgeKennan than Rand Paul.

“From the end of World War II to1980, virtually no American soldierswere killed in action” in the MiddleEast, he writes. “Since 1990, virtuallyno American soldiers have beenkilled in action anywhere except inthe Greater Middle East.” True, butthe end of the Cold War and Sovietsupport for regimes in Iraq and Af-

ghanistan made those and other re-gimes more adventurous and muchless stable, leading to an entirely dif-ferent regional dynamic that the U.S.could not ignore.

He says that Desert Storm “ac-complished next to nothing.” Nottrue. The elder Bush administrationnot only liberated Kuwait from Sad-dam Hussein’s troops, with all of thehuman-rights ramifications thatsuch a liberation entailed; it mayhave also kept Iraq from moving onto attack Saudi Arabia. He writesthat the “surge” of troops in Iraq in2007 was a “pseudo-event.” Some

TANGIBLE ACHIEVEMENT Celebrating Operation Desert Storm and theliberation of Kuwait City from Saddam Hussein on Feb. 27, 1991.

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America’s War forThe Greater Middle EastBy Andrew J. BacevichRandom House, 453 pages, £21.09

BY ROBERT D. KAPLAN

EARLY IN “Kill ’Em and Leave:Searching for James Brown,” JamesMcBride describes the beginning ofthe recent biopic of Brown’s life,“Get on Up.” The film opens in 1988in Augusta, Ga. Brown, in a greensweatsuit, carries a shotgun into astorefront office space filled withwhite insurance executives. “Theystare in terror as he launches into atirade that ends with, ‘Which one ofyou gentlefolk hung a number two inmy commode?’ Then his shotgun ac-cidentally discharges into the ceil-ing—BLAM! Brown stares at the ceil-ing and mutters, ‘Good God.’ ” Beforelong he’s in a high-speed chase witha fleet of police cruisers, barrelingthrough a barricade before ulti-mately surrendering.

“It’s a funny scene,” Mr. McBridewrites. “Problem is, it’s mostly fic-tion.” It’s this willful misconceptionof Brown as “a drug addict, a trou-blemaker, all hair and teeth” that Mr.McBride hopes to correct in hislively book, a mix of biography andreportage and digressive storytellingthat peers beneath the professionalveneer Brown so carefully con-structed. He seeks out those whoknew Brown—friends, ex-wives, dis-tant relations, band members, man-agers, accountants—interweavingthese interviews with short historiesof Brown’s family and ancestry, theplaces he grew up, especially Au-gusta, and ruminations on Brown’ssocial and musical legacy.

Mr. McBride, who won the Na-tional Book Award in 2013 for hisnovel “The Good Lord Bird,” also in-vestigates the sad legal battle overBrown’s estate. Valued near $100million at the singer’s death in 2006and meant largely to fund scholar-ships for poor children in South Car-olina and Georgia, it has become anAmerican Jarndyce v. Jarndyce, withendless lawsuits brought by familymembers and exes left out ofBrown’s will slowly depleting thefunds, none of which has made it tothe children Brown hoped to benefit.

And looming over all of this isthe question of racism in Americanmusic, and the exploitation of blackmusic and musicians by white musi-cians and record executives alike.Mr. McBride argues that Brown is“the most misunderstood and mis-represented African-American fig-ure of the last three hundred years. . . nearly as important and as in-fluential in American social historyas, say, Harriet Tubman or Freder-ick Douglass.”

The false impressions are due inlarge part to the singer’s own efforts.“‘You did not get to know JamesBrown,” says his lawyer Buddy Dallas,“because he did not want to beknown. In 24 years of working withhim, I have never known a personwho worked harder at keeping peoplefrom knowing who he was.’ ”

The Brown who emerges fromMr. McBride’s dogged researchbears little resemblance to the car-toonish parody presented in the

biopic. Far from a drug-addled, un-hinged nut, Brown was a man who,born into abject poverty, worked re-lentlessly to perfect his music andto present a carefully composed faceto the world, a man who for most ofhis life rarely cursed or drank orsmoked, and who was so proud thathe “sat in a hair dryer for threehours after every show, because healways wanted the public to see him‘clean and proper.’ ”

The event that the film’s openingscene was based on, for instance,came, as Mr. McBride describes it, ata nadir in Brown’s career: His bandhad dissolved, his marriage was suf-fering and his father was in the hos-pital. It was only at this point, whenhe was 55 (“His knees were going—arthritis was killing him”) and in thedepths of his depression, that hehad turned to PCP after years ofavoiding drugs.

About those insurance executives,who had rented space in one of

Brown’s office buildings, Mr.McBride quotes Brown’s eldest son,Terry, saying that Brown, whose of-fice in the same building had re-cently been burglarized, marchedinto the room carrying an old hunt-ing rifle—one that Brown’s managerrecalled didn’t even have a firingpin in it—because he had seen anunlocked door and thought he wasbeing robbed again.

And, as Mr. McBride writes, itwas not Brown who destroyed thepolice cars, but the other wayaround—the police “caught him aftera low-speed ‘chase’ not far away andreportedly fired 17 bullets into thetruck, two of which entered the gastank—with Brown still inside thetruck.” When the chase began, hehad been, “pitifully and desperately,trying to get to his father.”

Brown was not an angel, cer-tainly. He treated his musicians ter-ribly—Mr. McBride calls it “one ofhis saddest legacies”—sleeping with

BOOKS‘Whatever he believed, he believed. It didn’t matter to him whether it was really true or not. He just changed the truth til it fit him.’ —James McBride

Emphasizing the Downbeatfemale singers, capriciously finingband members, running “senseless,endless, punishing rehearsals forhours, sometimes right after thegig, sometimes til daylight, for noreason other than to show who wasthe boss.”

Still, it’s hard to overstateBrown’s importance as a musician.He sold “more than 200 million re-cords,” Mr. McBride writes, “re-corded 321 albums, 16 of them hits,wrote 832 songs, and made 45 goldrecords. He revolutionized Americanmusic: he was the very first to fusejazz into popular funk; the very firstto record a ‘live’ album that becamea number-one record.”

Brown’s innovations led to thecreation of funk. He brought the bassup in the mix, put the emphasis onthe downbeat, rather than on thesecond and fourth beats, and re-placed traditional harmonic progres-sions with open-ended vamps basedon a single harmony (listen, for in-stance, to his 1967 song “ColdSweat.”) His innovations were pickedup and expanded on by everyonefrom Sly Stone to Stevie Wonder,Miles Davis to DJ Kool Herc.

Mr. McBride is himself also a mu-sician—he played tenor saxophonefor the jazz singer Jimmy Scott. Soit comes as something of a disap-pointment that Brown’s music isn’tdiscussed at more length. The sec-tion of the book in which Mr.McBride compares the differencesbetween jazz and funk soloing, em-phasizing the deceptive difficulty ofplaying funk, is so well done thatone wishes for more, especially sincethe book is often marred by clichédphrasing and puzzling similes, aswhen history is described as moving“like an erupted volcano spreadinglava that sets fires in places far dis-tant because of the enormous heatcontained within it.” Such sentencescan feel like filler.

The book is, on the whole, a Her-culean effort to bring clarity to aman who seemed to work all his lifeto remain remote. Though Mr.McBride’s reporting and research areadmirable, it still remains difficult toreconcile the Brown who wrote “Sayit Loud—I’m Black and I’m Proud”and who mentored a young Al Sharp-ton with the Brown who was friendswith Strom Thurmond and supportedReagan (neither of whom, surpris-ingly, come in for any serious discus-sion). Even so, Mr. McBride providesa sympathetic and deeply knowl-edgeable portrait of one the 20thcentury’s most important musicians.

Mr. Carroll is on the editorial staffof the New York Review of Books.

Brown recorded 321

albums, wrote 832 songs

and had 45 gold records.

sarily agree with—Mr. Bacevich’sworldview.

“America’s War for the GreaterMiddle East” is Mr. Bacevich’s mag-num opus about everything that hasbeen bothering him for decades re-garding U.S. foreign policy. The sub-title is “A Military History,” but itreally isn’t. History concerns itself,in part, with nuance, complexityand the entertaining of counterfac-tuals. It tries to grasp the multiplic-ity of motives and tragic choices be-hind any historical episode orepoch. The finest histories resemble

literature more than political sci-ence. Such qualities are missingfrom this book, which is instead adeft and rhythmic polemic aimed atAmerica’s failures in the MiddleEast from the end of Jimmy Carter’spresidency to the present.

The polemic starts with Mr.Carter’s 1979 “malaise” speech, whichcalled on Americans to be materiallyless self-indulgent and rediscover old-fashioned values. The speech was areaction to a bad economy, a secondoil shock and the Iranian Revolution—and it flopped, as Mr. Bacevich ad-mits, becoming a milestone on theway to Mr. Carter’s electoral defeatagainst Ronald Reagan.

Nevertheless, Mr. Bacevich findsthat Mr. Carter’s rhetoric “bearscomparison with Abraham Lincoln athis most profound, Woodrow Wilsonat his most prophetic, and FranklinRoosevelt at his most farsighted.”

pseudo-event. It may have pre-vented Iraq’s explosion from a Bal-kan level of violence to a Rwandanlevel. Foreign policy and militarystrategy are often not about accom-plishing anything positive but aboutkeeping even more negative thingsfrom happening.

This is how the book goes. Itsweeps you along, unless you arewilling to stop and say: Hey, wait aminute, that’s not the whole truth.Nevertheless, there is wisdom aplentyin one of Mr. Bacevich’s key proposi-tions, which is that in all the decadesthat the Americans sent troops tofight in the Middle East—from Ron-ald Reagan’s dispatch of Marines toBeirut in 1983 to Barack Obama’s ef-fort to topple Libyan dictator Moam-mar Gadhafi in 2011—there was fartoo little appreciation of the region’sdeeper problems: “the vacuum left bythe eclipse of British imperial power;intractable economic backwardness,”or, in a larger sense, the granular in-tractability of warring tribes andsects. As Mr. Bacevich puts it, “refer-ences to countries like Oman and So-malia” in too much American think-ing “implied that they were more orless interchangeable with Norway orthe Netherlands.”

In other words, American policymakers, especially in the run-up tothe Iraq War, didn’t know what theywere dealing with. Whatever differ-ences one might have with Mr.Bacevich’s broad indictment, it’shard to argue with that compelling,often-enough-true insight.

Mr. Kaplan’s most recent book is“In Europe’s Shadow: Two ColdWars and a Thirty-Year JourneyThrough Romania and Beyond.”He is a senior fellow at the Cen-ter for a New American Security.

Freedom for Me but Not for Thee

This antiwar polemic

offers plenty ofwisdom

but not thewhole truth.




WHAT CAN ONE TELL of a bird fromits wing? Enough to discern, manyyears and much discussion later, thatit was unknown to science. The Cam-bridge University Expedition of 1990,collecting biological specimens in alittle-known desert plain of Ethiopia,found a road-killed bird from whichthey recovered a single wing. Hadthey known they’d just bagged thefirst specimen of the rarest bird in theworld, the Nechisar nightjar, they’dhave scraped the sand for each brittlebone and matted feather.

Two decades later, author VernonR.L. Head set out to Ethiopia as partof a team of four, to look for the liv-ing bird. They were on a naturalist’serrand but also an artistic one, towitness and possibly photograph thenocturnal owner of this dried wing inlife; to bring it, through their quest,into the world of the known and liv-ing; and to give it color and voiceand presence. This all-consuming,panoramic experience is magicallycaptured in the measured pace anderratic but studied progress of Mr.Head’s exquisite book, “The RarestBird in the World.”

There are many species of nightjarspopulating the profound darkness ofthe Nechisar plains; the problem forthe travelers is to find the one that noone has seen alive. And this must bedone by torchlight, from a rolling ve-hicle. They know nothing of the bird’snatural history, or why it has neverbeen seen before. They’ll be lucky justto glimpse it, much less come away

cut a tiny hole in the canopy,” hewrites. “Its light was fragile andsharp, stretching up and pullingtightly at the sun. It was tied to aflower, lighting the petals in a glow-

ing red warmth. . . . We watched as ahummingbird came to laugh. Gerrylaughed with the bird. We laughedtogether. The bird buzzed: back-wards, upwards, downwards, thenforwards, and jerked into a new posi-tion on the air. To us it seemed to behaving fun. Blurred wingless, its longtail hung like a flying snake—air-borne, floating and white in tassels.”

Because the team is chasing aphantasm, the hope of a bird aboutwhich nothing is known other thanthe structure and markings of onedried wing, Mr. Head builds his

story as a sort of punctuated mem-oir of other such quests, embroi-dered by musings on conservation,rarity and extinction. Mr. Head hasspent much of his life witnessing thelast stand of a number of bird spe-cies, and the refreshing oddity of thestories he spins lights the way. Ofthe vanishing Liben Lark of south-eastern Ethiopia he writes: “We had

JULIEZICK

EFOOSE

The Rarest Bird in the WorldBy Vernon R.L. HeadSignal, 243 pages, £14.99

BY JULIE ZICKEFOOSE

GRAND FACADE The Palace Hotel being refurbished in 2009. Built in 1929 by Palestine’s Supreme Muslim Council, itwent bankrupt in the 1930s and then served as various government offices. It is now the Waldorf-Astoria Jerusalem.

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‘WHOEVER DID NOT SEE Jerusalemin its days of glory has not seen abeautiful city in his life,” the Talmudsays of the days when Herod’s tem-ple shone at the center of a city thatsymbolized the gateway to the di-vine. The world was given 10 allot-ments of beauty, the sages say, andJerusalem got nine.

Along the wall of the same temple,unmentioned by these sayings, was anoisy commercial street 25 yardswide where 2,000 years ago you couldbarter for a goat, change money, andfind weavers, butchers, prostitutesand some murderous zealots. It was ashort walk to the hippodrome, whereyou could brawl with rival fans and, ifyou were lucky, see a really goodchariot crash. One imagines a Templepriest, pausing mid-sacrifice, sighingas he glances at the earthly Jerusa-lem over the wall.

In “Till We Have Built Jerusalem:Architects of a New City,” AdinaHoffman gives us the story of threegifted architects who brought theirtalents to the city two millennialater, between the world wars. Bythis time Herod was long gone, re-placed by the British, but the tensionbetween the imagined city and thereal one remained.

One architect was a dictatorialGerman-Jewish modernist; another aBritish civil servant who hoped tostay away from Britain as long aspossible; the third a creature of theold polyglot Middle East—a Greek, aChristian and a Mason. Siftingthrough official documents and pri-vate letters, Ms. Hoffman, an Ameri-can writer who has spent many yearsin Jerusalem, resurrects these forgot-ten men and succeeds in adding fasci-nating human detail to the cityscape.Almost everything in the book wasnew to me, though I’ve lived in Jeru-salem my entire adult life and havepassed some of the buildings she de-scribes thousands of times.

I now wonder, for example, how Icould have spent days in the mater-nity ward of the hospital on MountScopus without knowing anythingabout the man who designed thebuilding. This was Erich Mendel-sohn, an architect of brilliant repu-tation in Germany who came to Pal-estine in the 1930s hoping not justto escape the Nazis but also to bringtogether Jews and Arabs througharchitecture and to create “a union

between Prussianism and the life-cycle of the Muezzin.” The Jews, hethought, didn’t know from beauty—they lost their aesthetic sense in ex-ile and had to be “trained anew tosee.” Mendelsohn had in mind justthe guy to do it. Indeed, he thoughthe should be entrusted with the de-sign of the entire country.

That this didn’t happen was acontinual source of annoyance, buthe had a good time living in a de-funct Jerusalem windmill with hisbohemian wife, dressing the maidlike “part of the windmill,” and de-signing a lovely library and villa forthe magnate Salman Schocken, an-other displaced German with an out-size personality. Mendelsohn’s planwas so detailed and authoritarianthat it included instructions for howresidents were to push back theirchairs after meals.

Now I know, thanks to Ms. Hoff-man’s book, that Mendelsohn’s angu-lar design for the Anglo-PalestineBank that opened in 1939 on JaffaRoad was meant to echo the “starkverticals” of buildings in Hebron. Iknow that he imagined the MountScopus hospital building, completedthe same year on the desert’s edge,as stretching “from Jerusalem toSaudi Arabia” and that the construc-tion workers called its small domes“breasts.” The stories in Ms. Hoff-man’s account brought new pieces of

Jerusalem to life and made me morealert to the choices, good and bad,made by those who put the city to-gether over the years.

Mendelsohn didn’t last long in Je-rusalem. One gets the impressionthat it was too small a stage, the vi-sion of an Arab-Jewish symbiosis toounlikely, and that the “Orient” wasinsufficiently interested in ErichMendelsohn’s ideas about how itshould look. When the Wehrmachtdrew distressingly close to Palestinein 1941 he decided, upon secondthought, that California might be abetter choice.

If some of the city’s best modernbuildings are Mendelsohn’s, the Brit-ish civil servant Austen St. BarbeHarrison is behind what may be thetwo most beautiful of all: Govern-ment House, finished in 1931, and theRockefeller Archaeological Museum,which opened in 1938. Both weremeant to serve as temples to apeaceful Palestine under British rule,and both reflect less a Middle East-ern style than a Western imaginingof a Middle Eastern style—a beauti-ful approach in itself and no lessgenuinely local than any other.

After a few quiet years in the1920s, Harrison watched friction be-tween Arabs and Jews burst into vio-lence, complicating his building proj-ects and eroding any optimism aboutthe future. In a letter, a British sculp-

tor whom Harrison brought over in1934 described Jerusalem as “funda-mentally depressing.” Harrison stayedin the city exactly one day longerthan the 15 years necessary to qualifyfor his government pension.

What the third architect of thisbook, Spyro Houris, thought of allthis is an interesting question, butdespite the author’s best attempts,Houris remains a cipher, his thoughtson the city lost along with all but thebarest details of his life—birth incosmopolitan Alexandria in 1883, amove to Jerusalem, the design ofsome beautiful villas, and death inthe city in 1936.

Ms. Hoffman sympathizes withthe subjects of her book, with theirhopes for a different kind of place,and with their disappointment. Sheregrets the way commerce down-town mars pretty facades with uglysigns advertising ugly clothes, theunsightly metal detectors and secu-rity guards outside her characters’buildings, rags that “droop from

BOOKS‘What today is a problem—will one day be a task; what today is a vision and faith of a single individual, will one day become a law for all.’ —Erich Mendelsohn

Holy Rubble and Rabblerooftops and laundry lines.” Part ofthis, she writes, echoing Mendelsohn,is “a deep-seated cultural indiffer-ence to physical beauty.” It seems toher like a kind of betrayal of whatJerusalem should be.

The author’s take is open to somedebate. In the past few years we’veseen a drab intersection transformedby a Santiago Calatrava bridge, theconversion of Jaffa Road from a per-petual traffic jam into a light-rail line,the construction of a popular parkalong an old Turkish train track, andthe restoration of the Old City walls,to name just a few projects. Ms. Hoff-man’s description of Jerusalem, inany case, seems to be less one of thecity’s appearance than of its soul,which leads us back to the question ofwhat exactly Jerusalem is and whereits soul lies. Is Jerusalem the city ofpriests, prophets, architects, and writ-ers, marred by ornery people who dothings like sell T-shirts and hang ragsto dry? Or are the shirt-sellers andrag-hangers Jerusalem?

When historians use phrases like“First Temple Jerusalem” or “SecondTemple Jerusalem,” it implies theTemple is the main event, the BigIdea. But the residents of “SecondTemple Jerusalem” were actually inthe market next door, trying to get agood price for some pigeons, plottingagainst one another, seeing peoplewith Big Ideas as a nuisance (liketheir present-day counterparts) andlooking upon the magnificent ma-sonry of Herod’s architects as a goodplace to chisel a joke. Big Idea peoplewrite the history, though, and whenthey notice the market people, it’soften as a disappointment or an af-front, like those poor money-chang-ers trying to make a buck on thewrong day early in the A.D.

Not far from where I live is Jeru-salem’s main shopping mall, a build-ing that appears in no prophecy andwhose awesome ugliness would havedriven Erich Mendelsohn to despair.It’s full of thousands of Jews and Ar-abs every single day, shopping, eat-ing, hanging out—an interfaithshrine to the gods Nike and Ameri-can Eagle. Is the mall an aesthetic ormoral blight on this exalted city? Orthe abode of its human heart?

The meeting of some grand de-sign with flawed human beings isn’ta perversion of Jerusalem butsomething close to its essence, thegroans of disappointed observers akind of eternal urban soundtrack, asfamiliar and soothing as car hornsand prayers.

Mr. Friedman is the author of“Pumpkinflowers: A Soldier’sStory,” out in May from Algonquin.

knowing anything of how it lives. Inthe end, all they—and the reader—learn about the nightjar is that it ex-ists, before its broad wings, slashedwith white just below the wrist, bearit off into the dark again.

The four friends move throughnatural areas left pristine by the du-bious beneficence of tsetse flies. Mr.Head’s gently rocking, unabashedlypurple prose is dense with surpris-ing metaphor and exquisitely de-scriptive phrases, the kind thatmake a reader double back to savorthem twice. Within a few lines, youknow you’re in for a Nabokovianride. “It was quiet and the heat feltdead. Nothing moved except thewings of parasites.”

Mr. Head, a bird-watcher and ac-tive conservationist, was joined by IanSinclair, an ornithologist and the au-thor of multiple books on Africanbirds; Dennis Weir, a retired police of-ficer and preternaturally expert birderfrom Belfast; and New York birderGerry Nicholls. Through the author,we come to see how there are differ-ent species of birders, just as thereare different species of birds.

It was Mr. Sinclair, Mr. Headwrites, who “showed me how tosense a bird, how to smell it with theears.” Later, the author describesspotting a rare hummingbird on hisfirst birding expedition with Mr.Nicholls: “He had found a shard ofsunshine shaped by the forest that

learnt of its rareness because lessthan fifty birds are thought to re-main. It is seldom airborne becauseit is uncomfortable in the sky. . . .Unable to roam and find new homes,it is now trapped, confined to a sin-gle tiny tract of land. It has becomea relic, a memory of a past habitat,a memory of change.”

The author wanders off downjungled paths in flights of languageso evocative that one hardly careswhere he’s headed; it’s enough justto hear his song. And in a particularbit of alchemy, the experience ofreading his book closely mimicsbird-watching itself. Catching thefluted phrase of a solitaire in a drip-ping cloud forest, pausing to savorthe perfect melding of sound, scentand place; then finally putting bin-oculars on the singer for an electri-cally intimate connection: This isthe essence of birding.

As these birders know, “discover-ing” a species may not be the bestthing for it. The Spix’s macaw, dis-covered in 1817 by Johann von Spix,lived in Brazil, but “collectors of cagebirds so coveted it that just a hun-dred and eighty years after its dis-covery it was extinct in the wild. . . .Today this macaw knows only theshadows of wire mesh, flying instunted space. . . . Our greed for itsbeauty has ultimately stolen this birdfrom the wild.” A deep reverence forall creatures, especially the last andfewest, suffuses this book with anoddly hopeful melancholy. The seek-ers find their nightjar. More study isneeded. But it hardly matters; thesearch and Vernon Head’s telling aremore than satisfying enough.

Ms. Zickefoose is the author andillustrator, most recently, of “BabyBirds: An Artist Looks Into the Nest.”

Catching Nature on theWing

There are many species

of nightjars in Ethiopia;

the problem is to find the

one no one has seen alive.

ErichMendelsohn came

here in the 1930s hoping

to unite Jews andArabs

through architecture.

BY MATTI FRIEDMAN

Till We Have Built JerusalemBy Adina HoffmanFarrar, Straus & Giroux, £19.77




OPINION

LETTERS TO THE EDITOR

No Wonder U.S. Manufacturing Has FledWilliam A. Galston provides a

thoughtful discussion about the lossof U.S. manufacturing, exploring theimpact of imports, which is anotherway of saying that manufacturingand employment have moved over-seas (“Why Trade Critics Are GettingTraction,” Politics & Ideas, March 31).This is attributed by some to the ve-nality of and lack of patriotism bymanagers in the U.S. There is anotherdimension that must be considered.

The board of a sock manufacturerconcludes that it needs anotherplant. The CEO and CFO do an analy-sis for opening a new plant in theU.S. They factor in the highest corpo-rate-tax rate in the world along withthe costs of preparing the requiredEPA applications and a multiyear de-lay while the EPA considers it with-out knowing if they will be success-

ful. Assuming the facility is approved,they factor in the costs of union-levelwages and benefits, including man-dated health care along with require-ments necessary to comply withDodd-Frank. The list goes on.

Completing the analysis, they findthat covering these costs and makinga reasonable profit requires pricingevery pair of socks at $50. Alterna-tively, they could open the new plantoverseas and continue to price theirsocks at $4.

The simple fact that the U.S. is themost expensive and problematicplace in the world to manufactureproducts must be taken into account.Until the U.S. becomes a more at-tractive place for manufacturing,don’t expect it to return.

BILL EMERSONWest Palm Beach, Fla.

Letters intended for publication shouldbe addressed to: The Editor, 1211 Avenueof the Americas, New York, NY 10036,or emailed to [email protected]. Pleaseinclude your city and state. All lettersare subject to editing, and unpublishedletters can be neither acknowledged norreturned.

The Icann 55 Internet Proposal Is a Good OneIn “Stopping Obama’s Internet

Giveaway” (Information Age, March22), L. Gordon Crovitz quotes a pas-sage from my March 2 CircleID.comarticle in which I was critical of for-mer Icann CEO Fadi Chehade’s lessthan complete response to a letterof inquiry from three senators.

I had previously questioned thepropriety of the December 2015 an-nouncement that Mr. Chehade,while still an employee of the In-ternet Corporation for AssignedNames and Numbers, and absentadvance notice to the Icann board,had agreed to be co-chair of theadvisory committee to China’sWorld Internet Conference. WIC ap-pears to have the aim of supplant-ing Icann’s multistakeholder modelwith multilateral government domi-nance, and to oppose the version ofInternet Governance that abhorsthe type of state information cen-sorship exemplified by China’s so-called Great Firewall.

While the quote is correct, andwhile I respect Mr. Crovitz’s view-point, I wish to make clear that Iam not opposed to the final IANAtransition and accompanying Icannaccountability proposals. The pack-age just adopted at Icann 55 in Mar-rakesh is a sound blueprint that,while composed of interdependentcompromises, will nonetheless pro-vide a substantial improvement inthe accountability of Icann’s boardto its multistakeholder community iffaithfully implemented over thecoming months.

PHILIP S. CORWINWashington

Panama BernieBernie Sanders causedthe Panama Papers.Bernie of Vermontdidn’t do it by himself,of course. The world’smost famous socialist,and Hillary Clinton’salbatross, had a lot ofhelp. Spare me thecrocodile tears overthe immorality of taxavoidance. Panama is

an indictment of government greed.After World War II, the govern-

ments of the West established tax re-gimes to support the reconstruction oftheir nations. Six decades later, thattax machinery, which runs the social-welfare states in the countries BernieSanders cites in every campaign stopas a model for America, has run totallyamok—an unaccountable, devouringmonster. Billionaires aren’t the onlyones who run from it.

Most governments, including Amer-ica’s, overtax their citizens to feedtheir own insatiable need for money.Then the legal thieves running thegovernment and their cronies, unwill-ing to abide the tax levels they cre-ated, move their wealth offshore toplaces like Panama. Arguably, all theworld’s people should be able to movetheir assets “offshore” to escape gov-ernments that are smothering eco-nomic life and growth, which hasstalled in the U.S., Europe and Asia.

Speaking of crocodile tears, BarackObama spent Tuesday bragging thatcorporate tax inversions are akin toPanama Papers’ tax avoidance. Mr.Obama said “corporations,” anotherswearword invoked by Mr. Sanders atevery stop, are “gaming the system.”

Well what about that “system?” Mr.Obama is saying, with Bernie Sandersand Hillary Clinton in his echo cham-ber, that U.S. corporations shouldsuck it up on America’s 35% corpo-rate-tax rate, the developed world’shighest, and simply send that moneyto him. Why? Because he’s gotta haveit. To spend.

Other than their national health-care systems, many of which are effec-tively bankrupt, most Europeans wouldbe hard put to explain what it is theirhigh-tax governments actually do withtheir money.

Suppressed for generations byhigh tax rates and regulatory minu-tiae, most Europeans survive in aneconomic half-life of gray and blackmarkets, with their assets protectedby cash-only transactions, barteringand endless hours devising off-the-books deals involving family real es-tate, inflated art prices and anythingelse they can hide from the taxman.The Beatles actually wrote a songabout it in 1966—“Taxman,” a grimode to all this.

Governments with unsated “needs”for revenue exist in Europe, Africa,Russia and South America. The Associ-ated Press this week reported that inRussia today shell companies existsimply to pay the bribes that are theprice of daily life.

One way or another, most peopleliving in the countries run on theObama-Sanders-Clinton model even-

tually go searching for their own pri-vate Panama. When private capital isunder public assault, it will hide.From the wealthiest to the poorest, itcreates a world of chiselers, not pro-ductive citizens.

Sen. Sanders gave his Wisconsinvictory speech in Laramie, Wyo., back-grounded by the smiling, bobbingheads of his 20-something voter base.In Western Europe, which is SandersLand, those 20-somethings are thesubject of a permanent economic disci-pline called high youth unemployment.

The Sanders campaign isn’t aboutidealism. It’s about the misallocationof capital. “Misallocation of capital” isa phrase utterly alien to socialists, andincreasingly to most of the modernDemocratic Party.

In the now-extinct DemocraticParty—the party of Hubert Humphrey,Jimmy Carter and Bill Clinton—roomexisted for the private sector tobreathe. Not yet unhinged completelyfrom economics, Democrats under-stood the symbiosis between healthyprivate production and public reve-nues. Both Presidents Carter and Clin-ton deregulated economic life.

No longer. The deconstructed partyof Barack Obama, Elizabeth Warren,Bernie Sanders and forced-recruitHillary Clinton says: Just keepsqueezing them.

This week marked a historic mo-ment in the Democratic drift towardlow-growth Euro-socialism. Both Cali-fornia and New York raised the mini-mum wage to $15. California Gov.Jerry Brown, who in his career hasbeen every Democrat that ever was,summarized the true meaning of thenew party. “Economically, minimumwages may not make sense,” he said,but they make sense “morally, so-cially and politically.”

It has been my view for some timethat to help her navigate Bernie’s newDemocratic world Hillary Clintonshould bring in Lady Gaga as a consul-tant. An expert in magic realism.

Sen. Sanders is getting mocked nowby Hillary Clinton and her supportersfor a catastrophic interview he gavethis week to the New York Daily News,revealing he knows little about his ownproposals. But France’s Socialist Presi-dent François Hollande knew every-thing about his economic proposals.What difference does it make?

The day before losing to BernieSanders in Wisconsin, Mrs. Clinton ar-gued: “I think we need a nomineewho’s been tested and vetted already.For 25 years they’ve thrown every-thing they could at me, but I’m stillstanding.”

Tested, vetted and still standing. Onthe available evidence so far, that isn’tthis year’s criteria for the Americanpresidency.

His politics producedthe Panama Papers,an indictment ofgovernment greed.

WONDERLANDBy DanielHenninger

REVIEW & OUTLOOK

A Dutch Warning for Europe

T he answer to the question in Wednes-day’s Dutch referendum should havebeen easy: Should the Netherlands rat-

ify the European Union’s tradeagreement with Ukraine? Thatthe “No” campaign thumped“Yes” by a 61%-38%margin isa symptom of the failure ofthe political center in theNetherlands, and in Europe.

The Dutch political class was surprised bythe referendum on the EU association agree-ment with Ukraine, which was forced when an“anti-establishment” political blog garneredthe 300,000 signatures necessary to call sucha vote. At first the liberal-labor coalition ofPrime Minister Mark Rutte tried to ignore thelooming vote, hoping turnout below the requi-site 30% would nullify the result. Only belat-edly did Mr. Rutte and others realize theyneeded to campaign actively for the deal withUkraine, and by then they were too far behindtheir opponents.

The result is an embarrassing rebuke to Eu-rope’s policy of engaging with Ukraine as acheck on Vladimir Putin’s Russian expansion-ism. Russian PrimeMinister Dmitry Medvedevwelcomed the vote on Twitter, writing that theresult was “an indicator of the Europeans’ atti-tude to the Ukrainian political system.”

Mr. Rutte’s loss is all the more remarkablegiven how well the Dutch have come to under-stand the dangers of Mr. Putin’s ambitions.

Amsterdam was the origin ofMalaysia Airlines Flight 17,shot down in 2014 by Russia-armed rebels in easternUkraine. One hundred andninety six Dutch citizens werekilled in that attack.

The explanation is two-fold. The Dutch gov-ernment, in line with many of its EU peers, hasconsistently failed to explain to voters what’sat stake in Ukraine and persuade them thatstanding with Kiev is in the best interests of therest of Europe. The EU itself is also so unpopu-lar among European voters—not least becauseits political class is imperious and often unac-countable—that campaigners could turn thisvote into a referendum on the EU.Why supportEU foreign policy if you hate Brussels?

The practical effects of the vote will be lim-ited, since the referendum is nonbinding andonly 32% of voters turned out. But the warningis clear for European leaders and their allies.Europe can’t have an effective foreign policyif leaders won’t educate their citizens aboutforeign affairs—and the EU itself will struggleto be a reliable partner so long as doubts re-main about its democratic legitimacy.

Mainstream leadersfailed to make the casefor backing Ukraine.

Backward to Athens

I t’s been nearly five months since Greece’slast near-crisis, so another financial tremorwas overdue. Sure enough, a general strike

this week came as PrimeMin-ister Alexis Tsipras heats uphis feud with Greece’s credi-tors and the creditors feudwith each other.

The trigger is the long-delayed review of the bailoutdeal Greece struck in August. The review is sup-posed tomeasure Athens’s progress on imple-menting fiscal and supply-side reforms as aprelude to unlocking the next tranches of aiddue under that €86 billion ($97.85 billion)agreement. Athens will need another of thosepayouts, of nearly €6 billion, tomake a €2.8 bil-lion debt repayment due to the European Cen-tral Bank in July.

But there’s notmuch progress to review. Re-forms to pensions, one of Athens’s biggest bud-get lines, remain undone.Mr. Tsipras’s left-wingSyriza party is debating cuts to benefits for re-tirees who enjoy the most generous payouts, aclass that includesmanypro-Syriza governmentunions that launchedThursday’s national strike.Creditors are blocking Syriza’s Plan B, which is

to increase pension contributions—also knownas taxes—even further to preserve benefits. Ath-ens is dragging its feet implementing a bank-

ruptcy-lawoverhaul andpriva-tizations mandated by lastyear’s bailout.

The main “reform” Athenshasmanaged so far are someofthe tax increases creditors de-manded, including applying

the 23% value-added tax to a larger number ofgoods and imposing new personal-income andcorporate taxes. Greece’s first two bailouts in-creased revenue as a percentage of gross domes-tic product to nearly 36% in 2014 from around31% before the 2010 crisis, according to theOECD, and that percentagewill have risen since.Creditors seem to think this is good for the bud-get, but it’s a growth killer.

All of which is worth remembering as Mr.Tsipras demands substantial debt relief, the In-ternationalMonetaryFundargues for somedebtforgiveness, and Germany resists any write-downs at all. No amount of debtwill be sustain-able if the Greek economy isn’t growing, andGreece can’t get the growth spurt it needswith-out supply-side reforms.

No one else can saveGreece if Greecewon’t save itself.

America’s East Asian Bargain

N ew Japanese laws took effect last weekthat empower Japan’smilitary to defendU.S. forces that comeunder attack, even

if Japan isn’t targeted. Count this as one ofmanyimportant facts Donald Trump overlookswhenhe blasts U.S. allies and proposes withdrawingfrom the Western Pacific.

“We take care of Japan,we take care of SouthKorea” and “we get virtually nothing” in return,Mr. Trumpsaid lastmonth.He threatens to rene-gotiate or abrogate the long-standing treatiesunder which the U.S. today bases some 50,000troops in Japan and 28,000 in South Korea.

But these aren’t one-sided or unaffordabledeals. Tokyo andSeoul nowpaynearly half of lo-calU.S.military costs—some$2billion a year forJapanand$900million for SouthKorea. TheU.S.troops based there cost the U.S. taxpayer lessthan they would if they came home. And that’swithout counting their value in sustaining de-cades of peace and prosperity in a region previ-ously marked by catastrophic wars.

The four largest U.S. military-constructionprojects in the Pacific are costingU.S. taxpayersonly $7 billion because Japan and South Koreaare payingmore than $30 billion. According toan April 2015 tally from U.S. Pacific Command,Seoul is providing 93% of the nearly $11 billionneeded to expandCampHumphreys,which is setto host almost all U.S. forces in Korea by 2017.

Tokyo is paying 94% of the nearly $5 billionneeded atMarine Corps Air Station Iwakuni, in

southern Japan, and 100%of the roughly $12 bil-lion to replace the Futenma facility on the south-western island ofOkinawa. Tokyo is evenpaying36% of the $3 billion needed for newU.S. facili-ties on the central Pacific island of Guam,whichis U.S. territory.

SouthKorea spends about 2.5%ofGDPonde-fense,which is lower thanAmerica’s 3.5%but stillin theworld top 10. Itsmilitary, backedbyuniver-sal male conscription, is the world’s front lineagainst the nuclear arsenal, long-rangemissilesand global-proliferation racket of North Korea.Japan is the leading local bulwark against Chi-nesedominationofEastAsia. Spending 1%ofGDPon defense is too little, but Japan has increasedspending for four years running.

At significant political cost, the Abe govern-ment reinterpreted Japan’sU.S.-imposed consti-tution to allow “collective self-defense,” pavingthe way for the new laws that took effect lastweek. Tokyo can now defend the U.S. againstNorth Koreanmissiles.Whenever U.S. ships pa-trol the South China Sea, Chinese planners nowmust also account for Japan’s fleet, which islarger than Britain’s.

Japan’s PrimeMinisterShinzoAbeandSinga-pore’s PrimeMinister LeeHsienLoonghavegonepublic recently praising theU.S. role inAsia andwarning about the damage froma short-sightedwithdrawal. Americans should understand thatthese countries are not free riders and forwarddeployments in Asia are crucial to U.S. security.

Jack Lew’s Political Economy

C EOs have learned to keep mum in theObama era, lest their companies bepunished like J.P. Morgan after Jamie

Dimon criticized some partsof Dodd-Frank. So it’s worthnoting the candid reactionafter a new U.S. Treasuryrule scuttled the merger be-tween Pfizer Inc. and Aller-gan PLC.

The companies ended their $150 billion tie-up after Treasury Secretary Jack Lew issuednew rules that made it harder for companieslike Pfizer to move to Ireland to legally lowertheir taxes. Pfizer will have to pay Allergan abreakup fee of $150 million, though Allerganshares are still down more than $10 billionsince the Treasury ambush.

Pfizer CEO Ian Read defends the company’splanned merger in an op-ed nearby, and hislarger point about capricious political powerhelps explain the economic malaise of the pastseven years. “If the rules can be changed arbi-trarily and applied retroactively, how can anyU.S. company engage in the long-term invest-

ment planning necessary to compete,”Mr. Readwrites. “The new ‘rules’ show that there are noset rules. Political dogma is the only rule.”

He’s right, as every CEOweknowwill admit privately. Thispoliticization has spreadacross most of the economyduring the Obama years, asregulators rewrite long-stand-ing interpretations of long-

standing laws in order to achieve the policygoals they can’t or won’t negotiate with Con-gress. Telecoms, consumer finance, for-profiteducation, carbon energy, auto lending, auto-fuel economy, truck emissions, homemortgages,health care and so much more.

Capital investment in this recovery has beendisappointingly low, and one major reason ispolitical intrusion into every corner of businessdecision making. To adapt Mr. Read, the onlyrule is that the rules are whatever the ObamaAdministration wants them to be. The resultshave been slow growth, small wage gains anda growing sense that there is no legal restrainton the political class.

Pfizer’s CEO nails thereason for slow growthand small wage gains.




OPINION

Obama IsWrong About Pfizer’s Merger and Growth

I n the pharmaceutical industrywe develop medicines andtherapies to address world-

wide health challenges. The workis complex and deeply gratifying.At Pfizer we employ more than30,000 highly skilled people in theU.S. alone and invest almost $8billion annually in R&D, much of itin the U.S.

Surely we benefit from world-class academic institutions, ahighly skilled labor force and otherattractions of doing business in theU.S. But the important point is sodo our foreign competitors. Andthey pay significantly less for theprivilege. So we compete in aglobal marketplace at a real disad-vantage. The U.S. tax code hasamong the highest rates in theWestern world and forces its multi-nationals to pay U.S. tax on incomeearned abroad if they want to bringit back to this country.

The real-world consequences are

significant. In Cambridge, Mass.,where Pfizer has a state-of-the-artresearch lab, we are surrounded byforeign-owned competitors’ facili-ties. When those companies investin their facilities, it is often asmuch as 25% to 30% cheaper thanevery dollar we put into researchand jobs. Why? Because our com-petitors don’t have to pay the pen-alty imposed on U.S. corporationsbringing earnings back to America.We can invest less—because of abroken tax system.

Pfizer has long worked withCongress to make the U.S. tax sys-tem more competitive and fair. Inthe absence of tax reform, we un-dertook a proposed merger with Al-lergan PLC in good faith and afterintense study and review of currentlaws. This strategic transaction,driven by strong commercial andindustrial logic, would have made iteasier to invest in the U.S.

On Monday the U.S. Treasuryannounced a third set of new rulesgoverning corporate redomicilings,

or so-called inversions. It sur-prised many because TreasurySecretary Jack Lew said in 2014that “we do not believe we havethe authority to address this in-version question through adminis-trative action. If we did, we wouldbe doing more. That’s why legisla-tion is needed.”

This week’s Treasury action in-terprets the tax laws in waysnever done before. This ad hocand arbitrary attempt to singleout and damage the growth oppor-tunities of companies operatingwithin the current law is unprece-dented, unproductive and harmfulto the U.S. economy.

The action was accompanied bymuch unfortunate rhetoric about

tax avoidance. No one was shirkingtheir U.S. tax bills. In a mergerwith Allergan PLC, an Irish com-pany, we would have continued topay all federal, state and local taxeson our U.S. income. All that thesenew rules will do is create a per-manent competitive advantage forforeign acquirers. Simply put, therewill be more foreign acquisitions ofU.S. companies resulting in fewerjobs for American workers.

What fails to get noted is oursteadfast commitment to scienceand good corporate citizenship.More than half of Pfizer’s 1,000-plus R&D collaborations takeplace in the U.S., where our part-ners include academic hospitals,government organizations, non-profits, foundations, patient advo-cacy groups and other pharmacompanies.

Companies like Pfizer and Aller-gan contribute to the communitiesin which we operate. To be pillo-ried as “deserters” when we aretrying to stay competitive on a

global stage so that we can con-tinue to invest in the U.S. is wrong-headed. Government policy shouldencourage investment certainty andjob creation. Combining these twobusinesses would have had a posi-tive impact on the lives and liveli-hoods of many people.

While the Treasury’s proposal isa shot at Pfizer and Allergan, thisunilateral action will hurt othercompanies as well. If the rules canbe changed arbitrarily and appliedretroactively, how can any U.S.company engage in the long-terminvestment planning necessary tocompete? The new “rules” showthat there are no set rules. Politicaldogma is the only rule.

Pfizer will continue to makemedicines that significantly im-prove lives. We are proud of ourheritage, our commitment to pa-tients and we will continue to drivefor cures.

Mr. Read is chairman and chiefexecutive officer of Pfizer Inc.

By Ian Read

A broken tax system putsAmerica’s companies at acompetitive disadvantage.

An Overheated Climate AlarmThe Lancet researchers found

that about 0.5% of all deaths areassociated with heat, not only fromacute problems like heat stroke, butalso increased mortality from car-diac events and dehydration. Butmore than 7% of deaths are relatedto cold—counting hypothermia, aswell as increased blood pressureand risk of heart attack that resultswhen the body restricts blood flowin response to frigid temperatures.In the U.S. about 9,000 people diefrom heat each year but 144,000die from cold.

The administration’s new reportrefers to this study—it would bedifficult to ignore, since it is theworld’s largest—but only in trivialways, such as to establish the rela-tionship between temperature andmortality. Not once does this “sci-entific assessment” acknowledgethat cold deaths significantly out-weigh heat deaths.

The report confidently claims thatwhen temperatures rise, “the reduc-tion in premature deaths from coldare expected to be smaller than theincrease in deaths from heat in theUnited States.” Six footnotes areattached to that statement. But oneof the cited papers doesn’t even esti-mate cold deaths; another flat-outdisagrees with this assertion, pro-jecting that cold deaths will fall morethan heat deaths will rise.

Further, the figure that made itinto news reports, those “tens ofthousands” of additional deaths, iswrong. The main model that theadministration’s report relies on toestimate temperature-related mor-tality finds, in a worst-case sce-nario, 17,680 fewer cold deaths in2100, but 27,312 more heat deaths—a net increase of 9,632.

Moreover, the model considerscold deaths only from October toMarch, focusing on those caused byextreme temperatures in winter.Most cold deaths actually occurduring moderate temperatures, asthe Lancet study shows. In the U.S.,about 12,000 people die from ex-treme cold each year but 132,000

die from moderate cold. In London,more than 70% of all cold-relateddeaths occur on days warmer than41 degrees Fahrenheit. Although ex-treme temperatures are moredeadly, they occur only a few daysor weeks a year, whereas moderatecold comes frequently.

Thus, one of the central findingsin the administration’s new reportis contradicted by a large number ofscientific studies from around theglobe. A 2009 paper from the Euro-pean Union expects that the reduc-tion in cold deaths will definitely

outweigh extra heat deaths in the2020s. Even near the end of thecentury, in the 2080s, the EU studyprojects an increase in heat deathsof “between 60,000 and 165,000”and a decrease of cold deaths of“between 60,000 and 250,000.” Inother words, the effects will proba-bly balance each other out, butwarming could save as many as85,000 lives each year.

An academic paper publishedtwo years ago in EnvironmentalHealth Perspectives similarlyshows that global warming will

lead to a net reduction in deaths inboth the U.K. and Australia. InEngland and Wales today, the au-thors write, statistics show thatheat kills 1,500 people and coldkills 32,000. In the 2080s, they cal-culate that increased heat will killan additional 3,500. But they findthat cold deaths will drop by10,000. In Australia the projectionssuggest 700 more heat deaths but1,600 fewer cold deaths.

Globally, one estimate of thehealth effects of climate change,published in 2006 by EcologicalEconomics, shows 400,000 morerespiratory deaths (mostly fromheat) by midcentury, but 1.8 mil-lion fewer cardiovascular deaths(mostly from cold).

In pushing too hard for the casethat global warming is universallybad for everything, the administra-tion’s report undermines the rea-sonable case for climate action. Fo-cusing on only the bad side of theledger destroys academic and politi-cal credibility.

Although there is a robust intel-lectual debate on heat and colddeaths, there is a much simpler wayto gauge whether people in the U.S.consider higher temperatures pref-erable: Consider where they move.Migration patterns show peopleheading for warm states like Texasand Florida, not snowy Minnesotaand Michigan.

That’s the smart move. A 2009paper in the Review of Economicsand Statistics estimates that be-cause people seek out warmth,slightly more die from the heat, butmany fewer die from the cold. In to-tal, the actions of these sun-seekersavert 4,600 deaths in the U.S. eachyear. You won’t be surprised tolearn that the study wasn’t men-tioned in the administration’s half-baked report.

Mr. Lomborg, director of theCopenhagen Consensus Center, isthe author of “The Skeptical Envi-ronmentalist” (Cambridge Press,2001) and “Cool It” (Knopf, 2007).

By Bjorn Lomborg

ISTO

CK

T he Obama administrationreleased a new reportthis week that paints astark picture of how cli-mate change will affect

human health. Higher temperatures,we’re told, will be deadly—killing“thousands to tens of thousands” ofAmericans. The report is subtitled“A Scientific Assessment,” presum-ably to underscore its reliability.But the report reads as a politicalsledgehammer that hypes the badand skips over the good.

It also ignores inconvenient evi-dence—like the fact that cold killsmany more people than heat.

Climate change is a genuineproblem that will eventually be anet detriment to society. Graduallyrising temperatures across decadeswill increase the number of hotdays and heat waves. If humansmake no attempts whatsoever toadapt—a curious assumption thatthe report inexplicably relies onalmost throughout—the total num-ber of heat-related deaths willrise. But correspondingly, climatechange will also reduce the num-ber of cold days and cold spells.That will cut the total number ofcold-related deaths.

Consider a rigorous study pub-lished last year in the journal Lancetthat examined temperature-relatedmortality around the globe. The re-searchers looked at data on morethan 74 million deaths in 384 loca-tions across 13 areas: cold countrieslike Canada and Sweden, temperatenations like Spain, South Korea andAustralia, and subtropical and tropi-cal ones like Brazil and Thailand.

TheWhite House launchesa scary campaign aboutdeadly heat. Guess what:Cold kills more people.

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Obock, Djibouti

T hey arrive daily by the hun-dreds now. Frustrated univer-sity graduates unable to find

jobs at home; drought victimswho’ve seen their livestock perish;victims fleeing violence spawned byreligious or tribal conflict.

Two months ago, it was perhapsonly several dozen a night, everyone of these men and, increasingly,women, arriving on foot, sometimeshaving walked for months to reachthis seaport. So eager are they tocross the Bab el Mandeb, a danger-ous stretch of water separatingthem from the Arabian Peninsula,

Yemen’s Looming Migrant Crisisthat they will embark on journeysthat can seem almost biblical.

Known as the “gateway to grief,”the strait’s treacherous waters haveswallowed more than 3,700 Africanmigrants since 2006. Across the 28-kilometer strait lies Yemen, a coun-try ravaged by bitter conflict. But tothese job seekers—overwhelminglyEthiopian, with a few Somalis, Suda-nese and Eritreans—the conflict isno deterrent. If anything, it has be-come an important selling point forthose arranging passage.

“Saudi Arabia is their destina-tion. Many are returning to jobsthey had there before,” says Ali Ab-dallah Al-Jefri, who directs the In-ternational Organization for Migra-

tion’s (IOM) Migrants ResponseCenter here. Human smugglers tellthe migrants that because of theraging violence in Yemen, “now is agood time to try to go back toSaudi Arabia,” Mr. Al-Jefri says. In-stead, it’s the worst time.

Take Dawit Deresseh, an Ethio-pian migrant. Mr. Deresseh, 30 andlandless, had already crossed Dji-bouti twice in the past 12 months.He made one trip last year to aconstruction job in Saudi Arabia,but was repatriated with IOM’shelp after losing his arm in a carwreck. He explained that he was ina smuggler’s vehicle with 26 otherpilgrims when it struck a landmine near the Saudi border. “All 27came from Ethiopia,” he said. Ev-eryone else was killed. Nonethe-less, within months of returning toEthiopia, he was back again tocross the Bab el Mandeb, so des-perate are he and his family for aregular income.

With the world’s attention on themillion-plus migrants and refugeesstreaming across the Mediterraneanfrom Syria to the European Union,the deadly route running throughDjibouti can seem almost a side-show. It will soon take center stage.Many of these migrants—alreadyabout 10,000 have been countedsince January, compared to about80,000 for all of 2014—are part ofa growing population of vulnerablemen, women and children who havedisappeared upon leaving Djibouti.Some have died at sea trying to en-ter Yemen, including 44 confirmeddrowned so far this year. Othershave been kidnapped or tortured.The exact numbers are still unclear.

Further complicating matters:Because any African labor crossingYemen is, by definition, unregu-lated, governments of the regionsimply don’t know how many havesuccessfully made the journey. Untilhumanitarian organizations likeIOM gain access to them, details onthe migrants’ conditions will re-main murky. But what we do knowis that thousands of migrants havealready been kidnapped by smug-gling gangs operating across theYemeni countryside, holding menand women for ransom.

In March, after IOM helped 300Ethiopians return from Yemen,many of the them told us of thehardships they endured at thehands of kidnappers. “Ahmed” toldof brutal torture and raping andkillings. “Ali” related how his sib-lings in Saudi Arabia had to paythe kidnappers 10,000 Saudi riyal($2,668) for his release. But heconsiders himself fortunate, la-menting how others didn’t sharehis fate, describing the inhumancruelties he witnessed.

But even under the protection oforganizations like ours, migrantsafety can’t be guaranteed. Lastmonth, armed men entered our cen-ter in Hodeidah firing their weap-ons, killing a 16-year-old migrant

when a bullet pierced the wall hewas hiding behind.

Making matters worse, many mi-grants end up as pawns in a propa-ganda war, with both sides to theYemeni conflict claiming the otheris arming these outsiders as merce-naries. As a result, upon being in-tercepted these migrants will lan-guish in government facilities, oftenwithout sufficient food, medical at-tention or proper sanitation, untilthey are released for lack of fundsto care for them.

While it’s no secret that merce-naries are operating in Yemen, wedon’t believe either side is recruitingdestitute, weak and abused Ethio-pian migrants. Many make this peril-ous crossing simply to return to jobsthey once held, after having been ex-pelled due to changes in work-per-mit regulations—a common occur-rence in the migrant world wheneverauthorities promise to crack downon irregular workers.

While few migration emergenciesmatch Yemen for the severity of theterror being inflicted on its victims,what’s happening in this region ispart of a growing world-widescourge of violence wherever mi-grants roam. Wherever govern-ments permit unregulated migra-tion to fester, regulation is reducedto the whims of smugglers, oftenviolent criminals who value profitsover human rights and human lives.Migrant passage everywhere shouldbe legal, safe and secure for all.

Mr. Abdiker is the director of thedepartment of operations andemergencies at the International Or-ganization for Migration.

By Mohammed Abdiker

Africans risk a periloussea crossing and a trekthrough a war zone seekingjobs in Saudi Arabia.




WeatherShown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.

City Hi Lo W Hi Lo W City Hi Lo W Hi Lo WToday Tomorrow Today Tomorrow

Amsterdam 11 4 pc 13 6 cAnchorage 9 4 pc 9 4 cAthens 23 13 pc 23 13 tAtlanta 18 8 pc 16 4 sBaghdad 33 17 s 34 21 sBaltimore 13 1 pc 9 -3 shBangkok 37 29 s 37 28 sBeijing 25 9 s 29 7 sBerlin 14 3 pc 15 6 pcBogota 20 11 pc 20 10 cBoise 27 11 s 26 12 pcBoston 12 1 c 8 -2 cBrussels 12 5 pc 14 5 cBuenos Aires 22 14 sh 20 12 rCairo 39 29 pc 38 22 cCalgary 24 6 pc 15 0 sCaracas 31 25 pc 30 24 pcCharlotte 17 5 pc 13 -1 pcChicago 6 -4 sn 4 -2 pcDallas 25 13 pc 24 16 pcDenver 18 6 pc 21 8 cDetroit 7 -4 sn 2 -7 sfDubai 33 23 pc 31 22 tDublin 9 0 r 7 1 tEdinburgh 11 4 pc 9 2 rFrankfurt 13 2 pc 14 6 pc

Geneva 10 4 c 12 4 shHanoi 26 22 pc 28 22 pcHavana 29 19 s 28 18 sHong Kong 27 23 c 27 22 shHonolulu 29 21 pc 29 21 pcHouston 26 12 pc 25 15 pcIstanbul 23 15 pc 22 14 pcJakarta 32 26 c 32 26 cJohannesburg 19 9 c 21 10 pcKansas City 16 -1 s 16 10 sLas Vegas 22 14 sh 21 13 cLima 27 21 pc 27 20 pcLondon 13 6 pc 11 3 rLos Angeles 20 15 sh 18 13 rMadrid 15 3 pc 17 6 pcManila 34 27 s 35 26 sMelbourne 20 12 pc 22 14 cMexico City 26 12 pc 27 13 pcMiami 29 19 pc 28 19 sMilan 19 9 t 18 8 cMinneapolis 2 -6 pc 6 2 sMonterrey 30 18 pc 27 17 shMontreal 5 -5 sf 1 -9 sfMoscow 13 6 pc 20 11 cMumbai 34 27 pc 35 28 pcNashville 17 2 pc 12 2 sNew Delhi 36 21 pc 37 23 pcNew Orleans 25 15 pc 24 16 sNew York City 10 3 c 7 -2 snOmaha 14 -3 s 15 9 sOrlando 30 14 s 26 12 s

Ottawa 1 -9 sf -1 -11 sfParis 13 4 pc 12 3 shPhiladelphia 12 3 pc 9 -1 snPhoenix 26 18 t 28 16 sPittsburgh 8 -3 sf 2 -7 sfPort-au-Prince 32 21 pc 33 21 shPortland, Ore. 28 11 pc 22 8 pcRio de Janeiro 32 24 s 32 25 sRiyadh 33 17 t 32 19 sRome 20 11 t 17 7 tSalt Lake City 23 12 pc 20 11 shSan Diego 21 16 sh 19 15 rSan Francisco 19 13 sh 19 12 shSan Juan 31 23 pc 30 24 pcSantiago 21 7 pc 20 6 sSanto Domingo 31 21 pc 31 21 shSao Paulo 32 19 pc 33 20 sSeattle 24 9 pc 19 8 pcSeoul 18 6 s 19 8 pcShanghai 22 13 pc 22 12 pcSingapore 33 26 pc 33 27 pcStockholm 10 2 c 10 0 pcSydney 23 18 pc 25 18 pcTaipei 28 20 pc 27 20 pcTehran 22 12 pc 19 12 cTel Aviv 31 21 pc 33 21 pcTokyo 22 9 pc 21 11 pcToronto 4 -8 sf -2 -9 cVancouver 19 7 pc 16 7 sWashington, D.C. 14 3 pc 9 0 snZurich 9 5 r 11 4 sh

Global Forecasts

City Hi Lo W Hi Lo W

s...sunny; pc... partly cloudy; c...cloudy; sh...showers;t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice

Today Tomorrow

Warm

Cold

Stationary

Showers

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T-storms

Snow

Flurries

Ice

-15-10-505101520253035

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Paris

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Algiers Tunis

Madrid

Lisbon

Rome

Milan

ViennaMunich

BudapestGeneva

Athens

London

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CHASINGAPITCH | By Marie Kelly

TheWSJ Daily Crossword | Edited by Mike Shenk

1 2 3 4 5 6 7 8 9 10 11 12 13

14 15 16

17 18 19

20 21

22 23 24 25 26

27 28 29 30 31 32

33 34 35 36

37 38

39 40 41 42

43 44 45

46 47 48 49 50

51 52 53 54 55

56 57 58 59 60

61 62 63

64 65 66

The answer to thisweek’s contestcrossword is aMajor LeagueBaseball team.

Across1 Site of fightingin early 1942

7 Fillable flatbread11 Schnauzer

sound14 Slayer of Niobe’s

sons15 Surrounded by16 LXVII tripled17 “Think nothing

of it”18 Rebounding shot20 Kickboxing and

kendo

Previous Puzzle’s Solution

22 Make fun of, ina way

25 World BaseballClassic uniformletters

26 TommyLasorda’s retirednumber

27 Imperfectly28 Sommelier’s

suggestion30 Joe holder33 Armada action35 River near

Tarascon Castle37 Company

eschewers38 Words after that

or easy39 Council member,

perhaps

40 Three-under-parscore on a hole

43 River nearBalmoral Castle

44 Opinions45 Catcher Berg

who worked asa spy in WWII

46 Restorative place49 Pee Wee Reese’s

retired number50 Euro division51 Majorette, at

times56 Nicholson wore

one in “TheShining”

57 Player with astore

61 Phil Rizzuto’sretired number

62 Spill all63 Carnival dances64 Opening day

pitcher, probably65 Dress66 Home

appearances,and where tolook for thecontest answer

Down1 Deserving of atimeout

2 Make fun of, ina way

3 Hauler’s unit4 Cry of dismay5 Montreal-based

shoe store chain6 Linguist

Chomsky7 Sun block8 Make fun of, in

a way9 Behavioral

quirks10 Make one’s own11 What a man has

that a womandoesn’t

12 “Rhyme Pays”artist

13 Exchange areas19 Lower in the

country?21 Sacrifice, at

times22 Took in23 Soccer stadium

cheer

24 Furtive28 Henry VIII’s third

Catherine29 “___ only a

game”31 Pitch coincidence32 Starter’s words34 Sacramento

paper35 Breaks down36 Woman as an

object?38 Gray-headed

crow40 Openly

confessing41 Jacket parts42 Ballpark quaff47 Pro runner48 Unfocused dread50 Ant’s prize51 Not quite ready

for release52 “Lady

Marmalade”preposition

53 Rush, e.g.54 Patty and

Selma’s niece55 Caroline du Sud,

par exemple58 Wizards’ gp.59 Mom’s order60 Protested org.

of the 1960s

PUZZLECONTEST

s

Email your answer—in the subject line—to [email protected] 11:59 p.m. Eastern Time Sunday, April 10. A solver selected at randomwill win aWSJmug. Last week’s winner: Mandi Delahunty, Woodacre, CA.Complete contest rules atWSJ.com/Puzzles. (No purchase necessary.Void where prohibited. U.S. residents 18 and over only.)

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K E E N N O RH A I L E D Z E P P E L I NA N D E S R O A R M E GM O B S S O A P Y G A V ES L R B O W S S E G E L

D A T A B L E H O P P E R SC A R A T O P

T H E W I Z B U T T E R U PO I L S I M I L E S T O N EA L E T O U T E R T A T AD O T A N G E R S O D O R

THE SONGS OF MERLE HAGGARD, a bard ofthe working man, had their roots in country,but they inspired musicians in other genresof American music as well. As a linchpin ofthe so-called Bakersfield sound, whichadded an earthy edge to the kind of countrycoming from Nashville, Tenn., Mr. Haggardforeshadowed outlaw country and countryrock, and for more than 50 years composed,sang with a rich, penetrating baritone andplayed songs that blended a firsthandknowledge of life’s trials and travails with afervent hope for better times ahead. He diedon April 6, his 79th birthday.

As a boy, Mr. Haggard began to compiletrying experiences that would serve himwell as a songwriter. Merle Ronald Haggardwas born in a converted boxcar in Oildale,Calif., just outside of Bakersfield. After hisfather died suddenly while Merle was still achild, Mr. Haggard began to teach himselfguitar and to commit crimes that started offpetty but escalated in their severity.

A promising musician with a voice influ-enced by honky tonk’s Lefty Frizzell, by 1956Haggard was playing clubs and roadhouses.But a robbery led to confinement in SanQuentin Prison. After witnessing a JohnnyCash concert at the fabled penitentiary, Mr.Haggard joined a country group in prison andearned his high-school equivalency diploma.

Mr. Haggard signed on with Wynn Stew-art’s band as a bassist and, at the sametime, began a solo career. When his thirdsingle, “(My Friends Are Gonna Be) Strang-ers,” landed high on the Country & Westerncharts in 1964, he formed a band, theStrangers, featuring a plucky electric guitarplayed by Roy Nichols. His cover of “The Fu-gitive,” released in 1966, became the first ofhis almost 40 No. 1 country hits, which in-cluded his compositions “Mama Tried,”“Workin’ Man Blues,” “Sing Me Back Home”and “If We Make It Through December.”Other Haggard compositions that becamestandards include “The Bottle Let Me Down”and “Today I Started Loving You Again,”written with his wife Bonnie Owens.

In 1969, Mr. Haggard courted controversywith his song “Okie From Muskogee,” inwhich he disparages hippies and promotestraditional values. Embraced by MiddleAmerica, the song was honored by the

Country Music Association, as was the al-bum of the same name. Though it definedMr. Haggard, perhaps too narrowly, he alsocomposed a song that supported interraciallove, “Irma Jackson,” which he released in’72. It was not as well-received as “OkieFrom Muskogee.”

By then, Mr. Haggard’s songs had crossedover into the rock-and-pop world. JoanBaez, the Byrds, the Grateful Dead, the NittyGritty Dirt Band and even Dean Martin cov-ered his songs. But Mr. Haggard remainedcommitted to the country side of the ledger,recording a 1970 tribute to Bob Wills andwestern swing in which Mr. Haggard re-vealed his skills as a fiddle player. In the1970s, he had 16 No. 1 hit singles on the

country charts.Mr. Haggard struggled with substance

abuse and financial setbacks in the late ’80sand into the ’90s, though his reputation as asongwriter remained stellar as covers of hissongs by contemporary singers charted andappeared in films. In 2005, he released“America First,” a song that lamented thestate of the country’s infrastructure while thegovernment was engaged in nation-buildingelsewhere. He issued his final solo album,“Working in Tennessee,” in 2011, and fouryears later he and Willie Nelson scored a No.1 album with “Django and Jimmie,” a tributeto Django Reinhardt and Jimmie Rodgers.The 78-year-old Mr. Haggard was in finevoice, his characteristic blend of defiance and

tenderness golden in the lines he sang.Mr. Haggard was inducted into the Nash-

ville Songwriters Hall of Fame in 1977 andthe Country Music Hall of Fame in 1994. Hereceived a Kennedy Center Honor in 2010for his contributions to American culture.When his journey from a boxcar and aprison cell to the heights of popular musicended with his death, Mr. Haggard wasfirmly established as an extraordinary com-poser and artist who spoke plainly from theheart to those who felt the power of hisconvictions.

Mr. Fusilli is the Journal’s rock and popmusic critic. Email him at [email protected] follow him on Twitter @wsjrock.

APPRECIATIONJIM FUSILLI

MERLE HAGGARD (1937-2016):

Brilliance Born in a BoxcarCOUNTRY PROUD

Merle Haggardperformingcirca 1985.

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most horrific cases of child sexabuse they had ever seen.

History may remember itfor another reason. It is be-lieved to be the first case of afederal judge ordering Appleto assist the government inunlocking an iPhone—and thetechnology giant not only com-plied; it helped prosecutorsdraft the court order requiringit to do so.

The recent dispute over thelocked iPhone 5C of Syed Riz-wan Farook, one of the SanBernardino shooters, endedPlease see UNLOCK page B3

“Amazon understands fash-ion is different from its corebusiness,” said Joëlle Grün-berg, the North American chiefexecutive of Lacoste, whichstarted selling select items onAmazon last year. “They dis-count when products aren’tselling, but they don’t markdown at crazy rates.”

Fashion has been one of thelast e-commerce holdouts be-cause the fit and feel of cloth-ing is important to shoppers.Only 15% of apparel was pur-chased online last year, com-pared with 65% of computers,according to Forrester Re-Please see FASHION page B2

Amazon.com Inc. hascrushed rivals by offering cut-rate prices on everything frombooks and electronics to dia-pers. But to attract fashionbrands, it has employed a newstrategy: promising full price.

With that pledge, the Inter-net retailer is making headwayattracting a crowd that foryears had rebuffed its ap-proaches. Dozens of brandsnow sell directly to Amazon,including department storestalwarts such as Nicole Miller,Calvin Klein, Kate Spade, La-coste and Levi Strauss.

BY SUZANNE KAPNER

Amazon’s Fashion Secret: Full Price

Celebrity Lauren Conrad, second from left, on ‘Style Code Live.’

CRAIG

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The roots of the currentstandoff between Apple Inc.and the Federal Bureau of In-vestigation reach back to2008, with the unexpected dis-covery of a suspect’s iPhoneapparently forgotten inside abag of diapers.

Lawyers and investigatorsinvolved in the 2008 prosecu-tion of Amanda and Christo-pher Jansen, a young marriedcouple from Watertown, N.Y.,remember it as one of the

BY JOE PALAZZOLOAND DEVLIN BARRETT

Apple Has HistoryOf Unlocking iPhones

features such as data-savingmode, which allows consumersto limit data usage—an impor-tant feature in emerging mar-kets where mobile data plansoften are capped.

Analysts warn that pricecuts will hit Samsung’s mar-gins and isn’t a long-term so-lution to turn around its ailingsmartphone business, which

saw its operating profit plum-met 60% in the fourth quarterof last year to 2.23 trillionwon ($1.85 billion) from twoyears earlier.

On Thursday, Samsung saidit expects to earn 6.6 trillionwon in operating profit acrossthe entire company in the firstthree months of this year as itmoved up the release of its

new flagship Galaxy S7 smart-phone into the first quarter.

Even with that boost, profitwould only be modestly higherthan a year earlier, and 22%off from the first three monthsof 2014.

Even if Samsung finds suc-cess in boosting its emerging-market share, it will put morepressure on its profit margins,

which remain suppressedroughly at or below 10%, de-spite pledges from executivesduring the past year that thecompany would be able tonudge its margins back consis-tently into the double-digitpercentage points.

Analysts estimate Apple’sgross margin at about 40%.

Last year, Samsung’s globalsmartphone market share fellto 22.5% from 31% in 2013, ac-cording to data from researchfirm Gartner, while its mobileprofit margins fell to 8.9%from 16.1% during that samestretch.

Company executives saythey plan to revive mobileprofit margins by continuingto reduce production costs andslimming down the number ofsmartphone models. D.J. Koh,who took the reins as Sam-sung’s mobile chief in Decem-ber, said in an interview thatcost cuts would take time.

“Material costs you can’tdecrease in a day,” he said.

Samsung phones still costabout 25% more than their lo-cal rivals in these countries,

Please see PRICE page B3

leaders, who in Germany alsoserve as influential directorson the company’s supervisoryboard, have so far backedChief Executive Matthias Mül-ler as he spearheads a restruc-turing and cost-cutting effortat the company.

Labor leaders took aim atHerbert Diess, a top Müllerdeputy who has run the carmaker’s Volkswagen brand forless than a year. Volkswagen’sworks council, in-house laborrepresentatives close to the IGMetall trade union, wrote ascathing letter to staff, attack-ing Mr. Diess and demanding acommitment to protect jobsfor the Volkswagen brand’s120,000 employees at its six

factories in Germany.“We have the impression

that the diesel scandal is slylybeing used to make workforcereductions that were not an is-

sue just a few months ago,”Bernd Osterloh, the influentialhead of the works council, saidin the letter to Volkswagenemployees.

Mr. Diess wasn’t immedi-ately available for comment.Karlheinz Blessing, boardmember for human relationsat the Volkswagen parent com-pany, said the company wel-comed the labor leaders’ “offerto negotiate a long-term pactfor the future.”

Messrs. Osterloh and Diessdon’t share the close relation-ship the labor chief had withhis predecessor heading theVolkswagen brand, MartinWinterkorn. Mr. Winterkornalso served as chief executiveof the entire Volkswagengroup until resigning last yearin the wake of the company’sadmission that many of its

Please see VW page B2

LONDON—Allergan PLCcompleted a licensing deal todevelop drugs for Alzheimer’sand other neurological condi-tions just hours after the col-lapse of its $150 billion tie-upwith Pfizer Inc., underliningits determination to move onas a stand-alone company.

Under the pact, Allergan willpay $125 million up front toHeptares Therapeutics, a U.K.-based biotechnology companywholly owned by Japan’s SoseiGroup Corp., plus $665 millionin milestone payments for thesuccessful completion of clinicaltrials. A further $2.5 billion inpayments, in addition to royal-ties, will depend on the eventualcommercial success of the drugs.

Allergan also has agreed toinvest $50 million in a joint re-search-and-development pro-gram to advance several drugsto mid-stage human testing.

The move could help assureinvestors that the sudden with-drawal of the Pfizer deal in theface of new rules from the U.S.Treasury Department designedto prevent so-called corporateinversions won’t disrupt busi-ness as usual at Dublin-basedAllergan.

The White House and theTreasury Department coun-tered criticism of the newrules, arguing that they wereclosing unfair loopholes thatallow large companies to shifttheir tax affairs to countrieswith less burdensome levies bymerging with smaller firms.

Chief Executive Brent Saun-ders on Wednesday said Aller-gan could “act immediately ifwe saw the right opportunitywith the right growth profileand the right strategic logic.”

Malcolm Weir, chief execu-tive of Heptares, said Aller-gan’s focus was apparent in hisinteractions with the company.“We never got any sense ofbreaking of stride with Aller-gan,” he said. “They alwaysshowed a face of very clear fo-cus on what they were tryingto do with their business.”

The deal involves threeclasses of drugs in early-stagedevelopment that aim to treatsymptoms of Alzheimer’s, suchas cognitive problems and psy-chosis. The most advancedprogram has two drugs inearly human testing.

Several other large pharma-ceutical companies, includingPfizer, AstraZeneca PLC andTeva Pharmaceutical Indus-tries Ltd., have struck licens-ing deals to access Heptares’stechnology, though the Aller-gan deal is its biggest yet.

Technology such as Hep-tares’s helps researchers de-sign drugs more closely tai-lored to their targets.

BY DENISE ROLAND

AllerganWraps UpLicensingAgreement

BERLIN—Volkswagen AG’spowerful labor leaders clashedpublicly with the car maker’smanagement on Thursday, ac-cusing it of using its emis-sions-cheating scandal as sub-terfuge for cost-cutting andjob reductions.

The move represents a sig-nificant break in ranks atVolkswagen, and it opens up anew front in the car maker’sbattle to resolve the scandal,amid several criminal and civilprobes, its own internal inves-tigation, lawsuits and an ex-pensive effort to fix as manyas 11 million affected cars. Thecompany’s most senior labor

BY WILLIAM BOSTON

VWFaces ClashWith Labor Chiefs

SEOUL—Samsung Elec-tronics Co., after being de-throned in 2014 and 2015 asthe No. 1 smartphone brand inChina, India and Indonesia, iswinning back consumers inthese key markets with a sim-ple policy: slashing prices.

Until this year, SiddharthSharma, a 35-year-old residentof New Delhi, didn’t considerbuying a Samsung phone be-cause devices offered by start-ups such as India’s MicromaxInformatics Ltd. offered simi-lar features for about two-thirds the price.

But in January, Mr. Sharmafound a Galaxy J2 smartphonethat fit his budget. The phone,launched last September in In-dia, has long battery life, fastdata speeds and the brightscreen he wanted—all forroughly $130. Previously, sucha Samsung model would havecost twice that, he says.

“The quality is much bet-ter,“ says Mr. Sharma, compar-ing it with the low-cost brandshe had used before.

The South Korean tech gi-ant’s newfound aggression inlow-end phones is a gamblethat it can win a race to thebottom against local andglobal competitors.

In February, China’s XiaomiCorp. unveiled a new flagshipdevice, with the same power-ful processor as Samsung’spremium smartphones, for aslow as $250. Apple Inc. inMarch launched a cheaper ver-sion of its iPhone at $399, en-suring the smartphone pricewar will continue this year.

Samsung’s flagship high-end phones cost more than$600, but in the past year ithas been adding high-end fea-tures to its low and midtierphones that cost between$100 and $300.

The Galaxy J series, whichhas gained traction in Indiaand Indonesia, was redesignedto look more like Samsung’stop-of-the-line Galaxy S series.For less than half the price ofits flagship devices, the phonesthat cost $100 to $250 offer

BY JONATHAN CHENG

Samsung Lowers Price to Broaden AppealPhone maker offersmore budget modelsto capture emerging-market consumers

Average selling price Quarterly mobile profit margin

Rapid DeclineSamsung's push into emerging markets could worsen the company'sfalling smartphone prices and profit margins.

Sources: IDC (selling price); the company (profit margin) THEWALL STREET JOURNAL.

$500

0

100

200

300

400

’112010 ’12 ’13 ’14 ’15

20

0

4

8

12

16

%

’12 ’13 ’14 ’152011

4Q: 8.9%

$343

Samsung's Galaxy J2smartphone is cateredfor emerging markets.

SAMSU

NG

Samsung’s push to sell low-cost phones in Indonesia helped it overtake a local rival, which briefly had the most market share.

BEAWIHART

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The deal follows onthe heels of thecollapse of itstie-up with Pfizer.

Labor leaders took aim at VW brand chief Herbert Diess, right.

FABR

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B2 | Friday - Sunday, April 8 - 10, 2016 THEWALL STREET JOURNAL.

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

A

Airbus Group...............B2

Al Badia Cement........A1

Alcoa............................B5

Alibaba Group.............B3

Allergan.......................B1

Amazon.com...............B1

Apple......................B1,B3

AstraZeneca................B1

B

Banco Santander.........B8

Bank of America.........B5

Bank of Queensland...B8

Barclays.......................B8

BNP Paribas................B8

BTG Pactual ................B7

C

Cargill Indonesia.........B7

Century Aluminum.....B4

Ceylon Tropics.............B7

Chipotle Mexican GrillA5

Citigroup......................B5

Credit Suisse Group ...B8

CypressSemiconductor..........B3

D - E

Deutsche Bank............B8

Didi Kuaidi Joint.........B3

Enovix..........................B3

Express Scripts

Holding .....................B8

F - G

Foundry Group............B4

GreenspringAssociates ................B4

H

HeptaresTherapeutics.............B1

HoneywellInternational.............A5

HSBC Bank..................B8

Hypo LandesbankVoralberg ..................A3

I

IG Metall.....................B1

Intel.............................B3

International BusinessMachines...................B3

J - L

J.P. Morgan Chase.B5,B8

Kleiner Perkins Caufield& Byers................A6,B4

L Brands......................B2

Levi Strauss................B1

M - O

Marks & Spencer

Group..........................B2

Menlo Ventures..........B4

Mossack Fonseca........A3

Numericable-SFR........B5Oracle..........................A5

P - QPetrobras.....................B7Pfizer...........................B1Qualcomm...................B3

SSantander Group ........B8Seven & I Holdings ....A1Siemens.......................B2Snapchat .....................B4Standard Chartered....B8SunPower....................B3

TTencent Holdings........B3Teva Pharmaceutical ..B1Third Point..................A23M...............................A5

UUber Technologies.B3,B4U.S. VenturePartners....................B4

VValeant PharmaceuticalsInternational.............B8

Viacom........................A5Volkswagen.................B1

W - ZWynn Resorts.............B2

ZTE..............................B3

BUSINESS NEWS

L BRANDS INC.

Company to RevampVictoria’s Secret

L Brands Inc. said it would re-structure its Victoria’s Secret busi-ness, as the retailer reported bet-ter-than-expected growthThursday across its establishedstores in March. The restructuringcomes two months after SharenTurney resigned as Victoria’s Se-cret chief executive.

L Brands plans to reorganizeVictoria’s Secret into three units:Victoria’s Secret Lingerie, PINK andVictoria’s Secret Beauty. Leaders ateach unit will report directly toChairman and Chief Executive Les-lie Wexner.

Victoria’s Secret same-storesales grew 2% in March as a de-cline in the beauty segment wasoffset by growth in PINK and lin-

BusinessWatch

AIRBUS

Siemens to Join onAircraft Technology

European plane maker AirbusGroup SE and German industrialconglomerate Siemens AG saidThursday they are joining forces towork on electric aircraft technology.

The companies said they wouldpool about 200 engineers to dem-onstrate by 2020 the possibility ofusing electric or hybrid-electrictechnologies on aircraft.

“We believe that by 2030 pas-senger aircraft below 100 seatscould be propelled by hybrid pro-pulsion systems, and we are deter-mined to explore this possibility to-gether with world-class partnerslike Siemens,” Airbus Chief Execu-tive Tom Enders said.

Airbus, which generally buildsaircraft seating more than 100passengers, has invested in recentyears to advance the use of elec-tric engines on planes to reducefuel consumption.

Siemens CEO Joe Kaeser saidthe effort would be part of its In-novation AG unit, which aims toexplore new technology trends.

—Robert Wall

gerie. Company wide, same-storesales rose 3% at L Brands, also theparent of Bath & Body Works andLa Senza. L Brands said total com-pany sales increased 4.7% to $1.03billion.

—Joshua Jamerson

WYNN RESORTS LTD.

Macau Resort UpdateLifts Firm’s Shares

Wynn Resorts Ltd. shares onThursday hit their highest pointsince August after the casino oper-

ator hosted an investor day andgave an update on its next resortin Macau. Shares, up 29% over thepast three months, rose nearly 12%to $100.11 in morning trading inNew York. The stock, which hasn’ttraded above $100 since August,reached as high as $99.62.

The company gave a financialoutlook for Wynn Palace, a $4 bil-lion hotel slated to open in June inCotai, a strip of reclaimed swamp-land in Macau that has becomeprime ground for developments.

—Joshua Jamerson

The Wynn Palace, seen in 2015, is set to open in June.

BOBBYYIP/R

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excerpts of which were pub-lished on IG Metall’s website,Mr. Osterloh cites a “graveloss of trust;” he calls Volks-wagen brand management“unreliable” negotiating part-ners; and accuses Mr. Diess oflacking a coherent plan to re-vive the company.

The split risks becoming aserious internal distraction asVolkswagen struggles to copewith the wider scandal aroundthe world. Labor representa-tives hold half the seats on

Volkswagen’s board. The stateof Lower Saxony, where mostof the German jobs are lo-cated, holds two more seats,guaranteeing labor a veto overany decision to slash jobs. Italso has a significant say overthe future of Mr. Diess at thecompany.

Mr. Diess riled labor leaderslate last year with a 12-pointplan to restructure the Volks-wagen brand. It is the group’slargest business by sales, butbarely ekes out a profit. The

plan calls for phasing out un-profitable models, cutting costsby more than €5 billion ($5.70billion) and boosting produc-tivity by as much as 10%.

Mr. Diess also faces troublewith labor in the U.S., whereVolkswagen is challenging aNational Labor RelationsBoard decision to allow main-tenance workers at its Chatta-nooga plant to organize as adistinct group. A decision onVolkswagen’s appeal is ex-pected later this month.

diesel-powered cars containedsoftware meant to deceiveemissions tests.

Until now, the labor bossand Volkswagen brand chiefhave kept any conflict in thebackground as the companywrestled with the fallout fromthe ballooning emissions scan-dal. But in an emotional letter,


VW

line retailer. There are stillholdouts, however, includingNike Inc., Tory Burch, Rag &Bone and many of the Euro-pean luxury-goods players,which are turned off by Ama-zon’s down-scale image andconcerned about third-partysellers listing merchandise be-low suggested pricing.

“Product by the pound” ishow one fashion executive de-scribed Amazon, adding, “Whywould you undercut your owndistribution channels by sell-ing to them?”

An Amazon spokeswomandeclined to comment for thisarticle.

Amazon has long struggledto crack into the fashion world.A decade ago, Amazon CEO JeffBezos visited Seventh Avenueshowrooms to try to generateinterest, but apparel executiveswere reluctant to entrust theirbrands to a retailer known forcut-throat prices and a utilitar-ian approach to displayingproducts, according to peoplefamiliar with the meetings.

Mr. Bezos set about buildinga fashion beachhead withoutthem. Amazon acquired Shop-bop.com, an online seller of de-signer apparel and accessories,in 2006. Later it wooed CathyBeaudoin away from Gap Inc. torun its fashion business. In2009, it bought shoe retailerZappos.com and launched flash-sale site MyHabit.com in 2011.

It also has improved its pre-sentation. Amazon built a pho-tography studio in Brooklyn in2013 to shoot clothing, shoesand accessories and createmagazine-like spreads on its

rate,” Jeff Yurcisin, an Amazonvice president, told a gatheringof retail executives last year.“We are a price follower, not aprice leader.”

Data compiled by Boomer-ang Commerce support thatstance. Amazon, including salesby third parties, had higher av-erage prices than Macy’s andKohl’s on 69 items of women’sand men’s clothing and shoesthat Boomerang tracked fromJan. 28 through Feb. 17.

In hard goods, by contrast—items such as books, TVs, ap-pliances and other non-fashionproducts—Amazon’s pricestypically were the lowest for75% to 90% of the time lastyear, according to 360pi, an-other price-tracking firm.

Brands that have joinedforces with Amazon say sellingto the retailer often is moreprofitable and a better experi-ence than dealing with depart-ment stores, which increas-ingly rely on deep discounts.

Amazon’s U.S. apparel busi-ness, including sales by thirdparties, is forecast to rise to$52 billion in 2020, from $16billion last year, according toCowen & Co. The bank esti-mates that Amazon will sur-pass Macy’s as the biggest ap-parel retailer in the U.S. assoon as next year.

To get a sense of the dam-age that Amazon can wreak,consider that it capturednearly 43% of overall onlinesales in November and Decem-ber, according to Slice Intelli-gence, which gathered data onthe email receipts of 3.5 mil-lion consumers.

search Inc. But just like somany other traditional shop-ping habits, clothes shoppingis yielding to the ease of theInternet.

The change means morechoice and convenience forshoppers, but it is another blowto traditional department storesand the malls they anchor.

While shoppers still like tovisit brick-and-mortar storesto try on clothes, Amazon’sPrime membership, which in-cludes free, two-day shipping,helps make buying apparel on-line a less risky proposition.

“It’s so much easier than go-ing to a store,” said KarenGestwicki, a 44-year-old real-estate broker in Charlotte, N.C.,who recently bought a pair ofJack Rodgers sandals on Ama-zon. When Ms. Gestwicki re-cently was looking for dressesher first stop was the Internetretailer “because Amazon hasthe biggest selection.”

For brands, Amazon offersgrowth at a time when depart-ment-store sales are sluggish.Amazon’s North American over-all sales last year rose nearly25% to $63.7 billion, while salesat Macy’s Inc. fell 3.7% andKohl’s Corp. sales inched up 1%.The two chains are closingstores and cutting staff.

Brands known to be pickyabout their distribution aretiptoeing onto Amazon, includ-ing Ralph Lauren Corp., whichsells shoes directly to the on-


FASHION

website.For those that don’t sell on

Amazon, the company has an-other message: watch out. Theretailer is creating private-labelproducts to fill gaps in its lineup.It recently introduced seven la-bels, including Franklin & Free-man men’s shoes and SocietyNew York women’s dresses.

Last month, Amazonlaunched a live fashion showthat it streams each eveningfrom its website. “Style CodeLive,” which combines a QVCshop-at-home broadcast withMTV-like celebrity guests,highlights items that are soldon the site. “We have a badrap, and that’s not fully accu-

Clothes HorseAmazon is expected to unseatMacy’s as the largest U.S.apparel seller by next year.

U.S. apparel and accessories sales

THEWALL STREET JOURNAL.Source: Cowen and Company

$30

0

5

10

15

20

25

billion

’132011 ’15 ’17

Amazon$27.8BMacy’s$24.7

TJX$21.0

Wal-Mart$21.3

2017

Estimates

Mr. Rowe, an M&S veteranwho started out doing smalljobs for the company in 1983at the age of 15.

The results underscore thepressure on Mr. Rowe to setout a clear strategy at M&S’sfull-year earnings update nextmonth on how he plans to re-vive nonfood sales.

“The outcome of his planswill ultimately determine thesuccess or otherwise of M&S’share price performance forthe immediate future,” saidShore Capital analyst CliveBlack.

Mr. Rowe, who continues tohead M&S’s clothing and home

arm, has in the months beforebecoming CEO moved to im-prove variety, pricing andavailability in the divisionwhile making senior manage-ment changes. On Thursday,the new CEO said the moveshadn’t gone far enough, addingthat “although the sales de-cline in clothing and home waslower than last quarter, ourperformance remains unsatis-factory and there is still morewe need to do.”

He said M&S has ratcheteddown promotional activity, in-stead cutting prices in a moresustainable fashion. The priceof women’s black jeggings—

leggings that resemble jeans—for instance, has dropped to£17.50 from £19.50, or to $24.71from $27.54, which more thandoubled units sold from a yearearlier. White T-shirts for menfell to £6 from £7.50, leading toa unit sales increase of 46%.

The retailer said it now ex-pects full-year clothing andhome gross margin to be be-tween 2.4 and 2.5 percentagepoints, narrowing its previousguidance for the top end of 2to 2.5 percentage points.

Peel Hunt analyst JonathanPritchard said he is looking toMr. Rowe “to hopefully usherin a new strategy” during thecompany’s full-year earningsreport next month, describingM&S results between 2010 and2015 as “profoundly disap-pointing.”

Analysts have suggested Mr.Rowe should look to sell un-derperforming stores, improvestaff engagement, streamlineits clothing and home brandsand improve product quality inthe division.

“Short-term pain is re-quired if M&S is to return topast earnings levels in a sus-tainable manner,” Mr. Prit-chard said.

—Olga Cotagacontributed to this article.

LONDON—British retailerMarks & Spencer Group PLCreported a 1.9% rise in salesfor its fiscal fourth quarter asfood sales helped outweigh acontinuing slump in its cloth-ing and home division.

The sales update is a firstunder Chief Executive SteveRowe, who took the reins onSaturday. He faces the task ofturning around M&S’s clothingand home sales, which havestruggled for a string of quar-ters, while continuing to growits food arm.

London-based M&S warnedthat it continues to expect cur-rency pressures and challeng-ing trading conditions to heav-ily impact its full-yearprofitability.

On Thursday, the retailerreported a 4% increase in foodsales for the 13 weeks endedMarch 26, although sales wereflat on a comparable basis asM&S said it chose to improveits margins in this business.Sales fell 1.9% in the clothingand home business while com-parable sales declined 2.7%.

“Turning around our cloth-ing and home business by im-proving our customer offer isour number one priority,” said

BY SAABIRA CHAUDHURI

M&S Continues to Feel Pressure

Quarterly sales at the company’s clothing and home unit fell 1.9%

CHRIS

RATC

LIFF

E/B

LOOMBERGNEWS

INDEX TO PEOPLEA - C

Ackman, William........B8

Benkoski, Jacques......B4

Blessing, Karlheinz.....B1

Butters, John..............B5

Campbell, Bill..............B4

Comey, James.............B3

Cote, David .................A5

D - F

Dauman, Philippe.......A5

Diess, Herbert.............B1

Dimon, James.............B5

Doerr, John..................B4

Esteves, André ...........B7

Fry, James...................B7

G - I

Gerlach, Stefan...........B7

Guber, Peter................A6

Isaka, Ryuichi .............A2

Ito, Masatoshi............A1

J - L

Jackson, Laban............B8

Jordan, Thomas..........B5

Kiyota, Akira...............A2

Kramlich, Dick.............B4

Lahiri, Ashok...............B3

Loeb, Daniel................A1

Loynes, Jonathan.......A4

M - N

Müller, Matthias.........B1

Mossack, Jurgen.........A3

Naylor, Bartlett ..........B5

Newhall, Ashton.........B4

Nicholson, David.........B1

O - R

Osterloh, Bernd..........B1

Pearson, Michael........B8

Perera, Maduka...........B7

Ramasubramanian,Murali........................B3

Raymond, Lee.............B8

Rodgers, T.J ................B3

Rosenstreich, Peter....B5

S

Safra Catz...................A5

Saunders, Brent..........B1

Schlein, Ted.................B4

Shin, Hyun Song.........B8

Suzuki, Toshifumi.......A1

T - W

Thulin, Inge.................A5

Tou, Jarvis...................B3

Wardaja, Satria...........B7

Weidmann, Jens.........A4

Weir, Malcolm.............B1

port-credit financing as anoption, a source of financingon which its commercial spacebusiness is heavily reliant.

“This deserves a vote,” Mr.Muilenburg said.

Boeing and jet-engine sup-plier General Electric Co., arethe among the biggest recipi-ents of the bank’s financialsupport, which enables air-lines to get access to commer-cial financing at comparativelycompetitive rates.

The bank hasn’t been ableto achieve the quorum of threeboard members required toapprove financing deals over$10 million.

The Obama administrationhas submitted a nominee forthe third seat, Mr. Muilenburgsaid, but the approval isstalled in the Senate BankingCommittee, chaired by Sen.Richard Shelby (R., Ala.).

The bank has been a hot-button political topic for bothsides of the political spectrum,with critics calling it a vehiclefor corporate welfare.

Defenders of the bank, in-cluding President BarackObama, say the bank is criticalto supporting U.S. manufactur-ers.

Boeing Co. Chief ExecutiveDennis Muilenburg said Thurs-day that one of its customerscan’t take delivery of newplanes because of the continu-ing closure of the U.S. Export-Import Bank to big-ticket fi-nancing.

Mr. Muilenburg called forswift action by the SenateBanking Committee to reopenthe bank to all business by ap-proving the nomination of anew board member.

Customers of Boeing havebeen unable to secure finan-cial support from the banksince last July, even thoughCongress extended Exim’smandate in December.

Mr. Muilenburg said at thebank’s annual conference thatBoeing may face a deliveryslowdown for customers thatrely on export financing.

He said Ethiopian Airlineshad told Boeing that it cannottake delivery of new jets with-out export credit guaranteesfrom the bank.

Mr. Muilenburg also said itwas recently shut out of a sat-ellite deal with Singapore be-cause of the absence of ex-

BY JON OSTROWER

Boeing Urges ActionOn Bank Nominee

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mercial manufacturing in thesecond half of 2017.

T.J. Rodgers, founder andchief executive of Cypress, ac-knowledges that many batterystartups have made loftyclaims with few tangible re-sults. “There is much morehype in the battery world thanthere is in the silicon world,”Mr. Rodgers said. But headded of Enovix: “I think theseguys will be important.”

Mr. Rodgers has helpedmake waves beyond chips be-fore, including Cypress’s suc-cessful investment in the solarpanel maker SunPower Corp.

Enovix plans to set up afactory near SunPower’s in thePhilippines, benefiting fromthat company’s manufacturingexpertise, Mr. Rodgers said.

Enovix Chief Executive Har-rold Rust and co-founderAshok Lahiri, the company’schief technology officer, havebeen working on silicon com-ponents together since theymet in 1984 at InternationalBusiness Machines Corp.’sformer disk-drive operations.Murali Ramasubramanian, thestartup’s senior director of re-

search and development, alsoworked at IBM.

In their latest venture, thethree co-founders tried to re-think the lithium-ion batteriesfound in most mobile devicesand electric cars. Such batter-ies normally are manufacturedby rolling or folding layers offlexible materials to producecylinders or other shapes.

One Enovix goal is to cutdown on wasted space. Thecompany estimates that 34%of the weight and about 43%of volume of a typical lithium-ion battery comes from mate-rials that don’t help store en-ergy, such as polymer layersthat separates the materialsinvolved in generating electriccurrent.

Enovix instead fabricatesflat, rectangular battery struc-tures from silicon wafers usinglithography, etching and othertechniques common in makingchips.

The approach, along with athin metal film and a ceramicrather than polymer separator,reduces the proportion of in-active materials to about 25%,the company says.

22% in the previous quarter—and beat local rival Micromax.

The chief executive of Mi-cromax resigned in Februaryas the company’s market shareslid. In Indonesia, where Sam-sung briefly was surpassed inoverall mobile phone sales bylow-cost rival Evercoss Indo-nesia in the second quarterlast year, the South Koreancompany’s new phone releaseshelped it regain the No. 1 posi-tion in the third quarter.

Analyst Mr. Pathak esti-mates that in Indonesia, theaverage wholesale selling price

of all Samsung smartphonesfell to $145 for the first ninemonths of 2015, the most re-cent period for which data isavailable, down by about one-fourth in cost from the sameperiod a year earlier.

In China, where Samsungplunged to No. 6 in smart-phone market share last yearafter reigning as the undis-puted leader for years, itlaunched the Galaxy A series,a midrange smartphone thatboasts better front-facingcameras. Mr. Koh, the Sam-sung mobile chief, said the

but that is down from about40% before its shift, accordingto Tarun Pathak, a Gurgaon,India-based analyst for Coun-terpoint Technology MarketResearch.

Samsung declined to com-ment about its pricing strategy.

In India, the new strategyhas helped Samsung regain itsmarket share—rising to 26% inthe last quarter of 2015 from

ContinuedfrompageB1

PRICE

the case in December 2008.Before seeking a federal searchwarrant for the iPhone, inves-tigators consulted with Apple,according to a Justice Depart-ment brief filed last year in aseparate case in Brooklyn.

The company wanted acourt order authorizing it tocrack a customer’s passcode.But it was otherwise coopera-tive: An Apple lawyer suppliedthe Justice Department withlanguage to use in the agency’slegal request for the order, ac-cording to the brief.

Lisa Fletcher, a federalprosecutor in Syracuse, said inher Dec. 15, 2008, request thatno specific statute authorizeda company like Apple to helplaw enforcement. But, she con-tinued, the court could orderApple to help the governmentunder the All Writs Act, an oldfederal law that judges hadused in the past to conscripttelephone companies intohelping federal agents installand operate call-tracking de-vices.

U.S. Magistrate JudgeGeorge Lowe signed the orderwithin hours of the Justice De-partment’s request. A NewYork State Police investigatorthen took the iPhone to Ap-ple’s headquarters in Califor-nia, according to court docu-ments and a person familiarwith the case.

Apple engineers bypassedthe phone’s passcode in the in-vestigator’s presence, accord-ing to court documents filed inBrooklyn.

People familiar with thatand other phone-opening casessaid the Watertown case is thefirst to their knowledge inwhich All Writs Act order wasused to crack an iPhone,though definitive records onthat score don’t exist.

At the time, said people fa-miliar with the matter, itwasn't considered a big stepworth noting, because govern-ment authorities had long usedthe All Writs Act to get compa-nies to help them with variousdevices and technical issues.

Once opened, the iPhone inthe Watertown case revealeddamning evidence of the cou-ple abusing the children, in-cluding text conversations be-tween the Jansens aboutspecific acts they wanted tocommit, as well as messagesthey exchanged during theabuse, according to sentencingdocuments. Both husband andwife pleaded guilty to federalcharges in October 2009 andwere sentenced to life inprison without parole.

In recent months,Apple has resistedat least a dozenU.S. requests.

by the end of this month, ac-cording to the people.

While many global startups,including some in Silicon Val-ley, have had difficulty raisingmoney amid a slowdown inthe global economy, DidiKuaidi has been an exception.

Its valuation has soaredfrom just $6 billion in February2015 when it was formed fromthe combination of two com-peting taxi-hailing companies.

The latest fundraising comesas growth in private funding forChina’s tech sector is slowingbecause investors are becomingmore cautious due to volatilityin China’s stock market andslowing economic growth.

In the past six months, suchfunding amounted to about$4.5 billion, less than the $6.7billion raised in the previous sixmonths, according to data fromHong Kong-based AVCJ Re-search. While more fresh capi-tal is flowing into leading play-ers in each category such as

Didi Kuaidi, startups that aren’tdominating their segments arestruggling to raise new funds,venture capitalists say.

China’s biggest Internetcompanies have taken sides inthe battle for the country’sride-hailing market. While DidiKuaidi’s investors include Ten-cent and Alibaba, backers ofUberChina, Uber’s Chinese af-filiate, include Baidu Inc.,China’s biggest search provider.

In China, Didi Kuaidi andUberChina are locked in afierce battle to attract ridersand investors. Both companiesare providing huge subsidiesto drivers and riders to signup for their services.

Didi Kuaidi dominates thecountry’s taxi-hailing market,and has a larger share thanUberChina in the private-car-hailing segment, though thetwo companies disagree onthe exact figures. Didi Kuaidihas expanded its private-carservices to compete more di-

the 5S and the 6.“This doesn’t work on the

6’s, doesn’t work on 5S’s,’’ Mr.Comey said Wednesday in re-sponse to a question from anaudience member at KenyonCollege in Ohio, where he wasspeaking to students aboutprivacy.

The revelation underscoresthe fact that tough legal issuesremain in the broader disputebetween the FBI and Apple overcriminal investigators’ access toencrypted information.

Asked for comment Thurs-day, an Apple spokesman re-ferred to a statement issuedby the company when the FBIfirst said it had been able toopen the phone.

At the time, the companysaid it would “continue to helplaw enforcement with their in-vestigations, as we have doneall along, and we will continueto increase the security of ourproducts as the threats and at-tacks on our data becomemore frequent and more so-phisticated.”

Mr. Comey said the govern-ment is still debating whetherto tell Apple what the securityflaw is that let them into Mr.Farook’s phone. “That’s an in-teresting conversation, be-cause if we tell Apple, they’regoing to fix it and then we’reback where we started,’’ Mr.Comey said.

The FBI had sought Apple’shelp working around a secu-rity feature that erases thephone’s data after 10 unsuc-cessful password attempts.

technological goods to Iranand other nations.

While the sanctions havesince been suspended, ZTEsaid Wednesday that U.S. in-vestigations “may result incriminal and civil liabilitiesunder U.S. laws,” and it cannotfully assess the potential legalliabilities or their impact onthe company’s finances.

The sanctions, which tookeffect March 8, created athreat to ZTE’s business as ithindered the company’s ability

to procure U.S. componentsand software.

Two weeks after the sanc-tions took effect, the U.S. gov-ernment agreed to suspendthem until June 30 as long asZTE cooperates with Washing-ton.

ZTE shares were suspendedfrom trading in Hong Kong asof March 7 because of the U.S.sanctions. On Thursday, thestock fell 10% to 12.70 HongKong dollars (US$1.64).

Earlier this week, Shen-

worst is behind, and the num-bers in China would reflect arebound in coming months.

The risk for Samsung is thatits price cuts could erode itspremium brand, said PatrickMoorhead, principal analyst atMoor Insights & Strategy.

“If they continue to dis-count the Samsung brand,they will need to keep sellingat a discount to Apple andthat hurts them greatly in thefuture,” he said.—Eric Bellman in New Delhiand Min-Jeong Lee in Seoulcontributed to this article.

last week with the announce-ment that an undisclosed thirdparty had shown the govern-ment a technique for accessingthe phone’s data.

Since the Watertown phonewas opened, Apple has helpedfederal investigators accessmore than 70 phones, accord-ing to a government court fil-ing. But in recent months, thecompany has resisted at leasta dozen requests by the Jus-tice Department for orderscompelling the company to as-sist in bypassing phone secu-rity, according to a Februarycourt filing by an Apple law-yer.

Court documents and inter-views with those involved inthe Watertown case shed lighton a bygone era of cooperationbetween Apple and the gov-ernment, before the two sidesparted ways on issues of datasecurity and customer privacy.

The 2013 leak by EdwardSnowden on government sur-veillance programs promptedthe tech industry both to shoreup their products’ security fea-tures and to view the govern-ment’s requests for informa-tion more skeptically.

In a decision that reachedthe very top of the company,say people familiar with thesituation, Apple in 2014 tight-ened its phone encryption,making it hard for even thecompany itself to unlock anencrypted phone. Today, Appleand other tech firms arguethat compelling them to writenew software to open deviceswould create new securityflaws for millions of their cus-tomers.

Apple first began sellingiPhones in 2007, about a yearbefore New York State Policeexecuted a search warrant atthe Jansens’ home.

Authorities suspected Mr.Jansen was in possession ofchild pornography, accordingto documents filed in the case.

But during a search of thehome for evidence of childpornography, Ms. Jansen re-vealed to an investigator thatshe and her husband haddrugged and raped Mr. Jan-sen’s 5-year-old daughter and8-year-old stepson, who stayedwith the couple over the sum-mer of 2008. Ms. Jansen alsoadmitted sexually abusing her1-year-old daughter with Mr.Jansen.

The Jansens were arrestedon Sept. 18, 2008. When work-ers from child protective ser-vices came to take the infant,the mother gave them a diaperbag. Inside that bag, the fosterparent assigned to care for thechild discovered an iPhone, ac-cording to court documents.

Federal authorities joined

ContinuedfrompageB1

UNLOCK

zhen-based ZTE, which sellssmartphones as well as net-working equipment for carri-ers, overhauled its top man-agement, replacing three of itsmost senior executives includ-ing its chief executive.

On Wednesday, ZTE also re-ported its 2015 financial re-sults, which had been delayedlast month due to the U.S.trade sanctions. Its revenueand profit were lower thanforecasts the company issuedin January.

ZTE Corp.’s shares plungedon Thursday upon resumingtrading after a monthlong sus-pension, as the Chinese tele-communications giant con-tends with allegations that itviolated U.S. trade laws.

Last month, the U.S. Com-merce Department imposedtrade sanctions on ZTE for al-legedly violating rules that re-strict exports of American

BY JURO OSAWAAND JOANNE CHIU

ZTE Takes Hit Amid Concerns Over Probe

The secret technique usedto unlock the iPhone of a ter-rorist from San Bernardino,Calif., doesn’t work on newerphone models, the director ofthe Federal Bureau of Inves-tigation said.

FBI Director James Comey,in a speech Wednesday night,also said the FBI had boughtthe phone-opening tool froman unidentified private thirdparty. He said he is confidentboth the FBI and the thirdparty could keep it secret ifgovernment officials decidethey want it to remain secret.

The FBI said last week it hadfound a way to open the phonein question, ending for the mo-ment a contentious legal fightwith Apple Inc. about whetherthe government could force thetechnology firm to write soft-ware that would help investiga-tors open the phone and exam-ine the suspect’s data.

Apple had resisted that ef-fort, saying that doing whatthe FBI wanted would compro-mise the security of millionsof other iPhones.

The iPhone in question, a5C model, was used by SyedRizwan Farook before he andhis wife opened fire at a holi-day party of his co-workers,killing 14 and injuring 22.Since an undisclosed thirdparty showed the FBI lastmonth how to open a 5C, theFBI has been testing to see ifthe method could be used onnewer models of iPhones, like

BY DEVLIN BARRETT

FBI Tool Can’t HackNewer iPhones

rectly with Uber, while addingother services such as busesand chauffeurs.

UberChina last year raised$1.2 billion at a valuation ofmore than $8 billion.

HONG KONG—Investors inChina’s homegrown competi-tor to Uber Technologies Inc.have revved up the ride-shar-ing company’s valuation tomore than $25 billion.

Beijing-based Didi KuaidiJoint Co. is close to complet-ing its latest funding round toraise more than $1.5 billion ata valuation of more than $25billion, according to people fa-miliar with the situation.

Didi Kuaidi’s biggest exist-ing backers, social-networkcompany Tencent HoldingsLtd. and online shopping giantAlibaba Group Holding Ltd.,are participating in the latestround, the people said.

The Chinese startup re-ceived strong demand fromnew and existing investors andexpects to complete the round

By Juro Osawa,KaneWu

and Rick Carew

Didi Valued Over $25 BillionCooling DownPrivate funding for China'stechnology sector

THEWALL STREET JOURNAL.Source: AVCJ Research*Preliminary

$4billion

0

1

2

3

’15 ’16*20141Q 2Q 3Q 4Q 1Q 1Q2Q 3Q 4Q

Another differentiator is inEnovix’s choice of material fora key battery componentcalled an anode, which usuallyis made of graphite. Siliconhas long been studied as an al-ternative, but it tends to beused sparingly because it canswell and lead to failures. Mr.Rust said Enovix has been ableto create a 100% silicon anode,using a porous structure akinto Swiss cheese that can toler-ate swelling, he said. “We havean anode that is three times asgood at storing energy thanothers,” Mr. Rust said.

Other companies havetalked up rival approaches.Enevate Corp., a startup in Ir-vine, Calif., recently disclosedplans to deliver batteries formobile devices and droneswith 70% silicon anodes.Jarvis Tou, an Enevate execu-tive vice president, said itsbatteries charge unusuallyquickly. They are produced us-ing rolls of materials, which hesaid are less expensive thansilicon wafers and more flexi-ble in size. “We went thisroute so we can create largerand larger batteries,” Mr. Tousaid.

Mr. Rust said Enovix ex-pects to also achieve very lowproduction costs. It can stacklayers of batteries to createmany sizes—including, possi-bly, batteries for cars one day,he said.

The key test for Enovix willbe finding big customers, saidChristopher Robinson, an ana-lyst at Lux Research who wasbriefed on the company’splans.

Mr. Rust said the companydoesn’t expect to begin manu-facturing until it has purchasecommitments, but it isn’t yetready to name potential cus-tomers.

For the moment, Enovixkeeps processing wafers to re-fine its production techniquesat a pilot plant in Fremont,Calif., a rarity in a portion ofSilicon Valley that has largelyshifted from manufacturing toother high-tech chores.

FREMONT, Calif.—EnovixCorp. is taking an unusual ap-proach to address user com-plaints that batteries of mo-bile devices run out of powertoo quickly.

Where others have focusedon boosting energy storage ca-pacity by changing batterychemistry, the Silicon Valleystartup is betting on a shift inmanufacturing technology thatborrows techniques from mak-ers of computer chips and so-lar cells. Enovix expects toproduce batteries for wearabledevices and other mobile ap-plications with at least doublethe capacity of existing prod-ucts.

The company, originallycalled MicroAzure, hasn’t saidmuch about its plans. But it islikely to attract attention be-cause of its backers, which in-clude chip makers CypressSemiconductor Corp., IntelCorp. and Qualcomm Inc.

They and other investorshave pumped more than $100million into the company,which expects to begin com-

BY DON CLARK

StartupTake NewTack on Batteries

Silicon wafers are processed to make high-capacity batteries at Enovix’s pilot unit in Fremont, Calif.

ENOVIX




BUSINESS NEWS

Chinese officials have de-nied overproduction, sayingthe problem is weaken-ing demand because ofa tepid global economy.

Chinese aluminum exportshave soared to $23.8 billionin 2015 from $6.2 billion adecade ago, helping prices tofall 40% in the past fiveyears, to $1,500 a metric tonfrom $2,500 a metric ton. In2015, China produced 32 mil-lion tons of the metal, ac-counting for more than 50%of global aluminum produc-tion, double the level in2005.

Meanwhile, the U.S. is im-porting more aluminum thanever. U.S. imports last yearaccounted for an estimated40% of U.S. consumption,compared with 14% in 2010,according to the U.S. Geologi-cal Survey.

By the end of this year,only four aluminum smeltersare expected to remain oper-ational in the U.S., downfrom 23 in 2000, leaving an-nual U.S. aluminum output at565,000 metric tons, downfrom 2.1 million tons fiveyears ago and 3.7 million tonsin 2000, according to theCRU Group.

Hong Kong-listed ChinaHongqiao Group Ltd., has be-come the biggest alumi-num producer in the world,surpassing Russian behe-moth United Co. Rusal PLC.

Some Chinese companieshave already come under firefrom U.S. authorities. TheCommerce Department lastmonth said it would investi-gate China Zhongwang Hold-ings Ltd. for trying to avoidU.S. import tariffs by trans-shipping aluminum throughthird countries.

China Zhongwang andChina Hongqiao declined tocomment. China’s CommerceMinistry didn’t respond to arequest for comment.

The U.S. InternationalTrade Commission said onWednesday that it will inves-tigate the global aluminumtrade and its impact on theU.S. aluminum industry, aninquiry that could help pavethe way for new import tar-iffs.

The ITC said it would lookinto foreign government pol-icies that drive overproduc-tion, a swipe at China,which has drastically in-creased output of the metalthis century, contributing tofalling prices and the closingof U.S. smelters.

The ITC said it would holda hearing Sept. 29 and de-liver its report to the HouseWays and Means Committeeby June 24, 2017. The investi-gation was requested by aletter sent to the ITC in Feb-ruary by the committee.House Ways and Means Com-mittee.

Century Aluminum Co.,one of the last smelter opera-tors in the U.S., and theUnited Steelworkers union,which represents thousandsof workers in the industry,have been lobbying the U.S.government for such an in-quiry. They have also askedthe U.S. government to file acomplaint to the World TradeOrganization.

In a statement, the Alumi-num Association said that“overcapacity, particularly inChina, is of paramount con-cern to the aluminum indus-try” as are “questionabletrading practices” that havehurt U.S. producers.

U.S. producers have saidthey have evidence showingthat some Chinese aluminumproducers have received bil-lions of dollars in subsidies,including access to loans be-low market rates.

BY JOHN W. MILLERAND SCOTT PATTERSON

U.S. to ProbeAluminum TradeAmid China Surge

investors, said people familiarwith the matter.

A Kleiner spokeswoman de-clined to comment on behalfof the firm and Mr. Doerr.Messrs. Schlein and Campbellcouldn’t be reached.

Succession is tough to planbecause “investing is a mentalsport, so you can play for along time,” said Venky Gane-san, managing director atMenlo Ventures, which lastyear began the process of re-tiring two of its six investingpartners. “You need to have anhonest conversation of when itis the right time to go.”

What retirement meansvaries from firm to firm. AtMenlo, it means staying activefor three or four years, sittingon boards and cutting back onfinancial interests in the firmto make room for youngerpartners. Foundry Group,based in Boulder, Colo., hassaid it has no plans to expandbeyond its five-member teamand will close shop wheneverthey decide to move on.

But for firms that plan tocarry on, the lack of a succes-sion plan can be a mortalweakness, said Dick Kramlich,

chairman of New EnterpriseAssociates, one of Silicon Val-ley’s biggest venture firms. “Ithink it’s a congenital prob-lem,” Mr. Kramlich said. “A lotof firms are going to be ad-dressing this issue going for-ward.”

Mr. Kramlich, who co-founded NEA in 1978, a yearafter personally investing inApple Computer, said he cre-ated the chairman role in2013, after observing a lack of

continuity among partnersfrom one fund to the next. “Itwas pretty obvious that mostpeople in our business lurchfrom partnership to partner-ship,” he said.

Venture firms can find theirprospects diminish quicklywhen they fail to cultivateyoung partners. U.S. VenturePartners parted ways withseveral investors who made

bets several years ago in start-ups that didn’t return capital,counting on the next genera-tion to take their place, said aperson familiar with the firm.Instead, several young part-ners defected to other firms,the person said.

Jacques Benkoski, a partnerat U.S. Venture Partners, de-clined to comment.

Last year, USVP raised a$300 million fund, less thanhalf the size of its previousfund from 2008.

“It’s why you don’t see lon-gevity of a significant numberof firms,” said Ashton Ne-whall, a co-founder of venture-fund investor Greenspring As-sociates. “They fumblepassing the baton.”

Mr. Doerr, who joinedKleiner in 1980, is creditedwith investing in Sun Micro-systems, Netscape and Genen-tech, in addition to Googleand Amazon.

But some current and for-mer partners blame him forthe firm’s decline after steer-ing its funds into money-los-ing clean-tech investmentsand missing the first wave ofsocial media.

The decision by John Doerr,one of Silicon Valley’s mostprominent investors, to stepaside as frontman of KleinerPerkins Caufield & Byers re-flects the battle venture-capi-tal firms face to stay relevant.

The 64-year-old Mr. Doerrsaid last week that he wouldbecome the firm’s chairman,giving up his managerial roleas partner after nearly fourdecades. The move strips himof his vote on Kleiner’s invest-ment committees for futurefunds, people familiar the mat-ter said, meaning he will nolonger be able to bet the firm’smoney on startups, as he didon Google Inc. and Ama-zon.com Inc.

Mr. Doerr won’t be able toapprove investments in futurefunds, or have legal obliga-tions to those funds’ investors,but he still will recommendand discuss deals, and can siton boards.

The shift followed years ofinternal debate about how toprepare Kleiner for the future,which intensified last year af-ter the trial of a gender-biaslawsuit against the firm by aformer partner. The firm pre-vailed, but court testimonycast it in an unflattering light.

While Mr. Doerr is re-spected by many at the firmand helped recruit several in-vestors, some partners wor-ried that the firm relied onhim too much, and that hisoutsize presence hampered itin developing new leadership,the people said.

Over the past year, a groupof Mr. Doerr’s colleagues andassociates, including seniorpartner Ted Schlein and exec-utive coach Bill Campbell, pro-posed that Mr. Doerr take areduced role in a new fund itwas raising, said people famil-iar with the matter. Ratherthan resist—or retire—heworked with them on a planletting him spend more timementoring and weighing in oninvestments, the people said.

Kleiner is now pitching thenew fund to limited-partner

BY DOUGLAS MACMILLANAND DEBORAH GAGE

Succession Tests Venture Firms

Kleiner Perkins’s John Doerr, shown in 2015, is said to have helped craft the firm’s transition plan.

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‘I think it’s acongenital problem,’one industry veteransaid of succession.

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© 2016 Dow Jones & Company. All Rights Reserved. THEWALL STREET JOURNAL. Friday - Sunday, April 8 - 10, 2016 | B5

MARKETS DIGEST B6 | THURSDAY’S MARKETS B7 | FINANCE WATCH B8

Asof 4 p.m. ET EUR/GBP 0.8084 À 0.14% YEN/DLR ¥108.06 g 1.58% GOLD 1236.20 À 1.12% OIL 37.26 g 1.30% 3-MONTHLIBOR 0.62880% 10-YRTREAS À 19/32 yield 1.689%

BY CHRISTOPHER WHITTALL

A $5.19Billion BetOn JunkBonds

reason is the looming earn-ings season, unofficially kick-ing off with Alcoa Inc.’squarterly report on Monday.

In short, earnings aren’texpected to be good.

By FactSet’s count, first-quarter earnings are forecastto log a contraction of 8.5%,with energy companies gar-nering much of the blame.As recently as December, theS&P 500’s earnings-growthrate was projected to beslightly positive during the

first quarter.Furthermore, if earnings

fall again, it will mark thefourth consecutive quarterlydecline. The last time thathappened was during the fi-nancial crisis.

Of course, earnings esti-mates have a propensity forfalling too far just before thereporting period begins.Companies often hurdle thelowered bar.

The S&P 500 has risenduring three of the previousfour earnings seasons, ac-cording to John Butters atFactSet.

While such positive “sur-prises” are nothing new, themarket’s reaction to a bet-ter-than-expected round ofearnings might not be typi-cal.

With pessimism, andshort interest, so high, earn-ings surprising to the upsidecould prolong the recentrally.

The bears may be growl-ing, but the bulls might havethe last laugh.

Email: [email protected]

Argentina to Issue FirstGlobal Debt Since 2001BOND MARKETS | B8

Bank Dividends CanWork Against InvestorsHEARD ON THE STREET | B8

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it limits the danger of havingthe economy become too de-pendent on the central bank.Implicitly, it raises the ques-tion: Do central bankers needto talk so much?

“After the financial crisis,there was a trend toward moretransparency,” says PeterRosenstreich, head of marketstrategy at Swissquote Bank.“People at first embraced that,but now we are seeing that itadds extreme amounts of vola-tility unnecessarily.”

Swiss National Bank Chair-man Thomas Jordan and othertop SNB officials held theirfirst news conference of 2016on Wednesday—to unveil thenew 50 franc bank note—butdidn’t discuss monetary policy.

There have been only ahandful of speeches from thethree members of the SNB’sboard posted on the bank’swebsite this year. In sharpcontrast, on Thursday alonethe European Central Bank re-leased the minutes of itsMarch meeting while at leastfour council members gavetestimony or speeches, withthe bank’s chief economist sig-

Please see SILENT page B7

ZURICH—Central bankershave cemented their status asamong the most powerful—and voluble—forces in finan-cial markets.

And then there are theSwiss.

In an era when their coun-terparts are making speeches,testifying before lawmakersand promising whatever dras-tic action is necessary, Swit-zerland’s monetary-policymakers stick to the old ways,where central bankers arerarely seen on a big stage andeven more rarely heard.

The conservative style isn’twithout consequences. Thesmall country is surrounded bymonetary-policy makers whoappear more active in trying toguide markets and their cur-rencies. Staying quiet meansfewer tools as the Swiss con-front what is widely viewed in-side and outside Switzerlandas an overvalued franc thatcould threaten the country’sexport-driven economy.

But it also keeps Swiss offi-cials from appearing to makepromises they can’t keep. And

BY BRIAN BLACKSTONE

Old-School SNBPrefers Silence...

is used in everything fromdish detergent to medicine.

The result has been a jumpin prices since February, to anaverage in March of $1,448 ametric ton, according to WorldBank data released lateWednesday. That is more than50% higher than the averageprice in 2013.

Meanwhile, the interest inspecialty products is only ex-pected to grow.

Global consumption of co-conut water jumped 13% from2014 to 2015, following a 24%increase the previous year, ac-cording to data from beverageresearch firm Canadean.

The trend toward specialtyproducts is being felt through-out the coconut industry, sug-gesting that prices for conven-tional oil aren’t likely to drop

significantly in the near fu-ture, analysts say.

Farmers in the Philippines,the world’s largest producer ofcoconut oil, for example, areincreasingly being asked toharvest younger coconuts, asmiddlemen chase after thehigher prices they net overfully mature ones.

In the Philippines, coconut-water exports more than dou-bled to 66.3 million liters andvirgin coconut oil was up 61%to 34,227 metric tons in the 11months to November 2015, ac-cording to the latest availabledata from the United CoconutAssociations of the Philip-pines.

In the same period, copraand coconut-oil exports fellslightly, and the industry

Please see NUTS page B7

Coconut oil prices havesoared nearly 20% in a month,largely because of the growingpopularity of specialty prod-ucts such as coconut water.

In supermarkets, coconutsare being sold with pull tabsto be drunk like beer. Coconutsugar is being touted ashealthier for diabetics. AndU.S. actress Gwyneth Paltrowis among celebrity coconutfans, once revealing sheswishes around virgin coconutoil for oral health and whiten-ing her teeth.

Such trendy products comefrom young green coconuts,fresh coconut and the trees’flowers. That leaves less driedcoconut—copra—to be madeinto the conventional oil that

BY LUCY CRAYMER

Price Goes Nuts asCoconuts GoTrendy

French telecommunicationsgiant Numericable-SFR SAhas sold $5.19 billion indebt in the largest-ever sale ofa single junk bond.

The debt sale showed thatinvestors’ appetite remainsstrong for selected deals inthe U.S. junk-bond market,which sold off sharply in late2015 and earlier this year.

The sale of 10-year debt,which was priced on Wednes-day, was increased from $2.25billion amid strong investordemand. It is the largest-eversingle-tranche debt sale in thejunk-bond market, accordingto data provider Dealogic.There have been larger issues,but they were deals sliced intovarious tranches.

“Throughout all this volatil-ity, it is reinforcing the mes-sage that the market is openfor the right kind of credit,”said Mitch Reznick, co-head ofcredit at Hermes InvestmentManagement, who boughtsome of the bonds.

He said the company’s shiftaway from acquisitions-ledgrowth toward focusing onstabilizing the business andinvestment should be morebeneficial for bondholders.

Numericable declined tocomment.

The deal comes after a vol-atile period for U.S. junkbonds. The average gap inyield between U.S. high-yieldbonds and U.S. Treasurys hasnarrowed to about 6.5 per-centage points on Wednesday,according to Barclays. Thatcomes amid a global rally inriskier assets and compares toa recent high of 8.4 percentagepoints in mid-February.

The U.S. junk-bond marketsold off in late 2015, when asharp fall in commodity priceshit the resource companiesthat have been big issuers ofthis debt. Investors were alsospooked by the closure of acredit fund overseen by ThirdAvenue Management LLC.

Since then, conditions haveimproved for high-yield inves-tors. Oil prices have re-bounded and the U.S. FederalReserve has signaled it is inno hurry to raise interestrates, making higher-yield in-vestments more attractive.

Investors poured $3.3 bil-lion into high-yield bond fundsin the first three months of2016, according to strategistsat Bank of America Corp.

and ability to absorb losses—for the entire industry in cer-tain cases.

J.P. Morgan “alone hasenough loss absorbing re-sources to bear all the losses,assumed by [a ‘stress test’ is-sued by the Federal Reserve],of the 31 largest banks in theUnited States,” Mr. Dimonwrote in his 50-page letter. Headded that large U.S. banksare far stronger because ofregulations and higher capitalrequirements.

Yet J.P. Morgan has contin-ued to face more-forcefulquestions from analysts, inves-tors and shareholders duringthe past year over whether itmight be better for sharehold-ers if the global bank broke it-self up into smaller, more-manageable units. The issue ofwhether banks should be bro-ken up is also a consistenttopic on the presidential cam-paign trail.

The bank said in its proxythat the board reviewed abreakup analysis with manage-ment that was presentedthroughout its February 2015investor day. It “concurred in

the conclusion that continuingour strategy and delivering onour commitments is the high-est-certainty path to enhanc-ing long-term shareholdervalue.”

That presentation also ref-erenced $18 billion in pretaxsynergies, and the bank saidThursday that each of its busi-nesses benefits from its $9 bil-lion in annual technologyspending, which includes morethan $600 million the bank ex-pects to spend this year on cy-bersecurity.

The shareholder vote wasrequested by Bartlett Naylor, ashareholder activist and a fi-nancial-policy advocate at theconsumer-rights group PublicCitizen.

He and others have raisedthe issue multiple times inprevious years with other bigbanks as well, without gettingmuch traction.

Mr. Naylor proposed thatJ.P. Morgan as well as Citi-group Inc. each create an in-dependent board committee toaddress whether the bankwould be more valuable to

Please see JPM page B8

J.P. Morgan Chase & Co.says it is huge, but only in thebest way, and just sprawlingenough to serve its clientswithout being unmanageable.

Those were among thetakeaways as the country’sbiggest bank by assets againargued that its size is a bene-fit and not a problem thatshould worry shareholders orregulators.

In a proxy statement re-leased Thursday morning, J.P.Morgan pushed back against ashareholder proposal for abank breakup, pointing to itsbusiness synergies, benefits ofscale and value to clients.

The bank also said it hasslimmed down even more inthe past year, reducing assetsby about $200 billion, drop-ping its regulatory capital sur-charge by 1 percentage point,and nearly wrapping up an ef-fort to simplify its business.

Less than 24 hours earlier,however, Chairman and ChiefExecutive James Dimon’s an-nual shareholder letter toutedthe virtues of the bank’s size

BY EMILY GLAZER

J.P. Morgan: We’re Just Right

Oil and Water Don't MixThe Philippines, the world's largest producer of coconut oil, has seen exports of oil made from driedcoconut stagnate while demand for products like water, made from younger coconuts, booms.

*January-November Source: United Coconut Associations of the Philippines

Coconut water

Fresh coconuts

Virgin coconut oil

Copra

Coconut oil

Desiccated coconut

66.3 million liters

3.2 million pieces

34,227 metric tons

480 metric tons

816,330 metric tons

62,166 metric tons

2015 exports* Change from previous year

105%

88

61

–0.6

–1.5

–40

THEWALL STREET JOURNAL.

Working a coconut plantation in the Philippines, the world’s largest producer or coconut oil.

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MONEYBEATRead thecontinuouslyupdated lookinside themarkets, free

online at wsj.com/moneybeat

WSJ.COM

For the European CentralBank, old habits die hard.

The ECB says it doesn’ttarget the exchange rate. Butbank officials have a habit ofstepping up to talk the eurodown whenever it rises too

far.Investors

often seeroughly the

$1.15 mark as a level thatsends the eurozone’s centralbankers to the microphones.

That happened again onThursday. The euro climbedas high as $1.1456 in earlyEuropean trading before twosenior ECB officials madespeeches underlining thebank’s readiness to providefresh monetary easing ifneeded. Thursday’s com-ments helped push the eurodown against the buck to be-low $1.14.

Before Thursday’sspeeches the euro hadgained roughly 5% againstthe dollar year-to-date, andthat complicates the central

bank’s attempts to booststubbornly weak inflation.

“The effects of a strongcurrency are still the same—it creates problems for econ-omies fighting [to increase]inflation,” said Matthew Co-bon, head of interest ratesand currency at ColumbiaThreadneedle Investments.

“The ECB may still wantto address that indirectlythrough broader commentsabout additional stimulus,”he said.

The ECB has form when itcomes to talking down theeuro.

When the euro was head-ing toward the $1.15 level inOctober last year, YvesMersch, a member of theECB’s executive board, said

Please see EURO page B7

...While ECB ChatterKeeps a Lid on EuroBY CHRISTOPHER WHITTALL

MONEYBEAT

This equity rally has fewbelievers. That might actu-ally bode well ahead of whatis expected to be anotherpoor earnings season.

The S&P 500 has surgedabout 12% since bottomingin February and is roughlyflat for the year. Yet a funnything has happened through-

out the mar-ket’s rebound:The skepticsstill are prettypessimistic.

Short inter-est, or bearish bets, on theaverage S&P 500 stockjumped to as much as 3.5%of available shares by mid-February, according to dataprovider Markit. That is thehighest since November2009, capping an upswingthat began last August dur-ing the summer selloff.While short interest hassince edged lower from theFebruary high, it remains ata still-elevated 3.1%.

So why haven’t the bearslost much conviction? One

Earnings Outlook Too BearishBY STEVEN RUSSOLILLO

AHEADOF THETAPE

Alcoa releases results Monday.

WADEPA

YNE/RE

UTE

RS




¥ TakedaPharm 4502 5155.00 1.74 -15.00HK$ TencentHoldings 0700 161.80 1.76 5.96¥ TokioMarineHldg 8766 3473.00 -0.52 -26.29¥ ToyotaMtr 7203 5424.00 -0.60 -27.56AU$ Wesfarmers WES 40.46 -0.10 -2.76AU$ WestpacBanking WBC 28.86 0.63 -14.00AU$ Woolworths WOW 21.33 -0.05 -12.94

Stoxx50CHF ABB ABBN 18.22 -0.65 1.45€ AXA CS 19.46 -1.89 -22.85€ AirLiquide AI 93.42 -1.76 -9.87€ Allianz ALV 136.10 -1.13 -16.78€ Anheuser Busch ABI 107.10 -1.11 -6.38£ AstraZeneca AZN 4167.50 0.97 -9.73€ BASF BAS 62.01 -1.60 -12.32€ BNPParibas BNP 41.35 -3.84 -20.83£ BTGroup BT.A 440.05 -0.47 -6.71€ BancoBilVizAr BBVA 5.32 -2.63 -20.21€ BancoSantander SAN 3.58 -1.73 -21.54£ Barclays BARC 147.10 -1.64 -32.80€ Bayer BAYN 100.15 -1.09 -13.51£ BP BP. 339.30 -0.07 -4.15£ BritishAmTob BATS 4148.50 0.58 10.01CHF FinRichemont CFR 59.00 -3.20 -18.17CHF CreditSuisse CSGN 12.75 -1.01 -41.22€ Daimler DAI 59.52 0.46 -23.28€ DeutscheBank DBK 13.74 -2.97 -38.98€ DeutscheTelekom DTE 15.10 -0.30 -9.53£ Diageo DGE 1910.00 0.24 2.88€ ENI ENI 12.32 -1.99 -10.72£ GlaxoSmithKline GSK 1474.50 0.89 7.39£ HSBCHldgs HSBA 416.15 -0.89 -22.39€ INGGroep INGA 9.99 -2.20 -19.76£ ImperialBrands IMB 3848.50 0.16 7.31€ IntesaSanpaolo ISP 2.16 -3.31 -29.92€ LVMHMoetHennessy MC 145.15 -0.65 0.17£ LloydsBankingGroup LLOY 64.82 -1.79 -11.29€ LOreal OR 155.15 -0.64 -0.10£ NationalGrid NG. 998.20 0.42 6.47CHF Nestle NESN 71.95 0.07 -3.49CHF Novartis NOVN 71.60 0.85 -17.51DKK NovoNordiskB NOVO-B 370.00 0.76 -7.48£ Prudential PRU 1281.00 -2.25 -16.33£ ReckittBenckiser RB. 6804.00 -0.06 8.33

£ RioTinto RIO 1917.50 -0.88 -3.13CHF RocheHldgctf ROG 243.00 0.45 -12.08£ RoyDtchShell A RDSA 1666.50 0.21 9.21€ SAP SAP 68.19 -1.35 -7.07€ Sanofi SAN 74.70 -0.08 -4.96€ SchneiderElectric SU 52.22 -1.30 -0.65€ Siemens SIE 88.08 -1.95 -2.00€ Telefonica TEF 9.11 -0.08 -11.02€ Total FP 38.58 -0.77 -5.57CHF UBSGroup UBSG 14.42 -1.03 -26.13€ Unilever UNA 39.53 -0.40 -1.42£ Unilever ULVR 3241.00 -0.03 10.75£ VodafoneGroup VOD 222.75 1.37 0.79CHF ZurichInsurance ZURN 196.00 -1.61 -24.15

DJIA$ AmericanExpress AXP 58.88 -1.67 -15.34$ Apple AAPL 108.55 -2.17 3.13$ Boeing BA 127.02 -0.71 -12.15$ Caterpillar CAT 74.18 -1.38 9.15$ Chevron CVX 94.81 -0.03 5.39$ CiscoSystems CSCO 27.59 -1.45 1.62$ CocaCola KO 46.36 -0.75 7.91$ Disney DIS 96.17 -1.34 -8.48$ DuPont DD 62.83 -1.06 -5.66$ ExxonMobil XOM 82.38 -1.12 5.68$ GenElec GE 30.62 -0.91 -1.70$ GoldmanSachs GS 150.46 -3.05 -16.52$ HomeDepot HD 133.87 -1.16 1.22$ Intel INTC 31.55 -1.64 -8.40$ IBM IBM 148.21 -1.21 7.70$ JPMorganChase JPM 57.32 -2.53 -13.19$ JohnsJohns JNJ 109.27 -0.14 6.38$ McDonalds MCD 128.17 0.51 8.49$ Merck MRK 55.42 -0.38 4.92$ Microsoft MSFT 54.46 -1.20 -1.84$ NikeClB NKE 60.32 0.02 -3.49$ Pfizer PFE 32.76 -0.52 1.49$ Procter&Gamble PG 83.23 -0.69 4.81$ 3M MMM 167.19 0.23 10.99$ TravelersCos TRV 114.61 -1.14 1.55$ UnitedTech UTX 100.92 0.55 5.05$ UnitedHealthGroup UNH 126.85 -0.92 7.83$ VISAClA V 77.58 -0.81 0.04$ Verizon VZ 52.00 -2.84 12.51$ WalMart WMT 68.23 -1.17 11.31

Nikkei 225 Index15749.84 s34.48, or 0.22%High, low, open and close for eachtrading day of the past three months.

Year-to-date52-wk high/lowAll-time high

17.25%t20868.03 14952.6138915.87 12/29/89

13000

14000

15000

16000

17000

18000

19000

Jan. Feb. Mar. Apr.

Bars measure the point change from session's open

tt

Session high

Session low

Session open

Close Open

CloseDOWN UP

65-day moving average

STOXX 600 Index328.10 t2.55, or 0.77%High, low, open and close for eachtrading day of the past three months.

Year-to-date52-wk high/lowAll-time high

10.31%t414.06 303.58414.06 4/15/15

280

295

310

325

340

355

370

Jan. Feb. Mar. Apr.


US$vs,Thu YTDchg

Country/currency inUS$ perUS$ (%)

AmericasArgentina peso-a 0.0688 14.5260 12.3Brazil real 0.2701 3.7030 –6.5Canada dollar 0.7597 1.3163 –4.9Chile peso 0.001467 681.80 –3.8Colombia peso 0.0003214 3111.31 –2.0EcuadorUSdollar-f 1 1 unchMexico peso-a 0.0559 17.9023 4.1Peru sol 0.2952 3.3873 –0.8Uruguay peso-e 0.0319 31.320 4.7Venezuela bolivar 0.100150 9.99 58.4

Asia-PacificAustralia dollar 0.7509 1.3317 –3.0China yuan 0.1547 6.4632 –0.5

Global government bondsLatest,month-ago and year-ago yields and spreads over or underU.S. Treasurys on benchmark two-yearand 10-year government bonds around theworld. Data as of 3 p.m. ET

Country/ SpreadOver Treasurys, in basis points YieldCoupon Maturity, in years Yield Latest Previous MonthAgo Year ago Previous Month ago Year ago

5.500 Australia 2 1.884 118.1 114.3 106.2 128.4 1.883 1.967 1.8044.250 10 2.462 77.2 69.0 68.3 47.2 2.447 2.592 2.3603.500 Belgium 2 -0.459 -116.2 -118.1 -135.2 -70.6 -0.442 -0.446 -0.1860.800 10 0.356 -133.4 -138.3 -137.9 -153.7 0.374 0.530 0.3524.250 France 2 -0.443 -114.6 -117.0 -134.1 -68.5 -0.431 -0.436 -0.1650.500 10 0.438 -125.2 -130.2 -135.9 -141.9 0.455 0.550 0.4700.500 Germany 2 -0.501 -120.5 -122.0 -141.7 -77.7 -0.481 -0.511 -0.2570.500 10 0.094 -159.6 -163.5 -168.3 -172.9 0.122 0.225 0.1594.500 Italy 2 0.054 -65.0 -72.5 -94.8 -43.2 0.014 -0.042 0.0882.000 10 1.398 -29.2 -47.3 -44.5 -69.8 1.284 1.464 1.1910.100 Japan 2 -0.235 -93.9 -96.8 -111.4 -49.9 -0.228 -0.208 0.0210.100 10 -0.058 -174.8 -181.4 -195.5 -152.7 -0.057 -0.047 0.3610.500 Netherlands 2 -0.485 -118.9 -122.4 -141.3 -71.3 -0.484 -0.507 -0.1930.250 10 0.192 -149.8 -154.9 -155.2 -161.2 0.208 0.356 0.2774.350 Portugal 2 0.312 -39.2 -47.5 -69.9 -51.1 0.265 0.207 0.0092.875 10 3.236 154.6 123.9 104.2 -26.3 2.996 2.951 1.6264.500 Spain 2 0.060 -64.4 -72.2 -94.4 -45.0 0.017 -0.039 0.0701.950 10 1.621 -6.9 -24.1 -32.6 -71.0 1.516 1.582 1.1783.750 Sweden 2 -0.651 -135.5 -139.0 -151.1 -85.3 -0.651 -0.605 -0.3331.000 10 0.719 -97.1 -107.9 -136.8 -148.2 0.678 0.540 0.4061.250 U.K. 2 0.355 -34.9 -34.3 -49.3 4.5 0.397 0.413 0.5652.000 10 1.330 -35.9 -37.2 -42.6 -29.5 1.385 1.482 1.5930.875 U.S. 2 0.704 ... ... ... ... 0.740 0.906 0.5201.625 10 1.690 ... ... ... ... 1.757 1.908 1.888

Cross rates London close onApr 7

USD GBP CHF JPY HKD EUR CDN AUDAustralia 1.3317 1.8761 1.3947 0.0123 0.1717 1.5165 1.0120 ...Canada 1.3163 1.8541 1.3786 0.0122 0.1696 1.4986 ... 0.9881Euro 0.8783 1.2372 0.9198 0.0081 0.1132 ... 0.6673 0.6594HongKong 7.7570 10.9280 8.1233 0.0718 ... 8.8330 5.8946 5.8247Japan 108.0580 152.2300 113.1700 ... 13.9320 123.0300 82.1117 81.1400Switzerland 0.9549 1.3451 ... 0.0088 0.1231 1.0873 0.7254 0.7169U.K. 0.7099 ... 0.7434 0.0066 0.0915 0.8084 0.5395 0.5330U.S. ... 1.4086 1.0472 0.0093 0.1289 1.1386 0.7597 0.7509

Source: Tullett Prebon

US$vs,Thu YTDchg


HongKong dollar 0.1289 7.7570 0.1India rupee 0.0150 66.6973 0.7Indonesia rupiah 0.0000759 13177 –4.8Japan yen 0.009254 108.06 –10.2Kazakhstan tenge 0.002924 341.95 0.9Macau pataca 0.1249 8.0084 0.1Malaysia ringgit-c 0.2538 3.9403 –8.4NewZealand dollar 0.6772 1.4767 0.9Pakistan rupee 0.0096 104.700 –0.2Philippines peso 0.0216 46.268 –1.3Singapore dollar 0.7398 1.3517 –4.7SouthKoreawon 0.0008639 1157.60 –1.6Sri Lanka rupee 0.0068861 145.22 0.7Taiwan dollar 0.03084 32.422 –1.5Thailand baht 0.02842 35.190 –2.3

US$vs,Thu YTDchg


EuropeBulgaria lev 0.5823 1.7174 –4.6Croatia kuna 0.1516 6.595 –5.9Euro zone euro 1.1386 0.8783 –4.6CzechRep. koruna-b 0.0421 23.732 –4.6Denmark krone 0.1530 6.5351 –4.9Hungary forint 0.003648 274.12 –5.6Iceland krona 0.008068 123.94 –4.8Norway krone 0.1200 8.3303 –5.8Poland zloty 0.2648 3.7763 –3.8Russia ruble-d 0.01468 68.121 –5.3Sweden krona 0.1227 8.1531 –3.5Switzerland franc 1.0472 0.9549 –4.7Turkey lira 0.3500 2.8573 –2.1Ukraine hryvnia 0.0388 25.7595 7.4U.K. pound 1.4086 0.7099 4.6

Middle East/AfricaBahrain dinar 2.6519 0.3771 –0.003Egypt pound-a 0.1126 8.8792 13.4Israel shekel 0.2641 3.7870 –2.7Kuwait dinar 3.3155 0.3016 –0.6Oman sul rial 2.5971 0.3850 0.02Qatar rial 0.2745 3.642 –0.006SaudiArabia riyal 0.2667 3.7501 –0.1SouthAfrica rand 0.0658 15.1880 –1.9

Close Net Chg %Chg YTD%Chg

WSJDollar Index 86.46 –0.03 –0.03 –4.12Sources: Tullett Prebon,WSJMarketDataGroup

Stoxx 50Last: 2724.36 t 16.76, or 0.61% 12.1%tYTD

315030002850270025502400

8 15 22 29 5 12 19 26Feb.

4 11 18 24 1Mar. Apr.

Dow Jones Industrial Average P/E: 18Last: 17541.96 t 174.09, or 0.98% 0.7%sYTD

Note: Price-to-earnings ratios are for trailing 12 monthsSources: WSJ Market Data Group; Birinyi Associates

180001740016800162001560015000

8 15 22 29 5 12 19 26Feb.

4 11 18 24 1Mar. Apr.

KeyRatesLatest 52wks ago

LiborOnemonth 0.43645% 0.18000%Threemonth 0.62880 0.27590Sixmonth 0.89465 0.40340One year 1.20555 0.69435

Euro LiborOnemonth -0.33643% -0.03357%Threemonth -0.25757 0.00643Sixmonth -0.14486 0.06643One year -0.02357 0.19000

EuriborOnemonth -0.33900% -0.02200%Threemonth -0.24700 0.01200Sixmonth -0.13400 0.08100One year -0.00700 0.19000

YenLiborOnemonth 0.22429% 0.24000%Threemonth 0.55643 0.38714Sixmonth 0.88946 0.53857One year 1.28536 0.84143

Offer

EurodollarsOnemonth 0.4500% 0.3500%Threemonth 0.6500 0.5500Sixmonth 0.9000 0.8000One year 1.2500 1.1500

Latest 52wks ago

Prime ratesU.S. 3.50% 3.25%Canada 2.70 2.85Japan 1.475 1.475HongKong 5.00 5.00

Policy ratesECB 0.00% 0.05%Britain 0.50 0.50Switzerland 0.50 0.50Australia 2.00 2.25U.S. discount 1.00 0.75Fed-funds target 0.25 0.00Callmoney 2.25 2.00

Overnight repurchase ratesU.S. 0.44% 0.22%Euro zone n.a. n.a.

Sources:WSJMarketDataGroup, SIXFinancial Information, Tullett

International Stock Indexes Data as of 4 p.m. NewYork time

Latest 52-WeekRange YTDRegion/Country Index Close NetChg % chg Low Close High % chg

World TheGlobalDow 2264.86 –15.24 –0.67 2033.03 • 2643.78 –3.1MSCIEAFE 1604.00 –2.58 –0.16 1471.88 • 1956.39 –6.5MSCIEMUSD 807.65 –1.38 –0.17 691.21 • 1067.74 1.7

Americas DJAmericas 488.34 –5.74 –1.16 433.38 • 525.25 0.2Brazil SaoPauloBovespa 48409.20 312.96 0.65 37046.07 • 58574.79 11.7Canada S&P/TSXComp 13255.52 –91.94 –0.69 11531.22 • 15524.75 1.9Mexico IPCAll-Share 45049.89 –232.08 –0.51 39256.58 • 46307.61 4.8Chile Santiago IPSA 3090.07 5.37 0.17 2730.24 • 3361.36 5.0

U.S. DJIA 17541.96 –174.09 –0.98 15370.33 • 18351.36 0.7NasdaqComposite 4848.37 –72.35 –1.47 4209.76 • 5231.94 –3.2S&P500 2041.91 –24.75 –1.20 1810.10 • 2134.72 –0.1CBOEVolatility 16.39 2.30 16.32 10.88 • 53.29 –10.0

EMEA StoxxEurope600 328.10 –2.55 –0.77 303.58 • 414.06 –10.3StoxxEurope50 2724.36 –16.76 –0.61 2556.96 • 3602.76 –12.1

Austria ATX 2210.18 –29.42 –1.31 1929.73 • 2695.57 –7.8Belgium Bel-20 3319.99 –25.38 –0.76 3117.61 • 3910.33 –10.3France CAC40 4245.91 –38.73 –0.90 3892.46 • 5283.71 –8.4Germany DAX 9530.62 –93.89 –0.98 8699.29 • 12390.75 –11.3Greece ATG 554.50 0.38 0.07 420.82 • 857.92 –12.2Hungary BUX 26397.46 99.35 0.38 20452.90 • 26452.41 10.4Israel TelAviv 1443.50 –0.42 –0.03 1383.34 • 1728.89 –5.6Italy FTSEMIB 16818.25 –422.66 –2.45 15773.00 • 24157.39 –21.5Netherlands AEX 428.73 –2.28 –0.53 378.53 • 510.55 –3.0Poland WIG 47231.36 –120.72 –0.25 41747.01 • 57460.44 1.6Russia RTS Index 859.24 –4.05 –0.47 607.14 • 1092.52 13.5Spain IBEX35 8292.90 –105.70 –1.26 7746.30 • 11884.60 –13.1Sweden SXAll Share 472.48 –6.16 –1.29 432.78 • 564.90 –6.5Switzerland SwissMarket 7761.35 –6.88 –0.09 7425.05 • 9537.90 –12.0SouthAfrica JohannesburgAll Share 51146.82 –37.50 –0.07 45975.78 • 55355.12 0.9Turkey BIST 100 81164.66 –346.61 –0.43 68230.47 • 88651.88 13.2U.K. FTSE 100 6136.89 –24.74 –0.40 5499.51 • 7122.74 –1.7

Asia-Pacific DJAsia-Pacific TSM 1326.96 8.70 0.66 1188.42 • 1621.10 –4.5Australia S&P/ASX200 4964.10 18.20 0.37 4765.30 • 5982.70 –6.3China Shanghai Composite 3008.42 –42.17 –1.38 2655.66 • 5166.35 –15.0HongKong HangSeng 20266.05 59.38 0.29 18319.58 • 28442.75 –7.5India S&PBSESensex 24685.42 –215.21 –0.86 22951.83 • 29044.44 –5.5Japan Nikkei StockAvg 15749.84 34.48 0.22 14952.61 • 20868.03 –17.3Singapore Straits Times 2813.59 2.34 0.08 2532.70 • 3539.95 –2.4SouthKorea Kospi 1973.89 2.57 0.13 1829.81 • 2173.41 0.6Taiwan Weighted 8490.25 –23.05 –0.27 7410.34 • 9973.12 1.8

Source: SIX Financial Information;WSJMarketDataGroup

Currencies London close onApril 7Yen, euro vs. dollar; dollar vs. major U.S. trading partners

–8–6–4–202468

10%

2015 2016

Euro

s

Yens

WSJ Dollar indexs

Asia Titans 50Last: 124.78 s 1.32, or 1.07% 8.4%tYTD

14013012011010090

8 15 22 29 5 12 19 26Feb.

4 11 18 25 1Mar. Apr.

HighClose

Low50–day

moving average

t

% YTD%Cur Stock Sym Last Chg Chg


Asia TitansHK$ AIAGroup 1299 42.65 0.47 -8.48¥ AstellasPharma 4503 1420.50 1.72 -17.96AU$ AustNZBk ANZ 22.62 0.31 -19.01AU$ BHP BHP 16.39 1.55 -8.23HK$ BankofChina 3988 3.05 -0.97 -11.85HK$ CKHutchison 0001 99.25 -0.55 -4.93HK$ CNOOC 0883 8.78 2.21 8.80¥ Canon 7751 3131.00 -1.07 -14.80¥ CentralJapanRwy 9022 18895 1.04 -12.52HK$ ChinaConstructnBk 0939 4.83 ... -9.04HK$ ChinaLifeInsurance 2628 17.92 -0.99 -28.61HK$ ChinaMobile 0941 86.25 1.59 -1.43AU$ CmwlthBkAust CBA 70.99 -0.22 -17.00¥ EastJapanRailway 9020 9407.00 2.29 -17.84¥ Fanuc 6954 16500 0.76 -21.73¥ Hitachi 6501 468.50 -0.99 -32.25TW$ HonHai Precisn 2317 81.50 0.37 0.87¥ HondaMotor 7267 2852.00 -0.58 -27.06KRW HyundaiMtr 005380 146500 1.74 -1.68HK$ Ind&Comml 1398 4.07 -0.97 -13.03¥ JapanTobacco 2914 4561.00 -1.47 2.01¥ KDDI 9433 2991.50 3.26 -5.15¥ Mitsubishi 8058 1775.50 1.00 -12.45¥ MitsuUFJFin 8306 482.80 -0.37 -36.23¥ Mitsui 8031 1234.00 1.65 -14.63¥ MizuhoFin 8411 152.90 -0.33 -37.21¥ NTTDoCoMo 9437 2547.50 2.64 2.56AU$ NatAustBnk NAB 25.52 0.08 -15.50¥ NipponStl&SmtmoMtl 5401 2041.00 -0.83 -15.52¥ NipponTeleg 9432 4739.00 1.87 -2.01¥ NissanMotor 7201 946.20 -0.21 -26.05¥ NomuraHldgs 8604 447.00 -1.15 -34.18¥ Panasonic 6752 879.20 1.02 -29.13HK$ PetroChina 0857 4.88 0.62 -4.13HK$ PingAnInsofChina 2318 35.00 -0.71 -18.41$ RelianceIndsGDR RIGD 30.90 ... 0.98AU$ RioTinto RIO 42.97 1.49 -3.89KRW SamsungElectronics 005930 1269000 -1.25 0.71¥ Seven&IHldgs 3382 4489.00 -1.60 -19.12¥ SoftBankGroup 9984 5604.00 1.65 -8.71¥ SumitomoMitsui 8316 3121.00 -1.64 -32.24HK$ SunHngKaiPrp 0016 91.90 0.55 -1.97TW$ TaiwanSemiMfg 2330 154.50 0.65 8.04


Top Stock Listings 4 p.m. New York time

S&P 500 Index2041.91 t24.75, or 1.20%High, low, open and close for eachtrading day of the past three months.

Year agoLast

Trailing P/E ratio *P/E estimate *Dividend yieldAll-time high:

23.82 20.2517.49 17.392.20 2.01

2130.82, 05/21/15

1800

1850

1900

1950

2000

2050

2100

Jan. Feb. Mar. Apr.

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


Data as of 4 p.m. New York time

MARKETS DIGEST

Commodities Prices of futures contractswith themost open interestEXCHANGELEGEND: CBOT:ChicagoBoard of Trade;CME:ChicagoMercantile Exchange; ICE-US: ICE FuturesU.S.;MDEX:BursaMalaysiaDerivativesBerhad;TCE: TokyoCommodity Exchange; COMEX:Commodity Exchange; LME: LondonMetal Exchange;NYMEX:NewYorkMercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 4/6/2016

One-DayChange Year YearCommodity Exchange Last price Net Percentage high low

Corn (cents/bu.) CBOT 361.50 3.50 0.98% 378.25 347.25Soybeans (cents/bu.) CBOT 904.00 -4.00 -0.44% 922.25 856.00Wheat (cents/bu.) CBOT 457.75 -5.25 -1.13 493.50 442.25Live cattle (cents/lb.) CME 121.775 -0.075 -0.06 131.350 118.775Cocoa ($/ton) ICE-US 2,870 -42 -1.44 3,211 2,746Coffee (cents/lb.) ICE-US 119.75 -1.75 -1.44 136.40 113.35Sugar (cents/lb.) ICE-US 14.40 -0.22 -1.50 16.75 12.61Cotton (cents/lb.) ICE-US 58.87 0.12 0.20 64.30 54.53Robusta coffee ($/ton) ICE-EU 1497.00 27.00 1.84 1,568.00 1,342.00

Copper ($/lb.) COMEX 2.0735 -0.0700 -3.27 2.3235 1.9440Gold ($/troy oz.) COMEX 1241.10 17.30 1.41 1,287.80 1,063.00Silver ($/troy oz.) COMEX 15.195 0.141 0.94 16.170 13.760Aluminum ($/mt)* LME 1,504.50 -14.50 -0.95 1,588.50 1,451.50Tin ($/mt)* LME 16,355.00 -150.00 -0.91 17,500.00 13,225.00Copper ($/mt)* LME 4,755.50 -7.50 -0.16 5,070.50 4,320.50Lead ($/mt)* LME 1,696.00 -16.00 -0.93 1,888.00 1,598.00Zinc ($/mt)* LME 1,797.00 -16.00 -0.88 1,866.00 1,467.00Nickel ($/mt)* LME 8,520.00 195.00 2.34 9,400.00 7,750.00Rubber (Y.01/ton) TCE 178.70 -1.40 -0.78 183.40 175.10

Palmoil (MYR/mt) MDEX 2710.00 -12.00 -0.44 2,793.00 2,419.00Crude oil ($/bbl.) NYMEX 37.45 -0.30 -0.79 42.49 29.85NYHarborULSD ($/gal.) NYMEX 1.1288 -0.0115 -1.01 1.2840 0.8950RBOBgasoline ($/gal.) NYMEX 1.3868 -0.0079 -0.57 1.5782 1.1488Natural gas ($/mmBtu) NYMEX 2.016 0.105 5.49 2.5490 1.7310Brent crude ($/bbl.) ICE-EU 39.57 -0.27 -0.68 43.10 29.31Gasoil ($/ton) ICE-EU 334.50 1.00 0.30 384.00 266.50

Sources: SIX Financial Information; WSJ Market Data Group

3:30 p.m. New York time



THEWALL STREET JOURNAL. Friday - Sunday, April 8 - 10, 2016 | B7

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And Indonesia, the world’stop harvester of coconuts,hasn’t undertaken a programto replace old coconut treesthat because of age are seeingless fruit, meaning plantationsare producing less nuts. Thegovernment is instead focusedon expanding rice, corn andsoybean production.

Manufacturers aren’t likelyto stampede to coconut-oilsubstitutes, analysts say. Thatis because substituting with,for example, petroleum-basedfatty alcohols can disruptproduct formulas and threatena product’s branding as beingenvironmentally friendly.Palm-kernel oil, which is pro-duced from the seed of the oilpalm, may get a boost instead.

James Fry, chairman atagribusiness analyst firm LMCInternational Ltd., sees somerelief coming in the fourthquarter of this year, as the

worst of the El Niño phenome-non since 1997-1998 haspassed.

The current El Niño has re-duced rainfall in Southeastand Southern Asia, puttingstress on coconut palms andreducing the amount of fruiton the tree.

An El Niño occurs whenwinds in the equatorial Pacificslow down or reverse direc-tion. That causes waters towarm over a vast area, whichin turn can upend weatheraround the world.

PT Cargill Indonesia,which crushes copra into oil,described copra supplies asthe worst he has seen in 16 or17 years, largely because ofthe high demand for whole co-conuts.

Cargill is “struggling bigtime” to get hold of copra,said Satria Wardaja, Cargill’scommunications manager.

group predicts they will drop6.9% to 2.1 million metric tonsin 2016 from last year.

“Increase in cost of produc-tion narrowed down margins,and the industry players natu-rally moved towards high-mar-gin [coconut] products,” saidMaduka Perera, owner of Cey-lon Tropics, a coconut busi-ness in Sri Lanka.

Meanwhile, supplies willcontinue to feel pressure.

The Philippines is still reel-ing from the 2013 Superty-phoon Haiyan, which damagedor destroyed 44 million coco-nut palms—about 15% of itstrees. It will take at least untilnext year for new trees tobear fruit.

ContinuedfrompageB5

NUTS

Journalists photograph images of the new 50-franc Swiss bank note on Wednesday in Bern.

FABRICECO

FFRINI/AGENCE

FRANCE

-PRESSE/G

ETT

YIM

AGES

Lovely Bunch of CoconutsThe production of higher-value goods from younger coconuts means there are fewer coconuts formaking oil.

Sources: staff reports Photos from left: iStock; European Pressphoto Agency; iStock; AFP/Getty Images THEWALL STREET JOURNAL.

Coconut flowerCoconut sugar isproduced from the sap,or liquid, that comesfrom the cut flower ofthe coconut palm. Thesap is boiled anddehydrated to producethe sugar.

Young green coconutAround nine months;used for coconutwater.

Mature coconutAround 12 months;virgin coconut oil ispressed using the freshflesh of the coconut.

CopraDried flesh; pressed forcoconut oil for use ineverything from lipstickto cookies to biofuel.

Bank of Norway.”Communications from cen-

tral bankers can have a whip-sawing effect on markets. Themost recent case in point: TheU.S. dollar weakened, includingagainst the Swiss franc, afterFed Chairwoman Janet Yellensuggested in a speech lastweek that the Fed would goslow on future rate increases.

The ECB sent stock andbond markets up in March af-ter expanding its bond buyingand lowering interest ratesfurther into negative territory,then back down later the sameday when ECB President MarioDraghi signaled rates may notgo down any further.

The conservative streak ofthe Swiss doesn’t mean theyaren’t willing to experiment.They embraced an extremeform of forward guidance in2011. Amid a persistentlystrong franc at the height ofthe euro crisis, the SNBpledged to keep the euro fromtrading below 1.20 Swissfrancs, and to intervene inmarkets if needed.

Faced with mounting finan-cial risks from the hundreds ofbillions of francs worth of for-eign currencies on its balancesheet, the SNB abandoned thefranc ceiling in January 2015without warning. No one atthe SNB greased the wheelswith the markets in advance,and the franc soared.

Since then, the Swiss havestuck to a tight script, empha-sizing their willingness to domore if needed while main-taining the mantra that thefranc is too strong.

Analysts at lender Nordeaestimate that the Swiss francis 20% overvalued against theeuro, the currency of Switzer-land’s main export destination,the eurozone. The euro fetched1.0871 francs in late Europeantrading Thursday, meaning thefranc is up about 10% since thestart of 2015.

To limit gains in the franc,which SNB officials routinelysay is “significantly over-valued,” the SNB pushed itskey interest rate on bank de-posits to minus-0.75% in Janu-ary 2015 and has kept the dooropen to reducing it further.

Even if the Swiss policymakers wanted to manage ex-pectations, they might fail inthe current environment. Theeconomy is small and very ex-posed to trade, making it sen-sitive to the franc’s level par-ticularly against the euro. Withthe eurozone economy about20 times bigger than Switzer-land’s, the ECB’s decisions typ-ically have more sway over thefranc than the SNB’s.

A communications revampseems unlikely. Because theSNB board is so small, publish-ing meeting minutes mightharm the bank’s policy discus-sions, Mr. Jordan has said. Oneconcern is that it might stokespeculation in markets overwho said what.

“No central bank shouldsimply jump on the latestmonetary-policy bandwagonwithout careful consideration,”Mr. Jordan said in January2014. “Sometimes, transpar-ency can be counterproduc-tive.”

naling that the ECB could easepolicy further.

The SNB’s first postmeetingnews conference isn’t untilJune—one of two it scheduleseach year, compared with fourfrom the U.S. Federal Reserveand eight from the ECB. (Onewrinkle in Switzerland is thatits entire governing board par-ticipates.) The SNB firststarted giving news confer-ences in the 1970s when it washeaded by Fritz Leutwiler, con-sidered one of the most promi-nent Swiss central bankers ofthe 20th century.

Like its peers, the Swisscentral bank releases state-ments to explain its monetary-policy decisions. But unlike theFed, ECB, Bank of England andothers, it doesn’t publishmeeting minutes—and Mr. Jor-dan opposes doing so.

The SNB does publish athree-year inflation forecast.But because it has wide berthon its inflation objective—tokeep it under 2%, comparedwith other central banks thatwant inflation right around2%—it is less clear what typeof response the SNB’s fore-casts might imply.

“The SNB is on balance lesstransparent than the ECB orthe Federal Reserve,” says Ste-fan Gerlach, chief economist atBSI Bank and until last yeardeputy governor of Ireland’scentral bank, “or the BOE orthe [Swedish] Riksbank or the

ContinuedfrompageB5

SILENT

MONEY & INVESTING

How many U.S. dollars €1 buys*

Fighting TalkSpeeches by members of the ECB's executive board and moves in the euro/dollar exchange rate

Sources: WSJ Market Data Group (currency); European Central Bank (speeches)Photos: European Pressphoto Agency; Agence France-Presse/Getty Images; Bloomberg News THEWALL STREET JOURNAL.

*5:15 p.m. London time Thursday

$1.25

1.00

1.05

1.10

1.15

1.20

2015 ’16

Aug. 25, 2015Vítor Constâncio, vice presidentof the ECB, says the bank standsready to use all the instrumentsin its mandate if needed.

Oct. 13, 2015Yves Mersch, member of theexecutive board of the ECB,says the bank ‘would nothesitate to act’ if necessary.

April 7, 2016Peter Praet, ECB chiefeconomist, says additionalstimulus could be launched.

“What we have here is a bigcase of uncertainty aboutwhat’s next for monetary pol-icy and the most urgent caseis in Japan,” said Brian Jacob-sen, chief portfolio strategistat Wells Fargo Funds Manage-ment.

The dollar declined 1.2%against the yen to ¥108.407.Japan’s currency has climbedhigher this year partly as in-vestors remained cautious inresponse to market swingsand sluggish global economies.

The European Central Bankhas faced a similar problem asJapan—a strengthening cur-rency despite ramped-up stim-ulus efforts. On Thursday, ECBchief economist Peter Praetsuggested the bank couldlaunch additional measures tocushion any new shocks to theeconomy.

In the U.S., minutes fromthe Federal Reserve’s Marchpolicy meeting releasedWednesday showed officialswere unlikely to raise interestrates in April.

Financial shares suffered

the biggest declines in the S&P500, falling 1.9%, with someanalysts saying a slower paceof interest-rate increasesthreatens to undermine bankearnings.

The KBW Nasdaq Bank In-dex of large U.S. commerciallenders lost 2.9%, while Citi-group and Bank of Americafell 3.8% and 3.2%, respec-tively.

The Stoxx Europe 600 lost0.8% to 328.10, weighed downby a fall in bank shares, whichmay suffer if the ECB decidesto push interest rates furtherinto negative territory. Sharesin European banks fell 2.2%.

U.S. crude oil lost 1.3% to$37.26 a barrel as doubts per-sisted that major oil producerswill agree to rein in output.

In Asia, Chinese stocksslipped amid worries aboutthe imminent expiration oftemporary restrictions onlarge shareholders selling do-mestic stocks.

The Shanghai Composite In-dex fell 1.4%. The Nikkei StockAverage rose 0.2%.

U.S. stocks slid, the yenstrengthened and U.S. govern-ment bonds rose in a broadpullback from risk Thursday.

The gain in traditional ha-vens added to concerns aboutthe strength of a rally that has

sent stocksroaring backfrom theirmid-Febru-ary lows.

The continued rise ofJapan’s currency this year, de-spite aggressive stimulus mea-sures from the Bank of Japan,has also raised investors’ con-cerns about central banks’ability to stoke growth.

The Dow Jones IndustrialAverage fell 174.09 points, or1%, to 17541.96 Thursday. TheS&P 500 fell 1.2%, and theNasdaq Composite lost 1.5%.

The yield on the 10-yearTreasury note fell to 1.689%Thursday, its lowest levelsince Feb. 11, compared with1.753% Wednesday.

BY AARON KURILOFFAND CHRISTOPHER WHITTALL

U.S. Stocks DeclineAmid Bid for Safety

THURSDAY’SMARKETS

in a speech that the strongeuro was contributing to “re-newed downside risks” forgrowth and inflation. Mr.Mersch said that the bank“would not hesitate to act” toboost inflation if necessary.

Soon after, the euro beganto fall. By late November itwas back down to below $1.06.

On Aug. 24 the euro tradedabove $1.15 on concerns thatChina would devalue its cur-rency. The following day, VítorConstâncio, vice president ofthe ECB, said the bank “standsready to use all instrumentsavailable in its mandate” to re-spond to material changes inthe inflation outlook.

ECB President Mario Draghihas also previously talkedabout the deflationary pres-

ContinuedfrompageB5

sures caused by a strong euro.Eurozone consumer-price in-flation in March was mi-nus-0.1%, slightly higher thanminus-0.2% the previousmonth, but still well below theECB’s medium-term target ofjust below 2%.

The recent appreciation inthe euro has come as the dol-lar has fallen, as investorsconclude that the Federal Re-serve is in no rush to raise in-terest rates. Higher rates tendto boost a country’s currency.

But Thursday’s commentsalso came just as investors be-gin to say that global centralbanks, including the ECB, aremoving away from measuresaimed at aggressively weaken-ing their currencies.

The ECB’s latest package ofmeasures, in March, appearedto be aimed more at boostingcredit growth than targetingthe currency.

Many economists say low-

ering interest rates is the mostpowerful way to weaken theeuro, and the ECB did just thatlast month. Mr. Draghi ap-peared to play down thechances of further cuts,though minutes releasedThursday showed the ECB’sgoverning council didn’t rulethem out altogether at thatlast meeting.

“The currency is still an is-sue,” said Thuska Maharaj, aglobal strategist at J.P. Mor-gan Asset Management. “Butthe ECB is rightly movingaway from a pure focus on thecurrency [in] contrast to lastyear.”

Even so, many investors be-lieve there is only so mucheuro strength the ECB will tol-erate. “I think the chances arethat the ECB has to cut ratesagain if euro-dollar exceeds$1.17,” said Andrew Millward,head of European macro trad-ing at Morgan Stanley.

EURO

SÃO PAULO—Brazilian in-vestment bank BTG Pactualsaid Thursday that an internalinvestigation found “no basisto conclude” that allegationsof misconduct and corruptionagainst its former chief execu-tive officer, André Esteves,were “credible, accurate orsupported by reliable evi-dence.”

Mr. Esteves resigned aschairman and CEO of BTG lastNovember, days after he wasarrested as part of an investi-gation into alleged corruptionat state-controlled oil com-pany Petróleo Brasileiro SA.

Mr. Esteves’s arrestprompted many clients to pullmoney from investment fundsmanaged by the bank, whichhas been forced to sell assetsand significantly shrink its op-erations as a consequence. Thevalue of the bank’s tradedunits has dropped by almosthalf since the day before Mr.Esteves’s arrest.

BTG created a special com-

mittee in December, compris-ing two independent directorsand one nonindependent di-rector, to investigate the alle-gations against Mr. Esteves,the bank’s former controllingpartner.

The independent investiga-tion is seen as an effort byBTG, once a growing regionalinvestment bank, to try to re-build its credibility. But the ef-

fects of the effort may be lim-ited, Max Felipe Bohm, analystat independent research firmEmpiricus, said. “The impactis small, as this is somethinginternal, and won’t changemarket perceptions muchabout the bank.”

Prosecutors allege that Mr.Esteves and a Brazilian sena-tor tried to obstruct justice by

attempting to persuade a sus-pect in the Petrobras corrup-tion case not to agree to aplea bargain.

Mr. Esteves has denied theallegations through his lawyer.He was released to house ar-rest in December but had toturn over his passport andwas prohibited from enteringBTG Pactual’s premises or hav-ing any dealings related to it.

BTG said Thursday that theBrazilian arm of global ac-counting and consulting firmKPMG LLP collected electronicand hard-copy documentsfrom more than 50 BTG em-ployees.

About 430,000 documentswere reviewed by lawyersfrom Quinn Emanuel Urquhart& Sullivan LLP and the Veiranolaw firms as well, the banksaid.

William Burck, co-managingpartner of the Washington of-fice of Quinn Emanuel, saidthe investigation was carriedout with full independenceand no interference by thebank.

BY LUCIANA MAGALHAES

BTG: Inquiry Clears Ex-CEO

Clients have pulledmoney from fundsmanaged by theBrazilian bank.




ECB WorksTo ExpandIts Reach

Investors have plenty ofquestions about the Euro-pean Central Bank’s plan tobuy corporate bonds. Tojudge by the account of theECB’s March meeting, re-leased Thursday, they aren’talone.

The plan will help the ECBlift its overall volume ofbond purchases to €80 bil-lion ($91 billion) a monthfrom €60 billion. The detailsof the purchases have yet tobe unveiled.

Yet some ECB officialsdoubt the plan’s ability to af-fect the eurozone economyand boost private invest-ment. The meeting accountcites concerns that purchaseswould mainly be of bondsfrom cash-rich corporationswhose financing costs are al-ready very low and whose in-vestment behavior isn’t con-strained by the cost oravailability of funding.

Financing is cheap indeed.The Bank of America MerrillLynch euro corporate indexyields just 1% and pharma-ceuticals company Sanofi re-cently issued a three-yearbond with a zero coupon anda yield of just 0.05%. Butmuch of the activity in theEuropean market is relatedto borrowers from outsidethe eurozone, who have ac-counted for around half of is-suance this year, accordingto Société Générale.

As with other monetaryexperiments, the best argu-ment for expanding pur-chases to company bonds isthat it prevents a worse out-come, whereby financial con-ditions tighten throughhigher corporate fundingcosts. But it isn’t the silverbullet that will improve theeconomic outlook.

The ECB may lead corpo-rate borrowers to market. Itisn’t clear it can make theminvest. —Richard Barley

Investors’ attachment todividends may be doing themmore harm than good, espe-cially in banking.

European investors reactbadly to dividend cuts. Butthe chief economist at theBank for International Settle-ments—the central bankers’central bank—believes thatbanks have been paying outtoo much since the crisis andthat this has actually hurttheir ability to lend and thusmake future profits.

Several European bankshave cut dividends in thepast two years and investorshave balked. Shares in BancoSantander dropped 14% inJanuary 2015 when it an-nounced a cut; DeutscheBank and Standard Char-tered both suffered falls ofabout 7% when they an-nounced cuts last autumn;Barclays dropped 8% on itscut in March.

Some banks have raisedcapital to bolster their bal-ance sheets while promisingto continue payouts. In otherwords, they have asked in-vestors for money so theycan hand some of it straight

back. Credit Suisse’s stocksuffered only a 1.5% drop lastOctober when it announced a$6 billion capital raise, butpledged to keep its dividend.

But all this is happeningeven as many banks arestruggling to build the capi-tal they require, while someare still battling to unloadbad loans or long-term, illiq-uid exposures from beforethe crisis that are a drain onthe business today. That is astrue for big banks as for

smaller ones in countries likeItaly.

It is affecting their abilityto make new loans or engagein other activity that couldhelp not only their profitsbut also the wider economy,according to Hyun Song Shin,the BIS chief economist.

“To the extent that under-capitalized banks perpetuatea weak economy and therebykeep bank stock prices underpressure, it may even be thecase that paying out large

dividends also fails to pro-mote the collective interestsof bank’s shareholders, letalone the wider public inter-est,” he said Thursday.

He notes that since 2007,European banks have paidout almost as much in divi-dends as they have kept inretained profits, which addto capital. In France, Italyand Spain, banks have paidout more in dividends thanthey have retained in capital.

The really silly thingabout this is that, whenbanks retain profits, it is stillshareholders’ money, as longas the profits aren’t spent onbonuses or executive pay in-stead, of course.

Investors see returns inthe form of growing tangiblebook values rather than incash returns and, if morecapital helps banks to engagemore business and makemore profits, that can onlybe to investors’ benefit.

Obviously, investors wantshare-price growth and cashreturns. But being too wed-ded to dividends in all cir-cumstances looks like a fool’scounsel. —Paul J. Davies

Valeant Pharmaceuticals: Stepping Back from the AbyssThe road ahead won’t be

smooth, but Valeant Phar-maceuticals Internationalfinally has some breathingroom.

With Wednesday’s agree-ment to amend terms withits loan holders, Valeant hasstaved off the prospect ofdefault in the near term.Reaching the deal didn’tcome without a cost; Valeantnow has to pay a higher in-terest rate on its $11.6 billionin loans, as well as a fee.Valeant maintains that it in-tends to file 2015 audited fi-nancial statements by April29.

But Valeant now has untilMay 31 to file. Lenders alsohave agreed to relax inter-

est-coverage requirements.Creditors aren’t generally

in the business of pushingdebtors into default, ofcourse, so these develop-ments aren’t entirely sur-prising. But since the major-ity of Valeant’s enterprisevalue is in its debt, ratherthan equity, a cleaner debtpicture means big gains arein order for the stock.Valeant shares are up about40% since Monday.

More positive catalystsseem to be in the cards. Ac-tivist hedge-fund managerWilliam Ackman, who joinedValeant’s board last month,said Wednesday he is cau-tiously optimistic that a newchief executive to succeed

the outgoing Michael Pear-son will be found in a “mat-ter of weeks.” That, alongwith actually filing auditedfinancials, could close thebook on months of organiza-tional upheaval and sparkanother rally.

Yet the irony for equityinvestors is that big gainswill be harder to come byonce Valeant gets its housein order. After all, there isgood reason to worry aboutValeant’s continuing finan-cial performance, thanks toincreased pushback from in-surance companies and phar-macy-benefits managers.

More than half ofValeant’s top 30 brands,which represent more than

half of total sales, suffered asequential revenue decline inthe fourth quarter. That in-cludes Valeant’s top-sellingproduct, the gastrointestinaldrug Xifaxan, and there isreason to worry about someproducts that did grow.

For instance, revenuefrom the diabetes drug Glu-metza grew 62% from thethird quarter to $86 million,good for third place on thelist. But one payer, ExpressScripts Holdings, said inFebruary it would excludeGlumetza from its list of ap-proved drugs.

The Bausch & Lomb eye-care unit is a high-quality as-set, but investors could usemore information about its

growth profile.And absent meaningful

new acquisitions, whichwon’t be in the cards any-time soon, Valeant needs torely on its pipeline of newdrug candidates to generategrowth. Recently, that hasbeen a problem. Sales for thewomen’s libido treatmentAddyi have been a dud.

Taking a potential defaultoff the table, even a techni-cal one, means there likelystill is upside left for thecompany’s unsecured notes.

And equity holders couldenjoy more gains from here.Until the operational picturebecomes clearer, though,those are far from certain.

—Charley Grant

Bank Dividends Can Be a Danger

HEARD ON THE STREETEmail: [email protected] FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

Poor Mongolia has had arough ride of late. Its miningboom, based on feeding coaland copper to neighboringChina, has turned into a bust.The country’s currency hasplunged and foreign-exchangereserves have been depleted.It did manage to raise a $500million bond from internation-al markets last week, but atan interest rate of nearly 11%.Less than 3½ years ago, itpaid 4.125% on a similar bond.

Prime Minister Saikhanbi-leg Chimed, speaking to in-vestors at a Credit Suisseconference in Hong Kong,tried to put a happy face onthe nonmining parts of theeconomy. For instance, heboasted of the country’s herdof 54 million livestock, notablysheep, goats, horses, camelsand yaks, which graze on thecountry’s vast steppes. “Wehave the most democraticlivestock, because they arefree to go where they wantand eat what they want,” hesaid. That makes for theworld’s tastiest organic meat,apparently. Too bad meat isn’tas valuable as copper.

OVERHEARD

Payout PriorityProfits and dividends of 90European banks, 2007 to 2014

THEWALL STREET JOURNAL.Sources: BIS; Bloomberg News (photo)

*Austria, Belgium, Finland, Greece, Ireland,Portugal

€0 billion €100€50

Germany

Spain

France

Other Europe*

Netherlands

Italy

Retainedearnings

Cumulativedividends

A Deutsche Bank branchin Hamburg

MONEY & INVESTING

shareholders by divesting allnoncore banking-business seg-ments.

The committee would be re-quired to report back to share-holders within 300 days.

The bank said that wouldn’tbe necessary or valuable toshareholders, breaking downdetails of shareholder commu-nications that already includestrategy discussions. For in-stance, J.P. Morgan hostedmore than 90 shareholdercalls and meetings on topicsincluding strategy, partici-pated in more than 50 investormeetings, presented at 13 in-vestor conferences and con-ducted 10 investor trips in theU.S., Europe and Asia.

“The Board and manage-ment do not favor size for itsown sake or support or opposeany strategy on ideologicalgrounds, but instead analyzestrategy from the perspectiveof serving the Firm’s clients,customers and communitiesand how we believe any par-ticular strategic initiative willaffect long-term shareholdervalue,” according to the proxy.

The proxy also shed lighton Mr. Dimon’s $27 millionpay package for 2015, thehighest among large U.S. bankCEOs.

J.P. Morgan’s board said Mr.Dimon deserved the $7 millionboost from the prior year, or35%, because of strong multi-year results, business simplifi-cation efforts and strength-ened “control” environment,among other factors, accord-ing to the proxy statement.

“Mr. Dimon has led a multi-year effort to fortify our con-trols, which includes address-ing issues that resulted insupervisory and enforcementactions,” according to theproxy.

Mr. Dimon’s pay packagecomprises $20.5 million inperformance-related restrictedstock and $5 million in cash,along with his base salary of$1.5 million, according to aJanuary filing.

This is the first year Mr. Di-mon is being paid in perfor-mance share units, a type ofrestricted stock that has re-

ContinuedfrompageB5

JPM quirements on how long itmust be held and has the pos-sibility of being worth nothingbased on the performances ofMr. Dimon and the bank.

The new features are de-signed to respond to a share-holder proposal last yearthat nearly garnered a major-ity in voting against Mr. Di-mon’s pay package.

The bank also disclosedthat the board updated its pol-icy on director age in 2015, be-yond the previous 72-year-oldretirement rule. J.P. Morgan’sboard has two key directorswho passed the threshold: leadindependent director Lee Ray-mond, 77, and audit committeehead Laban Jackson, 73, whois a liaison to regulatorsaround the world. They bothoffered not to stand for re-election this year, according to

the proxy.“The Board believes that,

while refreshment is an impor-tant consideration in assessingBoard composition, the bestinterests of the Firm areserved by being able to takeadvantage of all available tal-ent and the Board should notmake determinations with re-gard to membership basedsolely on age,” the proxy said.

The bank disclosed that theboard amended its bylaws inJanuary by adding for a rightof proxy access, allowing “eli-gible shareholders to includetheir nominees for election asdirectors.”

It was adopted following“extensive discussions withshareholders and reflects theirexpressed desire to have addi-tional access to the directornomination process.”

The terms include allowinga shareholder to nominate upto 20% of the board, at leasttwo directors in any event,and allows up to 20 sharehold-ers to group together to reachthe required threshold.

The bank also said it wouldhold its annual shareholdermeeting in New Orleans onMay 17.

This is the first yearMr. Dimon is beingpaid in performanceshare units.

EUROPEAN UNION

Warning on PropertyAs U.K. Weighs Exit

U.K. commercial-real-estatevalues could fall if Britain votesto end its European Union mem-bership in June, credit-ratingfirm Standard & Poor’s Corp.said in a report on Thursday.

The U.K. is set to hold a ref-erendum on its relationship withthe EU on June 23. Uncertaintyleading up to the public vote “islikely to have a paralyzing effecton investor decisions on U.K.real-estate purchases,” Marie-Aude Vialle, an analyst at thecredit-rating company, said in astatement.

Exiting the EU “could poten-tially reverse the significantboost to real-estate asset valuesthat the U.K., and London in par-ticular, has experienced in recentyears,” S&P said in a report.

Office buildings in London’smain financial district, called theCity, would be worst hit, S&P

After a decade and a half,Argentina is heading back tothe global bond market. Ar-gentina is planning to marketa $12.5 billion bond offeringnext week in the U.S. and U.K.in what would be its firstglobal debt sale since thecountry defaulted in 2001.

Argentine officials led byFinance Secretary Luis Caputoare scheduled to meet with in-vestors in New York, Los An-geles and Washington, D.C.,next week, according to a let-ter reviewed by The WallStreet Journal on Thursday.The letter was sent to poten-tial investors by DeutscheBank, one of four lead under-writers of the bond offering.

The other underwriters areHSBC Bank PLC, J.P. Mor-

gan Chase & Co. and Santan-der Group.

The government plans touse proceeds from the offeringto pay back holders of the

country’s defaulted debt.Argentina defaulted on

more than $80 billion in 2001,the largest sovereign defaultat the time. The government

has been trying to reachagreements with variousgroups of bondholders sincethen. President MauricioMacri’s administrationreached a deal in Februarywith a group of holdout U.S.hedge funds led by ElliottManagement Corp. Thatagreement paved the way forthe country’s return to the in-ternational debt markets.

Under that settlement, Ar-gentina has said it would paycreditors $4.65 billion by April14. But some Argentine offi-cials have indicated this weekthat they may not make thatdeadline, which some analystssay could complicate or delaythe government’s plans to is-sue the new debt.

A hearing on that matter isscheduled for April 13 in NewYork.

BY JULIE WERNAU

Argentina Returns to Bonds

Finance Secretary Luis Caputo will meet with investors.

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FinanceWatch

said. Housing markets, especiallyin London, are also susceptible,although less so than commer-cial property.

—Art Patnaude

BNP PARIBAS

IPO Is in the WorksFor Hawaiian Unit

French bank BNP Paribas SAis planning an initial public offer-ing of its First Hawaiian Banksubsidiary as early as June, ac-cording to people familiar withthe matter.

First Hawaiian would seek toraise roughly $1 billion in an of-

fering valuing it at between$4 billion and $5 billion, accord-ing to people familiar with thematter.

Should the sale go asplanned, it would be the largestU.S. bank IPO since Citizens Fi-nancial Group Inc. went public ina $3 billion offering in 2014.

—Maureen Farrell

OCBC

Lender to AcquireA Barclays Business

Singapore-based Oversea-Chinese Banking Corp. saidThursday that its private-bank-

ing unit has signed a deal to buyBarclays PLC’s wealth- and in-vestment-management businessin Singapore and Hong Kong for$320 million in cash.

The purchase price is equiva-lent to 1.75% of Barclays’swealth assets under manage-ment in Singapore and HongKong.

The assets under manage-ment, which total about $18.3billion, will be transferred toBank of Singapore, OCBC’s pri-vate-banking unit, the lendersaid in a statement to the Sing-apore Exchange.

The acquisition will allowOCBC to increase its share ofthe wealth-management busi-ness in Asian financial centers ata time when it is seeking togrow in its four key markets:Singapore, Malaysia, Indonesiaand greater China.

OCBC and its counterpartsacross Asia are jostling to man-age the growing assets of theregion’s wealthy families and en-trepreneurs.

For its part, Barclays lastmonth said it was planning toexit its Asian wealth business aspart of its strategy of shoringup its sprawling operations andconcentrating on the units itdeems core.

—Gaurav RaghuvanshiOCBC is seeking to expand in wealth management in Asia.

EDGARSU/REUTERS



© 2016 Dow Jones & Company. All Rights Reserved. THEWALL STREET JOURNAL. Friday - Sunday, April 8 - 10, 2016 |W1

EATING | DRINKING | STYLE | FASHION | DESIGN | DECORATING | ADVENTURE | TRAVEL | GEAR | GADGETS

Korean beautyregimens:

Only for thedoggedly

determinedW3

The electric SUVgoes over the top:

Dan Neil onthe Tesla Model

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ThisIsNotaSugarBomb

Life without dessert? Unthinkable.

These recipes deliver all the flavor but significantly

less of the sweet stuff. You won’t miss it

W HAT’S A SWEETtooth to do? Sugarhas become the newdemonized ingredi-ent du jour. And

while I’m as interested in healthy(ish)eating as the next person, for me,dessert is not negotiable.

Millions of Americans are striving tocut back on sugar. In January, for the

first time, the new federal dietaryguidelines set a limit for added sug-ars—those added to foods or drinkswhen they’re processed or prepared, asopposed to the naturally occurring sug-ars in, say, fruits and dairy products—and recommended they make up nomore than 10% of daily calories. A Reu-ters/Ipsos poll conducted soon afterthe new rules were announced revealedthat 58% of Americans try to limitthe amount of sugar they consume—

PleaseturntopageW2

BY JANE BLACK

Coconut milkenriches both

batter and glazeand provides analternative source

of sweetness.Added egg yolksgive the cakemoisture that

recipes otherwiserely on sugar to

provide.

This coconutcake containsonly 46%of the sugarused in a

typical angelfood cake.

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W2 | Friday - Sunday, April 8 - 10, 2016 THEWALL STREET JOURNAL.

HOW SWEET IT IS TO EAT LESS SUGAR

Cherry WalnutGranola

At Eleven Madison Park inNew York, diners are senthome after the meal witha bag of granola. It’sdelicious, but more likecandy than a wholesomebreakfast. This versionwas inspired by thatrestaurant’s parting giftbut uses less than halfthe sweeteners. It’s stilladdictively tasty.

ACTIVE TIME: 15 minutesTOTAL TIME: 45 minutes

MAKES: 6½ cups

1 cup walnuts, chopped1/3 cup olive oil1/3 cup maple syrup

1/2 cup dark brown sugar1 cup pumpkin seeds4½ cups old-fashionedrolled oats

¼ teaspoon groundcinnamon

¼ teaspoon groundginger

¼ teaspoon groundcardamom

¾ teaspoon salt1 cup dried cherries

1. Preheat oven to 325degrees. Place walnuts ona baking sheet and toastuntil fragrant butnot browned, about 8minutes. Let cool slightly.2. In a small saucepanheat olive oil, maple syrup

and sugar over mediumheat until sugar dissolves.Remove from heat.3. In a large bowl, mixwalnuts, pumpkin seeds,oats, spices and salt.Pour oil-sugar mixtureinto bowl and mix well.4. Spread mixture overa parchment-paper-linedrimmed baking sheet. Bakeuntil lightly golden and dry,about 30 minutes.5. Remove from ovenand let cool slightly. Mixin cherries so they areevenly distributed. Granolawill keep in an airtightcontainer up to two weeks.—Adapted from ElevenMadison Park

Strawberry Cream Cheese FoolFool is a classic English dessert that pairs stewedfruit with custard. This Americanized versionis kind of like a cheesecake filling studded withstrawberries. Reduced apple-juice concentrate

substitutes for white sugar.TOTAL TIME: 25 minutes SERVES: 8-10

1 (12-ounce can) frozen apple juiceconcentrate

8 ounces cream cheese, at roomtemperature

½ cup crème fraîche2 cups heavy cream2 teaspoons vanilla extract¼ teaspoon kosher salt4 cups strawberries, hulled andquartered (or halved if berries aresmall)

1. Make apple syrup: Bring apple juice concen-trate to a boil in a small saucepan overmedium heat. Decrease heat to medium-low

and simmer until juice reduces to ¾ cup,15-20 minutes. Keep an eye on pan to makesure juice doesn’t burn. (You may need todecrease heat as syrup reduces and thickens.)Remove from heat and refrigerate until coolto the touch.2. Use an electric mixer with whisk attachmenton medium speed to whip together creamcheese and ½ cup cooled apple syrup. (Reserveremaining syrup for another use.) Mix until lightand fluffy, 2-3 minutes.3. Add crème fraîche to cream cheese mixtureand whip until combined. Slowly drizzle in heavycream and beat on medium speed until thick-ened, 1-2 minutes more. Whisk in vanilla andsalt.4. Fold in strawberries, reserving a few spoon-fuls for garnish. Portion into bowls or glassesand top with berries. Serve immediately orcover with plastic and refrigerate up to 2 hoursbefore serving.—Adapted from “Baking With Less Sugar” byJoanne Chang

Breakfast CookiesDates, soaked in hot water andwhizzed in the food processor,

substitute for sugar in these cookiesthat are great with morning coffee orafternoon tea. The recipe makes alittle more date paste than you

need; it’s hard to whip up a tiny batch.Mix the leftovers into plain yogurtor a yogurt smoothie with bananas

and apple juice.ACTIVE TIME: 15 minutesTOTAL TIME: 1 1/4 hoursMAKES: 9 (3-inch) cookies

4 ounces Medjool dates, pitted(7-8 dates)

5 ounces boiling water2 cups old-fashioned rolled oats¼ cup unsweetened shreddedcoconut

½ teaspoon ground cinnamon½ teaspoon baking powder½ teaspoon fine sea salt¼ teaspoon baking soda1/3 cup coconut oil¼ cup maple syrup½ teaspoon vanilla extract1 large egg½ cup chopped dried fruit,such as raisins, cranberries orapricots

1. Preheat oven to 350 degrees. Makedate paste: Place dates in a smallbowl and pour boiling water over top.

Coconut Chiffon Cake withCoconut Glaze

This cake uses less than half the sugar of atraditional angel food cake and is moist and,thanks to a generous seven eggs, decadent toboot. The cake can be stored in an airtightcontainer at room temperature up to two days.ACTIVE TIME: 25 minutes TOTAL TIME:

11/4 hours MAKES: 1 cake

Special equipment: a 10-inch tube pan witha removable bottom

For the cake:2 cups sifted cake flour2/3 cup granulated sugar1 tablespoon baking powder1 teaspoon kosher salt1 cup shredded unsweetened coconut1 cup full-fat coconut milk1/2 cup vegetable oil7 large eggs, separated1 tablespoon vanilla extractFor the glaze:½ cup confectioners’ sugar2 tablespoons coconut milk2 tablespoons shredded unsweetenedcoconut, plus more for garnish

1. Place rack in center of oven. Preheat oven to350 degrees. In a large bowl, stir togethercake flour, 1/3 cup granulated sugar, bakingpowder, salt and coconut until combined.Give coconut milk a good stir. In a bowl, whisktogether coconut milk with vegetable oil, eggyolks and vanilla.2. Using an electric mixer fitted with whisk at-tachment, beat egg whites on medium speeduntil frothy, 1-2 minutes. Slowly add remainingsugar to egg whites. Continue to whisk untilegg whites are a bit glossy and hold a softpeak when you raise whisk, 2-3 minutes more.3. Make a well in center of dry ingredients,then pour coconut-milk mixture into well.Use a rubber spatula to stir until well com-bined. Add a few large spoonfuls of beatenegg whites to batter and fold in using a rubberspatula. Add remaining egg whites and foldin gently until well combined.4. Use a rubber spatula to scrape batter intoa 10-inch ungreased tube pan with a remov-able bottom. Bake cake until it is pale goldenand springs back when you poke it at thecenter, 35-45 minutes. Remove from oven andlet cool in pan, upside down, on a wire racksupported by the inner tube. When cake iscool, run a knife around sides to slip off pan,then along tube and bottom to loosen cake.Quickly invert onto a plate an then flip itright-side up onto a serving plate5. Make glaze: In a bowl, whisk togethersugar, coconut milk and coconut until some-what thick but still easy to pour.6. Spoon glaze over top and sides of cake, al-lowing extra to drip off. Sprinkle with coconut.—Adapted from “Baking with Less Sugar” byJoanne Chang

a greater number than those who shuncalories, sodium, fat, cholesterol orcarbohydrates.

To meet the federal target, the aver-age American needs to trim sugar in-take by about a third. The game is onto figure out how to bake delicioussweets with less sugar.

Joanne Chang, owner of Flour Bak-ery in Boston, said that sugar’s oftena safety net as much as a sweetener,helping to keep cakes moist, promotebrowning and prolong shelf life. A solidrecipe will cultivate those qualitieseven with a reduced sugar content. Herbook “Baking with Less Sugar,” pub-lished last year, includes a coconutchiffon cake that slashes the sugar inher usual recipe by 46%. The low-sugarversion’s become so popular Ms. Changfeatures it as a special on the menu atboth Easter and Christmas.

Still, sometimes you really can’tmonkey with the sugar content. “Whenyou cream butter and sugar together,the sharp little crystals create pocketsthat fill the batter with air,” saidShauna Sever, author of “Real Sweet,”a collection of recipes made with less-refined sweeteners. “That’s what cre-ates a light fluffy texture.” And thatmakes a big difference to the consis-tency of the finished cake or cookie.In contrast, “with a muffin or a quickbread, there’s some other leavener todo the work.” Sugar also lowers thefreezing temperature of ice creams and

sorbets and pre-vents them fromfreezing solid.

Alternatives tosugar—agave nectar,honey, maple syrup,molasses, coconutsugar—are also invogue because theytend to be less pro-cessed than whitesugar, and processedfoods are right upthere with sugar atthe top of the taboolist these days.Cooks argue, too,that they add moreflavor. In theory, thatmeans you need lesssweetener to makesomething delicious.Ms. Sever, for exam-ple, soaks dates inwater then whizzesthem into a paste tosweeten oat-and-dried-fruit “break-fast cookies.”Ms. Chang reducesapple juice to asyrup for herluscious strawberrycream cheese fool.

These flavorful alternative sweetenershave plenty to recommend them, but it’sworth bearing in mind that the dietaryguideline applies to all sugars, not justthe refined white kind. “Sugars are calo-ries and no nutrients,” said Marion Nes-tle, a professor of nutrition at New YorkUniversity. “It all works the same wayand everyone would be healthier eatingless of it.”

Indeed, I’ve wondered if the mostsensible tactic is simply to go on theever-unpopular eat-less-dessert diet.But after trying out the recipes atright, I’m relieved to know it won’thave to come to that. If low-sugarsweets can taste this good, I’ll takethose and eat them, too.

ContinuedfrompageW1

SWEETSTRATEGIESFOR LOW-SUGAR BAKING

� Add finelychopped dried fruitto a batter toboost sweetness.

� Increase theamount of sweetspices, such ascinnamon andvanilla. Theseflavors suggestsweetness so youdon’t notice thesugar isn’t there.

� Substituteoverripe bananasor date paste.These have plentyof sweetness (andnutrients to boot).They also providemoistness that canbe lost when youcut sugar.

Tightly cover with plastic wrap. Let situntil dates are soft and mushy, 10-15minutes. Spoon dates into bowl of afood processor, reserving soakingliquid. Purée dates until mixture islight and texture is like apple butter.If too stiff or dry, add a tablespoon ortwo of soaking water.2. In a food processor, process ¾ cupoats to a powdery consistency.Transfer oat flour to a large bowl. Addremaining oats, coconut, cinnamon,baking powder, salt and baking sodato bowl and whisk to combine.3. In a food processor, blend 1/3 cupdate paste, oil, maple syrup, vanillaand egg until slightly aerated, about1 minute. Scrape wet ingredients intodry, stirring until dough is moist.Stir in dried fruit. Let dough rest10 minutes to soak up liquid.4. Use a ¼-cup measure to scoopout nine balls of dough onto aparchment-paper-lined baking sheetor silicone baking mat. Use yourfingertips to flatten each cookie to½-inch thickness; the cookies will notspread much during baking.5. Bake until golden, about 30minutes. Remove from oven and letcookies cool on baking sheet 5minutes, then transfer to a wire rack.Cookies will keep in an airtightcontainer up to 3 days.—Adapted from “Real Sweet” byShauna Sever V

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OFF DUTY



THEWALL STREET JOURNAL. Friday - Sunday, April 8 - 10, 2016 |W3

Middle MarcherNational costumes from Spanish cities like Salamanca andSegovia have always fascinated designer Manolo Blahnik,who based the squiggles on these 3½-inch-heel slingbackson a photo by José Ortiz-Echagüe of a man in traditional

dress. Heels, $775, Manolo Blahnik, 212-582-3007

Willing to commit to a celebrated, if wearying, 10-step beauty regimen? From South Korea come peculiarpeel-off masks and creams with weird ingredients that promise a spectacularly dewy complexion

I F SNAIL CREAM and sheetmasks are already part ofyour beauty routine, con-gratulations: You’re offi-cially on the cutting edge

of beauty. Now please step asidewhile the other 99% of us catch upto the K-Beauty trend.

K-Beauty—the umbrella termfor all South Korean imports in theskin care, makeup and bath-and-body categories—has been attract-ing fans in the U.S. Over the last18 months, it’s cultivated a certaingentle, nature-meets-technologyethos. Boosting its appeal is pack-aging that comes with poppycolors, nonsensical names likeTonymoly and bottles whimsicallyshaped like pandas and crackedhard-boiled eggs.

Even more hyped than the prod-ucts themselves, however, is theultra-elaborate K-Beauty skin-careregimen espoused by popular web-sites like Soko Glam and Peach &Lily, both of which are run by Ko-rean Americans. Incorporating upto 10 (and sometimes more) steps,the typical regimen kicks off witha “dual cleansing” ritual (via oil-and water-based products), windsits way through a series of sheetmasks, essences, serums and richmoisturizers, and wraps up withSPF 35 sunscreen. At night, youswap out the sunscreen for a thick,gloppy “sleep cream.”

Many of these beautifiers arelaced with outré ingredients suchas snail mucin, culled from thegooey substance snails leave intheir wake and said to boost cellregeneration; bee venom (an anti-inflammatory “faux-tox” allegedto relax facial muscles); moisturiz-ing starfish extract; and firming-and-tightening pig collagen. “Foryears, Korean women have focusedon skin care products rather thanmakeup,” said Sarah Jindal, seniorinnovation and insights analystfor market research firm Mintel.“The ultimate goal is to achievea complexion that has a dewy,glowing finish, one that doesn’tneed concealers and foundationsto hide it.”

Each complexion, the reasoninggoes, needs a customized routinethat addresses factors such as hor-monal fluctuations and lifestylechoices. The repetitive cleansings,masks and layers of moisturizersminister to skin that’s suffered a

K-Beauty’s most effective contribu-tion to the world of skin carebecause they deliver a saturateddose of hydration to dry skin.They’re an easy add-on and comein a single-dose package (as lowas $2) or 5-packs (around $20).

Another smart, albeit pricier,approach is to follow one of Peach& Lily’s well-thought-out “KoreanSkincare Routine Kits.” Custom-ized according to skin type (oily,normal, dry, etc.), these include10 or more products, at a totalcost ranging from $225 to $250.If that’s too much of a financialcommitment, start small by sam-pling a nightly snail-mucin cream.Don’t be squeamish: The delicatelyscented, rich formula feels smooth,not oily, when applied to yourskin. Bonus: You’re less likely toscare other people after rubbing iton than if you pop up wearing oneof the peel-away Freddy Krueger-esque masks.

BY DANA WOOD

litany of assaults, which may rangefrom hormonal shifts to wrinkle-inducing UV rays to the dehydrat-ing effects of alcohol.

Unsurprisingly, some dermatol-ogists applaud this skin obsession:There’s a decided upside to both

expanding a regimen beyond thebasics (cleansing, moisturizing)and addressing specific issueslike fine lines, enlarged pores anduneven skin tone, said New Yorkdermatologist Dennis Gross, whononetheless doesn’t prescribe10-step protocols for his patients.A customized skin-care routine“makes good sense from a skin-bi-

Slather on snail mucincream that feels smooth,not oily, on your skin.

You’veGot Snail

THE HEIGHTS OF FASHION

AN UNLEVEL PLAYING FIELD

One of our favorite spring trends is the playfully punchy graphic shoe.And there’s a version for everyone, whether you favor flats or a sky-high style

Low and BeholdFendi’s whimsical flat with its sculpted, stacked 1-inch heel

is for those who prefer to stay lower to the ground. Its glossypatent-leather toe cap and sky-blue trim get a cheeky

tweak from the wink of the brand’s signature “Bag Bugs”monster eyes. Flats, $700, Fendi, 212-897-2244

Highest FlyerFor these irrepressibly animated 4-inch stilettos, happy

shades of leather and suede are cut into serpentine shapesthat designers Peter Pilotto and Christopher De Vos saywere inspired by the look of scrolled wooden intarsia inlays.

Peter Pilotto Heels, $1,124, matchesfashion.com F.MART

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MisshaCell Renew SnailCream, $45,sokoglam.com

Tonymoly Panda’sDream White

Hand Cream, $12,sokoglam.com

Shangpree BlackPremium ModelingRubber Mask, $20,peachandlily.com

AmorePacificGreen Tea Seed

Treatment Oil, $195,sephora.com

GLOBALLYGORGEOUS

Let’s face it: We’re often suckersfor youth-in-a-bottle promises,especially those that feel exotic.Here, a few foreign-born beautycrazes we fell for over the years.

1970s THAILAND // Four-Handed Massage Like skatingpartners at the Win-ter Olympics, twomassage thera-pists workin synchronyup and downyour body.This ’70s off-shoot of a millen-nia-old deep-kneading techniquelets partakers Zen out.

1999 INDIA // Ayurvedic SkinCare Targeting enlightened typeswho are dialed-in to their dosha,ayurvedic skin care got a super-model assist from Christy Turl-ington, who co-partnered on theSundari beauty line in the late’90s. The multi-step regimenrooted in ancient Hindu healinghas fans who feel “balance” isthe key to beauty, even if it takesan hour a day to achieve.

2004 FRANCE // Le SlimmingWithin six months of its publi-cation, Mireille Guiliano’s diet-book juggernaut, “FrenchWomen Don’t Get Fat,” was in

its 20thprinting andhad sold amillion-pluscopies. De-spite itsmystique, itsums up theGallic ap-proach tostaying svelte

in obvious, Michael Pollan-ishterms: Eat real food. Small por-tions. No snacking.

2006 MOROCCO // Argan OilExtracted from the kernels of theargan tree, this allegedly miracu-lous multitasker hitsupernova statuswith the 2006 de-but of Morocca-noil hair treat-ment. The “liquidgold” has driz-zled its wayinto “arga-nized” cuticleoil, lipstick and even flat irons.

2011 GERMANY // BB CreamEssen-based dermatologistChristine Schrammek concoctedthe first tinted “blemish balm”in 1967, and after they hit U.S.shelves in 2011 under the “beautybalm” banner, BB creams soldclose to $9 million in the firstyear and spawned an alphabetof CC and DD creams.

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ology standpoint,” he said. “Butthe Koreans don’t own the high-way on this; most of my patientsare up to at least four steps, in-cluding a daily peel and a serum.”

Freelance business consultantSoojin Min—a longtime fan ofEstée Lauder, Chantecaille andKiehl’s skin care—recently addedproducts from Korean importsSulwhasoo, AmorePacific andHera to her daily routine and isn’tput off by the extra labor theydemand. “I feel they have fewerchemicals,” said Ms. Min (a state-ment for which there’s no sup-porting research). The Seoul na-tive, who splits her time betweenhomes in Hong Kong and Bronx-ville, N.Y., “was happily surprisedto see a K-Beauty section at Sep-hora when I was in Manhattan.”

For the K-curious eager to gofor the glow, the best approach isto incorporate one additional stepat a time. Sheet masks are perhaps

Dr.Jart+Liftra ContourCream, $60,sephora.com

GLOW SLICKS //A K-BEAUTY SAMPLER

Neogen RealFlower Cleansing

Water, $22,sokoglam.com

OFF DUTY




NOT YOUR AVERAGEJEAN JACKET

If you want to stand out—subtly—from the pack,Levi’s 1953 Type II Jacket fits the bill, thanks

to design details rooted in its proletarian past

SOME OF THE saddestwords in the English lan-guage are “ordinary,” “ge-neric” and “Relaxed-Fit Kha-kis.” Unwilling to blendcompletely into the Gap-cladcrowd, I sporadically seekout clothing with subtledesign details that will setme, infinitesimally, apart.I’ve made some embarrass-ing buys: overwrought G-Star Raw trousers with but-tons in perverse places; asweatshirt depicting a wiseold owl with a unicorn horn.But I’ve also scored somewinners, most recently the1953 Type II Jacket (right)from Levi’s Vintage Cloth-ing, the division of the com-pany that reproduces findsfrom the Levi’s archives.

Ironically, I discoveredthis resoundingly Americanjacket in a Levi’s store nearCarnaby Street in London.I was promptly taken withits low-set pockets and the

pleats that inexplicably bor-der its button placket—de-tails that, according toPaul O’Neill, head of designat Levi’s Vintage Clothing,relate to its origin as work-wear. When Levi’s originallyproduced jackets, as earlyas the 1880s, they were “forminers, cowboys, steelwork-ers,” said Mr. O’Neill. “It be-came less about a function-ing jacket as you got intothe 1960s.”

This classic was replacedby the 1961 Type III Jacket,which did away with theeccentricities in favor of amore tailored fit, copper-col-ored buttons and the pointedpocket flaps that are aLevi’s trademark. “It becamerecreational wear,” said Mr.O’Neill. “Half of Woodstockwas wearing the Type III.”

My jacket, originallyissued in 1953, cost $4.35back then, one detail that isnot intact. $385, levi.com

BY DALE HRABI

the owner of Smart Turnout, a London-based outfitter which recreates the pull-overs that tennis and cricket players woreway back when.

Free of logos or labels, those traditionalknits sported striped bands around the col-lar and cuffs, an indication of the club orschool to which the wearer belonged—bluefor Yale, orange and black for Princeton,and so on. Over time, the all-white courtmandate loosened (think of Rafael Nadal’slime green and yolk-yellow outfits in recentyears), and the tennis sweater becamemore of a player off, versus on, the courts.

“You haven’t seen a pro wear one inprobably 50 years, but tennis sweaters gotabsorbed into popular culture,” said BrianDavis, the purveyor of Wooden Sleepers,an Americana-focused vintage outfitter inRed Hook, Brooklyn. “There’s always a de-mand for that Brooks Brothers or old made-in-France Lacoste tennis sweater, especiallyin the spring and summer.” These vintageknits tend to have a looser, squared-offfit that isn’t for everyone, said Mr. Davis.Mr. Turner of Smart Turnout noted that hisbrand’s “thick, chunky re-creations tend tocome up oversized on people.”

Update Bryan Ferry’s ’70stennis-sweater look with

new takes on the iconic knit

E ACH SPRING, with visions ofBjörn Borg’s two-handed back-hand and Andre Agassi’s A-plusaces in my head, I am drawnto the moss-green asphalt of

my local tennis court. I uncork a fresh tubeof Wilson’s, step up to the baseline—andam harshly reminded that my ability to pre-cisely land a serve ranks up there with Mr.Magoo’s. I never learn. My only consolationis knowing that, off the court, I can almostpass for one of Wimbledon’s immortalsin my classic tennis sweater: V-neck, cableknit, ultra-preppy and reminiscent in noway of Mr. Magoo.

Consider suave Bryan Ferry over there(right) in just such a sweater. I’m unsurewhether the Roxy Music frontman can wielda racket as ably as he can a Stratocaster,but this circa-1974 photo of him confirmsthat a tennis sweater strongly implies thatits wearer has a credible backhand.

This season, like a well-returned volley,these iconic V-neck knits, first popular inthe 1930s, are making a strong comeback.Back in the Depression, when club rulesmandated all-white clothing, the thick woolknits were a necessity for chilly days; theykept athletes warm, yet the loose, cabledweave allowed for a full range of motion.“You needed to move in them, so theycouldn’t be tight fitting,” said Philip Turner,

BY JACOB GALLAGHER

Today, designer labels such as Gucci,Dunhill and MP Massimo Piombo have re-vamped the classic tennis sweater, makingminor adjustments to modernize its retrolook. The signature cable knit remains butis rendered in lighter yarns such as silkand cotton blends for a featherweight feel.Better still, that once-blocky silhouette

is nicely fitted now and the V, withoutplunging cheesily, dips far enough to showoff a button-down or polo shirt (no barechests please, guys). These tweaks givethe classic a smart style advantage oversweatshirts and less pedigree’d pulloversthis season.

Mr. Davis sees the potential to take thetennis sweater even further. “I would liketo see a brand like Kapital, RRL or evenKanye West deconstruct the design of it,”he said, stripping away its prep-schoolpropriety so it looks more modern. Whiledesigners toed the line by tweaking thefabric and colors in their spring versions,Raf Simons showed oversized tennissweaters for fall, with torn V-neck collarsand frayed hems that give them an edgieradvantage. In tennis parlance, the Belgiandesigner aced it.

Without plunging cheesily, thenew tennis sweater’s V dipsfar enough to show off a crispbutton-down or polo shirt(no bare chests please, guys).

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SWING TIME Roxy Music’s Bryan Ferry, photographed around 1974, projects plausible athletic skill in a traditional tennis sweater.

Sweater, $450,dunhill.com

Sweater, $770, Gucci,212-826-2600

Cricket Sweater, $300,smartturnout.com

POINTS OF DISTINCTION

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PLEATSLevi’s historians

are puzzled by these.One theory is that work-ing men could unstitchthem come fall for a

looser fit accommodat-ing heavy sweaters

underneath.

LOW-SLUNG POCKETSWorkers could access

these without crampingtheir arms. The higher,

smaller, style-driven oneson Levi’s modern jack-ets are comparably

impractical.

TUCKSIN THE BACK

These were designed togive men more freedomof movement “because

they were souping up theirhot rods—or mining,”said Paul O’Neill

of Levi’s.

OFF DUTY







In this center of Americana, the locals hold barbecue,jazz and even jeans to a much higher standard

THE TRENDSETTERAndy Spadeco-founder, Partners &Spade and Sleepy Jones;married to fashion designerand Kansas City nativeKate Spade

SHELL GAME // The Peanut. This standoutcorner bar has been around since 1933. Thereare peanut bowls on the bar and peanut shellson the floor, and it’s known for triple BLTs, Buf-falo wings and homemade blue cheese dressing.5000 Main St. (original location), peanutkc.com

KC ROYALTY // Arthur Bryant’s Barbecue.Calvin Trillin called this the world’s best restaurant,not to mention its best barbecue pit. 1727 Brook-lyn Ave. (original location), arthurbryantsbbq.com

SWING SHIFT // Mutual Musicians Founda-tion International. (2) After midnight on week-ends, legendary jazz musicians getting off gigsaround town come for jam sessions at this 1930slandmark. 1823 Highland Ave., mutualmusicians-foundation.org

FRY FOR ALL // Stroud’s Fairway. Kate andI always go to Stroud’s, just across the state line,for their famous pan-fried chicken. Kate’s beengoing since she was a kid. 4200 Shawnee MissionParkway, Kan., fairway.stroudsrestaurant.com

THE BLUES MANMatt Baldwinowner/designer ofKansas City-based BaldwinDenim & Collection

AWESOMESAUCE // Gates Bar-B-Q. (4)Simply the best ribs in Kansas City. The spicyketchup-vinegar sauce is a hometown favorite.Six locations, gatesbbq.com

CHIC EATS // Genessee Royale Bistro. Thisfashionable cafe in the Stockyards District drawsthe city’s creative types for lunch or for a late-afternoon glass of wine. 1531 Genessee St.,genesseeroyale.com

ART ATTACK // Haw Contemporary. Thisinfluential West Bottoms gallery—owned byBill Haw, Jr., a pioneer in the city’s art sceneand the son of a prominent cattle rancher anddeveloper—primarily shows works from localand regional artists, including abstract painterEric Sall. 1600 Liberty St., hawcontemporary.com

FOR KICKS // Sporting K.C. America’s firstEuropean-style soccer club and stadium, it’smaking K.C. the soccer capital of the U.S. Chil-dren’s Mercy Park, 1 Sporting Way, Kansas City,Kan., sportingkc.com

THE RESTAURATEURSColby andMegan GarreltsChef-owners ofBluestem, in KansasCity; and Rye, inLeawood, Kansas

RARE FIND // The Majestic Restaurant. In theheart of downtown, this iconic steakhouse lookslike it’s from the Prohibition era, with high tinceilings and old mosaic floor tiles. The KC stripand porterhouse are amazing. Start with the arti-choke dip. 931 Broadway Blvd., majestickc.com

SHORE LEAVE // The Ship. This sexy 2-year-old dive bar and live-music club, off an alley inthe West Bottoms district, was restored from a1930s nightclub. 1217 Union Ave., theshipkc.com

YEEHAW JUNCTION // Harry’s CountryClub. Honky-tonk-loving dudes in chinos fre-quent this live-music spot. Get the “Sea Hogs,”bacon-wrapped shrimp with horseradish sauce.112 Missouri Ave., harryscountryclub.com

TO DYE FOR // Baldwin KC. (5) One of theflagship stores for the Kansas City-born denimlabel that cuts American-made and finely tai-lored staples. Every style-savvy guy in K.C. hasto own a pair of these jeans. 340 W. 47th St.,baldwin.co

THE CURATORJulian Zugazagoitiadirector, The Nelson-Atkins Museum of Art

SOUND TRACKS // Knuckleheads Saloon.This fascinating music club has a great outdoorstage and bar by the train tracks. The rumbleof passing trains only adds to the sound of thehorns. 2715 Rochester St., knuckleheadskc.com

ARTFUL LODGER // Oak Street Mansion. (3)An art-centric hotel housed in a stately old red-brick manse. The rooms have different themes—Cuban, Impressionists—and pop with color. Fromabout $150 a night, oakstreetmansion.com

SCENIC SCENE // Bar Rosso at HotelSorella (6) The bar and bistro in this new hotelis housed in an elegant rotunda. It’s becomea local hot spot during happy hour and afterthe hotel’s black-tie events. 901 W. 48th Place,hotelsorella-countryclubplaza.com

DIG THIS // Urban Mining. A huge midcenturyfurnishings and architectural-salvage market,Urban Mining is open only the first Friday, Satur-day and Sunday of each month. 3923 Main St.,urbanminingvintage.com

2. Mutual Musicians Foundation.

3. Oak Street Mansion’s Cuban room.

CHRIS MULLINS FOR THE WALL STREET JOURNAL

4. Ribs and other offerings at Gates Bar-B-Q.5. Baldwin KC clothing shop.

6. A Paper Plane cocktail at Bar Rosso.

Plus, Don’t Miss…Port Fonda A former food-truck phenom and James Beard Foundation semifinalist, chef Patrick Ryan serves excellent, innovative Mexican food. 4141 Pennsylvania Ave. (original location),portfonda.com // Hi Hat Coffee Set inside a former filling station, this is the coolest little java hut around. 5012 State Line Rd., Westwood Hills, Kan. // Joe’s Kansas City Bar-B-Que You’ll have to wait in longlines at this temple to all things smoked, but it’s worth it. The owners have won countless barbecue pit competitions. 3002 W. 47th Ave., Kansas City, Kan. (original location), joeskc.com // The Bloch Buildingof the Nelson-Atkins Museum of Art (1) Opened in 2007, this glass-walled architectural stunner houses rotating shows and permanent photo exhibits. At night, it’s lit up like a UFO. nelson-atkins.org

IT WOULD BE EASY to typecast Kansas City,Mo., as the most bread-and-butter metropolisin the country, the Heartland personified,its very soul wrapped in butcher paper. Af-ter all, it’s the birthplace of CharlieParker-style jazz, Hallmark Cardsand Walt Disney animation, and amecca of low-and-slow barbecue. Indowntown K.C., streets flicker withvintage neon signs and old ware-houses hulk on the corners, evokingEdward Hopper’s stark paintings, while theold-guard residential neighborhoods are fullof Prairie School-style manses built by thecaptains of cattle and railroads. So, yes, Kan-

sas City is as “Americana” as it gets, but itthrows visitors plenty of curveballs, too. The1930s Nelson-Atkins Museum, for one, is

known for its collection of Chinese paint-ings, as well as the 17-foot-tall shuttle-cocks on its lawn. The West Bottoms’hood, formerly stockyards, is nowhome to suave eateries and shops,while the Power & Light districtis a newly throbbing music hub,

and in the arty Crossroads area indiebands perform beside train tracks. With

240 neighborhoods, not counting those justacross the Kansas state line, a little localguidance goes a long way. —Steve Garbarino

OFF DUTY

KansasCityJOURNAL CONCIERGE

An Insider’s Guide

1. Looking out from the Bloch Buildingat the Nelson-Atkins Museum of Art.




OFF DUTY

A grandma’s unglazed stoneware seeds a collector’s passion

for a cobalt-blue service) andhaggled over cake plates (un-der $50 each) with toothlessMainers at flea markets.Though I’ve bought non-Wedg-wood jasperware, I find theoriginal producer’s the mostrefined and pleasing. AndI don’t buy online, because itlacks the thrill of the chase.

In terms of value and his-tory, “the less writing on thebottom, the older it is,” saidAlan Kaplan of New Yorkdealer Leo Kaplan. Numberand letter codes began show-ing up in the 1860s and coun-try-of-origin markings around1900. Rare tri- and multicolorpieces can be valued at manythousands of dollars. ButWedgwood still produces jas-perware, and for a small sumone can begin collecting.

My china cabinet may bea dead ringer for a nonagenar-ian’s, but nothing is too pre-cious to use. For a recent din-ner party I used jasperwarecreamers to hold tea lights andde-lidded sugar bowls asvases. My girlfriend studiedmy tablescape and dubbed itsstyle “granny gone rogue.”Fine by me.

MATTE GIRL Theauthor’s favoriteinherited jasperware,notable for itstricolor design.

A Jasperware JonesLOVE STORY

�WedgwoodJasperwareGinger Jar,4 inchestall, $56,Replacements,800-737-5223

Jasperware Dancing HoursTeacup (3.5 inches in diam-eter) and Saucer (5 inchesin diameter), $1,450 for6 assorted, Wedgwood,877-720-3486

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ing to Tricia Foley, author of“At Home with Wedgwood,”“People were bringing backartifacts from Greece and Italy.Rather than plunder, JosiahWedgwood replicated.” Intri-cate molds depicted Greek andRoman myths and muses, andthe Wedgwood factory (and,later, other English and Euro-pean companies) produced ona mass scale, which is why youcan find jasperware in fine,and not so fine, antique storesacross the U.S.

When my grandmotherdied, the collection amassedwith my mother in mind cameto me instead. “You’ve alwayshad fancy-old-lady taste,”quipped my mother, whose ce-ramic preferences incline to-ward naive American luster-ware. Since then, I’ve pluckedtea sets from shabby antique-shop vitrines in Arizona ($250

The ceramics lookedlike talismans leftby the Easter Bunny.

�WedgwoodTricolor

JasperwareTobacco Jar fromMy Endless Attic,4½ inches tall,$75, rubylane.com

�WedgwoodCrimsonJasperwareCovered Jug,8½ inches tall,$3,450, rauan-tiques.com

MY DESIGNtaste mightwell betermedgranny chic.

It includes a penchant forchintz, toile and the Wedgwoodcompany’s jasperware. Myobsession with the matte ce-ramic and its usually white re-liefs dates to childhood visitswith my grandmother inBoston. In the corners of herfederal-style dining room stoodscrolled-shell cupboards filledwith Meissen-china figurines,Limoges snuff boxes and Neccowafer-hued jasperware thatlooked like talismans left bythe Easter Bunny: urns, cameosand tea sets in dusty rose,lilac and celadon.

Thus began my affair withthe unglazed stoneware, namedfor its resemblance to thetough mineral jasper, thatJosiah Wedgwood invented inthe 1770s, capitalizing on theEuropean fascination with Neo-classicism that erupted afterarchaeologists unearthed Pom-peii and Herculaneum. Accord-

BY MIEKE TEN HAVE

RELIEF PITCHERS // AND GINGER JARS AND TEACUPS TO AUGMENT, OR LAUNCH, A COLLECTION

�WedgwoodJasperwareCake Plate,about 9½inches in di-ameter, $60,Replacements,800-737-5223

TheFamily AlbumAn LP collection offers more than classic-rock schlock. It can also tell children who their parents really are

Rosemary and Thyme” still flauntsthe index card of the library fromwhich he borrowed it decades ago.(He maintains that he intends to re-turn it.) I inherited his tendency toignore due dates; when he and Iended up on the most-wanted list atjust about every video-rental storein town in the mid-90s, that indexcard made perfect sense.

One day, my kids will riflethrough the stacks of records andCDs that I can’t bear to part with,and they’ll find as much of my backstory as they care to uncover.

When Thomas and Lucy, ages5 and 1, ask about my neglected

copy of “The Doors,” I’ll tell themthat, although I can’t stand the bandanymore, when I was 15, I had apart-time job sweeping floors at arecord store owned by a guy whowas obsessed with Jim Morrison. Asthe youngest employee by at least ageneration, I was the only one therewho, by the mid-90s, was still ex-cited to put on “American Pie” and“Sweet Home Alabama.” SometimesI’d come home with a stack of oldrecords in lieu of a paycheck.

My kids will also find the copy ofJohn Coltrane’s “Crescent” that mydad bought for me at Chicago’s Vir-gin Megastore in 1996. (I can hear

them asking now, “Dad, what’s aVirgin Megastore?”) That albumwas my introduction not just to Col-trane but to his longtime drummerElvin Jones. (I was a budding drum-mer myself.)

If my children develop a taste forswing, they might wonder why mycopy of “Basie Straight Ahead” issigned by Count Basie’s favoritedrummer, Harold Jones. I’ll tellthem about the time I took a job asa counselor at a music camp in Wis-consin so I could spend a week withthis Mr. Jones; it was there that Ifell in love with another camp coun-selor whom they know as “Mom.”

IN THE AGE of Spotify, it’stough to justify keeping themassive collection of vinylrecords that I’ve acquiredfrom my parents and my

decadelong career as a music writer(a profession that affords little fi-nancial security but plenty of freealbums). This is especially truewhen the room that houses all ofmy LPs also serves as a home of-fice, guest room and a play area formy two young children, Thomasand Lucy.

I’m not an audiophile or vinylfanatic. Every time my growingfamily has moved, I’ve beentempted to give away my LPs. Butas I get older, wiser and more sen-timental, I’ve decided to hold on tothose records for the same reasonI’m glad my parents did: Thumbingthrough your parents’ LP collec-tion isn’t just an opportunity toget turned on to some great music;it’s a chance to learn about yourfolks as people.

Sure, my parents’ cache of LPswas my entree to a lifelong loveof the Beatles, Stevie Wonder andCreedence. But those records werealso a trail of biographical bread-crumbs that my parents left for meto discover.

Once, for instance, I pointed tomy mother’s copy of “Rubber Soul”to defend my mop haircut. Whenthe tactic worked, I realized momwasn’t always a mom; at one time,she was a girl who thought theBeatles were dreamy.

Meanwhile, my dad’s copy of Si-mon & Garfunkel’s “Parsley, Sage,

BY CHRIS KORNELIS And if Thomas ever asks toborrow my copy of “Sgt. Pepper’sLonely Hearts Club Band,” it willgive me a chance to tell him that it’sas much his as mine: We found ittogether in the bargain bin of a localrecord store when he was just a fewmonths old. Record shopping wasone of the first activities the two ofus shared, Thomas strapped to mychest in a Baby Bjorn.

My kids are already enjoying thebenefits of my hoarding. Recently,Thomas made his first discovery:“Daddy! The boy’s naked!” he ex-claimed. “He’s not wearing a swim-ming suit!”

Among the stacks and shelves ofvinyl and CDs, Thomas haddiscovered my copy of Nirvana’s“Nevermind.” He pleaded for me toput it on. As he listened to the era-defining riff of “Smells Like TeenSpirit” for the first time, his eyes litup and he began to bounce.

Then he began to flail. I took hishands and we formed our first fa-ther-son mosh pit, which culmi-nated in my swinging him by anarm and leg and flinging him ontothe futon.

Not everyone has a record collec-tion to document life’s milestones.But when you’re creating space foryour kids, you deserve a pass fornot always making the most rationalchoices. There’s nothing wrong withholding on to a few things that giveyour child a trail to your past—anda good excuse to mosh.

Adapted from Mr. Kornelis’s book“Rocking Fatherhood: The Dad-to-Be’s Guide to Staying Cool,” avail-able this month from Da CapoPress/Lifelong Books.

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Even before my son heard the PylePVTT2UOR Retro Belt-DriveTurntable ($70, amazon.com), thisappealingly orange player (availablein other colors, too) was his favorite.

It has the thinnest sound of thethree, but what 5-year-oldcan tell the difference?Bless his heart for pickingthe only model with a

built-in rechargeable battery. —C.K.

HOOKED ON PHONO // RECORD PLAYERS FOR KIDS

The sound of the Crosley Cruiser($100, crosleyradio.com) is a hairtinnier than the one above, and Ihad some trouble with its finickytone arm, but it has two key fea-tures going for it: It runs on six AAbatteries (instead of Cs that theManny runs on) and it has a head-phone jack—ideal for those times

when your youngster discovers a newfavorite song and plays it incessantly.

Musician Jack White has long been avinyl evangelist, touting the format’s(supposedly) superior sound, so it’sno surprise that his music labelwould offer a relatively inexpensiverecord player to hook the youngergeneration. True to its musician-backed pedigree, the Manny’sChildren’s Turntable ($90, third-

manstore.com) has the best audioquality of the models shown here.




at Venice Beach, Calif., while theyselfied themselves, laughingmadly, sitting in mid-row seatswhile the doors were up. When allthe doors are open you can lookthrough the Model X as if it werea picture window with a Tesla-shaped sill and sash.

Would minivan-style doors havebeen a more sensible technical so-lution to a mid-row door opening?Infinitely. You could have donethe doors off the Dubonnet Xeniaeasier that the Model X. But thespell these doors cast—let’s call itemotional engineering—is payofffor some of the shrewdest designmoney ever spent.

A bit of context: The FalconWing Doors came about becauseTesla CEO Elon Musk liked themand wanted them, full stop. He has

said he didn’t want the productioncar to be a dialed-back version ofthe concept car, which is just thesort of initiative and forwardthinking that gets people cashieredfrom General Motors.

To aficionados, Mr. Musk’s movesmacked of pride since in over acentury of automotive design, fromthe Mercedes-Benz 300SL Gullwingto the DeLoreans to Lambos, gull-wing doors have always looked cooland never really worked.

To name a few of the problems:ease of entry and exit, weathersealing and wind noise. Froma safety standpoint, center-hingedoverhead doors cut into the kind ofrectangular geometry around a dooropening that lends it rigidity.

What if it snows overnight?What if it’s raining? Where do youput the ski racks and bicycles andthe Thule roof module full of hik-ing gear?

Who cares? Have you seen thedoors open?

Most maddening was creatinga dead-stable pivot point for thedoors, which rise and fall slowlyon the motorized breeze not likefalcon wings but more like seagullwings, with a double fold. The so-lution required a heroic amountof costly magnesium in the car’sdorsal spine.

Mr. Musk has copped to over-reach with the Model X. Maybe hetried to do too much, what withthe Model X’s sensor-rich Autopi-lot driver aids; the dancing shut-tle-craft seats; the HEPA air filtra-tion system with the “BioweaponDefense Mode” setting; the pan-oramic windscreen, a stunningsoap bubble of a canopy over yourhead. Dude, you’re forgiven. Butthen again, I’m not a stockholder.

Practicality for fascination. Thisis the card Mr. Musk continuesto play to his advantage. This isthe part of the Tesla business planthat might as well have been

The price for the “standard”Model X 70S with a 70kWh batteryis $80,000, which is about $5,000more than a base Model S—a factthat is academic because Teslawon’t be building any base ModelXs for some time.

The company will instead befilling orders for the flagship P90D(“P” for performance). These willcome with a face-flapping 713pound-feet of insta-torque fromtwo huge four-pole AC inductionmotors ($35,000) and the famous“Ludicrous” Drive Mode ($10,000),which essentially permits the bat-tery to violently eject electrons inpursuit of maximum acceleration.In Ludicrous Mode, the Model XP90D max output is 532 hp.

That’s the version that Tesla pro-vided me, and I want them to know,I’m on to their game. It is very hardto find fault with a six-seat SUVthat accelerates like a Formula At-lantic open-wheeler. Jeebus. Stampthe accelerator and it goes off likea sprung mousetrap. Tesla esti-mates 0-60 mph in a Lambo-like 3.2seconds. While doing so, the ModelX quietly withdraws everythingfrom your pockets and scatters itconveniently under the back seats.

And then, between 50 and 100mph, it’s goodbye, Charlie. TheP90D Ludicrous operates at an en-tirely different frame rate thanjust about anything on the streetin L.A. It takes a sustainably har-vested baseball bat to Panzer wag-ons like Porsche Cayenne Turboand Range Rover Sport SVR.

Around the City of Angels, thesweet, effortless blurt of our EVhot-rod tempted me to do, well,questionable things. No yellow lightever turns red for the Model XP90D. No hole that opens up intraffic is ever too small or far away.

Falcon wings? Maybe Icarus.But if the Model X flies too closeto the sun, there’s always morewindow tint.

quoted out of the Old Testament.The rich will want the riches.

Not to be confused with theModel 3 compact sedan that de-buted so boffo this week, theModel X is a full-size SUV withdual electric motors front andrear, providing all-wheel drive.Although its body structure is al-most entirely aluminum and mag-nesium, our flagship test car(P90D Ludicrous) was quotinga massive 5,381 pounds, most of itin the floor-mounted battery pack.Four-corner air suspension withfive ride-height settings, from off-road to highway, is standard.

The Model X is a luxury familymover, with five-, six- or seven-passenger seating options, witha rear trunk and a frunk (a fronttrunk). The deeply tinted glass

canopy creates a pretty magicalspace, although (another old les-son, relearned) the California sunis too bright through the roofglass. I understand additional tint-ing is available.

The front and mid-row seats aremounted on powered pedestalsthat glide forward as if to aStrauss waltz, easing access to thethird row’s two cozy bucket seats.The seats’ pedestal mountings al-low passengers more foot roomthan otherwise.

All the doors open electrically,which can take some getting usedto. If you get in and put your rightfoot on the brake, the driver’s doorwill swing closed, even if you havenot yet retrieved your left leg. Thedoor will gently gnaw on it untilyou take your foot off the brake.

ElonMusk has copped tooverreachwith theModelX. Dude, you’re forgiven.

Price, as tested: $135,400Powertrain: all-electric all-wheelsystem comprising dual three-phase, four-pole AC induction mo-tors; liquid-cooled lithium-ion bat-tery pack (90kWh nominal); on-board charger and superchargerenabled; permanent all-wheel drive.Horsepower/torque: 532 hp/713

pound-feet of torqueLength/weight: 198.3 inches/5,381poundsWheelbase: 116.7 inches0-60 mph: 3.2 secondsTowing capacity: 5,000 poundsCargo capacity: 77 cubic feet(total interior storage, six-seatconfiguration)

2016 TESLA MODEL X P90D LUDICROUS

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Jonathan: The 3-D room walk-thrus that I’ve seen with theSamsung Gear VR are great.It’s basically goggles that youput your Samsung phone into toview 3-D environments. I justdid a demonstration, and it’s likeyou’re standing in a room.—Edited from an interview byKelly Michèle Guerotto

Drew: We shoot a lot of Vinesand videos for our fans, so weuse the F&V Z180S Bi-ColorLED Video Light. It’s tiny butoutputs so much light. I canchange the color temperature tomake it look like daytime, night-time or natural light indoors.

Jonathan and Drew Scott of HGTV’s’Property Brothers’ on paint-pickingapps and tech survival kits

Drew: I’m a total organization freak, so I use ClosetMaid [organizingsystems] a fair bit. They give you drawers, shelves and hanging unitsto maximize every square inch of your closet or room. The best part isyou can mix and match. If at some point you have more long hangingpieces, pop the bracket off the track, move it up and you’re good to go.

Drew: When I want to quicklytake a measurement, I use myStanley Laser Distance Mea-surer. You just put it on thewall, and it shoots a laser andinstantly tells you the exact dis-tance to the other wall withina fraction of an inch.

THE PROPERTYBROTHERS

MY TECH ESSENTIALS

Drew: At my house, I can operate prettymuch everything from my phone. I can beanywhere in the world and adjust the tem-perature, check my security cameras and talk

to people in the house. I can even turn on the TVs. I use a Crestronsystem, but there’s also one called Insteon that’s more entry-level anddoesn’t have to be hard-wired.

Jonathan: I use and recommendthe Sherwin-Williams ColorSnapVisualizer app. If you havea favorite painting, you canupload a photo and the app willpinpoint the colors in it and tellyou which are in their line. Andwith their iPad app or website,

you can uploada picture ofa room, andit will showyou whatthe walls willlook like in dif-ferent colors.

Drew: I al-ways carrywhat I call my“I got yourback” kit,which I keepin a GRID-ITOrganizer.The kit has

every technology connectionyou could possibly ever need.I have a charging plug foryour car. I’ve got every typeof memory card reader. If youever need anything, I’ve gotyour back.

OFF DUTY

TeslaModel X: ElectricMeets ExtravagantLET’S ADDRESS WHAT somemight consider the morally incon-sistent status of an all-electric lux-ury SUV costing $135,400. Bydesign, the Tesla Model X P90DLudicrous (that’s the real name, ap-parently) is meant to be green andefficient—and well-to-wheel, net-to-net, EVs are way cleaner than gas-powered cars. Electric vehicles area technical expression of our beliefthat the atmosphere is the bluecommons, owned by all. Egalitarianin impulse, in other words.

But the Model X is also therarest sushi of materialism, classprivilege under a blister of tintedglass, a suede-lined pachinko par-lor of the soul. Just remember asyou pull up to Nobu in West Holly-wood and supermodels come run-ning out to the valet to take a pic-ture with your Model X with thedoors up: You’re saving the planet.

Here’s the hard part for mostpeople: It can be both. A featureof a free society is that some havemore than others; such are therisks and rewards of capitalism.This is a given. This is gravity.But everyone, no matter their life-styles, can consume less. And,by the power of numbers, a lot oflesses add up to quite a lot.

So some Hollywood celebritydownsizes to a Gulfstream IV andnow she’s Mother Earth? Well,yes. Consider it a self-imposedcarbon flat tax.

F. Scott Fitzgerald said the testof a first-rate intelligence is theability to hold two opposed ideasin mind at the same time and stillfunction. It also seems to apply tothe Model X’s famous Falcon WingDoors, since they are simultane-ously unnecessary and absolutelyvital to the entire enterprise; deeplythought-through yet completelyspurious; impractical and…well,more impractical. But you get usedto them, because they are so cool.See above re: supermodels.

Or retired aerospace engineers.Or French tourists. Or the hard-core, mainlining petrolheads whokept me waiting in the parking lot

RUMBLE SEAT: DAN NEIL

TESL

A(2)

WINGS OF DESIRE The FalconWing Doors on the Tesla ModelX P90D Ludicrous are at oncethoughtfully engineered, largelyimpractical, and very, very cool.



© 2016 Dow Jones & Company. All Rights Reserved. THEWALL STREET JOURNAL. Friday - Sunday, April 8 - 10, 2016 |W9

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

MANSION‘Until you play it, St. Andrews

looks like the sort of real estate youcouldn’t give away.’ —Sam Snead

58 years old. “There are monkeys all over thegolf course. The views are stunning.”

The Buttafuocos currently own a three-bed-room villa at the Four Seasons Resort Estates,but they’re considering upgrading to a four-bed-room, 3,400-square-foot home in a new FourSeasons development called Villas at Pinney’sBeach.

The property, located on the fourth fairwayand just a short walk from the sea, costs $4.2million. It features a contemporary design, with

vaulted ceilings and walls of glass that open to apatio, pool and guest cottage. Interior appoint-ments include white marble countertops, mahog-any doors and Bosch and Thermador kitchen ap-pliances.

The Nevis villas are among a handful of newluxury developments cropping up around the Ca-ribbean that appeal not only to golf enthusiastslike Mr. Buttafuoco, but to beach-lovers andthose who want family-friendly activities. These

PleaseturntopageW10

WHEN DANIEL BUTTAFUOCO needs a breakfrom his busy legal practice and bitter New Yorkwinters, he and his wife fly to the Caribbean is-land of Nevis. There he unwinds with a round ofgolf on a course that climbs up a mountainthrough lush rain forest before descending tothe edge of the Caribbean Sea.

“It’s beautiful,” says Mr. Buttafuoco, who is

BY ARIAN CAMPO-FLORES

FORE SALE At the Four Seasons resort in Nevis, the Robert Trent Jones Jr.-designed golf course climbs toward Nevis Peak before descending to the edge of the Caribbean Sea. A new devel-opment there called Villas at Pinney’s Beach features luxury villas with prices starting at $3.5 million for a three-bedroom home.

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SURF, TURFAND 18HOLESNew luxury golf developments around the Caribbean

shoot for broader appeal, targeting beach lovers and families as wellas golf enthusiasts; a recording studio near the greens.

The Golf Homes Issue

HOUSEOF THE DAY

wsj.com/houseoftheday

FranceTwo ski chaletsin the French Alps

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tropical living in Bali

United StatesA producer’s islandpad in Kauai, Hawaii

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SETTING AMEDITERRANEAN COURSEThe Spanish island of Mallorca courts affluent second-home buyers with days of golf and nights of food and wine.

MALLORCA IS MAKING anew bid for Mediterranean-bound millionaires.

The Spanish island haslong been known for its rug-ged landscape, dramaticviews and yacht-filled har-bors. Now it courts second-home buyers, with morethan 20 golf courses and athriving artisanal food andwine scene.

The 2007 opening of theGolf Son Gual golf club nearPalma de Mallorca, consid-ered the island's most chal-lenging course, helped raiseMallorca’s profile as a seri-ous golf destination. Theclub was founded by Germanbusinessman and golf enthu-siast Adam Pamer. AndreasPamer, the founder’s son andSon Gual’s general manager,says the course’s new pro,South Africa-born RobertBaker, has tutored the likesof President Obama and Mi-chael Bloomberg.

Also esteemed is the Alca-nada Golf Club near Pollensa,which has a coastal settingfor its pro course, designedby architect Robert TrentJones Jr. The club was

PleaseturntopageW15

BY J. S. MARCUS

SWINGINGMallorca’s challenging San Gual golf course, above. Top from left, the master bedroom of the Swarovski family home nearPollensa, St. Mary’s Cathedral in Palma de Mallorca, a stairway in the Swarovski home and fresh fish in Palma’s Mercat de l’Olivar.

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)For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com



MEXICO The 18-hole golf course at Mayakoba resort on the Yucatán Peninsula was designed by Greg Norman. Pricesstart at $2.5 million for a two-bedroom home at the new Rosewood Residences.

ISLAND GETAWAYMichael Lagopoulos, above, bought a two-bedroom unit in one of the Ritz-Carlton residential towers four years ago for about $2 million. An8,100-square-foot penthouse unit in the towers is currently listed for $16.1 million. The resort includes a golf course designed by Greg Norman.

NEVIS The Four Seasons resort has an 18-hole golf course, above left, designed by Robert Trent Jones Jr. Above right, a home listed for $5.85 million in theStewart’s Estates section of the Nevis resort, which offers views of fairways and the sea.

THE BAHAMAS A recently completed beachfront residence, left, at Albany, a new 600-acre development on the coastof New Providence. On the right, an interior of an Albany property by the marina.

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days, beach resorts are wooingbuyers with everything from high-end fitness centers to equestrianfacilities to water parks for chil-dren, says Neal Sroka, who special-izes in global marketing for resortproperties at Douglas Elliman RealEstate in New York.

When Mr. Buttafuoco isn’t onthe Robert Trent Jones Jr.-de-signed golf course, he says hesometimes heads to the spa for amassage or haircut.

His wife loves lounging on thebeach and dining at one of severalrestaurants. And his grandchildrencan choose among activities thatinclude crab hunting and naturewalks.

At Playa Grande on the northerncoast of the Dominican Republic,plans for a new complex underconstruction named Amanera Vil-las call for about 40 homes. They

range from two-bedroom, 2,400-square-foot residences that startat $4 million to six-bedroom,8,600-square-foot homes that cancost $10 million or more.

So far, five have sold, mainly tobuyers from the U.S. and Canada,says Pierre Charalambides, found-ing partner of developer DolphinCapital.

The villas offer views of the Ca-ribbean and an 18-hole golf courseoriginally designed by RobertTrent Jones Sr. The course—whichwas just renovated by his son ReesJones, the brother of Robert Jr.—stretches along the coastline, with10 holes perched on cliffs. Ownerscan indulge in perks that includean “energy-healing” treatmentnear the surf.

On the Caribbean side of Mex-ico’s Yucatán Peninsula, anotherset of residences is rising at theMayakoba resort, where three ho-tels sit amid nearly 1,600 acres ofbeaches, mangroves and canals.The most posh are the RosewoodResidences, where plans call for 33homes, most of them on three pri-vate islands.

Prices range from $2.5 millionfor a two-bedroom, 3,500-square-foot home to $5.5 million for afour-bedroom, 6,100-square-footproperty. Eleven have sold, mostlyto Americans, Canadians and Mexi-cans.

Each residence features a mod-ern, minimalist aesthetic, withlarge windows overlooking a pri-vate infinity-edge pool and a la-goon. The resort’s 18-hole golfcourse, designed by former No. 1-ranked player Greg Norman, hostsan event on the PGA tour.

Other amenities include a spalocated on a private island and achildren’s program with activitieslike scavenger hunts and piratenights.

When Charles Goldstuck, a 55-year-old music-industry executivein New York, was looking for anew winter home, he picked a 600-acre development called Albany onthe southwestern coast of NewProvidence in the Bahamas.

He bought a lot in an area nearthe beach and is about to startbuilding a seven-bedroom, 7,500-square-foot home that will includea large music and entertainmentroom overlooking the ocean. Hedeclined to discuss the price, but alot alone in that section runsabout $1.5 million.

Mr. Goldstuck says he wasdrawn to the vision articulated byJoe Lewis, a billionaire Britishbusinessman who is the main in-vestor in Albany, along with golf-ers Tiger Woods and Ernie Els.Their aim was to build a “Monacoof the Caribbean” that allows own-ers to mix work and play and of-fers amenities for the entire fam-ily, from a day school for childrento an adults-only pool wheresometimes a DJ spins tracks.

Because of the robust telecom-munications infrastructure, “I’mfully connected with my businessaround the world,” Mr. Goldstucksays. And “I really like the wholededication to wellness.”

Some late afternoons, he likesto play a round of golf with one ofhis daughters at the 18-holecourse, designed by Mr. Els, whichis now home to the Hero World

ContinuedfrompageW9 Challenge tournament hosted byMr. Woods.

Mr. Goldstuck also is helpingguide the latest creation beingbuilt at Albany: a recording studioaimed at the numerous musicianswho own properties at the resort.

Albany offers an array of resi-dences: beachfront villas, lots forcustom-built homes and condomin-iums designed by architects suchas Bjarke Ingels that surround a 71-slip megayacht marina.

One unit for sale is a six-bed-room, 7,800-square-foot condo onthe fifth floor of a building de-signed by architect Morris Adjmi.A reception room in the $24 mil-lion residence opens to a wrap-around ipe wood and stone terracethat faces the ocean.

At the Ritz-Carlton resort onGrand Cayman in the Cayman Is-lands, the largest of five new pent-house units in an existing residen-tial tower is also pitching theviews.

The three-bedroom, 8,100-square-foot space, which costs $16.1million, features floor-to-ceilingwindows that fully retract, extend-ing the living space to a wrap-around terrace.

Inside, there are two master bed-rooms with motorized draperies, amovie room with long sofas andfinishes like light sycamore wallsand marble floors.

The other four units range from2,500 square feet to 4,000 squarefeet and start at $3.9 million. Theresort features restaurants like Blueby chef Eric Ripert, a La Prairie Spaand a water park for children.

For golfers, there is a nine-holecourse designed by Mr. Normanthat overlooks a canal and a club-house with a Trackman golf simula-tor.

Michael Lagopoulos, a 59-year-old retired Toronto banker, boughta two-bedroom, 2,400-square-footunit in one of the residential towersfour years ago for about $2 million.

Mr. Lagopoulos says he immedi-ately unplugs when he arrives at theresort and sometimes plays a roundof golf with his 28-year-old son.“The loser buys lunch and beers,and that’s typically me,” he says.

SURF & TURFHOMESWITH 18 HOLES

These days, beach resortsare wooing buyers witheverything from high-endfitness centers toequestrian facilities towater parks for children.

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Madison, CT $1,350,000Custom 4 bedroom 3.5 bath homeon 2 private acres abutting conser-vation land miles of hiking trails.Spectacular forest, hillside andLong Island Sound views. Mastersuite is a spacious sanctuary witha private deck and custom bath.Arched breezway to an in-groundpool, solar panels and irrigation.River to Shore Group 860.767.5390

Truro, MA $1,295,000Simply spectacular in every way.Architect designed home nestledin a serene and private setting withlovely gardens, walkways and an in-ground pool. Nature abounds withfrequent wildlife sightings. Elegant,welcoming and comfortable with 5bedrooms, screened porch, patio,hot tub and 2 car garage.Kinlin Grover Truro 508.349.2782

Masons Island, CT $1,239,000This stately home boasts panoram-ic views, seclusion, and a completemodern renovation. Ideally situat-ed with outstanding water views.�� -met kitchen add to the home’s in-terior appeal. The fully equipped 1br guest cottage has its own kitch-en and bath. Available boat dock-age for water enthusiasts.Fran Wiehn 860.823.0707

Guilford, CT $2,295,000Beautifully renovated VineyardPoint residence. Boasts panoramicviews of both Long Island Soundand wildlife-rich marshes. Largegranite kitchen opens to a stonepatio with gunite pool and per-gola. Brazilian cherry hardwoodthroughout,master bedroom suite�� family room surrounded by glass.John Campbell 203.245.1593 x1103

West Chatham,MA $1,599,000Your beach retreat awaits. Not onebut two homes comprise this rareoffering. Main house completelyrebuilt and features 4 bedroomsuites. Large comfortable kitchen.Detached 1 bedroom cottage isreminiscent of old Cape Cod. Seton 1.12 acres and 4/10 mi to Hard-ing’s Beach. Solid rental history.Kinlin Grover Chatham 508.945.1856

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MANSION

HOUSE CALL | ALAN CUMMING

Seeds of Acting Grew in Tense Family LifeA Broadway and TV actor recalls growing up on a 14,000-acre Scottish estate and the rage of a father

Coming home from school at dusk was scary.The house where I grew up was near Car-noustie, on the northeast coast of Scotland. Itstood on a 14,000-acre estate, about a milefrom the main road. During the day, the estatewas a beautiful place for a child, but when thebus dropped me off, the forested driveway wasdark. I also had a rough time with my father.

My dad, Alex, was the estate’sforester, which meant he was incharge of growing new trees andclearing out older ones and havingthem cut up at the sawmill forlumber. The property originallyfeatured Panmure House, the mainestate building built in the late1600s. But by the time I lived therein the 1970s, all that remained wasthe chapel and the stables.

Our two-story house stood be-low the sawmill across from thetree nursery. It was a gray stoneGothic Scottish estate house pro-vided by the landowner. There wasa slate roof and windows on theground floor with mottled circlesin the glass.

I shared a bedroom with myolder brother, Tom. The room wasso drafty I could see my breath inthe winter. The room next to ourswas large—a playroom of sorts thatdoubled as a den. It had a little tur-ret window looking out to the field.That’s where I did my homework,at a large table while looking out-side. There also was a little doorthat led to a secret attic in theeaves where I went to be by myself.

I had a silent childhood, withpauses between bouts of terror in-flicted by my father. Our housewas incredibly tense as we won-dered when the next episode ofrage would be unleashed. My fa-ther’s violent spells weren’t con-stant, but there was no rhyme or

reason for the cruelty when theycame. He would work himself upinto a state and then explode. Mymother, Mary, tolerated the situa-tion as best she could.

I suppose the seeds of my act-ing studies were planted when Ihad to hide my feelings and try tounderstand my father’s. I had tosize up his level of energy—whatpart of the anger cycle he was in. Ibecame quite good at it, reading asituation before it arrived andthen making decisions based on

how I was going to behave.Carnoustie High School didn’t

have a drama department so act-ing wasn’t an outlet for me untilmy last year. My English teacherheld acting classes after schooland there was the Carnoustie The-atre Club in town.

Acting for me then was aboutbeing away from home and beingwith people I liked and who likedme. Acting was the first thing Iwas really good at, so I stuck to it.I felt like I was with a family or in

a club, and it was a relief not to bechided or derided.

In May 2010, I agreed to be onthe BBC version of “Who Do YouThink You Are?,” a TV show thatinterviews family members andlooks into your genealogy. Thenight before I started filming, mybrother came to my apartment inLondon to tell me our father toldhim that I wasn’t his biologicalson. My father claimed my motherhad been with another man.

I could barely breathe. By then,

I hadn’t spoken to him for 17years. I once confronted him aboutthe violence, and that didn’t gowell. We never stayed in touch af-ter that, and I never thought I’dhave to speak with him again.

I took a DNA test. It turned out,I was my father’s child. All thestress and emotional turmoil mybrother and I had been through—Iwanted to be free of my father,and this was one last grab.

I called my father to tell himabout the results. When I reachedhim and said the DNA proved Iwas his son, he said, “Well I’mglad to hear that.” Then the phonewent dead. I called him back. “Idon’t know if you heard me.” Hewas shocked.

That’s when I realized I wasn’tgoing to get satisfaction. My fa-ther was going to believe what hehad made up in his head long agoinstead of what I was telling him.

None of this bothers me now. Ifeel that everything that happensto you in the past is part of thereason you are where you are. I’mhappy, so I can’t regret my past. Idon’t think I’d be a better actor if Ihad a happier childhood.

Today, I live in a four-roomapartment with my husband,Grant, near Tompkins Square Parkin New York’s East Village. The liv-ing room is filled with sunlight.

I love sitting in our windowseat looking down at the park. It’sthe same peaceful feeling I had asa child, being away in the upstairsden of our home in Scotland, gaz-ing out at the green landscape.

—As told to Marc Myers

Actor Alan Cumming, 51, is awriter, producer and director. Heis author of the memoir “Not MyFather’s Son” (Dey St.) and he re-cently released the album “SingsSappy Songs: Live at the Cafe Car-lyle” (Yellow Sound).

BACKSTAGE Alan Cumming, right, atChez Josephine in Manhattan in No-vember, and, above on right, with hisbrother, Tom, in Scotland in 1968. FR

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� See more photos of notable homes at WSJ.com/Mansion.Email: [email protected]

Sales at Waiea, which has174 units, started in February of2014 and the project is nowover 90% sold, Mr. Vander-boom said. The penthousesweren’t previously marketed,and will now be going on themultiple listing service in com-ing weeks, he said. Buildingamenities include a pool withcabanas, a dog park, an indoorgolf simulator and a fitnesscenter with a yoga room. Thebuilding is slated to be com-pleted in late 2016.

have ocean, mountain and Ho-nolulu skyline views, Mr. Van-derboom said. Outside it willhave a lanai with a private infin-ity pool and a pool house con-taining a guest bedroom,kitchen, bar and living room.The unit will be fully furnished,though the furniture is an addi-tional cost, and will also comewith a private four-car garage,he said. A six-bedroom pent-house on the floor below, whichmeasures about 8,500 squarefeet, is asking $35 million.

An under-construction pent-house in Honolulu is going onthe market for $36 million,which would set a record forHawaii condos if it fetches itsasking price, according to thedevelopers.

The unit is on the 36th floorof Waiea, a condo tower beingbuilt in the 60-acre Ward Vil-lage planned community, ac-cording to Nicholas Vander-boom and Bill Pisetsky ofHoward Hughes Corp., the de-veloper. The five-bedroom unitis the highest-priced condo cur-rently on the market in the is-lands, Mr. Vanderboom said. Nocondo unit in the state has eversold for more than $20 million,he said.

Measuring about 10,100square feet, the penthouse will

Network television executiveFred Silverman is putting hislongtime Los Angeles estate onthe market for $30 million, ac-cording to listing agents Ste-phen Shapiro and Richard Ehr-lich of Westside Estate Agency.

The Brentwood property hasbeen Mr. Silverman’s home forover 20 years, Mr. Shapiro said.The 2.63-acre gated estate hasa five-bedroom main housemeasuring about 8,000 squarefeet, plus a four-bedroomguesthouse which Mr. Silver-man uses as an office, Mr. Sha-piro said. There is also a swim-ming pool, pool house and atennis court.

Mr. Silverman has been anexecutive at all three major net-

works, and was known forbringing popular shows like“Three’s Company” to televi-sion. In 1988 he purchased themain house, a ranch built in theearly 1950s, then renovated andexpanded it, Mr. Shapiro said. In1998 Mr. Silverman bought anadjacent home that became theguesthouse. The pool housedoubles as a screening room,with a drop-drown screen and aprojector. There is also a largekoi pond with over 100 fish, Mr.Shapiro said.

Mr. Silverman, 78, couldn'tbe reached for comment. Mr.Shapiro said Mr. Silverman isselling because he and his wifehave purchased a smaller homein Pacific Palisades.

PRIVATE PROPERTIES | CANDACE TAYLOR

TVExecutive Fred Silverman Lists in Los Angeles

ESTATE IN SOUTHAMPTON, N.Y., ASKS $59MILLION

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The property is owned bythe family of the late investorFrank H. Wyman, who boughtit about 35 years ago, accord-ing to his son, Fred Wyman.After acquiring the land, Mr.Wyman, an avid golfer, built thehouse and did extensive land-scaping, his son said, plantingspecialized grasses on about 6

acres so they resemble “a man-icured golf course fairway.” Healso had homes in New YorkCity, Vail, Colo., and the Baha-mas, his son said.

Mr. Wyman died in 2013 inhis 90s, and the family is sell-ing because “we didn’t feel wewould use the place,” the youn-ger Mr. Wyman said.

A Hamptons estate onroughly 15 acres is going on themarket for $59 million. Locatedin the estate section of South-ampton, N.Y., with views ofLake Agawam, the property in-cludes a house built in the1980s, according to Tim Davisof the Corcoran Group, who islisting the property with Debo-rah Srb of Sotheby’s Interna-tional Realty. The house hasseven bedrooms and measuresabout 6,500 square feet. Theproperty includes a tenniscourt, an outdoor swimmingpool and pool house.

The property consists offour building lots, so threeother houses could be built onit, Mr. Davis said. The lots arealso for sale individually: Themain house, which sits onabout 5.5 acres, is asking$19.75 million and the threeother lots are $13.95 millioneach.




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luxury homes with scenic lakes, bridges, parks and a Grande Clubhouse. Live

minutes from the Sarasota Polo Club, 5 premier golf courses, the Lakewood

Ranch Golf & Country Club, and the white sand beaches of the Gulf coast.

Choose your homesite and enjoy an extraordinary way of life.

Lots from $200K to $800K+ TheLakeClubLWR.com

LAKEWOOD RANCH, FLORIDA

MariSol Malibuphone: 310.589.8848 [email protected]

Award-winning oceanfront estate in MariSol, Malibu’s exceptionally private

80-acre, 17-home community. 7 bdr/11 bath, 13,814 sqft w/ 137’ of frontage

on Malibu’s finest surf break. Elevator accessed 2,500+ sqft master suite,

putting green, movie theater, 67’ infinity-edge pool, gym, detached studio,

aquarium, fully furnished. Nearby private airport.

$27,900,000 www.marisolmalibu.com

MARISOL, MALIBU, CALIFORNIA

Santa Ynez Valley Real Estate Companyphone: 805.688.5717 [email protected]

Spanish Colonial home on 5 acres, high quality construction. 3 bedrooms

and 6 baths, office, exercise room, tech room, outdoor loggia with BBQ &

fireplace, 2 walk in wine storage rooms, high ceilings, hand carved doors and

more Extra room with a full bath could be used as a library, music or media

room or a 4th bedroom. Room for barn, grapes, etc.

$3,395,000 http://bit.ly/1RLrqqV

SANTA YNEZ VALLEY, CALIFORNIA

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




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WHERE IN THE WORLD?

SUMMERHOMES FOR LINKS LOVERSArizona, England or Italy? Can you match these three summer homes near golf courses with their locations? Answers below.

ANSWERS: FROM LEFT, OXFORDSHIRE, ENGLAND, SCOTTSDALE, ARIZ., LAKE COMO, ITALY

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$27.3 million13 bedrooms, seven bathrooms

This expansive home features a flower room, gun room and bil-liards room. The grounds include a private nine-hole golf course, aswimming pool, three lakes, a tennis court and horse stables. Alsoset among the park land are formal gardens and a walled garden.Three species of deer can be hunted on this 257-acre property. Agame larder is included in the sale.Agent: Christie’s International Real Estate

$24.5 millionSix bedrooms, 14 bathrooms

Overlooking the sixth hole of an 18-hole golf course, this20,805-square-foot home has two elevators and five indoor andoutdoor kitchens. The property, which spans 3.92 acres, includesa virtual-reality golf simulator, a gymnasium with basketballcourt, a volleyball court, a rock-climbing wall and a fitness centerwith steam room.Agent: The Moen Group

$13.7 millionSix bedrooms, six bathrooms and guesthouse

This villa was commissioned by a British noble family and built in1910. The main house has six bedrooms and a guesthouse pro-vides two more bedrooms. The nearly 7-acre property includesman-made waterfalls, caves, ponds and an art studio. This 8,611-square-foot residence is a short walk from an 18-hole golf course.Agent: Habitat Real Estate/Savills

—Aili McConnon

FROM

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but Mallorca has the best food,pointing to Palma’s bustling mainmarket hall, Mercat de l’Olivar.

The Swarovski family’s otherisland estate is between Deià andthe sea. Some of the Mallorca’smost prestigious homes arenearby on the island’s northwest-ern edge, clinging to the sides ofthe Tramuntanas. The area,known for its cluster of quaintvillages, including Deià and Vall-demossa, offers privacy alongwith superlative views, thoughsome potential buyers balk at thenarrow, winding roads. Home-owners here include actor MichaelDouglas, whose historic estate is

now on the market, and composerAndrew Lloyd Webber.

On the island’s southwest coastare Port d’Andratx, a Monaco-likecluster of villa-covered cliffs over-looking a swank waterfront, andSon Vida, a mountainside commu-nity close to Palma, whose airportis a two-hour flight from manynorthern European cities.

Prices are rising in Palma, whereproperties in the renovated historiccenter now command well over $1million. Many of the new villas closeto Palma are contemporary, but therecent homes in Tramuntana tendto be traditional, often using localmaterials to create structures in the

“finca” style, recalling the island’scenturies-old farmhouses.

Although prices bottomed outin 2014 in the wake of Europe’swider economic crisis, Mallorcanow has one of the strongest resi-dential markets in Europe, saysMark Harvey, London-based headof Knight Frank’s Spanish andFrench networks.

The sale of high-end residentialproperties on Mallorca increasedabout 20% in 2015, he adds. Golfvillas, an emerging midrange lux-ury category, often border courses,offering homeowners the option ofkeeping a golf cart in their garageso they can ride right onto thelinks from home. One, a 1-acre golfestate with easy access to twocourses and a short drive fromPalma, is on the market for $5.52million. The main house has sixbedrooms and five bathrooms, andhas immediate access to courses atthe Golf Santa Ponsa club.

In Port d’Andratx, a new, three-quarter-acre estate with a mainvilla and a large guesthouse, has anasking price of $19.4 million. Theproperty has expansive sea views,a spa area, a home cinema and itsown Spanish-style wine cellar, suit-able for party-size tastings.

Buyers on Mallorca tend to beGerman and British, and manyreal-estate agents attribute themarket’s strength to the booming

German economy and the value ofthe pound against the euro.

High-end German buyers lookfor homes in Son Vida and An-dratx, while some British buyersmight look farther afield, like thearea around Pollensa on the farnorth of the Tramuntana range,where there are sandy beaches aswell as mountain vistas.

Mr. Garcia-Ruiz is currently de-signing a 43,000-square-foot,four-structure Son Vida com-pound, with a dozen bedroomsand more than 20 bathrooms, fora German client. “It’s like a cas-tle,” he says.

In 1998, Dutch software entre-preneur Johannes Bruggeling andhis wife, Karin Kleine, bought anestate on the mountainside aboveDeià for $2.85 million. They gavethe property and its traditionalstone villa, built by a Barcelonafamily a few years earlier, landscap-ing and infrastructure upgrades.

“We bought it because of thefantastic view,” says Mr. Brug-geling, 70 years old, who divideshis time between the island andDüsseldorf, Germany.

The couple invested about $9.1million in the sloping, 9.5-acreproperty, adding a network of ter-races, and structural improve-ments like a private generator and132,000 gallons of water storage.The asking price is $14.58 million.

MOUNTAINSIDE The living room, above, in the home of Karin Kleine and Johannes Bruggeling, below right. The estate, on the Tramuntana range, was bought in1998 for $2.85 million, with another $9.1 million invested. It is now listed for $14.58 million. Below left, a terrace and the dining room.

THE GOLF HOMES ISSUE

JAMES

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opened in 2003 by Hans-PeterPorsche, a member of the Austro-German family of car makers.

Mallorca’s emergence as a ma-jor Mediterranean golf destinationand its growing inventory of eight-figure luxury villas have helpedchange the profile of the largest ofthe Balearic Island chain over thepast decade.

“I play everywhere,” says Anto-nio Garcia-Ruiz, a Palma architectwho specializes in designing lux-ury villas. Like many golfers onthe island, he plays close to home,but once or twice a year he makesthe pilgrimage to top courses suchas Son Gual and Alcanada.

For his own home, the 39-year-old Mallorca native has chosen avalley setting between Palma andthe Serra de Tramuntana, themountain range running along theisland’s northwestern edge. Thevilla, built piecemeal over the pastdecade on a 5-acre lot, started outas a tiny house that once gaveshelter to a local priest.

The house “changes every year,”says Mr. Garcia-Ruiz, who concealsthe structure’s warren of interlock-ing glass pavilions with fruit and

olive trees. He says he has spentabout $740,000 on the project sofar, with one major expense beinga 42-foot-long infinity pool andadjoining bar area. The 7,500-square-foot home currently has sixbedrooms and six bathrooms.

This year’s addition is a chil-dren’s playroom, being fashionedout of a 1,500-square-foot annex.In the future, he hopes to outfithis home cinema with a golf simu-lator. In the mean time, he says,he is making do with a puttingcup.

Danna Swarovski says her hus-band enjoys Mallorca for the con-venience of its many golf courses.She likes the beauty of the islandand the sea. And they both enjoyits homegrown cuisine.

Ms. Swarovski is the American-born wife of Helmut Swarovski,former chairman of the SwarovskiGroup, the family-owned Austriancrystal and luxury-goods conglom-erate. She praises the island’s gen-trifying metropolis, Palma de Ma-llorca, and the seclusion of whatshe calls “our little valley,” thefamily’s 350-acre estate near Pol-lensa on the island’s northern tip.The property and its renovated17th-century farmhouse are on themarket for $6.3 million.

The Swarovskis also own a sec-ond Mallorca estate, and theyhave decided they don’t needboth, she says. Ms. Swarovskisays the family also has homes inAustria, Florida, and Barbados,

ContinuedfrompageW9

SETTING AMEDITERRANEAN COURSE

Buyers on Mallorca tend tobe German and British, andmany agents attribute themarket’s strength to thestrong German economy.




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