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OLD TENSIONS
SELF-DRIVING RESURFACE
JASPER JUINEN/BLOOMBERG NEWS

SKEPTICISM IN THE EU
KEYWORDS | B1 SIMON NIXON
EUROPE FILE | A2

MONDAY, SEPTEMBER 26, 2016 ~ VOL. XLI NO. 18 WSJ.com ASIA EDITION
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S&P 500
Whats Earnings
News Slump Set
Business & Finance
To Go On
.S. companies are ex-
U pected to report lower
third-quarter earnings,
BY CORRIE DRIEBUSCH

raising questions about The third quarter was sup-

how far stocks can rise. A1 posed to be when earnings
growth returned to U.S. com-
 Beijing approved the
panies. Not anymore.
use of credit default
Companies in the S&P 500
swaps, which pay out if
are now expected to report
the issuer of a bond or a
negative earnings growth for
loan defaults. B1
the sixth consecutive quarter
 India is being offered blue- in the coming weeks, accord-
prints to advanced combat ing to analysts polled by Fact-
aircraft by aerospace firms as Set. That slump would be the
the country prepares to up- longest since FactSet began
grade its military jet fleet. B1 tracking the data in 2008.
The prolonged contraction
JULIO CORTEZ/ASSOCIATED PRESS

 The Fed proposed new

has raised questions about
restrictions on banks ac-
how far stocks can rise with-
tivities in physical-com-
out corresponding strength in
modity markets. B5
corporate earnings.
 Goldman plans to lay As recently as three months
off over one-quarter of its ago, analysts estimated U.S.
investment bankers in Asia corporate earnings growth
amid a slowdown in deal would return to positive terri-
activity in the region. B5 Workers prepare for Mondays debate, the first between Hillary Clinton and Donald Trump, at Hofstra University in Hempstead, N.Y. tory by the third quarter. As of
Friday, they were predicting a
 Demand from Chinas

Budget Vise Looms in U.S.

2.3% contraction from the
small oil refineries, known
year-earlier period.
as teapots, is helping to
Many of the factors pres-
reshape global markets. B5
suring U.S. corporate earnings
 Hanjin Shipping will in recent quartersincluding a
likely sell some of its most New presidents money or cut taxes than any room to respond if interest stronger dollar and falling oil
valuable ships as it heads president since World War II. rates remain near todays ul- priceshave abated in 2016.
toward liquidation. B1 spending plans will be Not since Harry Truman tralow levels. The WSJ Dollar Index, which
 Sony Pictures is teaming challenged by likely will a new leader enter office  Review: The state of Due to this erosion in the measures the U.S. dollar
with a higher debt-to-GDP ra- American debate............... A8 policy arsenal available to mon- against a basket of 16 curren-
up with Wanda to help mar- widening of deficits tio. And for the first time in  Opinion: Trump debate dos etary policy makers, the burden cies, is down 4% this year, ver-
ket its films in China. B2, B8
decades, the new president and donts............................ A12 for any classic Keynesian re- sus up 8.6% for all of last year,
BY NICK TIMIRAOS will face the specter of widen- sponse would have to fall more and the price of U.S.-traded
World-Wide ing deficits despite a growing on the fiscal side, which crude oil has risen 20% in
Donald Trump and Hillary economy. doesnt take into account what is why the political constraints on 2016, rebounding from its ex-
Clinton are likely to recite their A President Trump or Clin- would happen if the U.S. en- action are more scary, said Tim- treme lows.
 Russia and China are varied promises for fresh gov- ton could try to barrel ahead ters another recession, when othy Geithner, President Barack Still, those moves havent
spending lavishly on new ernment spending at Mondays anyway, of course. But Mrs. falling revenue would send Obamas first Treasury secretary. been enough to project an end
combat aircraft that could presidential debate. One reality Clinton, in particular, is likely deficits even higher. Those fiscal constraints, Please see PROFIT page A2
challenge the Wests supe- theyre unlikely to note: Who- to be checked by the opposing In that scenario, the Fed- though, are increasingly palpa-
riority in the skies. A1 ever wins in November will en- partys control of at least one eral Reserve and other cen- ble. Spending on discretionary  The Outlook: U.S. labor gains
joy far less latitude to spend chamber of Congress. And that tral banks would have less Please see RACE page A7 reach a plateau......................... A7
 Hundreds of civilians
have been killed in heavy
bombing in the Syrian city
of Aleppo since a cease-fire
broke down last week. A3
 A Chinese woman un-
Territorial Output
Hong Kongs GDP relative to
Chinas
HONG KONG GETS CHINA REMAKE
der U.S. scrutiny for her al-
leged role in aiding North 30%
Korea is also a suspect in a Beijing is pressing the territory to mold itself in the mainlands image; the demise of autonomy
Chinese criminal probe. A5 25
BY NED LEVIN AND CHESTER YUNG omous for half a century after the enterprises are snapping up Hong Kong
 The next U.S. president
20 handover in 1997. assets, including its leading English-lan-
will face the specter of
HONG KONGThe integration of Legislators, publishers and journalists guage newspaper and choice real estate.
widening deficits despite
Hong Kong with mainland China was say freedom of expression is being re- New public-infrastructure projects,
a growing economy. A1 15
preordained in handover talks the U.K. stricted. Several candidates for Hong including a multibillion-dollar bridge
 U.S. authorities ar- held with Beijing in the 1980s. The year Kongs legislative elections recently spanning the Pearl River Delta and a
rested a Turkish immi- 10 2047 was the due date. were disqualified from running because high-speed rail link to the mainland,
grant in the shooting It is coming ahead of schedule. they advocated independence from promise to physically tie the city to
deaths of five people at a 5 Hong Kong, long an outpost of free China. Hong Kong authorities have is- southern China as never before.
mall north of Seattle. A7 trade and reliable courts beside Com- sued warnings to educators to rein in Many Hong Kong people used to feel
munist China, is coming under increas- young peoples interest in independence. more superior than mainlanders be-
 India said it will ratify 0
ing pressure from Beijing and local The tidal pull of Chinas giant econ- cause of the rule of law and freedom of
the 2015 global climate 1985 90 00 10 leaders to mold itself in the mainlands omy is making Hong Kong more depen- speech that characterized the city, said
agreement next month,
Source: World Bank image. That is despite Beijings dent on the mainland than ever. Main- Yeung Ke-cheong, 35 years old, a candi-
bringing the deal closer to
THE WALL STREET JOURNAL. pledges to keep the city largely auton- land tycoons and state-owned Please see CHINA page A6
taking effect this year. A5
 Corbyn called for the
U.K. Labour Partys parlia-
mentarians to rally behind
At 13 Pounds, This Novel Just
him after his re-election as
opposition party leader. A4
Lands With a Thud Seconds
i i i Shy of
Bottoms Dream is 1,496 pages History
Inside of linguistic cartwheels; no e-readers CLOSE CALL:
JOURNAL Kenenisa Bekele of
Ethiopia, left, won
REPORT B4 BY STEVEN NORTON the novel tells the story of two the Berlin Marathon
translators and their teenage on Sunday, finishing
Innovations An experimental German daughter who visit a scholar as six seconds behind
novel first published in 1970 is they try to interpret the writ- Dennis Kimettos
In Health Care
FABRIZIO BENSCH/REUTERS

set to be one of the biggest ings of Edgar Allan Poe. In- world record set in
books of the season. The pub- spired by James Joyces 2014 in Berlin.
lisher hopes you cant put it Finnegans Wake, it chronicles Bekeles time of two
CONTENTS Markets Digest..... B6 down. events of a single hours, 3 minutes
Business & Fin.. B1-3 Opinion.............. A12-13
Crossword............... A11 Review................. A8-10
At more than 13 day with lewd jokes and 3 seconds is
Europe File............... A2 Sports........................ A11 pounds, it is not easy and linguistic cart- the second-best
Finance & Mkts B5-8 U.S. News.................. A7 to pick up. wheels. mark ever. A11
Heard on Street.... B8 Weather................... A11 The first English- Tony Messenger, a
Journal Report...... B4 World News........ A2-5
language release of 53-year-old book
China: RMB28.00; Hong Kong: HK$23.00;
Indonesia: Rp25,000 (incl PPN);
Bottoms Dream, blogger in Australia,
all 1,496 pages, received Bottoms
Japan: Yen620 (incl JCT); Korea: Won4,000;
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 106/10/2015; SK. MENPEN R.I. NO: 01/
weighs as much as a
bowling ball. With a
Dream earlier this
month. He planned
Spending on Warplanes Spurs Arms Race
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
14-inch spine, the to read five pages a BY ROBERT WALL ity, spurring a new arms race. heightening urgency among
weighty hardcover day, which would Some of the hardware, both Western military brass to push
tome could topple a Bottoms Dream take him about a For more than two de- planes and antiaircraft capa- for their own, next-generation
flimsy nightstand. year to finish. Then cades, combat aircraft flown bilities, is expected to roll out combat planes.
Its a monster in all ways, he opened it. I now realize that by the U.S. and its European in the next few years. The up- The most pressing chal-
said Stephen Sparks, a book was overly ambitious, he said, allies have pretty much grades come as Moscow flexes lenge for the United States Air
buyer and seller at Green Apple and decided on two years. owned the sky. Now, Russia its muscles in hot spots such Please see COMBAT page A2
s Copyright 2016 Dow Jones & Books in San Francisco. The book contains layers of and China are spending lav- as Eastern Europe and the
Company. All Rights Reserved
Written by German author complex language and a multi- ishly on new weapons that Middle East and Beijing does  Foreign jet-fighter companies
Arno Schmidt, who died in 1979, Please see BOOK page A6 could challenge that superior- so in the South China Sea rush to woo India.................... B1
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Monday, September 26, 2016
EU Pushes Back Against Protectionist Forces
EUROPE FILE
SIMON NIXON
The European Union has
always had an ambivalent at-
titude toward free trade. The
early days of the European
project were characterized
by tensions between the
countries that believed a
continent with few natural
resources
had no
choice but to
be open to
the world
and those
that believed
in a fortress Europe pro-
tected by high tariff walls.
That battle looked to have
been decisively won by the
free traders in the early
1990s, when the EU simulta-
neously signed on to the
Uruguay Round of the Gen-
eral Agreement on Tariffs
and Trade, which opened up
vast swaths of European in-
dustry to global competition,
and embraced radical inter-
nal free trade with its single-
market project.
Yet now the old tensions
are resurfacing. The EU to-
day may be deeply inte-
grated into the world econ-
omy, with one in every seven
PROFIT
Continued from Page One
to the earnings recession.
After the battered energy
sector, the newly carved-out
real-estate sector of the S&P
500 has had the second-steep-
est earnings revision for the
third quarter. One of the big-
gest drops was from real-es-
tate investment trust SL Green
Realty Corp., which analysts
now expect to report a $2.51-
a-share loss in the third quar-
ter, down from a 15-cent loss
projected for the quarter as of
June 30, according to FactSet.
Overall, the real-estate sector
is now expected to report a
6.4% fall in earnings for the
quarter.
DuPont Co. was a drag on
the projected earnings-
growth rate for materials
companies, while Ford Motor
Co. has contributed to a de-
crease in earnings expecta-
tions for consumer-discre-
tionary companies, according
to FactSet.
For the third quarter, the
energy sector is projected to
COMBAT
Continued from Page One
Force is the rise of peer com-
petitors with advanced mili-
tary capabilities rivaling our
own, Air Force Chief of Staff
Gen. David Goldfein told law-
makers in June, days before
being confirmed in the job.
Two months later, the U.S.
Air Force certified its new F-35
Joint Strike Fighter. Designed
to be hard to detect, the plane
is specially built for the sort of
limited, precision strikes that
have become a hallmark of
Western military action since
NATOs bombing campaign in
Bosnia in the 1990s.
What is considered the Fer-
rari of combat jets, the F-22, is
still relatively new, first fielded
in 2005. Designed to shoot
down enemy aircraft while fly-
ing as fast as twice the speed
of sound, it has more recently
evolved into a bomber, too, and
can soak up intelligence over
enemy territory.
More than three-fourths of
the U.S. fleet of jet fighters,
Dogght
The world's major powers are developing more advanced combat jets
as they seek to keep or gain an edge in the skies over potential adversaries.
Aircraft Origin Range, in miles
F-22 U.S.
F-35 U.S.
Rafale France
Euroghter Europe*
T-50 Russia
0 500
*Includes U.K., Germany, Italy and Spain
jobs dependent on exports.
But public opinion is increas-
ingly wary of globalization.
Both Brexit and the rise of
antiestablishment insurgent
parties has been widely per-
ceived as a howl of rage by
left-behind voters, who
blame globalization for ris-
ing inequality, growing job
insecurity, stagnant wages
and the erosion of demo-
cratic controls.
E
ven so, Europes free
traders arent giving
in without a fight. At
an informal meeting last
week, EU trade ministers
took three important steps
to try to signal their contin-
ued commitment to open
markets.
The first was to signal
their strong backing for the
Canada-EU Comprehensive
Economic and Trade Agree-
ment, or CETA. This has be-
come a totemic test of the
EUs commitment to free
trade and whether it can
continue to be taken seri-
ously as a partner. After all,
this deal has been hailed on
both sides as a new kind of
trade agreement, packed
with safeguards for workers
rights and the environment
and respect for national
sovereignty.
Yet the deal still ran into
opposition from some mem-
ber states, amid concerns
that the proposed investor
protections and dispute-res-
yet again report the largest
year-on-year earnings de-
cline of all sectors in the S&P
500, with a drop of 66% ex-
pected. It would mark the
eighth consecutive quarter
that energy companies in the
index have reported a year-
on-year fall in earnings, Fact-
Set data show.
Oil giant Exxon Mobil Corp.
was expected to report 80
cents a share of earnings for
the third quarter as of the end
of June, but as of Friday that
expectation had worsened to
66 cents a share.
Even as U.S. oil prices have
stabilized, they still remain far
below their 2014 highs and
marginally below where they
were this time last year. In the
third quarter of 2015, the av-
erage price of U.S.-traded oil
was $46.50 a barrel. In the
third quarter of 2016 through
Friday, the price of U.S. oil av-
eraged $44.79 a barrel.
In four of the past five
quarters, S&P 500 earnings
would have been positive if
the energy sector was stripped
out, according to FactSet.
Declining earnings fore-
casts dont necessarily mean
however, can be traced back to
the 1970s. The Air Force has
flown its F-15 since 1975. The
widely used F-16 has been oper-
ational since 1979, and the U.S.
Navys F/A-18 was first de-
ployed in 1978.
Those older planes are also
the backbone of the air forces
of many Asian and European
allies, along with newer jets
like Frances Rafale and the
Eurofighter.
Russia plans to start fielding
its first stealth fighter, the
T-50, in 2018. The twin-engine
plane is designed to be highly
maneuverable and equipped
with sophisticated electronics
to spot enemy aircraft from
miles away.
Meanwhile, it has deployed
some of its latest combat
planes, such as the Su-34
bomber and Su-35 fighter, to
Syria. Russias Defense Minis-
try couldnt be reached for
comment.
China has historically relied
on Russian designs, many older
and some built domestically
under license. That is starting
to change with the new proj-
ects. The countrys air force is
1,000 1,500
Source: IHS Markit Janes
WORLD NEWS
Protesters in Bratislava, Slovakia, enlisted a Trojan horse as a symbol for EU trade deals last week.
olution mechanism would
hand too much power to cor-
porate interests. Trade min-
isters decided against re-
opening the talks, hoping
instead to assuage those
concerns via a legally bind-
ing joint declaration and by
carving out the most conten-
tious issues for separate rat-
ification by national parlia-
ments. This should allow EU
leaders to ratify the bulk of
CETA at an Oct. 27 summit,
paving the way for its provi-
sional application in 2017.
The second step was to
refuse to pull the plug on the
Trans-Atlantic Trade and In-
Low Expectations
Analysts have cut their forecasts for U.S. corporate-earnings
growth and expect the slump to continue.
Analysts forecasts,
S&P 500 earnings,
change from a year earlier
6%
Full-year 2016
4 Third quarter
2 3
0.3%*
0 0
2 3
4 2.3%* 6
2016
*Estimate as of Sept. 23 Source: FactSet
falling stock prices. On aver-
age, earnings estimates are
revised lower during the
three months ahead of the
quarterly reporting season,
according to FactSet.
Those revisions make the
forecasts easier to beat, and
actual earnings tend to be bet-
rapidly closing the gap with
Western air forces across a
broad spectrum of capabilities,
the Pentagon said this year in
its annual assessment of the
Chinese military.
Chinas J-20, which resem-
bles the U.S. F-22, started fly-
ing in 2011, though it hasnt yet
entered military service. A year
later, Beijing began flight trials
of the FC-31, a look-alike of the
U.S. F-35.
Chinas Defense Ministry
referred to its response in
May to the Pentagons report
when it expressed strong dis-
satisfaction and resolute op-
position and accused the U.S.
of improper comment on is-
sues including Chinas weap-
ons development.
The U.S. still maintains an
edgeits radar-evading planes
are operational, while Russia
and China are still developing
theirs. But it isnt just new air-
craft raising concerns.
Both China and Russia are
also fielding more sophisti-
cated antiaircraft systems.
Moscow says its new S-400 can
shoot down planes at a range
of up to 236 miles, or roughly
Max speed
Mach 1.7
Mach 1.6
Mach 1.8
Mach 2.0
Mach 2.0
2,000 2,500
THE WALL STREET JOURNAL.
vestment Partnership with
the U.S. This move was
largely symbolic since every-
one accepts that there is no
chance of a deal before the
U.S. presidential election.
S
everal EU member
states would have liked
to take this opportu-
nity to kill TTIP for good, or
at least rip up the European
Commissions mandate. But
by agreeing to stick with the
current mandate, trade min-
isters have backed the com-
mission, which was eager to
preserve what has already
been achieved in the talks
S&P 500 earnings,
change from a year earlier
9%
6 this period of earnings con-
ernment-bond yields as justifi-
2014 15 16
THE WALL STREET JOURNAL.
ter than the forecasts. Earn-
ings growth for the S&P 500
comes in on average 2.8 per-
centage points ahead of esti-
mates, FactSet data show.
Revenue growth, mean-
while, is set to return to com-
panies in the S&P 500 for the
first time since the end of
twice the previous range.
That enormously compli-
cates the challenge of conduct-
ing any type of military opera-
tion, said David Deptula, a
retired U.S. Air Force lieuten-
ant general.
China this year deployed its
HQ-9 surface-to-air missile
system to the Paracel Islands
in the South China Sea, a
chain that is also claimed by
Vietnam.
To counter those new
threats, the U.S. Air Force, in a
recent assessment of combat
needs, recommended introduc-
ing long-range missiles or
other weapons that would al-
low current planes to strike
targets while remaining out-
side the range of an adver-
sarys defenses.
It is also already pushing
new planes, targeting 2030 for
an upgraded model, U.S. Air
Force Gen. Herbert J. Carlisle,
CORRECTIONS 
AMPLIFICATIONS
The last name of Brian
Killgore, spokesman for the
Fremont Unified School Dis-
trict in California, was mis-
spelled as Kilgore in a Page
One article in the Friday-Sun-
day edition about U.S. charter
schools becoming embroiled in
a proxy fight between Turkeys
president and Muslim cleric
Fethullah Gulen.
Elizabeth Musmanno is
president of the Fragrance
Foundation, a perfume indus-
try trade group. Ms. Mus-
manno performs the day-to-
Readers can alert The Wall Street Journal to any errors in news articles by
emailing wsjcontact@wsj.com.
THE WALL STREET JOURNAL.
Trade Organization, China is
currently treated as a non-
market economy, allowing
WTO members to apply dis-
criminatory trade defenses.
But this deal expires in De-
cember. Some EU member
states had argued that since
China still clearly isnt a
market economy, the EU
should refuse to change its
policies rather than expose
sensitive industrial sectors
to highly subsidized compe-
tition. The commission plan,
instead, would see the EU re-
CHRISTOPH THANEI/ZUMA PRESS
vamp its trade defenses in a
way that maintains current
levels of protection without
discriminating against China.
C
an the EU hold the line
against rising protec-
tionism? EU leaders
could still derail CETA or
pull the plug on TTIP in Oc-
and keep alive the possibility tober. And the China com-
that TTIP might be revived. promise may yet fall apart.
The third step was poten- On the other hand, EU
tially the most politically trade officials insist that
sensitive. Trade ministers there is no prospect of turn-
agreed to back a commission ing back the clock on free
proposal to overhaul the trade, since this is virtually
EUs anti-dumping policies in impossible under the EU sys-
a way that would allow the tem, in which trade policy is
EU to recognize China as a an exclusive EU responsibil-
market economy and thereby itya deliberate decision to
avoid a trade war. put the bloc beyond the
This issue had threatened reach of domestic political
to become a major test of pressures. The real danger
the EUs commitment to the for the EU is that as trade
rules-based multilateral trad- moves to center stage, those
ing system. Under the terms domestic political pressures
of a deal struck in 2001 risk undermining the legiti-
when it joined the World macy of the EU itself.
2014, according to analysts
polled by FactSet. Nine of the
eleven sectors are predicted to
report year-over-year sales
arent concerned with the
stock markets gains in the
face of earnings contraction
a dynamic that stretches valu-
growth during the third quar- ations, a metric investors use
ter. Consumer-discretionary to evaluate whether stocks are
companies lead with a pro- overpricedbecause the gains
jected rise of 8.7%. have been relatively slow and
Grim corporate results ha- steady.
vent kept stocks from reach- The S&P 500 is trading at
ing highs. Since the start of 19.7 times its past 12 months
of earnings, above its average
traction, the end of March of 16 times earnings over the
2015, the S&P 500 has risen past decade, according to
about 4.7% and hit 15 fresh FactSet.
records. However, stock prices are
One reason for stocks meant to be forward looking,
climb even as earnings shrink some say. And indeed, analysts
is easy-money central-bank now expect earnings growth to
policies. Some investors are resume in the fourth quarter.
using the resulting low gov- The market is anticipating
were going to see a resump-
cation to buy more stocks in a tion of earnings growth, and I
search for yield, pushing up think thats the right perspec-
major indexes. tive, said David Lefkowitz, se-
Investors dont care about nior equity strategist at UBS
fundamentals as long as cen- Wealth Management Americas.
tral banks have their back, If we were talking about an
said Jack Ablin, chief invest- earnings outlook where earn-
ment officer at BMO Private ings were going to be con-
Bank, though he added that he tracting for as far as the eye
finds the lack of earnings can see, Im fairly confident
growth for such a long period that the market wouldnt be
is certainly problematic. within a hairs breadth of an
Some analysts say they all-time high.
head of the services Air Com-
bat Command, said at an air
show in England in July.
The U.S. Navy in May kicked
Tornados, developed with Italy
and the U.K., which entered
Luftwaffe service 37 years ago.
Paris, in addition to working
off an 18-month assessment of with the U.K. on new concepts,
how to replace its F/A-18E/F plans to upgrade the Rafale
Super Hornet multi-role com- combat plane to keep it effec-
bat jet, with a target date tive against evolving threats, a
around 2035. French Defense Ministry
The Pentagon is still defin- spokesman said.
ing exactly what it wants in a
new plane, but such plane THE WALL STREET JOURNAL.
makers as Boeing Co., Lock- Dow Jones Publishing Company (Asia)
heed Martin Corp. and Nor- 25/F, Central Plaza, 18 Harbour Road,
Hong Kong
throp Grumman Corp. have all Tel: 852 2573 7121 Fax 852 2834 5291
started circulating futuristic
Paul Beckett, Asia Editor
drawings of what such a plane Troy McCullough, Senior News Editor, Asia
might look like. David Holland, News Editor, Asia
Margaret de Streel, International Editions Editor
The U.K. Defense Ministry Darren Everson, Deputy International Editor
said it plans a number of tech-
Hugo Restall, Editorial Page Editor
nology maturation efforts in
conjunction with the U.S. and Mark Rogers, Advertising Sales
Jacky Lo, Circulation Sales
France. It is buying the F-35, Jacquelyn Drozdoff, Communications
but is also pursuing its own ef- Simon Wan, Technology
forts, the ministry said. Jonathan Wright,
Managing Director Asia & Publisher
Germany, too, wants a com-
bat aircraft to replace its aging Advertising through Dow Jones Advertising
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40200 Shah Alam, Selangor. (ROC No: 048885)6;
a Page One article Thursday Singapore: Singapore Press Holdings Limited, 82
about former U.S. President Bill Genting Lane Media Centre Singapore 349567
Clintons speaking fees. Trademarks appearing herein are used under
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Paris is one of the coun- USPS 337-350; ISSN 0377-9920
tries in the running to host
the 2024 Olympics. A Page NEED ASSISTANCE WITH
One article in some editions YOUR SUBSCRIPTION?
Thursday about Romes mayor By web: http://wsj-asia.com
saying she wont support her By email: service@wsj-asia.com
citys bid to host the Games By phone: Hong Kong: 800 901 216; Australia:
0011 8000 322 8482; China: 400 991 1174;
incorrectly said Paris had India: 000 800 440 1938; Indonesia: +62 21
pulled out of the running. 2970 2702; Japan: 0120 779 868; Korea: 0030
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THE WALL STREET JOURNAL. Monday, September 26, 2016 | A3

WORLD NEWS
New Fighting in Aleppo Kills Hundreds
Powerful bombs have
shaken the Syrian city
since a cease-fire
collapsed last week
BY RAJA ABDULRAHIM

Hundreds of civilians have

been killed in the Syrian city
of Aleppo since a cease-fire
broke down last week, accord-
ing to rescuers, medical work-
ers and rebels who said on
Sunday the toll is due in part
to powerful bombs being
dropped on the city.
Rebels and opposition lead-
ers blamed Russia, Syrias key
ally, for the bombs, which resi-
dents said left craters much
larger than those seen in past
airstrikes and caused shock
waves that destroyed build-
ings streets away from the
point of impact.
The Russian Defense Minis-
try didn't immediately re-

spond to a request for com-
ment on allegations that the
weapons had been dropped on
rebel-held Aleppo.
The first time one struck
everyone thought there was an
earthquake, said Muhammad
al-Zein, who helps oversee
hospitals in the rebel-held part
of Aleppo. But the next day
another one hit and we real-
ized it was not an earth-
quake.
Much of the death toll came
in the four days since the Syr-
ian regime announced on
Thursday the start of a new
offensive against Aleppos be-
sieged rebel-controlled neigh-
borhoods.
President Bashar al-Assad
has vowed to retake all of
Aleppo and the offensive was
the latest indication that he
aims to win the war militarily
despite repeated failed efforts
by the U.S. and Russia to reach
a lasting cease-fire and a dip-
lomatic solution.
Syrian state media reported
that the army on Saturday
seized control of an area north
of Aleppo city called Handarat
Men walking through rubble inspect damage on Sunday in a rebel-held neighborhood of Aleppo, a Syrian city that is a major battleground in the conflict.
Camp. Within hours, rebels
said they had retaken the ter-
ritory.
State media has been
mostly quiet about the Aleppo
offensive. But on Saturday,
state news agency SANA
tweeted a video from inside a
nightclub with a DJ and pyro-
technics with the caption:
#Aleppo, now dubbed as the
Worlds Most Dangerous City,
still boasts a thriving night-
life. The tweet was widely
mocked on social media.
United Nations Secretary-
General Ban Ki-moon said on
Saturday that Aleppo was fac-
ing the most sustained and in-
tense bombardment since the
beginning of the Syrian con-
flict in 2011. He reported the
use of both incendiary weap-
ons and bunker buster
bombs and said the system-
atic use of these types of in-
discriminate weapons in
Aleppos densely populated
neighborhoods could amount
to war crimes.
The U.N. called an emer-
gency meeting on Sunday over
the bombardment of Aleppo.
The Russian military has
acknowledged the use of mu-
nitions in Syria that are de-
signed to penetrate concrete
structures, which Russian me-
dia has called bunker busters.
Last November, a Russian
military spokesman said war-
planes had struck Islamic
State targets with two 1,100-
lb. concrete-penetrating
bombs, the news agency Inter-
fax reported. The spokesman
added that the weapons
weren't dropped on populated
areas, Interfax added.
Local activists and medical
officials in Aleppo said Sunday
that in addition to the power-
ful bombs being referred to as
bunker busters, they were be-
ing hit by phosphorus, cluster
and barrel bombs in opposi-
tion-held neighborhoods
where some 300,000 people were being felt for about 10
live under siege by the regime.
The Syrian military and
Russia kept up the bombard-
ment of rebel-held eastern
Aleppo on Sunday, killing at
least 50 people, Mr. al-Zein
said. More than 320 civilians
have been killed since the
cease-fire collapsed a week
ago, said Ammar Ahmad
Alselmo, director of the Syrian
civil defense group known as
the White Helmets.
The U.S. and Russia haven't
ruled out trying to revive the
truce.
Yasser Ibrahim al-Youssef, a
political representative for the
rebel group Nour al-Dine al-
Zinki, said the attacks created
craters 7 meters deep and 20
meters wide. The shock waves
are working as if in a daze,
seconds and destroying build-
ings up to 75 meters away, he
said.
On Saturday, rescuers were
pulling survivors and bodies
out of a building in the Bustan
al-Qasir neighborhood when
they suddenly heard a building
on another street collapse,
trapping seven people under
the rubble, said Mr. Alselmo.
ABDALRHMAN ISMAIL/REUTERS
The attacks have reduced
multistory buildings to a fine
rubble within seconds, leaving
rescuers combing through the
rubble with their hands as if
excavating artifacts from sand,
according to rescuers and vid-
eos posted online.
Those rescued have been
taken to overwhelmed hospi-
tals where doctors and nurses
said Mr. al-Zein.
People are dying under our
hands because we are unable
to cope, Mr. al-Zein said.
When you have 50 injured
you have to treat the most in-
jured and someone else might
not get treated, they might
bleed out as they are waiting.
Nathan Hodge contributed
to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Monday, September 26, 2016
FortuneTurns for Uzbekistan Ruling Family
New leadership
consolidates power
after death of Karimov,
displacing relatives
BY THOMAS GROVE
MOSCOWWhen Uzbeki-
stans longtime president, Islam
Karimov, died this month, one
person was conspicuously ab-
sent at his funeral: His daugh-
ter Gulnara Karimova, a former
pop star and businesswoman.
Ms. Karimova was once de-
scribed in leaked U.S. diplo-
matic cables as a possible suc-
cessor to her father. But her
absence from the state funeral
opened a window into the for-
tunes of the Karimov family
and the countrys new direc-
tion since his death.
Observers say the countrys
elite will likely maintain the
status quo to retain control
over their patches of the iso-
lated economy. Parliament ap-
pointed Prime Minister Shavkat
Mirziyoev acting president,
paving the way for him to con-
solidate power ahead of elec-
tions planned for December.
But the Karimov family
whose members, by the ac-
counts of diplomats and ob-
servers, enriched themselves
during the patriarchs 25-year
authoritarian reignwill now
be vulnerable to asset seizures,
analysts said.
What Karimovs family has
gained so far could easily be
subject to confiscation by the
new leadership, because the re-
Bank of England SleuthsTake Brexits Measure Prospects
BY JASON DOUGLAS
LONDONSeeking clues to
the U.K. economys health af-
ter voters chose to leave the
European Union, Bank of Eng-
land officials are turning to
their envoys scattered across
the country.
With hard data on the econ-
omy only slowly trickling out,
the hope is the network of re-
gional agents will uncover
scraps of information that give
officials in London an edge
as they have in the past.
The BOE has 12 outposts
across the U.K., staffed by 29
agents and their deputies. In
part a legacy of the days when
the BOE was a private bank
with branches in British towns
and cities, they keep in close
touch with the businesses on
their patch to gather intelli-
gence on the economy. The
agents compile a monthly re-
port for the central banks in-
terest-rate setting panel led by
Gov. Mark Carney.
Juliette Healey, the BOEs
agent for Yorkshire and the
Humber in Englands northeast,
said she reached out to dozens
of business leaders in the days
after the June 23 vote.
Some of them were very
shocked and worried, said
Ms. Healey, who has also
worked at the U.K. Treasury
and the International Mone-
tary Fund. But what these
people are very good at doing
Re-elected Corbyn Faces a Divided Labour Party
BY NICHOLAS WINNING
LONDONVeteran leftist
Jeremy Corbyn called for the
U.K. Labour Partys disaffected
parliamentarians to rally be-
hind him after he was re-
elected leader of the opposi-
tion party by a solid margin.
Mr. Corbyn won almost 62%
of the votes cast on Saturday
despite deep divisions in the
party over his policies and
leadership style, beating chal-
lenger Owen Smith, Labour
announced at its annual fall
conference in Liverpool. Mr.
Corbyn was widely expected to
win; attention has already
shifted to whether he can
bring together the partys
warring factions and lift La-
bours poll ratings.
In a victory speech, Mr.
Corbyn said it was his respon-
sibility to unite the party but
also the responsibility of La-
bour members of parliament
to respect the result of the
leadership vote and focus their
energy on defeating the gov-
erning Conservative Party of
Prime Minister Theresa May.
Elections are passionate
and often partisan affairs and
things are sometimes said in
the heat of the debate on all
Gulnara Karimova, the late presidents daughter, has been under house arrest since 2014. Her sister and mother, center, met with Russias Vladimir Putin on Sept. 6.
sources at the moment are very
scarce, said Alisher Ilkhamov,
an Uzbekistan analyst for the
Open Society Foundations.
Ms. Karimova was a highfly-
ing member of the Karimov fam-
ily. The Harvard-educated busi-
nesswoman served as
ambassador to Spain and aspired
to pop stardom, filming a music
video that featured a cameo from
French actor Grard Depardieu.
She has also held sway over
some areas of the economy
and was described as some-
thing of a robber baron in a
leaked U.S. diplomatic cable.
Swiss prosecutors have
named her as a suspect in a
criminal corruption probe
launched in 2012. They seized
Support Network
Post-Brexit reports from the Bank of England's regional agents
suggest companies are cautious on investment; index based on
planned investment compared with previous three months.
Agent scores for investment intentions
2.5
Services
2.0
1.5
1.0
0.5
0
2013 14
Note: A score of -5 indicates a steep decline; zero is unchanged
Source: Bank of England
is distinguishing between their
emotional reaction and what
the business is going to do.
In their most recent report,
published Wednesday, the
agents said the worlds fifth-
largest economy appears to
have slowed since the referen-
dum but is still growing, as
healthy consumer spending
offsets more cautious behavior
from companies.
In the wake of the referen-
dum, BOE officials asked the
agents to dig deeper than
usual. The agents first postre-
ferendum findings, published
late July, were mixed. Few
firms said they planned to im-
sides which we sometimes
later come to regret, but al-
ways remember in our party,
we have much more in com-
mon than that which divides
us, he said. As far as Im
concerned lets wipe that slate
clean from today and get on
with the work we have got to
do as a party together.
Mr. Smith was one of sev-
eral members of Mr. Corbyns
top team who resigned in late
June and called on the leader
to step down. They had criti-
cized him for his relatively
lackluster endorsement of
Britains membership of the
European Union in the June
referendum, despite the
partys pro-EU position.
Some three-quarters of the
partys lawmakers also said
they no longer had confidence
in his leadership, with many
concerned that the party
would fail to win a national
election with him in charge.
Despite the pressure, Mr.
Corbyn refused to step down
and said he had the backing of
party members and would de-
fend against any leadership
challenge. Mr. Smith, a rela-
tive unknown outside Labour
circles, stepped up to contest
the leadership, triggering what
HK JP KO ML SI
WORLD NEWS
800 million Swiss francs ($823
million) that, they said, Ms.
Karimova was the beneficial
owner of, according to people
familiar with the probe.
Ms. Karimova couldnt be
reached to comment. Grgoire
Mangeat, a court-appointed
lawyer representing Ms. Kari-
mova in Switzerland, said he
has never succeeded in con-
tacting his client.
Amsterdam-based Vimpel-
Com Ltd., one of the worlds
largest telecommunications
companies, admitted in February
to giving more than $114 million
in bribes to an Uzbekistan offi-
cial and agreed to pay more than
$795 million in civil and criminal
penalties to U.S. and Dutch au-
Since Brexit vote
Manufacturing
15 16
THE WALL STREET JOURNAL.
mediately change their hiring
or investment plans but many
said they would keep them un-
der close review. Some export-
ers said they expected a boost
in sales from the falling
pound, while others said they
anticipated a rise in costs.
Weighing these and other
data, the BOE in August cut its
benchmark interest rate to a
new low of 0.25% as part of a
package of measures aimed at
cushioning the economy.
BOE officials fret that un-
certainty over the U.K.s future
economic ties to the bloc may
weigh on spending, hiring and
investment, making early-
was at times a rancorous sum-
mer campaign.
Mr. Corbyn has faced criti-
cism from moderate Labour
parliamentarians since he was
the surprise winner of his first
leadership election last Sep-
tember following the partys
defeat in national elections.
But the veteran peace cam-
paigner has drawn enthusias-
tic support from the partys
grass roots for his pledges to
fight government spending
cuts and scrap Britains nu-
clear weapons. He has helped
Mr. Corbyn retained the leadership but faces a fractious party.
IN UK FR MN PR THE WALL STREET JOURNAL.
YVES FORESTIER/GETTY IMAGES FOR STYLE.UZ ART WEEK
thorities. In court documents, she took part, along with her
U.S. authorities have described mother, Tatyana, in the tele-
the Uzbek official as a relative vised funeral for Mr. Karimov.
of the deceased president. Ms. But the countrys acting leader
Karimova was the relative, ac- is in a position to quickly consoli-
cording to people familiar with date his power, according to Cen-
the U.S. and Dutch rulings. tral Asia analysts. Russian state
Ms. Karimova has been out media and an Uzbek news outlet
of public view since she have reported the government
clashed with powerful people launched an investigation of an
in her fathers government import market run by Ms. Kari-
over her growing power. Uzbek mova-Tillyayeva and her family.
authorities opened a tax-eva- Neither the late Mr. Kari-
sion investigation and placed movs younger daughter or his
her under house arrest in 2014. widow could be reached to
Her younger sister has comment. A company represen-
sought to raise her profile tative denied that the company
since their fathers death. Lola was subject to investigations.
Karimova-Tillyayeva was the Mr. Mirziyoev, the countrys
first to publicly say the presi- new leader, has praised his pre-
dent had suffered a stroke. And decessors policy of nonalign-
LUKE MACGREGOR/BLOOMBERG NEWS
The Bank of England, based in London, has 12 outposts in the U.K.
warning signs the agents un- agents in a typical month quiz
cover critical to the course of hundreds of businesses on is-
policy. The central bank has sues including output, prices
penciled in annual growth of and the availability of finance.
just 0.8% in 2017. The responses feed into the
Official data so far suggest agents monthly scores,
the economy has weathered which help officials plot the
the initial postvote period well, course of the economy. They
but third-quarter growth wont also highlight unexpected
be published until next month. trends they have uncovered.
In the U.S., the Federal Re- Ive found [the agents]
serves 12 regional banks simi- very useful, as the eyes and
larly collect information from ears of whats going on at the
across the country to feed into company level, said Kristin
officials decisions. Their find- Forbes, a former economic ad-
ings are published eight times viser to President George W.
a year in a report known as Bush, who now sits on the
the Beige Book. nine-member Monetary Policy
In the U.K., the BOEs Committee.
attract hundreds of thousands remains much more popular
of people to join Labour, than Mr. Corbyn and her Con-
whose membership has soared servative Party holds a com-
to over half a million, more manding lead over Labour in
than double that of the Con- terms of voting intentions.
servative Party. We know from all the evi-
But critics say that while dence that Labour are not go-
Mr. Corbyn has rallied a like- ing to win a general election
minded section of the popula- under Corbyn, said Andrew
tion, Labour isnt winning over Hawkins, chairman of polling
any new political ground un- company Communicate Re-
der his leadership and his left- search. We have this bizarre
ist policies will alienate mod- democratic anomaly of Corbyn
erate voters who are often the being hugely popular but with
key to winning national elec- a tiny proportion of voters.
tions. Polls indicate Mrs. May Mr. Corbyn urged people to
help Labour build support for
an alternative to the Conser-
vatives, in which the wealth
we all create is shared more
equally, and announced a La-
bour campaign against selec-
tion in education next Satur-
day. The government was
threatening to take the coun-
try backward and dithering
as we face the historic chal-
lenges of Brexit, he said.
DAVID MIRZOEFF/ZUMA PRESS
Together, arguing for the
real change this country
needs, I have no doubt this
party can win the next elec-
tion whenever the prime min-
ister decides to call it, and
form the next government. To
do that we need to work to-
gether, Mr. Corbyn said.
ALEXEI DRUZHININ/SPUTNIK/KREMLIN POOL
ment between the Kremlin and
the West. But Tashkent has a
chance to tilt to Moscow, said
Livia Paggi, an analyst on the
Caucasus region and Central Asia
at risk assessment firm GPW.
The U.S. and the West
have significantly disengaged
with Central Asia, she said.
Observers say, however, that
the new leader will ultimately
be beholden to the oligarchs.
There are connections to
businesses in Russia, said Mr.
Ilkhamov. But for Mirziyoev,
they will be second place to
keeping other business clans
and local oligarchs happy.
David Gauthier-Villars
in Stockholm
contributed to this article.
Dim for
Landmark
Trade Pact
BY VIKTORIA DENDRINOU
Negotiations over a far-
reaching trade pact between
the U.S. and the European
Union will almost certainly not
be finished during President
Barack Obamas presidency, Eu-
ropean trade ministers con-
cluded during a meeting Friday.
The worlds two biggest eco-
nomic blocs have been negoti-
ating the Transatlantic Trade
and Investment Partnership, or
TTIP, since 2013, and have re-
peatedly said they hope to con-
clude negotiations before the
end of the Obama administra-
tion in January.
The debate showed that a
conclusion of the TTIP negoti-
ations by the end of the year
is unrealistic, said Peter Ziga,
Slovakias trade minister who
presided over the ministers
meeting in the Slovak capital,
Bratislava.
During Fridays meeting, all
ministers expressed their
doubts about being able to con-
clude this before the end of the
Obama presidency, and indeed
it looks increasingly unlikely,
said Cecilia Malmstrm, the
EUs trade commissioner.
Prospects for completing the
deal have suffered from weaken-
ing political support in Europe
as well as growing public criti-
cism, as anti-globalization senti-
ment has gained traction on
both sides of the Atlantic.
On Sept. 17, hundreds of
thousands of people marched
through seven German cities
to protest against the EUs
planned trade pacts with the
U.S. and Canada, highlighting
a strengthening public back-
lash against the blocs trans-
Atlantic trade policies.
The trans-Atlantic talks have
generated more widespread
disapproval in Europe than in
Washington, where the Obama
administration is struggling to
get a major Pacific deal
through Congress but would
also like to finish the lower-
profile talks with Europe.
If the EU and its member
states are prepared and have
the necessary political will, we
can complete an agreement this
year, said Matt McAlvanah, a
spokesman for U.S. trade repre-
sentative Michael Froman.
If negotiations arent con-
cluded by the end of Mr.
Obamas administration, then a
natural pause will ensue while
the new president decides on the
priorities, Ms. Malmstrm said,
but she added that it is difficult
to tell how long it would be.
William Mauldin
in Washington
contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, September 26, 2016 | A4A

Space travel used to be the

occupation of nations and
superpowers, now its also the
pastime of millionaires. But
how can private investment take
space travel to new frontiers?

For a fresh perspective, visit

LombardOdier.com
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A4B | Monday, September 26, 2016 THE WALL STREET JOURNAL.

The best-equipped reader survives.

Visit wsj.com/Markets

2016 Dow Jones & Co., Inc. All rights reserved. 6DJ3946
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, September 26, 2016 | A5

WORLD NEWS

Criminal Link in Pyongyang Probe

BY CHUN HAN WONG In a stock-exchange filing, Ma and her company appears U.S. and South Korea say
Liaoning Darong Technology to mark a new effort by U.S. Hongxiang Industrials trade
BEIJINGA Chinese busi- Co. said it hadnt been able to and Chinese authorities to pur- with North Korea includes
nesswoman under U.S. scrutiny reach Ms. Ma, who chairs its sue Chinese businesses sus- goods that have both civilian
for her alleged role in aiding supervisory board, since the pected of supporting North Ko- and military purposes, includ-
North Koreas nuclear program company learned of the crimi- reas nuclear-arms program. ing applications in nuclear-
is also a suspect nal probe. It didnt The U.S. and China have often weapons development.
in a Chinese crim- specify when it sparred over how best to rein Chinese authorities in re-
inal investigation found out. in North Korea. cent weeks have frozen certain

THOMAS PETER/REUTERS
into her trading Ms. Ma is the Liaoning police announced assets held by Hongxiang and
business, a corpo- s e c o n d - l a rge s t their investigation after prose- Ms. Ma, including her and her
rate filing shows. shareholder in cutors from the U.S. Depart- familys holdings in Darong,
Fridays disclo- Darong, an infor- ment of Justice made two trips which offers mapping and geo-
sure about Ma Xi- mation-technol- to Beijing last month to alert graphic data services.
aohong is the first ogy firm, with a Chinese officials about alleged It isnt known if the Liaon-
to tie her to a 17.2% stake, ac- activities by Ms. Ma and ing police probe is related to A truck crosses a bridge from Dandong, China, into North Korea.
criminal investiga- cording to other Hongxiang Industrial, The Wall the U.S. allegations.
tion. Police in the filings issued this Street Journal reported last Ms. Ma, a Communist Party were unsuccessful. Yao Jizhou, chairman until December,
northeastern Chi- month. In Fridays week. member, founded Hongxiang a Hongxiang Industrial official when she was appointed chair
nese province of Ms. Ma as seen in a filing with a Bei- The Justice Department Industrial in 2000 to trade and assistant to Ms. Ma, de- of its board of supervisors,
Liaoning said this company publication. jing-based ex- cited alleged evidence that Ms. commercial goods with North clined to comment. which monitors the perfor-
month that they change for mostly Ma and her company had aided Korea. She grew her business Calls to police in Liaoning mance of company executives
were investigating the trading smaller companies, Darong Pyongyangs nuclear program into a conglomerate, Liaoning province and in the Chinese and directors. Ms. Mas
firm that Ms. Ma founded, said Ms. Mas situation hasnt and its efforts to evade United Hongxiang Industrial Group, border city of Dandong, where mother-in-law and three sib-
Hongxiang Industrial Develop- affected its operations but Nations and Western sanctions, with some 680 employees cov- Ms. Ma and Hongxiang Indus- lings each hold roughly 1% of
ment Co., for alleged serious could have a negative impact according to U.S. officials. ering interests in cross-border trial are based, werent an- Darong shares.
economic crimes, without on the firm. In a report, researchers trade, hotels and tourism. swered. Junya Qian in Shanghai
naming her. The investigation into Ms. from nonprofit groups in the Attempts to reach Ms. Ma Ms. Ma was Darongs vice contributed to this article

India to Ratify Paris

Accord Next Month
BY NIHARIKA MANDHANA
NEW DELHIIndia will rat-
ify the 2015 global climate
agreement early next month,
Prime Minister Narendra Modi
said Sunday, bringing the deal
a significant step closer to tak-
ing effect this year.
The accord, struck in Paris
by 195 countries, laid out a
path to curb global warming
and, for the first time, re-
quired developing countries to
lower the trajectory of their
greenhouse-gas emissions
growth.
But it can take effect only
once 55 countries, represent-
ing 55% of the worlds green-
house-gas emissions, ratify it.
So far, 60 countries have done
so, including the largest emit-
ters, the U.S. and China, fulfill-
ing the first condition.
These countries together
account for 47.76% of global
emissions. Once India ratifies,
that figure will go up to nearly
52%, according to the World
Resources Institute, an envi-
ronmental think tank.
Mr. Modi said at an event of
his Bharatiya Janata Party that
India would ratify on Oct. 2. A
further 13 countries have also
committed to ratify the deal
by the end of the year, all but
ensuring that the agreement
will take effect in 2016.
President Barack Obama,
who championed the agree-
ment, has pushed world lead-
ers, including Mr. Modi in two
recent meetings, to expedite
their efforts to ratify. If the
pact comes into force this
year, the U.S. would be bound
to the agreement for four North America will export more
years, potentially binding the
hands of the next president.
Under the deal, India didnt
agree to cap or cut its emis-
oil than it imports by 2020.
sions like some other emerg-
ing economies. Instead, New
Delhi pledged to ramp up its
use of renewable energy and
The global energy landscape is changing dramatically. For
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lawyer close to the case.

World
Watch
IRAQ
Triple Suicide Attack
Kills 11 Troops
A triple suicide bombing
against a security check point
north of Baghdad killed at least
11 members of the security
forces, a police officer said.
The spokesman for the Sala-
huddin province police force, Col.
Mohammed al-Jabouri, said
three militants rammed their ex-
plosives-laden vehicles into the
main check point near the town
of al-Salam. He said 34 other se-
curity officers were wounded.
Mr. al-Jabouri said the attack
occurred as the local police chief
and head of the provincial secu-
rity committee were visiting the
site. Both escaped unharmed.
Almost at the same time, an-
other group of militants on foot
attacked a check point at the
eastern edge of the province,
killing four policemen and
wounding two others, he said.
One militant was killed in that
attack, while the others fled the
scene, he said.
Associated Press
A formal inquiry hasnt yet
been opened, according to the
attorney. Mr. Temer likely wont
be investigated while he remains
in the top office, thanks to legal
protections afforded to sitting
presidents.
Luciana Magalhaes
THAILAND
Three Police Officers
Killed in Bomb Blast
A homemade bomb planted
in a road killed three police offi-
cers Friday in insurgency-
plagued southern Thailand, offi-
cials said.
Pongsak Khaonuan, a police
investigator in Yala province,
said the bomb was detonated as
the officers car passed over it,
wrecking the vehicle and killing
the three instantly. Another offi-
cer was taken to a hospital with
injuries. Police said they believe
Muslim separatist insurgents
were behind the attack.
More than 6,000 people have
been killed since the insurgency
flared in 2004 in Thailands three
southernmost provinces, the only
ones with Muslim majorities in
the predominantly Buddhist
country. Roadside bombings and
drive-by shootings are common
tactics of the insurgents, while
the government has blanketed
the region with soldiers.
Associated Press

BRAZIL
Top Court Approves
Probe of President
Brazils Supreme Court gave
the green light to prosecutors to
open a probe into corruption al-
legations that President Michel
Temer is linked to a sprawling
graft scandal centered on the
nations state-run oil company.
Brazil Supreme Court Judge
Teori Zavascki on Friday ap-
proved the preliminary investiga-
tion, which is based on plea-bar-
gain testimony by a key witness
that allegedly implicates Mr. Te-
mer and several high-ranking
members of his Brazilian Demo-
cratic Movement Party or PMDB,
including Senate President Re-
nan Calheiros, according to a
VIETNAM
Consumer Prices
Rose in September
Vietnams consumer price in-
dex in September rose 3.34%
from a year earlier, led by an in-
crease in the cost of health care
and education services, govern-
ment data released Saturday
showed.
The cost of health-care ser-
vices and medicines rose 33.43%
in the period, while the cost of
education services was up
10.30%, the General Statistics
Office said in a statement. CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
Transport costs, meanwhile, fell Copyright 2016 CME Group. All rights reserved.
5.70% because of lower fuel
prices.
Vu Trong Khanh
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Monday, September 26, 2016
BOOK
Continued from Page One
tude of allusions to Joyce, Poe,
Shakespeare and other literary
giants. Heavy stuff. For refer-
ence, Mr. Messenger keeps an
iPad and Poes collected works
nearby.
You spend more time goo-
gling and finding other books
than you do actually reading,
he said.
Mr. Schmidts oversize novel
is a standout in the e-reader
age. There is no Kindle version.
The volume isnt likely to fit in
purses or briefcases; a back-
pack, maybe, or something
with wheels. At 1,325,000
words, it is more than double
the length of War and Peace
and Atlas Shrugged.
Bottoms Dream is also
proving a weighty challenge for
booksellers. Green Apple or-
CHINA
Continued from Page One
date disqualified from recent
elections for Hong Kongs 70-
member Legislative Council.
Nearly half its seats are re-
served for constituencies that
represent largely pro-Beijing
and business interests. Hong
Kongers are more like second-
class citizens in China now,
he said.
Zhang Dejiang, the Commu-
nist Partys No. 3 official, has
said that Hong Kong has unique
advantages that cant be repli-
cated by other Chinese cities
and criticized a very small mi-
nority of people for advocat-
ing independence.
Keeping Hong Kong in line
is a major test for President Xi
Jinping, the countrys most
powerful leader in decades, as
he consolidates control amid
factional opposition.
In Beijings view, China
faces threats along its perime-
ter, from Uighur militants in
the far western Xinjiang re-
gion, separatists in Tibet and
Taiwanese leery of the main-
lands embrace. Allowing Hong
Kongers to push for indepen-
dence would set a troubling
precedent and possibly inspire
more calls for autonomy or po-
litical reform elsewhere. It
could embolden Mr. Xis oppo-
nents within the Communist
Party, which next year anoints
a new leadership that Mr. Xi
wants to dominate.
Anson Chan, a former Hong
Kong chief secretarythe citys
No. 2 officialsaid in a recent
speech that challenges to Hong
Kongs rule of law and civil lib-
erties are coming so thick and
fast they no longer even seem
to cause surprise.
She cited threats to aca-
demic freedom at local univer-
sities, a series of violent at-
tacks on local journalists and
the disappearances of several
book publishers who reap-
peared in the custody of main-
land authorities.
Frustrated by a lack of prog-
ress on what they saw as Bei-
jings promise that Hong Kongs
chief would be elected by popu-
lar vote, not selected by a
1,200-member committee
stacked with Beijing loyalists
and businesspeople as it is cur-
rently done, some young people
now advocate independence.
That is a leap from 2014, when
student-led protesters occupied
central Hong Kong and de-
manded democracy but not an
outright break with China. Sev-
eral candidates calling for more
self-determination, including a
23-year-old college student
who helped lead the protests,
won seats in the Sept. 4 elec-
Mainland Inuence
Since Britain's handover of Hong Kong to China in 1997, companies
from mainland China have come to dominate Hong Kong's stock index.
Five largest companies by market capitalization
in the Hong Kong Hang Seng Index
Place of headquarters:
1997
Hutchison Whampoa
HK$259.43 billion
Sun Hung Kai Properties
HK$222.82 billion
Hang Seng Bank
HK$213.43 billion
HSBC Holdings
HK$208.97 billion
Cheung Kong Holdings
HK$175.76 billion
Note: HK$1 billion = $130 million
Source: Reuters
dered 30 copies for a coming
event with the books translator,
John E. Woods: 15 boxes
showed up, two books per box.
Mr. Sparks said he had to play
a little Tetris to squeeze just
two copies onto the New Fiction
table. The store has sold two; 16
line the top of a bookshelf; 10
remain in boxes.
The single copy of Bottoms
Dream at Brazos Bookstore in
Houston sometimes joins the
staff recommendation display,
where it fits only on the top
shelf, towering over the compe-
tition. The rest of the time it
sits with the art books, said
Benjamin Rybeck, the stores
marketing director. The fiction
shelves are too small.
Big books can be big busi-
ness. German art book publisher
Taschen is known for signed,
limited editions that often come
with a book stand. One release,
GOAT: A Tribute to Muham-
mad Ali, weighs 75 pounds.
tions amid record turnout.
The Chinese governments
Hong Kong and Macau Affairs
Office warned after the vote
that independence violates
Chinas constitution and Hong
Kong laws and harms the terri-
torys prosperity and stabil-
ity. It said it supports the
Hong Kong government in le-
gally punishing Hong Kong in-
dependence activities.
China denies any stepped-
up pressure on Hong Kong.
Mainland officials routinely
call for strict adherence to the
Basic Law, Hong Kongs post-
handover constitution, and to
the principle of One Country,
Two Systems, which guaran-
tees Hong Kongs different
way of life.
Hong Kongs leaders say the
territory continues to enjoy a
high degree of autonomy. It re-
mains a bastion of freedom
compared with the mainland,
with street protests, open ac-
cess to the internet and some
newspapers that can be critical
of mainland policies.
Hong Kong was hardly a
model of democracy under
British rule, and China has pro-
vided benefits. Strapped to the
rocket ship of Chinas economy,
the citys gross domestic prod-
uct has grown substantially
since the handover.
Yet Hong Kongs role in the
Chinese economy has dimin-
ished. In 1997, its GDP was
18.5% of Chinas. In 2015, it was
just 2.9%.
The citys status as a spe-
cial administrative region can-
not last foreverthis is imprac-
tical, said Kingsley Sit, who
directs a research office for the
Heung Yee Kuk, an advisory
group that represents rural in-
terests outside central Hong
Kong and has long backed Bei-
jing. The major trend is grad-
ual integration into China. If
Hong Kong became indepen-
dent, how feasible would that
be? Lets do something wise.
In a sign of worries in the
territory, the film Ten Years,
a collection of vignettes that
envisioned a politically circum-
scribed Hong Kong one decade
from now, was a surprise suc-
cess over the past year. In one
vignette, mainland officials
stage an assassination attempt
to spur passage of a national-
security law in Hong Kong. In
another, a taxi driver who cant
speak Mandarin struggles to
find business as the citys na-
tive Cantonese language is rele-
gated to second-class status.
Banned in the mainland, the
movie won best film at the
Hong Kong Film Awards.
Many Hong Kong cinemas
didnt screen it or didnt add
showings to meet demand.
State broadcaster CCTV and
Tencent Holdings Ltd., the Chi-
Hong Kong United Kingdom China
Present
1 Tencent Holdings
HK$2.07 trillion
2 China Mobile
HK$1.97 trillion
Industrial and Commercial
3 Bank of China
HK$1.82 trillion
4
China Construction Bank
HK$1.48 trillion
5
PetroChina
HK$1.48 trillion
THE WALL STREET JOURNAL.
FROM PAGE ONE
Such heft isnt common for
literary fiction. The 1996 hard-
cover edition of David Foster
Wallaces Infinite Jest, a
benchmark of the contemporary
mega-novel, is 2 inches thick
and weighs 2.6 pounds, accord-
ing to Amazon.com. A 1992 edi-
tion three-book box set of Leo
Tolstoys War and Peace tips
the scales at 4.1 poundsless
than a third the weight of Bot-
toms Dream.
Shipping delivers another
plot twist. Green Apple in San
Francisco offers 99-cent flat-
rate shipping. That means the
store will eat about $8 for ev-
ery delivered copy of Bot- usually lift packages that come
toms Dream. Mr. Sparks said
he doesnt mind, given the
novelty of the massive book,
which was released Friday
with a $70 list price.
Readers who preordered
Bottoms Dream expressed took the Amazon package for a
excitement and surprise when
it thudded on their doorsteps in
The pull of Chinas giant economy is making Hong Kong, long an outpost of free trade, more dependent on the mainland than ever.
A market in Hong Kong sells Mao paraphernalia. Mainland Chinese are driving a tourism boom.
The court built a century ago for the British colony, left, is now Hong Kongs Court of Final Appeal.
nese internet firm, pulled out
of agreements to broadcast the
awards in the mainland. CCTV,
Tencent and the award organiz-
ers didnt respond to requests
for comment.
The worries about Beijing
interference coincide with
questions about Hong Kongs
viability as a top financial,
business and trading center.
Hong Kongs container port, the
worlds busiest as recently as a
decade ago, slid to No. 5 last
year as mainland ports such as
Shanghai expand. HSBC Hold-
ings PLC decided this year not
to relocate its London head-
quarters to Hong Kong, citing
Londons talent pool and inter-
national status.
Hong Kong has been a bone
of contention as far back as the
1840s, when an insubordinate
British captain took possession
of the island in the First Opium
War. The colony, with low
taxes, free-market policies and
Western rule of law, bloomed
into a major trade entrept and
financial center and is now
home to more than seven mil-
lion people.
In the 1980s, London and
Beijing negotiated a handover
deal that gave China control
of foreign affairs and de-
fense. Hong Kong kept the
right to maintain its own ju-
diciary, manage its currency
and set social policies for an-
other 50 years.
Exactly what happens in
BRAZOS BOOKSTORE
will be able to finish it. The cu-
Benjamin Rybeck opens the
1,496-page Bottom's Dream.
the past weeks.
My 5-year-old daughter can
to our house, said David Auer-
bach, a tech columnist at Slate.
She couldnt lift this one. He
says he reads it on the floor.
Thomas Sweterlitsch, a fic-
tion writer in Pittsburgh, mis-
three-pack of laundry detergent
he had ordered. I knew it was
2047 wasnt spelled out. Many
locals hoped China would de-
mocratize and that its political
system would converge with
Hong Kongs over time, rather
than the other way around, al-
though Chinas crackdown on
Tiananmen Square protests in
1989 damped those expecta-
tions.
Beijing, by contrast,
thought that pulling Hong
Kong closer into Chinas eco-
nomic orbit would win people
over. It offered preferential
treatment on the mainland for
Hong Kong businesses, en-
couraged Chinese companies
to invest in the territory and
allowed millions of Chinese to
travel there, creating a boom
for hotels and shops.
In many ways, the strategy
backfired. Some middle-class
Hong Kong residents com-
plained about overcrowding
from mainlanders and worried
that locals were being squeezed
by higher real-estate prices.
Faced with opposition, Bei-
jing decided that doling out
economic favors had run its
course and that it had to get
more visibly involved in Hong
Kong, Chinese political schol-
ars say.
They gave out a lot of
candy, a lot of sugar, said Ding
Xueliang, a social scientist at
the Hong Kong University of
Science and Technology. Fi-
nally they realized theyd given
so much, and they still hadnt
THE WALL STREET JOURNAL.
a longer book, he said, but I
had no idea.
German literature fans may
wonder where they will keep
hiking britches; He, tall=thin &
hairy). / :
dYou even listen ? To what
I said ?
the book. It will probably stay More than 1,000 copies of
put on the dining room table, Bottoms Dream have been
like a weird centerpiece, Mr. ordered by U.S. bookstores, said
Sweterlitsch said. John OBrien, founder of Dalkey
Others wonder whether they Archive Press, the books pub-
lisher; 2,000 were printed.
rator of the literary blog The Mr. OBrien said the idea
Untranslated said he planned of an electronic version was
to read the English version af- raised with the Arno Schmidt
ter he recovers from the shell- Foundation, which has the fi-
shock of trying to read the nal say.
original in German. For all but hard-core
I dont think there are that Schmidt fans, Bottoms
many people in the world who Dream is likely to be little
can confidently say that more than an art object, ac-
theyre going to read itand cording to those who have
deliver on the promise, said seen it.
the curator, who gave his I suspect it will mainly be
name only as Andrei. a conversation piece, said Mi-
He might have a point. From chael Orthofer, founder of
the novels first page: Complete Review, a literary
(P had mutterd meanwhile. website. Im not sure about a
He towerd, coffee-table additionit would
above & belo, from out his crush mine.
PHILIPP ENGELHORN FOR THE WALL STREET JOURNAL(2)
The Case of the
Booksellers
Hong Kongers are sensitive
about encroachment by main-
land law enforcement. Last
year, several Hong Kong book-
sellers disappeared after pub-
lishing thinly sourced, salacious
tell-alls about Chinas leaders.
They turned up later in deten-
tion in mainland China.
In a June press conference
after his release, one of the
booksellers, Lam Wing-kee, al-
leged that he was abducted at
a Shenzhen border crossing
and held by a special task
force of the central Chinese
government for eight months,
without charges. Previous
statements that Mr. Lam and
four similarly detained col-
leagues had made from China
were scripted and made under
duress, he said.
Mr. Lam said one colleague,
Lee Bo, was spirited away di-
rectly from Hong Kong.
Hong Kongs top official,
Chief Executive Leung Chun-
ying, said he would write a let-
ter to the mainland govern-
ment to express concern and
called for tweaks to the sys-
tem for notifying the govern-
GEORGE RINHART/CORBIS/GETTY IMAGES
ment when a Hong Kong resi-
dent is detained in the
mainlandgestures pro-democ-
racy lawmakers and activists
criticized as underwhelming.
The Chinese Ministry of
Public Security acknowledged
inadequacy in the notification
mechanism between Hong
Kong and China.
Ned Levin and Chester Yung
fixed things. So they have to Mainland Chinese companies
take stronger measures. such as China Mobile Ltd. and
Beijing issued a policy paper Tencent dominate Hong Kongs
in 2014 emphasizing limits to Hang Seng Index. At the time
Hong Kongs autonomy. It has of the handover, the top 10
brought Hong Kong legislators listed companies by market
to Shenzhen for talks on the capitalization were almost all
territorys political system, led old-line British colonial firms
by high-level mainland officials. such as HSBC or conglomerates
Mr. Ding estimates that owned by local tycoons.
China likely has more than Chinese developers, many
100,000 people in Hong Kong with government backing, are
who help it monitor the city. outbidding Hong Kong counter-
An official at the central parts for public land, sold by
Chinese governments liaison Hong Kongs government.
office in Hong Kong declined to Mainlanders now make up
comment for this article. 12% of the students in Hong
The Chinese government or Kongs university system, com-
mainland corporations now pared with less than 1% in the
have direct control or stakes in 1996-97 school year. In Au-
eight of Hong Kongs 26 main- gust, Hong Kongs education
stream media outlets, accord- department said that second-
ing to the Hong Kong Journal- ary-school teachers advocating
ists Association. That has
contributed to a steady erosion
Hong Kong independence
could have their licenses re-
of press freedom, the associa- voked. Mr. Leung, the Hong
tion said. Kong chief executive, com-
It cited the purchase of the
South China Morning Post by
pared teenagers interest in in-
dependence to drug use.
Chinese internet giant Alibaba Many of Hong Kongs newly
Group Holding Ltd. last year. elected legislators disagree.
Alibaba Executive Vice Chair-
man Joseph Tsai said editorial
We Hong Kong people need
to seize the opportunity to de-
independence would be re- cide our own future, said 25-
spected. year-old Yau Wai-ching, one of
He also said in an interview the new legislators, suggesting
with a Hong Kong news web- the tension is unlikely to dissi-
site that coverage of China was pate soon. Self-determination
neither complete nor healthy is our inherent right.
because newspapers tended to Alex Frangos, Te-Ping Chen,
carry the Western angle. The Anjie Zheng and
Post, he said, would put out Gregor Stuart Hunter
another angle. contributed to this article.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Labor Gains Reach Plateau
BY ERIC MORATH
AND JEFFREY SPARSHOTT
A
fter a half-decade of
steady gains, the U.S.
labor market appears to
be leveling off. What that pla-
teau means for the economys
trajectory is one of the big-
gest questions hanging over
policy makers and investors.
Hiring is consistent but
slower than in recent years,
the unemploy-
THE ment rate is no
OUTLOOK longer falling
and layoffs are
holding at a his-
torically low level. But partic-
ipation in the workforce is
stuck near a 40-year low.
If the moderate hiring rate
continues, that should keep
the unemployment rate in
check by absorbing new en-
trants to the workforce.
Thats a good thing, but it
might not be enough to de-
liver significantly higher pay-
checks for workers or draw
discouraged Americans back
into the labor force.
Mixed signals from the la-
bor data pose a challenge to
companies forecasting future
demand, Federal Reserve pol-
icy makers attempting to set
interest rates and investors
trying to assess the climate
ahead.
The labor market is close
to as good as it gets, given
the underlying fundamentals
of the economy, said IHS
Markit Chief Economist Nari-
man Behravesh. But averages
hide a lot of problems. A lot of
low-skilled and blue-collar
workers have been left behind.
They might have a job, but it
pays less than the job they
had before the recession.
The dichotomy is pre-
sented frequently in the pres-
idential race. Democrat Hil-
lary Clinton positions herself
as the candidate to maintain
President Barack Obamas
policies that delivered a long,
relatively steady expansion.
Republican Donald Trump
seizes on the frustration of
Americans who feel left out of
that recovery.
The unemployment rate
OLIVIER DOULIERY/PRESS POOL/GETTY IMAGES
President Barack Obama on Saturday helped open the National
Museum of African American History and Culture in Washington, D.C.
U.S.
Watch
WSJ/NBC POLL
Third Say Debates to
Influence Their Vote
One-third of voters say the
presidential debates will be very
important in helping them de-
cide whom to support for presi-
dent, with slightly more Republi-
cans than Democrats saying so,
a new Wall Street Journal/NBC
News poll has found.
Some 34% of registered vot-
ers said the set of three presi-
dential debates that start on
Monday in New York would be
extremely or quite important to
their decision. Among Republi-
cans, 37% said the debates would
be important to them, while 31%
of Democrats said the same.
Voter groups that seem poised
to pay the most attention include
several Mrs. Clinton is counting
on. Some 49% of Hispanics, 42%
of African-Americans and 39% of
voters under age 35 say the de-
bates will be extremely or quite
important to them.
Janet Hook
NORTH CAROLINA
Chief Says Video
Exonerates Police
Charlotte-Mecklenburg Police
Chief Kerr Putney said he is ab-
solutely not recommending
Leveling Off
After steady improvement since the recession ended, many important measures of the labor market have
plateaued in the past 6 to 12 months.
Jobless rates
20%
Broadest measure of
underemployment*
15 August
9.7%
10
5 12-month
Unemployment rate
4.9%
0 Recession
2007 09 11 13 15
Note: All gures are seasonally adjusted *Includes unemployed workers, involuntary part-timers and those marginally attached to the labor force
Source: Labor Department
peaked at 10% in October
2009, just after the recession
ended and less than a year af-
ter Mr. Obama was elected.
U.S. employers have consis-
tently added jobs since late
2010. For the next five years,
most measures of the labor
market gradually improved,
before leveling off in the past
six to 12 months.
Some gauges are at histor-
ically strong levels. The un-
employment rate has been at
or just under 5% for nearly a
year. The 12-month moving
average of job creation, at
204,000 a month, is above
the long-run average.
B
ut other measures have
stalled out, and remain
weaker than before the
recession. A broader measure
of unemployment that in-
cludes discouraged workers
and those stuck in part-time
jobs was 9.7% last month. Its
been little changed for almost
a year. And the share of
Americans ages 25-54 with
jobs, 77.8% in August, is near
a postrecession high, but has
changed little since January.
The data has left the Fed
frozen this year. Chairwoman
Janet Yellen last week
pointed to modest wage im-
provement and workforce
participation as signs the jobs
market is strengthening. Yet
charges for the officers involved
in Tuesdays shooting of Keith La-
mont Scott, who the chief said
was holding marijuana and ignor-
ing police commands to drop his
gun before the fatal encounter.
They were reacting to what
they saw, and they have a duty
to do so, Chief Putney said Sat-
urday, referring to the officers ac-
count that they noticed Mr. Scott
in a parked SUV with a marijuana
cigarette and holding a gun.
Police ordered Mr. Scott to
drop his weapon multiple times,
according to video footage. Chief
Putney said Mr. Scott didnt
comply. They perceive an immi-
nent lethal threat by a handgun
and they react to that, he said.
After days of public pressure,
the department late Saturday
released dash-cam and body-
cam video of the shooting. The
department also released photo-
graphs of a gun, an ankle holster
and a marijuana cigarette that
police said belonged to Mr. Scott.
Valerie Bauerlein
IOWA
Residents Along River
Brace for Flooding
Residents on Sunday were
leaving low-lying areas of Cedar
Rapids, Iowa, that are in danger
of flooding from the rising Cedar
River after heavy rains. The river
crested Saturday night in Water-
loo and Cedar Falls, some 90 ki-
lometers upstream. The National
Weather Service predicted the
river would crest in Cedar Rap-
ids, a city of about 128,000 peo-
ple, on Tuesday morning.
Associated Press
U.S. NEWS
Monthly change in nonfarm
payrolls
600 thousand
August
400
+151,000
200
0 was found walking down a
200
400
average
600
800
2007 09 11 13 15
central bankers didnt view
the economy as strong
enough to withstand the first
increase in their benchmark
interest rate since December.
The unemployment rate
and other measures of labor
utilization are little changed
since the beginning of the
year, Ms. Yellen said. I dont
see that as bad news because
it may reflect that the strong
labor market is attracting
people from outside the labor
force back into employment.
Ms. Yellen and other Fed
officials have said they ex-
pected hiring to slow and the
unemployment rate to level
off as slack in the labor mar-
ket diminishes. But in previ-
ous expansions, long stretches
of sideways movement in la-
bor measures were followed
by an economic downturn.
I do think that its fair to
say that the pace of improve-
ment has slowed, said Tom
Porcelli, chief U.S. economist
at RBC Capital Markets. The
plateau can go on for a while,
or a slow easing toward a re-
cession can go on for a
while.
That can leave businesses
uncertain, especially when the
lackluster expansion in the
U.S. is outpacing developed
economies in Europe and
Asia. Companies have already
reacted by curtailing capital
RACE
Continued from Page One
programs, or those that law-
makers fund directly ev-
ery year, is being crowded out
by spending on what are known
as mandatory programs, includ-
ing Medicare and Social Secu-
rity. About two-thirds of all
spendingincluding interest
payments on the national
debtis in that latter category,
compared with about half in
the 1980s. Just one-third of
spending is actually set by Con-
gress and the White House
through annual spending bills.
By 2022, nearly every dollar
of revenue the U.S. collects will
have been committed before
Congress even votes, according
to an analysis by Eugene
Steuerle of the Urban Institute.
With more and more federal
spending on autopilot, there is
almost no discretion or flexibil-
ity to act to address new chal-
lenges without having to renege
on past promises to the public,
says Mr. Steuerle, a Treasury offi-
cial in the Reagan administration.
On the Democratic side,
Mrs. Clintons proposals im-
plicitly acknowledge the bud-
get headwinds by including off-
setting revenue increases for
most new spending. Those off-
sets avoid running up deficits,
but they face extra hurdles to
being politically palatable.
She has promised a five-year,
$275 billion infrastructure pro-
gram in her first 100 days, a
package roughly equal to a high-
way-funding reauthorization
Congress approved last year. She
also has proposed to dramati-
cally cut child-care costs and col-
lege costs by increasing spend-
ing and offering tax breaks.
On the Republican side, Mr.
Trump has advocated a tax-cut
package that could reduce reve-
nue by 10% over a decade while
endorsing big spending boosts
for infrastructure, veterans
health care and national de-
fense. He has also promised to
spare Social Security and Medi-
care, the biggest drivers of
spending over the coming de-
cades, from any changes.
Mr. Trumps advisers say
stimulating growth is a bigger
imperative than balancing the
budget. Like Ronald Reagan,
the deficit maybe isnt Mr.
Share of the population
that has a job
90%
Workers aged
80
70
60
50
2007 09 11 13 15
THE WALL STREET JOURNAL.
investment, creating a drag
on the U.S. expansion this
year, which has so far been
offset by consumer spending.
The economy has been
growing very slowly for a
number of years now, and we
dont expect it to materially
change for quite a long time,
Texas Instruments Inc. Chief
Financial Officer Kevin March
told investors this month.
The U.S. economy has
been mired in 2% annual
growth for seven years, the
weakest expansion since
World War II. When the labor
market took off in 2014 and
2015 to produce the best jobs
gains since 1999, many econo-
mists predicted robust gains
in gross domestic product
would follow. They havent.
Growth in the first half of this
year slowed to a 1% pace.
S
ome economists now
worry that a leveling-off
of the labor market
might mean hiring is sinking
to match weak growth.
Gradually I think things
will slow down, said Sung
Won Sohn, an economist at
California State University,
Channel Islands. The overall
economy is already weighed
down by weak business spend-
ing and global headwinds.
Sooner or later that will get
to employment, he said.
Trumps highest priority, said
Lawrence Kudlow, an economist
who served as a budget official
in the Reagan administration
and now is advising Mr. Trump.
The 2000 election turned on
how to spend a large budget sur-
plus, and President George W.
Bush won backing for sweeping
tax cuts after taking office. In
2008, Mr. Obama proposed to
pay for a range of new programs,
beginning with the health-care
overhaul, by repealing those tax
cuts and ending foreign wars.
Both presidents faced recessions
in their first year, sending defi-
cits higher still.
The 45th president could
have one beneficial tailwind:
markets suggest interest rates
could remain lower for much lon-
ger than most imagined just a
Starting At a
Disadvantage
The next president
looks to inherit a
particularly dismal
set of scal
circumstances.
Decit to GDP ratio,
actual (gray) and as
forecast by the
Congressional Budget
Ofce when each 8
president ran for
10
election
An increasing share
of the budget is
devoted to
mandatory
spending.
Share of
government
spending dedicated
to mandatory
outlays
And the situation 100%
could vary widely
based on where
interest rates go in
the coming decade. 70
Debt to GDP ratio
under various
interest-rate
scenarios
Source: Congressional Budget Ofce
Monday, September 26, 2016 | A7
Turkish Immigrant
Held in Washington
For Mall Shooting
A 24-hour hunt for the man Police are also still deter-
suspected of shooting and kill- mining who owns the rifle
ing five people at a mall north used in the shooting, Lt.
2554
77.8% of Seattle came to an unevent- Cammock said. Mr. Cetin was
ful and abrupt end when he booked Saturday in county
jail on an investigative hold
street in his home city. and is expected to be charged
this week.
By Zusha Elinson Investigators believe Mr.
and Jim Carlton Cetin drove away from the
in San Francisco scene after the shooting, but
Overall
and Jay Greene didnt go far. At some point,
59.7%
in Oak Harbor Mr. Cetin traveled to the is-
land city of Oak Harbor,
Police arrested Arcan Ce- about 50 miles north of Seat-
tin, 20 years old, in Oak Har- tle. It is the largest city on
bor, about 30 miles from Whidbey Island, a weekend
where the shootings took
place at the Cascade Mall in
Burlington. One of the arrest-
The arresting
ing officers, Lt. Mike Hawley officer described
of the Island County Sheriffs
Office, said Mr. Cetin said
the suspect as
nothing as he was taken into being zombielike
custody Saturday night. He
was just kind of zombielike.
Police said they still don't getaway spot for Seattleites.
know the motive in the kill- The island is accessed from
ings or if Mr. Cetin knew any the south by ferry, though
of his alleged victims. Four there is a bridge at the north-
women ranging from the ern end of the island, about
teens to senior-citizen age 30 miles from Burlington,
were killed, police said. One where the shooting occurred.
man in his 60s later died at a Vigils were held Saturday in
Seattle hospital. Burlington. We suffered a dev-
Surveillance video showed astating loss of five treasured
a man in the mall with a rifle members of our community,
and, initially, police said they said Mayor Steve Sexton.
were searching for a suspect
of Hispanic descent, based on
WASHINGTON STATE POLICE/AGENCE FRANCE-PRESSE/GETTY IMAGES
eyewitness reports. They dis-
tributed a photo showing a
man with thick, closely cut
black hair. However, Mr. Cetin
immigrated from Turkey and
is now a legal permanent
resident in the U.S., Mount
Vernon police Lt. Chris Cam-
mock said.
Federal investigators had
said there were no indica-
tions of terrorism, but they
couldnt discount that as a
possibility. When asked about
terrorism Saturday night, Lt.
Cammock said: I am not go-
ing to rule out anything at
this point. Shooting suspect Arcan Cetin
few years ago, a consequence of
slowing global growth. As a re-
sult, the cost to service the na-
tional debt has fallen to its lowest
Doug Elmendorf, who as
head of the Congressional Bud-
get Office from 2009 until 2015
warned frequently of the toll un-
level in nearly 50 years as a per- checked deficits could take on
centage of the nations gross do- the economy, now says the next
mestic product even though total president should tolerate wider
debt as a share of GDP has dou- short-term deficits to boost
bled to about 75% since before public investment in high-qual-
the 2007-09 recession. ity infrastructure or education
Some say the next president programs. My thinking has
should see that as an opportu- changed because interest rates
nity. We have a window here, have fallen so far, he said.
courtesy of central banks of the Others say the case for stimu-
world, to borrow money very lus isnt compelling. If it were,
cheaply, said Jim Millstein, a wed all be studying the Japa-
former Treasury official in the nese economic miracle of the last
Obama administration who is 20 years that never happened,
working on an infrastructure- said Andy Laperriere, political
bank proposal. With low rates strategist at Cornerstone Macro
deterring private firms from in- who served as adviser to former
vestment, he said, were going House Majority Leader Dick
to have to use public capital. Armey (R., Texas) in the 1990s.
HOW THE SITUATION LOOKED WHEN EACH PRESIDENT ASSUMED OFFICE
Ronald George Bill
Reagan H.W. Bush Clinton
George W.
Bush
Barack
Obama
Next
president(s)
1980 90 2000 10 20 25
6%
4
2
0
2
4
6
1981 89 93 2001 09 17
80%
70
60 Projections
50
40
30
20
10
0
1981 89 93 2001 09 17
90 Given a higher rate
80
Baseline
60 Given a
50 lower rate
40
30
20
10
0
1980 90 2000 10 20 25
THE WALL STREET JOURNAL.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
Can math disable
cancers cellular
machinery?
Scientists are
working on it
A10
BOOKS | CULTURE | SCIENCE
A8 | Monday, September 26, 2016
The first
presidential debate between Hillary
Clinton and Donald Trump is Monday
night. What can we hope for?
A revealing gaffe, a zinger that hits
home, a flash of true spontaneity or a
glimpse of the real character
BY BRYAN
GARSTEN
of the candidatesthese
seem to be the most anyone
is hoping for, and more
than we are likely to get. H Debates,
at their very best, are the diamonds
of democratic politicscrystal clear
in argument, sparkling with wit, free
from the discolorations of petty self-
interest and shaped to focus light
on the great issues of the day.
But diamonds are rare, and no one
is expecting a jewel on Monday. The
problem isnt only that our candidates
are lackluster, tempting as that
explanation may be. Nor does the fault
lie mainly in the quality of the
questions or the skill of the moderator.
The forum itself is flawed. How many
ways are there to say, Vote for me?
That line will always be more
advertisement than argument.
| COMMERCE | HUMOR | POLITICS | LANGUAGE
THE WALL STREET JOURNAL.
Talk
Show
The first televised presidential debate, star-
ring John Kennedy and Richard Nixon, aired 56
years ago on Sept. 26, 1960. People who listened
on the radio thought Nixon won, but those who
watched on TV thought Kennedy won, and the
election was so close that the TV factor might
have made a difference. But should it have? Did
viewers learn something from the grainy, flick-
ering black and white images on their tiny TVs
that was really relevant to the
question of which policy or person
was best for the country? Even the
The Kennedy-Nixon debate gar-
nered mixed reviews, including se- vaunted
vere criticism from establishment Lincoln-
figures. The journalist Edward R.
Murrow called it a puny contribu-
Douglas
tion, capsuled, homogenized, per- debates of
haps dangerous in its future impli-
cation. The historian Henry
1858
Steele Commager responded with brought out
an essay entitled, Washington
Would Have Lost a TV Debate.
vices in both
The present formula of TV de- candidates.
bate, he remarked, is designed
to corrupt the public judgment
and, eventually, the whole political
process. The American Presidency is too great
an office to be subjected to the indignity of this
technique. Though the televised debates re-
turned and eventually became a regular part of
the campaign, it is hard to think of even one
that stands out as a model of informed and in-
formative discourse.
During most campaign cycles, someone will
write an essay comparing the disappointing pet-
ASSOCIATED PRESS (KENNEDY, NIXON); GETTY IMAGES (TRUMP, CICERO, LINCOLN, DOUGLAS); REUTERS (CLINTON)
FREE FOR ALL
Hear columnist Jason Gays unique spin on the stories
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to sports and everything in betweenits a Free for All.
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A new planet
has Christians
asking if alien
souls need
to be saved
A10
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The much-anticipated
face-off between Hillary
Clinton and Donald Trump
will just be a TV spectacle.
Real debate takes place
in the course of governing
(or at least it used to).
tiness of modern debates to the great Lincoln-
Douglas debates of 1858, a series of daylong ex-
changes in various towns around Illinois during
the contest between Abraham Lincoln and Ste-
phen Douglas for a Senate seat. (Lincoln lost.)
Whereas in modern televised debates, a candi-
date often has just 90 seconds for an answer,
those debates gave each speaker 90 minutes for
a single response. Audiences stood all day in the
late summer sun to listen to intri-
cate arguments about matters of
national importance, such as the
extension of slavery into the west-
ern territories. Our attention
spans on the couch at home dont
compare very well.
But even the Lincoln-Douglas
debates left a lot to be desired.
They brought out vices in both
candidates: Lincoln spun out an
elaborate conspiracy theory about
the spread of slavery, Douglas
moralized self-righteously, and
both pandered energetically to the
crowds. The architecture of some
of Lincolns greatest thoughts is
visible in his remarks, but he also
stooped low, assuring a crowd in Charleston, Ill.,
in the part of the state closer to the South, that
he did not believe that African-Americans
Please turn to the next page
Mr. Garsten is professor of political science
and the humanities at Yale University and the
author of Saving Persuasion: A Defense of
Rhetoric and Judgment.
P DCASTS
2016 Dow Jones & Co., Inc. All rights reserved. 6DJ3812
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, September 26, 2016 | A9

REVIEW

The Sad State of American Debate

Continued from the prior page inside. John Quincy Adams, the former president, wrote to
should be voters or jurors or intermarry with white peo- Martin Van Buren that the debate was the most important
ple. As for Douglas, his case for popular sovereignty in one that has taken place since the existence of the govern-
each state merely dressed up the extension of slavery into ment. The two doctrines are now before the nation.
the territories as a matter of principle. Websters contribution has often been compared with that
Traditionalists at the time reacted to these debates in of Edmund Burke in England about 50 years earlier. Burkes
much the same way that Murrow and Commager later re- speeches in Parliament, like Websters in the Senate, became
sponded to the Kennedy-Nixon debateas a scandal and an models of eloquence for generations of aspiring politicians
affront to the dignity of our institutions. The spirit of the and students. Like Webster, Burke did his best work in the
Constitution is being violated in Illinois, wrote the editors context of particular legislative debates. He defended the de-
of the Union, a Washington, D.C. newspaper. In those days, sire for independence of the American colonists, pleaded for
state legislatures, not the people at large, were responsible humane treatment of his native Ireland, predicted the worst
for electing senators, and the point of that arrangement, the excesses of the French Revolution, and excoriated the East
Union reminded its readers, was to place the selection of India Company and colonial managers for their corrupt ad-
a Senator beyond the reach of the maddening issues of the ministration of India.
hour. The whole country, the paper wrote, is disgusted If Websters reply to Hayne offers an example of how to
MIND & MATTER: with the scene in Illinois.
From that traditional perspective, the proper setting for
debate protectionism with more depth than we have heard
lately, Burkes speech in support of the India Bill of Charles
MELVIN KONNER political debate was thought to be the institutions of govern- James Fox in 1783 offers an example of how to debate the
ment themselves, not the campaign trail. Legislatures and proper oversight of large corporations. Burke argued that
parliamentary assemblies had evolved over centuries to en- the East India Company had violated the terms of its corpo-
A Need for More courage substantive discussion of concrete policy choices
and to reduce the danger of demagoguery.
rate charter and should be made to cede control over its op-
erations in India to two commissions appointed by Parlia-
Answers on Teens Lincolns own favorite political oratory came not from
campaign stumping but from congressional debate. He loved
ment. He thus urged regulation of a company that had
enjoyed nearly unlimited autonomy in its operations abroad.
And Pornography Daniel Websters famous Second Reply to Hayne, which
was delivered on the floor of the Senate in 1830. Sparked
The moral and psychological subtlety of Burkes case for
reigning in that particular corporate excess dwarfs anything
WE ALL worry about how inter- by a proposal to limit the sale of federal lands in the west- in our own public discourse. Instead of resorting to populist
net pornography and other sexu- ern territories, the debate quickly turned into an impas- commonplaces, Burke explored the corrupting effects that
alizing influences affect children. sioned discussion of whether the national government was working for the company in India was having on Britains
But good research on the causes a creature of the states or a direct creation of the whole best and brightest. Young men arrived in India and were
and consequences of that expo- American people. promptly given vast political and economic power with little
sure is hard to come by. Sen. Robert Hayne of South Carolina made the case for oversight. They drank the intoxicating draught of authority
One reason has been American squeamish- the priority and independence of the states. Daniel Webster, and dominion before their heads are able to bear it, and
ness. Thirty years ago, I asked a psychologist young but poised and a polished speaker, put forward a vi- then, Burke warned, they brought their newly acquired hab-
running what was then the largest study of sion of a great nation united by modernized roads and infra- its of imperial brutality back to England with them. These
young adolescents ever, What are you structure and fortified by New Englands manufacturers. men, Burke told the House of Commons, marry into your
learning about sex and violence? She re- families; they enter into your senate. His arguments car-
plied, Oh, we cant ask about that. Now the ried the chamber but could not overcome the kings influ-
research situation has improved, although ence in the House of Lords. He and his party ultimately lost
state and local school authorities still have a the debate, but his speech remains an example of what de-
patchwork of rules covering permitted re- bate can be.
search, and parents often wont consent. If we are looking for exemplary debates, we should also
One recent exception is High Heels, Low look behind Burke and Webster to the classical models they
Grades, an article in the Journal of Research would have studied in schoolabove all, Demosthenes and
on Adolescence, describing two studies. In one, Cicero. These were the great orators, respectively, of demo-
91 girls aged 10 to 14 were given a 40-item In- cratic Athens and republican Rome. Plutarch had paired
ternalized Sexualization Scale, or ISS, to mea- them in his Parallel Lives, which was an obligatory part of
sure how important sexual attractiveness was a liberal education. Burkes long campaign to impeach War-
to their identity. After controlling for age, ren Hastings for his corrupt management of India owed
higher scores on the ISS predicted lower much to Ciceros first speech in 70 B.C. against Verres, a cor-
grades in English, science and social studies. rupt Roman governor of Sicily.
In the second study, 95 girls aged 11 to 15 As for Demosthenes, his speeches warning the Athenians
completed a brief mock video newscast about of the growing strength of Philip II of Macedon in the fourth
new animal species in Indonesia. They got a century B.C. had a furious, anxious power that comes across
433-word transcript and had five minutes to even today and even in translation. Simple in style, with lit-
prepare, in a room with beauty products tle rhetorical ornament, Demosthenes sentences concen-
available. The girls also took the ISS. A high trated the force of his mind into a few words, as a good
score predicted less time reading the tran- punch concentrates the bodys force into the inch between
script and more applying makeup. two knuckles. He was not running for office; he was pressing
While studies have lagged in America, it has his fellow lawmakers to act.
been easier to do research in Europe on how Examples like these remind us that public debate at its
common hard-core pornography exposure is, at best is a part of governing, not of campaigning. Webster and
what ages and with what consequences. One Burke, Cicero and Demosthenesall spoke in deliberative as-
Belgian study found that more than 4 in 10 semblies to a specific group of their fellow citizens who
boys age 12 to 15 have viewed explicit porn. In were empowered to decide to-
a large Danish study of people 15 to 25 (about gether a particular law or course
80% of them under 21), 88% of 1,400 males and The Roman of action.
45% of 3,200 females had viewed sexually ex-
plicit materials the year before.
orator Their speeches were tran-
scribed and published beyond the
These and other studies confirm that such Cicero confines of the chamber to a
exposure predicts lower grades in school and
earlier initiation into sex. Still, these are al-
served as a much wider audience, but that
was secondary; the immediate
most all correlational findingswhich sug- model for goal was to govern. The heyday
gest a relationship but do not prove that one men such of political debate in the U.S.
thing causes another. However, one 2015 lasted from the founding era
study in Belgium was a true experiment, fo- as Daniel through much of the 19th century,
cused on the impact of videogames. Webster. when arguments on the floor of
In that study, Karolien Driesmans of the legislatures directly informed de-
University of Leuven and two colleagues ran- cisions on policy. These delibera-
domly assigned 12- to 15-year-olds to play a tive institutions, whether local or
videogame that either featured a sexualized fe- national, focused debaters on particular questions and lim-
male or a neutral character in loose-fitting ited the audience they were addressing. Such settings im-
clothing. The boys, girls and their control parted a natural discipline to the speeches given within
groups then answered questions on tests. them, encouraging substance.
Fifteen minutes with the former game made Today public deliberation hardly ever takes place in our
a difference in results. Both boys and girls legislative assemblies, though sometimes a pretense is
scored higher than control individuals on two staged for the cameras. In the U.S., we have been at war in
well-established measures. One, the Rape Myth one theater or another for 15 years, and yet Congress has
Scale, asks if subjects agree with statements not had a sustained debate about these conflicts since the
like, If a girl goes to a room alone with a guy months leading up to the invasion of Iraq in 2003. In the
at a party, it is her own fault if she is raped. U.K. last spring, leaders declined to follow a centuries-old
The other, Tolerance for Sexual Harassment In- tradition of parliamentary debate and responsibility when
FROM TOP: GETTY IMAGES; ASSOCIATED PRESS

ventory, asks if most girls who are sexually making the most consequential choice of the countrys re-
insulted by a boy pro- cent history, to leave the European Union. They preferred to
voke his behavior by stage debates in the enormous and amorphous public
The power the way they talk, act sphere that the media creates and that individuals dip into
of a short or dress. and out of through their devices.
If a 15-minute vid- In our own increasingly fractured public sphere, the Com-
videogame eogame could have mission on Presidential Debates has announced that the sec-
session. such effects, what ond debate between Mrs. Clinton and Mr. Trump, on October
happens when chil- 9, will take the form of a town meeting, in which half of the
dren play them questions will be posed directly by citizen participants.
hours a week for What exactly will these citizen participants participate
years? We dont know. As Ms. Driesmans in? They are offered roles in a television show. They will ask
and her colleagues wrote, Play for many questions, as a reporter does, to help elicit responses that
hours spread over a period of several weeks TOP: A bust of Marcus Tullius Cicero (106-43 B.C.). ABOVE: might inform the public. This can certainly be useful, but we
or even months could have stronger nega- Daniel Webster (1782-1852), who famously concluded, should not let the language of town meetings and partici-
tive effects, but we need further work to Liberty and Union, now and forever, one and inseparable. pation obscure the limitations of the forum. One thing that
test this assumption. the staged presidential debates cannot offer is a reminder
An American Psychological Association Protecting that manufacturing sector with high tariffs on of what debating sounds like when it is actually a part of
task force warned in 2007 that sexualization imports from Europe was one of Websters immediate goals, self-government.
messages were widespread and directed at but the debate explored how this policy would affect various Years ago, when I lived in Williamstown, Mass., I at-
younger and younger girls, from preschool- parts of the country and linked the issue with questions of tended a real town meeting to discuss the municipalitys
age beauty pageants to bikinis for toddlers. sectional politics, national strategy and constitutional prin- annual budget. Citizens did not pose questions; they made
The task force urged more research. ciple. Webster helped Americans to imagine the nation that arguments. A youth program had been cut, and townspeo-
In an article published in May in the Jour- Lincoln would eventually fight to preserve. ple argued pro and con and then voted. The program was
nal of Sex Research, L. Monique Ward of the Admirers of the Webster-Hayne debate often praise its saved, with funds shifted from elsewhere. No one offered
University of Michigan reviewed 135 studies most famous lines, such as Websters memorable peroration. oratory for the ages, but it was a good debate, full of clear,
of the effects of sexualization of women in Hayne had worried that national unity would threaten the forceful, responsible arguments. Demosthenes would have
media. Of those, 84% were published since states liberty. Websters final line was a succinct answer: been proud.
the task force report. But only five of the Liberty and Union, now and forever, one and inseparable. In the history of democratic societies, it was the intense
studies looked at children under 13 and only But one turn of phrasea tweet, basicallycannot cap- pressures of governing together that occasionally com-
19 at adolescents; just 11 concerned video- ture what was special about Websters speech, or about pressed the sand of ordinary political speech into a gem or
games, and of those, only the study by the Haynes. The real strength of the debate lay in the power two of public oratory worth saving. We have mostly let pub-
Driesmans team looked at children younger and clarity with which both sides elaborated the complex ar- lic debate float free from the pressures of our governing in-
than college age. The Ward survey points up guments behind their different positions, allowing listeners stitutions these days. We should not be surprised that we
ISTOCK

the need for us to learn more. to enter into each point of view and understand it from the do not produce diamonds.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Monday, September 26, 2016 THE WALL STREET JOURNAL.

REVIEW
already compelling evidence, widely published
in scientific journals, to support the existence of
such universal on-off switches for cancer.
Indeed, the more we use quantitative models,
the more we understand that cancer isnt the re-
sult of a single gene going roguethe premise
of the mutation-based therapy approach. Rather,
cancer develops when an entire gang of rogue
proteins work in concert to thwart the defense
mechanisms that cells use to keep cancer at bay.
This is no mere hypothesis. Clinical trials at
Columbia, in patients with metastatic and
drug-resistant breast cancer, have already
started to evaluate how well novel, multi-drug
regimens can target the aberrantly activated
proteins in a tumor checkpoint. And in N of
1 studies, also at Columbiathat is, studies
in which a single patient is the entire trial
tumor checkpoints are being used to select the
best therapy for 260 patients across 14 differ-
ent kinds of previously untreatable tumors.
To identify master regulator proteins and tu-
mor-checkpoint modules, DarwinHealth is using
sophisticated tools such as the VIPER algo-
rithm, which we presented recently in the jour-
nal Nature Genetics. Like astronomers and
physicists discovering dark planets indirectly,
from deviations in the trajectory of the stars
around which they gravitate, we are able to use
VIPER to begin to decode the hidden oncotec-
ture of cancerthat is, the universal regula-
tory architecture of cancer cells.
It might seem counterintuitive to employ a
virtual world to decode something as real as
cancer, but predictions made by these methods
are already undergoing rigorous clinical evalua-
tion. These studies are geared to finding the
specific drugs and drug combinations that, by
short-circuiting the regulatory logic of the can-
cer cell, can help turn these tumor switches to
the off positionpermanently.
Setbacks are inevitable in this line of re-
search. This is cancer, after all, and develop-
ing and testing new checkpoint-based drugs
or innovative combinations is an expensive
BRIAN STAUFFER

process that can take years.

But we are already seeing hopeful develop-
ments. Our individualized N of 1 studies at
Columbia suggest that toggling these on-off
cancer switches may not require new drugs.
Rather, it may be accomplished by drawing

Can Math Crack

tients, and to use single drugs and novel drug from a large tool kit of drugs already approved
combinations to target them. by the FDAmany of them inexpensive and no
We are not alone on this track. An increasing longer under patentsand from compounds
number of systems biologistsFranziska Michor available from late-stage clinical investigations.

Cancers Code?
Quantitative models focus
on the architecture of cancer
BY ANDREA CALIFANO
AND GIDEON BOSKER
AT SOME POINT in their lives, about half of all
Americans will hear the frightening words, You
have cancer. For patients and families, the per-
sonal burden of cancer is staggering, and many
scientists and physicians, though working hero-
ically on new treatments, remain unsatisfied
with the care that they are able to provide.
Much attention and excitement has fo-
cused lately on precision medicinethe
targeted deployment of drugs to counter spe-
cific driver mutations in tumors and also to
activate the bodys own immune system
against cancer cells. These strategies have re-
sulted in some real success stories, but not
enough patientsespecially those with meta-
static breast, colon, lung and prostate can-
cerare achieving the kind of lasting remis-
sions that were expected. Worse, most
tumors cannot be treated this way.
Researchers are continuing to refine these
targeted treatments, but new approaches are
neededand here, as in many other fields, the
answers may lie in the information revolution.
Disappointed with the slow pace of discovery
and inclined to look for elegant, universal expla-
nations for natures conundrums, many cancer
researchers have increasingly been asking: Is
there some sort of Da Vinci Code for cancer?
And can we crack it using mathematics?
Quantitative modeling has been extremely
successful in disciplines as diverse as astron-
omy, physics, economics and computer science.
Can cancer quantsscientists applying quan-
titative analyses to the landscape of cancer bi-
ologyfind the answers we seek? And, if so,
what would the new paradigm look like?
This approach has been in the works for
years at Columbia University (in the lab that
one of us directs), and we are attempting to
develop it commercially at the company that
we co-founded, DarwinHealth. The idea is to
integrate robotics and supercomputers to
identify more universal tumor vulnerabilities,
within a much larger segment of cancer pa-
and Peter Sorger at Harvard University, Gordon
Mills at the MD Anderson Cancer Center and
Trey Ideker at the University of California, San
Diego, among othersare also embracing this
sort of strategy, with growing support from the
National Cancer Institute.
As a result of this evolution, the focus in
many labs has shifted from
genes to proteinsthe mo-
lecular machines that gov- Computations
ern cell behavior, including
cancer. But while genes can
to pinpoint the
be readily sequenced, pro- command
teins are much harder to
observe and measure.
center of the
There is mounting evi- cancer cell.
dence that virtual, computa-
tion-based methods are par-
ticularly effective in detecting
aberrant proteins in this hidden layer of cancer
control. In our own labs, we rely on computa-
tional methods to pinpoint the dark proteins numbers to improve our lives. Increasingly, it
that constitute the command center of the can-
cer cell. Abnormal activity in these master reg-
ulators can result in rapid tumor growth and
devastating propagation of cancer cells.
Perhaps most important, these proteins form
tightly knit modulesor tumor checkpoints Chemical Systems Biology at Columbia Univer-
that represent the ultimate on-off switches in
the cancer cells engine room, providing a new
class of targets for anticancer therapy. There is
We are currently conducting a trial in collabo-
ration with Drs. Kevin Kalinsky of Columbia
and Jose Silva of Mount Sinai in New York to
test how well a new combination of two FDA-
approved drugs can shut down the tumor
checkpoint of breast-cancer patients who no
longer respond to conventional therapy.
Cancer researchers are
only now beginning to appre-
ciate how much they can
learn by applying these new
tools to one of medicines
most elusive challenges: dis-
abling, reversing or subvert-
ing the aberrant regulatory
programs that ignite perfectly
normal cells and morph them
into monsters that explode
with destructive fury.
Over the centuries, and across countless ar-
eas of human need, we have seen the power of
looks as if this will hold for cancer, too. It may
just be a matter of getting the math right.
Dr. Califano is Clyde and Helen Wu Professor of
sity and co-founder of DarwinHealth. Dr. Bosker
is the CEO and co-founder of DarwinHealth and
CEO of CMEducation Resources.

SPACE MISSION: CHRISTIANS ASK IF ALIEN SOULS NEED SAVING

BY IAN LOVETT in spreading the Gospel, are starting
to openly debate whether that duty
FOR ASTRONOMERS, Proxima b is a extends beyond Earths atmosphere.
dream planet. Discovered last month As for Mormons, they may have an
orbiting the star nearest to our own edge: They are already in space
solar system, it is thought to reside proudly counting several astronauts
squarely in what scientists call the in their foldand are used to evange-
Goldilocks zonewhere the temper- lizing in far-flung places. Utah has
ature for life is just right. stood in for Mars in at least one
The news prompted excited ques- movie and is home to a research sta-
tions among scientists: Is there really tion for the Mars Society.
water on Proxima b? Could a rocket The Church of Jesus Christ of Lat-
make it there one day? Could there be ter-day Saints declined to comment,
life on the planet? But it started a but a church official pointed to the
very different discussion among Encyclopedia of Mormonism,
Christians: Would alien souls need which accepts the existence of
saving? And if so, do missionaries other worlds created by God for a
have a responsibility to rocket into divine purpose that is the same as
space with a trunk full of Bibles? the purpose of earth life.
At a minimum, a Christian would For most denominations of Chris-
have an obligation to at least tell the tianity, said David Weintraub, an as-
Gospel story to other life-forms tronomy professor at Vanderbilt Uni-
JOSH COCHRAN
Jesus was constantly incarnating and
dying on various worldsa concept
that few Christians found appealing.
On a recent morning outside St.
Marks Catholic Church in Los Ange-
les, parishioners were at ease with
the possibility of sentient life on
other planetsand with spreading
the Gospel there. The Bible should be
preached all over, Chutti Vanderwall,
64, said after mass. The Bible
teaches lovenot just here. It teaches
us to be good people.
Some theologians argue that Ms.
Vanderwalls observationthat the
Bible teaches us to be good peo-
pleis precisely why Christians
shouldnt plan to baptize alien life-
forms. The Gospel tells of the fall and
salvation of humanity, they say, not of
other beings on some far-off world.
Other theologians posit that intelli-

found outside of Earth, said Bill
Nettles, the chair of the physics de-
partment at Union University, an
evangelical college in Jackson, Tenn.
But to other Christians, the idea
that an extraterrestrial, no matter
how intelligent, could have a spiritual
relationship with God is unthinkable.
Its just planet Earth that has
spiritual beings in need of redemp-
tion, said Hugh Ross, an astrophysi-
cist who founded Reasons to Believe,
a ministry that seeks to show that
science supports Christian scripture.
That doesnt rule out dolphins or
grass or bacteria on another planet,
he said, but he doesnt expect to find
life anywhere else in the universe.
He added, Its not Jesus Christ dy-
ing on 1,000 planets.
Discussion of alien spirituality has
long been the stuff of science fiction.
But as humans have peered further
into space with telescopes and un-
manned probes, religious groups have
been forced to grapplesometimes
uncomfortablywith what the exis-
tence of intelligent extraterrestrial life
would mean for their faith.
In 2014, two Jesuit astronomers at
the Vatican published a book with the
title, Would You Baptize an Extrater-
restrial? That year, Pope Francis
himselfduring a hypothetical sec-
tion of a weekly homilysaid that he
would baptize a green Martian with a
long nose and big ears, although
only if the alien ambled into St. Pe-
ters Basilica and asked. Who are we
to close doors? the pontiff asked.
Evangelical Christians, who believe
versity and the author of Religions
and Extraterrestrial Life, the possi-
bility of life elsewhere presents seri-
ous theological problems. Until now,
questions about who created us and
are we alone were purely theological,
he said. But now, astronomers are
saying, Were taking over some turf
that used to belong to you.
Christians have long argued about
the cosmosat least since Galileo in-
sisted in 1633 that the Earth revolved
around the sun, a heresy that won
him house arrest for the rest of his
life. Nearly 200 years later, the philos-
opher Thomas Paine asked whether
life on other planets would mean that
gent extraterrestrials would have
their own relationships with God.
Beyond the theological questions
lie serious practical obstacles. Com-
munication would take a long time,
obviously, said Deborah Haarsma,
president of BioLogos, a group that
promotes the idea that Christianity
and science are in harmony. Even if
communication were possible, she
added, Can we communicate about
something as profound as God?
Christians have plenty of time to
decide all this. Proxima b is 4.2 light
years awayso a space probe using
current technology would take thou-
sands of years to get there.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, September 26, 2016 | A11

SPORTS
tion for how the event can seem to
turn the games hierarchy on its head.

The Mystery of
For one thing, the format during the
first two days, which includes both al-
ternate-shot and best-ball pairings,
makes players records partly a byprod-
uct of how their partners perform.

The Ryder Cup Even Sunday, which features 18-hole

singles matches, doesnt separate the
best from the rest the way 72-hole
stroke play is designed to do.
How different would the U.S. Open
There are theories but no consensus about why tennis be if every match were played
over one set instead of five? said Paul
some stars struggle while lesser names thrive McGinley, the captain of the winning
European team in 2014.
Thats what you have with the
Ryder Cup. You have 18-hole matches
that are a sprint. If every match were
played over four rounds, you can bet
Tiger Woods would have had a phe-
nomenal Ryder Cup record.
Part of the difficulty in figuring out
who will thrive at the event, which this
year will be played at Minnesotas Ha-
zeltine National Golf Club, is that there
isnt anything else exactly like it. At the
highest level of golf, match play is rare,
and team play is rarer still. The Ryder
Cup combines both.
Then there are the crowds, which
are rowdier than at typical PGA Tour
events. The idea of cheering for a poor
shot by the visiting team might seem
Clockwise from top: Spains Sergio Garcia at the 2014 Ryder Cup, perfectly natural in other sports, but for
and Americans Tiger Woods and Phil Mickelson. pro golfers it is a shock to the system.
Its the closest we get to playing golf
in a football-type environment, where
Davis Love III, the captain of the Weekley, J.B. Holmes and Patrick Reed. youre playing in front of a home crowd
U.S. Ryder Cup team, got to person- Even among more seasoned Ryder or an away crowd, said Justin Rose of
ally choose four of the 12 members of Cup players, there is little consensus as England. The two experiences are com-
the American roster. In doing so, he to what makes a player particularly pletely different from each other.
had reams of data to well-suited for it. When asked what makes players
consider. Its not an easy thing to explain, well-suited for match play, Love men-
Love could have as- Poulter said. Theres something about tioned guys that love the stage. He
sessed which players the Ryder Cup that grips certain play- said, Phil Mickelson, he loves standing
have performed best of ers. I dont know why. on the last hole with $1,000 on the
late and which have More than ever before, both Love and line with his buddies, or standing on
GOLF been better over time. European captain Darren Clarke have re- the last green at Augusta National.
JOURNAL. He could have quantified lied on statistical analysis to help make Yet despite winning the Masters
BRIAN which players strengths their picks. (Love was due to make his three times, Mickelson has been one of
COSTA help negate the teams fourth and final choice by Sunday night.) the biggest American disappointments
weaknesses and evalu- But even the best analysis available only in the Ryder Cup. His career record
ate which players per- goes so far in explaining the most sur- stands at 16-19-6. Meanwhile, Sergio
sonalities seem to jibe best. prising individual performances. Garcia of Spain, golfs perennial also-
But for all of the thought that goes I think its partly some random- ran at majorsseemingly the antithesis
into the selection of the teams, predict- ness, said Jake Nichols, head of golf of the type of player Love described
ing which players will perform best at intelligence for the 15th Club, the Lon- has been among Europes best Ryder
the Ryder Cup is kind of a crapshoot. don analytics firm working for Team Cup players ever, at 18-9-5.
One of the enduring mysteries of Europe. We havent cracked the code, I Poulter, who will be a vice captain for
the event is why some of the most ac- guess. I we wish we had. Europe this year, cited the importance
CLOCKWISE FROM TOP: HARRY HOW, ROSS KINNAIRD, MIKE EHRMANN (GETTY IMAGES)
complished players in the world strug- The idea that the outcome of the of playing with pride and passion. Yet
gle in it while lesser players thrive. the equivalent of last seasons New century, with a 12-4-2 career record. Ryder Cup is essentially random is hard one of Europes best performances in
Tiger Woods reigned for more than York Knicks. In the era of Woods and Phil Mick- to accept at a time when there is an 2014 came from its most outwardly
a decade as the best player in the Ian Poulter has never won a major elson, the four best American Ryder entire task force devoted to assessing aloof player, Victor Dubuisson of France.
world yet his career record in Ryder championship but the Englishman be- Cup players since 2000, in terms of and ending the Americans failures. And therein lies the secret to the
Cup matches is 13-17-3, which by win- came the screaming, bug-eyed face of points won per match played, are of (Europe has won eight of the past 10 Ryder Cup: Nobody really knows
ning percentage makes him roughly Europes Ryder Cup dominance in this far lesser stature: Scott Verplank, Boo times.) But it may be the best explana- what it is.

Heard on The Field

At Berlin Marathon, I wanted to set a personal
best and its a fantastic time,
A Bittersweet Victory but its a little disappointing to
Kenenisa Bekele of Ethiopia miss the world record by so lit-
pulled away from Wilson Kip- tle, Bekele said.
sang of Kenya late in the race to Bekele is considered one of the
win the Berlin Marathon just greatest distance runners ever. He
Major-League Star
Killed in Boat Crash
Jos Fernndez, the fireball-
ing and fun-loving ace for the
Miami Marlins, has died, the
team said Sunday. He was 24.
WILFREDO LEE/ASSOCIATED PRESS

outside the world-record time. won three Olympic titles and five Fernndez was one of three
Bekeles winning time of two world-championship golds and is people who died in a boat crash
hours, 3 minutes and 3 seconds the world-record holder over early Sunday, the AP reported.
on Sunday was six seconds out- 5,000 and 10,000 meters. A Cuban defector who at-
side Dennis Kimettos world re- Aberu Kebede led an Ethio- tended high school in Florida,
cord, also set in Berlin in 2014. pian sweep in the womens race Fernndez had quickly become
Bekeles mark is the second- in 2:20:45. Birhane Dibaba was one of the games top pitchers. Marlins right-hander Jos
best time. Evans Chebet of second, Ruti Aga third. The Marlins game Sunday was Fernndez earlier this month.
Kenya was third in 2:05:31. Associated Press canceled. Andrew Beaton

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are todays noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 6 Buglers call 36 Many a
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57 58 59 60 61 suit in the 1960s
T-storms 52 Investors
62 63 64
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28 Finish a hole concern
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65 66 67
29 Poet Pound 53 Brewpub
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31 Symbol on a 56 Surrounding
Global Forecasts City
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Geneva 20 11 pc 21 10 pc Ottawa 18 11 r 19 8 c music 58 Peg for Pebble
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34 Music maker in Beach
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footballer calculation ___ Believer
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16 Love ___ 39 Address for a 65 Letters before A L P A U R
A L E S S E R
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Solve this puzzle online and discuss it at WSJ.com/Puzzles.
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Frankfurt 20 10 pc 22 11 pc Orlando 32 23 t 32 23 t Zurich 19 9 t 19 8 pc letters spell the answer in order.

For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Monday, September 26, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
Trump Debate
Whether or Not in Syria Dos and Donts
R
ussian and Syrian regime forces re- against Islamic State. Hes also unsure of
newed their offensive against the be- whether to provide Syrias Kurdsby far the Which Donald Trump Aleppo question. Her campaign team is
will show up to Hofstra already trying to pressure debate mod-
sieged city of Aleppo on Friday, kill- most effective U.S. ally in the warwith the
University on Monday erators into helping with a gotcha. Jen-
ing 27 civilians in air and weapons they would need to night for the first U.S. nifer Palmieri, Mrs. Clintons communi-
ground bombardments. But Obama could arm evict Islamic State from its presidential debate? cations director, groused on Wednesday
this time the Obama Admin- Syrian capital in Raqqa. The Oval Office may that reporters lower the bar for Mr.
istration isnt taking the out-
Americas friends Whether its worth alienating
rage lying down. Behold Ben the Kurds, but he Turkey by doing so is another POTOMAC hinge on that question. Trump. She said debate moderators
Presidential debates need to ask substantive questions, fac-
WATCH
Rhodes, warning the Kremlin White House puzzle. always matter, but the tual questions.
that there are limits to the
probably wont. All this is causing some
By Kimberley
stakes in this first Mrs. Clinton will also attempt to
A. Strassel
White Houses diplomatic presidential misgivings, not Trump-Clinton faceoff needle Mr. Trump into an explosion.
patience after Russia flouted least because Mr. Obama are higher than most. She must know (who doesnt?) that
another cease-fire by bombing a humanitar- knows hell be judged harshly for his Syrian Or at least they are for Mr. Trump. nothing drives him to extremes more
The billionaires biggest problem is than personal attackson his wealth,
ian aid convoy. abdication. In an interview for Vanity Fair,
that Americans remain unsure about Trump steaks, his lawsuits. Mrs. Clinton
The question is whether or not we just Mr. Obama told historian Doris Kearns Good- what they would get with a Trump will attempt to turn the corruption
walk away from the table completely at this win that Syria haunts me constantly, and presidency. question around on Mr. Trump, to call
point, the deputy national security adviser that he asks himself what a Winston Church- Over the years theyve seen Donald him out as a con man, but more to de-
said last week, or whether or not we do ill or Dwight Eisenhower might have done the reality-TV star. Theyve seen Donald flect attention from her own pay-to-
some more diplomacy and consultation to in his place. Yet he continues to insist that the one-time Democrat. Theyve seen play and email scandals. Once again she
determine whether or not there is some he got all the big calls right. Regrets, hed Donald the unhinged. More recently, will paint him as the biggest rotten ap-
path forward. have a fewif only he could think of what theyve seen Donald the serious candi- ple in that basket of deplorables.
To whether or notwhen it comes to the Ad- they might be. date. Yet Mr. Trump has no prior
ministrations Syria policy, thats always been If Mr. Obama is really looking for a elected service from which to judge po-
the question. President Obama dithered for Churchillian answer to Syrias dilemmas, he litical or policy leadership. He has run Voters know hes a
only a few ads. For many voters, this
months over whether to call on Bashar Assad could arm Americas Kurdish friends, destroy first debate will be a (re)introduction, scrapper. But he must
to step aside, first deciding in favor of it only the Assad regimes air force and its armor re- and at a critical time. show an optimistic
effectively to reverse himself last year. He serves, and redraw the map of Syria to take ac- The matchup will provide an an-
struggled with the question of whether and to count of the new dividing lines of a broken coun- swerone way or the otherto the vision for America.
what extent to arm a credible opposition force, try. Instead of dispatching John Kerry on more central accusation against Mr. Trump.
only to spend a half-billion dollars training a negotiating dead ends with Russia, he could also The overwhelming focus of Mrs. Clin-
handful of fighters. He drew a red line against impose further economic costs on Moscow for tons campaign has been its unrelenting Word is that Mr. Trump isnt doing a
the use of chemical weapons, but whether to its Middle East adventurism. charge that he is unfit to be president. whole lot of debate prep. But his team
enforce it was another matter. None of this would require deploying U.S. Polls show this resonates with voters. A ought to have at least readied him for
More recently, Mr. Obama has been of two ground troops in large numbers to Syria. But recent New York Times/CBS survey what should be the easy response to all
found that 47% of registered voters the nasty attacks. Mrs. Clintons own
minds over whether to oppose Moscows in- it might warrant restoring Winstons bust to
thought a Clinton presidency would be past is so malodorous, so rife with
tervention in Syria, or join it in a mutual effort the Oval Office where it belongs. a safe choice for the country, versus crooked deals and lies, that Mr. Trump
30% who thought that about Mr. shouldnt have to do much more than

The Wells Fargo Standard Trump. Fifty-five percent said that Mrs.
Clinton had the right kind of tempera-
calmly question her credibility and then
move on to better subjects.

D
ment to be president, compared with Mr. Trumps impulse no doubt will
emocrats are waging a nonstop cam- ber his role? Mr. Lew spent the weeks before 31% for Mr. Trump. On Monday voters be to take it to her, to hit back, to dwell
paign to punish bank executives for his 2013 Senate confirmation saying he couldnt will see how his temperament holds up on Mrs. Clintons malfeasance. No
misconduct, both real and imagined. even recall the details of investments that blew under stress on live TV. doubt a few tough reminders to the au-
After revelations that Wells up on his watch. Thats why this is such a test. Mr. dience of her ethical failings are neces-
Fargo fired thousands of em- Imagine if the Treasury What makes this so awk- Trumps disciplined campaigning lately
has served him well and helps account
sary. But everyone already knows Mr.
Trump is a scrapper. What he needs to
ployees for setting up ac- Secretary had to live ward is not merely that Sen.
for the tightening polls. But the disci- show now is that he has his own opti-
counts without customer per- Warren and her Democratic pline has been largely the result of pre- mistic and considered plans for change
mission, Massachusetts Sen. by new rules for banks. colleagues overwhelmingly pared speeches, teleprompters, talking in America. This is one of his openings.
Elizabeth Warren and her voted to confirm Mr. Lew to points and a staff that is clearly work- In that same New York Times/CBS poll,
colleagues were howling last run the Treasury. And its ing hard to keep him on message. 48% of voters felt Mr. Trump could
week for Wells to claw back bonuses that had not merely that many of the regulators on The Republican nominees worst mo- bring about real change. Only 36%
been paid to senior executives. Awkwardly for Mr. Lews Financial Stability Oversight Coun- ment in recent weeks was at NBCs com- said that of Mrs. Clinton.
Ms. Warren and her colleagues, Rep. Scott cil are now drafting clawback rules that mander-in-chief forum, where he was By being positive, Mr. Trump would
Garrett (R., N.J.) decided to pursue this line other, less politically connected, bankers will tasked with talking off the cuffand draw a stark contrast. Mrs. Clinton these
of argument a little too vigorously for Demo- have to live by. happily did so, in rambling fashion. days looks perpetually angry and seems
cratic tastes. Monday nights debate, with hours of to have only one volume setting: yell.
Theres also the issue of scale. Mr. Lews
unscripted talk, offers plenty of opportu- The press keeps noting that she is a sea-
At a hearing last week in the House Finan- Citigroup consumed a series of multibillion- nities for Mr. Trump to erase, with one soned debater, but then again she has
cial Services Committee, Mr. Garrett asked dollar taxpayer bailouts and helped trigger loose-lipped error, what credibility he mostly debated fellow Democrats and
Treasury Secretary Jack Lew, who helped pre- a world-wide financial panic. Wells Fargo has built in the past month. Conversely, been questioned by sympathetic press.
side over a titanic financial disaster at Citi- mistreated its customers, but its $2.6 million it could be the moment he begins to look Her style is fairly predictable.
group in 2008, whether the bank had clawed in remediation for those affected is a round- seriously presidential. Mr. Trump is by contrast new to this.
back any of his compensation. ing error at a bank with $86 billion in annual The good news for Team Trump is But that also gives him an advantage, in
YouTube viewers may be entertained revenue. If J.P. Morgans famous 2012 trad- that Mrs. Clintonnothing if not un- that he has the freedom and the per-
watching the video of this exchange, in ing loss was triggered by a London whale, subtleis already radiating her main sonality to be unconventional and un-
which Mr. Lew makes every effort to avoid as a financial matter this is the San Fran- lines of attack. She will attempt to predictable. It could give him new mo-
answering the simple question. At one point cisco minnow. make him look stupid by chiding him mentum toward the White Houseif he
for a lack of policy knowledge and can get this first one right.
the former chief operating officer of two Mr. Garrett sums up the lesson for bankers
sandbagging him with a what is Write to kim@wsj.com.
troubled Citi units says, I was responsible when he says that so long as youre a high-
for administrative activities, not for design- ranking Democratic official, you can make all
ing risk products so lets just remember the money that you want on Wall Street but LETTERS TO THE EDITOR
what my role was. if youre not one of them then you have to play
How could any lawmakers possibly remem- by the rules if the company collapses. Dummies Reply to NeverTrump for Dummies
Regarding NeverTrump for Dum- Mr. Trump will work with Congress
Trumps $1.5 Trillion Tax Detail mies (Global View, Sept. 14): Bret
Stephens concludes by saying, If
and is on the right side of each of
these key issues. Mrs. Clinton will

D
onald Trump released a new tax-re- ganize as a contractor or personal C corp and youre truly confident in American in- make things worse. This election is
stitutions, then well ride out Mrs. about more than making America
form plan last week, but theres since try to pay 15%. The campaign says Mr. Trump
Clinton just as we have Mr. Obama. great, its about saving America.
been more than a little confusion over would work with Congress to write tax rules Isnt the point that large and growing JAMES HOLLAND
the details. Well try to sort that distinguish the hardware numbers of Americans are not confi- Winchester, Va.
out the debate, but since the The good news is that stores from the lawyers, fi- dent at all in American institutions
candidate prides himself on Congress would rewrite nanciers and the like who and, further, that many people ha- Mr. Stephens, I praise you for hav-
not sweating the details, this might try to game the tax dif- ven't enjoyed the ride of the past ing the courage to say what The Wall
indeterminacy shows how his reform plan. ferential. eight years and dont like where we Street Journal is unable to say. Hillary
unusually reliant a Trump Then again, if the ulti- as a nation are headed? Clinton is undesirable, but Donald
Administration would be on mate cost of this hybrid Americans trust and respect for Trump is, quite simply, unthinkable.
Congress. system would be somewhere between $4.4 their Congress and the government LAWRENCE GAGE
The main virtue of the Republicans plan is trillion or $5.9 trillion, and less after ac- at large is less and less. Isnt that Pittsford, N.Y.
how Donald Trump and Bernie Sand-
directional, in the sense that Mr. Trump says counting for growth, the episode under- ers scored so many points against I have no illusions about Mr.
his top priority will be economic growth after scores how expensive and detail-dependent the institution? Trumps ideological purity, but I dont
a decade of political focus on other goals. But tearing up the status quo would be. Luckily, Perhaps Mr. Stephens should add the think hes going to open the flood-
his campaign got in trouble over how he theres still room to offset following questions to his mock dia- gates for organized labor, environ-
would treat pass-through business income. some of the costs of this logue: Did anyone die on this candi- mentalists, Planned Parenthood, sin-
Mr. Trump is proposing a 15% rate for work in progress, such as dates watch? Did this candidate show gle-payer health care, racial
corporations, and the question is whether downsizing Mr. Trumps flagrant disregard for the law regarding pandering, increased government in-
businesses that are organized as S corps, new entitlement for child communications while serving in the trusion into the economy and educa-
partnerships and the like and pay taxes care. executive branch of government and tion, and support higher taxes. With
through the personal-income code would be Some have also interpreted then flagrantly lie about her actions? Hillary Clinton, all of the above and
BILL DOUGLAS more are a slam dunk.
eligible for the same rate. As we read his the Trump plan as an intellec-
Medford, Mass. RAY PERRY
speech and fact sheet, the 15% rate would tual challenge to the GOPs Warrington, Pa.
apply to all business income. Others came growth wing because of its Mr. Stephenss insulting attitude
to the opposite conclusion. top 33% rate for single income
The Trump campaign told the National Fed- above $112,500. On the cur-
toward dummies like me is very lib-
eral-like: If you dont have the facts or
CORRECTIONS
eration of Independent Business, the small- Donald Trump rent schedule, 33% kicks in for arguments on your side, then engage
business trade group, that the 15% would ap- singles at $190,000. in the politics of personal destruction. Slovakias Foreign Minister, Miro-
ply to its members. The Tax Foundation This is misdirection in part, because the GERRY DENOTTO slav Lajck, holds a masters degree
couldnt get an answer to its satisfaction and Tax Foundations distributional analysis Mount Prospect, Ill. from the Moscow State Institute of
thus modelled the Trump plan with and with- found that the Trump plan would provide a International Relations. The edito-
out the 15% pass-through rate. The plan would substantial tax cut on net for all income Despite her hidden emails, there is rial Who Will Run the U.N. (Re-
no mystery where Mrs. Clinton and view & Outlook, Sept. 20) misstated
reduce federal revenue by either $4.4 trillion groups. But far better to cut marginal tax
the Democratic Party stand on the is- the degree.
or $5.9 trillion, by the Tax Foundations static rates for all groups to improve the incentives sues. There is no Democratic plan to
estimate. to work and invest. restore economic growth and reduce i i i
In one sense, this $1.5 furor is overblown, Trying to evaluate Mr. Trumps ideas has the federal debt. That plan has been
even if the campaign was careless about its a quicksilver quality, because he has so few missing for almost eight years, since Former Vice President Hubert
terminology and the differences between fixed policy convictions and views any pro- President Obama ignored the Bowles- Humphreys first name was mis-
pass-throughs and corporations. Mr. Trumps posal as the opening bid for negotiation. In Simpson recommendations. Mr. Ste- stated in the Oct. 23 op-ed article,
advisers now tell us that under his plan all 1999 he proposed a one-time tax of 14.25% on phens should focus on the key issues: Party Loyalty Cant Make Me Vote
businesses could choose to pay either the 15% the already-taxed wealth of people with net conservative Supreme Court nomina- for Clinton.
rate or stay in the individual code. A hardware worth above $10 million, which would have tions, economic growth unleashed by
tax cuts and regulation reform,
store with a single owner, say, might pay an been the largest tax confiscation in U.S. his- Letters intended for publication should
ObamaCare repeal, restoration of mil- be addressed to: The Editor, 1211 Avenue
individual rate as low as 12%. tory. Now hes emphasizing growth. itary strength and readiness, energy of the Americas, New York, NY 10036,
The Trump campaign is attempting to pre- But the irony is that precisely because he independence and affordability and or emailed to wsj.ltrs@wsj.com. Please
vent a tax avoidance and unfairness problem: is such a tabula rasa, he would be more depen- the reversal of socialist influence in include your city and state. All letters
Since the top marginal rate in Mr. Trumps in- dant than any other President on Congress the Justice Department, IRS, State are subject to editing, and unpublished
dividual proposal would be 33%, every affluent and on those Members most engaged with the Department, EPA, NLRB, FCC and letters can be neither acknowledged nor
returned.
professional in American could instantly reor- reforms they think will improve American life. other federal agencies.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
By Mark Helprin
E
ven should nuclear brink-
manship not result in Ar-
mageddon, it can lead to
abject defeat and a com-
plete reordering of the in-
ternational system. The extraordi-
narily complicated and consequential
management of U.S. nuclear policy
rests upon the shoulders of those
that Americans elevate to the highest
offices. Unfortunately, President
Obamas transparent hostility to
Americas foundational principles and
defensive powers is coupled with a
dim and faddish understanding of nu-
clear realities. His successor will be
no less ill-equipped.
Hillary Clintons robotic compul-
sion to power renders her immune
to either respect for truth or clear-
headed consideration of urgent
problems. Theodore Roosevelts sec-
retary of state once said that he was
pure act (meaning action). Hillary
Clinton is pure lie (meaning lie),
with whatever intellectual power she
possesses hopelessly enslaved to re-
flexive deviousness.
Donald Trump, surprised that nu-
clear weapons are inappropriate to
counterinsurgency, has a long history
of irrepressible urges and tropisms.
Rather like the crazy boy-emperors af-
ter the fall of the Roman Republic, he
may have problems with impulse con-
troland an uncontrolled, ill-formed,
perpetually fragmented mind.
Lulled to believe nuclear
catastrophe died with
the Cold War, America
is blind to rising dragons.
None of these perhaps three worst
people in the Western Hemisphere,
and few of their deplorable under-
lings, are alive to the gravest danger.
Which is neither Islamic State, ter-
rorism, the imprisoned economy, nor
even the erosion of Americas na-
tional character, though all are of
crucial importance.
The gravest danger Americans face
is fast-approaching nuclear instabil-
ity. Many believe it is possible safely
to arrive at nuclear zero. It is not.
Enough warheads to bring any coun-
try to its knees can fit in a space volu-
metrically equivalent to a Manhattan
studio apartment. Try to find that in
the vastness of Russia, China, or Iran.
Even ICBMs and their transporter-
erector-launchers can easily be con-
cealed in warehouses, tunnels and
caves. Nuclear weapons age out, but,
thanks to supercomputing, reliable
replacements can be manufactured
with only minor physical testing. Un-
accounted fissile material sloshing
around the world can, with admitted
difficulty, be fashioned into weapons.
Presidential Debates Get No Respect. They Should
By Newton N. Minow
And Craig L. LaMay
A
s Americans enter the home
stretch of one of the most
unusual presidential campaigns
in memory, journalists, the political
parties and voters are awaiting the de-
bates. Everyone is wondering what will
happen on Monday at the first debate
at Hofstra University. And everyone,
not least the candidates, has an idea
about how to make them better.
These arent academic debates, nor
should they be. In a real debate
judges assign points and declare the
winner. In presidential debates, voters
are the judges, and they declare the
winner on Election Day. There have
been 30 presidential and nine vice-
presidential debates, beginning with
the first on Sept. 26, 1960. Weve
come a long way since.
Today the televised presidential de-
bates arent only an important instru-
ment in American democracy; they
are a near-universal requirement of
democratic elections, from Afghani-
stan to Zambia. If Americans are look-
ing for something to feel good about
this campaign season, this is it.
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
Rupert Murdoch
Executive Chairman, News Corp
Gerard Baker
Editor in Chief
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The Gathering Nuclear Storm
And when rogue states such as North
Korea and Iran build their bombs,
Americas response has been either
impotence or a ticket to ride.
Nor do nuclear reductions lead to
increased safety. Quite apart from en-
couraging proliferation by enabling
every medium power in the world to
aim for nuclear parity with the criti-
cally reduced U.S. arsenal, reductions
create instability. The fewer targets,
the more possible a (counterforce)
first strike to eliminate an enemys
retaliatory capacity. Nuclear stability
depends, inter alia, upon deep re-
serves that make a successful first
strike impossible to assure. The fewer
warheads and the higher the ratio of
warheads to delivery vehicles, the
more dangerous and unstable.
Consider two nations, each with 10
warheads on each of 10 missiles. Ones
first strike with five warheads tasked
per the others missiles would leave
the aggressor with an arsenal suffi-
cient for a (countervalue) strike
against the now disarmed opponents
cities. Americas deterrent isnt now as
concentrated as in the illustration, but
by placing up to two-thirds of our stra-
tegic warheads in just 14 submarines;
consolidating bomber bases; and en-
tertaining former Defense Secretary
William Perrys recommendation to do
away with the 450 missiles in the land-
based leg of the Nuclear Triad, we are
moving that way.
Supposedly salutary reductions
are based upon an incorrect under-
standing of nuclear sufficiency: i.e., if
X number of weapons is sufficient to
inflict unacceptable costs upon an en-
emy, no more than X are needed. But
we dont define sufficiency, the ad-
versary does, and the definition var-
ies according to culture; history; the
temperament, sanity or miscalcula-
tion of leadership; domestic politics;
forms of government; and other fac-
tors, some unknown. For this reason,
the much maligned concept of over-
kill is a major contributor to stability,
in that, if we have it, an enemy is less
likely to calculate that we lack suffi-
ciency. Further, if our forces are cali-
brated to sufficiency, then presum-
ably the most minor degradation will
render them insufficient.
N
or is it safe to mirror-image
willingness to go nuclear. Ev-
ery nuclear state has its own
threshold, and one cannot assume
that concessions in strategic forces
will obviate nuclear use in response
to conventional warfare, which was
Soviet doctrine for decades and is a
Russian predilection now.
Ballistic-missile defense is op-
posed and starved on the assumption
that it would shield ones territory af-
ter striking first, and would therefore
tempt an enemy to strike before the
shield was deployed. As its oppo-
nents assert, hermetic shielding is
impossible, and if only 10 of 1,500
warheads were to hit American cities,
Today 78 countries and regions
around the world hold leader debates.
This year debates have been held in
Peru, Serbia, the Dominican Republic
and Guatemala, and are scheduled in
Cambodia. Argentina held its first
presidential debate last year. Most
countries of the European Union now
hold televised debates; Britain, long a
holdout, began leader debates in 2010.
South Africa held its first in 1994, be-
tween Nelson Mandela and F.W. de
Klerk, a transformative moment in the
countrys history. The U.S. Commis-
sion on Presidential Debates has been
instrumental in many of these de-
bates, providing guidance on formats,
security, candidate negotiation and
stage design.
The singular benefit of leader
debates is that voters get to see
candidates talk to each other (or one
another in parliamentary systems),
face-to-face. Critics dismiss them as
theater, and sometimes theyre right;
many of this years U.S. primary
debates were uninformative, chaotic
and even vulgar.
But the presidential debates are an-
other animal. Not only are they sub-
stantive and serious, they are the only
Robert Thomson
Chief Executive Officer, News Corp
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
Ashley Huston, Chief Communications Officer;
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OPERATING EXECUTIVES:
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DJ Media Group:
Almar Latour, Publisher; Kenneth Breen,
Commercial; Edwin A. Finn, Jr., Barrons;
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
Clockwise from top left, Irans Ayatollah Ali Khamenei, Chinas Xi Jinping,
Russias Vladimir Putin and North Koreas Kim Jong Un.
the cost would be unacceptable. But
no competent nuclear strategist ever
believed that, other than protecting
cities from accidental launch or rogue
states, ballistic-missile defense is
anything but a means of protecting
retaliatory capacity, making a coun-
terforce first strike of no use, and
thus increasing stability.
In a nuclear world, unsentimental
and often counterintuitive analysis is
necessary. As the genie will not be
forced back into the lamp, the heart
of the matter is balance and deter-
rence. But this successful dynamic of
70 years is about to be destroyed.
Those whom the French call our re-
sponsibles have addressed the nu-
clear calculusin terms of suffi-
ciency, control regimes and foreign
policyonly toward Russia, as if
China, a nuclear power for decades,
didnt exist. While it is true that to
begin with its nuclear arsenal was de
minimis, in the past 15 years China
has increased its land-based ICBMs
by more than 300%, its sea-based by
more than 400%. Depending upon the
configuration of its missiles, China
can rain up to several hundred war-
heads upon the U.S.
As America shrinks its nuclear
forces and fails to introduce new
types, China is doing the opposite,
increasing them numerically and
forging ahead in various technolo-
gies (quantum communications, su-
percomputers, maneuverable hyper-
sonic re-entry vehicles), some of
which America has forsworn, such as
road-mobile missiles, which in sur-
vivability and range put to shame
U.S. Minuteman IIIs.
Because Chinas nuclear weapons
time in a modern campaign when vot-
ers see candidates think on their feet
and speak at length and extemporane-
ously, without the benefit of script or
consultants. The debates give voters
multiple opportunities to see how can-
didates handle pressure, how well they
Following the U.S. example,
78 countries or regions
now have leader debates.
think on their feet. They show the can-
didates on stage armed with nothing
but their character and intellect. The
American debates are also provided to
voters without commercials.
Debates are imperfect, and always
will be. Candidates dont have to
participate. Incumbents everywhere
dont like them and often try to avoid
them, especially if they lead in the
polls. There are hard choices about
formats, sponsors, whether there will
be moderators and who they should
be, and which candidates and how
many are invited to participate. In
Notable&Quotable:CleanMyRoom,Mr.President
A 1984 letter to President Ronald
Reagan, and a draft of his reply, as
published in the second volume of Let-
ters of Note: An Eclectic Collection of
Correspondence Deserving of a Wider
Audience, compiled by Shaun Usher:
Dear Mr. President,
My name is Andy Smith. I am a sev-
enth grade student at Irmo Middle
School, in Irmo, South Carolina.
Today my mother declared my bed-
room a disaster area. I would like to
request federal funds to hire a crew to
clean up my room. I am prepared to
provide the initial funds if you will pro-
vide matching funds for this project.
I know you will be fair when you
consider my request. I will be await-
ing your reply.
Sincerely yours,
Andy Smith
Monday, September 26, 2016 | A13
they made good on decades of bur-
den-sharing delinquency.
Russia deploys about 150 more nu-
clear warheads than the U.S. Inten-
sively modernizing, it finds ways to
augment its totals via undisguised
cheating. Bound by no numerical or
qualitative limits, China speeds its
strategic development. To cripple
U.S. retaliatory capability, an enemy
would have to destroy only four or
five submarines at sea, two sub
bases, half a dozen bomber bases,
and 450 missile silos.
Russia has 49 attack submarines,
China 65, with which to track and kill
U.S. nuclear missile subs under way.
Were either to build or cheat to 5,000
warheads (the U.S. once had more
than 30,000) and two-thirds reached
their targets, four warheads could
strike each aim point, with 2,000 left
ZUMA PRESS(3)/GETTY IMAGES
to hold hostage American cities and
industry. China and Russia are far
less dense and developed than the
U.S., and it would take more strikes
for us to hold them at risk than vice
versa, a further indictment of reli-
ance upon sufficiency calculations
and symmetrical reductions.
Russia dreams publicly of its
former hold on Eastern Europe and
cannot but see opportunity in a
infrastructure is in part housed in disintegrating European Union and
3,000 miles of tunnels opaque to faltering NATO. China annexes the
American intelligence, we cannot know South China Sea and looks to South
the exact velocity and extent of its Korea, Japan and Australasia as
buildup. Why does the Obama admin- future subordinates. Given the
istration, worshipful of nuclear agree- degradation of U.S. and allied
ments, completely ignore the nuclear conventional forces previously able to
dimension of the worlds fastest rising hold such ambitions in check, critical
major power, with which the U.S. and confrontations are bound to occur.
allies engage in military jockeying al- When they do occur, and if without
most every day on multiple fronts? American reaction, China or Russia
Lulled to believe that nuclear catastro- have continued to augment their stra-
phe died with the Cold War, America is tegic forces to the point of vast supe-
blind to rising dragons. riority where one or both consider a
A
first strike feasible, we may see nu-
nd then we have Russia, which clear brinkmanship (or worse) in
ignores limitations the Obama which the U.S.startled from sleep
administration strives to ex- and suddenly disabused of the myth
ceed. According to its own careless or of sufficiencymight have to capitu-
defiant admissions, Russia cheats in late, allowing totalitarian dictator-
virtually every area of nuclear weap- ships to dominate the world.
ons: deploying missiles that by treaty Current trajectories point in exactly
supposedly no longer exist; illegally this direction, but in regard to such
converting antiaircraft and ballistic- things Mr. Trump hasnt the foggiest
missile defense systems to dual-capa- and, frankly, Mrs. Clinton, like the
ble nuclear strike; developing new president, doesnt give a damn.
types of nuclear cruise missiles for The way to avoid such a tragedy is
ships and aircraft; keeping more mis- to bring China into a nuclear control
siles on alert than allowed; and retain- regime or answer its refusal with
ing battlefield tactical nukes. Americas own proportional increases
In the almost complete absence of and modernization. And to make sure
its own soft power, Russia fre- that both U.S. nuclear and conven-
quently hints at nuclear first use. All tional forces are strong, up-to-date,
this comports with historical Soviet- and survivable enough to deter the
Russian doctrine and conduct; is an militant ambitions of the two great
important element of Putinesque powers rising with daring vengeance
tactics for reclaiming the Near from what they regard as the shame
Abroad; and dovetails perfectly with of their oppression.
Mr. Obamas advocacy of no first
use, unreciprocated U.S. reductions Mr. Helprin, a senior fellow of the
and abandonment of nuclear mod- Claremont Institute, is the author of
ernization. Which in turn pair nicely Winters Tale, A Soldier of the
with Mr. Trumps declaration that he Great War and the forthcoming
would defend NATO countries only if novel Paris in the Present Tense.
some countries, like Sweden or Kenya, ness to debate again, there wouldnt be
debates have had as many as nine par- another televised presidential debate
ticipants, while others, like Holland, until 1976. President Ford, down 30
will have separate debates for the ma- points in the polls, agreed to meet
jor and minor candidates. Jimmy Carter, who wanted the country
In the U.S., the rule for participa- to know him better. Four years later,
tion is simple: Any candidate who is Mr. Carter refused to go on stage with
legally eligible to be president, who is John Anderson, but Ronald Reagan did,
on enough state ballots to win an and changed history.
electoral majority, and who has 15% Since 1976 the presidential debates
voter support in an average of five have continued uninterrupted. They
major polls is automatically included have become the most important fea-
in the debates. ture of Americas presidential cam-
Yes, the debates could be better paigns. They are far better instru-
and the commission works tirelessly to ments to inform the voters than the
make them sobut that we have them nasty commercials that dominate
at all is something of a miracle. When campaigns, funded often by anony-
Vice President Richard Nixon and Mas- mous sources. The presidential de-
sachusetts Sen. John Kennedy met for bates treat American voters with re-
the first televised debate in 1960, it spect. The U.S. has taken the lead, and
was the first ever face-to-face debate the world has taken notice.
between presidential candidates.
If Congress in 1960 hadnt given a Mr. Minow is vice chairman of the
one-time suspension of the Equal Time Commission on Presidential Debates
Law of the Communications Act, the and former chairman of the Federal
networks couldnt have broadcast them Communications Commission. Mr.
without including every legally quali- LaMay is associate dean at North-
fied candidateand typically there are westerns Medill School of Journal-
more than 200. With Kennedys death ism, Media, and Integrated Marketing
and Johnsons and Nixons unwilling- Communications.
Dear Andy May I make a suggestion? This
Im sorry to be so late in answer- administration, believing that govt.
ing your letter but as you know Ive has done many things that could
been in China and found your letter better be done by volunteers at the
here upon my return. local level, has sponsored a Private
Your application for disaster Sector Initiative Program, calling
relief has been duly noted but I upon people to practice volunteer-
must point out one technical ism in the solving of a number of lo-
problem; the authority declaring cal problems.
the disaster is supposed to make Your situation appears to be a
the request. In this case your natural. Im sure your Mother was
mother. fully justified in proclaiming your
However setting that aside Ill room a disaster. Therefore you are
have to point out the larger prob- in an excellent position to launch
lem of available funds. This has another volunteer program to go
been a year of disasters, 539 hurri- along with the more than 3000
canes as of May 4th and several already underway in our nation
more since, numerous floods, forest congratulations.
fires, drought in Texas and a num- Give my best regards to your
ber of earthquakes. What Im get- Mother.
ting at is that funds are danger- Sincerely,
ously low. Ronald Reagan
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ROLLING STONE MAGAZINE SELLS A STAKE TO BANDLAB TECHNOLOGY | B3
Yen vs. Dollar
110
100.99 s 0.22% Hang Seng
105
100
95
J A
As of 12 p.m. ET
2016 Dow Jones & Company. All Rights Reserved.
China Backs Credit Default Swaps Hanjin
To Sell Its
Dumped
The number of defaulted bonds in
China has surged in recent years.
50
40
30
20
10
0 known as CDS. Such deriva-
2013 14 15
*Year to date
Source: Wind Info
THE WALL STREET JOURNAL.
Self-Driving
Hype Fails
To Reflect
Realities
T
O JUDGE by recent
claims, fully autono-
mous self-driving
technology is just around the
corner. Uber Technologies
Inc. is offering Pittsburgh
residents rides in autono-
mous Ford Fusions. Ford Mo-
tor Co.,
BMW AG,
Volvo Car
Corp. and
Lyft Inc.
say they
KEYWORDS will pro-
CHRISTOPHER duce fully
MIMS autono-
mous vehi-
cles by 2021
or sooner. Tesla Motors Inc.
Chief Executive Elon Musk,
rarely topped in hyperbole,
says the technology will be
here within 24 months.
To many industry insiders,
these claims are largely hype.
Theyre not false, but they
abuse the terms autonomous
vehicle and self-driving,
which evoke images of hop-
ping into a car, entering a
destination and disappearing
into sleep, food or our
phones.
That is not what were go-
ing to get by 2021. It wont
happen for a long time,
maybe decades.
These statements are as-
pirations, theyre not really
reality, says Raj Rajkumar, a
professor of engineering at
Carnegie Mellon University,
who collaborates with Gen-
eral Motors Co. The tech-
nology just isnt
there.Theres still a long
way to go before we can take
the driver away from the
drivers seat.
Dr. Rajkumar is hardly
alone in his skepticism. Mary
Cummings, a professor of me-
chanical, electrical and com-
puter engineering at Duke
Please see MIMS page B3
Foreign Jet-Fighter Companies Rush to Woo India
BY DANIEL STACEY
NEW DELHIIndia is being
offered blueprints to advanced
combat aircraft by the worlds
aerospace companies, a move
unthinkable even a decade
ago, as New Delhi gets ready
to place another multibillion-
dollar air force order.
Indias aging military jet
fleet desperately needs an up-
grade, which analysts say may
spur it to place an order worth
more than $10 billion in the
next year. Hoping for an edge,
and encouraged by a recent
law that allows 100% foreign
ownership of local defense
firms, jet-fighter makers such
as Lockheed Martin Corp.,
Boeing Co. and Saab AB are
BUSINESS & FINANCE
23800
23686.48 t 0.31% Gold
22500
21200
19900
S J A S
BY SHEN HONG
SHANGHAIChina has ap-
proved the sale of financial
products that can protect in-
vestors against bond or loan
defaults, signaling an in-
creased willingness to let mar-
ket forces deal with the rising
number of companies that
arent paying back debt.
The move means that Chi-
nese investors will for the first
time be able to buy products
such as credit default swaps,
16* tives drew wide scrutiny in
the West during the global fi-
nancial crisis because of the
way in which their extensive
Yeti has grown from a niche supplier of coolers for hunters and fishermen into a mass-market phenomenon.
Yeti Windfall: A Cool $3.3 Billion
Small equity firm stands to multiply its investment by about 50 times with IPO of cooler maker
BY MATT JARZEMSKY
A small private-equity
firm is about to get a big
payoff from a bet on $400
coolers.
If all goes as hoped, Cor-
tec Group, with just 20 em-
ployees in Midtown Manhat-
tan, could make a profit on
paper of about $3.3 billion in
the coming initial public of-
fering of Yeti Holdings Inc.,
according to people familiar
with the matter.
The company is seeking a
valuation of $5 billion in its
IPO, which could come as
soon as October, the people
said. Cortec bought a
roughly two-thirds stake in
2012 for about $67 million,
rushing in with offers to set
up production lines to India.
Efforts to give India un-
precedented access to jet
fighter know-how illustrate
the countrys rising impor-
tance to the West as Chinas
power increases, analysts say.
India, until a decade ago,
was trying stubbornly to build
its own jets, after the U.S. and
Japan imposed sanctions fol-
lowing its nuclear tests in
1998, which broke U.S. nonpro-
liferation laws and sparked
tensions with Pakistan. U.S.
companies were blocked from
giving India the technology it
needed.
Relations between India
and the U.S. have improved
since, as both share a goal to
1400
1337.20 t 0.24% WTI crude
1350
1300
1250
J A S J
THE WALL STREET JOURNAL.
use can build up hidden finan-
cial risks.
The National Association of
Financial Market Institutional
Investorsan industry body
backed by the Peoples Bank of
China, the countrys central
bankannounced the rollout
of four types of so-called
credit-risk mitigation tools
and released guidelines for
each of them on Friday.
Regulators are hoping that
products such as CDS, which
pay out if the issuer of a bond
or a loan defaults, will become
popular among investors in
the countrys main $8.5 tril-
lion bond market.
In turn, that could lower
some of the people said.
Yeti, which in July filed to
go public, still has to con-
vince investors it is worth
the hefty price tag. The mar-
keting process for the IPO
has yet to begin, and the
company could adjust its
projected valuation based on
conversations with investors.
A $5 billion valuation
would put Yeti at a steep 36
times its 2015 earnings be-
fore interest, taxes, deprecia-
tion and amortization of
$137 million. The company is
growing quickly, however,
and will be basing its pro-
posed value on newer data
and forecasts.
With U.S. stock indexes
near all-time highs and eco-
contain Chinas military. India
has struck deals with the U.S.
to buy everything from
Apache helicopters to trans-
port planes and artillery, lift-
ing the country to Indias sec-
ond-biggest defense trading
partner behind Russia.
Chinas rise has changed
the equation, said Pushan
Das, a fellow with the Ob-
server Research Foundation, a
policy think tank based in New
Delhi. Industry experts esti-
mate India needs over 300
new combat jets in the next 15
years.
It could be a while before a
deal is struck. Successful bid-
ders also face the challenge of
setting up a jet-manufacturing
system from scratch. Previous
50
46.32 s 2.16% 10-Year JGB
45
40
35
A S
the burden on Beijing to res-
cue companies that get into fi-
nancial difficulty.
Following years of rapid
buildup of public- and private-
sector debt, Chinas financial
system is coming under in-
creased strain.
There have been 45 defaults
totaling 26.81 billion yuan
($4.02 billion) in Chinas do-
mestic bond market this year,
already exceeding the 20 de-
faults on 12 billion yuan in
bonds in all of 2015.
The latest move is cer-
tainly a sign that the authori-
ties are adopting a more mar-
ket-oriented approach in
handling rising credit risks but
nomic growth subdued, the
companies behind hot prod-
ucts are trading for high
prices relative to their earn-
ings. Under Armour Inc. is
valued at 67 times its pro-
jected profit for this year,
while ski-jacket-maker Mon-
cler SpA trades for 20 times
this years expected income,
according to FactSet.
Still, making back 50
times an investment in four
years is nearly unheard of in
private-equity circles. It is
pretty rare even in the high-
return world of investing in
tech startups. Cortec already
has collected a $312 million
dividend payment from Yeti
earlier this year, according
to a regulatory filing.
Shrinking Squadrons
Many of India's old ghter jets are set to retire soon, leaving a
shortfall. Projected size of Indias Air Force:
Year Number of squadrons
2012
2017
2022
2027
2032
Source: Angad Singh/Vayu Aerospace and Defence Review
THE WALL STREET JOURNAL.
such attempts have failed.
A deal struck in 2012 with
Frances Dassault Aviation SA
to build Rafale fighters in In-
0.00
yield -0.049% 10-Year Treasury
-0.10
-0.20
-0.30
J A
Monday, September 26, 2016 | B1
it also suggests we are going
to see more defaults, said
Wang Ming, a partner at
Shanghai Yaozhi Asset Man-
agement Co., a bond fund that
manages 2 billion yuan in as-
sets.
By making these so-called
credit-risk mitigation tools
available, it simply means that
now investors will have to bite
the bullet themselves, instead
of continuing to hope for a
government bailout, Mr.
Wang said.
The National Association of
Financial Market Institutional
Investors also introduced a
new, complex instrument
Please see CDS page B2
The gains reflect Yetis
growth from a niche supplier
into a mass-market phenom-
enon. Texas brothers Roy
and Ryan Seiders founded
the company a decade ago
selling coolers to Gulf Coast
hunters and fishermen. It has
since expanded into soft
coolers and other products
such as drinkware, which
now account for 62% of its
sales.
The companys stainless-
steel mugs were a hard-to-
find holiday gift item in
2015, thanks in part to a
wave of tweeting by owners
marveling at their ability to
keep drinks hot or cold for
hours. Its ice chests are so
Please see YETI page B2
Authorized level: 42
37
32
35
34
22 shortfall
dia fell through last year fol-
lowing disagreements, and
was replaced with a smaller
plan to import 36 jets. That
2.25
yield 1.615%
1.50
0.75
0.00
S J A S
Sources: Tullett Prebon; SIX Financial
Largest
Vessels
BY COSTAS PARIS
Hanjin Shipping Co. likely
will sell some of its most valu-
able ships as creditors scramble
to secure whatever remains of
Koreas biggest container oper-
ator as it heads toward liquida-
tion, people involved in the pro-
cess said.
Those people said Korean
peer Hyundai Merchant Ma-
rine Co. would be the first to
look at Hanjins 37 container
vessels, with a focus on five
13,000-container ships, the
largest in the troubled car-
riers fleet. But it isnt certain
HMM will find the money to
buy the ships, which could go
for about $90 million each.
HMM will be the first to
cherry-pick among Hanjins
vessels, one person said.
They would like to get the big
ones, but that largely depends
on financial backing from the
government and Korea Devel-
opment Bank.
Hanjin filed for bankruptcy
protection in August. HMM is
facing its own financial prob-
lems, reeling under 5.2 trillion
won ($4.54 billion) of debt af-
ter being unprofitable for sev-
eral years.
Both the government and
KDB have said they would back
HMM in buying Hanjin assets,
provided such a move would
help it stay competitive. HMM is
looking to secure Hanjins slice
of moving Koreas exports to
Western markets, but would
need more capacity to achieve it.
HMM has said it is explor-
ing all possibilities with Han-
jin. A Hyundai spokesman said
Friday it was too early to com-
ment or to take action, as Han-
jin has until December to sub-
YETI
mit a rehabilitation plan to a
Korean court.
Both the Korean govern-
ment and KDB have said they
wont pump more funds into
Hanjin except for money to un-
load some of the half-million
containers stranded world-
wide. Yoo Il-ho, South Koreas
deputy prime minister for eco-
nomic affairs, said Friday he
expects 90% of the unloading
of Hanjin containers to be com-
pleted by the end of October.
A U.S. bankruptcy judge on
Friday expressed concern that
Hanjins efforts to cobble to-
gether a restructuring plan
may be moving too quickly for
U.S. creditors. Its very con-
densed, Judge John Sherwood
of the U.S. Bankruptcy Court in
Newark, N.J., said at a hearing
in the companys U.S. bank-
ruptcy proceeding. Im just
concerned that U.S. creditors
will be asleep at the wheel, be-
cause its a fast process.
In-Soo Nam
and Tom Corrigan
contributed to this article.
plan finally was approved by
Indias government, and an
agreement was signed on Fri-
day.
Similarly, efforts to co-de-
velop a next generation fighter
with Russias Sukhoi stalled
over cost disputes, while a
third indigenous jet program
aiming to deliver 120 light
combat aircraft is behind
schedule.
Those programs relied on
state-run Hindustan Aeronau-
tics to build and design jets.
Defense experts say the com-
pany faces a skills shortage as
its best engineers are spread
thinly across projects that in-
clude retrofitting old Russian
and French jet fighters and
Please see JET page B2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Monday, September 26, 2016
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in todays edition. Articles on regional page inserts arent cited in these indexes.
A Ford Motor..................B1
Aegis Group ................ B3
Alibaba Group.............A6
Allianz ......................... B7
Alphabet......................B3
AMC Entertainment...B8
AMC Entertainment
Holdings....................B2
Apple...........................B2
B HSBC...........................A6
BAE ............................. A2
BandLab Technologies B3
Barcodes......................B2
BMW ........................... B1
Boeing....................A2,B1
C J.P. Morgan Chase......B5
Carlyle Group..............B2
Carmike Cinemas........B2
China Mobile...............A6
Coleman.......................B2
Commerzbank ............. B5
Cortec Group...............B1
D-F
Dalian Wanda Group
............................... B2,B8
Dassault Aviation.......B1
Dentsu.........................B3
Dongming Petrochemical
Group.........................B5
INDEX TO PEOPLE
B L
Brooks, Lane...............B4
C Luo Wenbo..................B5
Coelingh, Erik..............B3
F Matsukawa, Tadashi...B7
Frank, Alan..................B3
Fukaya, Koji.................B7
G
Gruber, Andreas..........B7
H Wang, Nelson ............. B5
Hawkins, William.......B7
Hong, Kuok Khoon......B3
Huttner, Michael.........B7
J Price, Ray....................B4
Johnson, Alan.............B5
K Z
Karp, Mike...................B5
Kumar, Pratyush.........B2
Kuok, Meng Ru...........B3
YETI
Continued from the prior page
popular they have become a
favorite among thieves. Cool-
ers start at $250 and run to
$1,300 for a model Yeti says
can hold multiple elk.
Yetis sales more than tri-
pled in 2015 to $469 million.
The company touts its cool-
ers seamless construction
and the two walls of stain-
less steel that give its mugs
an insulating vacuum. The
company has also benefited
from social media, which has
made it possible for niche
products to get widespread
publicity and post explosive
growth.
Cortecs potential windfall
comes from a strategy that
many of its peers aim to fol-
low. Private-equity firms
have their eyes out for hot
products, said Jay Sammons,
head of the consumer and re-
tail team at Carlyle Group LP.
Mr. Sammons helped oversee
a roughly $500 million in-
vestment in Beats Electron-
ics that made Carlyle a profit
of about $1 billion when Ap-
ple Inc. bought the head-
phone maker.
In Yetis case, the risk for
potential investorsinclud-
ing Cortec, which will con-
tinue to own a majority of
the company after the IPO
is that sort of popularity can
be fickle. For every Under
Armour, whose market capi-
talization has risen to $16.1
billion from about $600 mil-
lion in its 2005 stock-market
debut, there is a GoPro Inc.,
whose shares are down 29%
from their IPO price.
The real question is can
Yeti keep innovating, and
how far can they take this
brand and broaden it without
losing their authenticity?
said Matt Hyde, chief execu-
ADVERTISEMENT
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 teries for Samsung Electron-
THE WALL STREET JOURNAL.
BUSINESS NEWS
Shandong Chambroad
G Petrochemical...........B5
Shanghai Yaozhi Asset
General Motors...........B1 Management.............B1
Goldman Sachs Group B5 Sony.............................B8
GoPro...........................B2 Sony Pictures
H Entertainment..........B2
Hanjin Shipping .......... B1 Sukhoi ......................... B1
Hindustan Aeronautics T
.....................................B1 Tesla Motors...............B1
Time ............................ B3
Hyundai Merchant Toyota Motor..............B3
Marine.......................B1 Twitter ........................ B8
I-J U
Igloo Products.............B2 Uber Technologies ...... B1
Intel.............................B3 Under Armour.............B1
V
L Vietnam Dairy Products
LG Electronics.............B1 .....................................B3
Lockheed Martin...A2,B1 Vinamilk......................B3
Volvo Car.....................B1
Lyft..............................B1
UNIVERSAL PICTURES/EVERETT COLLECTION
M-N W
Wenner Media ............ B3
Moncler ....................... B1
Northrop Grumman....A2 Y
S Yahoo...........................B3
Saab.............................B1 Yeti Holdings .............. B1
Salesforce ................... B8 Z
Samsung Electronics Zurich Insurance Group
............................... B1,B2 .....................................B7
Wanda offered nearly 80% of its scheduling slots to Warcraft on opening day. The film earned more than $220 million in China.
Sammons, Jay ............ B2
Sony Targets China With Tie-Up
Langell, John...............B4 Seiders, Ryan..............B1
Shashua, Amnon ........ B3
Shladover, Steven.......B3
M
T
Meidan, Michal...........B5
Tsai, Joseph................A6 Under the alliance, Wanda, for its part, can and Walt Disney Co. game adventure Jumanji.
benefit from Hollywoods de- Wanda will strive to high- China limits foreign studios
Ming, Wang.................B1 U Wanda will promote cades of moviemaking exper- light the China element in the theatrical releases to 34 films
Urmson, Chris.............B3
Musk, Elon..................B1
studios films to tise, Mr. Huang said. films in which it invests, the a year, and restricts marketing,
N W What Chinese studios know company said. curbing Hollywoods ability to
Nakamoto, Shoichi ..... B3 Wang, Jianlin.........B2,B8
Chinese moviegoers are what people like, but they The new alliance under- promote films through tradi-
lack the know-how or a strong scores Hollywoods increasing tional tools such as billboards
P
Wenner, Gus ............... B3 Sony Pictures Entertain- computer-graphics team, he dependence on the Chinese and TV commercials.
Paranjape, Abhay........B2 Wenner, Jann..............B3 ment Inc. is teaming up with said. Its going to be a mutually box office. The deal with Wanda
Paulson, Henry............B5 Widerstrm, Jan.........B2 Dalian Wanda Group to help beneficial partnership. Studios weigh carefully how doesnt guarantee Sony will
Y market its films in China, a The alliance is the latest a film will play in China, and get more films into China, but
Q foray into the global entertain- executives sometimes steer a partnership with one of
Yamamoto, Toshihiro..B3
Quinn, George.............B7
By Wayne Ma in Beijing ment industry by Wandas bil- clear of topics such as homo- Chinas biggest and most pow-
and Erich Schwartzel lionaire founder, Wang Jianlin, sexuality and the supernatural erful companies cant hurt.
R-S Zhang, Liucheng ......... B5 in Los Angeles who started as a commercial- that tend to alarm the coun- Sony had the worst China box
Rajkumar, Raj ............. B1 Zielke, Martin.............B5 land developer. Earlier this trys censors. office sales of any of the big six
Rosengren, Eric...........B7 Zimmer, John..............B3 deal that could boost Sonys year, Wanda purchased Leg- Mr. Wang is well on his way Hollywood studios last year. The
box-office returnsand endary Entertainment, a pro- to making his company a global James Bond film Spectre
strengthen Wandas hand in ducer of summer blockbusters force in entertainment. He was earned a modest 542 million
tive of West Marine, a boat-
ing-products retailer that
carries Yeti products. Those
are tricky waters to navi-
the movie business.
Under the deal, Wanda
would leverage its ticketing
platform, entertainment plazas
including Godzilla and War-
craft, for about $3.5 billion.
Wanda is the largest cinema
owner in China, and its AMC
interested in acquiring a large
stake in Paramount Pictures, but
the resolution of a power strug-
gle at parent company Viacom
yuan ($81 million), while An-
nie, a musical comedy featuring
Jamie Foxx, grossed 3.45 million
yuan, one of the lowest for any
gate. and theme parks to promote Entertainment Holdings Inc. Inc.which announced last Hollywood film.
Yeti lost $38.2 million in Sony films to Chinese movie- is seeking to become the larg- week that it wouldnt be selling Wandas knack for helping
the first quarter as expenses goers. Wanda could also show- est theater operator in the U.S. off a piece of the studioside- Hollywood films succeed in
for selling and general and case Sony films on its more with its proposed acquisition lined those ambitions. China was on full display this
administrative purposes rose than 2,000 screens in China, of Georgia-based Carmike Cin- For Sony, which has strug- summer with Legendarys
to $149.8 million from $13.9 and, according to a person fa- emas Inc. gled at the box office, the part- Warcraft. A disappointing
million in the year-earlier miliar with the arrangement, it The Sony deal will move nership will help the market- performer in the U.S., it earned
quarter, according to a regu- will have the option to buy a Wanda beyond exhibiting and ing of films in a country that more than $220 million from
latory filing. Igloo Products small stake in some films it co-financing U.S. films and expects to surpass the U.S. as Chinese audiences, according
Corp., Coleman Co. and oth- helps market, if Sony agrees. into the critical area of mar- the worlds largest box office to Box Office Mojo.
ers have introduced new What (Wanda) could offer keting. Wanda said in a state- in the next few years. Wanda offered nearly 80%
coolers with features similar Sony is local market knowl- ment that it will continue Sony has a number of major of its scheduling slots to War-
to Yetis at lower prices. edge, said Richard Huang, an seeking to identify mutually releases hitting theaters in the craft on opening day.
The Seiders brothers grew analyst at Nomura Holdings Inc. beneficial opportunities with next year, including the sci- Lilian Lin in Beijing
up working with their father, They could offer them a little all of the major Hollywood stu- ence-fiction drama Passen- contributed to this article.
Roger, who founded fishing- more airtime for a specific diosSony, Twentieth Century gers with Jennifer Lawrence,
rod materials company Flex movie, whether its the 007 or Fox, Paramount Pictures, Uni- the toy adaptation Barbie  Heard: China is coming to a
Coat Co. out of his garage in Spider-Man franchises. versal Pictures, Warner Bros. and a reboot of the 1995 board- theater near you...................... B8
Houston, according to Yetis
website.
Cortecs 2012 investment
gave Yeti the funding it
JET and Boeings bids to sell jets in
India.
THIBAUD MORITZ/AGENCE FRANCE-PRESSE/GETTY IMAGES
needed to expand to a more Boeings India President
mainstream market of beach- Pratyush Kumar said it was
goers, campers and backyard Continued from the prior page aiming to help India build F/
grillers. It began licensing building helicopters and A-18 fighters and develop jets
the logos of dozens of col- drones. The company didnt in the long term.
leges to win over football respond to requests for com- Saabs plan would have it
tailgaters, and it rolled out ment. build a second manufacturing
lines of mugs and stainless- Impatient with the delays, plant in Sweden for its Gripen
steel drink koozies. India relaxed foreign invest- E jet type, train Indian techni-
Cortec is run by four part- ment laws and defense pro- cians there, and then disman-
ners, including a former as- curement rules to kick-start a tle and ship the plant to India,
sistant to the chairman of privately managed jet-fighter said its Indian country head
annuities seller SunAmerica industry as its air force strug- Jan Widerstrm. Saab hopes
and a former executive of gles to keep its aging fighter to gain an advantage by offer-
building-supply company Ply fleet in the sky, including ing the blueprints for the
Gem Industries Inc. It is cur- MiG-21 jets bought in the India agreed Friday to import 36 Dassault-made Rafale fighters. Gripens advanced radar sys-
rently investing its sixth 1960s. Since then, U.S. manu- tem, Mr. Widerstrm said.
fund, a $1.1 billion pool of facturers Lockheed and Boe- tary cooperation between the side India. Saab and its suppliers could
capital. Its other investments ing, and Swedens Saab, have U.S. and India, said Abhay Still, it could take Lockheed help train 20,000 local techni-
include Barcodes Inc. and proposed building jets with In- Paranjape, Lockheeds director roughly four years to transfer cians in coming years if their
Community Veterinary Part- dian partners. of business development in In- the Fort Worth F-16 line, bid is successful, and build
ners, according to its web- The U.S. hasnt sold jet dia. which is slated for closure anywhere from 100 to 200 jets
site. fighters to India before, with If you ever want to fight soon when remaining orders for the Indian air force and ex-
Most of Cortecs earnings Indias air force preferring Eu- together, you need to train to- for the aging jet type tail off, port customers in places such
on the stake in Yeti will go to ropean and Russian manufac- gether, and to do that you industry officials said. as Thailand and Malaysia, said
its own investors. The fund turers. need to fly the same kind of A logistics-sharing treaty, Mr. Widerstrm.
Cortec used to buy Yeti has Lockheed also has proposed aircraft, Mr. Paranjape said. signed last month, is the first Were offering to set up
notched annual returns of moving its F-16 production U.S. industry officials said per- of three agreements the U.S. aerospace capability in India
about 53% through 2015, ac- line in Fort Worth, Texas, to unit costs could drop by as wants India to sign to allow for the next 100 years, he
cording to Palico SAS, which India, and training more than much as 20% in India com- for a greater transfer of U.S. said.
operates an online market- 5,000 locals. Its bid also is pared with the U.S., poten- military technology, poten- Doug Cameron
place for fund stakes. critical to strengthening mili- tially driving fresh sales out- tially strengthening Lockheed contributed to this article.
Samsung Complaints Go On CDS
their debts. But the authori-
BY EUN-YOUNG JEONG Galaxy Note 7 by three days to
ties attitude has shown a no-
table change since last year,
when slowing economic
Oct. 1 in order to swiftly Continued from the prior page growth and a depressed real-
BANKRUPTCIES SEOULCustomer com- complete its recall, citing that called credit-linked notes, a estate market weakened their
plaints that replacement bat- some 200,000 consumers in bond-like product that allows ability to foot the bill even for
 

South Korea havent yet investors to enjoy both inter- bleeding state-owned compa-
  

      
 
 

 







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sung began handing out re- So far, the complaints have risk sharing. Swaps and Derivatives Associ-

  

  
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  ' In a statement released on teries, calling the incidents comfortable with the idea of ing out insolvent companies
51 Sunday, Samsung said it will isolated cases related to allowing companies, including instead of letting them de-
delay resuming sales of the mass production issues. private firms, to default on fault.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, September 26, 2016 | B3

TECHNOLOGY @wsjd | wsjd.com

MIMS Volvos cars might refuse to

go into self-driving mode on
roads that are insufficiently
mapped, says Erik Coelingh,
Continued from page B1 the technical lead on Volvos
University, says a fully auton- self-driving car efforts. The
omous car operates by itself cars will pull over to the side
under all conditions, period. of the road, or come to a
She adds, Were a good 15 to stop, if inclement weather
20 years out from that. impedes the vehicles percep-
Chris Urmson knows the tual abilities, Mr. Coelingh
field as well as anyone, hav- says.
ing led the self-driving car That is a scary thought
project at Google parent Al- and one reason why early
phabet Inc. for more than fully autonomous cars will
seven years before departing require monitoring by hu-
in August. Last March, he mans.
told the SXSW conference It is worth noting that
that self-driving technology Google, the company with the
will arrive for some of us in a most experience with self-
few years, and for the rest of driving technology, is among
us in 30. That is, it could ar- the most cautious. Google has
rive soon for very specific yet to announce a release
uses; but as a full-bore re- date for its self-driving vehi-
placement for humans, it will cles, though it plans to soon
take a long time. begin tests in Fiat Chrysler
In other words, it is all minivans.
about how you define auton- In the near term, self-
omous and self-driving. driving cars will resemble
I always remind people Teslas, with their traffic-
weve had driverless vehicles aware cruise control that
carrying people between ter- can maintain a safe following
minals at an airport for 40 distance, change lanes and
years, says Steven Shla- stop in an emergency. Then
dover, manager of the Part- were likely to see vehicles
ners for Advanced Transpor- that dont require drivers but
tation Technology program at can only operate on a fixed,
the University of California, well-mapped route in cities
Dentsu Overbilled for Ads
Japanese advertising
giant apologizes to
clients, blames issue on
overworked employees
BY SEAN MCLAIN
TOKYOAdvertising giant
Dentsu Inc. on Friday said it
overcharged at least 111 com-
panies for internet ads, a rare
slip for a company that has
broad reach in Japanese media
but usually avoids making
headlines itself.
Dentsu executives bowed
deeply and apologized at a To-
kyo news conference, where
they blamed overworked em-
ployees for the overbilling.
The improper activity
came from a lack of capacity
and a lack of time, said
Toshihiro Yamamoto, a vice
president who manages digi-
tal-media operations. He said
he didnt think employees in-
tended to cheat clients.
Dentsu dominates the Japa-
nese advertising business, ac-
counting for 25% of the total

ISSEI KATO/REUTERS
Berkeley. But theyre operat- with fair weather, such as ad market in 2015. In recent
ing in a very well protected from the airport to the Las years, it has expanded abroad,
right of way. Vegas Strip. acquiring U.K. media-buying
Ford, for example, has said But the consensus of those firm Aegis Group PLC for
it would release a self-driving I interviewed is that it will be around $5 billion in 2012;
car by 2021. Dig into the many years before we get sales outside Japan now ac- The company has so far uncovered 633 cases of potential overcharging valued at $2.3 million.
statements and press for de- cars that can truly go any- count for more than half its
tails, and a Ford spokesman where. total. fied by Dentsu of irregulari- force in television advertising broadcasts, finances movies
says that car will only be self- Not everyone agrees, of The company said it was ties in some digital media in Japan, but it has a smaller and developed a robot in col-
driving in the portion of ma- course. Amnon Shashua, co- still investigating the scale of transactions, the auto maker foothold online. laboration with Toyota that
jor cities where the company founder and chief technology the improper billing but has so said, declining to comment Some industry participants was sent to the international
can create and regularly up- officer of Mobileye, says that far uncovered 633 cases of po- further. view the admission as pointing space station in 2013.
date extremely detailed 3-D the problem of sensing and tential overcharging valued at Dentsus announcement to wider problems in the Japa- Theyre not the 600-pound
street maps. Ford declines to controlling in self-driving a total of 230 million ($2.3 comes as the company makes nese ad business. gorilla, theyre the 1,200-
say how big those areas will cars is mostly solved. Perfect- million). In some cases, prom- a belated push into online ad- James Hollow, president of pound gorilla, Mr. Hollow
be. ing these systems wont re- ised ads never appeared on- vertising, which may have the Japan unit of digital mar- said.
Lyft is collaborating with quire scientific break- line, it said. magnified investors concern keting agency MullenLowe None of Dentsus clients
GM and says it will introduce throughs, he saysjust many Mr. Yamamoto said Dentsu about the news. The com- Profero, said that in Japan have stopped doing business
fully self-driving cars by small improvements in the would investigate ad sales go- panys shares fell 4.8% in To- long-term personal relation- with the company as a result
2021. But co-founder John software, gleaned from ing back to November 2012. kyo on Friday, the first day of ships are important and ad of the overbilling, said Mr. Na-
Zimmer says the vehicles will watching humans drive in the We want to proceed with the trading after the Australian agencies face less pressure kamoto, the finance chief.
be limited to a specific geo- real world. investigation as quickly as publication AdNews and the than elsewhere to make prom- He said in the U.S. or Eu-
graphic area and a top speed The ingredients exist; possible, he said. Financial Times reported ises about a campaigns im- rope, an agency that slipped
of 25 miles an hour. now it is a matter of engi- Dentsus chief financial offi- about the problems. pact. There is less focus on up could completely lose a cli-
Representatives of Volvo neering, Mr. Shashua says. cer, Shoichi Nakamoto, said it Dentsu consolidated its dig- proving return on invest- ents business, while that
and Israels Mobileye NV, Even the skeptics agree opened its investigation in Au- ital marketing businesses in ment, he said. didnt normally happen in
which makes self-driving that self-driving technology is gust after Toyota Motor Corp., April under a new subsidiary In addition, Dentsu has Japan.
technology and is collaborat- coming, will save lives and a major client, complained in called Dentsu Digital Inc. with deep ties with its clients and But I wouldnt be sur-
ing with Intel and BMW, will eventually become part of July that its internet ads the aim of capturing a greater media companies that go be- prised if a client pulls out en-
impose similar limits on their nearly all vehicles. But dont werent having the promised share of the online ad market. yond advertising sales. It owns tirely this time, Mr. Naka-
coming self-driving vehicles. expect it by 2021. impact. Toyota had been noti- The company is the dominant the rights to many sports moto said.

Rolling Stone Sells a Stake

BY JEFFREY A. TRACHTENBERG

Rolling Stone has struck a

chord with a new investor.
BandLab Technologies
Ltd., a closely held Singapore-
based social music company,
has purchased a 49% stake in
the storied music brand, in-
cluding the magazine and its
digital assets.
Terms werent disclosed.
SAM KANG LI/BLOOMBERG NEWS

However, the investment

doesnt include ownership in
closely held Wenner Media
LLC, Rolling Stones corporate
parent.
The move comes as many
publishers are seeking to
broaden their portfolios to be-
come less dependent on print BandLabs Meng Ru Kuok at a Singapore music store in July.
advertising revenue. Time Inc.,
the largest U.S. magazine pub- model, said Gus Wenner, who Ru Kuok, BandLabs 28-year-
lisher, has made a string of heads up digital at Wenner old chief executive and co-
deals aimed at growing its dig- Media and also oversees ad founder. Mr. Kuok is the son of
ital advertising business. sales, marketing, and digital Singapore businessman Kuok
Ad pages fell 14% at Rolling editorial across the company. Khoon Hong.
Stone between January and We have the quality that Our strength is local
August compared with a year most matters, a brand that knowledge, Meng Ru Kuok
earlier, according to a spokes- means something to people said.
woman for Rolling Stone. and elicits an emotional re- Mr. Kuok said he views the
BandLabs investment pro- sponse, he said. Mr. Wenner, partnership as a venture that
vides Rolling Stone with the 26 years old, is the son of Jann will extend for many years.
opportunity to expand into the Wenner, Rolling Stones co- We arent coming in as a tra-
live-event, hospitality and founder, editor and publisher. ditional investor with a short-
merchandising businesses in Plans call for Rolling Stone term plan, he said.
Asiaareas where BandLab and BandLab to form a Singa- Rolling Stones website in
has experience. Its flagship pore subsidiary called Rolling August attracted 17.7 million
product is a digital platform Stone International. The busi- unique U.S. visitors, up 59%
for creating and sharing music. ness, which will include Roll- over a two-year period, ac-
Everyone is trying to fig- ing Stones 12 international li- cording to media-measure-
ure out the new business censees, will be led by Meng ment firm comScore Inc.

process of privatizating state- counts, which Yahoo disclosed

Business owned assets as it faces mount-
ing public debt.
Watch Mr. Chi said SCIC now holds a
44.7% stake at Vinamilk, which
is formally known as Vietnam
Dairy Products JSC.
Vu Trong Khanh
VINAMILK YAHOO
Government to Sell Hack Tied to Russia
Shares in Dairy Firm Detected in 2014
The Vietnamese government Yahoo Inc. executives de-
will sell a 9% stake in the coun- tected hackers in their systems
trys largest dairy company, in fall 2014 who they believed
Vinamilk, this year, in a deal were linked to Russia and were
that could be valued at at least seeking data on 30 to 40 spe-
$810 million. cific users of the companys on-
We will hire advisers this line services, said a person famil-
month for the stake sale, iar with the matter.
Nguyen Duc Chi, chairman of The person familiar with the
state-run State Capital Invest- matter didnt know whether that
ment Corp., said late Friday. attack led to the theft of infor-
Vietnam is accelerating its mation on 500 million user ac-
Thursday. In that disclosure, Ya-
hoo said the information was
stolen from its network in late
2014 by a state-sponsored ac-
tor. The person familiar with
the matter said the intrusion
was discovered several weeks
after the attack.
A Yahoo spokesman pointed
out law enforcement was cur-
rently investigating the theft of
data it had disclosed Thursday.
A spokesman at the Russian
Embassy in Washington didnt re-
spond to a request for comment.
At the time of the 2014 attack,
Yahoo executives concluded that it
was linked to Russia because it
was launched from computers in
Russia, the person familiar with
the matter said. In addition, the
person said, the targets were peo-
ple who did business in Russia.
Robert McMillan
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Monday, September 26, 2016
It All Began With an iPhone Flashlight...
A low-cost device could make
surgery more available to
people in poor countries
BY MELINDA BECK
TWO-THIRDS OF the worlds
populationsome five billion
peoplelack access to safe, af-
fordable surgical care.
An $85 device conceived in
a sock drawer could help
change that.
John Langell, a surgeon who
runs the University of Utahs
Center for Medical Innovation,
had the idea when he was
called in for an emergency late
one night and used his iPhone
flashlight to look for clothes
without waking his wife. I
thought, Wow, this is as bright
as a laparoscope, he recalls.
Dr. Langell passed the
thought on to students in his
bio-innovation class who were
looking for a project: Why not
build a low-cost laparoscope
using cellphone parts and
bring minimally invasive sur-
gery to regions of the world
that cant afford it?
A laparoscope is a thin tube
with a tiny camera on the end
that allows doctors to perform
surgery inside a patients belly
by means of a few small holes
rather than a large incision.
Surgeons can see a magnified
image of the abdominal cavity
and watch what they are doing
on an external video screen.
Such tools typically cost
more than $20,000. And addi-
tional equipment requires a
capital investment of as much
as $700,000. Most systems are
sold with an annual service
contract that adds thousands
of dollars more.
The alternative that Dr. Lan-
gells team devisedthe Xeno-
scopecosts about $85 to pro-
duce. Theres no need for a
large image-processing tower
or video screen. Surgeons can
watch the video feed on an or-
dinary laptopeven a smart-
phonewhich can also provide
all the power the laparoscope
needs for up to eight hours.
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JOURNAL REPORT | INNOVATIONS IN HEALTH CARE
That will allow doctors to per-
form minimally invasive sur-
gery virtually anywhereeven
without a hospital or reliable
electricity.
Xenocor Inc., the company
the team founded, expects to
sell the devices for $300 to
$500, with no need for a capital
investment or service contract.
Its so inexpensive, if you
break it, you just throw it
away, Dr. Langell says.
The Xenoscope is part of a
new wave of ultra-low-cost
medical devices being designed,
mostly by graduate students, to
work in parts of the world
where money is scarce, elec-
tricity unstable and clean water
isnt assured. Universities are
enlisting engineers, scientists,
designers and business stu-
dents to identify health-care-
delivery problems and to devise
low-cost, practical solutions,
many of which address a criti-
cal need for surgical services.
A greater need
Lack of basic surgical care in
many middle- and lower-in-
come countries is responsible
for more than 18 million deaths
a year from burst appendixes,
diseased gallbladders, tumors,
traumas and other treatable
conditions, according to esti-
mates from the Lancet Com-
mission on Global Surgery, a
multinational effort to address
the issue. The World Health Or-
ganization and World Bank
identify improving surgical ca-
pabilities as an essential step to
raising health and economic
standards around the world.
Youre going to see a lot
more companies tailoring
products for low-income mar-
kets, says John G. Meara, co-
chair of the Lancet Commis-
sion and director of the
program in Global Surgery and
Social Change at Harvard
Medical School.
Minimally invasive surgery
has become standard for many
SUBSCRIBE.WSJ.COM/APAC
Surgeon John Langell (left) and Spencer Madsen (center) operate on a pig using the Xenoscope,
a laparoscope that relays images to a high-definition video screen or to a laptop or smartphone.
conditions in developed coun-
tries, largely because it gives
patients faster recoveries,
fewer hospital stays, less pain
and a lower risk of infection
than open surgery. Those same
advantages are even more criti-
cal in poor countries, where
hospital beds are scarce and
family breadwinners cant take
weeks off from work while
large incisions heal.
Yet only 18% of the worlds
population has access to lap-
aroscopic surgery, the Lancet
Commission reports.
In Mongolia, where no-
madic herders have a high rate
of gallbladder disease, health
officials have clamored for
what some patients call the
surgery with the little holes,
says Ray Price, co-chair of
global surgery for the Society
of American Gastrointestinal
and Endoscopic Surgeons, or
Sages. Dr. Price, who has
taught laparoscopic surgery in
Mongolia since 2005, plans to
demonstrate the Xenoscope
there for gallbladder removal
this week.
As simple as Dr. Langells
idea sounded, getting an inex-
pensive cellphone camera to
take high-quality images in the
800 901 216
Critical Shortage
Easily treatable conditions often
turn deadly in the developing
world due to huge gaps in the
availability of surgical care
5 billion
People who lack access
to safe, affordable surgery
18.6 million
Annual fatalities attributed
to surgical shortages
33 million
People who face nancial
ruin each year due to
surgical costs
143 million
Additional surgical
procedures needed annually
image on the screena poten-
$12.3 trillion
Estimated GDP losses by 2030
if shortage isnt addressed
signed a custom image-
Source: Lancet Commission
on Global Surgery, 2015
THE WALL STREET JOURNAL.
the LED leaked into the lens,
dark, wet confines of the ab-
dominal cavity posed a number
of technical challenges that off-
THE WALL STREET JOURNAL.
LANE BROOKS
the-shelf solutions sourced
overseas didn't handle well.
Typically, a smartphone
sensor is capturing images of
a person or a mountainnot
something five centimeters
away, says Lane Brooks, a pi-
oneer in digital-camera design
and miniaturization who was
recruited to the team.
Mr. Brooks concluded that
rather than use a camera from
an off-the-shelf smartphone
system, the team needed to
create its own custom optics
and image processor. But the
team was able to buy other key
parts, including the image sen-
sor and LED light, very inex-
pensively because the huge de-
mand for cellphones has made
them cheap commodities.
One early engineering prob-
lem was a one- to two-second
buffering delay in seeing the
and distribute the Xenoscope
tially dangerous time lag dur-
ing surgery. Mr. Brooks de-
processing pipeline that
eliminated the need for buffer-
ing. Another issue: Light from
bleaching out the image.
We became like plumbers
finding each source of the
light leaking, and developing
ways to block it, he says.
With those obstacles over-
come, Dr. Langell used the
Xenoscope last summer to per-
form minimally invasive sur-
gery on a pig. All went well un-
til he used an electrical
cauterizing device to finish the
operation, and the electromag-
netic interference ruined the
video image. That sent the
team back to the drawing board
to find substitute materials for
the tube and ways to shield the
sensor and data cables.
By late fall, the team re-
tested the Xenoscope inside
turkey carcasses left over from
Thanksgiving. Dr. Langell says
he was blown away by the
image qualityits as good as
any laparoscope Ive used.
In May, surgeons in India
performed a first human test of
the Xenoscope in an operation
removing fallopian tubes. Drs.
Langell and Price observed the
procedure and visited the pa-
tient at her home the next day.
She was up, mobile and had
zero pain, says Dr. Langell.
Hurdles ahead
There are still hurdles
ahead. The team has asked the
U.S. Food and Drug Adminis-
tration and the European
Union to designate the Xeno-
scope as substantially equiva-
lent to existing technology,
which means it could forego
lengthy clinical trials. Also, Dr.
Langell wants to wait until the
FDA and EU regulators are
satisfied before the company
rolls out the Xenoscope more
broadly.
Xenocor needs to raise $5
million in Series A funding to
gear up manufacturing. It
hopes to form partnerships
with companies in developing
countries that can assemble
locally. It also hopes to market
the tool in the U.S. as a single-
use device, eliminating the
threat of infection posed by
laparoscopes.
Ms. Beck is a Wall Street
Journal senior editor in New
York. She can be reached at
melinda.beck@wsj.com.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
NEIL RASMUS/BFA
Goldman CFO Harvey Schwartz
Fed Lays
Out Rules
On Banks
Trading
BY DONNA BORAK
AND LIZ HOFFMAN
WASHINGTONThe Federal
Reserve proposed rules Fri-
day that could drive banks out
of the business of owning,
trading and moving commodi-
tiessuch as oil and alumi-
numby making those lines
too expensive.
The long-awaited proposal,
designed to force banks to do
more to protect themselves
against environmental disas-
ters that might cause huge lia-
bilities, would require banks to
hold billions of dollars of extra
capital in their physical com-
modities businesses. The move
also follows congressional in-
vestigations probing whether
big banks were using their
commodities units to wield
outsize power over certain
markets and inflate prices.
The proposed rules are
likely to hit hardest at Gold-
man Sachs Group Inc., which
has held tighter to commodi-
ties than have many rivals.
While the firm has sold some
businesses, including a trou-
bled Colombian mine and a se-
ries of metals warehouses, it
has forged ahead into others,
becoming a big player in natu-
ral-gas marketing.
Weve been in the com-
modity business forever,
Goldman Chief Financial Offi-
cer Harvey Schwartz said last
year.
He said the collapse of en-
ergy prices made the banks
role as a market maker more
important. It really reinforces
the need for firms such as
Goldman Sachs to be in a posi-
tion to provide our clients with
liquidity, with financing capac-
ity, he said.
A bank spokesman declined
to comment Friday on the
Feds proposal.
Weve been in the
commodity business
forever.
HARVEY SCHWARTZ
The Fed said the proposal is
driven by its fear that an oil
spill, mine explosion or power-
plant meltdown at a bank-
owned facility could trigger a
ripple effect of fines, cleanup
costs, and loss of investor con-
fidence that could take down a
financial institution.
Regulators have cited disas-
ters such as the 2010 Deepwa-
ter Horizon oil spill in the Gulf
of Mexico, the 2011 Fukushima
Daiichi nuclear-plant melt-
down in Japan, and the fatal
2010 Pacific Gas & Electric Co.
natural-gas pipeline explosion
in San Bruno, Calif., as exam-
ples of risks that could poten-
tially destabilize the financial
system.
These damages can exceed
the market value of the physi-
cal commodity involved in the
catastrophic events, and can
exceed the committed capital
and insurance policies of the
organization, according to the
Feds draft plan.
As part of its proposal, the
Fed would impose an unusu-
ally steep 1,250% capital
charge on Goldman and Mor-
gan Stanley, which had been
given extra flexibility by Con-
gress to trade in these areas.
That depresses returns in
those businesses.
The proposal also calls for
imposing a strict, but less
onerous, capital charge of
300% on a dozen firms, includ-
ing Bank of America Corp., J.P.
Morgan Chase & Co. and Wells
Fargo & Co., which are permit-
ted by the Fed to engage in
physical commodity trading.
FINANCE & MARKETS
Teapots Take Bigger Role in Oil
Demand from Chinas
small refineries is
helping to reshape
global markets
When oil ministers from the
Organization of the Petroleum
Exporting Countries gathered
at the start of the oil-price
crash two years ago to take
stock of an industry in crisis,
they banked on demand from
Chinese state oil companies
and Beijings efforts to fill the
countrys strategic reserves to
boost prices.
By Brian Spegele
in Beijing and
Jenny W. Hsu
and Dan Strumpf
in Hong Kong
Today, OPEC is increasingly
counting on a new and far less
predictable force to increase
exports: private oil refiners in
China, known as teapots,
whose demand for foreign
crude is helping to reshape
global oil markets.
As the oil bust shows little
sign of reversing, independent
refiners in China have
emerged as perhaps the most
important, and little-known,
force in oil markets today.
They accounted for the vast
majority of the 13.5% surge in
imports this year by China,
which rivals the U.S. as the
worlds largest crude importer.
A few years ago, private re-
finers were merely bit players
in the state-dominated indus-
try. Their origins were so
humble that more than 20
years ago many relied on busi-
ness models in which workers
lined country roads in coastal
Shandong province, south of
Beijing, hawking gasoline di-
rectly from jerrycans, says Luo
Wenbo, general manager of
Sunshine Oil, the Singapore
trading arm of Shandong
Chambroad Petrochemical.
Now, the streets of Shan-
dong are lined with gas sta-
tions owned by teapots
Chambroad alone owns around
200and crude-oil imports to
the province have soared more
Goldman to Lay Off
Bankers in Region
BY LIZ HOFFMAN
Goldman Sachs Group Inc.
plans to lay off more than one-
quarter of its investment
bankers in Asia amid a slow-
down in deal activity in the re-
gion, according to people fa-
miliar with the matter.
The layoffs will be concen-
trated in Hong Kong and Sing-
apore and wont affect the
banks operations in Japan,
the people said.
It is a notable retreat for
Goldman, which has made a
big push in Asia in recent de-
cades. Former Chief Executive
Henry Paulson, who later be-
came U.S. Treasury secretary,
courted Chinese leaders and
helped open doors for Gold-
mans bankers, who spent
years cultivating ties with the
regions ascending private sec-
tor.
But the region remains far
less profitable for the bank
than the U.S. and Europe.
Chinas economy has slowed
and its stock market has been
volatile, with wild swings last
Commerzbank Looks
At Cutting 5,000 Jobs
BY MADELEINE NISSEN
AND EYK HENNING
FRANKFURTCommerz-
bank AGs management is con-
sidering cutting at least 5,000
jobs, or more than 10% of the
banks workforce, and eliminat-
ing one of its units as part of a
broader overhaul to address
weak profitability amid low in-
terest rates and sluggish client
activity, people familiar with
the matter said.
Germanys second-largest
lender by market capitaliza-
tion is still fine-tuning the job-
cut plans, set to be announced
at the end of this week when
Chief Executive Martin Zielke
intends to announce a new
strategy, these people said.
Shandong Chambroad Petrochemicals is one of Chinas teapot refineries driving import demand.
than 60% this year, leading to
a weekslong queue of tankers
at Shandongs port of Qingdao
this spring.
All the teapot refineries,
no matter how big they are
right now, started with a hum-
ble beginning, said Mr. Luo.
Winning these refiners over
as new customers and secur-
ing market share in China has
become an imperative for
OPEC members, who gather in
Algeria this week for a closely
watched meeting that may
yield clues on the cartels fu-
ture output.
The 14-nation organization
that controls a third of the
worlds oil once helped set
crude prices globally by regu-
lating its production levels.
But an American oil boom
made OPECs output less cru-
cial. It also reduced the U.S.s
oil imports, setting off a battle
for market share elsewhere in
the worldwith China taking
center stage.
Within OPEC, there is com-
petition to tap teapots de-
mand. In particular, Angola
has benefited from offering
Chinese teapots crude grades
with lower sulfur content,
which can be easier to refine.
year that effectively killed
what had been a lucrative
business for Goldman and oth-
ers in underwriting initial
public offerings.
Regional IPO volume, ex-
cluding Japan, is down 16%
this year from last year, ac-
cording to Dealogic.
Mergers are down 23% by
dollar value from 2015, and
high-yield and investment-
grade debt offers have both
fallen by double digits, accord-
ing to Dealogic.
A Goldman spokesman de-
clined to comment on the lay-
off plans, which were earlier
reported by Reuters.
Goldman and other banks
have been reducing head count
as they look to rein in costs
and convince investors they
can be disciplined. Earlier this
year, Goldman quietly moved
to shed about 2,000 jobs,
about 6% of its workforce,
which it says would save $700
million a year.
The Asia layoffs are sepa-
rate from that effort, the peo-
ple said.
Mr. Zielke, who succeeded
Martin Blessing this year, plans
mainly to cut back-office staff,
one of these people said.
Commerzbanks unit that ca-
ters to midsize clients, one of
its four core operations, would
be dissolved under the new
strategy, according to two peo-
ple familiar with the matter.
One of these people said
smaller clients, those with an-
nual revenue of up to 5 mil-
lion ($5.6 million), will be
transferred to its retail-banking
unit. Larger clients will be
shifted into Commerzbanks in-
vestment-banking activities,
this person said.
The cuts are similar to those
at many other European banks,
which have been retrenching.
Gulf Struggles
Russia is rivaling Saudi Arabia in selling oil to Chinese reners.
Top crude-oil exporters to China, Jan.-Aug.
2015
Saudi Arabia
2016
Russia
Angola
Oman
Iraq
0 50 100
Million barrels
Source: China General Administration of Customs
In the first eight months this
year, Chinas imports of Ango-
lan crude rose 14.6% to more
than 900,000 barrels a day, or
around half of the West Afri-
can nations total production.
By comparison, Chinas im-
ports from Saudi Arabia have
risen 1% this year, to about
1.05 million barrels a day.
Saudi Arabia has long pre-
ferred to deal with Chinas
state-run oil refiners such as
China Petroleum & Chemical
More money is being spent on information technology and private wealth management.
Wall Street Pay Is Shifting
BY LIZ HOFFMAN
For decades, the battle for
pay and prestige on Wall
Street was fought between in-
vestment bankers and traders.
As their profits ebbed and
flowed, the pendulum swung
between them.
But both are poised in 2016
to be losers to colleagues in
other rising businesses, includ-
ing technology, wealth man-
agement and asset manage-
ment, reflecting a shift in
priorities on Wall Street.
Options Group, a financial-
services recruiting and re-
search firm, predicts a 12% de-
cline in overall pay, which
includes bonuses, for invest-
ment bankers this year and
single-digit-percentage de-
clines for traders, with the big-
gest drops felt in relatively
plain-vanilla stock trading.
Revenue from these traditional
Wall Street functions has fallen
as trading has slowed and eco-
nomic growth remains muted.
Meanwhile, employees in in-
formation-technology and pri-
vate wealth management are
expected to get a 5% bump in
pay, according to the report,
which estimates full-year com-
pensation based on bank earn-
ings through the first two
Monday, September 26, 2016 | B5
MENG MENG/REUTERS
Change from
previous year
1%
30
15
13
4.5
150 200 250
THE WALL STREET JOURNAL.
Corp., or Sinopec. Saudi Ara-
bia tested the teapot market in
April, selling one spot cargo to
Shandong Chambroad Petro-
chemical, but hasnt repeated
the experiment.
The changes confronting
OPEC and the industry show
how policy moves by Chinas
government ripple globally.
The new demand by Chinas
private refiners stems from a
change in government policy
last year, allowing them to be-
quarters. Technology offers
two great promises for finan-
cial services: lower costs and
new or better sources of reve-
nue, said Mike Karp, Options
Groups CEO.
Specifically, banks are
boosting technology spending
for a variety of reasons, in-
cluding becoming more effi-
cient, improving risk manage-
ment, guarding against new
security threats, keeping up
with client demands and find-
ing edges in trading.
Trading revenue has tum-
bled over the past decade.
Banks can no longer trade for
their own account, a source of
past profits, and lower volatil-
ity has damped clients desire
to trade. The remaining activ-
ity has mostly moved to elec-
tronic platforms, which require
fewer people.
In stock trading, part of
banks equities divisions, pay
could drop 15% in the U.S. Op-
tions Group found there has
been little hiring among cash
equities traders and fewer pro-
motions to managing director.
Investment bankers, who
arrange mergers and raise cap-
ital, arent doing much better.
IPOs, one of the most lucrative
assignments in finance, have
slowed to a trickle this year.
gin importing foreign crude
for the first time.
That effectively broke a mo-
nopoly by state-run oil giants
over Chinas imports. Since
then, many have scoured over-
supplied markets for deals, at
times shunning OPEC power-
houses in the Middle East for
Russian and other suppliers.
For others, its an opportu-
nity; for OPEC its a chal-
lenge, said Michal Meidan, a
China analyst at consultancy
Energy Aspects. They are cre-
ating an opening for other
suppliers, other traders, and
OPEC has to rise up to that
challenge.
At a recent oil conference
in Singapore, energy execu-
tives from the Persian Gulf to
the U.S. packed a hotel ball-
room to hear from Zhang Li-
ucheng, vice president for
trading and marketing at
Dongming Petrochemical
Group, Chinas biggest teapot
refiner by capacity.
Independent refiners are
still much smaller than the
state-owned enterprises but
we are flexible and we can
easily adjust to changes, Mr.
Zhang said.
Chinas independent refin-
ers have been big buyers of
Russias oil. The latest cus-
toms data show Chinese im-
ports of Russian crude in Au-
gust soared 50% year over
year to more than 1.1 million
barrels a day, topping the Sau-
dis that month as Chinas big-
gest supplier.
The surge is partly attribut-
able to less stringent terms
imposed by the Russians, who
allow refiners to make pay-
ments within four months of
delivery, said Nelson Wang, an
analyst at brokerage CLSA, in-
stead of the typical one to two
months required by Middle
East suppliers.
Middle East suppliers such
as Saudi Arabia and Iran are
far more expensive and inflex-
ible on pricing, said Mr.
Zhang. What the teapots care
about most is still prices, he
said.
 Heard: Assessing Chinas
supply trajectory...................... B8
LI MUZI/XINHUA/ZUMA PRESS
High-yield debt offerings also
are down, and there is less
merger activity compared with
2015s record.
Pay is expected to fall dou-
ble-digit percentages in each of
investment bankings pillars:
10% in merger advisory, 15% in
equity underwriting and 12% in
debt underwriting.
Theres really nowhere to
hide, said Alan Johnson,
whose firm counsels banks on
compensation plans. The cost
structure in these traditional
finance businesses is out of
whack and has been for years.
Frustrated with falling com-
pensation and heavier compli-
ance, many trading and bank-
ing employees at big firms are
seeking work elsewhere.
Meanwhile, banks are racing
to hire technology specialists,
driving up salaries. Technolo-
gists numbers have swelled
across Wall Streetthey ac-
count for more than a quarter
of Goldman Sachs Group Inc.s
32,000 employeesand they
no longer are relegated to sup-
port roles. They fill front-office
positions in trading, risk man-
agement and cybersecurity.
Goldman recently hired an
executive from Google to work
on security for its new con-
sumer-banking effort.
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B6 | Monday, September 26, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST Data as of Friday, September 23, 2016

Nikkei 225 Index STOXX 600 Index S&P 500 Index 4 p.m. New York time
Last Year ago
16754.02 t 53.60, or 0.32% Year-to-date t 11.98% 345.34 t 2.52, or 0.72% Year-to-date t 5.60% 2164.69 t 12.49, or 0.57% Trailing P/E ratio * 24.81 20.59
High, low, open and close for each 52-wk high/low20012.40 14952.02 High, low, open and close for each 52-wk high/low 385.43 303.58 High, low, open and close for each P/E estimate * 18.43 16.45
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.13 2.22
All-time high: 2190.15, 08/15/16

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

17500 360 2200

65-day moving average 17000 350 2160

16500 340 2120

16000 330 2080

Session high 65-day moving average
DOWN UP 65-day moving average
15500 320 2040
t

Session open Close

Close Open
t

15000 310 2000

Session low
Bars measure the point change from session's open
14500 300 1960
June July Aug. Sept. June July Aug. Sept. June July Aug. Sept.

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2465.59 14.49 0.58 2047.44 2489.83 5.5 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1716.74 11.34 0.66 1491.52 1779.25 0.03 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 917.50 3.42 0.37 688.52 927.29 15.5 3.250 Australia 2 1.616 85.8 82.5 68.0 120.2 1.599 1.422 1.905
4.250 10 2.006 39.2 41.9 31.0 52.1 2.040 1.858 2.675
Americas DJ Americas 523.03 3.37 0.64 433.35 529.33 7.3
1.250 Belgium 2 -137.0 -139.3 -130.1 -88.5 -0.618 -0.560 -0.182
-0.612
Brazil Sao Paulo Bovespa 58697.00 297.17 0.50 37497.48 60231.65 35.4
1.000 10 0.147 -146.7 -149.1 -142.1 -124.3 0.131 0.127 0.911
Canada S&P/TSX Comp 14697.93 99.25 0.67 11843.11 14813.02 13.0
1.000 France 2 -0.606 -136.4 -138.8 -130.9 -88.1 -0.614 -0.568 -0.177
Mexico IPC All-Share 47778.48 196.57 0.41 40265.37 48694.90 11.2
0.250 10 0.217 -139.7 -141.5 -141.0 -125.5 0.207 0.139 0.899
Chile Santiago IPSA 3189.01 4.80 0.15 2759.77 3251.19 8.3
0.000 Germany 2 -0.665 -142.3 -144.1 -136.6 -95.0 -0.666 -0.624 -0.247
U.S. DJIA 18261.45 131.01 0.71 15660.18 18636.05 4.8
0.000 10 -0.080 -169.4 -171.6 -164.2 -155.4 -0.094 -0.094 0.599
Nasdaq Composite 5305.75 33.78 0.63 4266.84 5339.52 6.0
0.250 Italy 2 -0.116 -87.4 -90.4 -82.5 -56.9 -0.129 -0.083 0.135
S&P 500 2164.69 12.49 0.57 1829.08 2190.15 5.9
1.600 10 1.211 -40.3 -43.0 -41.3 -41.2 1.192 1.136 1.742
CBOE Volatility 12.29 0.27 2.25 11.34 28.14 32.5
0.100 Japan 2 -0.220 -97.8 -99.5 -94.7 -68.8 -0.221 -0.205 0.016
EMEA Stoxx Europe 600 345.34 2.52 0.72 303.58 385.43 5.6 0.100 10 -0.049 -166.3 -164.5 -163.9 -182.0 -0.023 -0.091 0.334
Stoxx Europe 50 2869.70 21.85 0.76 2566.26 3293.71 7.4 4.000 Netherlands 2 -0.633 -139.1 -141.2 -133.0 -93.4 -0.638 -0.588 -0.231
France CAC 40 4488.69 21.13 0.47 3896.71 4984.15 3.2 0.500 10 0.036 -157.9 -159.9 -152.2 -137.4 0.023 0.026 0.779
Germany DAX 10626.97 47.21 0.44 8752.87 11382.23 1.1 4.450 Portugal 2 0.439 -32.0 -31.0 -26.7 -31.1 0.465 0.475 0.392
Israel Tel Aviv 1461.56 Closed 1382.34 1583.00 4.4 2.875 10 3.369 175.4 173.1 145.7 43.5 3.353 3.005 2.589
Italy FTSE MIB 16452.84 184.85 1.11 15103.58 22736.86 23.2 0.250 Spain 2 -0.199 -95.7 -99.1 -93.8 -54.9 -0.217 -0.196 0.154
Netherlands AEX 454.48 1.03 0.23 382.61 472.24 2.9 1.950 10 0.967 -64.7 -70.4 -59.8 -19.1 0.918 0.950 1.962
Russia RTS Index 993.94 8.19 0.82 628.41 1013.11 31.3 4.250 Sweden 2 -0.654 -141.2 -143.0 -138.6 -118.9 -0.656 -0.645 -0.485
Spain IBEX 35 8823.60 111.30 1.25 7645.50 10478.30 7.6 1.000 10 0.207 -140.8 -139.7 -145.6 -144.6 0.225 0.092 0.708
Switzerland Swiss Market 8272.89 34.74 0.42 7496.62 9016.56 6.2 1.250 U.K. 2 0.102 -65.7 -69.5 -61.2 -11.4 0.079 0.130 0.589
South Africa Johannesburg All Share 51999.45 104.27 0.20 46282.02 54609.01 2.6 2.000 10 0.631 -98.3 -101.4 -100.2 -46.5 0.608 0.546 1.689
Turkey BIST 100 79756.44 39.50 0.05 68567.89 86343.65 11.2 0.750 U.S. 2 0.758 ... ... ... ... 0.774 0.742 0.703
U.K. FTSE 100 6909.43 1.97 0.03 5536.97 6941.19 10.7 1.500 10 1.614 ... ... ... ... 1.622 1.548 2.153
Asia-Pacific DJ Asia-Pacific TSM 1496.11 2.09 0.14 1190.45 1498.20 7.7
Australia S&P/ASX 200 5431.30 56.80 1.06 4765.30 5587.40 2.6 Commodities Prices of futures contracts with the most open interest 4 p.m. New York time
China Shanghai Composite 3033.90 8.42 0.28 2655.66 3651.77 14.3 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 23686.48 73.32 0.31 18319.58 24099.70 8.1 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 9/22/2016
India S&P BSE Sensex 28668.22 104.91 0.36 22951.83 29045.28 9.8 One-Day Change Year Year
Indonesia Jakarta Composite 5388.91 8.65 0.16 4120.50 5461.45 17.3 Commodity Exchange Last price Net Percentage high low
335.25 -1.50 -0.45% 449.00 314.75
Japan Nikkei Stock Avg 16754.02 53.60 0.32 14952.02 20012.40 12.0 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 953.25 -23.25 -2.38 1,186.25 868.00
Malaysia Kuala Lumpur Composite 1670.99 1.33 0.08 1600.92 1727.99 1.3
Wheat (cents/bu.)
CBOT
CBOT 403.75 -1.75 -0.43 551.50 386.75
New Zealand S&P/NZX 50 7296.74 14.97 0.20 5585.43 7571.11 15.4
Live cattle (cents/lb.) CME 106.875 -0.075 -0.07 125.500 101.275
Pakistan KSE 100 39781.95 353.36 0.88 30564.50 40414.72 21.2
Cocoa ($/ton) ICE-US 2,858 -62 -2.12 3,216 2,728
Philippines PSEi 7723.60 38.75 0.50 6084.28 8102.30 11.1
Coffee (cents/lb.) ICE-US 151.75 -3.50 -2.25 160.90 119.40
Singapore Straits Times 2856.95 10.89 0.38 2532.70 3083.07 0.9
Sugar (cents/lb.) ICE-US 22.74 0.07 0.31% 23.88 13.48
South Korea Kospi 2054.07 4.37 0.21 1835.28 2066.53 4.7
Cotton (cents/lb.) ICE-US 69.98 -1.73 -2.41 77.98 54.19
Taiwan Weighted 9284.62 49.36 0.53 7664.01 9284.62 11.4 Robusta coffee ($/ton) ICE-EU 1967.00 -35.00 -1.75 2,028.00 1,423.00
Thailand SET 1492.88 13.11 0.87 1224.83 1552.64 15.9
Copper ($/lb.) COMEX 2.2025 0.0080 0.36 2.3290 1.9710
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1341.90 -2.80 -0.21 1,384.40 1,066.00
Silver ($/troy oz.) COMEX 19.750 -0.349 -1.74 21.250 13.865
Currencies London close on Sept. 23 Aluminum ($/mt)* LME 1,620.50 42.50 2.69 1,700.50 1,451.50
Tin ($/mt)* LME 19,500.00 90.00 0.46 19,625.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Fri YTDchg Copper ($/mt)* LME 4,832.50 73.50 1.54 5,070.50 4,320.50
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,961.00 -7.00 -0.36 1,968.00 1,598.00
20%
Europe Zinc ($/mt)* LME 2,304.50 11.50 0.50 2,364.00 1,467.00
Bulgaria lev 0.5736 1.7434 3.2 Nickel ($/mt)* LME 10,600.00 220.00 2.12 10,950.00 7,750.00
10
Croatia kuna 0.1497 6.680 4.7 Rubber (Y.01/ton) TCE 169.50 0.50 0.30 170.30 149.50
s Yen Euro zone euro 1.1231 0.8904 3.3
0 Palm oil (MYR/mt) MDEX 2675.00 -50.00 -1.83 2,729.00 2,180.00
Czech Rep. koruna-b 0.0416 24.062 3.3
s Euro Denmark krone 0.1506 6.6385 3.4 Crude oil ($/bbl.) NYMEX 44.81 -1.51 -3.26 53.39 34.10
10 s WSJ Dollar index
0.003673 272.24 6.3
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.4235 -0.0430 -2.93 1.6112 1.0272
Iceland krona 0.008730 114.55 12.0 RBOB gasoline ($/gal.) NYMEX 1.3561 -0.0226 -1.64 1.4812 0.9764
20 Norway krone 0.1233 8.1081 8.3
0.2612 3.8291 2.4
Natural gas ($/mmBtu) NYMEX 3.029 -0.032 -1.05 3.1660 2.1680
2015 2016 Poland zloty
Russia ruble-d 0.01564 63.924 11.1 Brent crude ($/bbl.) ICE-EU 46.74 -1.47 -3.05 54.12 33.05
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1171 8.5370 1.1 Gas oil ($/ton) ICE-EU 418.25 -12.50 -2.90 481.75 307.00
Fri Fri
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0310 0.9699 3.2
Turkey lira 0.3388 2.9512 1.1 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1289 7.7566 0.1
Ukraine hryvnia 0.0385 25.9905 8.3
Argentina peso-a 0.0660 15.1570 17.1
India rupee
Indonesia rupiah
0.0150
0.0000765
66.6654 0.7
13075 5.5
U.K. pound 1.2966 0.7712 13.7 Cross rates London close on Sep 23
Brazil real 0.3099 3.2268 18.5 Middle East/Africa
Japan yen 0.009902 100.99 16.1
Canada dollar 0.7601 1.3157 4.9 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002958 338.04 0.2 Bahrain dinar 2.6532 0.3769 0.05
Chile peso 0.001512 661.20 6.7 Australia 1.3122 1.7011 1.3526 0.0130 0.1691 1.4734 0.9974 ...
Macau pataca 0.1251 7.9914 0.2 Egypt pound-a 0.1126 8.8808 13.4
Colombia peso 0.0003468 2883.50 9.2 Canada 1.3157 1.7058 1.3561 0.0130 0.1696 1.4774 ... 1.0026
Malaysia ringgit-c 0.2432 4.1123 4.4 Israel shekel 0.2660 3.7594 3.4
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7239 1.3814 5.6 Kuwait dinar 3.3177 0.3014 0.7 Euro 0.8904 1.1547 0.9179 0.0088 0.1148 ... 0.6769 0.6787
Mexico peso-a 0.0507 19.7289 14.7
Pakistan rupee 0.0095 104.800 0.1 Oman sul rial 2.5970 0.3851 0.03 Hong Kong 7.7566 10.0565 7.9974 0.0768 ... 8.7103 5.8956 5.9113
Peru sol 0.2999 3.3350 2.3
Philippines peso 0.0208 48.116 2.7 Qatar rial 0.2746 3.641 0.04 Japan 100.9850 130.9200 104.1000 ... 13.0190 113.4000 76.7600 76.9600
Uruguay peso-e 0.0350 28.540 4.6
Singapore dollar 0.7361 1.3586 4.2 Saudi Arabia riyal 0.2666 3.7510 0.1 0.9699 1.2577 ... 0.0096 0.1250 1.0895 0.7374 0.7393
Venezuela bolivar 0.100150 9.99 58.4 Switzerland
South Korea won 0.0009064 1103.21 6.2 South Africa rand 0.0731 13.6771 11.6
U.K. 0.7712 ... 0.7951 0.0076 0.0994 0.8663 0.5863 0.5878
Asia-Pacific Sri Lanka rupee 0.0068325 146.36 1.5 Close Net Chg % Chg YTD % Chg
0.7621 1.3122 4.4 Taiwan dollar 0.03191 31.341 4.8 U.S. ... 1.2966 1.0310 0.0099 0.1289 1.1231 0.7601 0.7621
Australia dollar WSJ Dollar Index 86.46 0.20 0.23 4.12
China yuan 0.1499 6.6693 2.7 Thailand baht 0.02888 34.630 3.9 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

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

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.52222% 0.19430% TakedaPharm 4502 4805.00 0.86 -20.77 RoyDtchShell A RDSA 1865.00 0.59 22.21 Last: 145.59 t 0.50, or 0.34% YTD s 6.8%
Three month 0.85294 0.32610 Asia Titans HK$ TencentHoldings 0700 218.20 1.68 42.89 SAP SAP 81.63 -0.89 11.24
145
Six month 1.24472 0.53610 51.80 0.78 11.16 68.45 High
HK$ AIAGroup 1299 TokioMarineHldg 8766 4061.00 -0.17 -13.82 Sanofi SAN -0.70 -12.91
One year 1.55744 0.86085 1594.50 0.92 -7.91 62.96
AstellasPharma 4503 ToyotaMtr 7203 5950.00 -3.16 -20.54 SchneiderElectric SU -0.27 19.79 Close 140
Euro Libor AU$ AustNZBk ANZ 27.59 1.32 -1.22 AU$ Wesfarmers WES 44.04 0.11 5.84 Siemens SIE 106.20 -0.42 18.16 Low 135
21.53
One month -0.11857% t
-0.37400% AU$ BHP BHP 1.17 20.55 AU$ WestpacBanking WBC 30.32 1.27 -9.65 CHF Syngenta SYNN 428.80 0.85 9.30
Three month -0.32029 -0.04143 HK$ BankofChina 3988 3.57 -1.65 3.18 AU$ Woolworths WOW 23.35 2.64 -4.69 Telefonica TEF 9.53 -0.94 -6.90 50day 130
Six month -0.21186 0.01643 HK$ CKHutchison 0001 100.30 -0.10 -3.93 Total FP 42.53 -1.21 5.15 moving average 125
One year -0.07329 0.13071 HK$ CNOOC 0883 9.45 0.32 17.10 Stoxx 50 CHF UBSGroup UBSG 13.44 -0.30 -31.15
120
Euribor AU$ CSL CSL 105.66 1.63 0.33 CHF ABB ABBN 22.12 0.09 23.16 Unilever UNA 41.12 -0.77 2.54
One month -0.37000% -0.11100% Canon 7751 2921.00 -0.73 -20.52 ASMLHolding ASML 97.25 -0.06 17.81 Unilever ULVR 3631.50 0.17 24.09 24 1 8 15 22 29 5 12 19 26 2 9 16 23
Three month -0.30200 -0.04100 CentralJapanRwy 9022 17625 -0.56 -18.40 AXA CS 19.77 ... -21.64 Vinci DG 68.69 -0.16 16.15 July Aug. Sept.
Six month -0.20000 0.03000 HK$ ChinaConstructnBk 0939 5.93 -0.84 11.68 AirLiquide AI 96.40 -1.08 -6.99 VodafoneGroup VOD 220.70 -1.25 -0.14
One year -0.05900 0.14600 HK$ ChinaLifeInsurance 2628 20.95 -1.64 -16.53 Allianz ALV 136.60 ... -16.48 CHF ZurichInsurance ZURN 256.30 ... -0.81
Yen Libor HK$ ChinaMobile 0941 96.35 -0.72 10.11 Anheuser Busch ABI 116.20 ... 1.57
DJIA Stoxx 50
One month -0.07843% 0.02929% HK$ ChinaPetro&Chem 0386 5.49 0.18 17.06 AstraZeneca AZN 5170.00 0.25 11.99
Last: 2869.70 t 21.85, or 0.76% YTD t 7.4%
Three month -0.01914 0.08357 AU$ CmwlthBkAust CBA 73.40 0.71 -14.18 BASF BAS 73.31 -0.33 3.66 $ AmericanExpress AXP 63.85 -1.21 -8.20
Six month 0.00707 0.11929 EastJapanRailway 9020 9383.00 1.73 -18.05 BNP Paribas BNP 46.95 -0.73 -10.10 $ Apple AAPL 112.71 -1.67 7.08 2925
One year 0.10929 0.23757 Fanuc 6954 17170 -0.67 -18.55 BT Group BT.A 397.60 0.15 -15.71 $ Boeing BA 131.78 -0.07 -8.86
82.44 -1.27 21.31 2850
Offer Bid Hitachi 6501 483.70 -1.31 -30.05 BancoBilVizAr BBVA 5.49 -0.69 -17.78 $ Caterpillar CAT
TW$ Hon Hai Precisn 2317 79.80 0.25 97.52 BancoSantander SAN 3.96 -3.25 -13.16 $ Chevron CVX 99.22 -0.76 10.29 2775
Eurodollars
HondaMotor 7267 3007.00 -2.37 -23.09 Barclays BARC 171.40 -1.04 -21.70 $ CiscoSystems CSCO 31.34 -1.01 15.41
One month 0.6000% 0.5000%
$ CocaCola KO 42.74 -0.51 -0.51
2700
Three month 0.9500 0.8500 KRW HyundaiMtr 005380 142000 2.90 -4.70 Bayer BAYN 91.48 -0.80 -21.00
HK$ Ind&Comml 1398 4.88 -2.98 4.27 BP BP. 436.90 0.53 23.42
$ Disney DIS 93.27 -0.15 -11.24 2625
Six month 1.3000 1.2000
JapanTobacco 2914 4008.00 -0.99 -10.36 BritishAmTob BATS 4939.00 1.56 30.97
$ DuPont DD 66.77 -0.12 0.26 2550
One year 1.6000 1.5000
3156.00
$ ExxonMobil XOM 83.45 -0.11 7.06
Latest 52 wks ago KDDI 9433 1.77 0.06 Daimler DAI 63.52 0.16 -18.12 24 1 8 15 22 29 5 12 19 26 2 9 16 23
$ GenElec GE 29.89 -0.50 -4.04
Mitsubishi 8058 2174.00 0.83 7.20 DeutscheTelekom DTE 15.28 -0.33 -7.56 July Aug. Sept.
Prime rates $ GoldmanSachs GS 165.13 -1.72 -8.38
MitsubishiElectric 6503 1317.00 1.39 2.69 Diageo DGE 2225.00 0.72 19.85
U.S. 3.50% 3.25% $ HomeDepot HD 127.79 -0.75 -3.37
MitsubishiUFJFin 8306 544.80 -1.54 -28.04 ENI ENI 12.60 -0.40 -8.70
Canada 2.70 2.70 $ Intel INTC 37.19 -0.96 7.95
Mitsui 8031 1367.50 0.66 -5.40 1653.00 0.24 20.39
Japan
Hong Kong
1.475
5.00
1.475
5.00 Mizuho Fin 8411 182.50 -1.93 -25.05


GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 574.30 -0.52
$
7.11 $
IBM
JPMorganChase
IBM
JPM
154.98
67.25
-0.72 12.61
-0.21 1.85
Dow Jones Industrial Average P/E: 20
NTTDoCoMo 9437 2617.00 1.32 5.35 INGGroep INGA 11.06 -0.81 9.02 $ JohnsJohns JNJ 118.81 -0.54 15.66 Last: 18261.45 t 131.01, or 0.71% YTD s 4.8%
Policy rates
ECB 0.00% 0.05%
AU$ NatAustBnk NAB 28.00 1.74 -7.28 ImperialBrands IMB 3989.50 0.87 11.24 $ McDonalds MCD 117.17 -0.16 -0.82
Britain 0.25 0.50
NipponTeleg 9432 4727.00 0.64 -2.25 IntesaSanpaolo ISP 2.00 -3.20 -35.36 $ Merck MRK 62.96 -0.10 19.20 18800
Switzerland 0.50 0.50
NissanMotor 7201 1033.50 0.98 -19.23 LVMHMoetHennessy MC 153.75 -0.29 6.11 $ Microsoft MSFT 57.43 -0.67 3.51
Panasonic 6752 1049.50 -0.24 -15.40 LloydsBankingGroup LLOY 55.98 -2.05 -23.39 $ NikeClB NKE 55.15 -0.47 -11.76 18300
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 41.50 -1.54 -3.26 LOreal OR 169.00 -0.41 8.82 $ Pfizer PFE 34.26 0.32 6.13
U.S. discount 1.00 0.75 17800
Fed-funds target 0.25 0.00
$ RelianceIndsGDR RIGD 32.80 ... 7.19 NationalGrid NG. 1074.50 -0.56 14.61 $ Procter&Gamble PG 87.76 -1.38 10.52
Call money 2.25 2.00
KRW SamsungElectronics 005930 1571000 -2.90 24.68 CHF Nestle NESN 76.80 -1.66 3.02 $ 3M MMM 177.39 -1.37 17.76 17300
Seven&I Hldgs 3382 4667.00 -1.14 -15.91 CHF Novartis NOVN 79.15 -0.13 -8.81 $ TravelersCos TRV 115.31 -1.22 2.17
Overnight repurchase rates 16800
U.S. 0.51% 0.16%
SoftBankGroup 9984 6658.00 -0.06 8.45 DKK NovoNordiskB NOVO-B 296.80 -2.37 -25.78 $ UnitedTech UTX 102.56 -0.43 6.76
Euro zone n.a. n.a.
Sony 6758 3400.00 0.80 13.26 Prudential PRU 1408.00 -0.49 -8.03 $ UnitedHealthGroup UNH 140.51 -0.38 19.44 24 1 8 15 22 29 5 12 19 26 2 9 16 23
Sumitomo Mitsui 8316 3629.00 -1.63 -21.21 ReckittBenckiser RB. 7199.00 -0.21 14.62 $ VISAClA V 82.54 -0.98 6.43 July Aug. Sept.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 118.60 0.25 26.51 RioTinto RIO 2519.00 1.16 27.25 $ Verizon VZ 52.56 0.40 13.72 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 187.50 1.08 31.12 CHF RocheHldgctf ROG 245.50 0.16 -11.18 $ WalMart WMT 72.35 0.11 18.03 Sources: WSJ Market Data Group; Birinyi Associates
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, September 26, 2016 | B7

FINANCE & MARKETS

Insurers Split on Tactics First Day After

Allianz has turned to
wind farms, sewer
BOJ Policy Shift,
tunnels and housing;
Zurich sticks to bonds Bond Yield Falls
BY JOHN LETZING BY SURYATAPA BHATTACHARYA an effort to pump more money
AND RACHEL ROSENTHAL into Japans financial system.
ZURICHFor years, Allianz Its new target for 10-year
SE was content with an invest- TOKYOThe brave new yields, a policy measure rarely
ment diet of mostly low-risk world for Japanese govern- adopted by central banks in
bonds. More recently, the Ger- ment bonds got off to a shaky the past, is designed to
man insurer has lavished start on Friday, as investors steepen the yield curve, or
money on a military garrison struggled to interpret the lat- widen the difference between
for the U.K.s Parachute Regi- est moves by the countrys short-term and long-term
ment, a Texas wind farm and a central bank that are set to yields. That should help Japa-
M. SPENCER GREEN/ASSOCIATED PRESS

26-kilometer sewer tunnel in deepen its influence over the nese banks, which tend to lend
London. $11 trillion market. over the longer term, become
Meanwhile, Switzerland- The Bank of Japan had said more profitable, encouraging
based Zurich Insurance on Wednesday that it would themthe hope goesto dole
Group AG has largely stuck start to target a yield of out more credit.
with its bond-heavy ways. around zero for the countrys In a sign of the challenge
The diverging strategies of benchmark 10-year govern- now facing the Bank of Japan,
two of Europes largest insur- ment bond, the latest radical prices for government bonds
ers reflect the challenges fac- step it has taken in its years- of different maturities on Fri-
ing an industry that has been long fight to stoke higher in- day moved in ways counter to
upended by low and even neg- Allianz was early to the party. A 2008 deal granted the German insurer the proceeds from Chicago flation in the country. its aims. The yield curve flat-
ative interest rates, depriving parking meters for more than 70 years. On Friday, the first full day tened slightly during the day:
it of the steady returns that of trading since the BOJs an- The yield on shorter-term
once were the lifeblood of the years, said Keefe, Bruyette & Officer Andreas Gruber said as insurers to earn returns. nouncementThursday was a bonds, such as the two-year
sector. Woods analyst William Haw- that about 90 billion ($100.4 Insurers, collectively, are an holiday in Japanthe bond tenor, rose slightly, while the
Allianzs less easily resal- kins. He said firms generally billion), or 15%, of Allianzs investing behemoth. In Eu- market failed to fall into line. yield on Japans newest 20-
able, but promising real-estate are seeking out investments roughly 600 billion portfolio rope, their combined assets The yield on Japans 10- year bond was trading at
and infrastructure investments with greater risk and better is now dedicated to alternative under management amounted year government bond fell 0.375% compared with 0.415%
of late amplify a 2008 deal returns. But there is a poten- investments such as real es- to 9.8 trillion last year, an slightly to minus-0.055%, from on Wednesday.
that granted the insurer pro- tial downside to committing to tate, and the firm aims to in- amount equal to 61% of the minus-0.030% at Wednesdays
ceeds from Chicago parking less-liquid assets or those less crease that portion to 110 bil- European Unions total eco- close, further away from the
meters for more than 70 years. easily sold for cash than lion or more over the next few nomic output, according to in- central banks new target.
We need to find out
These deals now offer the bonds, he said: Could the as- years. Alternative investments, dustry group Insurance Eu- Bond yields fall when prices what the BOJs
prospect of higher returns sets suddenly blow up? I do including real estate, totaled rope. rise.
than traditional bonds and re- think at some point that could roughly 50 billion, or about One reason Allianz has con- Trading in the worlds sec-
strategy is.
flect a burgeoning creativity lead to some surprises. 10% of Allianzs portfolio, as sidered different investments, ond-largest government-bond TADASHI MATSUKAWA
and potentially higher-risk Federal Reserve Bank of recently as 2012. analysts said, is its exposure market was light, participants
profilefor an industry known Boston President Eric Rosen- Recent deals include paying to the German life-insurance said, as investors waited to
for its conservative ways. In gren has cautioned that low about $420 million for a 44% business, which features long see how the Bank of Japan The new stance also means
the downside-up world of neg- interest rates may be fueling a stake in 10 Hudson Yards, an contracts and guaranteed re- would implement its new pol- that the centerpiece of the
ative interest rates, Allianz rise in commercial-real-estate office complex that Allianz de- turns for customers. icy. BOJs easing program since
isnt the only insurer feeling a prices, which could plummet scribed as being part of the Analysts said that helps to We need to find out what 2013buying huge amounts of
need to get more inventive. and cause broader fallout if biggest development in New make Allianz emblematic of an the BOJs strategy is, said Ta- government bondswill
The average portfolio yield economic conditions change. York since Rockefeller Center, element of the industry seek- dashi Matsukawa, head of change. Now, the amount the
is around 3% for most of these Pressure on insurers prof- and snapping up an interest in ing to get more creative with Japan fixed income at Pine- BOJs purchases could rise or
companies, J.P. Morgan Chase its has been behind a spurt of the Colbecks Corner wind investments, while Zurich In- Bridge Investments in Tokyo. fall depending on how close to
& Co. analyst Michael Huttner merger activity in the sector, farm in Texas. surance represents the oppo- We dont know what the tar- 0% yields hover.
said of insurers. You dont which rose in value to roughly Negative interest rates, a site end of the spectrum. get rate of buying is yet, and Just how the BOJ will
have to go many years ago to $111 billion last year from $64 tool wielded by central banks Zurich Insurance Chief Fi- there was no mention in the steepen the yield curve is dif-
where they wouldve been 4% billion in 2014, according to a in several countries, particu- nancial Officer George Quinn BOJ statement. ficult to predict, said Koji Fu-
and maybe 5%. report from Ernst & Young. larly in Europe, have created a cautioned that getting creative The central bank already kaya, chief executive at FPG
Analysts said dwindling Last month, Allianz re- jarring reversal. They have might bolster insurers tempo- has an outsize role in the mar- Securities in Tokyo, because
yields have yet to cut into in- ported a sharp decline in made borrowing cheaperin rarily, but it also could cause ket: It owns about one-third of the central bank will be able
surers profitability in a signif- profit for the first half of this some cases, even resulting in fallout when conditions all Japanese government to buy shorter- or longer-term
icant way. The question is year due in part to lower in- firms being paid to borrow change. The music stops, and bonds, or JGBs, outstanding, maturities freely, depending
where this industry is going to vestment returns. but also have made it more dif- you find yourself at peak asset having bought up trillions of on its view of the economys
be over the next five to 10 Allianz Chief Investment ficult for bond investors such risk, Mr. Quinn said. yen worth in recent years in condition at a given time.

2016 Dow Jones & Co., Inc. All rights reserved. 6DJ4192
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B8 | Monday, September 26, 2016
Email: heard@wsj.com
China Coming to Theater Near You
Matt Damon defending
monsters at the Great Wall of
China could be what Holly-
wood films are going to look
like. At least that is the vision
of Chinas richest man.
Dalian Wanda Group, a
property-to-theme-parks busi-
ness empire that is controlled
by billionaire Wang Jianlin,
said Friday that it had reached
an open-ended investment
partnership with major Hol-
lywood studio Sony Pictures.
For Sony, the deal is a clear
positive. It gets the financial
backing of a prominent Chi-
nese mogul while enjoying the
vast cinema networks of
Wanda, which owns the most
movie theaters in China.
Wanda also owns AMC En-
tertainment, which is in the
process of creating Americas
biggest theater chain in its
merger with Carmike. It also is
pursuing Europes largest cin-
ema chain, Odeon & UCI.
Sony also may be able to
get around Chinas quotas on
imported films by making co-
productions with Wanda. Hol-
lywood movies that have been
All the Texas Tea in China Just Isnt What It Used to Be
So Pumped
2015 output of petroleum and
other liquids, in thousands of
barrels a day
United States
Saudi Arabia
Russia
China
Canada
Iraq
United Arab Emirates
Iran
Brazil
Kuwait
Venezuela
Source: U.S. Energy Information
Administration
THE WALL STREET JOURNAL.
Investors See an Opening
In Hong Kong Shares
BY MIA LAMAR
Foreigners are loath to own
Chinese stocks. Few strategists
think the economy is turning a
corner. But some investors are
piling in anyway.
After spending the first
seven months of the year in
the red, the Hong Kong-listed
shares of Chinese companies
known as H-shareshave
clawed their way into positive
territory with a 10% surge
since July. Some investors see
further gains.
The reason: A rush of cash
from investors in mainland
China who are snapping up
Hong Kong sharescheaper
and higher yielding than those
at homevia the citys stock-
trading link with Shanghai.
Even after the recent rally,
companies in Hong Kongs
Hang Seng China Enterprises
Index, which tracks H-shares,
are trading at 8.4 times what
analysts expect them to earn
in the coming year, compared
with 13 times for yuan-denom-
inated A-shares traded in
Shanghai and 34 times for
stocks on Chinas tech-heavy
Shenzhen Stock Exchange.
For the likes of Grace Lu, a
former China stock picker for
Temasek Holdings Pte. Ltd.
who now runs hedge fund
Headed to Hong Kong
Flows from mainland China into Hong Kong stocks via a trading link,
as a percentage of a 250 billion yuan quota
Usage of investment quota
80%
60
40
20
0 recovery instead of just being
2014 15
Note: The quota was abolished in August.
Source: Thomson Reuters
THE WALL STREET JOURNAL.
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
OVERHEARD TwitterDeal
IsTooMuch
nese films abroad. The maestro has spoken,
Culture Clash
Revenue of Chinese lms overseas
The tie-up with Sony came
two days after Viacom said it
would no longer seek to sell a
but his words have a lot less
impact these days. Ignoring
him might be a mistake,
ForSalesforce
versus foreign lms in China
minority stake in Paramount though. Money may be burning a
20 billion yuan
!"#$%&%'(#)*&'+ Pictures, another major Holly- Former Federal Reserve hole in Marc Benioffs
wood studio that was report- Chairman Alan Greenspan pocket. So far, his investors
Chinese lms overseas
15 edly a target of Wanda. warned in a Bloomberg inter- are the ones getting singed.
Foreign lms in China
This shows how eager Mr. view on Thursday that yields The ambitious chief execu-
Wang is to get a piece of the on the benchmark U.S. Trea- tive of Salesforce.com made
ASSOCIATED PRESS
10
action. sury note could rise to 5%. no secret of his effort to grab
Wandas statement even That would mean a paper LinkedIn from the clutches of
5 spoke of working hand in loss of about 25%, though he Microsoft a few months back.
hand with all of Hollywoods didnt suggest it would occur Now, his eyes have report-
0 Big Six studios. overnight. edly turned to another beat-
Matt Damon, left, and director Wandas Legendary Pic- The yield promptly sank to en-down internet name:
11 12 13 14 15
Zhang Yimou at a press tures, a smaller studio that it a two-week low. How differ- Twitter.
Source: Wind Info conference for their lm 'The acquired earlier this year, will ent it was 20 years ago, Media reports Friday said
THE WALL STREET JOURNAL. Great Wall' in Beijing. release The Great Wall in when Mr. Greenspan gave his that the cloud software firm
December in China and in Feb- famous irrational exuber- is exploring a potential deal
cleared in China have done from China. ruary in the U.S. ance speech about technol- with the microblogging site.
well. Yet Mr. Wangs dreams The $150 million film, the ogy stocks: The Nasdaq Com- The talks are said to be at an
Half of the top 10 highest- seem bigger than bringing costliest U.S.-China co-produc- posite fell 3.4% from its early stage.
grossing films there are from Hollywood to China. The Chi- tion to date, features Mr. Da- intraday high to the following It should be noted that
Hollywood, including Furious nese company says it will mon as a European mercenary, sessions low. this is the latest in a long-
7 and Transformers: Age of strive to highlight the China incongruously romping After that, Mr. Greenspans running chain of rumors in-
Extinction. element in Sonys films. around medieval China. warning was ignored, and the volving Twitter. Previous ru-
There are caveats, however. Instead of just featuring By having a say at a major index soared 280% in a little mors have involved media
To be considered a co-produc- Chinese actors as a ploy to Hollywood studio, Mr. Wang over three years before sink- companies, Facebook and
tion, a movie must be partly win fans at home, Mr. Wang takes another step toward ing nearly 80%. His bond pretty much any other tech
filmed in China. may hope to achieve some- selling Chinese movies to a warning may be right eventu- company with a decent-sized
Also, at least a third of the thing quite the oppositeex- global audience. ally, too, but this time it has wallet.
leading actors have to be tending the influence of Chi- Jacky Wong been ignored from the start. Salesforce is a new en-
trant to that listalso a puz-
zling one. The company sells
subscription-based enter-
prise software to large busi-
nessesa very different in-
Anyone looking to this as Kuwait and Norway com- is a fungible commodity, so dustry than advertising.
weeks oil meeting in Algeria bined in 2015. and far more Chinas impact on the overall But Mr. Benioff has spoken
for the future of oil produc- than major OPEC members global energy balance is the previously of an M&A win-
tion should shift their gaze Iran and Venezuela, accord- factor to watch. After the dow created by a harsh sell-
eastward to China. ing to the U.S. Energy Infor- U.S., where output has been off in software and internet
China, the worlds mar- mation Administration. falling, it is one of the lead- companies earlier this year.
15,044 ginal consumer of nearly ev- Now its output is falling ing contributors to a needed Twitter fits that bill, at
GETTY IMAGES
11,949 erything that comes out of fast. In terms of barrels, RBC adjustment in supply. least. Its shares were down
the ground, is a big factor in Capital Markets commodity OPEC output is near re- 19% for the year before Fri-
11,030
the demand side of the equa- strategist Michael Tran says, cord levels and even non- days reports, as its once-
4,722 tion. But for oil, the worlds the drop this year versus the OPEC production, largely rapid growth has stalled. But
4,506
most valuable resource, its same period in 2015 is more PetroChina is reducing thanks to Russia, was higher that doesnt make Twitter
impact on the supply side is than in troubled Nigeria or investment in aging fields. in the first half of 2016 than any sort of bargain.
4,050 underestimated, but could Venezuela. Rather than vio- in the first half of 2014. If Twitter commanded a
3,474 gain more attention soon. lence or economic chaos, where they had to spend Chinas stimulus spending similar deal multiple to
Based on output alone, though, the explanation lies heavily to maintain output. and building of its own stra- LinkedIn of about 6.8 times
3,447 China wouldnt be out of in a sudden focus on the bot- In August, Chinese crude-oil tegic petroleum reserve have forward sales, that would put
3,183 place in the Organization of tom line at Chinese oil pro- production fell to its lowest been helping to bolster weak the price in the $18 billion
the Petroleum Exporting ducers. level since late 2009. demand. While projecting range, which is $18 billion
2,710
Countries. Of course, it is the PetroChina Co. and Cnooc Chinese crude imports, how those will affect oil more than what Salesforce
2,685 worlds No. 2 consumer and Ltd. have both projected fall- therefore, may not deceler- market demand in the future has in net cash. A lot, in
hence not an exporter. But ing hydrocarbon production ate as much as some pro- is tough, Chinas downward other words, to chase a
China produced as much pe- this year as they cut back on jected. So far this year, they supply trajectory is crystal highly speculative dream.
troleum and related liquids investment in aging fields are up by about 9%. But oil clear. Spencer Jakab Dan Gallagher
FINANCE & MARKETS
existing debt and for general pur- symbolic return to global markets
Finance poses, according to a term sheet.
The company sold $1.1 billion
after a previous issue faltered
earlier this year.
Watch worth of three-year bonds with a VTB Capital PLC, the sole or-
1.75% coupon, the term sheet ganizer of the bond placement,
said. It also sold $1.3 billion worth said Russias Finance Ministry had
of five-year bonds with a 2.% cou- raised $1.25 billion in 10-year Eu-
pon and $600 million of 10-year robonds with a 3.99% yield.
LyGH Capital, that means in- looking more to Hong Kong bonds with a 2.75% coupon. That brings Russia to its tar-
vesting in Hong Kong stocks for investment opportunities SINOPEC Carol Chan get of $3 billion in external bor-
right now is simply a matter in part because conditions at rowing for this year.
of following the money. home are no longer favorable.
Energy Firm Sells RUSSIA In May, Russia fell short of
There is a good chance for Market conditions in China $3 Billion of Bonds State Raises Cash that goal when it raised only
the Hong Kong market to go are different than two years China Petrochemical Corp., $1.75 billion in its first bid for in-
further higher even though ago. At that time, equity was known as Sinopec Group, raised a In Offshore Market ternational funding since it was
global investors sentiment on cheap, bond yields were high, combined $3 billion from a U.S. Russia overcame sanctions-re- hit by sanctions in 2014 over the
China [is] still subdued, Ms. property prices were not that dollar-denominated bond offering lated hurdles to tap international Ukraine crisis.
Lu said in a note to investors outrageous, Ms. Lu said in via three tranches to refinance debt markets Friday, marking a Laura Mills
this month. the interview.
Hong Kong stocks now Lim Say Boon, chief invest-
make up 40% of her portfolio,
up from 10% two months ago,
ment officer of DBS Bank, re-
peated some earlier advice
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she said in an interview with this week, urging his clients in
The Wall Street Journal. a note to follow the money [ Search by company, category or country at asia.WSJ.com/funds ]
and buy H-shares.
To be clear, its not about NAV %RETURN
H-shares have the Chinese economy, which
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
VP Classic-C Units AS EQ HKG 09/22 USD 15.80 5.3 7.2 4.9
clawed their way will continue to struggle, Mr. VP Classic-C Units AUD H
VP Classic-C Units CAD H
AS
AS
EQ HKG
EQ HKG
09/22 AUD
09/22 CAD
13.01
12.66
6.1
5.7
8.1
7.3
6.4
5.8
Lim said. Our call at midyear
into the black, rising was driven by low valuations
VP Classic-C Units HKD H
VP Classic-C Units NZD H
AS
AS
EQ HKG
EQ HKG
09/22 HKD
09/22 NZD
10.72
13.06
4.5
5.4
NS
7.6
NS
6.5
Data as shown is for information purposes only. No offer is being made by VP Classic-C Units RMB AS EQ HKG 09/22 CNH 10.68 4.7 NS NS
10% since July. and expectations of policy Morningstar, Ltd. or this publication. Funds shown arent registered with the
U.S. Securities and Exchange Commission and arent available for sale to United
VP Classic-C Units RMB H
VP Multi-Asset Fund Cls A HKD
AS
OT
EQ HKG
OT HKG
09/22 CNH
09/22 HKD
10.39
10.02
6.1
NS
NS
NS
NS
NS
support. And both factors re- States citizens and/or residents except as noted. Prices are in local currencies. VP Multi-Asset Fund Cls A USD OT OT HKG 09/22 USD 10.17 3.6 NS NS
main valid. All performance figures are calculated using the most recent prices available. VP Taiwan Fund AS EQ CYM 09/22 USD 17.31 20.1 20.5 2.9
So far in September, main- Still, the rally could stall if NAV %RETURN
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
land investors have bought a mainland support for the citys For information about listing your funds,
net 49.4 billion yuan ($7.4 bil- stocks were to dry up. Indeed, n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866 please contact: Freda Fung tel: +852 2831
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
lion) in Hong Kong shares the buying spree hit a speed CAM-GTF Limited OT OT MUS 09/16 USD 302948.64 8.2 13.3 -7.8 2504; email: freda.fung@wsj.com
through the trading link, more bump Thursday as the trading
than three times the monthly link recorded its first day of
average this year. A fresh wave net outflows from mainland
of money could be coming: investors since Aug 1.
Among the investors recently
given the green light to use
the link are the countrys in-
Global investors wary of
Chinas slowing economy and
opaque companies have been
n Website: Https://Www.Valuepartners-Group.Com/ Tel: (852) 2143 0688
China A-Share Fund Cls A AUD H OT
China A-Share Fund Cls A AUD UnH OT
China A-Share Fund Cls A CAD H OT
OT HKG
OT HKG
OT HKG
09/22 AUD
09/22 AUD
09/22 CAD
11.99 -5.4
10.92 -9.8
11.16 -6.4
6.3
-2.8
4.5
NS
NS
NS
LIST YOUR
China A-Share Fund Cls A EUR H OT OT HKG 09/22 EUR 11.78 -7.1 4.3 NS
surance companies. reluctant to step up buying of China A-Share Fund Cls A EUR UnH OT OT HKG 09/22 EUR 11.43 NS NS NS
Investors and strategists
said mainland investors are
Chinese shares this year de-
spite an emerging-market rally
China A-Share Fund Cls A GBP H OT
China A-Share Fund Cls A GBP UnH OT
China A-Share Fund Cls A HKD H OT
China A-Share Fund Cls A HKD UnH OT
OT HKG
OT HKG
OT HKG
OT HKG
09/22 GBP
09/22 GBP
09/22 HKD
09/22 HKD
11.79 -3.8
13.19 6.2
11.92 -6.4
11.80 -5.4
7.9
22.2
4.6
4.0
NS
NS
NS
NS
FUNDS
that boosted stocks from Paki- China A-Share Fund Cls A NZD H OT
China A-Share Fund Cls A NZD UnH OT
OT HKG
OT HKG
09/22 NZD
09/22 NZD
11.79 -5.4
9.99 -11.7
6.3
-9.4
NS
NS
stan to Brazil. China A-Share Fund Cls A RMB (CNH) OT OT HKG 09/22 CNH 12.71 -4.0 7.9 NS
China A-Share Fund Cls A USD OT OT HKG 09/22 USD 11.78 -5.5 3.5 NS
Others warn Hong Kong China A-Share Fund Cls A USD H OT
China Greenchip-A Units AS
OT HKG
EQ CYM
09/22 USD
09/22 HKD
11.85 -6.0
54.71 3.3
4.9
2.9
NS
-5.5
shares are getting less cheap,
China Greenchip-A Units AUD H AS EQ CYM 09/22 AUD 9.22 3.7 3.6 -6.0
particularly given the possibil- China Greenchip-A Units CAD H AS EQ CYM 09/22 CAD 9.00 2.7 2.3 -6.8
China Greenchip-A Units NZD H AS EQ CYM 09/22 NZD 9.44 4.4 4.2 -4.7
ity the Federal Reserve will China Greenchip-A Units USD AS EQ CYM 09/22 USD 9.06 3.3 3.0 -6.4
raise interest rates this year, China Greenchip-A2 QDIs Units AS
GC Hi Yield Inc - Cls A MDIs GBP H OT
EQ CYM
OT CYM
09/22 HKD
09/22 GBP
9.97 3.3
9.66 12.7
2.9
15.9
-5.6
NS
which would dent the higher- GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
OT CYM
OT CYM
09/22 AUD
09/22 CAD
9.21 14.1
9.25 13.0
17.9
16.0
9.3
7.7 In print & online. Contact:
yielding bank and property GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 09/22 NZD 9.51 14.7 18.5 10.6
GC Hi Yield Inc-Cls P HKD Acc sh OT OT CYM 09/22 HKD 13.76 13.3 16.4 7.6
shares that have been popular GC Hi Yield Inc-Cls P HKD MDIs sh OT OT CYM 09/22 HKD 9.08 13.4 16.4 7.6
GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 09/22 SGD 9.96 13.4 17.0 NS
with mainland investors GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 09/22 USD 13.87 13.1 16.3 7.6
The flow coming to Hong GC Hi Yield Inc-Cls P USD MDIs sh OT OT CYM 09/22 USD 9.13 13.1 16.3 7.6 wsja.advertising@dowjones.com
GC Hi Yield Inc-ClsA MDIs EUR H OT OT CYM 09/22 EUR 10.09 12.0 15.0 NS
Kong I think is very sustain- Hi-Div Stk Cls A RMB H Acc OT OT HKG 09/22 CNH 10.56 7.6 9.4 4.0
Hi-Div Stk Cls A RMB UnH Acc OT OT HKG 09/22 CNH 12.51 7.4 10.5 5.4
able, but I think we are past Hi-Div Stk Cls A1 OT OT HKG 09/22 USD 76.47 6.4 7.2 1.6
the really cheap-valuation Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
09/22 AUD
09/22 CAD
9.60
9.68
6.7
5.8
7.7
6.3
2.5
1.1
stage, said William Ma, chief Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 09/22 GBP 9.11 5.5 6.1 NS
Hi-Div Stk Cls A2 HKD MDIs OT OT HKG 09/22 HKD 9.85 6.8 7.5 1.5
investment officer of wealth Hi-Div Stk Cls A2 MDIs OT OT HKG 09/22 USD 10.79 6.4 7.2 1.6
Hi-Div Stk Cls A2 NZD H MDIs OT OT HKG 09/22 NZD 9.72 6.2 7.5 3.0
manager Noah Holdings Ltd. Hi-Div Stk Cls A2 RMB H MDIs OT OT HKG 09/22 CNH 9.31 8.5 10.3 4.3
What we need is an earnings Hi-Div Stk Cls A2 RMB UnH MDIs OT OT HKG 09/22 CNH 9.58 8.3 11.9 5.9
Intel-China Converg Fund-A AUD H AS
Intel-China Converg Fund-A CAD H AS
EQ CYM
EQ CYM
09/22 AUD
09/22 CAD
9.43
10.73
0.3
NS
NS
NS
NS
NS
Intel-China Converg Fund-A NZD H AS EQ CYM 09/22 NZD 10.76 NS NS NS
16 cheap. Intel-China Converg Fund-A Units AS EQ CYM 09/22 USD 142.57 -2.5 -1.5 3.3
250 billion yuan = $37.5 billion Gregor Stuart Hunter Intel-Chinese Mainland Foc Fund AS
VP Classic-A Units AS
EQ CYM
EQ HKG
09/22 USD
09/22 USD
39.49 -4.4
277.85 5.6
-0.2
7.7
3.6
5.2
THE WALL STREET JOURNAL. contributed to this article. VP Classic-B Units AS EQ HKG 09/22 USD 125.22 5.3 7.1 4.7