Wall Street Journal

P2GW161000-0-A00100-1--------AL
Beware of Europes
Tourist Traps
Greg Ip
Whats Fueling the Rise
Of the Populist Right
PERSONAL JOURNAL | A8
CAPITAL ACCOUNT | A2
THURSDAY, JUNE 9, 2016 ~ VOL. XXXIV NO. 90
DJIA 18005.05 0.37%
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Whats
News
Business & Finance
orporate yields in the

eurozone fell to their lowest in over a year as the ECB
began a multibillion-euro
bond-buying program. A1
BHSs chief told U.K. lawmakers the firms owner
threatened his life after he
asked about a $2.2 million
transfer out of the retailer. B1
Chinese firms are on
course to set record investment levels in Germany this
year, fueling concerns about
a loss of technology. B1
NIKKEI 16830.92 0.93%
STOXX 600 344.56 g 0.49%
WSJ.com
OIL 51.23 1.73% GOLD 1259.80 1.24% EURO 1.1407 0.43%
Suspect says terror

group is larger than
three men arrested;
new details emerge
The revelations, part of new State sleeper cell of between

details emerging about the ar- 10 and 20 people, officials farested suspects, add to con- miliar with the investigation
cerns that the extremist group said. Based on his testimony,
could be poised
German police
to strike again
last week arBy Ruth Bender in
in Europe.
rested three susBerlin and Matthew
Authorities in
pected Islamic
Dalton in Paris
France,
GerState members
many and the Netherlands are who arrived in the country
examining testimony from among Syrian asylum seekers
Saleh A., who walked into a on suspicion of preparing an
police station in the north of attack in the western Germany
Paris in February claiming city of Dsseldorf.
that he was part of an Islamic
Saleh A.s statements are
A man who was detained in

France and exposed an Islamic
State terror cell in Germany
told authorities that the cell
contained many more people
than the three now in custody,
according to officials familiar
with his testimony.
central to the investigation,

one German official familiar
with the investigation said.
German and French authorities have worked closely together on the case, the person
said, adding that German investigators had been able to
question Saleh A.
Saleh A. told French police
that his terror cell was awaiting instructions from a certain
Abu Doujana Al Tunisi, supposedly the head of foreign
fighters for Islamic State, and
Indias Modi Brings Warmth and a Little Humor to Washington
European authorities
are seeking to replace Greek
banks boards and are targeting the chairwoman of the
National Bank of Greece. B5
Two gunmen opened fire

at a Tel Aviv food market,
killing three people, in what
Israeli police called an apparent terror attack. A5
Indias Modi charted a
course for strong defense
and counterterrorism ties
with the U.S. in a warm
address to Congress. A3
Iraqs military said its
forces had entered Fallujah for the first time since
their offensive against Islamic State began. A5
A Chinese jet fighter
conducted an unsafe intercept of a U.S. spy plane over
the East China Sea, the U.S.
Pacific Command said. A3
An Eritrean suspected of
being a top migrant smuggler was extradited to Italy,
but some said authorities
had the wrong man. A4
Turkey blamed Kurdish
rebels for car bombings that
killed at least 14 people. A5
France launched an app
to alert users to possible
terror attacks. A5
Inside
MARKETS B5
How REITs
Crushed the
Stock Pickers
CONTENTS
Arts & Ent............... A9
Business & Tech. B1-4
Crossword.............. A12
Capital Account.... A2
Heard on Street.... B8
Markets Digest..... B6
Money & Inv...... B5-8

Opinion.............. A10-11
Personal Journal.. A8
Technology............... B3
U.S. News.................. A7
Weather................... A12
World News........ A2-5
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U.S. Military (Eur.) $2.20
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Company. All Rights Reserved
EVAN VUCCI/ASSOCIATED PRESS
Suzukis leader plans to

give up his CEO title over the
fuel-economy scandal. B2
An Islamic State cell in

Europe contained many
more people than the three
in custody, a terror suspect
told authorities. A1
Attack in Tel Aviv

Kills at Least Three
Two gunmen opened fire at a
market Wednesday in what
Israeli police said appeared to
be a terror attack. A5
that around 20 people were
members of the cell, according
to a French official. Another
official familiar with the probe
Please see CELL page A4
Corporate
Yields Fall
As ECB
Starts Big
BY MIKE BIRD
AND TOM FAIRLESS
GM launched a broadside against Ford that questions the durability of its rivals F-150 pickup truck. B1
World-Wide
DLR 106.66 g 0.66%
Signs of Bigger German Cell Emerge
WPP shareholders approved Sorrells compensation after the ad groups CEO

faced a revolt over his $102.4
million pay package. B1
Amazons CEO said the

firm will invest an additional $3 billion in India. B3
EUROPE EDITION
GUEST SPEAKER: Indian Prime Minister Narendra Modi addressed the U.S. Congress on Wednesday, emphasizing the bond between
the U.S. and India and urging cooperation on security matters. He also joked about how harmonious the American legislature is. A3
DEMOCRATIC PARTYS SHIFT

LEFT PULLS CLINTON WITH IT
Tough primary challenge pushed the former centrist toward more liberal stands
BY LAURA MECKLER
When she stood before New York
Democrats and launched her first campaign for office 16 years ago, Hillary
Clinton was unabashed about her centrist credentials.
Im a New Democrat, the first lady
said in announcing her Senate bid. Her
husband worked for a decade to move
the party away from its liberal roots
and win over independent voters. Now
Mrs. Clinton touted that third-way phi-
Capital Journal: Insider Clinton runs in

a year of outsiders.................................... A7
Missing from Trumps new hotels:
the family name.......................................... B5
losophy, too.
I dont believe government is the
source of all our problems, or the solution to them, she said.
Shout of Africa: Heavy Metal

Maniacs Blast the Kalahari
i
Botswana is home to a raucous festival,

starring Overthrust and a lot of leather
BY PATRICK MCGROARTY
Once a year, in May, the

dusty streets of this sleepy town
GHANZI, BotswanaBy the in the Kalahari Desert fill with
light of a smartphone, Thato hundreds of Mad Max-channelMohamadi inspected his heading metalheads who rock to the
to-toe leather ensemble,
screams of homegrown bands.
which featured lizardAt this years seventh annual
like scales and silver
installation, the rockers
studs. Red flames
known to their countrymen
flared a full foot
as Ma Rockparaded in
from either side of
leather cowboy hats
his black leather
and skeleton-print
chaps.
jumpsuits before
Now thats a supartying
until
perpowered outfit,
dawn.
said Mr. Mohamadi,
The gathering
who is known as
has made tiny
Thato Mohamadi
Demon in BotGhanzi a Mecca
swanas booming
for bikers and
heavy-metal scene. I will be rockers from across this landthe baddest this year. The locked country and beyond. Its
outfit clinked and clattered as a dress-to-kill event, said Tshothe 29-year-old mechanic marelo Mosaka, or Vulture
turned and strode, limbs Thrust, his nom de guerre as
akimbo, into a community hall bassist and lead singer for the
Please see METAL page A6
hosting Metal Mania Fest 2016.
Today, a transformed Mrs. Clinton

campaigns again, this time for president.
On a swath of domestic issues, dragged
along by a rapidly changing party and a
surprisingly tough primary opponent in
Sen. Bernie Sanders, Mrs. Clinton has
moved to the left, sometimes reversing
her positions and in other cases changing her tone in significant ways.
Mrs. Clinton has undone her longtime
opposition to gay marriage. She apologized for her 2002 vote authorizing an
Please see LEFT page A6
EU Vote
Looms Large
In a U.K.
Export Hub
Yields in the eurozones

corporate-bond market fell to
their lowest in more than a
year on Wednesday, heralding
the arrival of a very big buyer:
the European Central Bank.
The ECB bought bonds from
telecommunications, insurance
and utility companies, pushing
yields down in these sectors,
according to people familiar
with the matter. The purchases kick-started a multibillion-euro program of corporate-bond purchases that is
part of the central banks
yearslong attempt to stoke inflation and lower financing
costs across the euro area.
Investors said the central
bank bought big on Wednesday to make a splash on the
first day of its program,
though market participants
question the effectiveness of
such unconventional monetary policy.
Anticipation of the program
already had boosted Europes
credit markets and prompted a
flurry of new issuance since it
was announced in March. The
biggest impact from bond-buying programs often comes after the announcement and before the actual debt is bought,
analysts said.
That leaves Europes bond
markets vulnerable to a pullback if investors become disappointed in the programs
early days.
They could not have let today pass as an underwhelming
day to startThey needed to
show a credible amount of
buying, said Barnaby Martin,
credit strategist at Bank of
Please see ECB page A2
Oracle #1
Cloud ERP
BY ERIC SYLVERS
SUNDERLAND, England
This gritty port city in Englands
northeast corner has more than
most riding on this months
vote on whether the U.K. will
leave the European Union.
About 7,000 people work at
Nissan Motor Co.s Sunderland
factory, the U.K.s largest auto
plant producing some 500,000
cars a year. Thousands more
workers are employed at
nearby suppliers.
Claims of potential damage
to the U.K. auto industry from a
British exit from the EU put this
industrial citystill recovering
from the last downturnin a
precarious position. In interviews with Nissan workers, several said they favor remaining in
the EU, fearing disinvestment
after an exit. But they still felt
Please see U.K. page A2
1,800
227
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ERP Customers
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Oracle has their act together better than SAP

Aneel Bhusri, Workday CEO
Midsize and large scale Enterprise Fusion ERP Cloud customers.

oracle.com/modern-finance or call 1.800.ORACLE.1
Copyright 2016, Oracle and/or its affiliates. All rights reserved.
P2GW161000-0-A00200-1--------AL
THE WALL STREET JOURNAL.
A2 | Thursday, June 9, 2016
WORLD NEWS
Rise of Populist Right Not End of Globalization
s the industrialized
world suffers through
its worst economic
stretch since the 1930s, voters have flocked to populists
decrying the harm inflicted
by outsiders. It raises disturbing comparisons to the
Great Depression, when globalization reversed and fascism advanced.
But on
closer examination, the paralCAPITAL
lels are flawed.
ACCOUNT
Right-ofGREG IP
center populists in continental Europe,
advocates for a British exit
from the European Union,
and Donald Trump, the presumptive Republican nominee for U.S. president, derive
their backing less from a
broad backlash against globalization than from one specific facet of it: immigration,
which arouses anxieties that
are racial and cultural, not
just economic.
Consider Germany. In
2013, its hugely popular
chancellor, Angela Merkel,
and her center-right party
trounced the anti-euro populist party, the Alternative for
Germany, or AfD, which drew
just 4.7% of the vote. Since
then, however, support for
Ms. Merkels party has sunk
while its surged for the AfD.
In March state elections,
AfD drew 24% of the vote in
Saxony-Anhalt and 15% in
Baden-Wrttemberg and 13%
in Rhineland-Palatinate. This
has nothing to do with the
economy; German unemployment is half its precrisis
level. Its a backlash against
Ms. Merkels decision to ad-
ECB
Continued from Page One
America Merrill Lynch.
On Wednesday, yields kept
falling. Markits iBoxx euro
corporate-bond index registered an average yield of just
1.09% for debt maturing in one
to 10 years, down from 1.10%
on Tuesday and the lowest
close since April 2015.
Bank of America Merrill
Lynch expects spreads between euro-denominated debt
and government bonds to
tighten by another 0.15 to 0.20
percentage point from their
current levels by the end of
the year.
But the program comes
with risks. Some investors are
concerned that the ECB could
own so much of the market
that it becomes difficult to buy
U.K.
conflicted at the prospect of
staying a member.
Nissan executives, like those
at other auto manufacturers
that build cars in the U.K., have
opposed the U.K.s exit, saying it
would result in a period of uncertainty that could trigger
higher tariffs and other barriers
to trade that endanger investment. None have said that factories would close.
The city is likely to support
an exit in the June 23 binding
The Unpredictable Politics of Economic Stress
Economic woes can't fully explain the rise of anti-establishment populism. In Europe's hardest-hit economies, high unemployment has tended to
boost left-leaning movements. In the U.S., stagnant incomes havent broadly undermined support for free trade and immigration.
Left-leaning
Right-leaning
50%
Austria
Hungary
40
Support
for
populist
parties,
as of the
most
recent
available
election
or
opinion
poll
Poland
Netherlands
Greece
30
France
20
Italy
Spain
Sweden
Germany
0
5 pct.
pts.
10
15
20
70%
70%
60
An opportunity
60
50
50
40
40
A threat
30
20
20
10
10
Good
thing
Bad thing
0
1992
2000
2010
2001
2010
mit more than a million

mostly Middle Eastern refugees. In state elections, more
than half of the AfDs supporters cited refugees as
their decisive issue; barely a
quarter cited the economy.
Historically, financial crises have led to political polarization and fragmentation,
and the euro crisis is no exception: support for establishment parties has eroded
across the continent. But this
doesnt automatically channel
support to the far right.
In the five eurozone countries that received bailouts,
right-wing populists average
less than 2% of the vote, says
Cas Mudde, a Netherlandsborn political scientist at the

University of Georgia. A revolt
against austerity carried leftwing populists to power in
Greece and to second place in
recent polls in Spain, but neither backs leaving the euro.
By contrast, right-of-center populists govern Poland
and Hungary, both of which
escaped the eurozone crisis
(they havent adopted the
euro) and enjoy low unemployment. This is not to say
that economic conditions play
no role at all, says Mr.
Mudde. But they tend to
benefit the far right if they
can be translated in sociocul-
tural terms, i.e. being related

to concern about corruption,
crime, and integration.
The same dynamic is apparent in the run-up to Britains referendum on June 23
on whether to leave the European Union. For decades, a
core of euroskeptics have
complained that meddlesome
bureaucrats in Brussels are
subverting British democracy.
But only 30% of Britons who
say they want to leave cite
legislative independence as a
reason, compared with 49%
who cite immigrants, according to Ipsos, a pollster.
While voters in the U.S.
consistently rank the econ-
omy first among concerns,

that doesnt equate to rejecting globalization. Overall,
Americans support for free
trade and immigration has
trended up since the recession, not down. Mr. Trump
has railed against free trade,
but that appears less central
to his electoral success than
opposition to immigration
and broader racial anxiety on
the part of a fairly narrow
slice of the population.
In exit polls, only about
10% of Republicans named immigration as their No. 1 issue.
But those who did backed Mr.
Trump by far greater margins
than did Republicans overall.
et broad-based prosperity wouldnt necessarily

salve political tensions
over culture and race. The
1960s were outstanding for
middle-class incomes, yet
white southerners still abandoned the Democratic Party
over the Civil Rights Act. It
was during the Roaring 20s,
not the Great Depression, that
nativist politicians pushed
through stringent immigration
restrictions by fomenting fear
that eastern and southern European immigrants included
communists and anarchists.
That finds an echo in Mr.
Trumps proposal to bar Muslims because some might be
terrorists.
Stronger, broadly shared
economic growth would drain
some of the anger from many
issues dividing voters today.
History suggests, however,
that immigration wont be
one of them.
or sell. Some analysts warn of

a bubble in debt markets.
The ECBs corporate-bond
purchase program is drying up
liquidity and people have been
trying to get ahead of the
curve; this is one reason we
disinvested completely from
the European corporate-bond
space, said Markus Stadlmann, chief investment officer
at Lloyds Private Bank.
Many analysts and investors also are uncomfortable
with the idea of a central bank
making decisions about which
private companies get funds.
Such criticism has been particularly strong in Europes largest economy, Germany, where
a range of critics have attacked the ECBs stimulus
measures.
Deutsche Banks chief economist, David Folkerts-Landau,
on Wednesday called the decision to buy corporate bonds
an act of desperation.
The central bank is trying
to play the role of commercial
bank by lending to the corporate sector, and that will lead
to misallocation of funds and
sap business confidence in
policy makers, he said.
The ECB hasnt said how
much corporate debt it will
buy, but most analysts expect
it to target between 5 billion
($5.7 billion) and 10 billion a
month, in a market estimated
at roughly 600 billion. The
central bank will buy investment-grade bonds of companies established in the euro
area, but not banks. It will buy
up to 70% of each bond issue.
Wednesdays buying took
place in Europes most liquid
corporate-bond markets.
Among the companies
whose yields fell furthest was
brewing giant Anheuser-Busch
InBev NV, whose bond matur-
ing in 2028 fell from 1.4% at

the opening to 1.339% at the
end of trading in Europe. A
bond maturing in 2021 and issued by German electrical utility RWE AG dropped from
1.177% to 1.062% at its lowest.
And yields on 10-year bonds
from Spanish telecommunications company Telefnica SA
fell to their lowest on record,
touching 1.427%, after being at
1.466% when European markets opened Wednesday.
The ECB already has bought
more than 1 trillion of mainly
government bonds under its
quantitative-easing program.
But this is the first time that
the Frankfurt-based central
bank has ventured into corporate bonds.
The ECB declined to comment on its buying Wednesday. But top officials at the
bank have signaled that they
have high hopes for the new
stimulus program.
ECB Governing Council
member Ardo Hansson said
Wednesday that the corporatebond purchases could be more
effective than the banks buying of government bonds.
Ive always thought that
channels that work directly
through enterprises and banks
are the most likely channels to
have an impact, said Mr. Hansson, who also is governor of
Estonias central bank.
The ECB hopes that this
money will flow straight into
corporate coffers while also
helping banks as investors
look to buy banks bonds,
which arent eligible for this
program, in an attempt to gain
extra yield.
The ECB debt-buying programs exemplify the sort of
monetary policy that has
pushed yields in governmentand corporate-debt markets
lower throughout the developed world. The Bank of

Japan, ECB and several European central banks have cut
interest rates into negative
territory.
Yields also are low because
the eurozone, as well as other
parts of the world, are struggling with a lack of inflation,
so investors have been willing
to accept lower returns. Low
economic growth has encouraged people to buy safe investments, such as bonds. Yields
fall as people buy, pushing up
prices.
On Wednesday, the yield on
the 10-year German government bond fell as low as
0.036% in early European trading, its lowest-ever intraday,
according to data from
Tradeweb. On Tuesday, it had
reached an all-time closing
low of 0.049%. Riva Gold
contributed to this article.
referendum, according to Credit

Suisse data released this week.
Nationally, polls show the nation pretty evenly divided between those backing an exit and
those who wish to remain.
About 10% of British voters say
they are undecided.
Those arguing for Britain to
remain in the EU say access to
the worlds largest trading bloc
is critical to its auto exports, and
they believe business investment and employment would
drop sharply if the U.K. left. But
those in favor of an exit say the
departure would free business
from burdensome regulation
and the U.K. would quickly sign
its own deals with large trading

partners like the U.S.
Meanwhile, emotions on issues such as immigration and
EU regulation in cities like Sunderlandwhere car manufacturing helped overcome job losses
in mining and shipbuildingappear to be holding sway over
many residents. In the citys
center, shops and pubs still alternate with abandoned buildings and empty lots, evidence of
continuing economic stress.
I know there could be negative effects in Sunderland if we
leave the EU because of the Nissan factory, but Im worried
about immigration and border
controls, said Nicola Hawkins

as she cut a clients hair in her
tiny downtown barbershop. I
cant make up my mind.
To some residents, business
arguments to remain are losing
out to gut feelings they would
be better apart. The 30-year-old
Nissan plant today is a symbol
of the industrys rise to a mainstay of British manufacturing.
Two years ago, the factory produced more cars than were
made in all of Italy.
Still, EU membership helped
the U.K. car industry thrive even
as foreigners have steadily
grabbed control of British luxury-car brands including Land
Rover, Bentley, Aston Martin
and Rolls-Royce. U.K. car makers are exempt from the 10%
tariff the EU slaps on cars imported from outside the bloc.
Moreover, they dont pay tariffs
on components imported from
the EU, particularly important
for an industry that gets 60% of
its parts from abroad, almost
double Germany.
As a result, foreign car makers often use the U.K. as a
springboard for exporting to Europe, making the auto industry
one of the few manufacturing
bright spots for the country as
it emerged from the financial
crisis. It employs about 700,000
people and four of every five
cars made in the U.K. are exportedwith most of those going to the EU. Today, the U.K. is
the EUs No. 3 auto producer, after Germany and Spain.
Earlier this year, Nissan Chief
Executive Carlos Ghosn hinted
that future investments at the
Sunderland factory could be affected by an exit. Ford, which
employs 14,000 in the U.K., also
warned that a split could
threaten jobs. Daimler AG, BMW
AG and Toyota Motor Corp.
have said Brexit would be bad
for the car industry.
From a business point of

view it doesnt make sense to
target the European market
from outside the EU, said Mike
Matthews, U.K. managing director at Japanese auto-parts supplier Nifco Inc. It employs 500
people at a facility 30 miles from
Nissans Sunderland factory.
Mr. Matthews said Nifco,
which supplies all major car
makers, would curtail investment in the U.K. if it exits, and
that he expects most of the car
industry would do the same.
The EU creates a level
playing field for local companies and without it we would
become a Third World country, said Paul Watson, head of
Sunderlands city council. Unite
the Union, which is the U.K.s
biggest labor union, also favors
staying in the European Union.

A study commissioned by
Sunderlands city council
found that 2,500 local jobs
could be lost if the U.K. leaves
the EU. The city is ramping up
a large public-works project to
improve logistics near the Nissan factory.
Supporters of an exit say the
car industry is exaggerating the
negative impact of an exit and
bluffing when it threatens to
curtail investments should the
U.K. abandon the EU.
Gerard Lyons, a U.K. economist said any economic impact
would be contained.
Jenny Gross
Unemployment rate, difference from 2007 average

Notes: Support in Greece (Syriza), Spain (Podemos), Finland (True Finns), Austria (Austrian Freedom Party) and the U.K. (U.K. Independence Party) is based on vote shares in recent elections,
while the latest opinion polls were used for support in Italy (Five Star Movement), France (National Front), Sweden (Sweden Democrats), Poland (Law and Justice), Netherlands (Party for
Freedom), Hungary (Fidesz) and Germany (Alternative for Germany). Unemployment for Greece and the U.K. is as of February; Hungary is as of March, and all others are as of April.
Sources: Eurostat (harmonized unemployment rates); news reports (populist support in Europe); Gallup (U.S. opinion polls)
Why a Brexit Matters to the U.K. Auto Industry

Almost four out of every ve cars produced in Britain last year were exported.
Where British car exports go:
EU 58.0%
U.S. 11.0%
Turkey 2.9%
China 7.0%
EU car production:
On the whole, U.S.

immigration is a...
30
Finland
U.K.
10
For the U.S., foreign trade is...
Many critics of illegal immigration would actually welcome more legal immigrants
so long as they wait their
turn and bring needed skills.
Yet for many of Mr. Trumps
supporters, their anxiety is as
much cultural as economic.
According to Pew, Mr. Trump
has particular appeal to Republicans bothered that the
white share of the U.S. population is shrinking.
To be sure, some of this
has economic roots. Mr.
Trumps support comes heavily from less-educated whites
who have suffered disproportionately from the shift of
well-paying work to other
countries, to automation or
to college graduates, and
now compete with immigrants for jobs.
= 100,000
Russia 2.0%
Australia
2.8%
Rest of World
16.3%
Germany
5.70 million
Spain
2.20 million
U.K.
1.59 million
France
1.55 million
Czech Republic
1.30 million
Slovakia
1.00 million
EU
total
18.50
million
cars
Italy
0.66 million
Poland
0.53 million
Other
3.96 million
Sources: The Society of Motor Manufacturers & Traders (exports);
International Organization of Motor Vehicle Manufacturers (production)
CORRECTIONS
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Thursday, June 9, 2016 | A3
WORLD NEWS
Modi Hails U.S. Ties in Congress Speech
Indian prime minister

wins upbeat reception
as two countries
deepen partnership
Indian Prime Minister Narendra Modi charted a course

for strong defense and counterterrorism ties with the U.S.,
sharing his vision in a warm
address to American lawmakers that appeared geared toward maintaining close cooperation with Washington in
future U.S. administrations.
Today our relationship has
overcome the hesitations of
history, Mr. Modi said. In every sector of Indias forward
march, I see the U.S. as an indispensable partner.
Washington has worked
carefully for years to advance
defense ties with New Delhi as
China grows increasingly assertive in Asia. Such strategic
cooperation accelerated in the
latter part of the Obama administration after Mr. Modi
was elected prime minister.
While he didnt mention
China directly, Mr. Modi said,
In Asia, the absence of an
agreed security architecture
creates uncertainty. A strong
India-U.S. partnership can
help ensure security of the
sea lanes of commerce and
freedom of navigation on
seas, he said.
Mr. Modi won loud applause with allusions to American figures ranging from Martin Luther King Jr. and Walt
Whitman to Abraham Lincoln,
and the prime minister even
joked about the partisan split
ANDREW HARRER/BLOOMBERG NEWS
BY WILLIAM MAULDIN
Indian Prime Minister Narendra Modi, right, waved as he arrived to speak at a joint meeting of the U.S. Congress in Washington on Wednesday.
of the lawmakers before him.
I am informed that the
working of the U.S. Congress
is harmonious, Mr. Modi
quipped, before taking an
analogous swipe at his own
parliament, especially the upper house, which has impeded
some of his administrations
policy goals.
Mr.
Modi,
frequently
praised by the U.S. business
community for his attempts to
loosen restrictions on companies, also dwelled on the importance of better economic
exchanges, especially in technology and civilian nuclear
China Exports Shrink

As Demand Wanes
BY MARK MAGNIER
BEIJINGChinas exports
declined in May for the second
consecutive month while imports fell slightly as weak demand further weighed on the
worlds second-largest economy.
Exports slid 4.1% last
month from the previous year,
after declining 1.8% in April,
the General Administration of
Customs said Wednesday. The
rate was slightly stronger than
the median 4.6% decline economists had forecast.
Imports fell by a less-thanexpected 0.4% from a year ago,
compared with a 10.9% drop in
April, mostly due to rising
commodity prices. The customs agency said Chinas trade
surplus widened to $49.98 billion in May from $45.56 billion
in April.
For exports, Im very cautious, not only for this month
but in the medium term, said
RHB Research Institute economist Zhang Fan. For the next
one or two quarters, I dont
think well see much recovery
in global demand.
Weak export growth from
China reflects lackluster U.S.
and European demand and a
declining global appetite for
technology products, economists said. Shipping-industry
volumes signal little immediate chance of a trade upturn,
making it difficult for exporters to raise prices, Mizuho Securities Asia said in a report.
That has left many on the

front lines struggling. Yiwu
Xindian Artistic Products Co.
in the foreign-trade hub of
Yiwu in eastern China, said
sales have fallen this year
compared with early 2015.
Things are getting a bit
tougher, said Wang Meiqi,
general manager at Yiwu Xindian, an exporter of childrens
clothes, suitcases and T-shirts
with annual revenue of three
million yuan ($456,600). We
have more orders, but profits
arent keeping up, he said.
To stay competitive, the
company is switching its focus
from childrens wearwhich
faces tougher safety and quality requirements in the U.S.
and Europeto lower-value Tshirts with logos that sell better. And were trying to team
up with companies that might
have more creative apparel
ideas, Mr. Wang said.
China reported a sharp rise
in imports from Hong Kong,
up 240% year-over-year in
May, a shift economists said
may be a sign businesses are
trying to move money offshore
and evade regulatory controls
amid soft growth and a weakening yuan.
Chinas imports of commodities in May were robust, defying expectations of a seasonal
downturn. Among imports,
copper rose 19% year-overyear, iron ore advanced 19%,
and crude oil rose 39%.
Grace Zhu and Liyan Qi
powera focus of his meeting

Tuesday with President Barack
Obama.
India is eager for foreign
investment to help build infrastructure and boost growth,
and Mr. Modi has sought to
reach out to Indian-American
business leaders and investors.
Hes a guy you can do business with, too, Sen. Rob Portman (R., Ohio.), a former U.S.
trade representative, said after
the speech.
Still, military cooperation
and counterterrorism issues
appeared to be front and center for some lawmakers.
In all my years in Congress, I recall only a select few

countries that rose so quickly
to such an exalted esteem,
said Sen. John McCain of Arizona, the Republican who
chairs the Senate Armed Services Committee, in an op-ed
published by CNN.
Mr. Modi reminded lawmakers of Indias purchases of
billions of dollars of American
materiel, joint military exercises and joint work on counterterrorism and Afghanistan.
Starting Friday, warships
from the U.S., India and Japan
will conduct naval exercises
off Okinawa. The site of the

maneuvers is close to the East
and South China Seas, where
Beijing is locked in territorial
disputes with neighbors.
In a stern voice, Mr. Modi
singled out groups operating
in South Asia that New Delhi
says are backed by Pakistan.
Terrorism must be delegitimized, he said. Although its
shadow is spreading across
the world, it is incubated in
Indias neighborhood.
He commended Congress,
which in recent months has
taken a tough stance against
subsidized weapons sales to
Islamabad, for sending a

clear message to those who
preach and practice terrorism. India has long objected
to U.S. military support for
Pakistan.
The warm reception capped
a big turnaround for Mr. Modi,
who once was banned from
entering the U.S. For years,
some members of Congress
have criticized Mr. Modis previous role as leader of the
state of Gujarat during a religious riot in which many Muslims were killed.
Niharika Mandhana
Abe Looks to Lure Foreign Workers

BY PETER LANDERS
AND YUKA KOSHINO
TOKYO Prime Minister

Shinzo Abes government is
easing the path for foreign
workers, with new policies
that include a pledge to deliver the worlds fastest permanent-residency cards for
skilled migrants.
A set of immigration measures, including that one, was
buried amid dozens of ideas
released last week in Mr.
Abes annual list of policy
changes. The government also
said it planned to bring in
more workers for understaffed nursing homes and
2020 Tokyo Olympics construction projects. And it
promised to raise the proportion of foreign students in
Japan who stay to work after
finishing their studies.
Mr. Abes ruling Liberal
Democratic Party incorporated the ideas in its platform
for parliamentary elections in
July, saying that in some areas of society, grave effects
are emerging because Japanese people alone are insufficient for the workforce. It
said a large increase in foreign workers is anticipated.
Many details remain to be
worked out, and none of the
steps would clear the way for
broad migration of unskilled
workers. That notion still
raises concerns in Japan
about possible crime or social
unrest.
The backdrop to the immigration debate is Japans long
External Efforts
The number of foreign workers in Japan has increased in recent

years, with Chinese nationals representing the biggest group.
Foreign workers in Japan
Breakdown by nationality
Total workers: 907,896
China
800,000
600,000
Vietnam
Philippines
400,000
Brazil
South Korea
Nepal
200,000
Other
0
2011 12
13
14
15
2015
Note: As of Oct. 31 each year

Source: Ministry of Health, Labor and Welfare
struggle to grow consistently,

a goal Mr. Abe has been unable to achieve. Part of the
problem relates to the workforce, which fell as Japan lost
nearly a million people between its 2010 and 2015 national censuses. The population now is about 127 million.
Toshihiro Menju, a managing director at the Japan Center for International Exchange, has called for more
immigration but warned that
bringing in skilled foreigners
would require social changes
beside government measures.
There arent the right struc-
tures in place among Japanese companies and in society to accept foreign

workers, he said.
Japan has long made it relatively difficult for foreigners
to get work permits, especially those who lack specific
skills. Surrounded by water,
the country has generally
been able to keep out unwanted migrants, avoiding issues that have roiled politics
in the U.S. and Europe. The
difficulty of learning Japanese and getting acclimated
to the local culture are other
barriers.
The program for giving

permanent residency to
highly skilled professionals
began in 2012, and only 4,347
people took advantage of it
through the end of 2015, the
Ministry of Justice said.
But with the native-born
population declining, Tokyo
increasingly sees the low
number of foreign workers as
a problem. It has expanded
job-matching services for foreign students in Japan, who
can work nearly 30 hours a
week. That helped raise the
number of foreign workers to
907,896 as of October, a 15%
increase over the previous
year, according to labor ministry figures.
Mr. Abes proposal for a
Japanese green cardwhich
borrows American terminology for permanent residencysays it would be the
fastest such system in the
world. It doesnt specify how
fast that would be. Currently,
skilled workers in areas such
as engineering or finance
must live in Japan for at least
five years before applying for
permanent residency.
Business leaders such as
Takeshi Niinami, chief executive of beer and beverage
maker Suntory Holdings Ltd.,
have called on Mr. Abe to
loosen immigration restrictions as a way to jump-start
the economy.
Increasing labor will stimulate demand and combat the
labor shortage, which is very
acute in this country, Mr. Niinami said in a recent speech.
Jets Intercept American Spy Plane Over East China Sea

By Jeremy Page
in Beijing and
Gordon Lubold
in Washington
The jet was one of two Chinese J-10 fighters that intercepted a U.S. Air Force RC-135
reconnaissance plane on routine patrol Tuesday, the Pacific Command said in a statement. That same day, U.S.
Secretary of State John Kerry
was in Beijing for economic
and security talks that included discussions of regional
tensions.
Tuesdays intercept was the
second such incident since
Beijing and Washington agreed

in September on rules of behavior for air encounters. The
Pentagon said last month that
a Chinese fighter had flown
dangerously close to a U.S. spy
plane over the South China
Sea. China denied that its
plane flew dangerously during
that encounter and accused
the U.S. of threatening its security by regularly patrolling
along the Chinese coast.
Chinas Defense Ministry
said on Wednesday it would
look into the latest incident
but accused the U.S. of again
deliberately hyping the issue
of U.S. military reconnaissance
flights near China. Chinese
military pilots always operate
according to laws and regulations, and are professional and
responsible, the ministry said
in a faxed statement.
Chinas Foreign Ministry
echoed the comments in a reg-
ular news briefing. The U.S.

continues to carry out close
reconnaissance
activities
against China, which severely
undermines Chinas maritime
security, said foreign ministry

spokesman Hong Lei. He declined to comment on whether
the intercept was timed to coincide with the U.S.-China
NARONG SANGNAK/EUROPEAN PRESSPHOTO AGENCY
A Chinese jet fighter conducted an unsafe intercept of a

U.S. spy plane in international
airspace over the East China
Sea, the U.S. Pacific Command
said, in the second such midair
encounter in a month.
The Chinese jets that intercepted a U.S. spy plane over the East
China Sea were J-10s, like these from a Chinese aerobatics team.
talks. I think you need to ask

the U.S. about that, he said.
Mr. Hong also declined to
comment on Beijings commitment to the air-encounters
agreement. The recent intercepts have raised questions
about that among some foreign military officials.
The Pacific Command didnt
specify where Tuesdays intercept occurred, saying only that
it was in international airspace over the East China Sea.
China and Japan both claim a
small group of islands there,
known as Senkaku in Japanese
and Diaoyu in Chinese.
One of the intercepting
Chinese jets had an unsafe excessive rate of closure on the
RC-135 aircraft, the Pacific
Command statement said.
Initial assessment is that this
seems to be a case of improper airmanship, as no other
provocative or unsafe maneu-
vers occurred.
The Defense Department is
addressing the issue with
China in appropriate diplomatic and military channels,
the statement said.
There had been several
close air and sea encounters in
the preceding years, which
some U.S. officials feared
could lead to a collision like
one in 2001 over the South
China Sea between a U.S. spy
plane and a Chinese jet fighter.
The Chinese jet crashed, killing the pilot; the damaged U.S.
plane was forced to land on
Chinas Hainan Island.
There is also mounting concern among U.S. and Asian officials that China plans to establish
an
air-defense
identification zone, or ADIZ,
over the South China Sea,
which would require all foreign aircraft to identify themselves to Chinese authorities.
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HK JP
KO ML
SI IN UK
FR MN
PR
WORLD NEWS
Migrant Smugglers Arrest Sparks Doubts

Friends and family of
Eritrean held in Italy
say he isnt the man
named as a ringleader
An Eritrean suspected of
being among the top leaders
of a criminal network that
smuggled thousands of migrants to Europe has been extradited from Sudan to Italy,
Italian authorities said. How-
World
Watch
RUSSIA
Performance Artist
Is Ordered Freed
A Russian court ordered the

release of a performance artist
who had been under arrest after
setting fire to the entrance of
the countrys main secret-police
headquarters, the news agency
Interfax reported Wednesday.
Pyotr Pavlensky, who was on
trial for burning the doors of the
Lubyanka building in November,
was found guilty of destroying
an object of cultural heritage and
fined 500,000 rubles ($7,800).
The judge opted not to sentence Mr. Pavlensky to prison,
after prosecutors said good behavior and the fact that he had
small children provided mitigating circumstances, Russian news
agencies reported.
Laura Mills
A man Italian authorities identified as Medhanie Yehdego Mered, center, is shown with Italian police officers at Palermo Airport on May 24.
spond to requests for comment.
A member of the intelligence community who worked
on the case against Mr. Mered
said the Sudanese had extradited the wrong person to Italy, for unknown reasons.
He said that while the Sudanese authorities had cooperated
well in the investigation and
evidence-gathering against the
smuggler, something had gone
wrong before the arrest and extradition, and the wrong man
had been taken into custody.
A woman who said she was
Mr. Berehets sister said he
Germany as an example, because
it has balanced its national books
over the past two years. Several
eurozone members, including
Austria, Italy and Spain, obliged
and adopted similar rules.
Bremens refusal to live by
the rules because of soaring
costs to accommodate and train
recently arrived refugees is a
setback for a government that
has long touted Germany as a
model of fiscal responsibility.
Andrea Thomas
UZBEKISTAN
Bomb Hoax Forces

EgyptAir Landing
A bomb hoax forced an

EgyptAir flight to make an
emergency landing in Uzbekistan, a spokesman for Egypts
civil aviation ministry said.
Officials at Cairos international airport received notification
that a bomb was on board Flight
955 three hours after it took off
for Beijing, the spokesman said.
Authorities at Uzbekistans Urgench Airport carried out a safety
check of the Airbus A330 and
deemed the threat unfounded.
Dahlia Kholaif
GERMANY
AFGHANISTAN
Finance Minister Wolfgang

Schuble and his counterparts in
Germanys 15 states issued a public warning on Wednesday to the
city-state of Bremen for failing to
comply with national fiscal rules
that require the states to eliminate their budget deficits by 2020.
What [Bremen] has proposed so far is not enough, said
Mr. Schuble at a news conference. We are therefore demanding this state adopt additional
measures.
National fiscal rules of the
type Germany enshrined in its
constitution in 2011 were among
the tools Mr. Schuble has peddled to less virtuous neighbors as
Berlin sought to put the bloc on
a sounder financial footing during
the crisis years. He pointed to
Unidentified militants seized

47 passengers traveling on a
highway in Afghanistans Kunduz
province, officials said, the latest
in a series of kidnappings fueling
concerns that the government is
losing control of major routes.
Armed men seized the people
from a bus and car on Wednesday after stopping the vehicles
on the outskirts of Kunduz city,
which was briefly held by the
Taliban late last year. The highway connects Kunduz to the
neighboring province of Takhar.
The abductees were taken to
the provincial town of Uqtash, a
Taliban stronghold, local officials
said. Most of Kunduz province is
under Taliban control. There was
no claim of responsibility.
Habib Khan Totakhil
Militants Kidnap
47 in Kunduz
SERGEI SAVOSTYANOV/TASS/ZUMA PRESS
Government Warns
Bremen Over Deficit
Pyotr Pavlensky, right, with wife Oksana Shalygina, left a hearing

at the Meshchansky District Court in Moscow on Wednesday.
had fled Eritrea to Ethiopia in

2014 and arrived in Khartoum
in February 2015.
The police arrested him at
a cafe in Khartoum two weeks
ago and I havent heard from
him since, Seghen Tesfamariam, who lives in Khartoum,
said. When I saw his photo in
the news today I collapsed.
Another woman who identified herself as his sister said
the man was Mr. Berehet.
Three Eritrean men who
said they were friends of the
man shown arriving in Italy
said they had been with him in
Ethiopia and Sudan and that
he wasnt the person named

by the Italians.
In addition, a refugee who
said he met Mr. Mered on two
occasionsin Khartoum in
2011 and in Tripoli, Libya, in
2013said the man shown arriving in Italy isnt the same
person he met and paid to facilitate his smuggling to Europe. The refugee is now a
Swedish citizen after getting
asylum there.
I am over 100% sure it is
not the right guy, he said.
Mr. Mered is accused of
helping lead of one of the most
significant people-smuggling
rackets operating between

central Africa and Libya, which
organized migrants trips
through the Sahara and across
the Mediterranean. It wasnt
immediately clear if the suspect had a lawyer.
While police often arrest
smugglers on migrant boats
during search-and-rescue operations, they frequently corral only small-time criminals.
The leaders of the peoplesmuggling networks largely
remain out of reach, living in
countries in Africa and the
Middle East that offer little or
no concrete cooperation in Eu-
Austrian Nationalists Challenge Vote
BY ANTON TROIANOVSKI
BERLINAustrias populist,
anti-immigrant Freedom Party
challenged the result of the
presidential election it narrowly lost last month, injecting fresh uncertainty into a
country already in political
turmoil amid Europes migrant
crisis.
The party alleged on
Wednesday catastrophic violations of election law connected to what it said was the
improper processing of mail-in
ballots in the May 22 vote.
We have always said that
we will not challenge the election for the sake of challenging the election, party chairman Heinz-Christian Strache
said. But the disaster around
how the vote was counted cannot be accepted without comment.
The mail-in ballots are a
key point of contention in part
because a big margin of victory there helped independent
candidate Alexander Van der
Bellen, who was supported by
the left-of-center Greens, beat
out the Freedom Partys Norbert Hofer in the runoff.
While the presidency is a
largely symbolic post in Austria, Mr. Hofers near-win
drew international attention
CELL
said Saleh A. had told investigators about 10 people would
participate in the attack in
Dsseldorf.
The incomplete dismantling
of a cell could be a hazard in
itself. Belgian police, for instance, say there is evidence
the March arrest of Salah Abdeslamthe sole surviving
member of the group that attacked Paris on Nov. 13in
Brussels persuaded his still-atlarge accomplices to accelerate
their plans for an attack.
Those accomplices had
been preparing to strike
France again, but when authorities published several of
their names, they decided the
risk of traveling to France was
too great, according to testimony provided by one of Mr.
Abdeslams accomplices. Days
later, they set off bombs at
Brussels Airport and in the
Brussels metro, leaving 32
people dead.
Last weeks arrests have
heightened concernsonce
dismissed as unlikely by German security officialsthat Islamic State could have smuggled hundreds of fighters
among the 1.2 million refugees
who have arrived in Germany
GEORG HOCHMUTH/AGENCE FRANCE-PRESSE/GETTY IMAGES
ever, five people in Africa who

identified themselves as
friends and family of the man
who appeared in news images
arriving in Italy said he wasnt
the right man.
According to a statement by
a court in Palermo, 35-yearold Medhanie Yehdego Mered
arrived on the Italian island of
Sicily late Tuesday after being
arrested in Khartoum, Sudan,
on May 24.
But the people in Africa
said the man pictured in footage released by Italian police
was instead Medanie Tesfamariam Berehet, an Eritrean
refugee who was born in 1987.
In response, Italian magistrates said they identified the
man when the Sudanese handed
him over and remain confident
that they have the right person.
A spokeswoman for the Italian
police said they werent aware
of any further checks on the
suspected smugglers identity.
The U.K.s National Crime
Agency, which also worked on
the investigation, didnt re-
ITALIAN POLICE DEPARTMENT/REUTERS
By Manuela Mesco
in Milan
and Matina Stevis
in Nairobi, Kenya
ropean investigations.
About 350,000 migrants have
sought to reach Italy by sea
since the start of 2014, the vast
majority leaving from Libya.
The desperation of the migrants
and the brutality of the smugglerswho sometimes stuff
hundreds of people on boats
and dinghies that are barely
seaworthyhave also made it
the deadliest migration route
the world. About 2,300 people
have died trying to reach Italy
by sea this year so far, according to the International Organization for Migration.
Investigations that led to
24 arrest warrants against Mr.
Mered issued in April 2015 on
charges of people smuggling
were carried out in cooperation with police forces across
Africa and Europe, including
the U.K.s NCA and Sudanese
authorities.
Mr. Mered organized the
passage of a number of ships
that sank, including one in
April 2015 that left about 800
dead, said the Sahan Foundation, working on behalf of the
Intergovernmental Authority
on Development, a regional
body in East Africa.
The NCA, which tracked Mr.
Mered down to an address in
Khartoum, said the Eritrean
allegedly organized the passage of several hundred migrants who died in October
2013 during a shipwreck off
Lampedusa, the small Italian
island long the destination of
many seaborne migrants. Mr.
Mered was heard laughing
about the fatal overloading of
migrant ships in one recorded
conversation, the NCA said.
Alexis Flynn in London
Freedom Party chief Heinz-Christian Strache, speaking in Vienna,

alleged violations occurred in last months presidential election.
because it showed the extent
of voter anger toward Europes
political establishment and its
handling of the migrant crisis.
A spokesman for Austrias
Constitutional Court, Christian
Neuwirth, confirmed it had received the Freedom Partys
challenge.
The document alleged election law violations that Austrian officials have already acknowledged, including that
officials in some districts began counting mail-in ballots
earlier than allowed by law, as
well as other irregularities not
previously known, he said.
The court would now work

to rule on the challenge within
four weeks, Mr. Neuwirth said,
cautioning that the breadth of
the Freedom Partys allegations could cause the process
to take longer.
He said he had no memory
of a similar challenge of national election results in recent history. Mr. Neuwirth declined to speculate on the
possible outcomes of the case
but said the Constitutional
Court theoretically had the
power to correct election results or order a revote.
The Freedom Party claimed
since the start of last year, and

that some could have Europes
most populous country in
their sight.
At least three of the alleged
members of the cell had been
living in migrant shelters in
different states.
Saleh A. had been registered in a refugee camp in
Kaarst, a small town near Dsseldorf, since late March 2015,
said Stephan Adams, who runs
the office of the towns mayor.
His file shows he wasnt always present in the housing
block he shared with other
refugees, Mr. Adams said. His
request for asylum was still
being processed, he added.
At least two of the suspects
arrested in Germany last week
had lived in migrant shelters.
One of them, Mahood B., had
lived in a refugee shelter in a
quiet middle-class neighborhood of Mlheim in western
Germany, a German official
said. The man, identified as a
25-year-old Syrian national,
had been registered in this
shelter since late 2015, the
person said.
The other, 27-year-old
Hamza C., had lived in a migrant shelter in the small eastern German town Bliesdorf.
Another suspect named Abd
Arahman A.K., a 31-year-old
who according to the prosecutor had built explosive vests
already in 2013 back in Syria,

had been living in a privately
rented apartment in the
southwest German town of
Leimen, according to the
towns
mayor
Wolfgang
Ernst. The prosecutors office
said he had come to Germany
in October 2014.
The German prosecutor last
week said Saleh A. and Hamza
C. had joined Islamic State in
Syria in the spring of 2014.
There, they received the order
from the organizations leadership to carry out an attack in
At least three men

in the alleged cell
had lived in refugee
shelters in Germany.
the pedestrian zone of Dsseldorf, the prosecutor said. After receiving the orders, both
traveled to Turkey and then
separately to Germany via
Greece, the office said.
The two men allegedly
planned for two suicide bombers to blow themselves up on
one of the main streets in the
center of the city. Further attackers were supposed to
kill as many passersby as
possible with guns and further
explosives, the prosecutors
office said in its release last
that aside from counting starting too early in some districts,

some ballots were opened too
soon, improperly sorted for
validity or were counted by
unauthorized people.
A spokesman for Austrias
Interior Ministry, which is responsible for summing up the
ballot counts forwarded by local officials, said it had already established isolated irregularities but that their
small number had no impact
on the result of the vote. The
spokesman declined to comment on the Freedom Partys
challenge.
A senior Greens official,
Dieter Brosz, called Mr. Hofer
a sore loser.
It is now the task of the
Constitutional Court to decide
on this, Mr. Van der Bellens
campaign manager, Lothar
Lockl, said. We are relaxed in
this regard.
Mr. Van der Bellen won
61.8% of the roughly 750,000
mail-in ballots while winning
just 50.3% of the 4.5 million
total votes.
Austria saw a big influx of
migrants last year because its
location in central Europe
made it a key transit country
for people traveling by sea and
land from the Middle East to
Germany and Scandinavia.
week. The German prosecutors office added that there
was no indication the suspects
had already begun concrete
preparations for their plan.
Even after the arrests,
questions remain about the
identity of some of the presumed attackers.
The nationality of Hamza
C., who according to the prosecutor is Syrian and had arrived at a migrant shelter an
hour outside Berlin in September, was marked as undetermined in his file, the countrys migration commissioner
Thomas Berendt said. Another
German official said that two
of the suspects are thought to
have used fake identities.
German officials have
warned for months that the
chaotic situation under which
thousands of migrants were
let into the country without
any background checks during
the peak of the migrant crisis
meant authorities were in the
dark about who many of the
new arrivals were.
Authorities in the Netherlands say they are also investigating Saleh A.s disclosure
that some members of the suspected Islamic State sleeper
cell were staying at a refugee
camp in Nijmegen, a city close
to the German border.
Maarten Tartwijk
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WORLD NEWS
Gunmen Kill
Three in Israel
Market Attack
BAZ RATNER/REUTERS
TEL AVIVTwo gunmen

opened fire Wednesday at a
popular food market in central
Tel Aviv, killing three people
and wounding several others in
what Israeli police said appeared to be a terror attack.
A third accomplice fled from
the Sarona Market and fired
additional shots nearby before
leaving the scene, police said.
Officers had neutralized
two suspects and were searching the area for the third, they
said.
Three victims died after
reaching the hospital, and the
others remained in serious to
moderate condition, police said.
The shooters identities
werent immediately known.
Lone-wolf Palestinian attackers have carried out some
of the worst violence in decades against Israelis over the
past seven months.
It was unclear whether
Wednesdays shooting was related.
FranceUnveilsEuro2016TerrorApp Turkey Blames Attacks

BY NOEMIE BISSERBE
AND WILLIAM HOROBIN
PARISThe French government has launched a smartphone app to alert users to

possible terror attacks and
provide guidance on how to
stay safe ahead of the Euro
2016 soccer tournament,
which starts Friday.
The app, called SAIP (Systme dalerte et dinformation
des populations), is part of the
countrys efforts to enhance
security ahead of the UEFA
competition. The tournament,
the continents largest sporting event, is expected to attract millions of people to the
country.
SAIP geolocates users who
are near a potential attack and
sends them an alert within 15
minutes with safety instructions, Frances interior ministry said Wednesday. It is intended for the fans watching
games at stadiums and in fan

zonesoutdoor venues where
games are broadcast on giant
screensas well as people living near the soccer venues,
the ministry said.
The French government is
facing a huge security challenge for the Euro 2016 event,
the first major mens soccer
championship held in Western
Europe in eight years.
The tournament will comprise 51 soccer games in 10
different cities from June 10 to
July 10. It takes place almost
seven months after terrorist
attacks in Paris killed 130 people in restaurants, a rock concert and the Stade de France,
the countrys largest stadium.
Tournament
organizers
sought to strike a reassuring
tone Wednesday. Weare not
aware of a precise, concrete or
targeted threat against Euro
2016, against a particular stadium or a particular match,
said Jacques Lambert, the

head of the Euro 2016 organizing committee.
French authorities also are
facing social unrest related to
strikes and protests of the
governments plan to overhaul
Mobile app will alert

users to terror
threats and provide
safety guidance.
the labor market. In addition
to wider protests, workers at
state-owned railway operator
SNCF are continuing a rolling
strike over conditions, and pilots at Air France are planning
to strike over pay starting Saturday, the second day of the
tournament.
Cancellations
across
Frances train network already
have sent UEFA scrambling to
change transport plans for officials in the buildup to the

tournament. Pilot strikes
would inflict greater chaos.
Its not a good situation
for us. And I regret that. Unfortunately, we have no handle
on these strikes, Mr. Lambert
said at a news conference at
the Stade de France.
The combined threats hovering over the soccer tournamentincluding exceptionally
poor weather and flooding
have pushed UEFA to come up
with contingency plans. That
could even involve playing
matches behind closed doors,
Mr. Lambert said.
The French government
said it is aware of the risk that
launching a terror-alert application could fuel fears among
fans planning to attend Euro
2016. But spokesman Stphane
Le Foll said it would be a useful tool in dealing with the
threat.
On Kurdish Militants
BY EMRE PEKER
ANKARA, TurkeyTurkish
officials on Wednesday blamed
Kurdish insurgents for backto-back car bombings over two
days that killed at least 14
people in Istanbul and the
countrys southeast, and
vowed to press ahead with an
uncompromising war on terrorism.
Following Tuesdays strike
on security forces in central
Istanbul, the outlawed Kurdistan Workers Party, or PKK, attacked police headquarters in
the Midyat district of Mardin
on the Syrian border Wednesday, a Turkish official in Ankara said.
At least one policeman and
two civilians were killed in the
Mardin blast, Turkish Prime
Minister Binali Yildirim said in
televised remarks from Istan-
bul, where he was visiting

about three dozen people
wounded in the Tuesday attack. Around another 30 people were wounded in the Mardin bombing, which took place
about 26 hours after a similar
assault in Istanbul killed five
policeman and six civilians.
The murderer is the PKK
organization. This doesnt surprise us, Mr. Yildirim said.
The noose is slowly tightening around them, we will continue with determination to
crack down on them both in
cities and in the countryside.
Websites affiliated with the
PKK and its offshoots, where
Kurdish militants often claim
attacks, didnt have any statements on the bombings in Istanbul and Mardin. A spokesman for the PKKs umbrella
political group didnt respond
to a request for comment.
Elite Unit of Iraqi Forces Pushes Into Southern Fallujah

The Iraqi military said its
forces had entered the city
limits of Fallujah for the first
time since their offensive to
retake the Islamic State-held
city began more than two
weeks ago.
AHMAD AL-RUBAYE/AGENCE FRANCE-PRESSE/GETTY IMAGES
By Ghassan Adnan
in Baghdad
and Asa Fitch in Dubai
An Iraqi soldier on Wednesday near Fallujah, which the military is trying to take from Islamic State.
The offensive to seize back

control of Fallujah, about 40
miles west of the capital
Baghdad, had stalled over
concerns about the safety of
an estimated 50,000 civilians
trapped inside the city and
fierce resistance by the Sunni
Muslim extremist group,
which took over the city in
early 2014.
On Wednesday, the militarys elite counterterrorism
forces overran a militant-controlled area on Fallujahs
southern outskirts, a spokesman for the counterterrorism
unit said. They then moved on
to the southernmost street of
the citys Shuhada neighbor-
hood, the military said separately. The citys southern

border is just over a mile
from its center.
The move to capture the
outlying area went quickly
and forced Islamic State fighters to retreat into the heart
of the city, the counterterrorism spokesman, Sabah al-Noman, told state television.
Government forces were regrouping before beginning
their next advance, he added.
Iraqi Prime Minister Haider
al-Abadi met with commanders near Fallujah on Wednesday and instructed forces to
protect civilians, according to
state television.
The Fallujah offensive,
which began May 22, follows
a string of Islamic State defeats in western Anbar province, a longtime Sunni Muslim
stronghold and a bastion of
support for antigovernment
militants since the U.S.-led invasion of Iraq in 2003.
Iraqi government forces
backed by training, advice
and air support from a U.S.-
led international coalition retook Ramadi in December and

Hit four months later. After
Fallujah, the northern city of
Mosul is the last major urban
area in Iraq controlled by Islamic State.
With government forces
now surrounding Fallujah, civilians are desperately trying
to flee the city. Hundreds
have used inner tubes and
makeshift rafts to cross the
Euphrates River, which lies
just west of the city, and
reach safety, government officials and humanitarian aid
groups say.
Islamic State is trying to
stop people from fleeing, in a
bid to keep them in Fallujah
for use as human shields, according to these officials and
aid organizations. The militants have fired on civilians
trying to cross the river, killing an unknown number, they
say.
Numerous camps have
been set up near the city to
accommodate displaced residents.
The USS Harry S. Truman Sails on a Mission with a Message

The ship plays a central role in the campaign against Islamic State, and has moved into an area where Russia is asserting itself
BY TAMER EL-GHOBASHY
ABOARD THE USS
HARRY S. TRUMANThis
20-story-tall aircraft carrier with a crew of 5,000
made an unplanned diversion from the Gulf to the
eastern Mediterranean last
weeka quick pivot intended to send a clear message to Russia.
The massive ship serves
as a launching point for a
near-constant barrage of
airstrikes on Islamic State
targets in Iraq and Syria.
Since November, it has accounted for a little more
than half of the total sorties
flown over those two countries by the U.S. military.
Rear Adm. Bret
Batchelder, the highestranking officer on the carrier, told visiting reporters
this week that moving the
capital ship of the U.S.
Navy from the Gulf through

the Suez Canal is a flexing
of muscle meant to reassure North Atlantic Treaty
Organization allies of the
American commitment to
maintaining the balance of
naval power in the Mediterranean.
It is a demonstration of
capability. Thats for sure,
he said. There are undoubtedly folks who are
watching that and this is
just a graphic representation of what were capable
of.
The repositioning of the
USS Harry S. Truman provides a window into American military strategy at a
time when Russia has asserted itself aggressively in
the region, using its navy
and air force to turn the
tide of the five-year Syria
conflict in favor of President Bashar al-Assad.
The U.S. has shown a

willingness to use powerful
Navy vessels to make provocative political statements, as it did in 2015
when it sailed a destroyer
through the South China
Sea at the height of tensions with Beijing over
Chinas territorial claims
there.
Syriawhich fall under another combatant command,

U.S. Central Command. This
demonstrates the U.S. Navy
can be agile and adaptive,
the official said.
It provides some
needed presence in the
Med to check...the Russians, the official said.
The unpredictability of
The carrier was shifted into the

Mediterranean as a signal to Moscow
A military official in
Washington said the Trumans shift was a signal to
Moscow and a demonstration of the Navys operational flexibility and reach.
The ship is operating in
the U.S. European Commands area of responsibility while conducting airstrikes inside Iraq and
what we did with Truman

kind of makes them think
twice.
Russia has maintained a
contingent of about 10 to 15
ships in the Mediterranean
for three years because of
the conflict in Syria. In
March, state media said the
countrys sole aircraft carrier would be sent to join
those ships by summer.

Russian and U.S. aims in
the Syrian war are not entirely at odds.
Moscow and its Syrian
regime allies, like the U.S.led coalition, are all battling Islamic State.
On the ships 4.5-acre
flight deck, sailors and airmen busied themselves
with launching and landing
F-18 class fighter jets. The
carrier, one of 10 in the
Navys fleet, is capable of
catapulting an aircraft off
the deck every 40 seconds.
The vessel has been a
workhorse in operations
against Islamic State in
Syria and Iraq since it
joined the effort in November, launching seven-hour
close-air-support missions
several times a day.
Planes from the carrier
conducted 52 strikes in
Iraq and Syria from Friday
through Tuesday.
The 75-plane fleet assigned to the ship responds
to calls from allies on the
ground for airstrikes.
Starting in the early
morning and lasting well
into the night, F/A-18
fighter jets and E-2C Hawkeye surveillance planes take
off using a steam-powered
catapult to sling-shot them
off the short runway.
Capt. David Little, commander of the air squadrons, said his fleet has
been active recently over
Fallujah, where Iraqs military and allied militia
forces have been engaged
in an intense battle to uproot Islamic State from one
of the first cities it occupied.
Gordon Lubold
in Washington and
Thomas Grove in Moscow
P2GW161000-0-A00600-1--------AL
FROM PAGE ONE
LEFT
Youngest
First Catholic
Oldest
First Black
First Woman
William Jennings Bryan

1896 Democrat Age 36
Al Smith
1928 Democrat
Ronald Reagan, 2nd term

1984 Republican Age 73
Barack Obama
2008 Democrat
Hillary Clinton (presumptive)

2016 Democrat
ment, Mr. Larson said. Third

Way came after Elizabeth Warren. It didnt hurt Elizabeth
Warren. It hurt Third Way.
Matt Bennett of Third Way
said the incident was not damaging to the group. Weve
never been more influential in
the Democratic Party, he said.
This is the environment Mrs.
Clinton found when she prepared to launch her current
campaign. Liberal groups lobbied her staff to get on board
with their ideas. Two weeks before Mrs. Clinton announced,
Ms. Warren won 42 Democratic
Senate votes for a nonbinding
resolution calling for a sustainable expansion of benefits.
In a video announcing her
candidacy in April 2015, Mrs.
Clinton signaled her campaign
would take a populist tone: The
deck is still stacked in favor of
those at the top, she said.
On the campaign trail, she
addressed Social Security only
when asked. Her go-to response was to decry Republican efforts to privatize it,
though no one prominent was
advocating that position.
In a Democratic debate in
October, she was pressed to
say whether she agreed with
Mr. Sanders that Social Security should be expanded. She
said she wanted to enhance
benefits for the poorest recipients, such as certain widows
with scant earnings.
She also alluded to the programs finances. Im going to
look for ways to try to make
sure its solvent into the future, she said. To that end,
she backed increased taxes on
the wealthy.
The following month, she
proposed an extra Social Security benefit for caregivers who
took time out of the workforce.
She still didnt indicate whether
she was open to cuts elsewhere.
Advocates for Social Security thought their best chance
to force her hand was ahead of
the New Hampshire primary,
where she was badly trailing
Mr. Sanders. They challenged
Mrs. Clinton to clarify whether
she would rule out benefit
cuts. When the Huffington
Post asked the campaign for
comment, a Clinton aide said
she has no plans to cut benefitsnot exactly a hard no.
Mr. Sanders amped up the
pressure. I urge Sec. Clinton
to join me in saying loudly and
clearly that we will never cut
Social Security, he wrote on
Twitter a few days before the
primary.
Mrs. Clinton responded to
him, also on Twitter: I wont
cut Social Security. As always,
Ill defend it, & Ill expand it.
Enough false innuendos. She
signed the tweet with an -H
to indicate it was written by
her and not her staff.
Advocates wasted little time
in trumpeting that message as a
major new policy. VICTORY,
Social Security Works said in an
email. Hillary Clinton Commits
to Never Cut Social Security.
It wasnt clear her tweet really meant never. Rather than
being a policy announcement,
it instead was meant to express
outrage Mr. Sanders was accusing her of wanting to cut benefits, said her aide Mr. Sullivan.
But if she was leaving herself
wiggle room, advocates for Social Security had little reason
to say so; they preferred to tell
the world she was boxed in.
Meantime, last week, Mr.
Obama announced that he,
too, now supports increased
benefits.
rone in 1972. Today their children make up two-thirds of

one of the countrys most popular metal acts, Skinflint.
Our idea was to create a
new style of music combining
elements of African culture
with heavy metal music, said
Giuseppe Sbrana, the bands
singer and guitarist.
Some time during the past
decade, as the band recorded
four albums and toured the
country, they noticed more
fans turning up in increasingly
intricate attire that fused met-
alhead menace with African

cowboy culture. Overthrust
and other local metal acts are
as popular here as hometown
rappers have become in Johannesburg or Lagos.
Were passionate musicians, but our fans have taken it
to an extra level, said Alessandra Sbrana, Skinflints drummer and Giuseppes cousin.
Mr. MosakaVulture to his
friendswas an early evangelist
in this mineral-rich countrys
musical conversion. People
locked into the heavy-metal
scene because they could make

it a passion, an identity, he
said. They want to feel like
they belong. Six years ago, he
founded the annual festival in
this tiny town 500 miles northwest of Johannesburg.
The 30-year-old recalls his
uncles introducing him to the
iconic metal band Iron Maiden
in the 1990s. Lesego Modibati,
or Calvera, the 37-year-old
lead singer of a three-piece act
called Barren Barrel, said he
inherited cassette tapes of the
band AC/DC from South African and British safari guides
working around his hometown
in the late 1980s.
Thats when I started
opening up my eyes, said Mr.
Modibati, whose screamingeagle vocals, light mustache
and lithe frame evoke a
mashup of AC/DC frontman
Bon Scott and Little Richard.
Eager for a piece of the action, bands from South Africa
and Europe have made tour
stops here for the first time recently. One from Finland roared
into town last year; a Pretoriabased outfit called Adorned in
Ash headlined this years event.
Theyve taken a subculture
and made it all their own, said
Robyn Ferguson, the bands
lead singer and guitarist, as

she watched a parade of roaring motorcycles and chanting
metal fans march toward the
modest festival venue.
The fashion is as much a
draw as the music itself. In the
halls parking lot, dozens of Ma
Rock die-hards strutted in
enough chain, leather and metal
to stock a Harley-Davidson
dealership. Most had dreamed
up hard-edge nicknames to
match their outfits, including
Gunsmoke, Hardcore, Fire
Darkness and Mad Dog.
Im expressing myself as a
warrior, said Justice Keleghaile,
who is known as Series. The
27-year-old graphic designer
had turned the bottom of a plastic bucket and a pile of spent rifle casings into a menacing sundial of a belt buckle.
He carved a workmans helmet into a gladiator mask
crowned by high spikes. Along
with his leather pants and frilled
leather jacket, the outfit cost
him about $450, or about 5,000
Botswanan pula, he said.
Inside, Raven N Flesh took
the stage. Let me see your
hands if you want to hear
some black metal! roared
frontman Bobby Lefi.
As the bands thrashed on
toward midnight, Mr. Mohamadi prepared to make his

grand entrance. He belongs to
a group called the Superpowers who spend months planning outfits that aim to make
other get-ups look tame.
Rock is in my DNA, said
the groups leader, Mompati
Seithamo, or Desert Dust, a
27-year-old electrician. He
learned how to punch holes in
leather from his father, a cowboyan honored profession in
a cattle-mad nation.
This year, Mr. Seithamo
sewed a tuft of fur onto a
stud-spiked leather cap and
layered his limbs in leather
flaps that made him look like a
samurai warrior.
He acknowledged that one of
his pupils, Mr. Mohamadi, may
have outdone him this time. The
understudys 6-foot spread of
spikes and studs, which he spent
nearly an hour riveting together,
was the envy of the crowd.
In the end, though, its the
music that matters. Gomolemo
Sebidio, aka Vaselyn, a 24year-old waitress with long,
orange curls, said the vibe is
something that only grows. I
was born a six, she said, rating her own fanaticism. And I
became a 10.

invasion of Iraq. She backed off
support for charter schools. She
called for an end to the era of
mass incarceration, a rebuke of
her husbands 1994 crime bill.
Under intense pressure from
Mr. Sanders, she came out
against the Keystone XL pipeline, a project that as secretary
of state she said she was inclined to approve. She opposed
the Trans-Pacific Partnership,
an Asian free-trade agreement
she had predicted would be the
gold standard, but that was
opposed by labor unions, most
Democrats and Mr. Sanders.
And on Social Security, Mrs.
Clinton all but abandoned her
longtime interest in a bipartisan compromise aimed at extending the programs solvency and adopted liberal
promises not to cut benefits.
On Tuesday, eight years after
Mrs. Clinton conceded the 2008
contest, she celebrated victory
in her quest for her partys
presidential nomination, a historic achievement making her
the first woman to run on a major party ticket. Primary voters
cast ballots on Tuesday in California and five other states.
Mrs. Clinton went over the top a
day earlier with commitments
from party leaders who are convention delegates, according to
an Associated Press tally.
Now Mrs. Clinton is set to
face Republican Donald Trump
this fall, and being seen as
more liberal may not help in
wooing crucial independents
and working-class voters. Further, her changing views may
feed a perception among some
voters that she is untrustworthy, as it did among many
Sanders supporters.
I dont feel shes genuine, to
be honest, said Bill Losch, 63
years old, of Las Vegas, a Sanders delegate. Shell do whatever she needs to do to be
elected.
Democrats in and out of
Mrs. Clintons campaign say
her shifting positions reflect
new facts and show her willingness to adapt while sticking
to core principles.
The world has changed
enormously and the economy
has changed enormously since
2008, and to be thinking the
same way eight years later
would be a breach of common
sense, said Geoff Garin, a pollster who works for Priorities
USA, a pro-Clinton super PAC.
Mrs. Clinton has stopped
well short of Mr. Sanderss positions. He backs an acrossthe-board increase in Social
Security benefits, while her increases are targeted. On certain issues, notably gay marriage, the nation as a whole
has grown more liberal.
Jake Sullivan, the Clinton
JULIE JACOBSON/ASSOCIATED PRESS
campaigns policy chief, said

Democrats in general and Mrs.
Clinton in particular have
shifted as circumstances have
changed. Her support for gun
restrictions is much more robust now, for instance, in response to the rash of mass
shootings, he said.
Mr. Trump has changed
many of his own positions
over the course of the campaign. He, too, opposes the
Asian free-trade agreement,
and has said entitlements
shouldnt be touched.
For now, Mrs. Clintons more
urgent task is unifying Democrats after a bruising primary.
An early test will come over the
platform, which Mr. Sanders
will insist include his more liberal take. The Clinton campaign
has signaled it is willing to give
him much of what he wants.
Some of Mrs. Clintons shifts
came before she announced her
candidacy, such as in coming
out for gay marriage. Other adjustments she made on the fly
during the long primary fight,
including her evolving view on
Social Security. That stands as
one of the clearest examples of
how Mrs. Clintons views shifted
in response to a party that had
moved decidedly to the left.
With the baby boomers retiring, the government pays
more in benefits than it collects in taxes. Under current
projections, the programs reserves will be exhausted by
2034, and it will be able to
pay only about three-quarters
of promised benefits.
Centrists in both parties assumed that eventually Democrats and Republicans would
agree to a combination of tax
increases and benefit cuts that
would extend the programs
solvency with bipartisan
agreement giving both sides
political cover.
On the political left, the
view was different: There was
no real crisis, activists argued,
and Democrats shouldnt let
themselves be scared into cutting a program that was already too skimpy.
Mrs. Clinton long was
aligned with the centrists. In
announcing her Senate candidacy, she spoke of Social Security in terms of fiscal responsibility. In her presidential
campaign in 2008, she backed
a bipartisan panel to address
the program and pointed to a
1983 deal that extended its life
by increasing taxes, raising the
retirement age and other shifts.
President Reagan and
Speaker Tip ONeill came up
with a commission, she said in
a 2008 debate. That was the
best and smartest way, because
youve got to get Republicans
and Democrats together. Thats
what I will do.
The only limits she specified
were no benefit cuts to current
beneficiaries and no added
taxes on the middle class. Later,
Hillary Clinton with her husband, former President Bill Clinton, at a rally in New York Tuesday night.
A Delegate Dance
Hillary Clinton surged past the number needed to clinch the Democratic nomination Tuesday when
including superdelegatesparty leaders and elected ofcials who are free to support whomever
they like but most of whom have publicly declared their support for someone.
2,383 needed to win nomination
2,000
With superdelegates
included
1,500
1,000
Clinton
Sanders
500
0
February
March
April
May
Note: Totals as of 12:45 a.m. EDT Wednesday

Source: Associated Press
June
like most Democrats, she also

opposed privatization, which
President George W. Bush
pushed unsuccessfully in 2005.
Facing growing deficits, in
2010, President Barack Obama
appointed a bipartisan panel
to make recommendations on
entitlement programs, cochaired by former Republican
Sen. Alan Simpson and Erskine
Bowles, a Democrat and former Bill Clinton chief of staff.
Among the first to oppose
Simpson-Bowles was a small
advocacy group called Social
Security Works. Alex Lawson,
now its executive director,
captured a cantankerous Mr.
Simpson on video confirming
that reductions to the program were on the table, and
worked to spread the word.
Mr. Lawson tried to persuade
members of Congress to promise not to cut the program, but
found most Democrats reluctant
to criticize Mr. Obamas commission. One of his few commitments came from Mr. Sanders.
The Simpson-Bowles panel

wound up recommending a
higher retirement age, increased
taxes for upper-income earners
and reduced cost-of-living increases. The recommendations
didnt receive a vote in Congress, but Mr. Lawson and his
allies suspected they wouldnt
die and began building a coalition against cuts that grew to
include labor unions, online activists and disability, veterans
and womens groups.
The group grew stronger after Mr. Obama proposed a formula change that would mean
lower cost-of-living increases,
part of his unsuccessful effort
to negotiate a fiscal deal with
Republicans. People on the left
willing to consider Mr.
Obamas proposal were castigated, said Paul Van de Water,
a Social Security expert at the
liberal think tank Center on
Budget and Policy Priorities.
He recalls a meeting on the issue when he said the change in
formula had some merit. I
was completely reamed out

from organized labor, he said.
Soon, the left changed its
strategy. Rather than just defend against benefit cuts, activists decided they would demand
benefit increases, which they
saw as just smart politics as
well as also good policy.
In November 2013, Sen. Elizabeth Warren, a hero to liberals, came out for expanded benefits. Partly in response, Third
Way, a centrist Democratic
think tank, published an op-ed
piece in The Wall Street Journal
arguing that a populist message
in the 2016 presidential race
would be disastrous for Democrats. They called plans to expand Social Security reckless.
An activist group called the
Progressive Campaign Change
Committee staged a protest outside Third Ways offices and
pressured Democrats to cut ties
to the group. One congresswoman did; others distanced
themselves from the comments.
That was the critical mo-

death-metal band Overthrust.
Heavy metal, a North American and European mainstay, has
been surging in popularity in
seemingly unlikely places in recent years, including Indonesia
and Chile. As scruffy as it seems,
metal requires expensive equipment and a relatively high degree of musicianship, and is often seen as a companion to
increasing education, affluence
and internet use.
In Botswana, known for its
diamonds, stable governance,
wide open spaces and shortage of distractions, fans say
metal is a way to blow off
steam while expressing a little
cultural dissent.
Were a very conservative
culture, said Kefentse Masimolole, a bureaucrat who made
the 400-mile trip from Gaborone for this years festival.
This is the flip side.
Many Botswanans trace
their rock roots to the success
of a more straight-ahead rock
band called Nosey Road that
two Italian brothers founded
in Botswanas capital of Gabo-
A musician performs at Metal Mania Fest in Ghanzi, Botswana.
JUSTIN SULLIVAN/GETTY IMAGES
PAUL SANCYA/ASSOCIATED PRESS
ASSOCIATED PRESS
CHARLIE SHOEMAKER FOR THE WALL STREET JOURNAL
METAL
ASSOCIATED PRESS
ASSOCIATED PRESS
Notable Nominees: Milestones among major party candidates
P2GW161000-0-A00700-1--------AL
U.S. NEWS
CAPITAL JOURNAL
GERALD F. SEIB
hen Hillary Clinton

first burst onto the
national political
scene, Barack Obama was a
rookie law lecturer, Bernie
Sanders was an obscure
backbencher in the House of
Representatives and
Donald
Trump was
an overextended developer trying to keep unhappy banks
and bondholders at bay.
It has been a long, quarter-centurys journey from
those early dayswhen she
famously declared that she
was more than a Tammy
Wynette knockoff standing
by her man, Bill Clintonto
Tuesday night, when she celebrated becoming the first
woman to accumulate the
delegates needed to secure a
presidential nomination. Its
an achievement that would
have been impossible half a
century ago, was unlikely two
decades ago and proved just
beyond reach eight years ago.
By now, of course, its almost a clich to say that Hil-
lary Clinton has been preparing her whole life for this
moment, but in many ways
that is true. The question
now is whether she has arrived at the right timeor, if
not, whether she can adjust
to the times at which she has
arrived.
Put differently, can Mrs.
Clinton now convince the
country that a profile that
has made her life difficult for
much of this yearestablishment figure, experienced in
the ways of Washington, serious to the point of severitywork in her favor in the
next five months? Will running against Donald Trump,
a fellow baby boomer with
essentially the opposite profile, make that task easier for
her, or harder?
The questions arise because, just beyond the history-making character of her
candidacy, and the early
fights she had to wage to
earn her own spot onstage,
Mrs. Clinton has taken on
the look of a thoroughly conventional politician who has
checked all the boxes needed
to create a strong presidential-campaign rsum:
Ivy League education?
Check. Experience in the
Senate? Check. Experience in
the cabinet? Check. Foreignpolicy experience? Check. A
raft of mainstream policy experts? Check. Book about
your government record and
philosophy? Check. Top-tier
list of donors? Check.
SHANNON STAPLETON/REUTERS
Insider Clinton Runs in a Year of Outsiders
Supporters of presumptive Democratic presidential nominee Hillary Clinton in New York on Tuesday.
There was a time, and not
so long ago, when such a rsum would have been
enough to ward off pesky unconventional challengers and
guarantee a respectable reception, at least within ones
own party. But 2016 isnt
such a time, and Mrs. Clinton
has had to face the reality
that such a rsum, for at
least some voters, isnt an
asset to be burnished but a
problem to be overcome.
I honestly believe that
we are in one of the most
populist eras in modern
American history, says Mo
Elleithee, a former Demo-
cratic Party official and Clinton supporter who now is executive director of the
Institute of Politics and Public Service at Georgetown
University. The old left-right
paradigm is gone, and it
doesnt exist outside of the
New York-Washington axis.
going to look out for me?

What voters in 2016 are
looking for, Mr. Elleithee
says, is a champion for
them.
Sen. Bernie Sanders
found that the things he had
been saying to no great effect for yearsWall Street
greed is ruining the economy, rich people need to
pay more to help everybody
elsemade him into such a
champion figure. Mr. Trump,
despite his billions and his
lavish lifestyle, found that
attacking foreign-trade
deals and illegal immigrants
has made him such a cham-
e adds: Left and

right has been replaced by up and
down. Voters across the
land believe that the people above me are getting all
the breaks, the people below me are getting all the
handouts. Who in the hell is
pion in the eyes of millions.

The 2016 landscape is littered with other conventional politicians who
couldnt pull that off: Jeb
Bush, Scott Walker, Chris
Christie and so on.
Mrs. Clinton, by contrast,
has survived, which alone is
saying something this year.
Shes suffered damage along
the way, though. Many voters say they dont find her
honest and trustworthy, a
problem exacerbated by the
nagging questions over her
decision to use her own
email system while secretary
of state. Theres an inescapable whiff of Clinton fatigue.
Yet her biggest problem
in the general isnt likely to
be winning over Bernie
Sanders, or wooing Sanders
voters, or making an ideological shift to the center, or
finding the right tone for attacking Donald Trump. Odds
are that she will find a way
to do all those things.
Her problem is going to
be finding a way to connect
with skeptical middle Americans in revolt against the political establishment and
convince them that she can
be the economic champion
they seek. Mr. Elleithee says
he has seen flashes of that
Hillary Clinton in the primary seasonbut also warns
she wont be able to make
that case if she allows the
campaign to be an extended
national conversation about
Mr. Trump.
Trumps Late Fundraising Start Worries Some in GOP

Donald Trump will escalate
his fundraising in the coming
weeks, yet his late start has left
him reliant on party fundraisers
who havent all swung into action and arent always in sync
with his campaign promises.
Several members of a list of

prominent Republican fundraisers who Mr. Trump and the Republican National Committee
announced last month had
signed on to work for their joint
fundraising committee said they
have yet to raise any money for
the effort. I agreed to lend my
name, said Howard Leach, who
previously backed Jeb Bushs
presidential campaign and was
listed as a presidential trustee
for the committee.
Bill Binnie, who in 1990 was
chairman and chief executive of
a plastics company that closed
a California factory and moved
the jobs to Mexico, will host a
New Hampshire fundraiser on
Monday for Mr. Trump, who
has made railing against such
relocations a centerpiece of
his campaign. Meanwhile, realestate investor Thomas Barrack, the host of the only major
KENA BETANCUR/AGENCE FRANCE-PRESSE/GETTY IMAGES
By Reid J. Epstein,
Rebecca Ballhaus
and Beth Reinhard
Republican presidential candidate Donald Trump preparing to deliver remarks Tuesday in New York.
fundraiser Mr. Trump has attended since completing the
RNC fundraising agreement,
has also offered praise for the
Democratic presumptive nominee, Hillary Clinton.
Mr. Trumps tardy fundraising start has some Republicans
concerned he wont be able to
match the robust finance operation of Mrs. Clinton, who

raised more than $240 million
through May on top of $60
million for her joint committee
with the Democratic National
Committee. She has held at
least 20 fundraisers for her
campaign and joint commit-
tee since the start of May.

Mrs. Clinton had $42 million on hand at the end of May,
her campaign said. Mr. Trump
had $2.4 million at the end of
April. The Democrat also has a
super PAC that has raised
more than $76 million.
Mr. Trump has seen several
Assault at Stanford Prompts Protests

Former Stanford University
student Brock Turner was sentenced to six months in county
jail and three years of probation
last week for sexually assaulting an unconscious woman on
campus. But for many Stanford
students and faculty, the case is
far from closed.
A coalition led by a Stanford faculty member launched
an effort this week to recall
the California judge in the
case. A student-led protest is
planned
during
graduation ceremonies Saturday.
Meanwhile, Mr. Turners defense team filed a notice after
the sentencing Thursday preserving Mr. Turners right to appeal, according to Dennis P.
Riordan, a San Francisco appeals
lawyer who was at the court.
The team hasnt yet decided
whether to pursue the appeal, or
who would represent Mr. Turner
if the appeal proceeds, he said. If
an appeal does go forward, it
could lead to a new trialand,
potentially, a new sentence.
Mr. Turner, a Stanford
freshman and competitive
swimmer at the time of the attack, was found guilty in
March of three felony counts
of sexual assault. The victim,
who hasnt been identified and
wasnt a Stanford student, was
found behind a dumpster after

visiting the campus for a fraternity party in January 2015.
The case ignited an uproar
after the sentencing and after
the victim, known as Emily
Doe, read a 12-page statement
in court Thursday about the
impact of her rape.
I was the wounded antelope of the herd, completely
alone and vulnerable, physically unable to fend for myself,
and he chose me, she wrote.
She criticized the court for
taking Mr. Turners lost swim-
ming scholarship into account

in his sentencing: How fast he
swims does not lessen the impact of what happened to me.
Her statement was circulated widely over the internet
and read in full by a CNN anchor. There has been a lot of
outrage, especially online, said
Victor Xu, a junior and managing editor of news for the Stanford Daily newspaper. People
are upset, confused that he got
only six months.
Members of a closed Facebook page dubbed #20MIN
DAN HONDA/BAY AREA NEWS GROUP/ASSOCIATED PRESS
BY MELISSA KORN
AND MIRIAM JORDAN
Brock Turner, right, was sentenced to six months in jail for a

sexual assault on the campus of Stanford University in California.
planned a protest during commencement Saturday. The

pages name refers to a statement in court from Mr.
Turners father, who said six
months was a steep price to
pay for 20 minutes of action.
The Stanford Association of
Students for Sexual Assault Prevention circulated a letter supporting the victim and a petition demanding that the school
issue her a public apology. The
university should have come out
as supportive of the victim before this went viral, said sophomore Alexis Kallen, who participates in a task force dedicated
to addressing safety issues.
Lisa Lapin, a Stanford
spokeswoman, said the university had been proactive in addressing sexual assault.
Much of the fury over the
case has been focused on Santa
Clara County Superior Court
Judge Aaron Persky, who said
during sentencing that a longer
prison term would have a severe impact on [Mr. Turner]. A
Change.org petition urging Mr.
Perskys recall had garnered
more than 262,000 signatures
by Tuesday. The judge couldnt
be reached to comment.
Judge Persky is running for
re-election this year. Californias primary was held Tuesday, but his name didnt appear on the ballot, since he
had no opponent.
outside groups ramp up their

activities in recent weeks,
though they have raised just
about $3 million so far. Casino
owner Sheldon Adelson is also
looking into creating a proTrump super PAC.
Fred Malek, the finance
chairman of the Republican
Governors Association and a
leading fundraiser for past
GOP nominees, called Mr.
Trumps fundraising disadvantage huge and not widely understood. He added: Unless hes willing to write a
huge personal check, which is
unlikely, I believe Trump will
have a financial disparity of
$300 million to $500 million.
His campaign has said the
real-estate developer, who relied heavily on free media and
mostly his personal bank accounts to fuel his primary bid, is
running an unconventional campaign and may not need to raise
as much as previous presidential candidates. And Mr. Trump
will have some traditional Republican fundraisers hosting
events in the coming weeks.
Woody Johnson, owner of
the New York Jets, will host two
events for Mr. Trump in New
York this month. Mr. Trump will
also do a three-day fundraising
swing through Texas.
U.S.
Watch
MEDICAL DEVICES
Bill Would Require

Reports by Doctors
Doctors would be required to

report potentially serious problems with medical devices they
use to the U.S. Food and Drug
Administration under a new bill
that was expected to be introduced in Congress on Wednesday.
The proposed legislation,
known as the Medical Device
Guardians Act, is intended to
help raise awareness of the possible risks of medical devices.
Sponsors of the bill said they
were motivated to change the
law after the long delay in public
awareness of the risks of a
womens surgical tool called the
laparoscopic power morcellator.
The FDA in 2014 called for a
black box warning for power
morcellators, sharply curtailing
use of a device that the agency
said can spread a hard-to-detect
uterine cancer during surgery,
primarily hysterectomies.
While medical studies and literature had highlighted the risk
since the devices debut in the
1990s, the FDA didnt receive a
report of this adverse event until
late 2013 when Dr. Amy Reed
went public after a hysterectomy.
Some members of the

Trump-RNC finance team have
moved quickly to begin raising
money. Dallas-based investor
Ray Washburne, a former RNC
finance chairman and a vice
chairman for the committee,
said he has been helping the
committee set up fundraisers.
To raise the kind of money you
need to raise in the time period
were raising it, you need people that are experienced at raising money, he said.
Each of the six top fundraisers listed as vice-chairmen
for the Trump-RNC fundraising committee previously supported another presidential
candidate. He was not at the
outset the person I picked, but
he has the support of the voters, Mr. Leach said.
In a brief phone interview Monday, Mr. Binnie confirmed he is hosting a fundraiser for Mr. Trump. When
asked if his own corporate history contradicts Mr. Trumps
vow to boost American manufacturing by instilling high tariffs on companies to move jobs
overseas, Mr. Binnie hung up
without responding.
Trump campaign spokeswoman Hope Hicks said Mr.
Trump looks forward to Mr.
Binnies fundraiser.
Currently, the FDA requires

hospitals and device manufacturers to report deaths and serious
injuries linked to medical devices.
Doctors dont have to report, although they are encouraged to.
Jennifer Levitz
ECONOMY
Job Openings Rise,

But Hiring Declines
U.S. employers advertised the

most open jobs in nine months
in April but pulled back on filling
them, a sign of caution that may
reflect concerns about tepid economic growth. Job openings rose
2% to 5.8 million, the Labor Department said Wednesday, yet
hiring slipped to 5.1 million from
5.3 million in March.
The figures suggest that an
annual economic-growth rate of
just 0.8% in the first three
months of the year has caused
businesses to postpone hiring.
There are other reasons that
companies may not fill open
jobs: They may not be able to
find enough qualified candidates
or may not be offering sufficient
pay to entice enough applicants.
The number of layoffs in
April fell 122,000 to 1.65 million,
according to Wednesdays report.
The figures track total hiring
in April and come from a report
known as the Job Openings and
Labor Turnover survey, or JOLTS.
More than 2.9 million people
quit their jobs in April. More
quitting is evidence that employees are finding new jobs.
Associated Press
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PERSONAL JOURNAL.
Renting a Car in Europe? Watch for Speeding Tickets
Cameras lead to fines that

follow, surprise travelers
upon their return home
For travelers visiting Europe,

theres a new kind of tourist trap.
Local traffic fines and rentalcar liability requirements can surprise even the savviest of travelers
heading abroad this summer. Some
have escalated in recent years and
can add hundreds of dollars to trip
costs, sometimes just showing up
on credit cards after your return
home.
Among the costliest new traps,
automated radar
THE MIDDLE cameras are multiSEAT
plying across Europe and other
parts of the world.
They catch speeding violations
even a few kilometers per hour
over the limit. They snap a picture
of the car and send the driver a
fine through the rental-car agency,
sometimes months later.
U.S. travelers renting cars in
Europe are often unfamiliar, since
the U.S. has some cameras at red
lights and automated toll booths,
but limited use of automated
speed traps. In many countries
now, speeding violations are automatically recorded and tickets
come in the mail or get billed to
credit cards.
Ten years ago wed get questions from maybe two clients a
year whod say, We got tickets and
what do we do about it? Now I
get two a week, says Robert
Bestor, a travel adviser based in
Ashland, Ore., who specializes in
booking European rental cars.
Some rental-car agencies turn
over the renters home address
and charge the customer an additional processing fee, usually
around $30. Other car-rental firms
simply pay the fine, which typically runs $45 to $105, and bill the
renters credit card for the fine
and processing fee.
Renting a car overseas can be
one of the great joys of a trip, enabling leisurely exploration of the
countryside or shuttling between
cities at your own pace. But it can
be complex. Vacationers can be
lured by low rates, then pressured
to buy expensive liability insur-
CLOCKWISE FROM TOP LEFT: ISTOCK (2); GETTY IMAGES (2)
BY SCOTT MCCARTNEY
Some Signs to Watch
Clockwise from top right, Sections of the famed German Autobahn have posted speed limits, here illuminated at
night. A speed limit of 50 kilometers per hour enforced by radar camera in Staffordshire, England. Workers in France
post a sign warning that speed limits are enforced by radar. A universal no-parking sign.
ance that can triple the cost of the
rental. Its best to get full terms of
a rental in writing when you book.
Enterprise Rent-A-Car and
other agencies say they try to
warn renters about the speed
traps, but clerks dont always have
time. Avis Budget says it provides
information on national speed limits in Europe and city congestion
charge zones, where drivers have
to pay to enter certain neighborhoods, but its current guidelines
dont mention automated speed
cameras, a spokeswoman says.
Michael Dautermann, a Detroitarea software engineer, got caught
speeding in Germany last year. He
was driving from Frankfurt to Berlin and again in the same spot on
the return trip. With the German

speed traps, he saw a flash each
time and knew he had been
blitzed, in the local lingo.
The German fines were about
$70 each, plus processing fees.
I dont really drive crazy, just
normal, he says. Thats why I
was surprised.
Travel managers and rental-car
companies say more visitors are
getting hit with fines because authorities are putting up more cameras as well as automatically linking computer systems to car-rental
agencies under laws that require
disclosure of renter information.
Sometimes travel agencies that
book rentals end up with fines
and invoice clients.
French people are being more

careful about this, but foreign people dont know, says Stephane
Roussel, a Hogg Robinson Group
executive in Paris who manages relations between the corporate
travel agency and airlines, hotel,
rail lines and rental-car companies.
Some countries post warning
signs about speed enforcement
cameras, sometimes with rather
cryptic figures or all in local languages. Others have no warning.
Imad Khalidi, chief executive of
Auto Europe LLC, a Portland,
Maine-based wholesaler of European car rentals, says cameras
have proliferated in France and
its a huge problem in Italy,
where warning signs are only in
Italian. He recommends jet-lagged

travelers take a cab to downtown
rental car locations and pick up
cars there. Theyll have more time
to discuss local rules with clerks
than at very busy airport locations.
Since the first were installed 12
years ago, speed cameras have
lowered the average speed of drivers in France by 6 miles an hour
and saved thousands of lives, according to a spokesman for the
French National Agency for Automated Processing of Infringements, or ANTAI, which administers the program.
Appealing or protesting fines
can be difficult. In Italy, for example, authorities have 360 days to
notify foreigners of a violation and
the driver has 60 days to appeal.
All appeals must be sent by registered mail and must be in Italian.
If the appeal isn't accepted, the
fine is at least double the original
amount, unless you appeal in person before a justice of the peace,
according to European Municipality Outsourcing, which processes
violations for local police.
Travelers have also complained
of automated tickets from Rome
and Florence for driving or parking in zones without the proper
Italian permit. Simply driving
down the street in Limited Traffic
Zones can trigger a fine.
The simplest remedy is to obey
speed limits. Consequences arent
likely, but some countries say they
can detain people entering the
country at a later time if violations
are outstanding. Ask hotels in advance about neighborhood parking
and driving zones. And take time
at the rental-car counter to ask
about local customs and laws.
Visitors to the U.S. can also run
into unfamiliar rules, such as entering the country with food or
fruit that gets aggressively confiscated by Customs and Border Protection officers. In years past, visa
problems were a hassle for many
visitors, though travel groups say
U.S. agencies have reduced wait
times and improved processing.
Many bridges, tunnels and
highways have eliminated cash
lanes and if vehicles dont have
toll tags, bills are sent to owners.
Rental-car agencies pass those on,
plus hefty processing fees, to renters in the U.S.
In uncertain times,
the best-equipped reader survives.
2016 Dow Jones & Co., Inc. All rights reserved. 6DJ3364
P2GW161000-0-A00900-1--------AL
ARTS & ENTERTAINMENT
Annie
Proulxs
Forest
Epic
FOR YEARS, ANNIE PROULX was intrigued
and cowedby the idea of writing a multicentury epic inspired by her Canadian ancestors. A vanishing forest helped her
conquer those fears and complete the 713page novel this year at age 80.
Her ancestor Jean Prou came over from
Anjou, France, around 1666 as a domestic
servant for a seigneur, or feudal lord, of a
settlement on the St. Lawrence River east of
Quebec City. After Prou completed his service, he was granted 3 acres of woodsland
which he then set about clearing.
This is the world in which Ms. Proulxs
latest novel, Barkskins, out next week,
begins. Chronicling more than 300 years of
history, it follows the descendants of two
menRen Sel and Charles Duquetwho
arrive in New France in 1693 to work as indentured woodcutters.
Ms. Proulx, the Pulitzer Prize-winning
author of The Shipping News and Brokeback Mountain, moved in late 2013 from
Wyoming to Washington state, where she
now lives about 20 miles outside Seattle.
In an interview that began over email and
continued by telephone, Ms. Proulx talked
about her new novel, her fascination with
death, and the reason shes contemplating yet
another move. Below, an edited interview:
When did you first have the idea for this book?
One time on Michigans Upper Peninsula in
the 80s or possibly the 70s, I came to a
highway junction. There was nothing there
but a laundromat and a large billboard proclaiming that here, in the 19th century, grew
the finest stand of white pine in the
world. There were no white pine in sight,
only scrub brush. I did find some white pine
of considerable size growing in a difficult
steep place, probably never logged because
of the difficulty in getting those trees out.
The whole incident was odd and gave me a
mournful sense of the extirpated forest and
the lost men who laid it down.
How many of the characters were inspired by
real historical figures?
Certainly some of Jean Prous history inform-
WIQAN ANG FOR THE WALL STREET JOURNAL
BY JENNIFER MALONEY
INTO THE WOODS The

author at home in
Washington state.
ed the character Ren Sel, not so
much in any particular way, but
in general. Many young men
came to New France in service
and some were successful in
achieving a better life than that
of their parents in France. Jean
Prou was not one of those success stories, nor was Ren Sel.
Very few of the characters in
Barkskins came from historical
records. If one has a good imagination, the writing of a novel is
an excellent place to put it to work.
people died in different ways in

the past. I still do have a small
collection of books on death,
from Japanese death poems to a
history of fashion where the authors (unwittingly, I think) illustrated late 19th-century boys
clothing with a photograph of
the child in a sailor suit sitting
on the back steps surrounded by
favorite toys. If you have seen a
number of these photographs,
you recognize that the boy is
dead and has been posed for a memorial.
In a 2004 interview, you said were too daunted

by this book to start writing it. What gave you
the courage finally to start?
I was living in Wyoming in the Rockies and
severe drought and unusually hot summers
came at the same time as pine borers that
attacked the single-species lodgepole forests. Great swatches of lodgepole turned
rusty red, then gray, and stood waiting for
the fire that was sure to come. Outside the
state no one seemed to know the forests of
the Rockies were dying. Should not writers
and artists, sculptors and musicians and
others in the arts pay attention to the great
events of their time? Dying forests were
frightening and terribly important. I overcame my fear of the subject as too impossibly large and made a beginning.
One character is an elderly widow in 18th-century

Boston who, it turns out, is a man. Is she based
on a historical figure?
The character Bernard who comes home from
the Baltic countries with a wife originally had
a different secret. An orphan, he had one
valuable possession, a ring with a blue stone
given him by his dimly remembered mother. I
came to think it was stupid and awkward and
cut all mention of it out of the story. But then
Bernard was changed in a way I didnt like; he
needed a secret. And Birgit was his secret. As
to whether or not she is based on a historical
figure, that is my secret.
The characters in this book meet gruesome ends.

Did you have fun with that? I understand that in
Wyoming, you had a collection of books on death.
Its not so much that I enjoyed writing off
the characters as conveying the idea that
Whats your advice for people who want to see

an old-growth forest?
There are remnant pieces and patches of old
growth forest all over the world. For someone who wants the real thing, a trip to New
Zealands Waipoua Forest on the North Island will curl your toes. The protected
Olympic National Forest in Washington state
gives a taste of how our Western forests
looked. Many states have protected patches.

Just remember, no matter what you find
and see, the best is gone.
You purged half your library when you left Wyoming. What did you keep? What did you let go?
Sorry, the subject is still painful. I miss the
lost books very much and have even replaced some of them. Most of the Wyoming
and Western material stayed in Wyoming.
All of the forest-related material moved
with me and most of my maritime history,
Native American history, about 500 novels,
a few hundred short story collections, all
the poetry, only a small collection of art
books (so very heavy) and the most wonderful category, MISCELLANY, came with me.
Why did you move to Seattle?
I was beguiled by the reputation of Seattle
for misty, cloudy, damp, cool summers. And
I arrived just in time for the first of the hot,
scorching, dry, droughty summers to begin.
The West is beautiful. Its big. Its got delightful things, but this area is not for me.
Its full of techies and traffic and people I
dont understand at all who are devoted to
making large, large sums of money and having fast, excellent cars. Its a world that is
not for me.
So are you thinking of moving again?
I am, as a matter of fact. I never seem to be
able to settle down. I dont know whats
wrong with me. I just cant do it. Im not
contemplating anything specific at the moment. Im open to brilliant ideas, and
friends and children do toss them at me. So
well see what happens.
MUSIC
Greatness in Its Prime
Oud Is
New in
Israel
FROM TOP: OR MANY; EVGENI CHERTKOV
BY JIM FUSILLI
BY RORY JONES
ON A RECENT NIGHT in the ancient
port city of Jaffa, Israel, a crowd gathered in the trendy Container bar to listen to Liron Amram sing in an unusual
dialect for an Israeli musician:
Yemenite Arabic.
Strapping on his guitar, Mr.
Amram played a funky riff to
start his upbeat set, accompanied by a DJ, as the audience
nodded along to his modern
brand of Mediterranean music.
The 28-year-old artist is
one of a cadre of young
Jews of Middle Eastern descent, known as Mizrahim,
making music inspired by the
sounds and dialects of the
Arab world. As they embrace
ethnic backgrounds that once
sidelined their predecessors
as niche performers, these
musicians are breaking into
the mainstream.
Mizrahi music was always there in
Israel, but it was depressed, said Mr.
Amram, whose father is a well-regarded
Jewish Yemenite singer. We were always taught to hate our Arabic roots.
Israels cultural and political scenes
have long been dominated by Jews of
European descent, known as Ashkenazim. While Mizrahim make up
roughly half of the countrys Jewish
population, they are generally poorer
than Ashkenazim and underrepresented
in senior positions, according to Sergio
Della Pergola, an Israeli demographer.
Yet instead of assimilating to the
Western-influenced Israeli culture like
those before it, this new generation is
taking proud ownership of its diverse
ethnicity. Groups like Ars Poetica,
which organizes popular events showcasing Mizrahi poets and musicians, are
championing its art. Its part of Israel
now becoming more pluralistic, said
Mr. Della Pergola. The new generation
is increasingly a mixture of heritage.
Mizrahi musicians such as Zohar Argov, Ofra Haza and Yishai Levy first
popularized the genre in the 1970s and
MIZRAHI MEDLEY Israeli

artists like Dudu Tassa, top
right, and Liron Amram, left,
are embracing their roots.
80s but largely sang in Hebrew. Todays artists are bringing Mizrahi music
into the 21st centuryby reaching into
their past. Israelis of Iraqi, Yemenite
and North African descent are taking
well-known songs in the dialects of
their ancestors, played on traditional instruments such as the oud and darbuka and combining them with hip-hop
and electronic beats.
The most prominent is the all-girl
band A-WA. Made up of three sisters,
the group mixes dance music with Yemenite Arabic folk songs passed down
from their grandparents. A-WA, which
formed in 2013, had its biggest hit with
last years Habib Galbi (Love of My
Heart). The video, which features the sisters in traditional Yemeni dress against
the barren desert landscape of southern
Israel, has been viewed nearly 3.5 million
times on YouTube. This month, the trio
will release their first album in the U.S.
Our generation is curious about
where their family came from, says
32-year-old Tair Haim, the eldest of
the A-WA sisters. We understand
that we have this beautiful culture
and want to be part of it.

More established artists
have also been tapping into
their heritage. Dudu Tassa
rose to fame in Israel in the
2000s with a series of hit records, all in Hebrew. When
the 39-year-old singer began
researching his family roots,
he discovered that his grandfather and great-uncle, Daoud
and Saleh Al Kuwaiti, had
been popular musicians in
Baghdad in the 1930s, before
they immigrated to Israel.
That revelation led to his 2011 album, Dudu Tassa & the Kuwaitis. In
it, Mr. Tassa layers his vocals over old
compositions from the Al Kuwaitis catalog of more than 200 songs. He did
something similar last year with Ala
Shawati. Its fusing Western and
Eastern music and making it easier for
the ear, said Mr. Tassa, who will play
at Hungarys Sziget Festival in August.
Barriers still remain, however. Motti
Regev, author of Popular Music and
National Culture in Israel, said the
problem is twofold: Singing in Arabic
dialects is still considered to be sort
of gimmicky and Israelis are reluctant
to accept Arabic, which many consider
to be the language of the enemy.
But A-WAs Ms. Haim believes mainstream media will soon play catch-up.
The radio stations are more open to
play the music, although some people
say they are not open enough, she
said. But the audience is definitely
more open to hear it.
Orr Hirschauge contributed to
this article.
ITS NOT OFTEN THAT rocks bygone greats can surprise music lovers. But that is what Van Morrison
does with a series of live recordings
from 1973 that will be released this
Friday: Its Too Late to Stop Now,
a remastered version of the original
1974 album of the same name; and,
separately, three previously unreleased albums and a concert film
packaged together as Its Too Late
to Stop Now, Volumes II, III, IV &
DVD (Sony Legacy). Revisiting
the original album and spending
a few hours with the fresh material serves as a reminder of
what greatness is.
Supported by the 11-piece
Caledonia Soul Orchestra, the
original Its Too Late to Stop
Now presented Mr. Morrison
singing, with focus and fire, his
hits and covering songs made
notable by Bobby Blue Bland,
Ray Charles, Sam Cooke, Willie
Dixon and Sonny Boy Williamson. The tracks on the new discs
were culled from the same concerts as those on the 74 release, and rise to the same artistic caliber. The expanded Its
Too Late to Stop Now is a case
where more is more.
The 45 previously unreleased
performances on the albums present Mr. Morrison as an artist of significant achievement still in search
of new modes of expression and
willing and eager to illustrate where
his kind of rock came from. The new
albums reveal just how eclectic his
influences were. He covers faithfully
and with fitting humor Buona
Sera, a 1956 hit for Louis Prima,
and the oft-performed blues Since I
Fell for You. Theres even a reading
of Bein Green, originally performed
by the Muppets Kermit the Frog.
These and other performances
place Mr. Morrison and the orchestra in a jazz context, something the
original Its Too Late to Stop Now
failed to do. Mr. Morrisons Moondance swings loose and limber, propelled by Jeff Labess piano and David Hayess walking bass. The Way
Young Lovers Do swings, too, with
the strings dancing around the melody and offering a thrilling, unexpected interlude that welcomes a
piercing solo by trumpeter Bill Atwood, who excels on several numbers. A gorgeous reading of the ballad Snow in San Anselmo is
punctuated by a mad bebop interval,
and Hank Williamss Hey, Good
Lookin emerges as a jump blues.
In those days, Mr. Morrison was
a contradiction on stage. As the
DVD confirms, he could appear diffident in performance, standing for
the most part stationary at the microphone. And yet he churned with
contained energy and a soul-deep
connection to the emotional core of
Van Morrison performing in 1974.

his music. In Sweet Thing, the
strings deliver Mr. Morrison to its
aching two-word chorus. Pick it!
the singer barks at guitarist John
Platania, who responds with a terse
solo before Mr. Morrison and the
band leap into an improvised coda.
The three new volumes dont
skimp on Mr. Morrisons late-60s
pop-and-rock hits; they include
Brown Eyed Girl and different versions of Here Comes the Night
and Gloria than those on the original live album. But Mr. Morrison
was more than a hit maker. Concerts like the ones that provide the
material for the expanded Its Too
Late to Stop Now revealed he was
at the crossroads of rock-and-pops
past, the best of its then-present
and the possibilities for its future.
No mere historical artifact, the new
Its Too Late to Stop Now provides
an essential listening experience.
Mr. Fusilli is the Journals
rock and pop music critic.
REDFERNS
FOREIGN CORRESPONDENT
P2GW161000-0-A01000-1--------AL
OPINION
REVIEW & OUTLOOK
Saving Speaker Ryan
he impulse of some conservatives for

Theres no guarantee Mr. Trump would agree
self-destruction this year seems to have to Mr. Ryans agenda, but theres no chance if
no limits. Many of the same people who Mr. Ryan publicly refuses to vote for him. The
paved the way for Donald
Speakership is the second
Trump are now trying to exHis conservative critics most powerful elected posicommunicate from polite contion in Washington. Wed
dont seem to mind
servative company the men in
rather have a free-trade, prothe best position to minimize
immigration reformer like Mr.
if Republicans lose
the presumptive GOP presiRyan in that position than a
the House majority.
dential nominees damage.
Trumpian yes-man.
Thats the only way to read
A GOP Congressional mathe conservative journalists
jority is even more signifiwho are joining Democrats in denouncing House cant if Mrs. Clinton wins. The wily Mr. McConSpeaker Paul Ryan and Senate Majority Leader nell knows how to use Senate levers to stop
Mitch McConnell for saying they would vote for legislation and block judicial nominees. And
Mr. Trump, albeit without embracing his rheto- with the GOPs narrow Senate majority in
ric or all of his agenda. This has offended vari- jeopardy, Mr. Ryans House may be the last
ous Beltway grandees who are lecturing the two barrier to a Nancy Pelosi-Elizabeth Warrenleaders that they have besmirched their good Hillary Clinton government.
names, and for all time.
It isnt clear what Mr. Ryans critics want him
i
i
i
to do in any event. Do they really expect a House
We can understand why the left takes this Speaker to deny support to the GOP nominee,
line, which is partisan and opportunistic. Demo- making the Trump-Ryan division a running
crats know that Mr. Ryan in particular doesnt story through November? Theres nothing like
share Mr. Trumps political style or his views a bloody Republican civil war to dampen turnon many issues, especially immigration.
out and produce an election rout for the other
But they want to use Mr. Trump as a batter- side. As for a third-party run, no one has voluning ram to retake the Senate and House. Then teered for that duty precisely because it has althey can go about fulfilling their Sanders- most no chance of success.
Clinton-Obama agenda of expanding the entitleMr. Ryans endorsement doesnt include a
ment state without opposition.
vow of silence. In the past week he has joined
The swarm of tut-tutting proother Republicans in criticizing Mr. Trump for
gressive columnists want Mr.
saying a federal judge is biased against him
Trump to destroy the GOP.
merely because he is Mexican, saying Tuesday
The question is why conthe remarks are the definition of a racist comservatives would play along.
ment. He and Republicans in Congress can
Journalists on the right and
score their nominees excesses while still beleft can afford to indulge their
lieving he is superior to Mrs. Clinton.
political preferences because
i
i
i
they are only responsible for
The criticism of Mr. Ryan comes with particthemselves. Political leaders
ular ill-grace from the conservatives who
have to consider the conseseeded the ground for Mr. Trump. Many of the
quences of their actions for
most devout Never-Trumpers have spent years
Paul Ryan
their institutions. For Messrs.
fanning grassroots hostility against immigraRyan and McConnell, this means preserving tion and Mexicans.
GOP majorities as a check against either Mr.
They also blocked Mr. Ryans efforts to reach
Trump or Hillary Clinton.
a compromise on immigration reform to secure
Conservative pundits say Mr. Trump has au- the border while recognizing the needs of the
thoritarian tendencies, but then they should U.S. labor market. Mr. Trump saw his chance to
want principled leaders in positions of power hijack their softer hostility with his wall and
to restrain him. This week Mr. Ryan and his mass deportation, and now these conservatives
GOP colleagues are starting to roll out their profess to be shocked that he is taking his ethown agenda for governing next year. It in- nic broadsides to new lows.
cludes tax, health-care and financial reforms,
The Trump ascendancy is a dangerous moas well as measures to reduce poverty and re- ment for Republicans and conservative ideas.
store Congressional authority.
But unless the convention delegates in CleveThis is smart politics, not least because it land stage an uprising and nominate someone
gives GOP candidates for the House and Senate else (see below), Mr. Trump or Hillary Clinton
something other than Mr. Trump to promote will be the next President. Those who want to
and talk about. Voters will be able to see that preserve space for a better conservative politics
Republicans stand for something beyond Mr. should support politicians who share those beTrumps passions.
liefs, not engage in Trump-like purges.
High Trump Anxiety
onald Trump throttled back his racial in two or perhaps three of them. His Capitol Hill
attacks on a federal judge on Tuesday, get-to-know-you tour started to form relationand presumably hell now follow his ships with elected GOP officials, and he secured
normal M.O. of displacing one
endorsements like House
self-created controversy by Republicans are worried Speaker Paul Ryans. His encreating another. But the epiergy speech was substantive,
about more than his
sode has renewed Republican
and his list of potential Sucomments on a judge. preme Court nominees
doubts about his candidacy,
and the presumptive presishowed someone had condential nominee is in more posulted with the legal rights
litical peril than he thinks.
smarter thinkers. Mr. Trump gained on Mrs.
Mr. Trump said in statement that it is un- Clinton in the national polls.
fortunate that his claims about Judge Gonzalo
No one ever expected Mr. Trump to change
Curielan American, Indiana-bornhave been his personalitybut they did figure he would
misconstrued as a categorical attack against adopt the methods necessary to win a modern
people of Mexican heritage. He said he merely election. Instead, Mr. Trump continues to demeant that he wasnt getting a fair trial in the ride fundraising, polling, data analytics, voter
civil-fraud case over Trump University, and his targeting and staffers like field organizers. He
statement included a lengthy defense of the has built no communications team as far as we
now-defunct real-estate seminars.
can tell beyond press secretary Hope Hicks and
i
i
i
campaign manager Corey Lewandowski.
Before this welcome turnabout, Mr. Trump
Mrs. Clinton has 21 press aides including a
tripled down on his comments, suggesting that communications director, a lead press secremaybe Muslim and female judges would be prej- tary, a day-to-day spokesman, a travelling
udiced against him too. As recently as Monday press secretary, a rapid-response director, a
afternoon, Bloomberg reported, Mr. Trump told rapid-response spokesperson and a variety of
his cast of cable-TV surrogates to assail Judge handlers dedicated to regional and specialized
Curiels integrity as well. He repudiated a cam- outlets. This is what it takes to drive a coherpaign memo, which he learned about on the call, ent national message.
telling supporters to downplay Trump U.
Mr. Trump may believe a similar apparatus
Take that order and throw it the hell out, is a waste of money, and that he can run his
Mr. Trump said. Are there any other stupid let- campaign out of his hip pocket like the Trump
ters that were sent to you folks? Thats one of Organization: shoestring, centralized and ad
the reasons I want to have this call, because you hoc, with nearly every decision made at the top.
guys are getting sometimes stupid information He may think, too, that the political professionfrom people that arent so smart.
als are dummies and hell keep winning like he
Mr. Trumps campaign was always going to did in the primaries.
be a daily adventure, but this particular detour
But the pros know that competing in a genreflects poorly on his political and strategic eral election, and appealing to a voting-age
judgmentdeplorable as his comments were on population of some 240 million, is different
the merits. He provoked the irruption with a di- than winning 40% of the Republican primary
atribe against Judge Curiel during an ad-libbed vote. It also doesnt inspire confidence that Mr.
rally in San Diego. Since Mr. Trump brought it Trumps political and business operations are
up, the press served a round of stories about life so fungible: Many Republicans will conclude
on Trump campus, such as the playbooks that that he chose the self-interest of his personal
told sales personnel to encourage students to brand in a petty Trump U lawsuit over increasmax out credit cards to pay the fees.
ing his odds of winning the White House.
The polls show the economy is Mr. Trumps
Mr. Trump said in his statement that he does
chief advantage over Hillary Clinton, but he was not intend to comment on this matter any furtoo busy claiming Hispanics cant be fair judges ther, and maybe someone staged an intervento showcase Fridays dispiriting jobs report. He tion, or he finally came to appreciate the panic
also allowed the U.S. State Department investi- he is generating among Republicans.
gation of Mrs. Clintons private-email practices
If Mr. Trump doesnt start to act like a politito tumble down the memory hole, and he made cal leader, and his poll numbers collapse belittle effort to counterpunch her speech on his tween now and the July convention, he may
temperament and foreign policyaside from start to hear rumblings that delegates are looktweets about her appearance. Unanswered at- ing for someone else to nominate. As traumatic
tacks usually succeed.
as that would be, the Republican desire to avoid
Mr. Trump has been the presumptive GOP a landslide defeat that costs the House and Sennominee for five weeks, and he made progress ate might be stronger.
Trump University
Redefines the Brand
If Donald Trumps tirade against Judge
Gonzalo Curiel arises
from his sense that
Trump University has
become a threat to his
presidential hopes, he
BUSINESS
may be right.
WORLD
Poetic justice has
By Holman W.
taken a hand. The failJenkins, Jr.
ure of Trump U, and its
resulting
lawsuits,
would not be a national story in the first
place, subject of withering investigations
by major press organs, if Mr. Trump
werent running for president.
The lawsuits themselves portray a
scam that precisely reflects the arc of
Mr. Trumps career, from tyro realestate developer to peddler of his personal brand. Could there be a more
apt example of the Peter Principle than
if Mr. Trumps latest brand extension
into presidential politicsends up destroying his brand?
His private interests, his public interestsMr. Trump doesnt make distinctions. Its all about one thing, Mr.
Trumps unhealthy love affair with an
image of himself. That said, doesnt his
latest eruption seem like something
more: if not a cry for help, an unconscious rebellion against the situation he
made for himself?
His improper remarks about the
judge follow his improper threats
against Jeff Bezos, owner of the Washington Post. Theres a connection: A
petition from the Post brought last
weeks release of embarrassing trial
documents, featuring testimony by former Trump U employees who came to
regard his real-estate school as a swindle, that brought Mr. Trumps furious
charges that Judge Curiel was biased
and a hater of Donald Trump.
The Trump explosion comes just in
time to humiliate Paul Ryan, after the
House speakers reluctant endorsement
of Mr. Trump. It comes just in time to
humiliate John McCain (again), who
faintly praised Mr. Trump as a candidate
he could live with because Americas
constitutional protections mean we
wont become Romania.
Nowhere to be seen is Paul
Manafort, the Republican wise man
who was supposed to set the Trump
campaign on a path to November electability. As a Washington Post headline
put it: GOP can stop waiting for the
new Trump to emerge.
Meanwhile, Mr. Trump is still obsessing over the growth in his Twitter,
Facebook and Instagram followings. In
an interview with media provocateur
Michael Wolff in the Hollywood Reporter, he cant get beyond wonder at
the phenomenon that has swept him
up. Middle of the pack, he recently
admitted, is where he expected to rank
in the GOP field.
We come again to the Trump-as-democratic-accident problem. Mr. Trump has
always been an interesting American
specimen, enriching our national pageant, but he has left his natural sphere.
He lacks the qualities to rise to the occasion in which he finds himself.
Happily, theres still time for Republicans, at their convention, to replace Mr.
Trump with someone else, though this
will require continued help from Mr.
Trump. But hes working on it. On Monday, he ordered his staff to double-down
on vilifying Judge Curiel. He said on TV
that a hypothetical Muslim judge might
also be unfit to preside. And when and if
the Trump U cases proceed to trial before a jury, whole voting blocs (women)
will be on the edge of their seats to find
out if theyre disqualified because Mr.
Trump previously insulted them.
All this offers a second chance for
those prominent Republicans who, from
party loyalty, misborn hopes for Mr.
Trumps transformation or a mistaken
idea of their own populist bona fides,
clambered aboard the Trump express.
The Donald left his natural

sphere and proves unable
to rise to the occasion.
Q: So to be clear, if Donald Trump
gets to 1,237 delegates, all the fighting
over delegate selection and convention
rules probably goes away.
A: That is not guaranteed, but it
would make it all the harder for opponents to summon the political will to alter the rules in a way that produces a
nominee other than someone who won
the popular vote and the bound-delegate tally heading into the convention.
That comes from a late April Q&A
between New York Magazines Ed Kilgore and University of Georgia elections
expert Josh Putnam. Roger Stone, the
Igor who appears to think himself the
Dr. Frankenstein of the Trump phenomenon, has begun blogging about a conspiracy of the Republican National Lawyers Association to steal the nomination in Cleveland. A few convention
delegates already have called for a vote
on Day One to free themselves from any
obligation to support a particular candidate on the first ballot.
Lets hope so, because Mr. Trump
could yet be on his way to the presidency. Hillary Clinton last week gave a
speech widely praised for its listing of
Mr. Trumps improprieties. A campaign
of Ha, ha, youre stuck with me because Trump is awful may not be the
winner her strategists imagine.
Though the AP curiously awarded
the Democratic nomination to Mrs.
Clinton on Monday based on her superdelegate commitments, superdelegates
arent bound. They can change their allegiances as many times as they want.
Just conceivably, victory this year
might end up going to whichever party
is ruthless enough to dump its current
nominee-apparent.
LETTERS TO THE EDITOR
Getting the Benighted TSA to Pass Inspection

The obvious missing point of your
editorial The TSAs Summer of
Lines (May 31) is that the Transportation Security Administrations main
responsibility is to protect the traveling public, especially in the current
evolving threat environment.
We are working to address security lines at airports while maintaining the highest standards of security.
But we will not compromise security
for convenience. Secretary Jeh Johnson and Administrator Peter Neffenger are intensely focused on reducing the time spent in lines
without compromising the safety of
the public in the process. We have
added front-line officers and canine
teams, and we are working with Congress and the aviation community to
solve this problem together.
We are making progress. Nationwide, the TSA screened more than
10.3 million travelers over the May
28 Memorial Day weekend, and 93%
of passengers waited less than 15
minutes. The average wait time in
the standard line was less than 10
minutes; the average wait in the
TSA PreCheck line was less than
five minutes.
We arent through yet, and we
arent letting up. The TSA is dedicated to ensuring professionalism
and a positive experience while remaining focused on our counterterrorism mission. We cannot and will
not compromise on security.
HUBAN GOWADIA
TSA Deputy Administrator
Washington
Neither more funding, hiring more
screeners nor the PreCheck program
alone will work. I endured an in-person interview and background check
(20-year military service and now a
judge) to obtain a Global Entry card.
Yet going through Reno last week, an
overly vigilant screener found a
threatening umbrella in my briefcase, removed the entire contents of
my briefcase including my wallet, absconded with them for rescreening,
and while barking orders gave me a
very thorough and humiliating pat-
down all under the stare of an intimidating female supervisor.

It was amazingly similar to the
searches I had authorized of criminal
suspects. So much for PreCheck. I
was sickened by seeing the aftermath of such similar TSA thoroughness on a 3-year-old girl whose
mother had trouble comforting her.
Of course, little, if any, attention
was paid to the 45-minute backed-up
line of travelers at 5:30 a.m. on a
Sunday morning. I see such scenes
play out regularly.
TSA abruptness and insensitivity
is surely exacerbated by giving them
law enforcement training on handling suspects. Members of the
public arent suspects needing to
prove their innocence. Either strip
these agents of law-enforcement
authority and train them in courtesy,
or privatize the TSA.
RICHARD MORGAN
Pittsburgh
The most obvious answer to the
oppressively long lines at airport
security and the one most certain to
be effective and the easiest to implement is separation of passengers
into categories of screening intensity, known more pejoratively as
profiling.
Applying the same scrutiny to an
80-year-old Swedish grandmother
as to a 28-year-old Syrian male,
while absurd, wont be changed because political correctness doesnt
allow for the admission that negative characteristics can exist in statistically higher ratios in some population groups than in others, a fact
everyone knows to be correct but
dare not speak.
JAMES W. BENEFIEL
Dunedin, Fla.
Letters intended for publication should
be addressed to: The Editor, 1211 Avenue
of the Americas, New York, NY 10036,
or emailed to wsj.ltrs@wsj.com. Please
include your city and state. All letters
are subject to editing, and unpublished
letters can be neither acknowledged nor
returned.
P2GW161000-0-A01100-1--------AL
OPINION
By Zalmay Khalilzad
n foreign policy, there are key

momentsgolden hours
when events create a finite
window in which to achieve
important things. Sometimes
they are obvious, like in the aftermath of a successful military operation. More often golden hours are
fleeting and apparent only in retrospect, when policy makers realize
that they missed an opportunity.
Based on my discussions with
President Ashraf Ghani and other
senior Afghan officials in Kabul in
recent days, I believe that the killing
over the May 21 weekend of Taliban
leader Mullah Akhtar Mansour in a
U.S. drone strike has created a golden
hour in which to finally secure Pakistans cooperation in stopping support for the Haqqani network terrorists and for the extremist Taliban.
This is the golden hour

when the U.S. can finally
secure Islamabads help in
stopping al-Qaeda-linked
terrorists and the Taliban.
To have such a decisive effect on
Pakistani policy, however, the U.S.
and Afghanistan must follow up on
Mansours death with additional
steps that escalate pressure on Islamabad. Otherwise the opportunity
will dissipate.
Opportunities have come and gone
before. The last golden hour that
could have secured a verifiable Pakistani break with the Taliban was
after the U.S. invasion of Afghanistan
in 2001. From the moment the U.S.led coalition overthrew the Taliban in
2001, through 2004, when Afghans
voted in a landslide for the election
of President Hamid Karzai, U.S. credibility was sky high.
Washington then squandered this
By Dalibor Rohac
oland observed two major anniversaries in recent weeks. In

May, the country marked the
225th anniversary of its constitution, the first document of its kind
in Europe. Then, earlier this month,
Poles commemorated 27 years since
the election that marked the end of
the communist regime. Far from being occasions for jubilation, however, they brought hundreds of thousands of people out onto the streets
of Warsaw in protest of the Law and
Justice government.
The new government

is undermining the
institutions that have
been so important to
the countrys success.
At the heart of the peoples discontent is a constitutional crisis that
pits the Law and Justice party,
known by its Polish abbreviation,
PiS, against the countrys Constitutional Tribunal. No mere contest
over formalistic legal details, whats
at stake here is the establishment of
a new form of governance thats
been spreading across postcommunist Central and Eastern Europe, one
thats unconstrained by judicial review or checks and balances.
The model for this new form of
government is Hungarys illiberal
democracy, a term coined by Hungarian Prime Minister Viktor Orbn
in 2014 as his Fidesz Party gradually took over the countrys public
institutions. As early as 2011, PiS
leader Jarosaw Kaczyski declared
that he wanted to create a Budapest in Warsaw.
Polands constitutional crisis began just prior to the October election that brought PiS to power. The
previous parliament had elected five
opening. When initial indications

emerged that Pakistan was offering
sanctuary to the Taliban on its soil,
Washington was reluctant to take decisive steps. As a senior official in the
George W. Bush administration, I participated in countless circular debates
on whether such sanctuaries even existed, whether they had been authorized by Pakistans then-president, Pervez Musharraf, and whether the issue
was important enough to risk rocking
the boat with Islamabad.
My view was that Pakistan was
playing a perfidious and dangerous
double game and needed to be called
on it. But because of factors such as
the (actual or supposed) important
Pakistani contribution to the fight
against al Qaeda, Pakistans role as
transit route for supplies to U.S.
troops in Afghanistan, and its own
(however halfhearted) campaign
against Pakistani Islamist extremistssenior U.S. officials either ignored evidence of Pakistani support
for the Afghan Taliban or treated it
as a cost worth tolerating. One result:
Senior Taliban leaders were soon living openly in Pakistani cities like Peshawar, Karachi and Quetta.
Since 2005, the Taliban and the alQaeda-linked Haqqani network based
in Pakistan have regrouped and
waged a devastating insurgency
against U.S. and Afghan forces. Poor
governance by the Afghan government is certainly a factor in its inability to defeat the insurgents. But the
Talibans resilience is primarily due
to the strategic decision of the Pakistani military and intelligence services to provide sanctuary and support to these groups.
Pakistan views the Taliban as an
effective proxy to ensure Pakistani
dominance over Afghanistan, and to
limit Afghan relations with India.
Islamabad also doesnt believe that
the current pro-U.S. government in
Kabul can survive the continuing
drawdown of American forces. Last
year, Pakistani officials delivered a
paper to their Afghan counterparts
new justices to the Constitutional

Tribunal, including two to replace
judges whose term had not yet expired and who could have been
elected, in principle, later by the
new PiS-controlled Parliament.
Once in power, the new government challenged the appointments
at the Constitutional Tribunal. The
Tribunal decided that three of the
appointments were valid. But it also
found that PiS had the right to appoint two new judges to replace the
ones whose terms hadnt yet expired
at the time of the initial election.
But that wasnt enough for PiS.
Instead, PiS sought to replace all
five judges. The Constitutional Tribunal has so far refused to recognize these new judges, as their appointments directly violate the
Tribunals ruling.
There is also a second layer to
the deadlock. In one of its first
moves in office, PiS passed a law
modifying the decision-making procedures of the Constitutional Tribunal. That law now requires a
two-thirds majority instead of a
simple majority. It also increases
the number of justices needed at
any given vote.
PiS supporters present the
change as a restraint on the power
of unaccountable judges, selected
by previous parliaments dominated
by the centrist Civic Platform
Party. But critics charge the laws
purpose is to make it more difficult
for the Tribunal to strike down legislation, effectively limiting the
role of judicial review in restraining the government.
Either way, the Constitutional
Tribunal has ruled the new law unconstitutional. Yet for the Tribunals
ruling to acquire legal force, it has
to be published in the official Journal of Laws. So far, the government,
which controls the relevant printing
presses, has refused to do so.
The crisis prompted the European
Commission earlier this year to
launch an inquiry into the problem,
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Pakistani backers of the banned group Jamaat-ud-Dawa, in Peshawar on May 27,

protest the U.S. drone strike that killed Taliban leader Mullah Akhtar Mansour.
proposing terms for a new bilateral
relationship in the coming years. The
terms amounted to a demand that
Afghanistan subordinate its sovereignty to Pakistan.
While the Obama administration
is continuing the withdrawal of U.S.
forcesexpected to drop to below
5,000 by the end of this year, from
10,000 nowin recent weeks Washington has adopted a harder line
against Pakistan. Congress has imposed tighter restrictions on military aid to Pakistan, citing its failure to target the Haqqani network.
Congress also prohibited Pakistan
from using U.S. aid to purchase F-16
jet fighters.
It also appears that President
Obama has elevated the problem of
Pakistani support for the Haqqani
network and Islamabads broader
obstruction of the Afghan peace
process to a priority in determining
U.S. relations with Pakistan.
The manner in which Mansour was
killed is a telling manifestation of the
change in U.S.-Pakistan relations. The
U.S. has been waging drone attacks
on Pakistani territory since 2004, but
the strike against Mansour crossed a
threshold in the sense that it was the
first in Pakistans far southwest

Baluchistan province. Unlike previous
strikes, it was the U.S. military and
not the CIA that orchestrated the
Mansour attack. By conducting the
attack openly, Washington sent a
clear signal that, unless Pakistan
changes its policy of support for the
Taliban, additional coercive measures
could be on the way.
akistan is likely waiting to see

whether the Mansour attack
was a one-off event or is a harbinger of a fundamental shift in U.S.
policy. If Islamabad is to break with
the Haqqani network and the Taliban,
the Pakistani leadership needs to see
that continued support for the insurgency will come at a high price.
Escalated U.S. military pressure
through expanded drone strikes is
one way to deliver that message, but
it should be backed by corresponding
political and financial pressure.
On the financial side, Pakistan has
been an enormous beneficiary of
international support, including
from the coalition of nations aiding
Afghanistan and from organizations
including the International Monetary Fund and World Bank. In addi-
tion to limiting this assistance, the

U.S. can oppose the renewal of the
IMF support program when it runs
out this summer.
Washington should warn Pakistan
that it will face escalating financial
sanctions unless it ends its military
support for terrorists and extremists,
and facilitates reconciliation talks between the Afghan government and the
Taliban. An initial step could involve
imposing financial and travel restrictions on senior Pakistani officials
known to be complicit in the insurgency, and freezing funds in U.S. banks
belonging to Pakistani entitiesboth
military and corporateinvolved in financing the insurgency.
The U.S. currently designates Pakistan as a major non-NATO allya
status wholly inappropriate given
that its current policy and conduct
would better merit its inclusion on
the State Departments list of statesponsors of terrorism.
The U.N. Security Council is an
appropriate venue in which to raise
Pakistans aggression against Afghanistan. To help secure international support for a U.S.-Afghansponsored resolution condemning
Pakistan, the U.S. should declassify
and broadcast information indicating Pakistani support for the Taliban
and other insurgents, as well as Pakistani complicity in the insurgencys
narcotics trafficking.
Finally, to signal U.S. seriousness,
President Obama should reverse his
decision and keep the current level of
U.S. forces in Afghanistan, letting his
successor decide on future force levels. That, and allowing U.S. field commanders more flexibility in the use of
their troops in support of Afghans in
the current fighting season, would
demonstrate a level of American determination to rattle the insurgents
and Islamabad.
Mr. Khalilzad is a former U.S. ambassador to Afghanistan, Iraq and
the United Nations. He is the author
of Envoy (St. Martins Press, 2016).
Illiberal Democracy Spreads to Poland
Rupert Murdoch
Executive Chairman, News Corp
Rebecca Blumenstein, Matthew J. Murray

Deputy Editors in Chief
AFP/GETTY IMAGES
Breaking the Pakistan-Taliban Alliance
DOW JONES MANAGEMENT:

Ashley Huston, Chief Communications Officer;
Paul Meller, Chief Technology Officer;
Mark Musgrave, Chief People Officer;
Edward Roussel, Chief Innovation Officer;
Anna Sedgley, Chief Financial Officer;
Katie Vanneck-Smith, Chief Customer Officer
OPERATING EXECUTIVES:
Nancy McNeill, Corporate Sales;
Steve Grycuk, Customer Service;
Jonathan Wright, International;
DJ Media Group:
Almar Latour, Publisher; Kenneth Breen,
Commercial; Edwin A. Finn, Jr., Barrons;
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
to see if there is a systemic threat

to the rule of law. Last week the
commission issued an initial opinion
concluding that the matter has not
been resolved. If the situation persists, the European Council could,
hypothetically, move to impose sanctions against Poland and even suspend Warsaws voting rights.
PiS is presenting the inquiry,
both to the Polish public and to
conservatives abroad, as an attempt
by the European Union to intimidate Poland into taking in tens of
thousands of refugees and migrants, as Polands Justice Minister
Zbigniew Ziobro has said.
Western conservatives and classical liberals may be tempted to side
with PiS. The European Commissions
focus on Poland now, after turning a
blind eye to similar moves in Hungary, or even the controversial deci-
sions made by the previous government in Warsaw, opens the EC to

criticisms of a double standard.
PiS is, after all, together with the
Tories in Britain, a member of the
European Conservatives and Reformists, a group that is often the voice of
market-friendly reforms and limited
government. Combined with the absence of a credible opposition force
in Poland committed to these values,
the conflict might appear as one between a democratically elected government and the unaccountable commissars in Brussels.
But none of this means PiS
should be forgiven for gradually undoing the extraordinary progress
achieved by Poland since its first
democratic election in June 1989.
Not only will attempts to re-create
Mr. Orbns illiberal democracy
erode Polands rule of law, they are
a source of economic uncertainty,

reflected in declining stock prices
and expectations of further creditrating downgrades.
More importantly, the standoff between PiS and the EC, accompanied
by escalating euroskeptic rhetoric in
Poland, has dramatically diminished
Polands voice within the EU at a time
when the EU needs it most.
In the past, Polands influence
within the EU has been undoubtedly
beneficial. Today, Poland is deliberately marginalizing itself, to its detriment and to the detriment of all
Europeans. Heres hoping that Polands voicedown-to-earth, pragmatic and informed by the experience of totalitarianismwill be
heard again.
Mr. Rohac is a research fellow at
the American Enterprise Institute.
A Political Earthquake in Israel

Jerusalem
Israeli Prime Minister Benjamin Netanyahus recent decision to fire his
widely respected deminister,
POLITICS fense
Moshe Yaalon, and
& IDEAS
replace him with
By William
right-wing populist
A. Galston
firebrand Avigdor
Lieberman has triggered a political earthquake in Israel. Mr. Netanyahu now may face
his most serious political challenge
since taking office in 2009. His move
also raises fundamental questions
about the governance and character
of the Jewish state.
Leading figures long associated
with Mr. Netanyahus Likud Party
have criticized his decision. Benny Begin, a Likud legislator, characterized it
in a television interview in Israel as
delusional. Moshe Arens, a former
defense minister, wrote in the Haaretz
newspaper that Choosing between
an excellent defense minister serving
in a narrow coalition . . . and obtaining a few more coalition votes should
have been easy. But Benjamin Netanyahu made the wrong choice.
Just months ago, a Likud press
release had this to say about Mr. Lieberman: He is a man who has never
led even a single soldier to battle
and never had to take a single operational decision in his life. He isnt
even qualified to be a television talking head on military issues.
Mr. Yaalon has resigned from the
Likud Party and from the Knesset.
But his withdrawal from politics is
only temporary. In a letter to potential supporters, he writes: I regard
this period as a time-out after
which I intend to return and run for
Israels national leadership.
If he does, other well-known figures, such as former Likud Interior
Minister Gideon Saar and former Israel Defense Forces (IDF) Chief of
Staff Gabi Ashkenazi, are likely to

join him. A recent poll conducted for
the Jerusalem Post found that a new
party headed by Mr. Yaalon would
win as many seats in the Knesset as
Mr. Netanyahus Likud. Parties that
have been unwilling to enter the
prime ministers right-leaning government would be more inclined to
join forces with Mr. Yaalon to form
a centrist coalition.
Netanyahu now may face

his most serious challenge
since taking office in 2009.
Mr. Yaalon is no ones idea of a
dove. But his tough line is based on
security, not ideology. Im not a supporter of greater Israel, he has said.
I supported the Oslo Accords. I was
willing to give up territory in return
for peace. But the Palestinians are not
partners for that kind of dealat
least not in the foreseeable future.
This argument suggests that Mr.
Yaalon would be open to the security-based proposals just unveiled by
Commanders for Israels Security, a
coalition of former members of the
IDF, Shin Bet (the Israel Security
Agency), Mossad and police forces.
These proposalsincluding completing the West Bank security barrier,
instituting strict border control along
this barrier, and freezing settlement
buildingare designed to enhance Israels security while preserving the
conditions for future negotiations for
a two-state solution.
As he left office last month, Mr.
Yaalon pointed to what he sees as
dangerous developments in his country. I fought with all my might
against phenomena of extremism, violence and racism in Israeli society
that threaten its fortitude, he said in
his May 22 final speech as defense
minister. But now, dangerous forces
have taken over Israel and the Likud

movement . . . and are trying to influence the image and values of the IDF.
A recent eventthe killing of a
wounded Palestinian attacker in
March by an Israeli soldierbrought
these concerns to a head. Mr. Lieberman leaped to the accused soldiers
defense and appeared by his side in
court. Mr. Netanyahu equivocated
but eventually called the soldiers father, stirring consternation among
senior military officials.
Mr. Yaalon characterized the episode as a clear violation of the code
that governs the IDFs conduct. He
urged officers at all levels to feel free
to speak their minds, even if criticizing military or political leadership,
and to act in accordance with your
human conscience and moral compass and not according to which way
the winds are blowing. In his farewell speech, he exhorted military
leaders: Remember, an army needs
to win, but we must remain human,
even after the battle.
In Mr. Yaalons view, rising Jewish
extremism imperils Israels existence.
In his final press conference as defense minister, he expressed confidence in a sane majority of Israelis
who seek a Jewish, democratic, and
liberal state. He emphasized the importance of the final adjective: a
healthy society accepts each person
as a person, without distinction of
religion, race, gender, ethnic origin or
sexual orientation, a tolerant and accepting country for the weakest and
the minorities, who we have the duty
to embrace and not to incite against.
Israelis are growing weary of
Prime Minister Netanyahus endless
political maneuvering. In a recent
survey, only 36% said they were satisfied with his performance in office.
Against this backdrop, Mr. Yaalons
staunch defense of basic principles
over political expediency represents
an alternative that many Israelis are
likely to find appealing.
P2GW161000-0-A01200-1--------AL
SPORTS
England Frets Over Rooney Role
Heard On
The Field
With his skills in decline

and a new cast of scorers
emerging, Three Lions star
attempts a position switch
Sharapova Banned
Two Years From Tennis
MIKE NELSON/EUROPEAN PRESSPHOTO AGENCY
Tennis star Maria Sharapova,

above, was suspended from competition for two years after testing
positive for the drug meldonium at
the Australian Open, the International Tennis Federation said
Wednesday.
The suspension, which is retroactive to Jan. 26, means Sharapova,
29, cannot play a professional tennis match until late January 2018.
She would miss eight Grand Slam
tournaments because of the ban,
the Rio Olympics and numerous
other high-profile events. In a statement, she said she would appeal
the ruling to the Court of Arbitration for Sport.
Sharapova is one of hundreds of
athletes who have tested positive
this year for meldonium, a Latvianmade cardiac drug that was banned
by the World Anti-Doping Agency
as of Jan. 1. WADA cited evidence
of athletes using the drug with the
intention of enhancing performance
when it announced a ban.
At a news conference in March,
Sharapova said that she had taken
the drug Mildronate, a brand name
of meldonium, for years because of
various health conditions, including
low magnesium, irregular electrocardiogram results and a family history
of diabetes. She said she didnt
know it had been banned. She later
added that she ignored a Dec. 18
notification about the ban, because
it was buried inside an email. But
she acknowledged her own fault
from the start.
Tom Perrotta
London
In the months leading up to this
summers European soccer championships, England manager Roy
Hodgson found himself in the best
possible position for a national team
coach. He was overloaded with goal
scorers.
Tottenhams Harry Kane finished
top of the English Premier League
scoring charts. Jamie Vardy fired unheralded Leicester City to a championship. An 18-year-old named Marcus Rashford was shaking up the
ranks at Manchester United. When it
came to his attacking options, Hodgson was spoilt for choice.
There was only one problem, a familiar headache that has perplexed
four successive England managers
and aggravated English soccer fans
for more than a decade: Wayne
Rooney.
With 111 appearances for the national team and a record 52 goals,
the 30-year-old Rooney is undoubtedly the most talented English forward of his generation. As captain of
the national team, his place in the
squad is assured.
But in recent seasons, his speed
and productivity have sharply declined. These days, hes around because hes always been around, like
a reliable pair of shoes. From a soccer standpoint, its no longer obvious
where on the field he can be most
effective.
I think sometimes you have to
make choices in your career, and at
the minute it is probably better for
me to play deeper, Rooney said,
conceding that his days as a frontline striker may be numbered.
Fretting over Rooney has been a
biennial tradition for England ever
since he made his major tournament
debut as an 18-year-old in Englands
Euro 2004 squad. At some competitions, the concern has been his
health. At others, his temperament.
But ahead of Englands opener
against Russia on Saturday, England
fans are wondering loudly about his
CHRISTOPHER LEE/THE FA/GETTY IMAGES
BY JOSHUA ROBINSON
Wayne Rooney is Englands all-time leading scorer with 52 goals, but will likely occupy a midfield role this summer.
usefulness for the first time.
For England and his club team
Manchester United, this year has
been one long experiment to relocate Rooney from the forward position to a midfield role where he can
still contribute.
I dont think that he has ever
complained about where he has to
play, said former United manager
Louis van Gaal.
This transition is harder than it
sounds. Forwards spend most of
their time with their backs to goal,
waiting to receive a ball, turn
against a defender and carve out a
shooting opportunity for themselves
or a teammate. Contact with an opponent is almost immediate. Midfielders, on the other hand, can act
more like quarterbacks. They pick up
the ball deeper, have more space
around them and can use a greater
array of passes to find a teammate.
Former Netherlands utility man
Ronald de Boer made the same
switch from striker to midfielder
late in his career. He had scored regularly as a forward and a winger, but
when his pace deserted him, he
Riga
Glasgow
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oscow
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Frankfurt
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Prague
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V
Geneva
Milan
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Bucharest
Showers
t b
Istanbul
Lisbon
Lisbo
Athens
Ath
Snow
Global Forecasts
s...sunny; pc... partly cloudy; c...cloudy; sh...showers;
t...tstorms; r...rain; sf...snow flurries; sn...snow; i...ice
Today
Lo W
9 pc
11 pc
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21 pc
11 t
9 r
15 s
11 pc
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17 10 r
14 10 r
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City
Geneva
Hanoi
Havana
Hong Kong
Honolulu
Houston
Istanbul
Jakarta
Johannesburg
Kansas City
Las Vegas
Lima
London
Los Angeles
Madrid
Manila
Melbourne
Mexico City
Miami
Milan
Minneapolis
Monterrey
Montreal
Moscow
Mumbai
Nashville
New Delhi
New Orleans
New York City
Omaha
Orlando
Today
Hi Lo W
22 11 t
33 27 t
30 23 pc
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22 16 pc
32 25 pc
18 4 s
33 22 pc
42 27 s
22 17 pc
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26 16 pc
36 18 pc
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32 21 pc
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14 5 sh
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31 17 s
41 30 pc
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35 23 s
31 23 t
If your favorite LP
is made of vinyl
Tomorrow
Hi Lo W
24 14 pc
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31 23 t
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32 24 t
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Today
City
Hi Lo W
Ottawa
13 7 pc
Paris
23 12 c
Philadelphia
24 13 s
Phoenix
41 28 pc
Pittsburgh
22 11 s
Port-au-Prince
35 23 pc
Portland, Ore.
20 12 c
Rio de Janeiro
21 17 c
Riyadh
41 28 s
Rome
24 16 t
Salt Lake City
34 21 s
San Diego
22 18 pc
San Francisco
21 13 pc
San Juan
31 26 pc
Santiago
16 4 s
Santo Domingo 31 24 pc
Sao Paulo
16 7 c
Seattle
19 10 c
Seoul
29 18 pc
Shanghai
26 21 c
Singapore
30 26 pc
Stockholm
15 5 pc
Sydney
21 13 pc
Taipei
31 26 t
Tehran
35 22 s
Tel Aviv
27 21 s
Tokyo
25 20 r
Toronto
19 8 s
Vancouver
18 11 pc
Washington, D.C. 26 15 s
Zurich
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Ice
Tomorrow
Hi Lo W
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39 27 t
25 17 pc
36 22 pc
19 8 sh
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44 31 s
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POSTSCRIPTS | By Samuel A. Donaldson

Across
1 Letters
associated
with letters
5 Put a strain on
9 Home to many
commuters
14 Who wants my
jellyfish? Im not
sellyfish! writer
15 That smarts!
16 Barber creation
17 Flavoring for the
liqueur prunelle
18 Practicing at a
leisurely pace?
20 Loopy fabrics
22 Apostrophized
affirmative
23 DeVry rival
24 Ruler of the
afterlife
25 Org. that
watches TV
broadcasts
26 Foxtrot
preceder
27 Extols the
virtues of a big
oil concern?
30 His or her, to
Henri
31 50-50, e.g.
32 Taking after
34 Participants in a
breast cancer
awareness race?
40 Palindromenamed 1975 hit
from a
palindromenamed band
41 Plan for later
yrs.
42 Shtick
44 Aiming aid on
the green?
49 Overexertion
indication
52 Satisfied
sounds
53 Call for a ring,
perhaps
54 Wild West
55 The Oval
Portrait
writer
56 Spade mashie,
modernly
57 Research the
cost of
razorbacks?
60 Practical
61 Tempted
62 Brouhahas
63 City of northern
Hungary
33 Trading that
exploits cost
differences
35 Not gonna
happen
36 Home of the
Big 12s Wildcats
37 Like some verbs:
Abbr.
38 Most inclement
39 Stole gas,
perhaps
43 Many Taylor
Swift fans
45 Sometime home
of Georgia
OKeeffe
46 2007 Ken Burns
documentary
47 Saxophonist
Beneke
48 Hunts Mad
About You
co-star
49 More than
adequate
50 Wasnt
indifferent
51 Friend of a
goatherd named
Peter
55 Stock holders
56 Superior sort
58 Guest
accommodation
59 Altar agreement
64 Fixes a draft
65 Part of Founding
Father Morriss
signature
66 Cabs, e.g.
Down
1 Uses a snake on
2 Pitching pro
3 Dermarest target
4 Onetime co-host
of Barbara, Joy
and Whoopi
5 Composes for
publication
6 Sinuous
swimmers
7 Tempeh base
8 Jerk
9 Cranberry farm
areas
10 Prosperous
periods
11 Object of
veneration
12 Hot stock
13 Handled
19 Good shot!
21 Graftons ___
for Innocent
25 Ford pickup line
26 Marie Claire
shelfmate
28 Nurse
29 What a pulldown
targets
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
Hi
18
20
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31
43
24
37
35
20
19
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2016 Dow Jones & Co. Inc. All rights reserved. 6DJ3504
Rain
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City
Amsterdam
Anchorage
Athens
Atlanta
Baghdad
Baltimore
Bangkok
Beijing
Berlin
Bogota
Boise
Boston
Brussels
Buenos Aires
Cairo
Calgary
Caracas
Charlotte
Chicago
Dallas
Denver
Detroit
Dubai
Dublin
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Frankfurt
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spite facing only 10 men for most of

the game, the Three Lions offense
never looked particularly dangerous
and Rooney struggled to link the
play to Kane and Vardy up front.
Instead, Rooney forced those two
players to move out wide any time
he surged forward. And there was
the same old problem. Rooney found
himself at the pointy end of the attack instead of his sharper teammates. We didnt have many
chances between us, so its obviously
something we are working on,
Rooney said.
Rooneys steady decline looks
even steeper against the speed and
budding talent in the England squad
around him. The Three Lions, who
havent made a tournament semifinal since Euro 1996, have finally realized what the rest of the Europe
figured out a decade ago: the most
successful national teams tend to
build around a young core. Englands
squad is the youngest at Euro 2016.
It is a young squad, Hodgson
said. I think that is an advantage
because, when you have had a lot of
failures, it does weigh on you.
The WSJ Daily Crossword | Edited by Mike Shenk
Weather
Shown are todays noon positions of weather systems and precipitation. Temperature bands are highs for the day.
dropped into central midfield.

To make it as a forward, you
have to be so good and fast to make
a difference, de Boer said. I could
turn people, I could dribble people,
but I didnt have that speed.
[Rooney] is a little bit in that position now.
Make no mistake, central midfield
isnt a retirement home. You might
not need an Olympic sprinters speed
to play there, but the position remains the most physically demanding on the field. Your area of responsibility extends from the edge of
your own penalty area to the edge of
your opponents, an 80-yard stretch
that requires constant patrolling.
Defensive responsibilities are
greater, too. Rooney must be involved with winning the ball back
and spawning attacks. The biggest
challenge is when you dont have the
ball, De Boer said. You have to run
back much more.You have to watch
the ball and your man.
The difficulties of recasting
Rooney as a midfielder were on
show Friday night in Englands final
tuneup game against Portugal. De-
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P2GW161000-0-B00100-1--------AL
BUSINESS & TECH.
Key to Succession Success
Those with long-term plans have smoother transitions BUSINESS | B4

2016 Dow Jones & Company. All Rights Reserved.
LONDONThe
political
spectacle surrounding the collapse of British retailer BHS
intensified Wednesday after
its chief executive told British
lawmakers that the companys
owner threatened his life.
CEO Darren Topp told a
British parliamentary hearing
that owner Dominic Chappell
threatened him after he queried a 1.5 million ($2.2 million) transfer out of the ailing
retailer. Mr. Topp said Mr.
Chappell owned a gun.
Asked by The Wall Street
Journal whether he had
threatened to kill Mr. Topp,
Mr. Chappell said only: I do
not have a gun. Ive never had
a gun.
Mr. Chappell, a former racecar driver whose company is
called Retail Acquisitions
Ltd., bought BHS for 1 last
year from billionaire retailer
Philip Green.
BHS was once a cornerstone of British retailing, but
like many other retailers it has
struggled amid the rise of online shopping. Last week, administrator Duff & Phelps announced that the company
was to be wound down, leaving more than 11,000 jobs at
risk.
Asked about the

alleged threat, BHSs
ex-owner said: I do
not have a gun.
Mr. Topp said of his conversation with Mr. Chappell: I
said to him, That is theft.
He basically said, Do not
kick off about this, Darren, Ive
had enough of you telling me
what to do over the last few
months. Its my business, I do
what I wantand if you kick
off [protest] about it Im going
to come down there and kill
you.
In later testimony at the
same hearing, Mr. Chappell
said that the money was being
held in trust for BHS to pay its
advisers. Mr. Chappell said
BHSs owners felt very
strongly that Mr. Topp wasnt
carrying out their wishes to
make the appropriate payments. When I got assurances
from Darren Topp that those
payments would be made, I returned the money, the owner
said.
Mr. Chappell told the hearing he had spoken with headhunters about replacing Mr.
Topp. We were going to sack
him, he said.
Mr. Chappell faced hours of
rapid-fire grilling by lawmakers on Wednesday during
which he sought to explain the
circumstances under which he
Please see BHS page B4
Thursday, June 9, 2016 | B1
China Chases German Tech Firms

BY WILLIAM WILKES
FRANKFURTChinese companies are on course to set record investment levels in Germany this year, fueling
concerns about the country
losing hold of its most innovative and technologically advanced companies.
Since the start of the year,
Chinese investors have sought
to acquire German companies
at a rate of roughly one a
week, according to data provider Dealogic.
They have offered to buy 24
companies, less than six
months into 2016, and at this
pace will soon surpass the record 28 German acquisitions
racked up in 2014.
The deals have already
achieved a new high in terms
of spending.
By mid-May, Chinese investors had offered the equivalent
of $9.1 billion for German companies, well beyond the record
$2.6 billion splashed out in
2014, according to Dealogic.
Behind the surge are Chinas
rising labor costs and shifting
demographics, which have
slowed domestic growth.
Now that Chinas wage advantage has gone, the government has realized its important to create world leaders in
markets, to build the empire
basically, said Andreas Grille,
a principal in consultancy Roland Bergers investment-banking practice.
The splurge is drawing attention less for the sums involved than the targets, some
of which are considered piv-
A Kuka robotic arm worked on a Mercedes in Germany in January.

otal to Germanys ambitions in
manufacturing and engineering technology. Several are
touted as crucial players in a
national initiative to digitize
manufacturing and link facto-
ries to consumers via the internet, called Industrie 4.0.

The transactions also come
at the same time European industry more broadly is complaining about difficulties do-
ing business with China. The

European Union Chamber of
Commerce in China, representing 1,600 companies, said
Monday that the environment
there is becoming more hostile toward foreign companies, and remains skewed in
favor of domestic competitors.
We completely open up our
markets, but the Chinese dont
open theirs to us. That could
prove fatal in the long run,
said Daniel Bauer, spokesman
for SdK, a German investorprotection association.
The deal that has irked Germany most is a $5 billion bid
by Midea Group Co., a Chinese
appliance maker, for robotics
specialist Kuka AG.
It is the latest example of a
Chinese company seeking to
Please see CHINA page B2
LOral Tries On Smaller Packets for Size

After 20 years in India,
cosmetics brand is
broadening its reach
to the mass market
BY PREETIKA RANA
MUMBAIAs
Jean-Paul
Agon, LOral SAs chief executive, drove around rural Indiapeeking into homes and
stores last yeara harsh reality sunk in: Small is big in the
South Asian nation.
The French cosmetics brand
had been sticking with a marketing campaign aimed at Indias most affluent for years.
But after 20 years in Indias
booming beauty and personalcare market, LOral has had
trouble pushing its market
share higher than 4%, according to Euromonitor International. So the owner of
Lancme, Body Shop and
other brands says it has now
entered a new phase of peddling its products in India
selling smaller packets to
poorer consumers.
LOrals transition to tinier
packaging shows how growth
in Indiaoften hailed as one
of the last great untapped
marketscan be elusive and
complicated.
It also shows how it will be
years before it is profitable
enough for companies to offset slowdowns elsewhere.
Unilever PLC, Procter and
Gamble Co. and other multinational companies sparked
what has been dubbed the sachet revolution back in the
1990s. They packaged shampoo and detergent in tiny plastic bags, hoping Indian consumers would snap up packets
which usually cost less than
an nickeland eventually upgrade to full-size versions.
That didnt happen.
Indians now buy more sachet-size shampoos, conditioners and other products than
regular-size products according to Nielsen, helping convince higher-end brands like
LOral they have to shrink
A cosmetic store employee shows LOral products to a customer. The brand wants to gain 150 million consumers in India by 2020.
sizes to have a chance at capturing a significant slice of
this increasingly important
market.
More than half of Indias
personal product sales by volume, last year, came from
small packs, says Euromonitor.
In China and Brazil, such small
packs accounted for less than
a third of sales volume. In the
U.S. and the U.K., small-size
servings make up less than a
fifth of sales volume.
Last year, a quarter of the
worlds 4.4 billion units of
small-size personal-care products were sold in India, making it the biggest player in this
market. Indonesia, which
shares a similar demand for
small packages, came a distant
second with a 13% share of the
global sales volume.
Traditional mom-and-pop
shops still dominate the landscape in countries such as In-
dia and Indonesia, and the

limited space in these tiny Mini Merchandise, Massive Market
storefronts means it is easier Most personal-care products in India are sold in small packets.
to display sachet-size selec- Share in the world's small size
Share of small packs in each country's
tion of products. Executives personal-care sales volume, 2015
personal-care sales volume, 2015
and analysts say Indiathe
Indonesia
worlds second-most populous
62%
nation and where hundreds of
India
millions of people live below
56%
39%
25%
$2 a dayis becoming a testOther
India
Brazil
ing ground for new ideas.
29%
If it succeeds in India,
13%
Japan
there is a great chance it will
Indonesia
28%
succeed in other developing
China
countries, said Vijay Udasi, a
5% 8% 10%
18%
senior vice president at NielU.S.
U.S. China Brazil
sen in India, referring to the
17%
countrys growing spread of
shrinking products from candy Source: Euromonitor International
bars to instant noodles.
Unilever offers a fingertip- Ferrero SpAs best sellers is of LOrals Indian business.
size pot of Ponds cold cream, tiny Tic Tac boxes that hold
Small packs werent a
British Tobacco PLCs Indian less than 10 breath mints.
prominent part of the compartner has shaved its cigaYou cannot exist, if you panys portfolio until a few
rettes down to 2 inches, Coca- dont have a selection of small years ago. Previously, Alain
Cola Co. has halved the size of packets in India, said Jean- Evrard, then managing direcPlease see L'ORAL page B2
its standard bottle and one of Christophe Letellier, the head
ment for remuneration reports.

Abstentions can be viewed
as a milder form of protest.
John Hood, the head of

WPPs compensation committee, said in the companys annual report that while the
PETER NICHOLLS/REUTERS
WPP PLC shareholders approved the pay package of

Martin Sorrell after the advertising groups founder and
chief executive faced another
sizable revolt over the issue.
Mr. Sorrells received 70.4
million ($102.4 million) in
compensation in 2015, up 65%
from the prior year, an
amount that some shareholder advisory groups called
excessive and unacceptable ahead of the meeting.
At Wednesdays meeting,
33.5% of investors voted
against the pay package, excluding abstentions. Among
most institutional shareholders of U.K.-listed companies,
the default vote is traditionally cast in favor of manage-
FINANCE | B5
Sorrell to Get Pay Deal Despite Revolt

BY NICK KOSTOV
New Rulers
At Greek Banks
DIPTENDU DUTTA/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY PHILIP GEORGIADIS
AND GILES TURNER
MONEY &
INVESTING
KRISZTIAN BOCSI/BLOOMBERG NEWS
BHS Chief
Says He
Got Death
Threat
INSIDE:
Martin Sorrells pay package was opposed by 33.5% of investors.
value of Sir Martin Sorrells

award is very large, it was
the result of an outstanding
set of returns to share owners. WPPs shares rose 16%
in 2015.
Shareholder revolts over a
number of issues, not least
pay, have become more common in recent years. A majority of Smith & Nephew PLC
and BP PLC investors, for instance, symbolically voted
against their executive pay
packages for 2015, while
Shire PLC said investors
holding 49% of votes opposed
its boards remuneration report.
Theres a broadly held
viewperhaps not quite reflected by the [WPP shareholders] votethat this is an
Please see WPP page B2
GMs Marketing Blitz

Targets Ford Trucks
Facing slowing sales of its
Chevrolet Silverado pickup
truck and other models, General Motors Co. launched a
broadside against Ford Motor
By Mike Spector,
Christina Rogers
and Gautham Nagesh
Co. that questions the durability of its crosstown rivals
most profitable vehicle.
In a marketing blitz on
Wednesday, Chevrolet said lab
tests and other demonstrations show the Silverados
high-strength steel bed better
withstands damage than the
stamped aluminum bed in
Fords F-150 pickup truck.
GM ads show loaders
dumping concrete blocks in

both beds, punching holes in
the F-150s bed while only
scratching and denting the
high-strength steel bed of the
Silverado. The demonstrations
were done without bed liners
protecting the trucks.
When youre the market
leader for 39 years, competitors sometimes try to take
shots at you with marketing
stunts, a Ford spokesman
said. He added that the F-150s
high-strength, military grade,
aluminum alloy cargo box
provides leading strength, durability and corrosion resistance, among other benefits.
The marketing offensive,
rolling out in print and televiPlease see GM page B2
P2GW161000-0-B00200-1--------AL
B2 | Thursday, June 9, 2016
INDEX TO BUSINESSES
A
Airbnb..........................B8
Amazon.......................B3
Amazon.com ............... B3
Anheuser-Busch
InBev.........................A2
Arcadia........................B4
Gazprom......................B3
General Motors...........B1
Goldman Sachs GroupA2
Bank of America.........B7
Bank of TokyoMitsubishi UFJ..........B7
Barclays.......................B8
Beijing Enterprises
Holdings....................B2
BHS..............................B1
BMW...........................A2
BSI...............................A2
C
Credit Suisse Group ... B8
D
Daimler........................A2
Dell..............................B3
Deutsche Bank............B8
Dropbox.......................B3
E-F
EMC.............................B3
Evergreen Holding
Group.........................B5
Ford Motor..................B1
Piraeus Bank...............B7
H
Hewlett Packard
Enterprise.................B3
J Sainsbury.................B8
K
KUKA...........................B1
L
Lidl...............................B8
L'Oreal....................B1,B3
M
Macy's.........................B8
Midea Group ............... B1
Mitsubishi Motors......B2
Mitsubishi UFJ Financial
Group.........................B7
N
National Bank of
Greece.......................B5
Nifco............................A2
Nissan Motor..............A1
O-P
1Malaysia
Development ............ A2
R
Rakuten.......................B3
Retail Acquisitions.....B1
RWE ............................ A2
S
Sky Network
Television..................B3
S&P 500 Index............B5
Sports Direct
International.............B4
Suzuki Motor..............B2
Sygenta.......................B2
T
Tata Motors................B3
Tech Pro Technology
Development.............B8
Telefnica....................A2
Toyota Motor..............A2
Trump Hotels..............B5
U
UBS Group...................B8
UEFA............................A5
V
Vodafone.....................B3
Volkswagen.................B2
W
WPP.............................B1
INDEX TO PEOPLE
A
Agon, Jean-Paul..........B1
Aikawa, Tetsuro..........B2
Ashley, Mike...............B4
Martin, Barnaby ......... A1
Gabriel, Sigmar...........B2
Green, Philip ............... B1
Price, Quintin..............B8
Bezos, Jeff..................B3
Buell, Samuel..............B5
Honda, Osamu ............ B2

Houston, Drew............B3
Sallas, Michalis...........B7
Sorrell, Martin............B1
Stadlmann, Markus....A2
Chappell, Dominic.......B1
Cryan, John.................B8
Katseli, Louka.............B5
Suzuki, Osamu............B2
D
Danziger, Eric..............B5
Suzuki, Toshihiro........B2
Letellier, JeanChristophe.................B1
Topp, Darren ............... B1
Mairone, Rebecca ....... B5
Whitman, Meg............B3
ERIC BELLMAN/THE WALL STREET JOURNAL
Folkerts-Landau,
David.........................A2
LOral sells small packages of hair color, face wash and shampoo.
LORAL
Continued from page B1
tor for LOrals Africa, Orient
and Pacific zone told The Wall
Street Journal in 2007: We
dont do poor products for
poor people.
LOral now sells single-use
sachets of LOral Paris shampoo, tiny tubes of mens face
wash, and a petite pouch of
Garnier hair color that sells
for 60 cents. The company is
rolling out more mini merchandise this montha new
range of 4-cent shampoo sachets infused with ingredients
such as lavender and green
tea. Mr. Letellier says LOral
had successfully established itself as an aspirational brand
out of reach of the average Indianso it started to reach
out to the mass market it had
once ignored.
A visit to India by LOrals
chief executive Mr. Agon in
January 2015 helped solidify
the move. On his previous
trips to India, Mr. Agon typically visited city stores. But on
this latest trip he went beyond
city limits, stopping at shops
in the smaller towns in the
western state of Gujarat. He
noticed that very few stores
would carry bottles, said Mr.

Letellier, who accompanied
him. LOrals smaller offerings
are already paying big dividends. Small packs now account more than a third of its
sales volume in India and its
shampoo sachets and haircolor pouches are among its
best sellers.
The French company is
hoping to capture 150 million
consumers in India by 2020,
roughly four times its current
base. LOrals early success in
Indias sachet-sized market
has also inspired it to introduce hair color pouches in
Kenya and South Africa.
At the small mom and pop
stores, the presence of LOral
products is pushing consumers
to upgrade.
Instead of moving from
the sachet of [Unilever shampoo] Clinic Plus to the bottle
of Clinic Plus, they would go
from the sachet of Clinic Plus
to the sachet of LOral Paris,
said Mr. Letellier.
Rita Kumari, a nanny who
earns $120 a month working
for an Australian family in
New Delhi, recently switched
from a Unilever shampoo to a
LOral sachet. The people I
work for use this brand, so I
wanted to try it, she said
about LOral.
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Shake-Up at Suzuki Gains Steam

BY ALEXANDER MARTIN
TOKYOSuzuki
Motor
Corp.s Osamu Suzuki, one of
the auto industrys longestserving leaders, said on
Wednesday he would give up
his chief-executive title to
atone for fuel-economy mismeasurement.
The decision by Mr. Suzuki,
86 years old, accelerates a
handover to his son already
under way. He is the second
auto-industry chief in Japan
pushed out by the industrys
fuel-economy scandal: Mitsubishi Motors Corp.s president,
Tetsuro Aikawa, is set to resign after the company admitted to manipulating data and
using an unauthorized testing
method on some models for 25
years.
I apologize once again for
the trouble we caused, Mr.
Suzuki said at a news conference. He will give up the CEO
title at a shareholders meeting later this month, he said,
but remain chairman to fulfill
his responsibility to prevent a
recurrence of the problem.
Mr. Suzuki, who had been
at the helm of the company
since 1978, last year ceded the
presidency to his son, 57-yearold Toshihiro Suzuki, easing
investor concerns over succession plans at Japans fourthlargest car maker.
CHINA
Continued from the prior page
buy into Germanys pioneering
technological and research
prowess.
I think the Kuka takeover
raises some questions, said
Roland Klose, a professor at
FOM Institute of Strategic Finance in Essen, Germany.
Automation and Industrie
4.0 are supposed to be of longterm, strategic importance for
German industry, [and] the
4.4 billion for Kuka isnt
much money for access to key
technologies.
Shareholder associations
and German unions have also
expressed concern, and last
week German Economics Minister Sigmar Gabriel proposed
forming a European consortium to launch an alternative
bid for Kuka.
On Wednesday Mr. Gabriel
suggested tougher rules for investors from restrictive economies, without mentioning
GM
sion ads, marked a significant
escalation in the perennial
truck battle among Detroits
auto makers.
Fords F-series trucks are
the U.S.s best-sellers, with
more than 750,000 delivered
annually in recent years. Sales
of F-series trucks this year are
up more than 7% through May,
outpacing flat Silverado sales.
GM said it fares well in direct
retail sales to consumers.
GM and Ford often take aim
at one another.
But the Chevrolet
campaign ratcheted
up the rhetoric ahead
of the crucial summer selling months,
unequivocally taking
shots at the F-150s
strength and quality
in lab tests and demonstrations in front
of prospective truck
Mary
buyers.
Its an all-out
war, said Dave Sullivan, an
analyst at research firm AutoPacific Inc. There is nothing
that appears to be off-limits
now.
Whether consumers will respond remains to be seen. Car
shoppers often home in on assessments from Kelley Blue
Book and other third-party researchers rather than advertisements when making buying decisions. GM officials said
they didnt have third-party
research showing that the
steel bed is more durable than
aluminum, but pointed to
other testing showing aluminum is more costly to fix.
Ford rolled out F-150 trucks
with aluminum at the end of
2014, attracted by the lighter
metals ability to, among other
things, improve fuel economy
and handling. The Silverado
uses aluminum in some truck
parts, but not the bed. GM executives on Wednesday insisted the Silverados bed is
superior for hauling tools and
KAZUHIRO NOGI/AGENCE FRANCE-PRESSE/GETTY IMAGES
These indexes cite notable references to most parent companies and businesspeople
in todays edition. Articles on regional page inserts arent cited in these indexes.
BUSINESS NEWS
Osamu Suzuki will surrender his CEO title, but remain chairman.
The company said Executive
Vice President Osamu Honda
will also step down to take responsibility, and announced
cuts in executive compensation. Board members wont get
bonuses for the year ended in
March 2016 and the elder Mr.
Suzuki will take a 40% salary
cut and his son a 30% cut,
both for six months.

The scandal that has engulfed the company in recent
weeks is over the use of a
testing method not approved
by Japanese regulators, in
which Suzuki tested individual
vehicle components to estimate driving-resistance data
without conducting actual
China specifically.
We must consider we have
one of the most open economies in Europe and are competing with companies that
dont come from open market
economies, Mr. Gabriel said.
Other recent proposed or
completed Chinese deals in
Germany include China National Chemical Corp.s $1 billion takeover of KraussMaffei
Group, a cutting-edge equipment maker that processes
plastics and rubber, and Beijing Enterprises Holdings
Ltd.s $1.59 billion takeover of
EEW Energy from Waste,
which operates high-tech
waste-incineration plants that
produce electricity, heat and
steam for industrial use.
Some Germans say their
country is naive to leave its
markets open to Chinese companies. When Kukas development partners know its ownership has changed, they may
reconsider their cooperation
on certain innovations, given
some of the information flows
could be directed back to the
Chinese owner, said Mr. Grille

at Roland Berger.
Germany ranks second in
investment value of Chinese
acquisitions in Europe this
year behind Switzerland, according to Dealogic. Switzerlands 11 Chinese deals, valued
at $48.81 billion, were domi-
other materials.
GMs salvo comes amid significant market-share declines
as the popularity of high-margin pickup trucks and sportutility vehicles surges, spurred
by cheap gasoline and low interest rates. The companys
share of the U.S. new-vehicle
market in May dropped to
15.7% from 17.9% a year earlier.
The campaign also comes
just months before Ford
launches an aluminum F-250, a
heavy-duty version of the
profitable F-series truck. GM
has recently ceded ground to
Ford in the competitive race
for commercial and government fleet sales.
GM
attributes
some of its marketshare losses to a deliberate pullback in
less profitable rentalcar sales. But the result is a fierce battle
that
encompasses
pickup trucks and
SUVs. GM Chief Executive Mary Barra said
Barra
on Tuesday before
the companys annual
shareholders meeting that the
auto maker remains focused
on profitable retail sales and
reducing rental deliveries regardless of the effect on market share. She said the strategy would better position GM
for a potential economic
downturn. But doing so could
curb GMs revenue and profit
in the short term.
Investors, meanwhile, are
cool to GMs stock despite record profit and sales, with
shares trading below the auto
makers 2010 initial public offering price of $33. Investors
are concerned that car sales,
which reached a record 17.5
million in 2015, have peaked,
and fears over the timing and
severity of another downturn
have become commonplace.
Mr. Sullivan, the AutoPacific analyst, said the GM
truck demonstrations werent
overly illuminating. Its just
one of the characteristics of
aluminum, he said. Having a
bed liner is a must.
The deal that has

most irked Germany
is a bid by Chinas
Midea for Kuka.
nated by a $43 billion bid by
China National Chemical
known as ChemChinafor
Swiss agrochemical company
Sygenta AG in February.
So far this year, 24 of a total 119 pending or completed
Chinese acquisitions in Europe
have been in Germany, putting
it ahead of 15 each in France
and the U.K., according to Dealogic. Last year showed a similar pattern.
China is looking to im-
coasting tests. Car makers are

required to submit a range of
fuel-economy data, including
from on-road test driving, to
the transportation ministry.
Suzuki, which last week
raised the number of models
involved to 26 from 16, has
said some 2.14 million vehicles
sold in Japan are affected.
However, it also has said tests
using the authorized method
show all the models have better fuel economy than listed in
its catalogs, and maintained
that it had no intention of inflating mileage.
Auto makers selling vehicles in Japan were required to
report to the nations regulators last month whether they
had violated mileage-related
rules.
Suzuki said it provided the
transportation ministry on
Wednesday with details of its
measures to prevent a recurrence of the problem. It said it
would renovate its on-road
test-driving course, improve
training and strengthen checking systems.
Auto makers globally have
fallen under scrutiny over
mileage and emissions data, a
problem that first came to
light last year when Volkswagen AG said it used illegal
software on some diesel cars
to cheat on U.S. emissions
tests.
prove its advanced manufacturing capability, with more
digitization and automation.
German firms are world leaders at this, said Margot Schller, senior research fellow at
the GIGA Institute of Asian
Studies in Hamburg.
Germany and Europe will
have to get used to Chinas increased presence, said Yi Sun,
a partner at Ernst & Young,
where she leads a team advising Chinese companies on investing in Germany, Austria
and Switzerland.
Chinese companies are getting more successful at takeovers, especially because these
firms are getting experienced,
Ms. Sun said. There are
plenty more deals in the pipeline.
The German takeovers are
part of a buying campaign that
has made China the worlds
top foreign acquirer to date in
2016.
If China finishes in first
place, it would dislodge the
U.S. from the top spot it has
held since 2007.
Rising Revolt
Anger over executive pay in the U.K. has triggered a series of

nonbinding shareholder rebellions this year.
Shareholder votes against pay proposals
BP
= 10%
Smith & Nephew
53%
59%
Pay package includes a
20% pay rise for CEO Bob
Dudley despite a 2015
loss of $5.2 billion.
Board moved to pay 2.1 million

in bonuses to 60 executives
despite the company missing a
shareholder-return benchmark.
Shire
Anglo American
49%
42%
CEO Flemming Ornskovs base pay

was increased 25% to $1.69 million in
2015, bringing his total remuneration
for the year to $21.6 million.
CEO Mark Cutifani is

slated to receive total pay
of 3.4 million, including
a 966,000 bonus.
WPP
Royal Dutch Shell
33%*
CEO Martin Sorrell
received a 65% pay
hike to 70.4 million.
14%
CEO Ben van Beurden's total
2015 pay, including pension, was
5.6 million. Base salary was
1.4 million; bonus, 3.5 million.
Note: 1 = $1.45 1 = $1.14

*Does not include abstentions
Source: the companies, staff reports
WPP
extraordinary amount of
money to give to one person,
said Stefan Stern, Director of
the U.K.s High Pay Centre, an
independent think tank in
London.
WPP said the size of Mr.
Sorrells pay was linked to
the formulaic application of a
long-term incentive program
that WPP investors overwhelmingly backed in 2009.
Mr. Sorrell, who has led
WPP for more than 30 years,
received a base salary of 1.15
million for 2014.
His pay packet also included a hefty long-term incentive stock award of 62.8
million and a 4.3 million
short-term bonus, as well as
pension contributions and
other benefits.
In 2012, when 60% voted
against Mr. Sorrells compensation, a new plan was set up

to cap Mr. Sorrells total pay
starting in 2017.
Ahead of the vote, Pensions & Investment Research
Consultants Ltd., a proxy adviser, told WPP shareholders
to oppose Mr. Sorrells pay,
while Institutional Shareholder Services Inc. said
shareholders should back it.
Hermes Investment Management, a WPP shareholder,
said that Mr. Sorrells pay
was excessive and made it
highly uncomfortable.
Separately, WPP said sales
trends had slowed slightly in
April. Comparable net sales
which strips out currency
changes, acquisitions and disposalsrose 3.1% in the first
four months of the year, compared with 3.2% in the first
quarter.
Ian Walker
and Nathalie Tadena
contributed to this article
P2GW161000-0-B00300-1--------AL
TECHNOLOGY
@wsjd | wsjd.com
Amazon to Spend $3 Billion in India Alphabet

Looks to
Announcement brings
e-commerce giants
planned investment
total to $5 billion
Connect
Wirelessly
BY GREG BENSINGER
BY JACK NICAS
PRADEEP GAUR/MINT/HINDUSTAN TIMES/GETTY IMAGES
Amazon.com Inc. plans to

invest an additional $3 billion
in India, which is emerging as
a critical area of growth for
the e-commerce giant.
Chief Executive Jeff Bezos
announced the plan at a meeting of business leaders Tuesday with the Indian prime minister, Narendra Modi, in
Washington. Amazon sees
huge potential in the Indian
economy, Mr. Bezos said in a
statement.
The announcement brings
Amazons total planned investment in India to $5 billion,
since it announced a $2 billion
infusion in 2014. An Amazon
spokesman declined to provide
details such as how the new
funds would be allocated or
over what period.
Amazon operates a pure
marketplace in India, due to local rules, selling only goods offered through its website by
third parties. It nonetheless
has warehouse and delivery
technologies there that are
particularly attuned to the local market, where internet connectivity can be spotty or nonexistent and many consumers
dont have credit cards.
At the technology-focused
Code Conference in California
last week, Mr. Bezos said Amazon does most of its own deliveries to customers doors in India, in contrast to the U.S.
where it relies heavily on the
U.S. Postal Service, United Parcel Service Inc. and others.
Workers at an Amazon pickup point in New Delhi. The online retailer operates a pure marketplace in India due to local rules.
Were adapting to the local
model, Mr. Bezos said at that
conference, noting Amazon has
smaller and more numerous
warehouses than other markets. In China, Amazon didnt
sufficiently model its business
to suit local preferences, he
said, and the company has
struggled to gain market share
there. Overall, Amazons international segment, which includes all markets outside
North America, is growing
much more slowly than its
home base.
Overseas sales rose 5.7% in
2015 to $35.4 billion, compared

with 25% in North America to
$63.7 billion. Amazon also
logged a $91 million operating
loss abroad, compared with a
$2.75 billion operating profit in
its home market. Amazon
doesnt break out results by
country. Amazon said last summer it planned to open a data
center in India to serve what it
said were tens of thousands of
customers in the worlds second-most populous country.
Amazon faces competition
in India from local startups
Flipkart Internet Pvt., which
was valued at $15 billion as of

last June, and Snapdeal.com,
with a valuation of about a
third of that, according to Wall
Street Journal data.
Amazons planned investment is especially large in
comparison to Indias still tiny,
but rapidly growing online
shopping market. Indians
bought $16 billion worth of
goods online last year, up from
$6.3 billion a year earlier, according to Morgan Stanley estimates.
Amazon is injecting money
into its Indian arm at a time
when its local competitors

have found it difficult to raise
cash.
Investors have tightened the
purse strings in recent months
as startups burned through
millions of dollars every month
funding deep discounts on everything from smartphones to
religious idols. In response, local e-commerce companies
have reined back on discounts,
laid off workers and reneged
on offers to new hires in an attempt to start making a profit.
Sean McLain
BY DON CLARK
LAS VEGASHewlett Packard Enterprise Co. and Dropbox Inc., two prominent companies operating in separate
spheres of computing, are
teaming up to help each other
expand their business.
The companies disclosed on
Tuesday that HP Enterprise
was the hardware supplier behind a shift in Dropboxs technology strategy. HP Enterprise
modified some of its standard
computers to help Dropbox
store customer data in its own
facilities, part of a more than
two-year effort to end the filesharing services reliance on
Amazon Web Services by
moving the data in-house.
Their alliance, discussed by
the two companies chief executives at an even here, comes as
HP Enterprise Chief Executive
Meg Whitman is eager to prove
her company can compete
against low-price vendors from
Business
Watch
SKY NETWORK TELEVISION
Company Is in Talks
On Vodafone Tie-Up
Pay-television operator Sky

Network Television said it is in
discussions with Vodafone
Group PLC about a potential
transaction involving a combination of Sky and Vodafone New
Zealand.
Sky Network Television said
the discussions are ongoing and
incomplete and may not result in
a transaction occurring.
Trading in Sky Network Television shares was halted ahead
of the announcement. They last
traded at 4.47 New Zealand dollars (US$3.12).
Kate Geenty
Asia for sales to Web services

firms. Such customers have
continued their computer purchases while other companies
have slowed outlays.
For Dropboxone of many
Silicon Valley startups whose
huge valuations have ebbed
latelythe relationship with HP
Enterprise is designed to help
it find more paying customers
at companies.
Dropbox says 500 million
people have signed up for its
service, which helps users
share and collaborate on documents. But the vast majority of
those people do so free.
Drew Houston, Dropboxs
CEO, said picking brand-name
hardware from a company like
HP Enterprise is important to
reassure potential corporate
customers concerned about
data reliability and security.
HPE is trusted by a lot of
customers, Mr. Houston said in
an interview. That helps us
scale even faster.
Rakuten will focus its e-commerce marketplace investment in

France and Germany as the businesses there have the scale and
potential for sustainable growth,
the company said.
Dubbed the Amazon.com of
Japan, Rakuten was created by
Hiroshi Mikitani in 1997 as a
small online marketplace. Since
then, the Japanese company has
grown into an e-commerce giant
with about 12,000 employees
and more than 42,000 shops.
Faced with limited growth
prospects in Japans shrinking
market, the company has been
working to translate its domestic
success into overseas sales.
Alexander Martin
MICHAEL NAGLE/BLOOMBERG NEWS
Dropbox, HP Enterprise Team Up to Build Out
HPE Chief Executive Meg Whitman is eager to prove her firm can
compete against Asian vendors.
Moreover, HP Enterprise recently became one of the
150,000 businesses that pay to
use Dropbox. The hardware
maker followed a pattern that
Dropbox has described for its
acquisition of other customers,
according to the companies.

HP Enterprise workers initially started using the service
in the office on an unpaid basis
but later the hardware maker
became a paying customer.
It has agreed to become a
JAGUAR LAND ROVER
The companys sales in May

rose 28% in China, 24% in Europe, 23% in the U.K. and 8% in
North America.
Santanu Choudhury
Tata Motors Unit

Posts Record Sales
Tata Motors Ltd.s Jaguar

Land Rover unit reported record
May sales of 44,946 units,
thanks to demand for its first
sport-utility vehicle, the F-Pace.
Mays sales were 18% higher
than the same month last year,
and the fifth straight month of
record sales for the Jaguar Land
Rover business.
Total sales rose 23% year
over year during January to May
to 245,100 vehicles. The robust
sales will cheer investors worried
about the impact of a slowing
Chinese auto market.
BRITISH EXIT
German Firms Wary

Of Votes Outcome
German companies fear rising

costs and higher complexity for
their businesses should the U.K.
vote in favor of leaving the European Union on June 23, a survey
conducted on behalf of Deloitte
and Germanys main industry association, BDI, showed Wednesday.
German industrys uncertainty about future business re-
lations with the U.K. is palpable,

said Markus Kerber, head of BDI.
Almost half of the 215 enterprises surveyed, representing
various sectors, anticipate increased complexity and higher
costs because of potentially new
and divergent regulations between the U.K. and the EU.
About 33% said the British exit,
or Brexit, would force them to
review their entire supply chains
for reorganization, while about
40% fear higher customs duties
for German companies.
Roughly 70% of companies
surveyed said they expected uncertainty on financial markets.
Natascha Divac
PIPELINE
Consortium Tenders
Pipe-Laying Contract
RAKUTEN
CHRIS RATCLIFFE/BLOOMBERG NEWS
Firm Plans to Close

U.K., Spanish Sites
Rakuten Inc., Japans biggest

e-commerce company, said Tuesday it will be closing its marketplaces in the U.K. and Spain as
part of a restructuring in Europe.
The U.K. and Spanish sites
are expected to close by the end
of August. Rakuten said it has
begun talking to employees
about the plans, while stressing
that it will continue to have a
strong presence in Europe.
sales partner, too, pitching the

service to its corporate customers, the companies said.
Dropboxs build-out of its
own internal storage capacity,
dubbed Magic Pocket, was a
massive effort designed to help
the company differentiate its
offerings from other cloud services, Mr. Houston said.
It is also expected to save
money, he said. One reason is
that it avoids the profit margin
included in Amazon Web Services price. Another is that it
allows Dropbox to reap the
benefits of falling hardware
prices more quickly, and requires HP Enterprise to modify
its systems to operate more economically by packing many
more disk drives in a server,
Mr. Houston said.
Financial terms of the hardware deal werent disclosed.
But both companies agreed
Dropbox drove a hard bargain
in seeking attractive pricing
from HP Enterprise.
Jaguar Land Rover had record sales in May amid strong demand for the F-Pace sport-utility vehicle.
The Nord Stream-2 naturalgas pipeline consortium has issued the first major tender for
its $11 billion project, which could
double supplies of Russian pipeline gas across the Baltic Sea to
Western Europe, according to
people familiar with the project.
The tender for the pipe-laying contractvalued at more
than $1 billionhas been sent
to contractors. Bids will be evaluated by the consortium, which
is led by Russias state-owned
Gazprom, on June 13.
The consortium plans to build
two natural-gas pipelines with a
combined capacity of 55 billion
cubic meters a year of gas that
will run some 1,200 kilometers
from Russia across the Baltic
Sea to Germany.
Kevin Baxter
Google parent Alphabet

Inc. wants to beam high-speed
internet wirelessly to homes,
using technology that it says
is cheaper than laying cables.
Alphabet Chairman Eric
Schmidt said at the companys
annual shareholder meeting
Wednesday that improvements
in computer chips and more
accurate targeting of wireless
signals have made point-topoint wireless internet connections cheaper than digging up your garden.
Mr. Schmidt said Alphabet
executives increasingly think
the technology can deliver internet connections at 1 gigabit
per second, equivalent to the
speed its Google Fiber unit
provides through fiber-optic
cables in five U.S. cities.
To give you an idea of how
serious this is, Mr. Schmidt
told shareholders, he met with
Alphabet Chief Executive
Larry Page, Chief Financial Officer Ruth Porat and others on
Tuesday to discuss the technology. Google Fiber has previously disclosed that it is
testing wireless technology in
Kansas City, the first city to
receive its high-speed internet
service, and hopes to have a
demonstration network operating there by next year.
The company said it is testing several wireless technologies, which could require users
to have special devices in their
homes to receive the signals.
Wednesdays shareholder
meeting proceeded as expected. Alphabets 11 directors
retained their seats, and six
shareholder proposals, including measures to require an independent chairman and disclose more information about
Alphabets lobbying, were
voted down.
Mr. Schmidt and Google cofounders Mr. Page and Sergey
Brin control a majority of Alphabets voting shares.
Dell Inc.
To Shed
Junk Bonds
BY SAM GOLDFARB
Dell Inc. was set to sell

$3.25 billion of junk-rated
bonds Wednesday, people familiar with the matter said, in
a major step toward financing
its acquisition of EMC Corp.
Having sold $20 billion of
investment-grade
secured
bonds last month and $5 billion of institutional loans last
week, Dell has made large
strides toward funding the acquisition. But Wednesdays
bond sale was still watched
widely, in part because of what
it says about the rebound in
demand for low-rated debt
since the high-yield market
was routed late in 2015.
As with the other bonds
and loans Dell has issued, the
unsecured bonds are generating strong interest from investors, who have expressed concerns about the long-term
prospects of Dells computerhardware business. Nonetheless, they are pleased with the
interest rates being offered
and optimistic Dell can reduce
its large debt load relatively
quickly using free cash flow.
Led by J.P. Morgan Chase &
Co., the unsecured bonds are
split between a five-year
tranche offered with a yield of
around 6.25% and an eightyear bond offered with a yield
of roughly 7.5%.
The bonds carry double-B
ratings, making them higher
quality by the standards of
junk-rated bonds. The average
yield
for
double-B
bonds Tuesday was 5.27%, according to Barclays PLC data.
Acquiring EMC, a leading
data-storage company with
valuable software holdings, is
Dells latest attempt to reshape
its business to make it less reliant on legacy hardware products, as spending shifts from
personal computers to mobile
devices and from corporate
data centers to off-premise
cloud services.
P2GW161000-0-B00400-1--------AL
BUSINESS NEWS
Succession Plan a Key to Success
Companies with a
long-term strategy for
replacing CEOs have
smoother transitions
SPARKS, Md. Lawrence E.

Kurzius laid out plans to replace
himself as chief executive of McCormick & Co. when he met with
the companys board in late January at its headquarters here.
The timing was unusual: It
was the week before the 58year-old had even started the
top job at the worlds largest
spice maker.
Succession planning gets
discussed early and often at
the 127-year-old manufacturer,
a lesson learned in part by the
unexpected death of a previous
CEO and heart problems that
forced the subsequent chiefs
premature exit. I didnt want
to go face down in my cereal
my last day of work, says
Alan Wilson, who on Feb. 1
handed the reins to Mr. Kurzius, a boyish-looking executive just three months younger.
McCormick uses many of
the same tools that other companies do: a long-term strategic outlook, regular assessments and job rotations for
senior executives, in addition
to hiring an outside leadership-development firm.
But McCormick directors
early involvement and a corporate culture focused on cultivating insiders for the top
job have kept transitions
smoother than elsewhere in
recent years. The process
works, says Michael Mangan,
lead independent director.
Many corporate boards fumble the changing of the guard,
widely considered their most
important duty. Power transfers recently have tripped up
Walt Disney Co., home builder
PulteGroup Inc. and teen retailer Abercrombie & Fitch Co.
Stock-market returns suffer
when large public companies
force out their CEOs, concluded a 2015 study by Strat-
JEFF LAUTENBERGER FOR THE WALL STREET JOURNAL
BY JOANN S. LUBLIN
AND THEO FRANCIS
McCormick CEO Lawrence E. Kurzius, left, and Executive Chairman Alan Wilson, who preceded Mr.
Kurzius as CEO. Succession planning gets discussed early and often at the worlds largest spice maker.
egy&, a consulting firm. Median relative total shareholder
return drops to -13% at those
companies in the year leading
up to the forced exit, compared with -0.5% in the year
leading up to planned successions, the study found.
CEO succession planning
isnt rocket science, says Noel
Tichy, author of the 2014
book, Succession, and a professor at the University of
Michigans Ross School of
Business. Yet 80% of the biggest U.S. companies get it
wrong because they fail to focus on the political and cultural fundamentals.
Disney lacks a No. 2 executive nearly 11 years into CEO
Bob Igers tenure following the
surprise exit of his expected
heir apparent Thomas Staggs
earlier this month. With few internal candidates, the board
must find an executive ready to
take command of the media giant in two years when the 65year-old Mr. Iger plans to retire.
Disney declined to comment.
Boards frequently dont

prepare to select a new chief
until a year or two before the
incumbent is slated to exit,
when its too late to develop
someone, says Deborah Rubin, a senior partner at RHR
International, the leadershipdevelopment firm that has advised McCormick for decades.
Boards increasingly are recognizing that risk. Only 48% of
783 board members polled last
year by PwC LLP said their
boards spend sufficient time
on CEO successiona sharp
drop from 62% in 2014.
At Abercrombie, there was
no serious talent development
in the organization. There were
no strong leaders below longtime CEO Mike Jeffries, says
Arthur Martinez, who joined as
chairman in 2014. We set the
train in motion on succession.
With sales slumping, the
company hired two executives
to lead its biggest brands that
year, and in late 2014 asked
the then 70-year-old Mr. Jeffries to leave. But neither new
brand president was ready to

be CEO. Mr. Jeffries couldnt
be reached for comment.
More than 500 days later, the
company still has no CEO and is
managed by a group of executives headed by Mr. Martinez.
One brand president left unexpectedly in December and the
other, Fran Horowitz, was promoted. She reports to Mr. Martinez, now executive chairman.
Many CEOs cant handle
the fact that they may have to
retire at some time and not
have all the trappings and
perks, says Robert Lawless,
who was 61 when he stepped
down in 2008 as McCormicks
CEO after 11 years. While in
charge, he insisted that fellow
directors tie his annual bonus
partly to succession planning.
Mr. Lawless set his target
departure date five years in
advance. I better have succession candidates ready or I am
not going anywhere, he recalls telling board members.
That same year, McCormick
bought Zatarains, a small spice
company led by Mr. Kurzius.

Mr. Lawless told him he could
be a long-shot candidate for
CEO, the younger man recalls.
That encouraged me to stay.
Mr. Lawless says he pushed
Mr. Kurzius to broaden his
management experience and
gave higher-ranked executives
challenging assignments. Directors chose Mr. Wilson, one
of those executives, as the
companys next leader in January 2008.
Among the written tips Mr.
Lawless gave him: You have
to start thinking about a succession plan. Mr. Lawless
says he brought up such planning every time he met with
the new CEO during his year
as nonexecutive chairman.
Mr. Wilson heeded him. He
briefed board members that first
year about how he hoped to plug
experience gaps for colleagues
who might fill his shoes after
eight to 10 years. In 2012, he and
the board narrowed the field to
Mr. Kurzius and two others.
RHR
identified
their
strengths and weaknesses
through psychological tests
and interviews. RHR coaches
advised each executive about
how to correct critical shortcomings and compared them
with outside talent.
Mr. Kurzius says he discovered he was less familiar to the
board than he realized because
he had spent so much time working on international operations.
During the next year, he met
with every director at least once.
McCormick directors liked
that Mr. Kurzius was really
open with the feedback he was
getting, according to Mr. Wilson. He says he preferred a
successor who was savvy
about emerging markets. The
company made Mr. Kurzius
president in January 2015, and
in December announced he
would become CEO.
Mr. Kurzius, who hopes to
shake up McCormicks consensus culture, isnt concerned
about being second guessed by
his former boss, now executive
chairman. Hes aware of the
hover factor more than anyone,
the new CEO observes.
The benefit of clarity

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2016 Dow Jones. All Rights Reserved. 6AO1563
BHS
bought the company, derived
profits and saw it founder. He
said: I am very upset there
are 11,000 that have now lost
their jobs.
Mr. Chappell acknowledged
that he had made a profit
from BHS, and said that he felt
he earned it.
He also told legislators that
Mr. Green, whose company Arcadia PLC sold BHS to Retail
Acquisitions, blocked a possible sale of the company to
British billionaire Mike Ashley.
Mr. Chappell said that in
the run-up to the collapse of
BHS he began conversations
with Mr. Ashley, the owner of
British retailer Sports Direct
International PLC, about a
possible sale.
BHSs ex-owner said

he was upset there
are 11,000 that have
now lost their jobs.
In testimony to lawmakers
on a separate matter yesterday, Mr. Ashley said he 100%
had wanted to buy BHS.
Mr. Chappell said Mr. Green
went insane when he discovered that the company was
talking to Mr. Ashley.
Mr. Green was unaware of
any bid by Mike Ashley/Sports
Direct, a spokesman for him
said.
BHSs collapse has caused
political debate, with several
parliamentary inquiries currently looking into the sale of
the company to Retail Acquisitions and the circumstances of
the chains demise.
Asked by the Journal what
he was going to do next, Mr.
Chappell said, Im going
home.
Delivering news and insight

on finance and markets
from London
Download on the App Store
P2GW161000-0-B00500-1--------AL
MARKETS DIGEST B6 | WEDNESDAYS MARKETS B7 | FINANCE WATCH B8
Lean Times Ahead

For U.K.s J Sainsbury
Bank of Tokyo Balks

At Dealing Japan Bonds
HEARD ON THE STREET | B8
INTEREST RATES | B7
2016 Dow Jones & Company. All Rights Reserved.
As of 4 p.m. ET
EUR/GBP 0.7836 0.33%
YEN/DLR 106.66 g 0.66% GOLD 1259.80 1.24%
OIL 51.23 1.73%
New Rulers at Greek Banks
European regulators
seek to depoliticize
lenders boards to
restore confidence
BY MAX COLCHESTER
AND STELIOS BOURAS
ATHENSEuropean authorities are seeking to replace one-
third of the board members at

Greeces major banks, among
the toughest actions by regulators since the financial crisis.
And Louka Katseli, chairwoman of National Bank of
Greece SA, is a major target.
The former socialist parliamentarian was named chairwoman last year, one of several
politicized appointments that
European regulators say saps
investors confidence in Greek

banks and makes it harder to
clean up a mountain of bad
loans.
Under pressure from international creditors, the Greek Parliament established rules for
who can and who cant serve on
bank boards, effectively banishing local business magnates and
former politicians. The rules are
extensive and complex. Direc-
tors must have worked in banking for at least a decade, for instance. But directors who head
committees that control decisions about risk and personnel
cant have worked in Greeces
financial sector in the past 10
years.
The result is a small pool of
eligible directors and a large
pool of frustrated elites. This
Please see GREECE page B7

3-MONTH LIBOR 0.65800%
10-YR TREAS 2/32 yield 1.706%
Greeks on Board
Greek bank boards have fewer independent directors

compared to major European lenders.
Percentage of nonexecutive directors on the board
EU banks*
60%
Alpha Bank
40%
Piraeus Bank
36%
Eurobank Ergasias
33%
National Bank of Greece
25%
*Top 25 median Note: As of May

Source: Nestoradvisors
Bonkers:
50-Year
U.K. Yield
Under 2%
Bonds in
China Are
Too Murky
For Some
BY JAMES MACKINTOSH
meted to silly levelsthe 40year bond yields 0.35%and

prompted the countrys pension funds and other big bondholders to look abroad for better income, depressing yields
elsewhere.
If the story were purely
about flows of money, it would
be a classic bubble. But it is
confused by the weakening
outlook for the global economy, at a time when several
major central banks have little
scope to cut rates further. A
weaker economy justifies
lower yields, but how much
lower? There is no right answer, but yields at present imply a really nasty outcome.
Japan offers one model for
investors. Holders of its 30year bond have made 32% in
the past six months, the most
since its 2003 bond bubble,
when they made 28% as the
yield dropped below 1%.
Yields are now much lower,
so those who bought the 30year, reinvested coupons and
rolled over into every new 30year issue would have made
money, gaining 47% since the
start of 2003. But it was still
better to be in shares, even
though they were still somewhat expensive at the time, as
the Topix index returned 129%,
including dividends.
In the short run, bonds look
like a repeat of last years
mini-bubble. German 10-year
yields reached a low of 0.03%
during the day Wednesday, so
after inflation buyers are almost certain to make a loss
and that doesnt count the
bloodbath if and when rates
eventually move higher.
The Problem With the Blame Game

BY CHRISTINA REXRODE
AND ARUNA VISWANATHA
Rebecca Mairone was either
a villain or victim of the financial crisis. The legal battle to
determine the answer shows
how hard it still is to definitively say who was responsible
for the housing bubble.
The 49-year-old mother of
two became a face of housingcrisis misdeeds when the Justice Department pursued civilfraud charges against her for
her work at Countrywide Financial Corp. A jury in 2013
found her liable, and a federal
judge ordered her to personally pay $1 million, making her
one of the few financial executives to be held to account for
the housing bust.
Until last month. A federal
appeals court threw out the

verdict against Ms. Mairone,
who is now divorced and goes
by her maiden name, Steele.
The court ruled the government hadnt proved her actions met the legal definition
of fraud.
For Ms. Steele, it was exoneration. In her first interview
since the 2012 case was filed,
Ms. Steele emphasized she had
done nothing wrong and denied
any mistakes in a controversial
mortgage-approval program
she helped create at Countrywide, called Hustle. When she
heard about the appellate ruling, she said, she texted her
daughter at high school, who
replied, Are you sure?
It was such a long time
coming, Ms. Steele said.
For the government, which
has gone after few executives

related to crisis-era acts, it
was a stunning setback.
For Edward ODonnell, a
former colleague of Ms. Steele
who filed two whistleblower
lawsuits alleging fraud at
Countrywide, one of which led
to the action against her, the
appeals-court decision didnt
change anything. He kept the
nearly $58 million he collected
in the other case.
The contrasting results
show the muddy and often
maddening outcomes of authorities efforts to prosecute
individuals for the housing
bubble. Lawyers add it highlights that doling out blame
and credit to those who blew
the whistleis rarely as simple as the public would hope.
Thats the law for you,
said Samuel Buell, a former

prosecutor who is now a professor at Duke Universitys law
school. It doesnt always
come out cleanly.
Indeed, to Ms. Steele, her
experience is inexplicable. She
said she had no idea why the
government chose her as the
lone executive to prosecute in
the case. That is something I
think about a lot, Ms. Steele
said. Why me?
In the late 1990s, Ms. Steele
was working for a cubicle
manufacturer. The company
wanted her to move to London, but she didnt want to
move her family. Although she
was a chemical engineer by
training, she started working
in mortgage operations.
In 2006, Countrywide rePlease see BLAME page B7
SHANGHAIChinas vast
corporate-bond market may be
opening up to foreign investors
as never before. But many are
worried that companies issuing
debt here remain too much of a
closed book.
When Evergreen Holding
Group Co., a shipbuilder from
eastern China, defaulted on a
400 million yuan ($60.9 million)
one-year bond last month it
wasnt just the chance of losing
money that angered its bondholders, but also the companys
delays in telling them about
some major problems.
Evergreen had already failed
to repay a 49.4 million yuan
bank loan in December, a fact
the company didnt disclose for
more than three months. It also
failed to disclose to investors in
China an internal probe carried
out last year into a Canadian
subsidiary that operates a mine
in the Republic of Congo.
Evergreens coyness has led a
group of major investors to take
the unusual step of filing a complaint to Chinese regulators accusing the underwriter of the
Evergreen bondIndustrial &
Commercial Bank of China
Ltd., Chinas largest bankof
failing to protect their interests.
An official at Evergreen declined to comment on the matter. An ICBC official in charge of
underwriting the bond said it
was inconvenient for him to
talk about the issue at the moment. Officials at the National
Association of Financial Market
Institutional Investors, the regulator that oversees Chinas interbank bond market, couldnt
be reached for comment despite
Please see BONDS page B7
How REITs Crushed New Trump Hotels Nix Name

The Stock Pickers
BY CRAIG KARMIN
AND ANUPREETA DAS
A very boring stock-market event later this summer

will provide a surprising answer to a perennial question:
Why are most fund managers failures?
The event is the creation
of a new sector in the stock
market. The winners here
are real-estate investment
trusts, which will become
their own
category,
joining technology, health
care, utilities
and the like.
REITs, which
UNHEDGED
KEN BROWN own commercial real estate and generate healthy dividends from
the rents, will be split off
from financial stocks, where
they have held an awkward
place alongside banks and
insurers since these sectors
were created in 1999.
The shift itself is a real
yawner. Im a little surprised at the interest, said
David Blitzer, managing director and chairman of the
index committee at S&P Dow

Jones Indices.
Whats interesting is that
the split exposes one reason
why active fund managers
have consistently failed to
beat the indexes. REITs are
by far the best-performing
asset class in the market
over the past 15 years. And
most actively managed funds
have largely ignored these
stocks.
Since 2000, REITs have
returned an average of 12% a
year, according to J.P. Morgan Asset Management. That
crushed the No. 2 finisher,
high-yield bonds, which returned 7.9%. Large-cap U.S.
stocks returned 4.1%.
Despite the performance,
nearly 40% of large-cap core
mutual funds, which largely
invest in S&P 500 stocks,
dont own any REITs, according to Goldman Sachs. Overall, funds with no REIT exposure have a total of $528
billion in assets, Goldman
says.
Funds that do own REITs
Please see BROWN page B8
Donald Trump has put his

name on everything from bottled water and fragrances to
airlines and vineyardsbut
dont look for it on his new
chain of hotels.
The new brand will cater to
the technologically savvy
younger generation, a group
among which Mr. Trump
hasnt polled well as a Republican presidential candidate. It
also wont be quite as highend as Trump Hotels luxury
properties.
The company hasnt announced what it will be called,
but does say it will avoid using
the Trump name to head off
any possible confusion.
We want to reserve the
name Trump only for luxury
and never want to confuse
customers or owners of the
difference in a four- and fivestar property, Trump Hotels
Chief Executive Eric Danziger
said.
The move is a departure for
the New York businessman
and presumptive Republican
presidential nominee, who has
long delighted in plastering his
personal brand on hotels, casi-
JOHN LAMPARSKI/WIREIMAGE
In the short run

bonds look like a
repeat of last years
mini-bubble.
Rebecca Steele,
formerly Mairone.
SASHA MASLOV FOR THE WALL STREET JOURNAL
Big numbers lost their

power to shock after $1 trillion
became the standard bailout
package. Small numbers are
rapidly losing their power to
shock too, as governmentbond yields sink to nothing, or
less, in the major developed
markets.
Yet, sometimes we should
stand back from the intraday
charts and be astounded, and
now is one of those times.
British governANALYSIS ment bonds are
yielding
less
than 2% for 50
years. That is locking up your
money for 50 years at a yield
less than the Bank of Englands inflation target.
The drop is part of a global
race for yield that has pushed
up prices of long-dated bonds
and pushed down yields rapidly since January, with the
German 10-year bunds yield
on Wednesday coming within
a smidgen of zero.
The trigger seems to have
been Japans move to negative
rates, pushing the countrys
investors to buy higher-yielding bonds maturing further
into the future. Yields plum-
BY SHEN HONG
AND MIA LAMAR
Donald Trumps children, left to right: Eric, Ivanka and Donald Jr.
They run Trump Hotels as executive vice presidents.
nos, golf courses and condominiums.
Of the 564 entities Mr.
Trump listed in his latest financial-disclosure
form,
around 426 carried the Trump
name or his initials. Many of
these are relatively obscure

limited liability companies attached to his real-estate holdings.
Mr. Trump also has
launched a range of lifestyle
Please see TRUMP page B8
P2GW161000-0-B00600-1--------AL
MARKETS DIGEST
Nikkei 225 Index
STOXX 600 Index
S&P 500 Index
Year-to-date
16830.92 s 155.47, or 0.93%
t 11.57%
52-wk high/low20868.03 14952.61
High, low, open and close for each
trading day of the past three months. All-time high 38915.87 12/29/89
344.56 t 1.70, or 0.49%

trading day of the past three months.
Data as of 4 p.m. New York time

Last
2119.12 s 6.99, or 0.33%

trading day of the past three months.
Year-to-date
t 5.81%
52-wk high/low 406.80 303.58
All-time high
414.06 4/15/15
Year ago
Trailing P/E ratio * 24.22 21.23

P/E estimate *
17.81 17.89
Dividend yield
2.18
2.00
All-time high: 2130.82, 05/21/15
* P/E data based on as-reported earnings from Birinyi Associates Inc.
18000
360
2120
17500
350
2090
17000
340
2060
16500
330
2030
320
2000
65-day moving average
Session high
Open
Close
Bars measure the point change from session's open
Mar.
Apr.
15500
Session low
May
16000
UP
Close
DOWN
Session open
15000
June
Mar.
International Stock Indexes

Region/Country Index
World
The Global Dow

MSCI EAFE
MSCI EM USD
Close
2390.30
1694.60
843.62
12.90
1.53
7.72
Americas
Brazil
Canada
Mexico
Chile
DJ Americas
Sao Paulo Bovespa
S&P/TSX Comp
IPC All-Share
Santiago IPSA
511.62
2.15
51736.92 1249.06
14307.87 57.74
46260.65 136.02
3126.06 3.15
U.S.
DJIA
Nasdaq Composite
S&P 500
CBOE Volatility
18005.05
4974.64
2119.12
14.07
344.56 1.70
2879.81 17.05
2245.19 18.65
3543.50 3.31
4448.73 27.13
10217.03 70.65
652.38 1.22
27396.89
2.70
1439.51 8.69
17909.70 65.79
450.15 1.43
46551.54 185.85
965.36 16.49
8831.40 63.10
486.16 1.14
8143.76 72.02
53960.18 345.55
78832.65 675.03
6301.52 16.99
Asia-Pacific
Australia
China
Hong Kong
India
Japan
Singapore
South Korea
Taiwan
1398.60
8.14
5370.00 1.00
2927.16 8.89
21297.88 30.36
27020.66 10.99
16830.92 155.47
2862.38 14.29
2027.08 15.45
8715.48 35.58
DJ Asia-Pacific TSM
S&P/ASX 200
Shanghai Composite
Hang Seng
S&P BSE Sensex
Nikkei Stock Avg
Straits Times
Kospi
Weighted
% chg
Low
52-Week Range
Close
2033.03
1471.88
691.21
0.54
0.09
0.92
May
15370.33
4209.76
1810.10
10.88
0.49
0.59
0.82
0.09
0.61
0.69
0.19
0.01
0.60
0.37
0.32
0.40
1.74
0.71
0.23
0.88
0.64
0.86
0.27
303.58
2556.96
1929.73
3117.61
3892.46
8699.29
420.82
20452.90
1383.34
15773.00
378.53
41747.01
607.14
7746.30
432.78
7425.05
45975.78
68230.47
5499.51
1188.42
4765.30
2655.66
18319.58
22951.83
14952.61
2532.70
1829.81
7410.34
0.59
0.02
0.30
0.14
0.04
0.93
0.50
0.77
0.41
Coupon
522.25 5.0
54977.70 19.3
14995.33 10.0
46545.32 7.6
3243.62 6.2
18188.81 3.3
5231.94 0.7
2132.82 3.7
53.29 22.7
406.80 5.8
3541.18 7.1
2567.85 6.3
3867.21 4.2
5217.80 4.1
11802.37 4.9
826.53 3.3
27477.51 14.5
1728.89 5.8
24157.39 16.4
506.05 1.9
54565.77 0.2
989.87 27.5
11612.60 7.5
543.12 3.8
9537.90 7.6
54760.91 6.4
86931.34 9.9
6873.43 0.9
Commodities
WSJ Dollar index
sYen
5
0
5
s Euro
10
2015
2016
US$vs,
YTDchg
Wed
in US$ per US$ (%)
Country/currency
Americas
Argentina peso-a
0.0724 13.8110 6.7
Brazil real
0.2963 3.3747 14.8
Canada dollar
0.7875 1.2699 8.2
Chile peso
0.001472 679.40 4.1
Colombia peso
0.0003399 2942.17 7.3
Ecuador US dollar-f
1
1 unch
Mexico peso-a
0.0552 18.1281 5.4
Peru sol
0.3053 3.2755 4.1
Uruguay peso-e
0.0327 30.620 2.4
Venezuela bolivar 0.100100
9.99 58.4
Asia-Pacific
Australia dollar
China yuan
0.7480 1.3369 2.6

0.1524 6.5601 1.0
Key Rates
Latest
52 wks ago
Libor
One month
Three month
Six month
One year
0.44530%
0.65800
0.94700
1.27835
0.18875%
0.28785
0.44155
0.78195
Euro Libor
One month
Three month
Six month
One year
-0.35357%
-0.28043
-0.16457
-0.02686
-0.07143%
-0.01500
0.05500
0.17500
Euribor
One month
Three month
Six month
One year
-0.35200%
-0.26400
-0.16000
-0.01800
-0.06300%
-0.01400
0.04900
0.16600
-0.07557%
-0.03271
-0.00843
0.08686
Offer
0.06000%
0.09857
0.13500
0.25257
Bid
0.5000%
0.6500
1.0000
1.3000
Latest
0.4000%
0.5500
0.9000
1.2000
52 wks ago
3.50%
2.70
1.475
5.00
3.25%
2.85
1.475
5.00
0.00%
0.50
0.50
1.75
1.00
0.25
2.25
0.05%
0.50
0.50
2.00
0.75
0.00
2.00
Overnight repurchase rates

U.S.
0.46%
Euro zone
n.a.
0.22%
n.a.
Yen Libor
One month
Three month
Six month
One year
Eurodollars
One month
Three month
Six month
One year
Prime rates
U.S.
Canada
Japan
Hong Kong
Policy rates
ECB
Britain
Switzerland
Australia
U.S. discount
Fed-funds target
Call money
Sources: WSJ Market Data Group, SIX

Financial Information, Tullett
Country/currency
Hong Kong dollar
India rupee
Indonesia rupiah
Japan yen
Kazakhstan tenge
Macau pataca
Malaysia ringgit-c
New Zealand dollar
Pakistan rupee
Philippines peso
Singapore dollar
South Korea won
Sri Lanka rupee
Taiwan dollar
Thailand baht
US$vs,
YTDchg
Wed
in US$ per US$ (%)
0.1288
0.0150
0.0000757
0.009376
0.002997
0.1251
0.2484
0.7023
0.0096
0.0218
0.7426
0.0008663
0.0068710
0.03111
0.02847
7.7617 0.1
66.5005 0.4
13215 4.5
106.66 11.3
333.66 1.5
7.9940 0.1
4.0253 6.5
1.4239 2.7
104.650 0.2
45.849 2.2
1.3467 5.0
1154.32 1.8
145.54 0.9
32.140 2.4
35.130 2.5
Bulgaria lev
0.5829 1.7155 4.7
Croatia kuna
0.1515 6.600 5.9
Euro zone euro
1.1407 0.8767 4.8
Czech Rep. koruna-b 0.0422 23.691 4.8
Denmark krone
0.1534 6.5193 5.1
Hungary forint
0.003673 272.27 6.3
Iceland krona
0.008140 122.85 5.6
Norway krone
0.1233 8.1096 8.3
Poland zloty
0.2639 3.7894 3.4
Russia ruble-d
0.01573 63.578 11.6
Sweden krona
0.1233 8.1117 4.0
Switzerland franc
1.0428 0.9590 4.3
Turkey lira
0.3463 2.8880 1.0
Ukraine hryvnia
0.0400 24.9730 4.1
U.K. pound
1.4557 0.6870 1.2
2.6526
0.1127
0.2611
3.3245
2.5967
0.2747
0.2666
0.0680
Cur Stock
HK$
AU$
AU$
HK$
HK$
HK$
HK$
HK$
HK$
AU$
TW$
KRW
HK$
AU$
HK$
HK$
$
AU$
KRW
HK$
TW$
Sym
Last
1299
4503
ANZ
BHP
3988
0001
0883
7751
9022
0939
2628
0941
CBA
9020
6954
6501
2317
7267
005380
1398
2914
9433
8058
8306
8031
8411
9437
NAB
5401
9432
7201
8604
6752
0857
2318
RIGD
RIO
005930
3382
9984
8316
0016
2330
46.50
1556.50
24.73
19.54
3.31
92.50
9.75
3128.00
19370
5.21
17.28
90.35
76.99
10030
16995
498.60
81.30
2944.00
139500
4.28
4460.00
3133.00
1956.00
544.10
1306.50
168.70
2835.00
26.47
2090.50
4802.00
1078.00
447.40
990.10
5.72
35.60
28.80
45.17
1406000
4757.00
6150.00
3415.00
94.05
165.50
-0.21
2.13
-0.52
-1.21
0.91
-0.22
1.88
-0.10
1.39
-0.38
-0.23
-0.82
-0.45
0.78
2.63
0.73
0.25
0.65
...
0.47
0.81
-0.44
0.72
2.04
1.28
0.12
2.03
-0.45
-0.33
0.78
1.46
0.97
3.68
2.33
0.14
0.88
-1.89
0.57
1.88
0.99
1.49
-0.95
2.16
84.6
46.1
-127.7
-139.5
-120.4
-128.2
-130.8
-164.6
-81.7
-38.6
-101.5
-181.5
-129.3
-154.6
-55.7
136.3
-87.4
-26.3
-128.1
-114.3
-39.1
-45.1
...
...
86.1
48.9
-130.6
-140.9
-122.6
-130.2
-133.2
-167.0
-84.1
-37.7
-103.3
-183.6
-132.5
-155.5
-59.7
138.5
-90.0
-25.4
-129.0
-109.6
-43.0
-44.8
...
85.2
52.4
-121.9
-136.0
-116.0
-125.1
-124.4
-162.8
-77.5
-28.5
-97.9
-189.0
-121.9
-152.7
-39.1
132.2
-79.5
-19.5
-117.0
-102.1
-31.9
-35.5
...
137.6
66.7
-79.2
-115.9
-81.2
-115.9
-85.2
-149.8
-48.0
-12.6
-68.6
-188.6
-83.2
-130.2
-54.8
57.4
-56.7
-14.4
-88.7
-139.7
1.5
-32.6
...
...
...
...
Yield
Month ago
Previous
1.649
2.207
-0.518
0.309
-0.439
0.416
-0.545
0.048
-0.054
1.341
-0.246
-0.118
-0.537
0.162
0.191
3.103
-0.113
1.464
-0.503
0.622
0.358
1.270
0.787
1.718
Year ago
1.586
2.300
-0.485
0.416
-0.426
0.524
-0.510
0.147
-0.041
1.490
-0.245
-0.115
-0.485
0.248
0.344
3.097
-0.061
1.581
-0.436
0.755
0.415
1.420
0.734
2.061
3.050
-0.108
1.224
-0.127
1.223
-0.167
0.885
0.205
2.257
-0.001
0.497
-0.148
1.081
0.137
2.957
0.118
2.238
-0.202
0.986
0.700
2.056
0.685
1.776
2.382
3:30 p.m. New York time
429.00
1151.25
517.50
118.600
3,094
139.25
19.71
65.73
1700.00
1.25
34.50
8.50
2.600
21
7.05
0.59
-0.11
11.00
2.0630
1263.90
17.050
1,551.50
16,950.00
4,595.00
1,734.00
2,026.00
8,620.00
156.80
0.0120
16.90
0.656
-6.00
150.00
-110.50
-1.00
7.00
-70.00
0.50
2568.00
51.27
1.5717
1.6261
2.464
52.49
468.00
-8.00
0.91
0.0302
0.0390
-0.010
1.05
11.50
CBOT
CBOT
CBOT
CME
ICE-US
ICE-US
ICE-US
ICE-US
ICE-EU
COMEX
COMEX
COMEX
LME
LME
LME
LME
LME
LME
TCE
439.25
1,159.25
524.00
125.350
3,241
139.85
19.82
66.45
1,709.00
351.25
868.00
449.50
110.925
2,745
115.35
12.92
54.19
1,372.00
2.3290
1,308.00
18.060
1,675.00
17,500.00
5,070.50
1,888.00
2,026.00
9,575.00
165.00
1.9580
1,065.70
13.810
1,451.50
13,225.00
4,320.50
1,598.00
1,467.00
7,750.00
156.10
2,707.00
51.34
1.5727
1.6707
2.6350
52.57
468.00
2,374.00
31.61
0.9406
1.1485
1.9390
30.70
278.50
0.29%
3.09
1.67
2.24
0.68
5.33
3.09
-0.17%
0.65
0.59
1.36
4.00
-0.39
0.89
-2.35
-0.06
0.35
-0.81
0.32
Year
low
-0.31
1.81
1.96
2.46
-0.40
2.04
2.52
Australia
USD
1.3369
GBP
1.9462
CHF
1.3943
JPY
0.0125
HKD
0.1722
EUR
1.5249
Canada
1.2699
1.8485
1.3238
0.0119
0.1636
Euro
0.8767
1.2763
0.9142
0.0082
0.1130
Hong Kong
7.7617
11.2986
8.0926
0.0728
Japan
85.55 0.42 0.49 5.12
London close on Jun 8

CDN
1.0529
AUD
...
1.4482
...
0.9496
...
0.6904
0.6558
...
8.8530
6.1123
5.8065
106.6580
155.2800
111.2200
...
13.7420
121.6500
84.0037
79.7900
Switzerland
0.9590
1.3961
...
0.0090
0.1236
1.0939
0.7554
0.7172
U.K.
0.6870
...
0.7163
0.0064
0.0885
0.7836
0.5410
0.5138
U.S.
...
1.4557
1.0428
0.0094
0.1288
1.1407
0.7875
0.7480
Source: Tullett Prebon
Sources: Tullett Prebon, WSJ Market Data Group
4 p.m. New York time
% YTD%
Chg Chg
Asia Titans
AIAGroup
AstellasPharma
AustNZBk
BHP
BankofChina
CKHutchison
CNOOC
Canon
CentralJapanRwy
ChinaConstructnBk
ChinaLifeInsurance
ChinaMobile
CmwlthBkAust
EastJapanRailway
Fanuc
Hitachi
Hon Hai Precisn
HondaMotor
HyundaiMtr
Ind&Comml
JapanTobacco
KDDI
Mitsubishi
MitsuUFJFin
Mitsui
Mizuho Fin
NTTDoCoMo
NatAustBnk
NipponStl&SmtmoMtl
NipponTeleg
NissanMotor
NomuraHldgs
Panasonic
PetroChina
PingAnInsofChina
RelianceIndsGDR
RioTinto
SamsungElectronics
Seven&I Hldgs
SoftBankGroup
Sumitomo Mitsui
SunHngKaiPrp
TaiwanSemiMfg
1.621
2.166
-0.502
0.310
-0.429
0.423
-0.533
0.058
-0.042
1.319
-0.240
-0.110
-0.518
0.159
0.218
3.067
-0.099
1.442
-0.506
0.562
0.384
1.254
0.775
1.705
Spread Over Treasurys, in basis points

Previous
Month Ago
Year ago
Cross rates
0.3770 0.03
8.8764 13.4
3.8304 1.6
0.3008 0.9
0.3851 0.04
3.640 0.1
3.7504 0.1
14.7146 4.9
Top Stock Listings
1940
June
Sources: SIX Financial Information; WSJ Market Data Group
Close Net Chg % Chg YTD % Chg
WSJ Dollar Index
Latest
Palm oil (MYR/mt) MDEX

NYMEX
Crude oil ($/bbl.)
NY Harbor ULSD ($/gal.) NYMEX
RBOB gasoline ($/gal.) NYMEX
Natural gas ($/mmBtu) NYMEX
Brent crude ($/bbl.) ICE-EU
ICE-EU
Gas oil ($/ton)
Middle East/Africa
Bahrain dinar
Egypt pound-a
Israel shekel
Kuwait dinar
Oman sul rial
Qatar rial
Saudi Arabia riyal
South Africa rand
May
Prices of futures contracts with the most open interest
Copper ($/lb.)
Gold ($/troy oz.)
Silver ($/troy oz.)
Aluminum ($/mt)*
Tin ($/mt)*
Copper ($/mt)*
Lead ($/mt)*
Zinc ($/mt)*
Nickel ($/mt)*
Rubber (Y.01/ton)
Europe
10
Yield
Corn (cents/bu.)
Soybeans (cents/bu.)
Wheat (cents/bu.)
Live cattle (cents/lb.)
Cocoa ($/ton)
Coffee (cents/lb.)
Sugar (cents/lb.)
Cotton (cents/lb.)
Robusta coffee ($/ton)
US$vs,
YTDchg
Wed
in US$ per US$ (%)
Country/currency
15%
Apr.
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
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 6/7/2016
Year
One-Day Change
Commodity
Exchange Last price
Net
Percentage
high
London close on June 8
Yen, euro vs. dollar; dollar vs. major U.S. trading partners
Country/
Maturity, in years
3.250
Australia 2
4.250
10
3.500
Belgium 2
0.800
10
1.000
France 2
0.500
10
0.000
Germany 2
0.500
10
4.500
Italy 2
2.000
10
0.100
Japan 2
0.100
10
0.500 Netherlands 2
0.250
10
4.350
Portugal 2
2.875
10
4.500
Spain 2
1.950
10
4.250
Sweden 2
1.000
10
1.250
U.K. 2
2.000
10
0.875
U.S. 2
1.625
10
Source: SIX Financial Information;WSJ Market Data Group
Currencies
Mar.
Global government bonds
1561.66 0.6
5706.70 1.4
5166.35 17.3
27404.97 2.8
28504.93 3.5
20868.03 11.6
3373.48 0.7
2107.33 3.4
9476.34 4.5
300
June
1970
Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
and 10-year government bonds around the world. Data as of 3 p.m. ET
YTD
% chg
2605.96 2.3
1956.39 1.3
1044.05 6.2
433.38
2.47 37046.07
11531.22
0.40
39256.58
0.29
2730.24
0.10
0.37
0.26
0.33
0.14
High
0.42
66.77
12.89
6.99
0.02
Stoxx Europe 600

Stoxx Europe 50
Austria
ATX
Belgium
Bel-20
France
CAC 40
Germany
DAX
Greece
ATG
Hungary
BUX
Israel
Tel Aviv
Italy
FTSE MIB
Netherlands AEX
Poland
WIG
Russia
RTS Index
Spain
IBEX 35
Sweden
SX All Share
Switzerland Swiss Market
South Africa Johannesburg All Share
Turkey
BIST 100
U.K.
FTSE 100
EMEA
Apr.
Data as of 4 p.m. New York time

Latest
NetChg
310
-0.21
-10.11
-11.46
9.41
-4.34
-11.40
20.82
-14.88
-10.32
-1.88
-31.16
3.26
-9.98
-12.40
-19.38
-27.90
0.62
-24.71
-6.38
-8.55
-0.25
-0.67
-3.55
-28.13
-9.62
-30.72
14.13
-12.35
-13.47
-0.70
-15.75
-34.12
-20.19
12.38
-17.02
-5.88
1.03
11.59
-14.29
0.18
-25.86
0.32
15.73
% YTD%
Chg Chg Cur Stock
Cur Stock
Sym
Last
HK$
AU$
AU$
AU$
TakedaPharm
TencentHoldings
TokioMarineHldg
ToyotaMtr
Wesfarmers
WestpacBanking
Woolworths
4502
0700
8766
7203
WES
WBC
WOW
4615.00
175.90
3662.00
5681.00
41.07
30.60
21.62
0.46
-0.40
0.58
0.48
1.81
0.29
...
-23.91
15.19
-22.28
-24.13
-1.30
-8.82
-11.76
CHF
CHF
CHF
CHF
CHF
DKK
ABB
AXA
AirLiquide
Allianz
Anheuser Busch
AstraZeneca
BASF
BNP Paribas
BT Group
BancoBilVizAr
BancoSantander
Barclays
Bayer
BP
BritishAmTob
FinRichemont
CreditSuisse
Daimler
Deutsche Bank
DeutscheTelekom
Diageo
ENI
GlaxoSmithKline
HSBC Hldgs
INGGroep
ImperialBrands
IntesaSanpaolo
LVMHMoetHennessy
LloydsBankingGroup
LOreal
NationalGrid
Nestle
Novartis
NovoNordiskB
Prudential
ReckittBenckiser
ABBN
CS
AI
ALV
ABI
AZN
BAS
BNP
BT.A
BBVA
SAN
BARC
BAYN
BP.
BATS
CFR
CSGN
DAI
DBK
DTE
DGE
ENI
GSK
HSBA
INGA
IMB
ISP
MC
LLOY
OR
NG.
NESN
NOVN
NOVO-B
PRU
RB.
20.65
21.56
94.79
142.95
114.95
4032.50
70.22
46.41
422.10
5.63
4.08
178.05
91.64
376.55
4276.50
61.60
12.90
59.61
14.99
15.50
1872.50
14.13
1450.00
446.70
10.86
3780.50
2.22
147.55
69.86
168.60
983.40
73.40
78.20
372.30
1316.00
6952.00
-1.10
-1.60
-0.43
-0.52
-0.52
-0.53
-0.66
-1.40
-1.11
-1.88
-1.38
-1.22
-0.36
0.88
-0.07
1.73
-1.15
-0.85
-1.80
-1.05
-0.29
0.28
-0.82
0.01
-1.14
-0.04
-1.16
-1.24
-0.56
-0.12
0.35
-0.74
-1.26
-0.88
-0.45
0.16
14.98
-14.55
-8.55
-12.60
0.48
-12.65
-0.71
-11.15
-10.52
-15.67
-10.38
-18.66
-20.86
6.37
13.40
-14.56
-39.93
-23.16
-33.43
-6.20
0.86
2.39
5.61
-16.69
-12.77
5.41
-28.24
1.83
-4.39
8.56
4.90
-1.54
-9.91
-6.90
-14.04
10.68
Stoxx 50
CHF
CHF
CHF
RioTinto
RocheHldgctf
RoyDtchShell A
SAP
Sanofi
SchneiderElectric
Siemens
Telefonica
Total
UBSGroup
Unilever
Unilever
VodafoneGroup
ZurichInsurance
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
AmericanExpress
Apple
Boeing
Caterpillar
Chevron
CiscoSystems
CocaCola
Disney
DuPont
ExxonMobil
GenElec
GoldmanSachs
HomeDepot
Intel
IBM
JPMorganChase
JohnsJohns
McDonalds
Merck
Microsoft
NikeClB
Pfizer
Procter&Gamble
3M
TravelersCos
UnitedTech
UnitedHealthGroup
VISAClA
Verizon
WalMart
% YTD%
Chg Chg
Sym
Last
RIO
ROG
RDSA
SAP
SAN
SU
SIE
TEF
FP
UBSG
UNA
ULVR
VOD
ZURN
2040.00
257.50
1800.00
71.70
72.65
56.73
96.31
9.11
43.37
14.53
40.70
3233.00
231.00
231.20
1.29
3.06
-1.30 -6.84
2.51 17.96
-0.93 -2.29
-0.59 -7.57
-0.49
7.93
-1.08
7.15
-0.69 -10.95
-0.90
7.21
-0.68 -25.56
-0.61
1.47
-0.02 10.47
-0.06
4.52
-1.07 -10.53
AXP
AAPL
BA
CAT
CVX
CSCO
KO
DIS
DD
XOM
GE
GS
HD
INTC
IBM
JPM
JNJ
MCD
MRK
MSFT
NKE
PFE
PG
MMM
TRV
UTX
UNH
V
VZ
WMT
66.25
98.94
133.00
78.11
103.09
29.14
45.55
98.05
68.37
90.79
30.31
154.66
129.59
31.89
154.01
65.25
115.84
122.11
57.62
52.04
54.12
35.25
82.64
171.43
114.22
102.05
140.40
81.62
51.51
71.28
0.55 -4.74
-0.09 -6.00
0.81 -8.02
1.69 14.94
-0.22 14.60
0.24
7.31
0.51
6.03
-0.31 -6.69
-0.54
2.66
0.09 16.47
0.56 -2.70
-0.33 -14.19
-0.25 -2.01
0.03 -7.43
0.44 11.91
0.29 -1.18
0.10 12.77
0.17
3.36
1.09
9.09
-0.12 -6.20
1.06 -13.41
1.18
9.20
0.39
4.07
0.30 13.80
0.27
1.21
0.59
6.22
2.53 19.35
1.27
5.25
-0.46 11.45
0.35 16.28
DJIA
Asia Titans 50
Last: 132.86 s 1.13, or 0.86%
YTD t 2.5%
High
Close
Low
11
18
150
140
130
120
110
100
50day
moving average
t
25
1
8
Apr.
15
22
29
6
May
13
20
27
Stoxx 50
Last: 2879.81 t 17.05, or 0.59%
3
June
YTD t 7.1%
3000
2925
2850
2775
2700
2625
11
18 24
1
8
Apr.
15
22
29
6
May
13
20
27
Dow Jones Industrial Average
3
June
P/E: 19
Last: 18005.05 s 66.77, or 0.37%
YTD s 3.3%
18500
18000
17500
17000
16500
16000
11
18 24
1
8
Apr.
15
22
29
6
May
Note: Price-to-earnings ratios are for trailing 12 months

Sources: WSJ Market Data Group; Birinyi Associates
13
20
27
3
June
P2GW161000-0-B00700-1--------AL
MONEY & INVESTING
S&P 500 Posts Third Day of Gains Japan Bank Balks

U.S. stocks rose, with the
S&P 500 notching its third
consecutive session of gains as
it drifted toward its all-time
high.
U.S. oil prices pushed further above $50 a barrel, and
the dollar
WEDNESDAYS fell.
MARKETS
The S&P
500 hasnt
breached its
record close of 2130.82 in
more than a year, the longest
dry spell since 2013. Investors
have remained cautious even
as the market inches higher,
traders and analysts said. The
S&P 500 hasnt posted a gain
of 1% or more since May 24.
People are not 100% comfortable with the levels were
at, said Larry Weiss, head of
trading at Instinet.
The S&P 500 added 6.99
points, or 0.3%, to 2119.12. The
Dow Jones Industrial Average
gained 66.77 points, or 0.4%,
BLAME
cruited her to work on upgrading
technology systems and acquiring new customers. She became
chief operating officer of a division that later housed Hustle.
Ms. Steeles saga began in
2012 when the U.S. attorneys
office in Manhattan joined Mr.
ODonnells lawsuit against
Bank of America Corp., which
acquired Countrywide in 2008.
At the time, she was named in
the complaint but wasnt being
sued. She had moved to J.P.
Morgan Chase & Co., where
she ran the banks review of
foreclosures.
Ms. Steele said she didnt
remember Hustle at first. I
had about 20 other projects
going on, including laying off
5,000 people in that time.
The Hustle program eliminated some quality checks on
mortgages, with the goal of
profits overseas.
The Wall Street Journal
Dollar Index, which measures
the dollar against a basket of
16 currencies, fell 0.4%
Wednesday to its lowest level
since May 3.
The euro gained 0.4%
against the dollar to $1.1397.
The dollar fell 0.4% against the
yen to 106.95.
Gold gained 1.2% to settle

at $1,259.80 an ounce.
Government-bond yields
fell. The yield on the 10-year
Treasury note slipped to
1.706% from 1.713% on Tuesday. The 10-year German government-bond yield fell as low
as 0.036%, the all-time intraday low, before rebounding,
according to Tradeweb.
Its quite something, said

Trevor Greetham, head of
multi asset at Royal London
Asset Management, who currently holds an underweight
position in bonds.
Theres a lot of central
bank buying to keep the yields
this low, he added. The European Central Bank has ought
more than 1 trillion ($1.14
trillion) of mainly government
bonds under its quantitativeeasing program.
On Wednesday, the ECB began its corporate-bond purchase program, the first time
the central bank has entered
the corporate-bond market.
Stock markets in Europe
ended mostly lower, with the
Stoxx Europe 600 falling 0.5%,
as investors grappled with
tepid economic figures.
Chinese trade data released
early Wednesday added to
economic concerns as exports
slid 4.1% in May from a year
earlier. The Shanghai Composite slipped 0.3%, while Japans
Nikkei rose 0.9%.
making loans more quickly.

At trial, the government
portrayed it as a means of
pushing through shoddy mortgages, and Ms. Steele as
quashing objections to it. Ms.
Steele said the program was
meant to eliminate unnecessary red tape and transition
the unit into higher-quality
mortgages.
Before she was sued, Ms.
Steeles attorney, Marc Mukaseya former federal prosecutor and son of former attorney general Michael Mukasey
told Manhattan U.S. Attorney
Preet Bharara that neither Ms.
Steele nor Bank of America had
done anything wrong.
Mr. Bharara listened. But
weeks later he added Ms. Steele
as a defendant to the lawsuit,
describing her as the architect.
Dont worry, Marc, Mr. Bharara told Mr. Mukasey at their
meeting, according to Mr. Mukasey. Its just a civil case.
A spokesman for Mr. Bharara declined to comment.
Civil or not, the case upended Ms. Steeles life. Her

daughter was asked if the
woman in the news was her
mom. Friends stopped returning her calls. I go from running a million miles an hour,
executing, managing large
groups of people, to Im all by
myself, and that was pretty
scary, Ms. Steele said.
On the eve of her trial, the U.S.
attorneys office offered to settle
if she would admit to wrongdoing, she said. She refused.
At trial, Mr. ODonnell acknowledged Ms. Steele, his
boss, had passed him over for
a promotion. Her lawyers presented an email from another
employee warning her Mr.
ODonnell was after her job.
The jury sided with the governments portrayal. And U.S.
District Judge Jed S. Rakoff,
who presided over the trial,
later described Hustle as a
vehicle for a brazen fraud
and Ms. Steele as the relatively new employee who had
to prove herself [and] most aggressively pushed forward

thefraud.
The appeals court disagreed, and threw out the verdicts against both Bank of
America and Ms. Steele. The
court said actions by the bank
and Ms. Steele might be considered an intentional breach
of contract but didnt constitute fraud.
Mr. ODonnell, 51, bought a
$2 million home in Pittsburgh
after receiving the whistleblower award and opened a
real-estate investment firm,
according to public records.
David Wasinger, Mr. ODonnells lawyer, said his client had
taken a risk in becoming a
whistleblower. Eds livelihood,
his reputation...was on the line,
Mr. Wasinger said.
After the ruling, Ms. Steeles
friends sent her wine, flowers
and cookies. She left J.P. Morgan after the trial and now runs
a consulting business from her
home outside Philadelphia.
TOKYOJapans biggest
bank delivered a fresh message
of frustration over negative interest rates to the Bank of
Japan, confirming it might
stop acting as a primary dealer
of Japanese government
bonds.
Bank of Tokyo-Mitsubishi
UFJ, the banking unit of Mitsubishi UFJ Financial Group
Inc., would become the first
Japanese bank to relinquish
that role in the government
bond market. A primary dealer
buys government bonds directly from the government.
The possible action, which
the bank has been discussing
with the Ministry of Finance,
underscores Japanese lenders
rising tensions with the central bank over negative rates,
in which the central bank
charges lenders to hold deposits, instead of paying interest.
Banks say negative rates havent created more demand for
loans but have hit their stock
prices and threaten to cut
profits. Executives say they are
becoming concerned that the
central bank, which in February set a rate of minus 0.1% on
some commercial-bank reserves, might move the rate
even lowerpossibly as low as
minus 0.3%and are pushing
against such a move.
MUFG President Nobuyuki
Hirano in April became the
first top Japanese banking executive to publicly criticize the
central banks negative-rate
policy, saying it had actually
caused households and businesses to rein in spending by
creating a sense of uncertainty
about the future. For the
banking industry, the consequences, at least in the short
term, are clearly negative, Mr.
Hirano said in a speech.
A person close to the Bank
of Japan said Wednesday that
a withdrawal by Bank of Tokyo-Mitsubishi as a primary
Greek banks and Greek politics.

The government, for instance,
has traditionally named the
head of National Bank of
Greece, the countrys secondlargest lender. Banks, meanwhile, have lent generously to
the countrys traditionally dominant parties, the conservative
New Democracy party and socialist Pasok.
The parties used the funds to
campaign, including busing in
supporters from around the
country to swell rallies and flying them in from abroad to
vote.
The parties still owe the
banks some 300 million, which
party insiders acknowledge
they cant repay in full now that
they have been abandoned by
many voters because of their
role in Greeces economic crisis.
Among National Bank of
Greeces political customers,
only the Greek Communist
Party and the ruling left-wing
Syriza are paying the interest
on their loans, according to one
bank official.
Greek lawmakers have begun
an inquiry into whether banks

previously dished out about
800 million in loans to financially shaky media groups, following pressure from politicians seeking positive media
coverage of their parties. The
banks and parties all deny
wrongdoing.
Under the new rules, passed
in October, people who have
been senior politicians during
the past four years are barred
from serving on boards.
One such person is Ms.
Katseli, a 64-year-old economist
who had sat in Greeces Parliament since 2007 and who publicly backed the ruling left-wing
Syriza party in recent elections.
In early 2015, after winning
power, Syriza made her National Bank of Greeces nonexecutive chairwoman.
The ECBs banking-supervision department, called the Single Supervisory Mechanism,
signed off on Ms. Katselis appointment at the time. Now, it
wants her out. Earlier this year,
the regulatory agency wrote the
bank asking pointedly about its
Chinese trade data

added to economic
concerns. Exports
slid 4.1% in May.
BONDS
repeated calls.
The problems at Evergreen
point to broader concerns
among bondholders in China
about how much they are being
told about companies in which
they invest. Those concerns are
growing as the number of Chinese company bond defaults is
rising: There have been 32 already this year compared with
21 in all of 2015.
Because of poor information
disclosure, land mines are everywhere in the corporate-bond
market. You never know when
youd step on one, said Peter
Zhao, chief executive of Eagle
Investments (Shanghai) Co., a
private-equity fund.
The worries come as Beijing
is giving foreign investors unprecedented access to its $8.5
trillion bond market, allowing
them greater freedom to invest
in Chinese bonds issued inside
the country. Already this year,
there has been $1.6 trillion of
new bond issuance in China, according to Wind Info. To date,
though, overseas investors are
estimated to make up less than
3% of the market.
For sure, many big foreign
investors with experience investing in China say rising cor-
LUCAS JACKSON/REUTERS
GREECE
month, amid fierce lobbying,
Greek banks will receive a report outlining which board
members need to be removed.
Bankers in Athens have dubbed
it the Get Katseli Law.
Greece agreed to the draconian rules as part of an 86 billion ($98 billion) bailout a year
ago, which included several billion euros to prop up its lenders. It is the third recapitalization of the banking system, and
Europe is pushing for deep
changes in how it is run. Last
week, Greece and its creditors
reached an initial deal to release a roughly 10 billion
tranche of the funds.
Ms. Katseli and others are
trying to convince Greek and
European authorities that the
country is being singled out for
boardroom practices that are
common all over Europe.
When Daniele Nouy, the top
banking regulator at the Euro-
At Negative Rates
to 18005.05, and the Nasdaq

Composite rose 12.89 points,
or 0.3%, to 4974.64.
Lululemon Athletica shares
rose 5% by late afternoon after
the yoga-wear maker raised its
financial forecasts for the
year.
Signet Jewelers rose 5%,
one of the biggest gainers in
the S&P 500.
U.S. crude oil rose 1.7% to
settle at $51.23 a barrel, up
95% since Feb. 11, which
marked a 2016 low for both oil
and stocks. Energy stocks in
the S&P 500 slipped 0.2%
Wednesday, but have notched
the biggest advance in the S&P
500 since the February low.
The rebound in oil prices
bodes well for an eventual recovery in profits at energy
firms, analysts said. This
years decline in the dollar,
which took another leg lower
after Fridays dismal jobs report diminished expectations
for a rate rise in the next few
months, could also lift profits
at U.S. companies that earn
Louka Katseli, chairwoman of the National Bank of Greece.

pean Central Bank, visited Athens early this year for discussions with top Greek bankers at
the neoclassical headquarters of
Greeces central bank, Ms.
Katseli attacked the new rules,
according to a person familiar
with the meeting. Ms. Nouy replied: The law is the law.
Greeces banks are in this position because they hold 100
billion in bad debts, an extraor-
dinary amount for a country

with a gross domestic product
of about 180 billion. Eurozone
banking regulators argue that
the boards must be gutted if the
banks are to attract the foreign
capital needed to clean up their
balance sheets. That cleanup, in
turn, is vital if Greeces depressed economy is to recover.
The concerns stem from the
unusually deep ties between
porate-bond defaults here can

be seen as a positive sign that
Beijing is allowing inefficient
companies to fail, forcing investors not to presume troubled
companies will receive state
backing.
They say companies lack of
transparency and weak financial
disclosure, as well as Chinas
unreliable credit-rating system,
all remain bigger concerns than
the largely expected rise in defaults itself.
Arthur Lau, head of Asia exJapan fixed income at $83 billion asset manager PineBridge
Investments, said the firm wont
invest in any corporate bonds
issued in mainland China even if
they are rated triple-A, unless
the company has already sold
debt outside the country, where
transactions require a higher
level of financial disclosure.
As a bond investor, you
dont know what you are facing
in terms of financial distress
scenarios, Mr. Lau said. You
cant price your risk.
Evergreens problems had
emerged last August when the
Toronto Stock Exchange delisted its Canadian unit, MagIndustries Corp.a miner of potash, a mineral used in fertilizers
three months after Evergreen
issued its one-year bond in
China. Evergreen had acquired
the Canadian company for $120
million in 2011.
By that stage, a special committee of some of MagIndustries independent directors had

launched an investigation into
the company following a January 2015 police raid on the companys offices in Toronto. The
internal probe found evidence
of payments and gifts made by
MagIndustries or Evergreen to
government officials in the Republic of Congo, including items
of furniture, a villa and a pair of
stone lions symbolizing the
friendship between Beijing and
Brazzaville, according to a company filing to the stock exchange in June 2015.
Until recently, Evergreens
bondholders in China were unaware of these developments.
The information was available
only in English on MagIndustries website.
We didnt hear about what
had happened to that Canadian
company until our first creditors meeting in April [2016],
right after Evergreen warned
about the bond-default risk,
said a fund manager who holds
more than 10% of the 400 million yuan bond.
The focus of our campaign
is now on the role played by
ICBC as an underwriter, because
Evergreen has outright told us
it simply has no money, said
the fund manager. Bondholders
are pressing Chinas financial
regulators to investigate what
BY ATSUKO FUKASE
Bond Bomb
As Chinas bond market grows, the number of defaults is rising
Number of defaulted bonds
Size of corporate-bond market
35
14 trillion yuan
30
12
25
10
20
15
10
0
2014
15
16
2011 12
13
14
15
16
Note: 2016 gures as of June 8; 1 trillion yuan = $152 billion

Source: Wind Info
they describe as ICBCs lack of

due diligence during the bondsale process.
According to guidelines from
the Chinese regulator, bond underwriters must help protect in-
Advertisement
vestors by obtaining accurate

information about the issuers
financial risk and ability to repay. Underwriters must also
prompt issuers to disclose relevant information about the
dealer would be welcome news

for the central bank, because it
would signal that the lender is
diversifying into riskier assets.
A retreat by Bank of TokyoMitsubishi wouldnt have a big
impact on the market in the
short term. There are 22 banks
and brokerages listed as primary dealers, a role that
comes with entitlements such
as meetings with Ministry of
Finance officials.
Such a move might help
limit the banks exposure to
Japanese government bonds if
the central banks monetary
policies lead to market instability. Primary dealers are required to bid on at least 4% of
each planned government-bond
issuance, a responsibility that
banks may find unattractive as
the central banks stimulus program, known as quantitative
easing, enters its third full year.
YUYA SHINO/REUTERS
BY SAUMYA VAISHAMPAYAN
AND RIVA GOLD
MUFG President Nobuyuki

Hirano was the first to publicly
criticize the Bank of Japan.
The central bank has been
buying 80 trillion ($745 billion) of Japanese government
bonds annually, roughly equivalent to all new issuance, and
now owns about one-third of
the outstanding market.
Its purchases, and the introduction of negative rates, are
meant to drive interest rates
lower, creating demand for
loans and pushing investors
into higher-yielding risk assets, such as stocks, as part of
efforts to fuel economic
growth.
succession plans.
The countrys bank-bailout
fund has hired U.S.-based executive recruiters Spencer Stuart
to evaluate boardroom personnel. Its headhunters flew to
Athens in May to begin evaluating Ms. Katseli and other directors at the four biggest Greek
banks. The directors are being
put through interviews sometimes lasting several hours.
Spencer Stuarts report, due
in mid-June, is expected to recommend replacement of about
a third of the 55 nonexecutive
directors at Greeces major
banks, said a person involved in
the project.
The board of Piraeus Bank
SA, Greeces largest lender, includes a shipping magnate and
an airline executive who dont
meet the new criteria. Nearly
half of the board will probably
have to be replaced, said a person close to the bank.
Piraeus Chairman Michalis
Sallas, who has headed the bank
since 1991, is likely to survive
the purge, people familiar with
the matter said.
companys health and alert
bondholders to issues on a
timely basis.
At a recent meeting of Evergreen bondholders organized by
ICBC in Ningbo, documents
were incomplete and the phone
line connecting regulatory officials in Beijing to the discussion
became disconnected irretrievably halfway through the event,
according to those present.
Information disclosure is a
widespread problem in China.
There are so many loan defaults, but theres no easy way
for investors to get the information they need, said Lisa Li, senior analyst at Fortune SG Fund
Management Co.
Ms. Li said the relatively low
number of problems with bonds
in China until recently had led
to complacency. Without defaults, bond underwriting has
been such easy money to make.
INTERNATIONAL INVESTMENT FUNDS
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FINANCIAL ANALYSIS & COMMENTARY
Life Gets Leaner for U.K. Grocer

Stuck in the Middle
Sainsbury's price/earnings
multiple
16
14
12
10
8 Weekly data
2011 12
13
14
15
16
Source: FactSet
ZUMA PRESS
J Sainsbury has clung on

to market share and margins
better than most big grocers
during Britains recent price
wars. But the midmarket
chain could now turn from
leader to laggard.
Stripping out fuel, sales
rose 0.3% year over year in
the 12 weeks through June 4,
the company said Wednesday. But Sainsbury is the
only major grocer that continues to open new stores.
Excluding these, sales
slipped 0.8%.
That is despite robust
nonfood sales: Clothing and
housewares revenues rose
5% year over year. Management also clocked food-price
deflation at 1% for the quarter. This is actually more benign than the recent trend,
which has been marked by
the expansion of German discounters Aldi and Lidl.
Add such figures together
and investors can conclude
that Sainsbury now is losing
food volumes on a like-forlike basis. This is new.
The most plausible explanation is the rejuvenation of
Tesco. The U.K.s largest gro-
A store in London
cer, which has almost twice

the market share of Sainsbury, launched in March a
range of cut-price products
in staple categories. The intention is to revive growth
in sales volumes, which Chief
Executive Dave Lewis sees as
the key to beefing up Tescos
wafer-thin margins.
The fear is that Sainsbury
is sitting on the other side of
Mr. Lewiss bet on volume
growth.
Such pressures arent
likely to ease. Sainsburys

other key rival, the ASDA
chain owned by Wal-Mart
Stores, had helped rivals by
ceding market share over the
past 18 months. But that
may change.
David Cheesewright, head
of Wal-Mart International,
admitted last Friday that
ASDA had been too focused
on protecting profit. In
hindsight we probably lost a
bit more share than we
would want, he told ana-
lysts at the groups AGM.

Now that Wal-Marts U.S.
business is performing better, he plans to get that
back.
Sainsbury also faces the
challenge of integrating Argos, an underperforming
housewares business it is in
the process of buying. The
deal was fairly cheap, and
should allow property savings. But it also risks distracting management from
an increasingly challenging
day job in the grocery aisle.
Sainsbury shares dont
look excessively expensive,
at 12 times forward earnings,
according to FactSet. But
that is misleading: The combination of ferocious competition and high fixed costs
means those earnings are at
risk. Jefferies says a percentage-point cut to its estimate
of 0.5% like-for-like sales
growth this year would imply a 6% profit downgrade.
U.K. grocers have taken it
in turns to underperform in
recent years. Tesco came
first, then ASDA. Sainsbury
looks to be next.
Stephen Wilmot
OVERHEARD
There is nothing so mundane big banks wont fight
over it.
Bank of America said
Wednesday it will announce
fourth-quarter results on Jan.
13. If the lead time seems
long, thats because it is.
BofA, unfazed by Friday
the 13th superstitions, wants
to lock in its spot so it can
get earnings out of the way
before the World Economic
Forum in Davos. The bank
says it wants executives to
be able to talk to investors
there without the restrictions
of the pre-earnings period.
When to announce earnings might be a scheduling logistic in other industries, but
in banking its a horse race. In
recent history, J.P. Morgan
Chase often positioned itself
as the first big U.S. bank to
report earnings, which other
banks interpreted as a subtle
(or not-so-subtle) proclamation of being the best. But
there has been plenty of jockeying among it and other big
banks around who goes first.
Good to see Wall Street is
as competitive as ever.
Time to Cut the Power to This Hong Kong Lighting Play

Tech Pro Technology Development turns out to be
no pro at defending itself.
The Hong Kong-listed companys rebuttal Tuesday to a
short-seller report only
strengthens misgivings.
At last weeks Hong Kong
chapter of the Sohn investor
conference, U.S.-based short
seller GeoInvesting argued
that Tech Pros LED lighting
business is too dim to support a tripling of its shares
in two years. The Wall Street
Journal first raised questions about the company in
March.
Among GeoInvestings
findings: Tech Pros workforce at key subsidiaries is
smaller than the company
claimed on its website. For

instance, as of June 3 the
site mentioned over 200
employees at the U Young
Technology unit, according
to cache of the site on
Google. GeoInvestings onthe-ground investigation
found 40 or fewer.
Tech Pro said the employee counts reflected the
workforce when certain subsidiaries were acquired in
2010 or 2011, and was out of
date. Its website no longer
provides a count for U Young
Technology.
Tech Pro also says it outsourced production to third
parties to cut head count. It
didnt disclose what work it
outsources and to whom. It
hasnt highlighted such an

efficiency drive in recent filings.
Given Tech Pros six years
of losses and two years of
burning cash, GeoInvesting
argued the company will
need to raise equity soon.
Tech Pro calls this absolutely fallacious, saying it
has sufficient resources and
hasnt conducted any equity
fundraising activity for cash
recently.
It is true that Tech Pro
hasnt raised equity for cash
directlybut it has issued
warrants and convertible
bonds that, converted to equity, have increased its ordinary share count by 70%
since June 2011, after adjust-
ing for stock splits. The proceeds from these conversions since 2013, totaling
$54 million, are the companys chief cash inflow, offsetting $25 million flowing
out through operations and
investments.
Tech Pro also has used equity to pay for investments,
such as the $59 million it
put into a Shanghai property-management company
in a deal announced last
week. It also used nearly $4
million in stock to pay celebrity endorsers, including
Macanese Cantopop singer
Maria Cordero, known to her
fans as Fat Mama.
Tech Pros rebuttal
doesnt address the uncom-
fortable suggestion that its

stock is its currency. Hence
the fear that Tech Pros high
share price, which has barely
budged amid the criticism, is
integral to the business. GeoInvesting last week repeated
the Journals finding from
March that in the last hour
of trading, Tech Pros share
returns are abnormally high.
Tech Pro says in response
that the share-price movement is entirely out of the
control of the company.
Considering shares command
15 times book value and 62
times sales, investors should
surmise that the stock isnt
in the control of any kind of
economic reality.
Abheek Bhattacharya
WSJ.com/Heard
Why Smaller
Banks Pay
The Price
Europe is getting closer to
breaking the doom loop between banks and their national governments. For Italy
and Spain, this could prove
costly.
The problem is that many
European banks still treat
bonds from their own governments as if they
were entirely risk free. That
means they hold no capital
against them. This makes
such debt attractive to own,
even at very low prevailing
interest rates, and helps
keep borrowing costs at a
bare minimum.
Forcing banks to hold capital against sovereign-bond
exposures would mean they
need to increase their total
capital by between 2% and
25% under five different and
progressively harsher scenarios calculated by Fitch
Ratings. The most painful of
these would entail a need for
$170 billion in extra tier-one
and tier-two capital across
European banks. That would
be unless they sold large
chunks of their domestic
sovereign bonds.
While that sounds like a
lot, the requirement will fall
disproportionately on
smaller banks.
The biggest banks in Europe all tend to hold capital
against government bonds
already, plus they hold bonds
from more governments.
Fitch reckons none of Europes 12 globally systemically important banks
breaches rules that say
banks exposures to a single
borrower shouldnt exceed
25% of its capital base.
For many smaller banks,
the levels are much higher.
Domestic government bondholdings are on average
equivalent to more than
175% of capital for all banks
in Belgium, Germany, Italy
and Spain. Paul J. Davies
MONEY & INVESTING
TRUMP
BROWN
hold about 2% of their assets
in the stocks, less than twothirds of the sectors weight in
the market, Goldman says.
Turning REITs into its own
sector will make it clear which
managers are avoiding real estate. Of course index funds
have always had a full weighting in REITs.
The question is, why have
investors ignored REITs?
When tech stocks are hot,
managers dive in with abandon. But REITs arent like
DEUTSCHE BANK
Asset-Management
Chief Is Leaving
JOE SKIPPER/REUTERS

and consumer products, all
branded with the same five
letters. There is Trump Natural Spring Water, served at
Trump hotels and restaurants.
There is Success by Trump, an
eau de toilette spray that captures the spirit of the driven
man. Trump Steaks were once
sold through the retailer
Sharper Images catalog.
Trump Vodka debuted in
2006 with the slogan Success
Distilled, but the brand was
discontinued. And for more
than a decade until it dropped
the partnership last year,
Macys Inc. carried items from
the Donald J. Trump Signature
Collection, including cuff links,
ties and dress shirts.
Mr. Trumps hotel business
has special status, however.
While many of his other ventures are primarily licensing
agreements that require little
or no cash from the Trumps,
the family has put its own
money into the hotel company.
It owns some of its hotels, including those in Miami and
Washington, and has stakes in
others.
Trump Hotels also represents the next generation of
the family business, called the
Trump Organization. It has
been run by three of his children: Donald Jr., Eric and
Ivanka, who each hold the title
of executive vice president.
Last year, the company hired
Mr. Danziger, a hospitality vet-
Finance
Watch
The Trump brand name is attached to everything from wine and bottled water to steaks.
eran, as its first CEO of its luxury-hotel-management company, Trump Hotels.
The hotel business itself is
facing a generational and technological shift in the form of
increased competition from
Airbnb, the room-rental service favored by younger Americans.
Many big hotel companies
have been rolling out more
stylish brands aimed at the
same clientele. That is a group
for whom the Trump brand
doesnt resonate, and the contentious presidential campaign
is widening the gap.
Traditionally, the Trump
brand has been associated

with luxury and glamour and
privilege, but in a very aspirational sense, said Susan Federspiel, strategy director at
brand consulting firm Landor.
Mr. Trumps remarks on immigration and other issues
have made the brand more
polarizing, Ms. Federspiel
said, and in some cases less
likable.
Mr. Trump is having trouble
getting younger people on
board to vote for him in the
campaign.
A poll this spring by Harvard Universitys Institute of
Politics found that among
likely voters between the ages

of 18 and 29, 61% would vote
for Hillary Clinton and 25%
would vote for Mr. Trump. The
remainder said they were unsure how they would vote.
Landors research suggests
that millennials put high value
on their brands being responsible and inclusive. They like
to hold their brands accountable, and that would go for a
lodging chain targeting their
youthful cohort as well, Ms.
Federspiel said.
If his company or business
is thinking about a hotel chain,
its not the best idea to put his
name on it, she said.
other stocks because they are

essentially conduits to take
rent and pass it on to investors. Analyzing a REIT is different than trying to figure
out a company that produces
products or delivers services.
For stock pickers, REITs are
frustrating because they tend
to rise and fall based on
whats happening in the economy, making it hard for a fund
to stand out. The stocks perform well when the economy
is humming along at a modest
pace, just like now when rents
are rising and occupancy is
high. But when the economy
tanks, they can get hit hard. In
2007 and 2008, REITs lost
15.7% and 37.7%, respectively.

And when the economy
runs too fast and interest
rates rise, they lag. Many
managers see REITs as bonds
masquerading as stocks. There
is truth to that. REITs tend to
lag behind the market when
interest rates are rising, just
like bonds. REITs also are
compared with stodgy utilities, which also throw off lots
of dividends but do little else.
Ultimately, many fund managers didnt buy REITs because they didnt have the
time or staff to figure out the
industry.
All of this is going to get
unmasked as the sector breaks
out on its own, said Iman

Brivanlou, who runs asset
manager TCWs high-income
equities group.
Fund managers are under
even more pressure this year,
when their stock picks have
been dismal and their investors are fleeing. According to
Goldman, the stocks most
loved by mutual funds this
year have trailed far behind
stocks that are the least favored by managers.
While fund managers were
ignoring REITs, the industry
changed a lot. Historically big
REITs owned office buildings,
shopping malls and apartments, and they still do. But
Deutsche Bank AGs assetmanagement chief, Quintin Price,

will depart from the lender effective June 15, after being on
medical leave for two months.
Mr. Price submitted his resignation to the banks supervisory
board this week, and it was accepted on Wednesday, according
to a statement from the bank.
His planned departure has
prompted a search for a new
head of the asset-management
division, one of four main operating units at the bank. Mr. Price
declined to comment through a
Deutsche Bank spokesman.
He joined the German bank
as part of an overhaul announced last year by Chief Executive Officer John Cryan. In midApril, the 54-year-old executive
went on medical leave for unspecified reasons.
Jenny Strasburg
through bankruptcy without a

taxpayer bailout.
Barclays PLC, Credit Suisse
Group AG, UBS Group AG, and
Deutsche Bank will have until
July 2017 to file their next bankruptcy plans, the Federal Reserve and Federal Deposit Insurance Corp. said. The previous
deadline was July 1 of this year.
The agencies said the change
came in light of a requirement
that foreign- owned banks create single holding companies for
all their U.S. operations by next
month. The new holding company structures are likely to affect the firms resolution plans
and strategies, the regulators
said.
Resolution is regulatory jargon for the process of handling
a failing bank.
Ryan Tracy
RESERVE CURRENCIES
Euro, Dollar Play

Smaller Roles
U.S. regulators said they will

give four large foreign-owned
banks an additional year to file
revised living wills showing
how their U.S. units could go
The euro and dollar both lost

ground as international currencies last year, slumping to 15year lows in their share of global
foreign-exchange reserves, according to an annual report by
the European Central Bank.
The euros share of globally
disclosed reserve was 19.9%, the
lowest level since 2000. The dollars share was 64.1% in 2015, its
lowest since 1999.
Nontraditional reserve currencies, including the Australian and
Canadian dollars, have seen their
share of global foreign reserves
surge by more than 4 percentage points since 2008, to 6.8%.
Tom Fairless
two of the largest REITs own

cellphone towers, while others
include a billboard company, a
big owner of timberland and a
document-storage business.
One REIT that many investors missed is Public Storage,
the self-storage giant that on
the surface appears boring but
has created a fantastic business housing all of the junk
that Americans refuse to part
with. The companys stock has
risen 250% over the past decade, trouncing the 69% return
of the S&P 500. Add in a
nearly 3% yield and Public
Storage gets sexier. It turns
out these can be quite exciting
after all, Mr. Brivanlou said.
Sadly for investors who

now have to take the sector
more seriously, the big gains
recorded by REITs over the
past 15 years arent likely to
continue. REITs have been the
best-performing asset class in
five of the last six years, a record thats unlikely to repeat
itself even though valuations
are in line with history.
When REITs do poorly, they
really crater. Since 2000, they
are second only to emergingmarket stocks as the most volatile asset class. With interest
rates likely to rise, the next
few years could be tough, especially for fund managers
who start buying REITs now.
U.S. REGULATION
More Time to File

Living Will Plans

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A2 | Thursday, June 9, 2016

Rise of Populist Right Not End of Globalization

The Unpredictable Politics of Economic Stress

mit more than a million

Cas Mudde, a Netherlandsborn political scientist at the

tural terms, i.e. being related

omy first among concerns,

et broad-based prosperity wouldnt necessarily

or sell. Some analysts warn of

ing in 2028 fell from 1.4% at

lower throughout the developed world. The Bank of

referendum, according to Credit

its own deals with large trading

controls, said Nicola Hawkins

From a business point of

staying in the European Union.

Unemployment rate, difference from 2007 average

Why a Brexit Matters to the U.K. Auto Industry

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For the U.S., foreign trade is...

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Thursday, June 9, 2016 | A3