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IN DEPTH 10-11
EUROPE EDITION
VOL. XXXIII NO. 7
$1.75 (C/V) - KES 250 - NAI 375 -
1.70
WSJ.com
TUESDAY, FEBRUARY 10, 2015
Obama Backs Ukraine Peace Talks Russian

Car Sales
No Decision Yet
On Arms; EU
Delays Sanctions
Go Into
Reverse
AND
WAS H I N GT O N P re s i dent Barack Obama said he

would allow one last push for
peace to play out before deciding whether to provide lethal assistance to Ukraine, as
he and German Chancellor
Angela Merkel pledged to
continue to work together toward a diplomatic solution
with Russia.
Mr. Obama and Ms.
Merkel on Monday said the
two countries remain united
against Russian aggression,
even if they arent in lock
step on each of the measures
being suggested to end fighting in eastern Ukraine.
In a joint news conference
at the White House, the two
leaders largely sidestepped
questions about trans-Atlantic
disagreements
over
whether to supply lethal aid
to Ukraine, emphasizing instead their commitment to
sanctions and hopes for a
diplomatic solution.
Mr. Obama said arming
MOSCOWJanuary auto
sales dropped 24% in Russia,
as consumers pulled back
sharply after the rubles
plunge in mid-December had
fueled panic buying of everything from vehicles to TV sets
before prices went up.
Although the ruble has
firmed up a bit, the reality of
the economic slowdown and
surging inflation has hit hard
since the holidays, according
to industry officials and economists, with consumer confidence falling to record lows.
Major foreign auto makers
with operations in Russia have
cut production and laid off
workers, at the same time
raising prices in rubles to reflect the currencys steep devaluation.
If December was a big
party for many market participants, then January is the
equivalent to a bad hangover,
Jrg Schreiber, chairman of
the AEB Automobile ManufacPlease turn to page 18
Opinion: Stop letting Putin

win war of words.................... 13
BY ANDREY OSTROUKH
OLGA RAZUMOVSKAYA
Associated Press
BY CAROL E. LEE
AND COLLEEN MCCAIN NELSON
Chancellor Angela Merkel arriving at the White House on Monday. She said the U.S. and Germany are united against Russian aggression.
Kiev is an option under consideration but that no decision has been made. He didnt
say when he would make a
decision, but pointed to a
possible time frame by saying
he was eager to see whether
Russian President Vladimir

Putin decides this week to
endorse a German-French
proposal for a cease-fire.
Ive consulted with not
just Angela, but will be consulting with other allies
EU Rules Set to Reshape

Analyst Research Sector
Wall Street research analysts who make a living valuing companies and sending
trading ideas to investment
managers have a new challenge: proving their own
worth.
By Margot Patrick,
Juliet Samuel and
Alexandra Scaggs
For decades, analysts research has been financed by
the commissions that clients
pay each time they buy or sell
shares via a bank. But a new
European Union law will require investment managers,
such as those at hedge funds,
to pay specifically for any analyst research or services they
receive.
Because many large money

managers are starting to follow the proposed rules globally, investment banks in Europe and the U.S. are devising
new business models for one
of their oldest, and highestprofile, functions.
Barclays PLC, Citigroup
Inc., Credit Suisse Group AG
and Deutsche Bank AG are
working with clients to come
up with pricing for the analyst research customers receive, according to bank executives. Prices are expected to
range from roughly $50,000 a
year to receive standard research notes, up to millions of
dollars for bespoke research
and open-door access to analysts.
In response to the pro-
posed new rules, UBS AG has

started to offer research and
direct access to analysts for
fees that depend on the analysts popularity and the fluctuating demand for his or her
area of expertise. The most
popular analysts at UBS can
command prices that are four
to five times higher than their
UBS peers, said Barry Hurewitz, chief operating officer of
UBSs investment research division.
Were creating a marketplace for our analysts, Mr.
Hurewitz said. Were auctioning off everybodys time
and [price] moves around depending on whats valuable.
Such changes are controversial, raising the prospect
Please turn to page 22
about this issue, the president said. Its not based on

the idea that Ukraine could
defeat a Russian army that
was determined. It is rather
to see whether or not there
are additional things we can
Inside
do to help Ukraine bolster its

defenses in the face of separatist aggression.
Mr. Obama detailed his
thinking after a White House
meeting with Ms. Merkel,
Africa Bond Bonanza

Faces a New Reality
BY MATINA STEVIS
In a big shift, majority

of residents in top U.S.
cities are now renters
U.S. News................ 7
Apple seeks to add to
its recent run of
blockbuster bond deals
Business News ..... 22
BGs boss constrained
by oils testing times
Heard ................... 28
Budget car brands gain in

Europe...................................... 18
NAIROBIFor the past

two years, debt investors have
been flocking to Africa, drawn
by the promise of high returns and the continents economic potential. But the benign climate that enabled
nations that were once financial pariahs to raise billions of
dollars is rapidly clouding
over.
The U.S. Federal Reserves
widely expected move to raise
U.S. rates, a plunge in oil
prices and a stronger dollar
are starting to scare fund
managers away from riskier
markets at the frontiers of
global capitalism.
Overall, African governments raised a record $11 billion in foreign-currency bonds
in 2013 and an additional $8
billion in 2014. By comparison, in 2000 they raised $1

billion.
In 2013 and 2014, countries ranging from tiny
Rwanda to the continents
largest economy, Nigeria, have
borrowed billions to build infrastructure and fuel economic growth. Foreign investors went along for the ride,
eager to pocket the higher returns promised by African
bonds when interest rates in
the West wallowed at historic
lows.
Rwanda, which depends on
foreign aid for almost half of
its state budget, raised $400
million in its first dollar-denominated bond in April 2013.
Demand from investors was
almost 10 times that.
But the path is getting
2 | Tuesday, February 10, 2015
AM
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THE WALL STREET JOURNAL.
PAGE TWO
Whats News
i
World-Wide
n BG Groups new chief executive inherits two of the companys big bets: a partnership
with scandal-scarred Petrleo
Brasileiro and an expensive liquefied-natural-gas project. 15
n India expects its economy to

grow at 7.4% in the fiscal year,
a growth rate that rivals
Chinas. 3
n OPECs strategy of not cutting production despite plunging prices appears to be working, bolstering the groups grip
on importing countries. 15
n Austrian steelmaker Voestalpine is working on a technique for fusing steel and aluminum, a Holy Grail for auto
makers looking to build more
fuel-efficient cars. 15
n Cathy Engelbert has been
named the new chief executive
of Deloitte, the first woman to
become CEO of one of the Big
Four accounting firms. 16
n HSBC got a fresh blast of
embarrassing publicity, as new
details on its Swiss banks historical services for unsavory
characters and tax evaders
were dumped on the media. 16
n Apple is seeking to add to
its recent run of blockbuster
bond deals with a debut sale in
Swiss francs. 22
n Budget brands are leading
the way as Europes car market
slowly awakens. 18
n Drug makers are moving toward a major upgrade of their
manufacturing techniques. 19
n Greece said it would cancel

about a third of the debt-reduction and economic-overhaul
measures the country had
signed on to as a condition for
international aid. 4
Associated Press
Business & Finance
n Germanys exports, imports

and trade surplus reached alltime highs last year. 4
U.S. President Barack Obamas budget proposal largely leans on the Affordable Care Act to help address Medicare costs.
Costs for Entitlements?

Out of Sight, Out of Mind
n A year after the Winter

Games, Sochis Krasnaya Polyana ski resort is having its first
full seasonjust as Russias
oil-dependent economy heads
for a wipeout. 5
n Chinese authorities executed tycoon Liu Han after his
prosecution brought attention
to his links to a top target of
Chinas broad crackdown on
corruption. 8
[ Capital Journal. ]
BY GERALD F. SEIB
n Australias leader, Tony Abbott, survived a move by party

rebels to unseat him. 8
Two words
seem to be
slipping from the
Washington
vernacular:
entitlement
n A Japanese traveler was

sexually assaulted by a man
posing as a tour guide near the
western Indian tourist city of
Jaipur, police said Monday. 9
n A former Taliban commander aligned with Islamic
State was killed in an airstrike
in southwestern Afghanistan,
Afghan officials said. 9
Getty Images
Whats Online
WSJ Live
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globe to influential people and decision makers. live.wsj.com
reform.
There was a time, not so long
ago, when both parties were at
least paying lip service to the idea
that the giant Social Security and
Medicare entitlement programs
their long-term solvency in peril,
their contributions to long-term
deficit and debt dauntingneeded
to be adjusted before they broke
the bank or failed future retirees.
Now a combination of factors
has blunted the reform drive.
Declining short-term deficits, the
salve of slower increases in
health-care costs, the sheer failure
of repeated attempts to find
bipartisan common ground on
changes, traditional Democratic
reluctance and the growing
dependence of Republicans on
senior citizens votes all reduce
Washingtons interest in tackling
this toughest of problems. Yet the
need isnt going away; its simply
slipped out of sight for now.
The Obama administration last
week proposed a budget that
offers little in the way of new
ideas or proposals to address the
long-term balloon in entitlement
costs. Instead, it largely leans on a
belief that Medicare changes in
the Affordable Care Act and
greater power to negotiate lower
drug costs for Medicare will
address the problem.
We are accelerating a lot of
reforms, President Barack Obama
said in discussing health costs an
interview just published by the
Vox news site. Using Medicare as
a lever, I think, is creating an
environment in the health-care
field where we can start getting
better outcomes and lower costs
at the same time.
Still, the nonpartisan
Committee for a Responsible
Federal Budget says in its analysis
of the new budget that it does
far too little to slow long-term
entitlement costs. The plan does
almost nothing to address Social
Security and too little to slow
health-care cost growth, the

drivers of rising long-term debt.
In coming weeks well see what
Republicans intend to do, when
the new GOP majorities in the
House and Senate try to compose
a budget of their own. In recent
years, when the party didnt have
the burden of full control, Rep.
Paul Ryan, then chairman of the
House Budget Committee,
composed budgets that proposed
to take on the long-term Medicare
cost problem by transforming its
current fee-for-service model into
what it presumed would be a
more cost-efficient premiumsupport model, in which the
government would provide a
payment to senior citizens to buy
their own insurance plan.
The Ryan plan softened the
blow by stipulating that current
senior citizens and those near
retirement would be exempt from
the change. Still, it was
controversial enough that
Republican presidential contender
Mitt Romney essentially ran away
from it in 2012, despite having Mr.
Ryan as his running mate. And
last year, candidates for the House
and Senate didnt exactly flock
toward it either.
Perhaps that waning
enthusiasm stems from the fact
that the Republican Party is
growing ever more dependent on
older voters, who are the most
jittery about entitlement changes,
even when assured they wont be
affected personally. Indeed, the
emergence of senior voters, once
a core Democratic constituency, as
a foundation of the Republican
Party is one of the most striking
trends in todays politics.
In the 2014 midterm election
the one that brought full
Republican control of Congress
Republican candidates won voters
aged 65 and over by a whopping
16 percentage points, 57% to 41%,
exit polls showed. Meanwhile,
they lost voters aged 18 to 29 by
11 percentage points, 54% to 43%.
And in the latest Wall Street
Journal/NBC News poll, broader
public sentiment toward the two
parties is, if anything, even more
starkly divided along generational
lines. Fully 40% of those aged 65
and over reported positive
feelings about the Republican
partytwice the share among
those aged 18 to 34. In any case,
both parties, which a few years

ago seemed driven by record
budget deficits to the waters edge
on the subject of Medicare and
Social Security changes, now dont
seem particularly inclined to take
a dive into those shark-infested
waters. Indeed, some Democrats
actually instead are pushing to
increase Social Security benefits.
Its the worst of all worlds,
and entitlement reform really
works under the best of all
worlds, says Maya MacGuineas,
president of the Committee for a
Responsible Federal Budget.
Meanwhile, heres the longterm picture, as seen in the
projections contained in a new
analysis from the Congressional
Budget Office: Social Security will
rise in cost by 77% over the next
decade, and Medicare by 89%,
under current policies. Meantime,
the governments bill for paying
interest on the accumulating
national debt will more than
triple. Good luck getting any other
domestic initiatives funded in that
environment. The need for
discussion and tough decisions to
reduce the long-term cost of
Medicare and Social Security is as
real as ever, and the cost of
avoiding it continues to rise.
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Tuesday, February 10, 2015 | 3
NEWS
India Growth Rate Poised to Rival Chinas

NEW DELHIIndia expects its
economy to grow at 7.4% in the current fiscal year, a growth rate that
rivals Chinas, reflecting a strengthening recovery but also a recent
radical revision in the way the country calculates its gross domestic
product.
The Indian statistics ministry
was careful Monday to play down
any notion of a horse race with Beijing. There is no comparison, said
Ashish Kumar, director general of
the Central Statistics Office, since
Chinas economy is several times
larger than Indias. We are not here
in a beauty contest.
If India can outpace its northern
neighbor and strategic rival, it
would mark a comeback for the
South Asian nation, whose economy
had until recently appeared to have
lost its shine amid corruption scandals and gaping trade and budget
deficits.
It would also provide a major political boost to the government of
Prime Minister Narendra Modi, who
won a landslide electoral victory
last year after pledging to revive the
economy and drive development so
India could catch up with its richer
neighbors in East Asia. For the final
three months of 2014, the third
quarter of Indias fiscal year, gross
domestic product grew 7.5%, the
statistics ministry said, buoyed by
accelerated growth in government
spending and financial services.
But the countrys new growth
figuresand the revised calculations that underpin themhave provoked confusion and jubilation in
roughly equal measure.
Shubhada Rao, chief economist
at Mumbai-based Yes Bank, said the
revised data, considered alongside
other indicators of continued frailty,
do not add up in terms of the extent of improvement in GDP.
Late last month, the statistics
ministry said it was updating the
base year used as the reference
point for measuring price changes,
as well as incorporating newer,
more-comprehensive data into its
GDP calculations, which aim to measure the countrys total economic
output. The ministry also shifted its
focus to GDP computed at market
price, not at factor cost, as its main
Bloomberg News
BY RAYMOND ZHONG
AND ANANT VIJAY KALA
One of the difficulties of predicting Indias growth is that indicators now paint divergent pictures of manufacturing activity. Above, a metal worker in Mumbai.
indicator of economic expansion.
Market-price GDP gauges activity by
adding up consumers and firms
spending, whereas factor-cost GDP
tabulates producers costs.
The first growth estimates produced using the new methodology
showed growth in the previous fiscal year, which ended in March, well
above what was originally announced: 6.9% instead of 4.7%. The
size of the economy, however, was
relatively unchanged.
That revision seemed difficult to
square with the events of that year,
in which the threat of tighter monetary policy by the U.S. Federal Reserve roiled emerging markets and
provoked emergency intervention by
Indias central bank.
Mondays data included bumpedup estimates of growth for the current fiscal year as well. Growth in
the three months that ended in September was revised to 8.2% from
5.3%. And in the quarter before that,
the official growth rate was changed
to 6.5% from 5.7%, indicating substantial acceleration between those
two quarters instead of a slight
slowdown.
The latest figures, which describe the economys performance
since Prime Minister Modi took office in the spring, also seem much
stronger than what other data imply. Mr. Modi has taken some steps
to improve the business environment and streamline bureaucratic
procedures. Indian companies announced $64 billion in new investment projects in the fourth quarter
of 2014, by one estimatethe highest level in four years.
But they dont appear to be putting big money on the table yet. Ex-
Obama Presses Iran on Talks

BY CAROL E. LEE
AND BYRON TAU
WASHINGTONPresident Barack Obama said the U.S. wont approve another extension of Iran nuclear talks if negotiations remain
at a substantive impasse this
spring, telegraphing a decision designed to ratchet up pressure on
Tehran to agree to a final deal.
Mr. Obama said differences with
Iran and world powers have been
sufficiently narrowed and sufficiently clarified at this stage in
the talks.
At a White House news conference with German Chancellor Angela Merkel on Monday, Mr. Obama
said it is now up to Irans leaders
to decide if they want a deal.
We are at a point where they
need to make a decision, he said.
We now know enough that the issues are no longer technical. The
issues now are, does Iran have the
political will and desire to get a
deal done?
Mr. Obama said that U.S. options in the absence of an agreement are narrow, and theyre not
attractive, a reference to the possibility of future military action
against Iran.
Mr. Obama made comments in
response to a question about tensions over Iran strategy with Israeli Prime Minister Benjamin Netanyahu.
Mr. Netanyahu in January accepted an invitation for a congressional address in March, angering
the White House, which said the
two leaders wouldnt meet during
the visit.
Mr. Obama acknowledged real
differences with his Israeli counterpart over how to deal with
Irans nuclear ambitions. But he insisted on Monday that a lack of a
meeting during Mr. Netanyahus
coming visit was a simple protocol
issue. The visit would come just
two weeks before Israeli elections.
We have a practice of not

meeting with leaders right before
their elections, Mr. Obama said.
He added: I think it is important
for us to maintain these protocols
because the U.S.-Israeli relationship is not about a particular
party.
International nuclear talks with
Iran have been extended several
times, with the next major deadline
in June.
The White House is operating
under a tighter time frame, however, since Congress agreed to Mr.
Obamas request to hold off on
passing additional sanctions until
March 28, when negotiators were
expected to be completing a framework for a final deal.
Mr. Obama, while stressing the
importance of a diplomatic resolution to Irans nuclear program, said
another extension wouldnt be
useful, unless to complete some
minimal issues in writing the final
accord.
ports in December shrank 3.8% in

dollar terms from a year earlier.
Financial constraints are a major
reason investment hasnt picked up.
Corporations are burdened with
debt and banks are reluctant to
lend. Finance officials have said the
government budget for the coming
fiscal year will likely include substantial investments in railways,
roads and housing to compensate
for weak investment by private
firms.
Such indications of subdued activity have vexed economists trying
to understand the new, peppier GDP
figures. We are still trying to connect the dots, said Dharmakirti
Joshi, chief economist at the Mumbai-based rating agency Crisil. He
said that for him, the main difficulty
for forecasting future growth is that
different indicators now paint diver-
gent pictures of manufacturing activity. For the previous fiscal year,

the governments index of industrial
production showed manufacturing
activity slowing 0.8%. The new GDP
data show a 5.3% jump in manufacturing for that year.
Vidya Mahambare, an economics
professor at the Great Lakes Institute of Management in Chennai,
suspects Indias growth figures for
the first decade of the 2000s will
eventually see big revisions as well.
Under the new parameters, economic expansion during the fat
years might have maxed out at 10%
or even 11% instead of 9%, Ms. Mahambare said. Whatever we
thought about potential growth and
business
cycleseverything
changes.
Rajesh Roy
contributed to this article.
U.S.-Led Airstrikes Help

Kurds Retake Iraq Routes
BY FELICIA SCHWARTZ
WASHINGTONU.S. and allied

warplanes conducted airstrikes in
support of Kurdish Peshmerga fighters in Iraq who retook main routes
into Mosul from Islamic State forces,
officials with the international coalition said Monday.
Coalition officials said the Peshmerga forces seized three strategic
corridors that defense officials
called bridgeheads north of Mosul
along the Tigris River in territory
formerly controlled by extremist
forces with Islamic State, also
known as ISIS, ISIL and its Arab acronym Daesh, military officials said.
The coalition conducted four airsupport strikes to help the Peshmerga retake ground. Bridgeheads
are areas near bridges that could be
used as a staging area, military officials said.
This most recent Peshmerga op-
eration is yet another example of

how Daesh can be defeated militarily
using a combination of well-led and
capable ground forces, said Lt. Gen.
James Terry, commander of the
Combined Joint Task Force Operation Inherent Resolve.
The coalition is preparing Iraqi
and Kurdish forces for an offensive
this year to try to retake Mosul from
Islamic State. In advance of that operation, anti-Islamic State forces are
seizing ground and cutting off supply lines used by extremists.
The White House on Wednesday
will propose to Congress an authorization for military operations
against Islamic State militants, congressional and administration officials said, kicking off a political fight
to define the scope and extent of the
U.S. operations.
Since August, the U.S.-led coalition has conducted more than 2,000
airstrikes in Iraq and Syria.
EUROPE NEWS
Greece Digs In Over Austerity
Greeces new government said it

would cancel about a third of the
debt-reduction and economic-overhaul measures the country had
signed on to as a condition for international aid, while Germany showed
no sign of backing off its insistence
on the current bailout terms.
Meanwhile, a top French official

fanned hopes for a compromise, saying that the will of Greek voters
who flocked to the far-left, antiausterity party Syriza last month
needs to be respected. He added,
however, that Athens also must respect European budget rules.
Mondays comments suggest that
the key actors in Greeces debt
drama are sticking to their guns as
an end-February deadline looms for
Athens to strike a deal with its creditors in Europe and at the International Monetary Fund.
The impasse, five years after
Greeces debt crisis first rocked the
global economy, is pushing Greece
closer to the brink of default and potentially even a forced exit from the
euro, an outcome that financial leaders fear could tilt the eurozone back
into recession and undermine global
growth.
In a sign of the high stakes, the
countrys woes are emerging as a
concern for finance ministers and
central bankers from the Group of
20 largest economies, who are meeting in Istanbul this week.
A strong eurozone is really important, Chinas Vice Minister of Finance Zhu Guangyao said at a conference Sunday. We really hope
Greece and the members of the European Union productively find a solution soon.
Greek markets tumbled Monday,
a day after Prime Minister Alexis
Zuma Press
By Harriet Torry and

Ian Talley in Istanbul and
Stelios Bouras in Athens
Austrian Chancellor Werner Faymann, right, and Greek Prime Minister Alexis Tsipras after meeting in Vienna on Monday.
Tsipras unveiled a plan in Parliament to increase the minimum wage
and drop a recently introduced
property taxsteps that would
likely meet stiff opposition from
Greeces creditors.
He also stuck to his refusal to accept an extension of Greeces current
international bailout, which expires
at the end of this month. Government officials say the country could
run out of money soon after that unless a solution is found.
Greek Finance Minister Yanis
Varoufakis called on eurozone finance chiefswho are holding an
emergency meeting on Greece on
Wednesday in Brusselsto drop demands for Athens to continue with
policies that he said have failed.
We will submit our proposal,
and move ahead with deep reforms,
Mr. Varoufakis told lawmakers in

Athens. To this list, we will add
about 70% of the reforms and commitments that are in the current
bailout. The remaining 30% will either be suspended or withdrawn.
Germanys Finance Minister
Wolfgang Schuble, speaking on the
sidelines of the G-20 meeting,
showed no sign of easing Berlins
pressure on Greece to extend its
240 billion ($271 billion) bailout.
Without a program it will be difficult for Greece, Mr. Schuble said.
Yet Frances finance minister
Michel Sapin offered a more conciliatory message.
I think there is flexibility to find
a short-term solution that would
give Greece financing while a longerterm program for the country is
thrashed out, he said.
Greece is expected to ask for a

bridge loan from its international
creditors. The country needs some
4 billion to 5 billion to tide it over
until June, by which time it hopes to
negotiate a broader deal.
U.S. Treasury Secretary Jacob
Lew may also sound the scolding
parent in Istanbul, urging his European colleagues toward greater economic collaboration.
We encourage the Greek authorities to put in place a strong reform
program and we also encourage
Greeces European partners and the
international community to continue
supporting
the
country
to
strengthen the foundation for longterm growth, a senior U.S. Treasury
official said ahead of the meeting.
Brian Blackstone and Nicole
Lundeen contributed to this article.
U.K. Discusses
Contingency Plans
For Greek Crisis
LONDONBritish Prime Minister
David Cameron held a special meeting with senior officials to discuss
contingency plans for a range of
possible Greek scenarios, including
the countrys withdrawal from the
eurozone.
Mondays meeting, which had
been planned for several days, included officials from the U.K. Treasury, foreign ministry, other government departments, and the Bank of
England, a spokesman for Mr. Cameron said.
While the newly elected Greek
government has said it wants to remain in the euro, and the eurozone
has showed a determination to
keep Greece in the fold, the spokesman said it was important to be
prepared for the risks of what
might happen.
We need to be prepared to deal
with uncertainties in financial markets, the spokesman said during a
briefing to reporters.
A spokeswoman for the German
finance ministry declined to comment on whether Germany was
conducting contingency planning.
Mr. Camerons spokesman said
the prime ministers meeting with
officials was an opportunity to revisit the extensive contingency
plans the U.K. government had put
in place in 2012 when there were
particular pressures in the eurozone
involving Greece.
However, the spokesman noted
the situation had changed since
then with several eurozone countriessuch as Portugal and Irelandundergoing economic overhauls, increased stress tests and
capitalizations of banks, and the announcement of the European Central Banks stimulus program.
Nicholas Winning
Germany Set Records in Exports, Imports in 2014

Germanys exports, imports and
trade surplus reached record highs
last year, spotlighting the unintended effects of the eurozones onesize-fits-all monetary policy on the
regions mismatched economies.
By Todd Buell
in Frankfurt and
Bertrand Benoit in Berlin
While tepid growth and high unemployment persist in much of the
eurozone, the euros falling valuea
corollary of the European Central
Banks ultra-loose monetary policy
is a boon for the regions powerhouse, making its exports cheaper
outside the currency area.
Low oil prices and low inflation
at home, meanwhile, are boosting
disposable incomes and demand
within Germany, as reflected in rising imports.
In an ironic twist, news that the
ECBs ultra-loose monetary policy is
lifting Germany more than the comatose eurozone economies it is designed to stimulate coincides with a
mounting backlash among German
politicians, business and the media
against this policy.
German critics of the ECB, who
include Chancellor Angela Merkel
and Bundesbank President Jens
Weidmann, say that the monetary
stimulus may discourage other eurozone governments from undertaking
unpopular but sorely needed over-
hauls of their rigid economies.

Others fear that it might fuel
speculative bubbles in asset classes
ranging from stocks to property in
the medium term.
Germanys statistics office,
Destatis, reported Monday that 2014
saw records set for exports, imports
and the trade surplus. The surplus
alone rose to 217 billion ($245.5
billion), shattering the previous record of 195.3 billion set in 2007.
And after the ECBs announcement last month that it would start
buying 60 billion a month in assets,
including government bonds, in its
latest effort to boost inflation in the
19-nation bloc, economists expect
the euros weakness against other
major currencies to persist, further
supporting the German export machine.
I think that due to the weaker
euro we should get stronger exports, this year, ING economist
Carsten Brzeski said. The weak euro
is particularly beneficial to Germany
because about two-thirds of its exports go outside the currency bloc,
he added.
The countrys export association
said Monday it expects exports to
grow by 4% this year, beating the
3.7% increase recorded last year.
The much-criticized export surplus will probably increase further,
primarily due to the cheap euro,
said Anton Boerner, chairman of the
export association BGA, in a state-
ment.
Germanys long-standing trade
surplusthe largest in the world
from 2002 to 2008has long drawn
criticism from European neighbors,
the U.S. and some international organizations for contributing to
global economic imbalances.
These critics viewed the trade
surplus partly as a factor of depressed domestic demand and a sign
that Germany wasnt doing all it
could to offer an outlet for struggling eurozone economies.
However, German government officials said that such objections
hadnt been raised recently, which
they explained by the fact that most
critics of the countrys economic
policies were also supporters of the

ECBs monetary stimulus as benefiting the eurozone as a whole.
The ECBs role in fueling Germanys export prowess, they said,
was being reluctantly accepted as a
byproduct of the fact that the central bank is conducting monetary
policy for 19 disparate economies.
Another factor defusing the criticism is that German domestic demand, long anemic, is also showing
signs of vigor. Falling oil prices and
inflation rates that have descended
into negative territory have translated into higher disposable income
for households.
Earlier on Monday, Germanys
statistics office reported that infla-
Bulked Up
Germanys trade surplus swelled to a record size in 2014, with both exports and
imports also breaking records in euros.
1,200 billion
2014
Exports
1.13 trillion
Imports
916.5 billion
Surplus
217 billion
800
400
0
2007 08
09
10
Source: German Federal Statistics Ofce
11
12
13
14
The Wall Street Journal
tion-adjusted earnings increased by

1.6% last year, the highest increase
since the index began in 2008.
We think that all wage agreements will be somewhat higher this
year than last year, said Commerzbank economist Ralph Solveen.
With an expected inflation rate of
just 0.1% this year, according to the
European Commission, such pay increases will translate almost entirely
into higher disposable income.
Like exports, imports also set a
record in 2014. Goods valued at
916.5 billion entered Germany,
breaking a record set in 2012, the
statistics office said, citing provisional figures.
Retail sales increased by about
1.7% in the fourth quarter from the
previous period, and a key consumer-confidence indicator continues to rise.
The renewed strength of Germanys domestic economy could
benefit eurozone partners in two
ways, analysts say. Germany has
more money to spend overall, and a
weaker euro means that imports
from non-eurozone countries are becoming more expensive.
A euro devaluation favors suppliers from other eurozone countries, says Nils Jannsen, an economist with the IfW institute in the
northern German city of Kiel.
The European Commission expects GDP to grow 1.5% in Germany
in 2015 and 1.3% in the eurozone.
EUROPE NEWS
BY PAUL SONNE
SOCHI, RussiaWhen oil-flush

developers conceived Sochis Gorky
Gorod ski resort ahead of the 2014
Winter Olympics, many envisioned
Russias answer to Aspen: a swanky
mountain village of tubby tycoons
on skis and pouty-lipped women in
fur, arriving from the airport on a
fast new train.
But on a recent January day, the
place was filled with hundreds of
ordinary college students, there for
an amateur comedy festival. They
had landed in the slopeside apartments for as little as 1,100 rubles
(less than $17) a night. Most came
from the airport by van; the fancy
train had curtailed operations.
We have this feeling that were
in Europe, our own little corner of
Europe, said Oleg Korotkin, a 29year-old comedy-troupe member
from Stavropol. Granted we havent been to Europe, his fellow
troupe member, 25-year-old Vadim
Kravchenko, said.
A year after the Winter Games,
Sochis new Krasnaya Polyana ski
resort is having its first full seasonjust as Russias oil-dependent
economy heads for a wipeout.
The Kremlin trumpeted the construction bonanza around the Olympicsabout $50 billion in infrastructure and other facilitiesas an
investment that would provide benefits for generations. Russian skiers
and snowboarders are indeed taking
to Sochis slopes, but the grandiose
accommodations and high-speed
train so far appear to exceed the
markets sustainable demand.
Now a looming recession is
promising government spending
cuts and lower real incomes, curtailing the number of people who
can engage in expensive pursuits
such as skiing.
The gloom also has led resort
owners to suspend plans to sell off
some Olympic accommodations as
mountainside apartments or convert others to luxury hotels, slowing
their transition to profitability.
Still, the economic downturn has
brought a silver lining. The rubles
plunge has nearly doubled the price
of U.S. and West European ski vaca-
tions for Russians, pushing many to

take domestic holidays instead.
Tourists flooded Sochi over the
countrys two-week New Year holiday period.
We told ourselves that it would
be good if the four million Russians
skiing abroad would return to us,
said Leonid Terentiev, who runs
Gorky Gorod, the ski village owned
by state-controlled OAO Sberbank.
The economic situation has just
helped push them to return to us
quicker.
But the vast mountain resorts
cant survive on two weeks a year.
We built some things that, for
the resort itself, we could have built
later. But we built them for the
Olympics, said Alexander Belokobylsky, head of Roza Khutor, the
neighboring ski village owned by tycoon Vladimir Potanin. To ensure
that all of it functions and we receive the revenue thats needed,
those two weeks wont suffice. Well
need hard work, day in and day out,
winter and summer. Our resort
must be year-round.
To boost occupancy at other
times, resorts have rented rooms at
a loss to visitors such as the comedy amateurs. Russian ski bums
have been paying as little as 550 rubles ($8.50) a night to stay in
dormlike rooms at the ski-on, skioff Olympic Village.
New measures to shore up the
resorts are in the works. Both Gorky
Gorod and Roza Khutor are planning to open beach clubs 40 minutes away on the Black Sea to attract summer visitors. Casinos will
appear in the mountains by yearend, according to Mr. Terentiev.
Sochi authorities also say they
are laying the groundwork for direct flights from China and Iran.
The survival of the resorts outside peak season depends partly on
government-linked funds and
events. Even the comedy troupes,
for example, relied mostly on public
money to reach Sochi.
Russian authorities have promoted Sochi as a patriotic destination, likely ensuring continued support despite the looming cuts.
President Vladimir Putin and
Prime Minister Dmitry Medvedev
Zuma Press
Sochi Suffers From Post-Olympic Blues
President Putin, right, after visiting a childrens sports center Saturday in Sochi.
appeared in Sochi over the weekend
to mark the one-year anniversary of
the opening ceremony. At a commemorative ice show, Mr. Putin
hailed the first winter season as record-breaking and said Russians
were discovering what an active
holiday is, what sports mean and
what it means to vacation at home
in Russia.
In December, Mr. Putin said
there was not a single place left
until the end of the ski season.
Many rooms, in fact, remain available. But over the New Year holidays, the resort was indeed fully
booked.
Singer Grigory Lepsa favorite
of Mr. Putin, barred from the U.S.
for alleged criminal tiesattracted
crowds in Krasnaya Polyana. Dmitry
Rogozin, the bombastic defense
aide sanctioned by the U.S. and Europe, posted photos of snow-swept
peaks.
A store at Roza Khutor sold T-
shirts of Mr. Putin, including one of

him and his foreign minister alongside the slogan: They are patriots,
you?
Lyubov Semyonova, 48, previously vacationed at ski resorts in
Western Europe, but her group of
10 from Arkhangelsk, a city in north
Russia, chose Sochi this year as the
ruble plunged. She was impressed.
It was a blessing in disguise,
Ms. Semyonova said, as she and her
husband, in matching yellow ski
jackets, snapped pictures around
Roza Khutor, where lift tickets cost
1,850 rubles a day. She said seeing
such a modern ski destination in
Russia roused feelings of national
pride.
Post-Olympics disputes over
costs remain. Resort owners say
terms of the billions of dollars in
loans they received from the national development bank are too
onerous. Russia has suspended repayment until late 2015 and signaled a generous restructuring.
While in Sochi this past weekend, Mr. Putin proposed repurposing the Azimut, one of the main hotel complexes next to the seaside
Olympic Park, as a national childrens camp dedicated to producing
top Russian performers in sports,
ballet, physics and math. Meanwhile, the government has injected
funds into the development bank to
help compensate for its losses.
State-run Russian Railways,
which built the roughly $8.4 billion
high-speed rail and motorway to
Krasnaya Polyana, has been locked
in a dispute with the regional government over the costs of running
such an expensive train, given the
number of customers.
On a recent week, the train,
which runs about 70 kilometers
from downtown Sochi to the resorts, with shorter branches to
Sochi airport and the Olympic Park,
was running on a reduced schedule
and didnt stop at the airport at all.
Artyom Smirnov, 24, a snowboarder from near Moscow, was
disappointed he had to take a taxi
instead. Otherwise, he was pleased.
Its the first real Russian resort, he said. Putin and Medvedev
ski here.
Obama Holds Off Weapons Decision During Peace Talks

Ukraine but said the decision was
part of a continuing analysis of
what can be done to dissuade Russia from encroaching further on
Ukrainian territory.
Ms. Merkel and Mr. Obama
agreed there is no military solution
to the violence in Ukraine.
During a weekend of fervent diplomacy, Ms. Merkel gave Mr. Putin
until Wednesday to agree to the
new road map to end the fighting.
Ms. Merkel and French President
Franois Hollande, who is also involved in the diplomatic effort, are
scheduled to meet with Mr. Putin
and Ukrainian President Petro Poroshenko on Wednesday in Minsk,
the capital of Belarus.
The French president and I
have decided to make one further
attempt to make progress through
diplomatic means, she said.
She added that reaching agreement on a cease-fire remained a
possibility.
A recent increase in deadly
fighting between Ukrainian forces
and Russia-backed separatists in
the east, coming after signs that
Mr. Putin was shrugging off the ef-
fect of international sanctions,

prompted Mr. Obama to reconsider
Kievs long-standing request for lethal assistance.
Mr. Obama has been pressured
by members of his administration
to provide arms, but has resisted
out of concern that it would thrust
the U.S. into an unwinnable proxy

war with Russia.
Ms. Merkels public opposition
to providing lethal aid to Kiev exposed potential divisions in a Western alliance that has for more than
a year tried to show a unified front
against Russia as Mr. Putin moved
Reuters
Continued from first page

who opposes providing lethal aid to
and is leading the latest diplomatic
effort to persuade Mr. Putin to end
the fighting in eastern Ukraine.
The German chancellor didnt
elaborate on that stance on Monday.
I have given you my opinion,
she said, adding: No matter what
we decide, the alliance between the
United States and Europe will continue to stand, will continue to be
solid.
Mr. Obama echoed that sentiment, saying, Russian aggression
has only reinforced the unity of the
United States and Germany and our
allies and partners around the
world.
The U.S. and German leaders,
meeting at a turning point in a crisis that has tested the unity of the
West, agreed to continue their effort to ratchet up costs against
Moscow, through constraints on
Russias already struggling economy.
Mr. Obama said he hadnt identified a specific point at which the
U.S. would move ahead with arming
Chancellor Merkel, left, and President Obama at the White House on Monday.
to intervene in Ukraine.
On Monday, Ms. Merkel said diplomatic success was far from ensured and if it is apparent that such
a solution isnt possible, then the
U.S. and Europe should explore further possibilities together.
Ms. Merkel has privately told
Mr. Putin she wouldnt stand in the
way of the U.S. providing lethal aid,
Western officials have said. But
several European ministers have expressed concerns that if the U.S.
provides lethal aid to Ukraine, the
conflict could escalate.
European Union foreign ministers agreed Monday to delay until
Feb. 16 the implementation of
sanctions against a new group of
individuals and companies in Russia
and eastern Ukraine, a move designed to give the new peace initiative time to play out.
The EU had been set to sanction another 19 people and nine
entities. Canceling them would
still require the approval of all 28
EU countries.
Laurence Norman
and Naftali Bendavid
U.S. NEWS
Coming Budget Presents Test for GOP

House Conservatives Expected to Push Spending Cuts That Could Turn Off Senators Up for Re-Election
Newly empowered Republicans

are looking to do something that
hasnt been accomplished since
1996: funnel a budget through both
houses of Congress and then pass
timely appropriations bills.
But first the party must agree on
what its budget document should
say.
Republicans, in full control of
Congress for the first time since
2006, roundly panned President Barack Obamas $4 trillion budget proposal last week, saying it goes heavy
on tax increases and light on efforts
to trim the deficit. But while Republicans top budget-writers have committed to eliminating the annual federal budget deficit over 10 years,
doing so is expected to require deep
cuts in entitlement programs, particularly if tax increases are off the
table.
That means the GOP will face a
challenge negotiating a budget conservative enough to pass the House
without proposing politically unpopular cuts that could cause heartburn
for Senate Republicans, whose states
often represent a broader political
spectrum. Democrats in either
chamber are unlikely to provide
many, if any, votes for a budget used
to map out GOP goals.
The only things that will be accomplished in this Congress will be
whatever it is the Senate can pass.
Its that simple, said Rep. Charlie
Dent (R., Pa.).
The chairmen of the budget committees, Rep. Tom Price (R., Ga.) and
Sen. Mike Enzi (R., Wyo.), expect to
unveil their budget plans by late
March.
William Hoagland, senior vice
president at the Bipartisan Policy
Center and a former GOP congressional budget aide, said the new
chairmen in some ways face a more
difficult task than Rep. Paul Ryan
(R., Wis.), Mr. Prices predecessor,
whose seven budgets built his national profile.
In the past few years, Republicans budgets werent making it out
of the U.S. Senate, so they werent
passing it with any expectation that
it would truly take effect, Mr.
Hoagland said. They werent firing
with real bullets.
The budget chairmens ability to
hold together a diverse caucus will
Bloomberg News
BY NICK TIMIRAOS
AND KRISTINA PETERSON
Sen. Mike Enzi (R., Wyo.), shown

speaking with Sen. Patty Murray (D.,
Wash.) after a hearing last week,
chairs the Senate Budget Committee.
be tested by conservatives emboldened after racking up big electoral
majorities last fall. Among those
pushing policy to the right will be
the new House Freedom Caucus, a
group of the most conservative lawmakers that is discussing the idea of
writing its own budget, said Rep.
Mick Mulvaney (R., S.C.).
On the other side are many of the
two dozen Senate Republicans up for
re-election next cycle who could face
heat, for example, if they support
changes to Medicare that Democrats
would portray as punishing to the elderly. We would want to make sure
that we can actually honor our commitments to seniors in a budget,
said Sen. Mark Kirk (R., Ill.), who is
up for re-election in 2016.
Some Democrats predict Republicans would be making a strategic
mistake to support anything modeled on the Ryan plan, which he said
would balance the budget over 10
years with big spending cuts while
overhauling Medicare. That was
considered so politically unpopular
that Republican presidential nomi-
In the Red
U.S. debt held by the public as a share of GDP, at year's end

100%
2015 projected 75.1%
80
Projected
60
40
20
0
1940s
50s
60s
70s
80s
90s
2000s
10s
20s
Federal scal years end on Sept. 30. Prior to scal year 1977, scal years ended on June 30.
Source: White House Ofce of Management and Budget
nee Mitt Romney had to disavow it

in 2012, said Rep. John Yarmuth
(D., Ky.), who is on the House Budget
Committee.
Republican leaders are hoping to
steer Congress away from the stopgap funding measures that have often kept the government running in
recent years and toward following
civics-class rules known as regular
order.
A joint budget resolution hasnt

been approved by both chambers of
Congress since 2010, although lawmakers did pass a two-year budget
deal in 2013. Congress hasnt passed
all 12 regular spending bills before
the start of the next fiscal year since
1996, according to the Congressional
Research Service.
In recent years, that is in large
part because some spending bills
have become political lightning rods,

particularly those involved with the
Affordable Care Act or the DoddFrank financial overhaul. Republicans have also sought to use spending bills to push back against White
House policy, including Homeland
Security funding, set to expire Feb.
27. Republicans are seeking to use
an extension of that funding to block
implementation of the presidents
executive action on immigration.
Passing spending bills would require 60 votes in the Senate to clear
procedural hurdles, while passing a
budget requires a simple majority in
the chamber, where Republicans
control 54 of 100 seats. Sen. Roger
Wicker of Mississippi, chairman of
Senate Republicans campaign arm,
sees the challenge in stark terms. It
would be a profound failure with a
51-vote threshold if we couldnt pass
a budget, he said.
Republicans will have to decide
how to tackle the spending curbs set
to return this October, when a twoyear budget deal ends. Mr. Obamas
budget proposed raising the spending limits on both defense and nondefense spending known as the sequester, born out of the deal ending
the 2011 fight over the debt ceiling.
Many Republicans want to boost
military spending, but Democrats
have insisted that any increases in
defense spending be matched with
gains for nondefense spending.
Even if Republicans are able to
clear a budget through both chambers, they could face later challenges
passing spending bills written to the
levels it sets. In July 2013, for instance, GOP leaders were forced to
pull from the House floor a bill that
would have required deep spending
cuts to transportation and housing
programs when it faced opposition
from Democrats and some centrist
Republicans.
The coming fiscal years spending bills are the cornerstone of Republicans strategy of using their leverage to pressure the president to
sign into law bills pulling policy to
the right.
It doesnt do us a lot of good to
pass a budget in the House that we
cannot get through the Senate, just
like it doesnt do us any good to get
a budget done that when we mark
up the appropriations bills on that
budget, we cant pass those bills either, said Rep. Mario Diaz-Balart
(R., Fla.).
Debate Deepens Over Response to Cyberattacks
BY DAMIAN PALETTA
AND DION NISSENBAUM
WASHINGTONSeveral largescale cyberattacks in recent months

have prompted a number of lawmakers and policy makers to call for
a more forceful response, including
suggestions that the U.S. engage in
counterattacks that would disable or
limit the culprits own networks.
But White House officials and
some technology security experts
remain skeptical that such offensive cyberattacks would work, saying they are concerned about the
difficulty in targeting specific hackers without causing widespread
spillover, among other things.
The debateplaying out in numerous closed-door briefings on
Capitol Hill and among federal agencieshas taken on new urgency
with the rise in well-executed online

attacks against U.S. corporations.
President Barack Obama is expected to meet with business executives in California on Friday to urge
them to work more closely with the
government to bolster their defenses. His aides have spent weeks
drafting a new executive order that
would encourage more information
sharing between companies and the
government about cybersecurity
threats.
But the divide within the government on how to respond to future
attacks is spilling into public view.
Ashton Carter, the White Houses
nominee for secretary of the Department of Defense, told a Senate
panel considering his confirmation
last week that the U.S. and companies need to improve their defenses,
but they should also consider some
sort of response to future cyberattacks.

Weneed to improve our abilities to respond, he said. And those
responses can be in cyberspace or in
other ways, but certainly they
should include the option to respond in cyberspace.
He said the U.S. should be careful not to reveal the extent of its
capability to respond, so as to
deny a potential aggressor a way
to counter an attack.
Noteworthy cyberattacks in recent months have forced policy
makers to rethink their approach.
Late last year, the White House alleged that North Korea stole large
amounts of data from Sony Pictures
Entertainment Inc.
Also, the recent theft of personal
information from tens of millions of
Anthem Inc.s health-insurance cus-
tomers may have originated in

China, the company has suggested,
though law-enforcement officials
continue to investigate the security
breach.
Mr. Obama has labeled the Sony
breach cyber-vandalism, stopping
short of calling it an act of war
that might elicit a more pronounced
U.S. response.
Determining the culprit of a cyberattack is very difficult because of
the sophistication of many hackers,
and cybersecurity experts are
mostly split on the merits of retaliation, with some saying it could distract companies from doing more to
prevent breaches.
Once the planners and everyone
looks [into retaliation], it puts it on
an escalation ladder we dont want
to be on, said Bob Gourley, a former top technology official at the
Pentagons Defense Intelligence

Agency. The first thing we need to
do is protect our systems. Until we
do that, were almost inviting them
to attack, saying Come on, take our
stuff.
Sen. Angus King (I., Maine), a
member of the Senate Intelligence
Committee, said he has expressed
the need for an aggressive government response to cyberattacks during multiple closed-door congressional briefings, particularly given the
breaches at Sony and Anthem.
Im wondering if we shouldnt
be thinking of strategy that, if a nation-state is behind a cyberattackthey will lose their network,
he said in an interview. Otherwise
we are entirely in a defensive posture.
Danny Yadron
U.S. NEWS
BY BRENT KENDALL
Same-sex marriages began in

Alabama Monday after the U.S. Supreme Court gave the green light,
setting up a potential clash with
the states chief justice over issuing
marriage licenses.
The high court issued a brief order early Monday rejecting a request by Alabama Attorney General
Luther Strange to postpone the implementation of a federal judges
ruling allowing same-sex marriages, which was set to begin
Monday. U.S. District Judge Callie
Granade last month ruled the
states marriage ban was unconstitutional.
While the nations highest court
wont stand in the way of marriages in Alabama, the chief justice
of the states supreme court, Roy
Moore, tried to do so. On Sunday
night, he ordered probate judges
and state employees not to issue or
recognize same-sex marriage licenses.
At least some county courts on
Monday morning were choosing to
abide by the federal-court ruling
and not Chief Justice Moores order. Courthouse officials in Jefferson and Montgomery counties confirmed they were issuing licenses
to same-sex couples.
Its about time, Shante Wolfe,
21, said to the Associated Press.
She smiled as she left the courthouse in Montgomery with spouse
Tori Sisson. They had camped out
in a blue and white tent to be the
first in the county given a license.
In Birmingham, a minister performed wedding ceremonies in the
park outside the Jefferson County
courthouse before a cheering
crowd, the AP added.
This isnt Chief Justice Moores
first constitutional confrontation
with a federal judge. In 2003, a
state panel removed him as Alabamas chief justice after he defied
a federal judges order to remove a
washing-machine-size Ten Commandments display from the rotunda of the state-court building.
The chief justice, a vocal opponent
of same-sex marriage, was elected
to the post again in 2012.
The Supreme Courts refusal to
intervene makes Alabama the 37th
U.S. state in which gay couples can
wed. The justices order was consistent with actions it has taken in
recent months to deny requests by
other states to postpone same-sex
marriages.
Mr. Strange, the states attorney
general, had urged the Supreme
Court to leave Alabamas prohibition on same-sex marriages in
place while the justices consider a
case this spring on whether gay
couples have a constitutional right
to marry. The high court is expected to rule on the issue by the
end of June.
Justices Clarence Thomas and
Antonin Scalia dissented from the
Supreme Courts refusal to intervene and said the courts action
may well be seen as a signal of
how the court will rule on gay marriage later this year.
Mr. Strange expressed regret
over the Supreme Courts move and
said he was now barred from enforcing the states same-sex marriage ban.
Shift to Renting Wont Let Up

Biggest Cities, Even Relatively Inexpensive Ones, Move Away From Homeownership
BY LAURA KUSISTO
AND KRIS HUDSON
American citiesand not just
the priciest onesare more and
more the domain of renters.
Renters made up the majority of
the population in cities at the core
of nine of the nations 11 largest
metro areas in 2013, a sharp
change from 2006, when renters
were the majority in just five of
those cities, according to a new report.
Cities have always had a larger
number of renters when compared
with suburban areas, in part because the cost of owning a home
within a citys limits is out of reach
for many residents, especially in
high-cost places such as New York,
San Francisco and Washington, D.C.
But the report, scheduled to be
Urban Trend
Nine cities of the 11 largest metros

have more renters than
homeowners.
Share of population in
rental housing
2006
2013
65%
Miami 65%
New York 64%
60
Boston 60%
Los Angeles 60%
San Francisco 57%
55
Houston 54%
Washington 54%
Dallas 53%
Chicago 52%
50
Atlanta 49%
45
Philadelphia 44%
40
Rentermajority city
Homeownermajority city
35
Source: Census Bureau via NYUs Furman Center
for Real Estate and Urban Policy
released Monday by New York Universitys Furman Center and Capital One Financial Corp., found a
significant shift in the proportion
of renters in all major citieseven
in lower-density, relatively inexpensive places such as Houston and
Dallas.
A resulting demand for apartments is rising so fast that it is
starting to overwhelm supply in
many cities, which is pushing up
housing costs nationwide. As the
number of renters grow, if the supply of rental housing does not keep
upas it has not in most of these
citiesthen vacancy rates will fall,
rents will rise, and more renters
will struggle with the costs of
housing, said Ingrid Gould Ellen,
the Furman Centers faculty director.
In some cases, the rise in the
number of renters reflects a reversion to levels before the housing
boom, when easy credit and nodown-payment mortgages allowed
many renters to become homeowners. Once the boom turned to bust,
people went back to renting, either
because they lost their homes to
foreclosure or they became skittish
about owning. In Chicago, renters
made up 53% of the population in
1990, then dropped to 46% at the
height of the housing boom in 2006
and returned to 52% in 2013.
In other cases, long-term demographic trends and changing attitudes have diminished the appeal
of the traditional American dream
of homeownership. In Houston, just
41% of the population were renters
in 1970. The rate rose to 51% by
2000 then declined slightly during
the housing boom before starting
to rise again, hitting 54% in 2013.
Texas cities have seen explosive
job growth, drawing many transplanted younger workers with entry-level or middle-income jobs.
Dallas-based apartment developer
Brad Miller said the young people
he sees prefer to rent and want to
be able to pick up and move to
places such as Denver at a moments notice without having to
Michael Stravato for The Wall Street Journal
High Court
Allows Gay
Marriages
In Alabama
Transplant Mark Tobia is renting an apartment in Houston, where renters made

up 54% of the population in 2013, up from 41% in 1970.
worry about whether they can sell
a condominium. Theyll go where
the jobs are and where the money
is, said Mr. Miller, president of Encore Multi-Family.
Mark Tobia, a single 27-yearold, moved to Houston from Boston
last September to take a job as a
project manager in construction for
Group 1 Automotive Inc. He chose
to rent an apartment in a complex
owned by Camden Property Trust
not far from the citys downtown.
I didnt want to buy a place not
knowing if Id like Houston or if Id
like the job, Mr. Tobia said, adding
that he has since become comfortable with both.
But for many, slow income
growth and a lack of savings are
the main reasons for renting instead of buying, even as mortgage
rates remain historically low. Accumulating savings has become even
more difficult as rents rise in many
cities. Rents outpaced inflation in
all of the 11 cities except for Dallas
and Houston, where they remained
largely flat, according to the NYUCapital One report. Rents rose the
most in Washington, D.C., over the
seven-year period, with a 21% increase in the median rent when adjusted for inflation.
For many people, the biggest

obstacle to buying is saving enough
for a down payment, which is more
difficult if youre paying a lot of
rent, said Jed Kolko, chief economist at Trulia Inc.
The Furman Center found New
York City no longer has the largest
share of renters of any of the big
cities, having been outstripped by
Miami, where 65% of the population rents, a percentage point
higher than New York. The nations
largest city is also one of several
where the percentage of renters
has been on a long-term decline,
falling from 71% in 1970 to 64% in
2013.
Among the 11 cities, Philadelphia had the smallest percentage of
renters in 2013, just 44%, up from
37% in 2006 and 33% in 1970. Nationwide, 64% of households were
owner-occupied and 36% were
renter-occupied at the end of 2014.
In the short term, economists
and developers said they expect to
see the percentage of renters continue to rise in most cities. I dont
think the American dream is dead,
said Mr. Miller, the Dallas developer. Its different, and its taking
longer for people to obtain the
American dream.
Homeland Chief Urges Funding Extension

BY PATRICK OCONNOR
Homeland Security Secretary

Jeh Johnson said Sunday that
roughly 30,000 agency employees
would be immediately furloughed if
Congress doesnt extend funding for
the department beyond February.
As the latest budget battle between the White House and congressional Republicans nears a Feb.
27 deadline, Mr. Johnson urged
lawmakers not to tie funding for
his department to the immigration
debate. We need a fully funded department right now, he said on
CNN.
GOP leaders opted in December
to split off funding for the Homeland Security Department when
they funded the rest of the government through September, gaining
leverage to challenge President Barack Obamas executive action on
immigration this year, now that Republicans control both chambers of
Congress. The executive action
from late last year would make it
easier for certain immigrants to
work legally in the U.S. and would
shield millions from deportation.
House Republicans passed legislation to fund Homeland Security

after February that seeks to prevent the executive action. The bill
has been blocked in the Senate by
Democrats, who say funding for the
department shouldnt be used for
the battle over immigration. It isnt
clear how the House and Senate
will resolve the issue.
Jeh Johnson cautioned of

30,000 employee
furloughs if Congress
doesnt fund agency
beyond February.
Republican leaders are trying to
determine how to proceed.
This fight has been won in the
House, said Michael Steel, a
spokesman for House Speaker John
Boehner (R., Ohio). Now, it is up
to Senate Republicans and Senate
Democratsespecially Democrats
who criticized President Obamas
executive overreach, but are now

filibustering Homeland Security
funding to protect it.
If Congress doesnt extend funding for the agency, Homeland Security officials would implement contingency plans that require most of
the agents who police the border
and screen airport passengers to
work without pay.
But Mr. Johnson cautioned that
the furloughs, representing about
13% of the agencys workforce of
230,000, would undermine other
activities. Meanwhile, the employees forced to work without pay
would face a real challenge, he
said. Historically, government employees have received back pay in
similar situations, but Congress
would have to approve such a move
and it isnt clear how long employees would go unpaid.
This is not a situation to make
light of, Mr. Johnson said.
The Homeland chief also warned
that stopgap spending measures
like the one currently financing his
agency prevent him from funding
new border-security initiatives, hiring additional Secret Service
agents for the 2016 presidential

election or bankrolling grants to
states and local law-enforcement
agencies.
Republican leaders in Congress
face conservative pressure to block
Homeland Security funding if the
president refuses to roll back his
executive order.
On Sunday, Sen. Ted Cruz (R.,
Texas), who wanted GOP leaders to
draw a harder line with the White
House during budget talks late last
year, criticized party brass for approving legislation to fund the rest
of the government last year. I said
in December this gives up our leverage and it puts into, effectively,
a box canyon, Mr. Cruz said on
CNN. So I would say its now up to
leadership to give us their strategy.
I told them this was not a winning
strategy but they went down this
path anyway.
The primary agency implementing Mr. Obamas executive action
U.S. Citizenship and Immigration
Servicesfunds itself through fees
and wouldnt shut down if the
Homeland Securitys funding lapses
at months end.
WORLD NEWS
BY ROB TAYLOR
ised Monday to drop his uncompromising political approach, including

in the Senate where the ruling Liberal-National coalition requires the
support of nonparty senators to
pass any new laws. Several flagship
policies have run aground because
of Senate opposition, including fee
increases for university students
valued at five billion Australian dollars (US$3.9 billion).
Ive changed, and the government will change with me, the
prime minister said. We will not
buy fights with the Senate that we
cant win unless we are absolutely
determined they are the fights that
we really do need to have.
The current political instability
in the Liberal Party echoes to a
lesser extent the conflicts that afflicted Labor for many years and
contributed to its defeat at the last
election. Leaders Kevin Rudd and
Julia Gillard had engaged in several
coups against each other as opinion
polls pointed to a crushing defeat.
The latest challenge energized the
Labor opposition, whose leader Bill
Shorten paraded his senior ministers past Mr. Abbotts party room
and awaiting media as the leadership vote was under way.
Tony Abbott promised he would
run a stable and united government.
This is his biggest broken promise
yet, Mr. Shorten told reporters.
The size of the vote against Mr.
Abbott, who defeated the so-called
spill motion by 61 votes to 39, suggests it is now a matter of time before he is challenged again, said
CANBERRA,
AustraliaPrime
Minister Tony Abbott survived a
move by party rebels to unseat him,
but now faces a challenge to convince
voters that he retains enough authority to bring in reforms and represent
the country on the world stage.
The leadership challenge divided
Liberal Party ranks, with more than a
third of the ruling conservatives
wanting Mr. Abbott to be replaced.
That leaves him vulnerable to future
moves against him, analysts said. He
also faces a resurgent Labor opposition, an obstructive upper house of
Parliament, and a looming election in
Australias most populous state that
will provide the latest litmus test of
his conservative partys popularity.
The prime ministers

popularity fell sharply
after the conservative
government unveiled its
first budget in May.
Realistically, the only thing Mr.
Abbott can do, it seems, is pray,
political analyst Haydon Manning,
from Flinders University, said of the
prime minister, who once trained to
become a Catholic priest. He needs
some dramatic event to happen to
make him look a statesman.
A chastened Mr. Abbott prom-
Bloomberg News
Abbott Remains
In Power, Faces
Party Instability
Australian Prime Minister Tony Abbott speaks at Parliament House in Canberra on Monday after the vote.
Geoff Robinson, a lecturer in politics
at Deakin University, Victoria. There
is an inevitability about this, and I
cant really see that changing. I think
this is a mortal wound for him.
One looming test will be state
elections in New South Wales in
late March. Mr. Abbotts Liberal
Party has already lost in three
states since he was elected in September 2013. The scale of the most
recent defeat, in Queensland late
last month, was the trigger for several junior lawmakers to call for Mr.
Abbotts ouster.
The prime ministers popularity
has been slipping since he was
elected, falling most sharply after
the conservative government unveiled its first budget in May 2014,
advocating steep cuts to welfare
spending affecting health, education
and pensions. The reintroduction of
fuel-tax rises also took voters by

surprise, with Mr. Abbott having
ruled out both tax increases and social-spending cuts in his successful
election campaign.
It was a bold and ambitious budget last year. With the wisdom of
hindsight, it was perhaps too bold
and too ambitious, Mr. Abbott said.
Those missteps have limited any
political gains from successful policies that have included stemming
the flow of asylum seekers to Australia by boat, free-trade pacts with
major trading partners such as
China, and the repeal of controversial taxes on mining profits and carbon emissions.
Recently, Mr. Abbott dropped a
signature paid parental leave proposal that business critics said was
unaffordable.
In another concession, the prime
minister has pledged changes to the

countrys honors system after his
widely derided decision to award a
knighthood to Britains Prince
Philip.
An opinion poll published by
Newspoll ahead of Mondays vote
showed the government trailing Labor by 57% to 43%, a result that if
repeated on election day would lead
to a landslide defeat. Newspoll is
partly owned by News Corp, publisher of The Wall Street Journal.
One of the rebels behind Mondays failed ouster, West Australian
member of Parliament Luke Simpkins, said he wanted to see how the
prime minister reacts from here,
what he changes to turn around
opinion polls, or he could face another leadership challenge.
James Glynn
China Executes Tycoon Liu Han and His Brother

SHANGHAIChinese authorities
executed tycoon Liu Han on Monday,
after his prosecution led to the collapse of his ambitious business empire and brought attention to his
links to a top target of Chinas broad
crackdown on corruption.
Mr. Liu, 49 years old, was executed Monday, according to a brief
notice from the Xianning Peoples
Intermediate Court in Hubei province that in May 2014 sentenced him
to death for offenses that included
running a mafia-like enterprise.
The intermediate court said a
Supreme Court review upheld the
death sentence for Mr. Liu, his
younger brother, Liu Wei, and three
others sentenced who likewise were
put to death. It provided no details
of the executions.
A billionaire who lived large, Mr.
Liu had built an investment empire
around his private Hanlong Group
based in Sichuan province that included resources businesses that
stretched beyond China to Australia
and the U.S. The court accepted arguments from government prosecutors that he made most of his
money running a criminal enterprise
that bribed, extorted and killed its
way to riches.
Mr. Liu denied that he ran a
criminal business, though he said
his tough attitude in business made
him the target of a shooting and the
Associated Press
BY JAMES T. AREDDY
Liu Han, here in a 2011 photo, built an investment empire around his private Hanlong Group, based in Sichuan province.
kidnapping of relatives.
Mr. Lius top political ties
werent officially part of the case
against him.
But in the months since he was
tried, some media in China have al-
leged Mr. Liu enjoyed deep connections to the biggest target in

Chinas corruption crackdown:
Zhou Yongkang, a former Communist Party leader who once ran Sichuan. He was officially arrested in
December to face a host of corruption charges.

Though Mr. Lius prosecution
wasnt part of the formal corruption
crackdown, his arrest came amid a
sweep of other officials and busi-
ness people in Sichuan with ties to

Mr. Zhou. As such, his execution
makes Mr. Liu one of the first people put to death in connection with
the crackdown.
While numerous people have
been detained during the campaign,
few have yet been tried in a court.
In some cases, companies rather
than party prosecutors have been
the source of news about people detained during this period when
theylike Mr. Liuwerent members of the party.
People who know Mr. Liu confirm he had ties to the now-disgraced politician Mr. Zhou, and say
the relationship ultimately made
him politically vulnerable. Police arrested Mr. Liu in March 2013 on allegations that he was harboring the
brother, who had been wanted for a
2009 triple murder.
The tycoon put up a vigorous defense during his trial, according to
court transcripts seen by The Wall
Street Journal. His defense received
little coverage in the state-run media, which gave wide play to the
charges against him and the trial.
Nothing in the court transcripts
suggests the politician Mr. Zhou was
ever mentioned.
The court didnt provide details
about Mondays execution but said
that the process respected the legal
rights of Mr. Liu and the others, including by permitting family members one final chance to visit.
WORLD NEWS
Afghan Chief With Islamic State Killed

KABULA former Taliban commander aligned with Islamic State
was killed on Monday in an airstrike
in southwestern Afghanistan, Afghan
officials said, marking the first time
the U.S. and its allies have hit a
high-level leader of the movement in
the region.
Mullah Raouf Khadim, a former
Guantanamo Bay detainee, was
killed in what Afghan officials and
local residents described as a drone
attack in Kajaki district, an area in
northern Helmand province that has
long been a Taliban stronghold.
Details of the attack varied
among officials involved. Farid
Obaid, a spokesman for Helmand police, said at least six people were
killed in the Kajaki strike, including
Mullah Khadim, an in-law, and four
other fighters from the Waziristan
tribal regions of Pakistan.
We havent got his body as the
place is under Taliban control, Mr.
Obaid said.
Nabi Jan Mullakhil, the police
chief of Helmand, and a senior official with the National Directorate of
Security, Afghanistans spy agency,
said Mullah Khadim was killed along
with five militants in the attack.
A spokesman for Resolute Support, the U.S.-led military mission in
Afghanistan, said, an airstrike took
place in Helmand on Monday, killing
eight people.We can confirm that
coalition forces conducted a precision strike in Helmand province on 9
February resulting in the death of
eight individuals threatening the
force. the spokesman said.
In an audio recording released
Last month, Islamic State formally
announced its operational leadership
European Pressphoto Agency
BY NATHAN HODGE
Security officials check cars in Helmand, Afghanistan, on Monday following an airstrike on a former Taliban commander.
in Afghanistan and Pakistan, In the
announcement, the group designating Hafez Sayed Khan Orakzai as
governor for the region and Mullah
Khadim as second-in-command.
The announcement of Islamic
State presence underscored the ideological rift between jihadist
groups in the region. The Afghan
and Pakistani Taliban owe allegiance to Mullah Mohammad Omar,
the spiritual leader of the Taliban
who has been in hiding since the
overthrow of the Taliban government in late 2001. But some Afghan
and Pakistani militants have recently pledged allegiance to Islamic
State leader Abu Bakr al-Baghdadi.whose forces control swaths of

territory in Syria and Iraq.
Local officials have said Mullah
Khadim and black-clad militants had
fought with local Taliban.
He started his own anti-Taliban
group and was against Pakistan, said
Haji Amin, a resident of Kajaki, adding that the drone attack took place
between 9 a.m. and 10 a.m. in the
Azankarez area of Kajaki. Because of
this, he had a lot of popular support.
A U.S. official at the Pentagon expressed little concern about the rise
of Islamic State support in Afghanistan.
Police: Tourist Raped in India
BY SURYATAPA BHATTACHARYA
AND VIBHUTI AGARWAL
Saudi Prince TV Channel

Is Suspended by Bahrain
BY AHMED AL OMRAN
Associated Press
NEW DELHIA Japanese traveler

was sexually assaulted by a man posing as a tour guide near the western
Indian tourist city of Jaipur, police
said Monday, the second report of
such an attack in recent months.
No arrests were made, said Police
Superintendent Nitin Deep. The 20year-old woman was attacked on the
side of a road by an Indian man who
offered to help her check into her
guesthouse Sunday night, he said.
She saw the headlights of a car
and ran toward it for help, Mr.
Deep said. The driver took her to a
police station, where she filed a rape
complaint, he said. We are trying
to identify the man behind this.
In January, six men were detained in connection with the rape
of another Japanese tourist, in a
case that cast a spotlight on a group
of Japanese-speaking Indian men in
the eastern city of Kolkata who prey
on visitors from Japan. A lawyer for
one of the men being held said his
client is innocent. Attorneys for the
rest declined to comment.
Following a series of highly publicized attacks on women since the
fatal gang rape of a student on a bus
in the Indian capital in December
2012, foreign tourists, especially
women, have grown warier of traveling in India.
The Japanese Embassy declined
to comment on the latest case. After
the earlier case emerged, the Japanese government warned citizens
to be careful and behave cautiously when traveling in India.
Its mostly just rebranding, the

official said. Its not as if they have
deployed groups of Islamic State
fighters to AfghanistanThe issue
is to what degree ISIL will be able to
maintain their momentum as a brand
name in recruiting fighters, he said.
.Clearly if fighters in Afghanistan
who were formerly Taliban or some
other organization believe there is
more utility in branding themselves
as ISIL to attract and recruit, then
they will.
The U.S. and its allies withdrew
combat forces from Afghanistan at
the end of last year, but as part of an
agreement between Kabul and
Demonstrators gathered in New Delhi on Monday to protest sexual violence.

India has toughened its laws, in
an effort to end sexual violence, but
attacks continue.
Authorities in Indias northern
state of Haryana arrested eight men
Monday in connection with the rape,
murder and mutilation of a Nepalese
woman this month, a crime that
shocked the country.
Police said the men didnt yet
have lawyers. They were in custody
and couldnt be reached to comment.
The body of the 28-year-old
woman, whose name hasnt been
made public, was discovered with a
fractured skull, evidence of rape and
several other severe wounds. Some
of her internal organs had been cut
out, police said.
I havent come across such a
gruesome case, said S.K. Dhatter-
wal, the doctor who performed an

autopsy on the woman. The exam
also found that stones, blades and
sticks were forced inside her body,
Dr. Dhatterwal said.
Police in Jaipur said the Japanese traveler who made the rape allegation on Sunday said that her attacker spoke English and introduced
himself to her at a tourist spot
called Jal Mahal, a 17th-century palace. From there he took her on his
motorcycle to his residence in Jaipur, then to lunch at his sisters
house and then offered to check her
into a guesthouse in the countryside, according to the womans complaint, Mr. Deep said. We have dispatched three investigative teams
and are trying to verify as soon as
possible, he said.
Washington, the U.S. is keeping a residual force to conduct counterterrorism missions in Afghanistan.
Drone strikes and counterterror
raids have continued with U.S. involvement. Last week, Omer Khalid
Khorasani, leader of a Pakistani Taliban splinter group, was seriously injured during a U.S.-Afghan joint military operation in eastern Afghanistan,
according to the groups spokesman,
Ehsanullah Ehsan.
Mr. Khorasani, who used to lead
a chapter of the Pakistani Taliban,
fell out with its leadership last year
joined with several powerful commanders from Pakistans northern
tribal regions to form a faction
called Jamaat-ul-Ahrar.
Mr. Ehsan said that Mr. Khorasani
was in Afghanistans Nangarhar province when he was wounded. We have
moved him to a safe location and are
treating him, Mr. Ehsan said.
Jamaat-ul-Ahrar claimed responsibility for a suicide bombing on the
Pakistani side of the main border
crossing between India and Pakistan
in November, an incident that killed
at least 50 people.
U.S. Army Lt. Col. Christopher
Belcher, a spokesman for the U.S.led coalition, confirmed international military involvement in the
Nangarhar operation on Feb. 3-4.
Coalition forces were with Afghan national security forces in an
advise-and-assist role, in line with
the security agreements, during an
operation in Nangahar province Feb.
3 and 4, Col. Belcher said.
Ghousuddin Frotan,
Qasim Nauman,
Ehsanullah Amiri,
Habib Khan Totakhil
and Dion Nissenbaum
RIYADHBahrain announced the

suspension of new pan-Arab news
television channel Al Arab, owned by
Saudi billionaire Prince al-Waleed
bin Talal, nine days after it began
transmission.
The countrys media regulator,
the Information Affairs Authority,
said Monday that authorities decided
to suspend the channel following its
failure to obtain the required licensing approval to commence broadcasting in Bahrain.
The regulator added that the
channel failed to meet professional
standards and to take account of efforts aimed at stemming the tide of
extremism and terrorism throughout
the region and the wider world.
It wasnt clear if the suspension
was permanent.
A media representative for Prince
Alwaleed didnt respond to a request
to comment. Calls to the cellphone of
Jamal Khashoggi, the channels general manager, went straight to voice
mail.
The channel was officially
launched on Feb. 1. A few hours later
its news programming was interrupted after it hosted a member of
the countrys opposition, who criticized a government decision to revoke the citizenship of 72 people after claiming they had damaged the
countrys national security.
Khalil Al Marzooq, a member of
Bahrains opposition Al Wefaq Shiite
party, appeared on the Al Arabs
news bulletin saying that the deci-
sion was politically motivated and

taken without a fair trial.
A week ago, the channel said that
it had stopped broadcasting for
technical and administrative reasons and that it would be back on
air soon.
After that it aired only promotional videos until they stopped
earlier on Monday. Now only a logo
of the channel is shown on screen.
Its website, which continued to be
updated after transmission stopped
last week, now shows a message
that says Site under maintenance.
It wasnt clear if the news

channels suspension was
permanent.
Prince Alwaleed has investments
in companies such as Citigroup Inc.,
Apple Inc., Time Warner Inc. and
Twitter. He also owns a small stake
in News Corp, the owner of Dow
Jones & Co. and publisher of The
Wall Street Journal.
He chose Bahrain, a small island
kingdom linked to Saudi Arabia, its
ally, by a causeway, as the headquarters for his new channel despite its
instability in recent years. The Gulf
nation, home to the U.S. Navy Fifth
Fleet, has been rocked by unrest
since its Shiite majority took to the
streets in 2011 to demand reforms including a constitutional monarchy.
IN DEPTH
Dubais Real-Estate Moguls

Ride Latest Property Boom
BY RORY JONES
DubaiI
Land of Opportunity
Residential sales price index for villas and

apartments in Dubai
500
Villa
400
300
Apartment
200
100
0
04
06
08
10
12
14
Source: REIDIN
have been executing new projects at a more

measured pace, and the banking system has
become much more resilient.
Two of Dubais biggest businesses, Emirates and DP World, have continued to grow
and gain market share in their industries,
creating jobs and stimulating trade.
Either we move forward or go backward, because the world is moving forward, says Salem Almoosa, an Emirati developer that has restarted a development of
thousands of villas and apartments surrounded by life-size replicas of the Pyramids of Giza, the Eiffel Tower and the Taj
Mahal.
Tourism has picked up as Dubai has
benefited from the turmoil in nearly every
other vacation spot in the region, from Beirut to Turkey. The emirate expects to wel-
Mall of the World
eal-estate mogul Safi Qurashi is often

asked why he has stayed in Dubai after he was imprisoned here for
nearly three years and came close to losing
his entire business.
Why should I leave? The 45-year-old
Briton says. Dubai is still full of opportunity.
Mr. Qurashi is just one of a cadre of
high-profile, sometimes controversial,
property magnates who built their reputation in Dubais last property bubble. Many
are now back building weird, wonderful
and some say wildly overambitious projects
in another go-go era for the Middle Easts
capital of bling.
Dubai, through its government and
ruler-owned real-estate conglomerates, is
leading a construction frenzy of ambitious
developments that seem to cost increasingly more with each new announcement.
Topping the list of government projects
is Dubai World Central, an airport that is
forecast to cost 120 billion U.A.E. dirhams
($32.7 billion) and house the fast-growing
Emirates Airline. Opening within eight
years, the airport will be larger than Londons Heathrow and Chicagos OHare combined.
A giant temperature-controlled retail
shopping district, dubbed Mall of the
World, is another major priority for the
government, which says it will cost AED25
billion ($6.8 billion) to build. The rulers
own real-estate company is building a Disney World-like development. Cost: AED10
billion ($2.72 billion).
Private investors like Mr. Qurashi are
quickly responding to the top-down activity. Among other projects, he has rekindled
plans to build a Great Britain-themed resort on The Worldan archipelago of
some 300 islands already built at sea by

government-owned developer Nakheel.
Even the recent drop in oil prices isnt
proving to be much of a deterrent. The IMF
downgraded its growth forecast for the
Gulf this month, and as a result, Dubai will
likely suffer from lower spending by the
states around it. But the emirates economy
is largely expected to hold up and continue
to stimulate growth.
Most of the new projects are slated to
be completed ahead of 2020, when Dubai
hosts a global trade fair, World Expo. Dubai
spent months vigorously campaigning to
edge out three other cities, and when it
won the bid in late 2013, the Burj Khalifa
erupted with fireworks and a school holiday was announced the next day.
Dubai has slowly but surely clawed its
way out of the hole it dug for itself in 2009
when a series of government-linked companies, including several under the direct
control of ruler Sheik Mohammed bin
Rashid Al Maktoum, were unable to pay
lenders on time and called for a standstill
on repayments. The move signaled the
death knell for an economic boom that had
been fueled by real estate for almost a decade.
Dubai has again succeeded in convincing
lendersboth international titans like
HSBC and Standard Chartered and dozens
of local banksto support its governmentlinked real-estate developers. Investors, analysts and the emirates new crop of leaders all say this time is different to the
previous boom running up to 2009.
Harald Finger, the International Monetary Funds head of mission in the United
Arab Emirates, remains cautiously positive on Dubai. He stresses that a lot of
progress has been made in the years since
the 2009 crisis.
Companies owned or part-owned by the
government have been repaying debts and
The planned $6.8 billion Mall of the World, depicted above, will be a temperature-controlled retail district and a centerpiece of Dubais new development.
come 20 million visitors by the Expo in

2020, up from 12 million in 2014. As a result, developers are building 40,000 new
hotel rooms within five years, up from a total 80,000 today, according to broker Colliers International.
As for residential real estate, house
prices here were some of the fastest growing in the world in 2013, up about 30%, according to most brokers. Sales prices,
driven by foreign buyers, continued to rise
in 2014, up by 18%, says property firm
CBRE. Brokers expect a much more restrained market this year as more supply is
built.
Ten years ago, Mr. Qurashi walked into a
real-estate sales office in Dubais up-andcoming marina development in a similarly
charged atmosphere. Plans were in place
for eye-catching real-estate projects. Residential prices had skyrocketed recently and
international investors were seeking fastbuck returns from the frothy city-state.
A confident sales assistant told Mr.
Qurashi to buy a two-bedroom apartment
and said he would double his money in
three months. The property, which wasnt
even built yet, was selling for AED1.3 million ($354,000) and required only a 10% deposit to buy that day.
The block was being developed by relative newcomer Emaar Properties, which is
part-owned by the government. At about
1,300 square feet, the apartment would
have fantastic marina views once finished
in a few years, the sales assistant said.
Why not? Mr. Qurashi said to his wife
Huma.
Just 20 days later, the Briton received
an offer for his two-bedroom apartment of
AED1.5 million.
Weve just doubled our money, an astonished Mr. Qurashi recalls muttering to
his wife. Lets buy two more.
Within four months, Mr. Qurashi says he
had bought and sold eight more properties,
joining the so-called flipping frenzy in
Dubai. Investors would buy property and
immediately sell, or flip it, for a better
price as more speculators entered the market.
Investors, such as Mr. Qurashi, who had
never developed real estate, were suddenly
pooling foreign investors, hiring architects
and buying land to construct projects. The
mentality was build it, and they will
come, explains Mr. Qurashi.
Within four years, Mr. Qurashi says he
had started a brokerage called Premier Real
Estate Bureau. In a 12-month period, he
says the company sold 2,500 apartments,
racking up about a $1 billion worth of property sales. He says he bought land and
spent AED205 million ($55.8 million) on
the Great Britain island on The World.
By the end of 2008, Mr. Qurashi was
driving a black Bentley Flying Spur. His top
salesman, Raj Rayit, was also driving a
Bentley. They coined the phrase cruising
gently in my Bentley as the pair of south
Londoners struggled to believe their luck.
It was like the gold rush, reminisces
Mr. Qurashi.
But the rush ended abruptly.
Dubais standstill on its debts precipitated a collapse of the local economy as a
bevy of highly touted projects were mothballed or ran out of funding. These included The World, the man-made archipelago that was left unfinished and was
plagued with legal disputes. The oil-rich
neighboring emirate of Abu Dhabi had to
marshal a $20 billion bailout to stave off a
default.
House prices soon crashed more than
Clint McLean for The Wall Street Journal
IN DEPTH
Why should I leave? Dubai is still full of opportunity.

Safi Qurashi
Dubai-based property investor
50% and investors like Mr. Qurashi were
left sitting on useless land that no financial
institution would fund for development. Investors fled Dubai, and Mr. Qurashi found
himself tangled in a dispute with a business
partner. Checks he wrote as collateral for
an AED200 million real-estate deal were
cashed and bounceda criminal offense in
Dubailanding him a seven-year conviction.
In January 2010, Mr. Qurashi went from
behind the wheel of a Bentley to behind
bars.
The entrepreneur spent nearly three
years protesting his innocence in Dubai Central Prison. He argued that the deal for
which he wrote the checks had already
closed, all parties had received moneys
owed and that the checks were void and
should never have been cashed. During a
40-day hunger strike, Mr. Quarashi shed 33
pounds, helping to highlight the tycoons
case in the local media. He was acquitted on
appeal and freed in July 2012.
My friends say I probably had it easy,
jokes Mr. Qurashi. I didnt have to suffer
two years of major financial crisis in Dubai.
Despite a more diversified economy and
good intentions by developers, questions
still remain over the underlying health of
Dubais current economyparticularly its
debt pile. Companies that are partly or
wholly owned by the government have restructured debts and some, such as Nakheel,
have repaid bank lenders in full. These deals
have largely pushed the time frame for repayment into the future, easing each companys ability to service loans.
New measures have been taken to help
regulate real-estate speculation. Developers
now have to fully own land and must place a

percentage of the construction costs in an
escrow account before marketing the development to investors. Sales transaction fees
have increased to deter speculators from
flipping properties, while some developers
have lock-in periods for investors who buy
properties before they are finished and
handed over. And the Central Bank has introduced caps on mortgages to ensure more
responsible lending by banks.
Sheik Ahmed bin Saeed Al Maktoum, the
rulers uncle and one of the most senior
leaders in Dubai, also believes the economic
resurgence is different from the last boom
and bust. The previous crisis was exacerbated by poor investments made by government-linked entities overseas, and financiers
and investors are now lining up to fund developments in Dubai, he says.
Yet some argue that Dubai hasnt really
solved its debt problems at all since it
hasnt managed to cut the overall borrowings, and so it has kicked the debt can
down the road, according to Jason Tuvey,
an economist at Londons Capital Economics.
In July, the International Monetary Fund
estimated Dubai and its entitiess debt at
$141 billion or 141% of GDP, before recent restructuring and repayments by Nakheel,
which reduced overall debt slightly.
But the overall figure is likely to increase
going forward with some of Dubais new
government-backed projects requiring financing, says Mr. Tuvey.
Theres no reason to think that Dubais
debt problems are over by any means, he
says.
While in prison, Mr. Qurashi vigorously
tried to learn the law to appeal his innocence. His daughter Sara launched a Facebook campaign to free her father. But
mostly, the property tycoon was busy planning new businesses in prison.
Since his release more than two years
ago, Mr. Qurashi has again built a growing
real-estate firm, benefiting from the frothy
property market. He says the U.K. was in a
similarly difficult economic position in 2012
as Dubai, so returning home wasnt an appealing prospect.
Mr. Qurashi says he took a small loan
from an investor to again get started after
he left prison. He wont name that investor
but says the loan was repaid after six
months when his companies began making a
profit. Renamed the Q Group, Mr. Qurashi
says his business includes a brokerage, a security firm and a development arm that are
all now profitable.
He still has a flashy car. Gone is the black
Bentley, but he cruises round in a dark-blue
Porsche Panamera, a hugely popular car in
Dubai. He still smokes a pack of Marlboros a
day.
For six towers, the Q Group has joined
with Empire Arabia, a Pakistan and Canadabased real-estate investment firm that will
soon be based out of Dubai. Empire invested
tens of millions of dollars in six plots,
which stalled in the previous bust and have
since been revived with the Q Group as
joint-developer and sales representative, according to Ahmad Furqan, director of Empire Arabia.
Dubai is a somewhat wild real-estate
market that still needs to be tamed a bit,
says Mr. Furqan. But for those with a longterm time horizon, it offers a wonderful
opportunity, he says. Any city is going to

make mistakes.
Despite his progress and the vote of confidence from investors, Mr. Qurashi is also
again falling foul of government institutions.
He recently announced an agreement with
Drydocks World, owned by the Dubai government, to provide marine utility services
in developing on the Great Britain-themed
island. But then Nakheel, owned by the government, issued a statement outlining that
he had not yet fully paid for the plot on The
World and couldnt start work with Drydocks.
Mr. Qurashi says his legal team is renegotiating the payment program for the
Great Britain island and once that plan is in
place, development can start. A Nakheel
spokesperson said legal proceedings were
currently ongoing to ensure it received final
payment.
Nakheel also released a statement on
Jan. 22 that said Dubais courts system had
ordered Mr. Qurashi to pay AED11 million
($3 million) to Nakheel for land on another
project of the government-owned developer.
Mr. Qurashi said Nakheels statement was
misleading and that the judgment is part of
a continuing dispute over additional payments for land he says he had already purchased before the financial crisis.
Meanwhile, Mr. Qurashis business is
about to move into some plush offices in the
new Downtown Dubai area developed by
Emaar, epitomizing both his rebirth and
that of Dubai, he says. Walking round the
empty space, he explains the new mentality
in the city-state.
Build what they want, he says. And
they will come.
OPINION: REVIEW & OUTLOOK
Can the GOP Change?
epublicans in Congress are off to a

less than flying start after a
month in power, dividing their
own conference more than Democrats.
Take the response to President Obamas
immigration order, which seems headed
for failure if not a more spectacular
crack-up.
That decree last November awarded
work permits and de facto legal status to
millions of undocumented aliens and dismayed members of both parties, whatever their immigration views. A Congressional resolution to vindicate the rule of
law and the Constitutions limits on executive power was defensible, and even
necessary, but this message has long ago
been lost in translation.
The Republican leadership funded the
rest of the government in Decembers
budget deal but isolated the Department
of Homeland Security that enforces immigration law. DHS funding runs out this
month, and the GOP has now marched itself into another box canyon.
The specific White House abuse was
claiming prosecutorial discretion to exempt whole classes of aliens from deportation, dumping the historical norm of
case-by-case scrutiny. A GOP sniper shot
at this legal overreach would have forced
Democrats to go on record, picked up a
few supporters, and perhaps even imposed some accountability on Mr. Obama.
But that wasnt enough for immigra- nelly and North Dakotas Heidi Heitkamp
tion restrictionists, who wanted a larger arent worried because they have more
brawl, and they browbeat GOP leaders than enough material to portray Republiinto adding needless policy amendments. cans as the immigration extremists.
The House reached back to rescind Mr.
Whatever their view of Mr. Obamas
Obamas enforcement memos from 2011 order, why would Democrats vote to dethat instructed Homeland Security to pri- port people who were brought here as
oritize deportations of illegals with crim- kids through no fault of their own? Mr.
inal backgrounds. That is
Obama issued a veto
The immigration
legitimate prosecutorial
threat to legislation that
discretion, and in oppos- defeat reveals a larger
will never get to his desk,
ing it Republicans are unand he must be delighted
problem in Congress. that Republicans are
dermining their crimefighting credentials.
fighting with each other
The House even adrather than with him.
opted a provision to roll back Mr.
Restrictionists like Sens. Ted Cruz and
Obamas 2012 order deferring deporta- Jeff Sessions are offering their familiar
tion for young adults brought to the U.S. advice to fight harder and hold firm
illegally as children by their parentsthe against executive amnesty, but as usual
so-called dreamers. The GOP lost 26 of their strategy for victory is nowhere to
its own Members on that one, passing it be found. So Republicans are now headwith only 218 votes.
ing toward the same cul de sac that they
The overall $40 billion DHS spending did on the ObamaCare government shutbill passed with these riders, 236-191, but down.
with 10 Republicans joining all but two
If Homeland Security funding lapses
Democrats in opposition. This lack of on Feb. 27, the agency will be pushed into
GOP unity reduced the chances that Sen- a partial shutdown even as the terrorist
ate Democrats would feel any political threat is at the forefront of public attenpressure to go along.
tion with the Charlie Hebdo and Islamic
And, lo, on Thursday the House bill State murders. Imagine if the Transporfailed for the third time to gain the 60 tation Security Administration, a unit of
votes needed to overcome the third Dem- DHS, fails to intercept an Islamic State
ocratic filibuster in three days. Swing- agent en route to Detroit.
state Democrats like Indianas Joe DonSo Republicans are facing what is
likely to be another embarrassing political retreat and more intraparty recriminations. The GOPs restrictionist wing
will blame the leadership for a failure
they share responsibility for, and the
rest of America will wonder anew about
the gang that couldnt shoot straight.
The restrictionist caucus can protest
all it wants, but it cant change 54 Senate votes into 60 without persuading
some Democrats. Its time to find another strategy. Our advice on immigration is to promote discrete bills that
solve specific problems such as green
cards for math-science-tech graduates,
more H-1B visas, a guest-worker program for agriculture, targeted enforcement and legal status for the dreamers.
Democrats would be hard-pressed to
oppose them and it would put the onus
back on Mr. Obama. But if thats too
much for the GOP, then move on from
immigration to something else.
i
Its not too soon to say that the fate of

the GOP majority is on the line. Precious
weeks are wasting, and the combination
of weak House leadership and a rump minority unwilling to compromise is playing into Democratic hands. This is no
way to run a Congressional majority, and
the only winners of GOP dysfunction will
be Mr. Obama, Nancy Pelosi and Hillary
Clinton.
John C. Whitehead
merica has a noble tradition of

the businessman who makes his
fortune and then devotes his
time and energy to public service,
whether in government or philanthropy.
Few men have exemplified that tradition better than John C. Whitehead, the
eminent New Yorker who died Saturday
at age 92.
Raised in Montclair, N.J., Whitehead
served in the Navy in World War II and
commanded a landing craft at Omaha
Beach during the Normandy invasion.
He joined Goldman Sachs after the war
and helped to build it from a small the Manhattan Development Corp. to

commercial-paper shop into a financial rebuild downtown Manhattan after 9/11.
powerhouse. He was co-chairman for He was the founding chairman of the
eight years and was
National September 11
A giant of postwar
known for stressing ethMemorial and Museum.
ics in businessa reputaWhen most business
finance and public
tion enhanced by his
leaders were cowering
service in New York. under government attack,
white hair and regal
bearing.
Whitehead took to our
He retired in 1984 afpages in April 2005 to
ter 37 years, becoming deputy secretary rebuke then New York Attorney General
of State under George Shultz. He was Eliot Spitzer for publicly and falsely acan active philanthropist, and in a sign cusing former AIG CEO Maurice Hank
of his public stature was asked to chair Greenberg of committing a crime.
According to Whiteheads account in

a follow-up piece, Mr. Spitzer responded by saying in a phone call that
Mr. Whitehead, its now a war between us and youve fired the first
shot. I will be coming after you. You
will pay the price. This is only the beginning and you will pay dearly for
what you have done. Mr. Spitzer denied saying that, but everyone knew
John Whitehead was telling the truth.
He represented the best of Wall Street
and of Americas post-World War II
generation.
Calpers Gets Schooled
ederal judges tend to be impatient

with bullies. Behold judge Christopher Kleins opinion last week confirming the city of Stocktons bankruptcy
exit plan, which is as incisive in its rebuke of the California Public Employees
Retirement System (Calpers) as it is instructive about U.S. bankruptcy law.
Stockton declared Chapter 9 bankruptcy in 2012, and it has since rewritten
labor contracts and asked creditors for
writedowns. Yet after being browbeaten
by Calpers, the giant public-pension
fund, the city held pensions harmless.
Calpers argued that the California constitutions guarantee of contracts shielded
pensions from cuts in bankruptcy. The
fund also asserted sovereign immunity
and police powers as an arm of the
state, including a lien on municipal assets.
Judge Klein upheld Stocktons bankruptcy plan but not before effectively
throwing Calpers out of court. It is the feds dont violate state powers under
doubtful that CalPERS even has stand- the Constitution. The judge notes that
ing, he writes. It does not bear finan- states act merely as gatekeepers to
cial risk from reductions by the City in Chapter 9 bankruptcy. Once states authoits funding payments because state law rize municipalities to file for bankruptcy,
requires CalPERS to pass
they hand over custody to
along the reductions to
A judge says public federal courts. Thus, as a
pensioners in the form of
matter of law, the Citys
pensions can be
reduced pensions.
pension administration
As the judge explains,
contract with CalPERS, as
impaired as part
CalPERS has bullied its
well as the City-sponsored
of bankruptcy.
way about in this case
pensions themselves, may
with an iron fist. Calpbe adjusted as part of a
erss arguments are conchapter 9 plan.
stitutionally infirm in the face of the exWhat all this means is that Calpers
clusive power of Congress to enact cant stop cities from modifying pensions
uniform laws on the subject of bank- in bankruptcy. This has ramifications
ruptcy under Article I, Section 8, of the across the U.S. because unions are trying
U.S. Constitutionthe essence of which to make public pension benefits inviolalaws is the impairment of contractsand ble as a matter of constitutional law. If
of the Supremacy Clause.
that view prevails, then politicians can
The Supremacy Clause holds federal make irresponsible deals to get elected
law superior to state statutes as long as that no future politicians can rescind
even if they become unaffordable. Illinois

is currently ground zero in this showdown.
Judge Klein also noted that Californias Supreme Court has recognized an
unusually inflexible vested right in
public employee pension benefits that
stands in contrast to the U.S. Supreme
Courts less rigid view of the extent of a
vested right in retiree benefits, as delivered in last months M&G Polymers v.
Tackett ruling. Judge Klein adds that California courts interpretation of vested
rights encourages dysfunctional strategies to circumvent limitation and peculiarities in California public finance.
You can say that again. The judge
seems to be inviting a legal challenge to
Californias vested-rights doctrine, and
someone should take him up on it. Meantime, Calpers would do better by raising
its investment returns rather than going
to court to raid taxpayers.
OPINION
Time to Stop Letting Putin Win the War of Words

Angela Merkel and Barack
Obama had a big job facing them
when they met in Washington on
Monday. They needed urgently to
put Western strategy toward Russia and Ukraine back on track.
The hollowness of their current
approach was apparent late last
week when Germanys Chancellor
Merkel and Frances President
Franois Hollande flew on short
notice to Kiev and then on to Moscow. They were desperately attempting to broker a peace deal
Why are we so inept at

setting the record straight
about Ukraine? Moscows
cracked version is going
everywhere.
that would head off the escalating
violence in eastern Ukraine. At the
same time, the Kremlin made clear
that Western military aid to
Ukraine in its battle against Russian-supported separatists would
be regarded as a threat to Russian
security.
The U.S.-supported mission by
Ms. Merkel and Mr. Hollande appeared unlikely to be any more
successful than a cease-fire agreement for eastern Ukraine in September that has lately collapsed
under a hail of artillery shells.
Russias President Vladimir Putin seems confident that he has
again outflanked the decadent democracies of the West. He is satisfied that he has convinced impor-
tant segments of world public

opinion that Russias invasion of
Ukraine was a justified response
to Western threats to Russian securityand not, as it was, punishment for Ukraines embrace of Europe.
While we in the West debate
the point, Mr. Putin is busy creating new realities on the ground.
He is immensely aided in this effort by a Russian propaganda machine that buoys his popularity at
home and disseminates his
cracked version of history through
digital networks around the world.
Mr. Putin is succeeding militarily
and winning the war of words.
Unless the U.S. and its allies
wrest the rhetorical high ground
from Russia, Mr. Putin will retain
the initiative and a military confrontation may become inevitable.
As he avidly rewrites history, he
may also be able to weaken the
democratic narrative as the defining principle of post-Cold War Europe. The negative effects of such
a development would stretch far
beyond Ukraine and Europe.
Current measures ostensibly
meant to address Moscows concernsas with an experts group
on European security structures
convened by the Organization for
Security and Co-operation in Europe, whose members include
much of Europe, the U.S. and Russiamake things worse by offering prolonged discussions while
the Kremlin continues to pursue
its real goals. Ukraine is well on its
way to becoming another one of
the frozen conflicts in former
Soviet republics that are Mr. Putins special method of keeping his
near abroad under control.
against a strategic stab in the

back. Many if not all viewed the
fall of the Soviet Union as liberation rather than defeat. They saw
Western democracy as the best
path to security and freedom for
their country.
Understanding this background
is an important prerequisite to
taking control of todays narrative.
Contrary to Mr. Putins fictions
about NATOs illegal enlargement,
the West has honored the agreements worked out with Russia two
decades ago. We have nothing to
apologize for. Russia would be in
much better shape today if it had
fulfilled the mutual visions of a
democratic former Soviet Union
increasingly integrated with the
democratic West.
Instead, Russia has drifted toward failure, and Mr. Putin has increasingly tried to distract Russians from his own shortcomings
by blaming the Westthe U.S. in
particular. He has employed the
tactic for nearly a decade, as with
his speech in 2007 at a Munich security conference when he accused
the U.S. of trying to establish a
unipolar world, with one single
center of power, one single center
of force and one single master.
Why are we so inept at setting
the record straight? One reason:
Since 9/11, and especially in recent
years, Western diplomacy has become so attuned to the mechanics
of conflict prevention that we too
often fail to see the bigger picture.
The digital revolution is engulfing
our societies faster than we can
comprehendwitness the mastery
of social media by Islamic State
killers.
But the implications of a glob-
TASS/ZUMA Wire
BY JOHN KORNBLUM
DICTATING TERMS Putin has so far

taken the rhetorical high ground on
Ukraine.
Western nations must start the
turnaround by emphatically refuting one of Mr. Putins favorite
claims: that the West abrogated
the promise of democratic partnership with Russia in the 1990
Paris Charter, a document produced by a summit that included
European governments, the U.S.
and the Soviet Union, convened as
Communism crumbled across
Eastern Europe.
The U.S. and its allies didnt
rush in after 1990 to exploit a
proud but collapsing Soviet
Uniona tale that Mr. Putin now
spins. I took part in nearly every
major negotiation of that era.
Never was the idea of humbling
Russia considered even for a moment. The Russian leaders we encountered were not angry Prussian-style Junkers who railed
ally integrated world for modern

diplomacy have hardly been examined. With Russia seizing the initiative in Ukraine and a wider war
threatening, this would be the
time for one of those ringing
speeches from President Obama,
one that would echo through online channels to those who most
need to hear it. But the president
seems to have failed to comprehend, in a digital world, the wider
importance of Americas role in
Europe and Russia.
The defense of democracy on
the ground in Ukraine remains vital, but it is essential also to discredit Mr. Putins fairy tales in the
global marketplace of ideas. Despite Russias weakness, the Putin
regime is strong enough to play
the spoiler in a few key areas of
the world.
The image of Western betrayal
of Russia resonates strongly
across the globe. Digitization itself
is coming to be seen by many as
an American plot against other
cultures and an excuse, from China
to Iran, for attacks on online freedom. Championing the democratic
foundation of digital society is as
important for the future as was
support for political democracy
during the Cold War. Ukraine is an
important test case. The West
must demonstrate its ability to defend the democratic operating system of the globally integrated
world.
Mr. Kornblum, a former U.S. ambassador to Germany and former

assistant secretary of state for
European affairs, is senior counselor for Noerr LLP law firm in
Berlin.
[ Americas ]
BY MARY ANASTASIA OGRADY
Less than two
months after his
historic outreach
to Havana with a
promise to normalize relations,
the U.S. commander in chief is getting the back of Ral Castros
hand.
On Dec. 17, President Obama
floated his plan to revise a halfcentury-old U.S.-Cuba policy by
promising engagement. We intend to create more opportunities
for the American and Cuban people, he said. The trouble is that as
his statements in recent weeks
have shown, Ral Castro has no interest in doing things differently.
The message from Havana is
that if Mr. Obama wants a Cuba
legacy it will have to be on Cubas
terms. That means he will have to
go down in history as the U.S.
president who prolonged the longest-running military dictatorship
in the Western Hemisphere.
Days before Assistant Secretary
of State for Western Hemispheric
Affairs Roberta Jacobson arrived
in Havana on Jan. 21 for talks, the
Cuban state newspaper Granma
published the governments list of
demands for normalizing relations. One of them was that the
U.S. recognize Cuban state-run

community groups as nongovernmental organizations. It did not
name any, but the notorious committees to defend the revolution,
which exist to enforce repression
by spying on the neighbors, come
to mind. Also on the list published
in Granma was a demand that the
U.S. end its asylum program for
Cuban doctors who escape while
serving in third-world countries
where they have been sent to work
for slave wages.
Ral Castros demands

include reparations
and no more U.S. asylum
for doctors who defect.
A few days later, at a summit of
Latin American and Caribbean
leaders in Beln, Costa Rica, the
83-year-old little brother of Fidel
reiterated some of his other
demands. He said that relations
would not be normalized unless
Washington unilaterally lifts the
embargo, returns Guantanamo Bay
to Cuba, ceases radio and television transmissions beamed into
Cuba and makes reparations for
the half-century-long embargo.
Mr. Obama may want to give
back Guantanamo as his critics
claim. But it is not clear that he
could do so without congressional

approval. He definitely needs Congress to lift the embargo and
theres not a snowballs chance in
Havana that Congress is going to
accept any such thing as embargo
reparations, let alone pay them.
Ral Castro knows this, so in other
words hes telling Mr. Obama to
take a hike.
But Mr. Obama wants to be
friends with the military dictatorship. To prove it, he has promised
to use his executive pen to streamline the permit process for socalled educational and cultural
travel by Americans to the island.
The military owns the tourism
industry and more American tourists will mean more dollars going
into its coffers.
No problem there for the Castros. But dont expect any quid pro
quo that requires a softening of
the totalitarian machine. That
much was made clear in the days
following Mr. Obamas speech.
Mr. Obama said that Cuba had
pledged to release 53 prisoners of
conscience in exchange for three
Cubans serving lengthy sentences
in the U.S. for espionage. This was
supposed to be proof that Havana
would behave more reasonably if
only Washington would show more
humility.
Snookered again. The spies
were released but Havana did not
keep its side of the bargain until
pressure mounted weeks later, and
Costa Ricas Presidency/European Pressphoto Agency
So Hows That Cuba Deal Going?
THE NEW NORMAL Barack Obamas

Cuba legacy may have to abide by Ral
Castros terms.
not even then in any true sense.
When the names of the prisoners
finally were made public, the Havana-based Cuban Commission on
Human Rights and National Reconciliation found that about a dozen
of them had been released before
the swap was even announced.
Some had completed or were close
to completing their sentences and
were already scheduled for release.
Marcelino Abreu Bonora was on
the list. He had been released in
October. He was rearrested on Dec.
26 and spent two weeks in a solitary punishment cell before being
released again in mid-January. His

crime was holding a sign that said
change. There were some 200
political arrests in the four weeks
following Mr. Obamas speech.
Cuba has never granted freedom to prisoners of conscience, as
the treatment of the 75 dissidents
rounded up during the Black
Spring of 2003 shows. Sixty-three
of them were exiled. The 12 who
refused to leave are sporadically
detained and denied the right to
travel abroad.
Mr. Obama says Cuba can help
the U.S. fight drug trafficking.
Cuba certainly knows the business.
It runs Venezuelan intelligence
these daysand Caracas is home
to some of the regions most notorious drug capos. But who can believe that Havana would interfere
with the cash flow the trade generates for its closest revolutionary
ally?
Cubas top demand is that it be
taken off the U.S. list of statesponsors of terrorism. But in 2013
it was caught running weapons for
North Korea. It is an Iranian ally.
Last week the Colombian military
intercepted 16 Russian-made antiaircraft rocket launchers bound for
the Cuba-supported Colombia
guerrilla group FARC.
No one doubts that Mr. Obama
is hard up for friends these days,
but courting Cuba makes him look
desperate.
Write to OGrady@wsj.com
OPINION
BY LAURENCE H. SILBERMAN
belief in which the NIE said it held

a 90% level of confidence. That is
about as certain as the intelligence
community gets on any subject.
Recall that the head of the
intelligence community, Central
Intelligence Agency Director George
Tenet, famously told the president
that the proposition that Iraq
possessed WMD was a slam dunk.
Our WMD commission carefully
examined the interrelationships
between the Bush administration
and the intelligence community and
found no indication that anyone in
the administration sought to
pressure the intelligence community into its findings. As our commission reported, presidential daily
briefs from the CIA dating back to
the Clinton administration were, if
anything, more alarmist about
Iraqs WMD than the 2002 National
Intelligence Estimate.
Saddam had manifested sharp
hostility toward America, including
firing at U.S. planes patrolling the
no-fly zone set up by the armistice
agreement ending the first Iraq
war. Saddam had also attempted to
assassinate former President
George H.W. Busha car-bombing
plot was foiledduring Mr. Bushs
visit to Kuwait in 1993. But President George W. Bush based his decision to go to war on information
about Saddams WMD. Accordingly,
when Secretary of State Colin Powell formally presented the U.S. case
to the United Nations, Mr. Powell
relied entirely on that aspect of the
threat from Iraq.
Our WMD commission ultimately
determined that the intelligence
In recent weeks, I have heard

former Associated Press reporter
Ron Fournier on Fox News twice asserting, quite offhandedly, that
President George W. Bush lied us
into war in Iraq.
I found this shocking. I took a
leave of absence from the bench in
2004-05 to serve as co-chairman of
the Commission on the Intelligence
Capabilities of the United States
Regarding Weapons of Mass Destructiona bipartisan body, sometimes referred to as the Robb-Silberman Commission. It was
Some journalists still peddle

this canard as if it were fact.
This is defamatory and could
end up hurting the country.
directed in 2004 to evaluate the intelligence communitys determination that Saddam Hussein possessed WMDI am, therefore,
keenly aware of both the intelligence provided to President Bush
and his reliance on that intelligence
as his primary casus belli. It is astonishing to see the Bush lied
allegation evolve from antiwar
slogan to journalistic fact.
The intelligence communitys
2002 National Intelligence Estimate
(NIE) stated, in a formal presentation to President Bush and to
Congress, its view that Saddam had
weapons of mass destructiona
AFP/Getty Images
The Dangerous Lie That Bush Lied
CREDIBILITY Its one thing to say the Iraq war was ill-advised. Its quite another to
assert that the president deceived the American people.
community was dead wrong about
Saddams weapons. But as I recall,
no one in Washington political
circles offered significant disagreement with the intelligence community before the invasion. The National Intelligence Estimate was
persuasiveto the president, to
Congress and to the media.
Granted, there were those who
disagreed with waging war against
Saddam even if he did possess
WMD. Some in Congress joined
Brent Scowcroft, a retired Air Force
lieutenant general and former
national security adviser, in publicly doubting the wisdom of invading Iraq. It is worth noting, however, that when Saddam was
captured and interrogated, he told
his interrogators that he had intended to seek revenge on Kuwait
for its cooperation with the U.S. by
invading again at a propitious time.
This leads me to speculate that if

the Bush administration had not
gone to war in 2003 and Saddam
had remained in power, the U.S.
might have felt compelled to do so
once Iraq again invaded Kuwait.
In any event, it is one thing to
assert, then or now, that the Iraq
war was ill-advised. It is quite
another to make the horrendous
charge that President Bush lied to
or deceived the American people
about the threat from Saddam.
I recently wrote to Ron
Fournier protesting his accusation. His response, in an email,
was to reiterate that an objective
reading of the events leads to only
one conclusion: the administration . . . misinterpreted, distorted
and in some cases lied about intelligence. Although Mr. Fournier
referred to evidence supporting
his view, he did not cite anyand
I do not believe there is any.

He did say correctly that intelligence is never dispositive; it
requires analysis and judgment,
with the final call and responsibility
resting with the president. It is
thus certainly possible to criticize
President Bush for having believed
what the CIA told him, although it
seems to me that any president
would have credited such confident
assertions by the intelligence community. But to accuse the president
of lying us into war must be seen as
not only false, but as dangerously
defamatory.
The charge is dangerous because
it can take on the air of historical
factwith potentially dire consequences. I am reminded of a
similarly baseless accusation that
helped the Nazis come to power in
Germany: that the German army
had not really lost World War I,
that the soldiers instead had been
stabbed in the back by politicians.
Sometime in the future, perhaps
long after most of us are gone, an
American president may need to
rely publicly on intelligence reports
to support military action. It would
be tragic if, at such a critical moment, the presidents credibility
were undermined by memories of a
false charge peddled by the likes of
Ron Fournier.
Mr. Silberman, a senior federal

judge on the U.S. Court of Appeals
for the District of Columbia, was
co-chairman of the Commission
on the Intelligence Capabilities of
the United States Regarding
Weapons of Mass Destruction.
The Great Internet Power Grab

[ Information Age ]
The era of open
innovation can be
dated to 1971, when
teenager Steve
Jobs and his engineer friend Steve
Wozniak became phone phreaks.
They sold kits to create routing
tones spoofing governmentregulated phones into making free
long-distance calls. Evading the absurdly high prices that federal regulators set for AT&T calls felt like
civil disobedience. The same spirit
of disruptive innovation led them
to found Apple.
Last week Washington abandoned open innovation when the
chairman of the Federal Communications Commission yielded to
President Obamas demands and
moved to regulate the freewheeling
Internet under the same laws that
applied to the Ma Bell monopoly.
Unless these reactionary regulations are stopped, they spell the
end of the permissionless innovation that built todays Internet.
Until now, anyone could launch
new websites, apps and mobile devices without having to lobby a
regulator for permission. That was
thanks to a Clinton-era bipartisan
consensus that the Internet
shouldnt be treated as a public
utility. Congress and the White
House under both parties kept the
FCC from applying the hoary regu-
Getty Images
BY L. GORDON CROVITZ
lations that micromanaged the

phone system, which would have
frozen innovation online.
Last weeks announcement from
FCC Chairman Tom Wheeler rejects 20 years of open innovation
by submitting the Internet to Title
II of the Communications Act of
1934. Once Mr. Wheeler and the
commissions Democratic majority
vote this month to apply Title II,
the regulations will give them
staggering control. Any Internet
charges and practices that the
bureaucrats find unjust or unreasonable is declared to be unlawful.
This is an open invitation to entrenched companies challenged by
new technologies. The Internet has
been a source of creative destruction, upending industries from music, movies and newspapers to retail, travel and banking. History
teaches that companies threatened
by competition will hire as many
lawyers as necessary to get regula-
tors to protect them.

Under Title II, regulators will
have the power to invalidate many
Internet practices that deliver
enormous value to consumers. Today, Amazon has a deal with Sprint
enabling Kindles rapid downloads
of e-books, which competing ebook sellers could claim was unjust. The WhatsApp messaging
system acquired by Facebook lets
people text for free, which traditional mobile phone companies
might well consider unreasonable. Netflix will regret lobbying
for Title II if its competitors object
to its special deals that enable its
smooth delivery of bandwidthintensive video.
Under Title II, almost all Web
operations will be subject to
bureaucratic control. In 2005, the
U.S. Supreme Court warned that if
the FCC treated the Internet as a
telecommunications service, it
would subject to mandatory common carrier regulation all informa-
tion service providers that use

telecommunications as an input to
provide information service to the
publicin other words, almost all
websites and apps would be subject to regulation.
This means the FCC will be able
to decide the reasonableness of
many websites and services: Regulators could micromanage Google
search results on the ground that
the company uses telecommunications to link to other sites. The
FCC could oversee news publishers
that link to other news sites or
have online advertisements connecting to advertiser websites.
Social media such as Facebook and
Twitter involve telecommunication
services, as do email services from
Google and Yahoo.
In anticipation of Title II, BlackBerry is already lobbying the FCC
to force Netflix and Apple to offer
apps for its phones, which have a
small market share.
Mr. Wheeler has promised to
forbear from some regulations,
but once regulators get power,
they use it. And if there is any forbearance, there will be litigation
from companies seeking to burden
their competitors with regulation.
President Obama claims that
Title II would boost broadband,
but the opposite is true. Today,
Google Fiber is the main threat to
the phone and cable broadband
duopoly. Under Title II, cable and
telecom lawyers will be able to
press the FCC to declare Googles
business model unjust or unreasonable. They can object to
Google serving only certain areas.

They can say its unfair that Google
can charge consumers less because
it benefits from advertising.
The FCC claims that it is supporting net neutrality, but Title
II was not designed to keep the Internet free of content discrimination. It actually enforces nonneutrality and fast lanes so long as
bureaucrats deem them reasonable.
It likely will take the courts into
the next presidency to litigate the
enormity of this FCC power grab,
but the sooner we return to the
national consensus against heavy
regulation, the better. The culture
of American innovation and the
freedom of the Internet hang in
the balance.
Thorold Barker, Editor,

Europe, Middle East & Africa
Bruce Orwall, Senior Editor, Europe
Gren Manuel, Executive Editor, Europe
Terence Roth, Managing Editor, Europe
Joseph C. Sternberg, Editorial Page Editor
Lauren Berkemeyer, Marketing
Kate Dobbin, Communications
Florence LeFevre, Institutional Sales Europe
Jonathan Wright, Circulation Sales
Published since 1889 by
Dow Jones & Company

2015 Dow Jones & Company. All Rights Reserved
Pound/Euro 0.7441 0.26%
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Global Dow 2500.25 g 0.34%
Gold 1240.80 0.56%
Oil 52.86 2.26%
U.S. Banks Say Rising Dollar

Puts Them at a Disadvantage
BY JOHN W. MILLER
Linz, AUSTRIAAustrian welder

Alois Leitner fuses strips of steel
and aluminum alloys in what could
be part of a historic breakthrough.
They taught us in engineering
school this was impossible, said Mr.
Leitner, who works for Linz-based
Voestalpine AG, Europes third-biggest steelmaker.
Mr. Leitners work in a small lab
on the outskirts of this industrial
town near the Czech border seems
simple enoughbut these two basic
metals are famously incompatible.
Solving the riddle of how to combine
them has long been considered a
Holy Grail for big metals and auto
companies.
Voestalpines process is neither
easy nor cheap. The company uses a
special solder and torches just hot
enough to melt aluminum but not
steel. The process, called cold metal
transfer, employs an argon gas to
avoid oxidation. Finally, the steel is
coated with zinc to bind the steel,
solder and aluminum.
You need to hit all the parameters in the right way to achieve the
right properties, said Voestalpine
spokesman Peter Felsbach. The company said its technique is two to
three times as expensive as the riveting and gluing techniques now
used. It hopes to shave costs by a
third to make the process suitable
for high-end autos.
To make it commercially feasible,
the company said it would need
more customers, which would help
pay for the tinkering necessary to
refine the process and make it less
expensive.
The payoff is potentially huge.
For decades, steel and aluminum
makers have competed for car
partsfrom hoods to engine
blockstouting their metal as
stronger, cheaper and lighter, and
the other as inferior. Being able to
readily combine the two would increase auto makers portfolio of
parts, adding a palette that benefits
from steels strength and aluminums lightness.
Luxury-car maker Audi AG first
contacted Voestalpine to help it join
materials like steel and aluminum
or fiber-reinforced plastics, according to the auto maker. Welding aluminum and steel is a very promising
technology development, it said.
We had always said it cant be
done, said Dick Evans, chairman of
Constellium NV, a major producer of
aluminum sheet for the auto industry that doesnt currently have a hybrid product on the market.
The interest is rising as massmarket auto makers, led by Ford
Motor Co. with its 2015 F-150 pickup
truck, embrace lighter but more exPlease turn to page 20
HEARD ON THE STREET 28
THE WA L L STR E ET JOU RNAL.
europe.WSJ.com
BGs New Chief Gets Early Start

BY SELINA WILLIAMS
LONDONBG Group PLCs new

chief executive inherits a challenging landscape at the U.K. oil-and-gas
company, analysts said, including its
two big bets: a partnership with
scandal-scarred Petrleo Brasileiro
SA and an expensive liquefied-natural-gas project in Australia.
Helge Lund, who recently left the
helm at Statoil ASA, wasnt supposed
to take the reins at BG until March 2.
A surprise announcement on Monday
said Statoil had released him from his
contract three weeks early. Statoil
had confirmed its new CEO, Eldar
Saetre, last week.
Mr. Lund, 52 years old, had won
praise in Norway as a skillful executive, forcing Statoil over his 10-year
tenure as CEO to drill across the
world while also revitalizing its
work in the home countrys continental shelf.
Now he inherits challenges at BG,
which hasnt delivered on most of
its promises of growth in production and cash flow. For the fourth
quarter, BG posted a net loss of
$5.03 billion and an $8.9 billion
write-down before tax.
Its not BGs last chance, but investor patience is certainly much
thinner now than it was a few years
ago, said a London-based Jefferies
analyst, Jason Gammel.
BG declined to make Mr. Lund
available for an interview.
He steps in after a disappointing
year for BG, once a favorite stock
pick that investors have since
soured on.
The companys share price has
fallen about 25% since January
2014, and it has been without a CEO
since the previous boss, Chris Finlayson, resigned last April.
A spokesman for BG said the
company delivered strong operational progress in 2014, started up
the significant Queensland, Australia, LNG project on schedule, doubled production in Brazil and met
its production guidance last year.
Though some investors ex-
Bloomberg News
Voestalpine
Pursues
Holy Grail
Of Welding
10-year Treasury g 3/32 yield 1.948%
Weak Euro Remains

In a Fragile Position
MARKETS 21
Tuesday, February 10, 2015
3-month Libor 0.25835
Helge Lund steps in as BGs chief executive after a 10-year run at Statoils helm.
pressed objections to his pay packagesince resolvedpeople who
know Mr. Lund said he would be a
steady presence at the top of BG.
Compared with other global oil
executives, hes got a different, more
down-to-earth leadership style,
Marit Arnstad, Norways former
minister of oil and energy, said in
October.
Some may see him as a man of
few words, but to the board and the
employees, hes open to suggestions
and new assessments, she added.
Much of Mr. Lunds attention will

be focused on two projects that will
provide the backbone of BGs production growth in 2015 and 2016:
the offshore oil fields of Brazil and
a natural-gas project in Australia.
Both are on unstable ground, analysts said, with oil prices trading at
less than $60 a barrel, half of last
summers level.
The bulk of BGs write-down
$6.8 billionwas related to its big
bet in Queensland, Australia, where
the company has started up a siz-
able first-of-a-kind project, known

as QCLNG, to convert coal-seam gas
to liquefied-natural gas for export.
BG said $4.1 billion of the Australia
write-down was driven mainly by
falling future oil prices.
The gas is flowing into a much
weaker market amid softness in
Asian demand.
Even when oil was trading at
more than $100 a barrel, the economics of QCLNG were tight. At the
start of the project, the expected
rate of return was about 6%, roughly
half the 10%-12% that companies
typically look for in LNG projects,
said Mr. Gammel.
In Brazil, BGs assets look encouraging on the surface.
Analysts said the Santos Basin
reservoir, about 300 kilometers off
the Brazilian coast, is highly productive, giving it the potential to be
particularly profitable.
But last week a corruption investigation engulfing state-run Petrobras, BGs partner in those fields,
led to a management shake-up.
Petrobras CEO Maria das Graas
Silva Foster and five other executives in the company resigned amid
a probe into allegations of kickbacks
and payments to company officials
and politicians. None of the departing executives has been implicated
in the matter.
Brazilian authorities allege that
some of the nations largest construction companies paid bribes to
secure $23 billion in contracts with
Petrobras in recent years. Petrobras
says it is a victim of the alleged corruption and that it is cooperating
with authorities.
The companys stock is off about
45% since the start of last year.
BG Chief Operating Officer Sami
Iskander said last week that the
company was keeping a close watch
on the situation.
There may be things we do not
know around the supply chain, he
said.
Kjetil Malkenes Hovland
in Oslo contributed
to this article.
Reports Hint at Strategic Win for OPEC

BY BENOT FAUCON
AND SARAH KENT
OPECs strategy of keeping the

oil taps open in the face of plunging
prices appears to be working, bolstering the groups grip on markets
in importing countries and undercutting the American crude boom,
said the cartel and an independent
group.
The result will be an inevitable
rebound in oil prices, according to a
monthly report by the International
Energy Agency. That recovery could
start as soon as the second half of
the year as U.S. shale production
slows, though prices arent expected
to reach the heights of the past
three years, when crude traded at
more than $100 a barrel.

Were looking at a contraction
in the U.S., said Antoine Halff, head
of the oil industry and markets division of the IEA, a Paris-based group
representing the energy interests of
industrialized countries.
The changes would eventually affect motorists, who have enjoyed
some of the lowest gasoline prices
in a decade since the cost of crude
began a nose dive last June. Booming production from shale-rock formations in North America and sluggish global demand have driven
prices down by about half, causing
spending cuts at oil companies and
a sharp decline in the number of
rigs drilling for oil in the U.S.
The Organization of the Petro-
leum Exporting Countries also produced a downbeat forecast for U.S.

oil production in its monthly market
report, saying it would grow more
slowly in 2015by about 130,000
barrels a daythan expected.
The group also reversed an earlier prediction that demand for
OPEC oil would decline in 2015, saying instead that it would increase by
about 100,000 barrels a day compared with last year, to about 29.2
million barrels a day.
Oil prices continued an upward
trend on Monday. March futures for
Brent crude, the global benchmark,
settled up 54 cents, or 0.9%, to
$58.34 a barrel on Londons ICE Futures exchange. U.S. oil futures settled up $1.17, or 2.3%, at $52.86 a
barrel.
The reports highlighted OPECs
decision in November to forsake its
traditional role of propping up
prices by cutting production. Led by
Saudi Arabia, the group instead decided to keep pumping, a move seen
as intended to inflict economic damage on U.S. producers.
Oil from newly tapped U.S. shale
fields is more expensive to produce
than crude in much of the rest of
the world, so output is harder to
sustain when prices are low.
Both OPEC and the IEA said Russia would take a hit. OPEC said aging Russian fields will produce less
than previously foreseen, while the
IEA said Russian output would sufPlease turn to page 20
BUSINESS & FINANCE
Tax Evasion Claims Trail HSBC
Fresh Details Come From Ex-Computer Analyst Turned Whistleblower on Secret Accounts
BY JOHN LETZING
Reuters
ZURICHHSBC Holdings PLC

got a fresh blast of embarrassing
publicity over the weekend, as a
mountain of new details on its Swiss
banks historical services for unsavory characters and tax evaders was
dumped on the media.
The U.K. banking companys
Swiss unit has been the source of
unwelcome attention for years, following a well-publicized data theft
by a former employee and the opening of a criminal investigation by
U.S. authorities into its alleged aiding of tax evasion.
The fresh details provided by
former HSBC employee Herv Falciani to the International Consortium of Investigative Journalists
and several media outlets illustrate
the ways HSBC allegedly sheltered
secret accounts for what the ICIJ
called dictators and arms dealers
as well as rock stars.
The report also describes ways
the bank allegedly advised clients
on ways to avoid paying taxes on
their funds in their home countries,
and it lists clients who are on U.S.
sanctions lists or were ousted in the
Arab Spring.
Franco Morra, chief executive of
HSBCs Swiss bank, said on Monday
that the unit began a radical transformation in 2008 to prevent its
services from being used to evade
taxes or launder money. New senior
management have comprehensively
overhauled the business, including
closing the accounts of clients who
didnt meet our high standards and
ensuring we have strong compliance
controls in place. The CEO added
that the new disclosures are a reminder that the old business model
ured out his identity and what he

had been up to in December 2008.
The Swiss said they had interrogated Mr. Falciani that month, but
added that he fled the country before they could pursue their questioning further.
In 2012, Mr. Falciani was arrested in Spain on an international
warrant, but a Spanish court ruled
against extraditing him in 2013. The
Swiss attorney generals office said
in its recent statement that Mr. Falciani could be tried in Switzerland
in absentia. Sometimes celebrated
as a hero abroad, the Franco-Italian
national is now to answer for his alleged crimes, the office said.
A spokeswoman for the Swiss Office of the Attorney General didnt
respond to a request for comment.
The ICIJ quoted Mr. Falciani as saying, Im not a white knight, but
there is something beautiful and exhilarating about establishing the
truth.
HSBCs Swiss bank remains one
of roughly a dozen lenders in the Alpine country under U.S. Justice Department investigation for allegedly
aiding American tax evasion by providing undeclared accounts. Credit
Suisse Group AG settled its probe
last year, by pleading guilty to a
criminal charge of conspiring to aid
tax evasion and agreeing to pay $2.6
billion. HSBC has also been hit with
a related case in France, where
prosecutors said last November they
were investigating HSBCs Swiss
bank for allegedly laundering the
proceeds of tax fraud. HSBC said at
that time that prosecutors were examining the banks behavior in the
years 2006 and 2007.
Nicholas Winning
Herv Falciani said establishing the truth is beautiful and exhilarating.

of Swiss private banking is no longer acceptable.
The revelations also had political
implications in the U.K., where British Prime Minister David Cameron
was forced to defend his appointment of former HSBC chairman Stephen Green as a minister. The main
opposition Labour Party said the
government had been handed information about malpractice at HSBC
in 2010 and took no action.
Mr. Camerons spokesman said
the prime minister didnt regret hiring Mr. Green as minister for trade
and investment from early 2011 to
late 2013 and that the prime minister never discussed the issue of the
HSBC files with Mr. Green. The former bank chairman couldnt immediately be reached for comment.
Treasury minister David Gauke
told Parliament the Treasury had

worked through Swiss HSBC data it
received in 2010 and brought in
more than 135 million ($205 million) in taxes, interest and penalties
from tax evaders who hid their assets in Swiss HSBC accounts.
The story of Mr. Falciani, the
HSBC computer analyst turned
whistleblower, isnt a new one. The
Wall Street Journal published a profile of him in 2010, noting that he
had been blasting emails out to tax
authorities around Europe with the
subject line: Tax evasion: client list
available.
The Swiss Office of the Attorney General said late last year that
it filed charges against Mr. Falciani
for alleged crimes, including industrial espionage and violating Swiss
bank secrecy, after having first fig-
BY MICHAEL RAPOPORT
Cathy Engelbert has been named

chief executive of Deloitte LLP, the
first woman to become CEO of one
of the Big Four accounting firms in
the U.S.
Ms. Engelbert, 50 years old, has
been at Deloitte since 1986 and is
currently chairman and CEO of Deloitte & Touche LLP, the firms auditing unit. She was elected for a fouryear term as CEO, standard at the
major accounting firms, and will
take over on March 11.
Ms. Engelbert replaces Frank S.
Friedman, who has been Deloittes
interim CEO since August. Mr.
Friedman had assumed the CEO
post when Joe Echevarria, who had

been Deloittes CEO since 2011, decided to leave before his term was
up to pursue his interest in public
service. Mr. Friedman will become
chief operating officer.
In written remarks, Ms. Engelbert said she was deeply honored to
lead Deloitte.
Ms. Engelbert is a former member of Deloitte LLPs board and has
held partner roles for the audits of
several leading pharmaceutical companies. She is also a member of the
Financial Accounting Standards Advisory Council, which advises the Financial Accounting Standards
Board, the U.S. accounting rulemaker, on strategic issues and other
matters that affect rule-making. She

holds a bachelors degree in accounting from Lehigh University.
Deloitte LLP is the U.S. member
firm of the international Deloitte
Touche Tohmatsu network, which
provides auditing, consulting and
tax-advisory services. It includes
both Deloitte & Touche and Deloitte
Consulting LLP.
Deloitte also named Mike Fucci
as chairman on Monday. Mr. Fucci
has been at the company for 33
years and has led the firms consulting-service areas. He has been a
member of Deloittes board since
2012.
Chelsey Dulaney
Deloitte Touche Tohmatsu
First Woman to Head Deloitte
New CEO Cathy Engelbert has worked

at Deloitte since 1986.
Banks to
Charge for
Forex Trade
At the Fix
BY CHIARA ALBANESE
KATIE MARTIN
AND
Banks including Barclays PLC,

Deutsche Bank AG and Credit Suisse Group AG are planning to
charge clients for carrying out foreign-exchange trades at the socalled 4 p.m. fix, according to people familiar with the matter.
The fix, a key currencies benchmark, was a central focus of the recent investigation into alleged
wrongdoing in the foreign-exchange
industry. The banks will start charging the fees after a new way of calculating the benchmark kicks in on
Feb. 15, the people familiar with
their plans said.
The unit of State Street Corp.
that produces the fix at 4 p.m. London time announced its new methodology in November. The new approach involves taking an average
price for trades conducted over a
five-minute period, instead of the
current one-minute slota change
suggested by global regulators, that
is meant to make it much harder for
bank traders to try to influence
prices. Previously, banks have conducted these transactions for free.
People familiar with the matter
say that the level of fees levied by
banks now will vary according to
the needs of each client.
In September, the Financial Stability Board called for a wider window during which the benchmark is
calculated to reduce the potential
for manipulation. The FSB also said
that clearly communicated fees
may be appropriate.
The decision to charge clients
could impact whether they use the
fix, said Alex McDonald, chief executive at Wholesale Markets Brokers
Association. This will likely diminish the attractiveness of this fix as a
standardized FX rate for commercial
transactions and reference, he said.
The moves come amid major upheaval in the foreign-exchange industry. Last November, six banks
paid a total of $4.3 billion to regulators in the U.S., U.K. and Switzerland over accusations that they let
traders share information and profit
unfairly at their clients expense.
While investigations by banks
and some regulators are continuing,
some currencies-dealing banks are
trying to clean up their business.
We are engaged with [banks],
the regulators, and the buy-side on
how to best implement ethical conduct codes, said Marshall Bailey,
chairman of industry body the ACI.
INDEX TO BUSINESSES
Businesses
This index of businesses

mentioned in todays
issue of The Wall Street
Journal is intended to
include all significant
reference to companies.
First reference to the
companies appears in
bold face type in all
articles except those
on page one and the
editorial pages.
Aberdeen Asset
Management..............18
Alibaba Group Holding.28
Alpha Bank ................... 22
AngelList.......................17
Anthem...........................6
Audi..........................15,18
Barclays.................1,16,28
Beepi ............................. 17
BG Group..................15,28
Biomarin Pharmaceutical
................................... 19
BMW.............................20
BNP Paribas..................28
Cameco..........................16
Citigroup ................. 1,9,21
Constellium...................15
Credit Suisse Group
........................... 1,16,22
Daimler..........................20
Deloitte.........................16
Deutsche Bank...........1,16
DexCom.........................19
DNO...............................20
eBay .............................. 17
Emirates Airline ........... 10
Eurobank Ergasias........22
European Automobile
Manufacturers
Association................18
Facebook .................. 17,19
Genel Energy ................ 20
GlaxoSmithKline...........19
Goldman Sachs Group

.............................. 21,22
Gulf Keystone Petroleum
................................... 20
Honda Motor.................20
HSBC Holdings (UK Reg)
................................... 16
Huawei Technologies....28
Insparo Asset
Management..............18
International Consortium
of Investigative
Journalists.................16
JD.com...........................28
Johnson & Johnson......19
J.P. Morgan Chase........21
Lenovo Group................28
Meizu Technology.........28
Moodys Investors
Service.......................18
Morgan Stanley............21
National Bank of Greece
................................... 22
Nestle............................22
News Corp....................8,9
Novartis ........................ 19
Organization of the
Petroleum Exporting
Countries ................... 15
Path...............................17
Petrleo Brasileiro........15
Pfizer.............................21
Piraeus Bank.................22
Procter & Gamble.........21

Renault..........................18
Sberbank.........................5
Sony ................................ 6
Sony Pictures
Entertainment.............6
Standard Life
Investments...............18
State Street.............16,21
Statoil ...................... 15,28
Swiss Office of the
Attorney General.......16
Tencent Holdings..........28
UBS ................................. 1
Vertex Pharmaceuticals
................................... 19
Voestalpine...................15
Volkswagen..............18,20
Wikia.............................17
Xiaomi...........................28
Corrections Amplifications
Uranium producer Cameco Corp. released full-year results Friday and was
set to hold its earnings call Monday. An
Ahead of the Tape article Monday incorrectly said the company would release
its results Monday.
Readers can alert the London newsroom of The
Wall Street Journal to any errors in news articles
by emailing wsjcontact@wsj.com or by calling
+44 (0)20 7842 9901.
BUSINESS & FINANCE
Websites Let StartupsTap Small Investors
When Gil Penchina decided to invest $25,000 in Beepi Inc., a twoyear-old online buyer and seller of
used cars, he fired off an email asking other people if they wanted to
get in on the deal. Within a day, he
rounded up a total of $2.8 million
from nearly 100 investorsand rejected 300 more.
The 45-year-old Mr. Penchina
isnt a big-time venture capitalist. He
is part of an emerging group of investors who negotiate with upstart
companies to buy equity stakes that
are sold through so-called crowdfunding on websites such as AngelList. The other investors rely on his
due diligence, and he gets 15% of any
investment profits eventually earned
by the groups, known as syndicates,
that he leads.
The moves are a sign of the intense desire among small investors
to try to cash in on the technology
industrys gold rush. Rather than
wait for up-and-coming firms to go
public, these investors are pouring
money in much earlier, hoping for
supersize returns if a company becomes a hit.
I am building Vanguard, says
Mr. Penchina, referring to the mutual-fund company best known for
selling index funds to the masses.
When Beepi announced completion of the crowdfunding stake, the
company said it raised an additional
$10 million from investors that include Russian billionaire Yuri Milner,
who is known for investing in Facebook Inc. and Twitter Inc.
The move to widen startup investing worries some venture capitalists and consumer groups. They
say making it easier for small investors to bet on young tech companies
is reminiscent of the dot-com booms
euphoria, which ended when the
tech-stock bubble burst in 2000.
Theres this populist notion that
we have to let everyone invest in
these new startup companies, but
the problem is most people cant afford to take that risk, said Barbara
Roper, director of investor protection at the Consumer Federation of
America.
Crowdfunding through syndicates
encourages a spray and pray strategy, or spreading bets among as
many companies as possible with the
hope that one or two will be stars,
according to some venture capitalists.
The practice is made possible by
the Jumpstart Our Business Startups
Act of 2012, which allows companies
to advertise broadly in search of
funds. AngelList is open to accredited investors who have earned at
least $200,000 in each of the past
two years, or $300,000 with a
spouse, or have a net worth of at
least $1 million.
That bar could get lower under
rules proposed by the Securities and
Exchange Commission that could be
finished by October. The proposal
would allow people who make
$100,000 or more to invest 10% of
their annual income or net worth
over a 12-month period.
Naval Ravikant, AngelLists chief
executive, says the company adequately warns new investors of the
risks. A disclaimer on the website
says: An Investor May, and Frequently Does, Lose All of Its Investment.
A Harvard Business School study
in 2012 concluded that about threequarters of venture-capital-backed
firms in the U.S. dont return investors capital.
Companies that pitch themselves
Evelyn M. Rusli/The Wall Street Journal
BY EVELYN M. RUSLI
Gil Penchina is part of an emerging group of investors who arrange for equity stakes to be sold through crowdfunding.
to potential investors on AngelList
and other investment websites usually are in their infancy. Last year,
243 startup firms raised more than
$104 million on AngelList, up from
$16 million a year earlier.
AngelLists investors include Dave
Morin, founder of social-networking
app Path Inc., Tim Ferriss, author of
The 4-Hour Workweek, and Barbara Corcoran, a real-estate mogul
and star of TV show Shark Tank.
As crowdfunding opens up to
more small investors, few people
stand to gain as much as Mr.
Penchina. He has assembled about
2,000 backers on AngelList who have
agreed to invest alongside him
through funds earmarked for areas
ranging from advertising technology
to the digital currency bitcoin.
While any investor who meets
AngelLists requirements can invest
through the website, Mr. Penchina
uses his contacts to line up companies that he believes will be especially attractive to investors. He previously was an eBay Inc. manager
and CEO of wiki-hosting site Wikia
Inc. Mr. Penchina is friends with Mr.
Ravikant and an investor in AngelList.
For each syndicate fund, Mr.
Penchina chooses several investments and shares limited financial
data and other information with his
backers, who can opt out of any investment. He invests an average of
$25,000 in each deal and is allowed
to write a check as large as $4 million on behalf of the group.
The group is known as Uprising, a name chosen by Mr. Penchina
to evoke a democratic undertone.
SEC rules limit such deals to 99 investors, which means Mr. Penchina
decides who else will get a piece of
each deal.
Unlike typical venture-capital
funds, no management fee is
charged. If the target company is acquired or has an initial public offering, Uprising gets a 15% carry, or
percentage of the investment profit,
on each success. In contrast, venture-capital funds only collect carry
if a total fund returns money.
For example, if Mr. Penchina and
98 chosen syndicate members invest
$1 million in a company that is
bought later and generates a $100
million return, he would make $15
million from his original $25,000
bet. AngelList would get $5 million,
while the remaining investors would
divide $80 million.

Mr. Penchina says he has poured
his life savings into AngelList. So far,
he has made 15 investments and has
spent about $1 million of his own
money on deals and staff to help run
the funds. All the companies are still
private.
Rodney Samaan, a cardiologist in
Mission Hills, Calif., who hasnt participated in Mr. Penchinas funds but
made separate investments using

AngelList, says newcomers should
heed the risks. Dr. Samaan thought
his 2013 investment in Outbox, a
company that digitizes mail, was an
easy home run.
Last year, Outbox shut down the
service and relaunched as a peer-topeer lending service. It was a learning lesson. It never occurred to me
that people wouldnt be into it, says
Dr. Samaan, who hasnt made any

bigger investments on AngelList
since then.
Still, other people are eager to invest. There are enough people using
AngelList that I feel comfortable
with it, says Roy Hammond, a radiologist in Utah who has made about
six investments alongside Mr.
Penchina.
The two men havent met, but Dr.
Hammond says he has warmed up to
Mr. Penchina, who comes across as
personable and responsive by email.
Im always cautious, but he
makes a good impression over the
Internet, says Dr. Hammond. About
5% of his investment portfolio has
been funneled into companies on AngelList.
Mr. Penchina says he was
shocked at first when small investors
were willing to commit a total of
$500,000 collectively to his deals
within weeks.
Mr. Penchina hopes to add 25 to
50 new syndicates this year to the
dozen already running. He is eyeing
unorthodox categories such as venture debt and plans to pick partners
who will help him find new deals
and split the carry with him.
At a recent Uprising party, Mr.
Penchina was an eager host, laying
out cheese and charcuterie on platters. He even oversaw the drying-out
of one guests pants, which were
soaked by a San Francisco rain.
Many of these people have never
met before, he said while filling
champagne flutes with Prosecco that
cost just $5 a bottle. It tastes better
than the fancy stuff.
2 01 4 ANN U AL RES U L TS
Robust overall performance

VINCIs overall performance in 2014 was robust: the continued upturn in motorway traffic, the
sharp increase in airport traffic and the good momentum in the Groups activities outside Europe
allowed the Group to reduce the impacts of the deterioration in the French economic environment
that affected the Contracting business from the second quarter, as well as the difficulties in
UK construction activities. As a result, net income excluding non-recurring items amounted to
1,906 million, slightly up (0.4%) compared to 2013. Thanks to the capital gain from the opening
of 75% of VINCI Parks capital, net income attributable to owners of the parent rose almost 27%
to 2,486 million, or 4.43 per share.
Xavier Huillard,
Chairman and Chief Executive Officer
Revenue: 38.7 billion (down 2.0% like-for-like)
EBITDA: 5,561 million (down 0.6%)
Net income excluding non-recurring items: 1,906 million (up 0.4%)
Net income attributable to owners of the parent: 2,486 million (up 26.7%)
Order book at 31/12/2014: 27.9 billion, representing approximately 10 months of average
Contracting activity
Dividend*: 2.22 per share
* Dividend that will be proposed to the Shareholders General Meeting on 14 April 2015. If approved, given that an interim dividend was paid in 2014,
a final dividend of 1.22 per share will be payable in cash on 29 April 2015. It includes a special dividend of 0.45 per share.
The 2014 annual results press release and presentation are available
in French and English on VINCIs website: www.vinci.com
BUSINESS & FINANCE
Budget Car Brands Gain in Europe

PARISAs Europes long-dormant car market slowly awakens, it
is the budget brands leading the
way.
Last year, new passenger car
registrations, a proxy for new car
sales, rose 5.7% to 12.6 million, according to figures released by the
European Automobile Manufacturers Association, or ACEA. It was
the first increase since 2007.
But the markets cheapest
brands, such as Renault SA-owned
Dacia and Volkswagen AG-owned
Skoda, made the biggest gains. Last
year, Dacias sales increased nearly
24% to 359,141 while Skodas rose
14% to 554,479.
When Florian Garnier, a 28-yearold plumber, searched for a new car
to replace his aging Renault Clio
hatchback, the Dacia Lodgy minivan
proved hard to resist.
A Lodgy starts around 9,900,
or $11,000. Anything similar by Peugeot or Renault is around 16,000,
said Mr. Garnier, who lives in Montbrison in central France and made
his purchase last month. Its so
much cheaper. You cant compare.
European car makers increasingly are turning to their lowestprice Eastern European marques to
replace the lack of growth from
their flagship Western European
brands.
The market has a lot of pent-up
demand. But it is the traditional car
makersGM, Ford, Volkswagen
that are coming under pressure as
consumers go down to budget
brands, said John Leech, an auto
analyst at KPMG in London.
GM and Volkswagen are considering budget cars. Next month, GM
plans to release a new entry-level
city car, called the Karl, with a
starting price of 9,500 and geared
toward price-conscious customers,
a spokesman said. VW also is exploring a 7,000 budget car under
its own brand name. However, a
spokesman said the popularity of
cheap cars has no impact on the
business strategy of Volkswagen.
Agence France-Presse/Getty Images
BY JASON CHOW
Buyers are turning to budget brands such as Skoda from the Czech Republic, which saw a 14% rise in sales last year.
Ford wasnt available to comment.
Since 2007, Europes car market
has been hit by two economic
recessions, a continuing debt crisis
and rising unemployment in several
countries including France, Italy and
Spain, all of which has shaken
consumer confidence. Auto analysts
say that European drivers simply
held on to their older cars and
delayed purchases of new ones as
the depressed economic climate set
in.
Its increasingly expensive to
maintain an aging car fleet, in light
of high fuel costs and increasing
taxation on older, polluting cars,
said Arndt Ellinghorst, a car analyst
at data provider Evercore ISI Research in London.
Buyers trading down are turning
to Dacia and Skoda, two brands that
once were considered stodgy exCommunist brands that made unsightly and unreliable cars. Quality
steadily improved as the parent
companies invested heavily over the

past decade. Both now have a cost
advantage from manufacturing in
Eastern Europethe Czech Republic
for Skoda and Romania for Dacia
where labor costs are far lower than
in Western Europe.
The difference between budget
brands starting list prices and
those of similar models by the market leading brands is stark: The Dacia Sandero, a small four-door
hatchback that is one of Dacias
most popular sellers, is listed at
7,990 in France. The vehicle comes
without air conditioning, power
locks or a radio. In contrast, similarsize but better-equipped Skoda Fabia is priced at 12,640. Meanwhile,
a four-door Volkswagen Golf starts
at 17,388.
To be sure, the traditional
brands still maintain market
supremacy over the cheap rivals.
Volkswagens status as the top
brand in Europe is unchallenged,
and its Golf model is the best-selling
car in Europe, according to

researcher
JATO
Dynamics.
Meanwhile, GM and Ford also expanded market share with popular
models like the Opel Corsa and Ford
Fiesta.
Even as the European market
contracted over the past seven
years, Volkswagen expanded its
market share: In 2014, its cars made
up 12.4% of all European sales, up
from 10.5% in 2007. Skoda doubled
its market share over the same period, but still remained at 4.4% last
year.
In Montbrison, the local Dacia
dealership says that business has
been constantly building for the
budget brand. Last year, it sold 132
Dacia cars, up from 104 in 2012.
People are replacing their old
cars, especially ones over 10 years
old, with new Dacias, said Laurent
Palomar, a sales manager at a dealership that sells Dacia and Renault
cars. They like the look, but especially the price.
Russian Car Buys Fall 24% on Ruble Plunge

turers Committee, a Moscow-based
trade group, said in a statement
Monday. Because prices are still going up, he added, the headache will
rather get worse before going away
eventually.
Januarys weakness heightens
the likelihood that Russia will continue to drag on global auto makers
doing business there. While other
markets in the region have improved
after several years of malaise, Russias once-strong industry is forcing
some car companies to lower their
European profit outlook or book
losses.
Battered by the falling oil price
and Western sanctions on Russia,
the ruble fell steadily in the autumn
before going into free fall in December, losing as much as 20% of its
value against the dollar on Dec. 16
before steadying. Russians scrambled to convert their weakening rubles into goods before prices went
up, clearing out car dealers, electronics shops and appliance sellers.
Auto sales in December were up
2.4% from a year earlier, enough to
help keep the drop for 2014 at a
rather modest 10%. Demand was especially strong for luxury brands like
Mercedes-Benz as wealthier con-
Hitting the Brakes

Sales of cars and light trucks
plunged in Russia in January.
Change from a year earlier,
monthly data
5%
0
5
10
15
20
25
30
J F M A M J J A S O N D J
2014
15
Source: Association of European Businesses
sumers unloaded their ruble savings.

Overall retail sales in December rose
5.3%, helping restore the cooling
economy to positive territory for the
month, according to official data.
But the situation has worsened
since the start of the year. Price increases took off, driving inflation to
3.9% a month in January, the highest
level since early 1999. Early in the

year, imports like electronics saw
even bigger hikes, with popular
notebook computers doubling in
price compared with October, according to Yandex NV, a Russian Internet company that tracks prices.
Confidence fell off a cliff in January as the crisis in Russia reached
a new level. This months survey was
devoid of any bright spots, with consumers reeling from the combination of high interest rates and inflation, said Philip Uglow, chief
economist at MNI Indicators, which
tracks consumer confidence.
Yelena Smirnova, 30, a freelance
translator in the Volga River city of
Cheboksary, said she had snapped
up appliances for a new apartment
in December before the prices rose,
but now faces the reality that renovating the new place will cost far
more than planned. I now have to
be more thrifty in everything from
grocery shopping to buying clothes
and entertainment.
With the economy heading into
recession, the government expects
average incomes, adjusted for inflation, to fall this year for the first
time since the global financial crisis.
The auto industry, once one of
Europes hottest growth prospects,
is facing a deep freeze. Consultants

PwC forecast sales this year could
drop as much as 35% to 1.52 million
vehicles, the lowest since 2009,
when the global financial crisis hit
Russia hard.
A representative of a major car
dealer in Moscow, who asked not to
be named, said that AEB figures for
January were more rosy than the reality as they also reflected sales of
cars that were ordered late last year.
Mercedes sales were up 17% in January, according to AEB data. If there
is no state support for the car sales,
our revenues may fall by some 50%
in the first quarter compared with a
year ago, the representative of the
car firm said.
Major international auto makers
have raised prices by as much as
56%, according to PwC. Volvo Trucks
and General Motors have already
said they may suspend production
later this year. Avtovaz, the manufacturer of Lada cars, majorityowned by Renault SA and Nissan
Motor Co., has said it would cut
1,100 people from its workforce in a
bid to steer back to profitability during a slowdown in the Russian economy. Last year, Avtovaz slashed its
workforce by 12,000 to its current
level of around 50,000.
Africa Bond
Bonanza
Confronts a
New Reality

rockier. The Fed has signaled interest rates will rise this year and analysts predict this will drive a repatriation of funds from so-called
emerging and frontier markets,
leading investors to sit out new debt
issues.
Meanwhile, low oil prices are
hitting some of Africas biggest
economies, such as oil-dependent
Angola, Ghana and Nigeria. And a
stronger dollar means that those nations that have borrowed in dollars
will find it harder to repay their
loans.
The global environment is not
supportive of frontier markets at
this stage, said Kristin Lindow, senior vice president of the sovereignrisk group of credit-rating firm
Moodys Investors Service.
But with the timing of the first
U.S. rate increase still uncertain,
some investors are willing to stick
with Africa for a bit longer.
Kevin Daly, emerging-market
portfolio manager at Aberdeen Asset Management, which has $550
billion under management$1 billion of that in Africasees a window in the first half of 2015 for African bond issuance before higher
U.S. rates kick in. He said Fed rate
increases will be very measured
and slow-paced, pushing it back toward the end of the year.
There will certainly be lower issuance by African sovereigns in
2015, Mr. Daly said, and investors
will be a little more discerning on
what they want to buy.
Mahan Namin, manager of the
Africa fixed-income fund at Londonbased frontier-market investment
firm Insparo Asset Management,
with $155 million under management, said stronger issuers such as
Ivory Coast, with an annual growth
rate of more than 8% and prudent
fiscal housekeeping, shouldnt have
trouble raising money in the debt
market. Mr. Namins fund is invested
in Kenyan, Ethiopian and Senegalese
sovereign bonds.
Still, he said that he recently
closed positions in oil-dependent
African economies such as Angola.
As long as African countries keep
up high growth rates and control
public finances, they will remain
more attractive than their frontiermarket peers such as Romania, Bolivia or Guatemala, said Mark Baker,
investment director of emergingmarkets fixed income at Standard
Life Investments, which has $368
billion under management.
Ivory Coast has said it would
seek to raise about $1 billion in the
next few months. Tanzania has signaled it plans to issue its first dollar-denominated bond, but is waiting to get its debt graded by a
credit-rating firm, a requirement to
issue in international markets.
Others, however, are turning to
more-familiar sources to finance
growth and build a buffer against
future problems. Last week, Kenya
was granted a roughly $700 million
loan from the International Monetary Fund, having graduated from a
full IMF bailout program in 2013.
And Angola is discussing with the
World Bank a roughly $500 million
loan. The country has revised its
2015 budget, cutting the oil-price
assumptions that underpin its revenue plans to $40 a barrel from $81.
BUSINESS & FINANCE
BY KATE LINEBAUGH
Medical-device maker DexCom

Inc. is designing an app that will display readings from its diabetes glucose monitor on Apple Inc.s smartwatch, giving the watch an early
foothold in the health-care market at
a time when regulatory treatment of
such systems has eased.
DexComs glucose monitor tracks
a persons blood-sugar levels continuously. The company has shown a picture of the app, which converts that
data into a simple graph that is just a
glance at the wrist away. It says the
app is expected to be ready when the
Apple Watch is launched in April.
Apple declined to comment. The
company hasnt accepted any apps
for the coming watch yet but has
provided guidelines and code to developers for creating apps for it. The
latest iPhone operating system increased its health and fitness offerings.
The Food and Drug Administration had been closely scrutinizing
such applications. But the agency
loosened its oversight in late Janu-
ary, months after a group of software

engineers, many of whose children
have Type 1 diabetes, developed a
system for monitoring diabetes patients blood sugar over the Internet.
The system was distributed without
first getting regulatory approval.
The groups effort challenged the
slow pace of innovation and regulatory approval in the field. It also
highlighted the growing role that Silicon Valley companies and software
developers hope to have in monitoring and maintaining peoples health.
Some 29 million Americans have
diabetes. Between 5% and 10% of
them have Type 1, an autoimmune
condition in which the body is unable
to convert glucose into energy. People with Type 1 diabetes rely on taking insulin and regular monitoring to
make sure their blood sugar doesnt
go dangerously high or low, both of
which can cause life-threatening conditions.
The DexCom monitor uses a
hairs-width sensor under the skin to
measure blood glucose levels every
five minutes.
Previously, the FDA considered
glucose monitors and any associated

software to be Class III medical devices, meaning they received the
highest level of regulatory scrutiny.
But the spread of NightScout, the
system developed by the group of
software engineers, and DexComs
submission of a separate iPhone app
for review prompted the FDA to
change course last month.
DexComs monitors will remain
Class III devices, but software that
helps display the data they produce
on mobile devices or smartwatches
now only needs to be registered with
the FDA and doesnt require prior
marketing approval.
The FDA has been reassessing its
health-apps policies. We felt that
the risks that the app imposed
werent as high, said Alberto Gutierrez, director of the FDAs Office of In
Vitro Diagnostics and Radiological
Health.
The issue came to a head last
year when the group of software engineers, working on their own time,
developed NightScout, which met a
critical need. The software takes data
from a glucose monitor made by Dex-
Drug Making Breaks Tradition

BY JONATHAN D. ROCKOFF
Medical-device maker DexCom must ensure its smartwatch app meets regulations.
Com, mainly for Type 1 diabetes patients, and uploads it to the Internet.
That allows parentsand caregiversto keep track of their children
blood sugar from afar via their cellphones, tablets and Pebble watches.
NightScout spread quickly to
thousands of users who found each
other on Facebook and Twitter. By
bypassing the FDA, the systems creators skipped a process that had
snarled or deterred formal development of similar products by medicaldevice companies.
Last fall, the group did take the
invention to the FDA. The agencys

new rules give NightScout a pathway
to regulatory compliance, according
to FDA officials.
DexCom still needs to make sure
its Apple Watch app complies with
FDA rules. But thanks to the rule
change, it doesnt need to get approval before bringing the app to
market.
Steve Pacelli, DexComs head of
strategy, said the regulatory nod for
the iPhone app came in January,
much faster than the company expected.
ADVERTISEMENT
The Mart
BUSINESS OPPORTUNITIES
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Kelvin Ma for The Wall Street Journal
For decades, drug makers have

used cutting-edge science to discover medicines but have manufactured them using techniques dating
to the days of the steam engine.
But now, the industry is moving
toward a major upgrade. GlaxoSmithKline PLC, Johnson & Johnson
and Novartis AG are among the companies building facilities to make
drugs differently. Biotechs including
BioMarin Pharmaceutical Inc. and
Vertex Pharmaceuticals Inc. are deployingor are about to deployelements of the processes in their production.
Under the new approach, raw
materials are fed into a single, continuously running process. Many
other industries adopted such a
continuous-manufacturing
approach years ago, because quality
can be checked without interrupting
productionwith weeks shaved off
production times and operating expenses cut by as much as 50%.
Until recently, pharmaceutical
companies have been stuck making
drugs the old-fashioned way, mixing
ingredients in large vats and in separate steps, often at separate plants
and with no way to check for quality
until after each step is finished. Any
desire to modernize was partly
blunted, industry officials say, by the
high margins netted on the industrys
string of billion-dollar-selling drugs.
But companies have lost most of
their sales from those blockbusters
due to competition from low-price
generic versions, prompting a hard
look at their operations and expenses. It also helps that industry officials expect that the Food and Drug
Administration, once viewed as a potential obstacle because it must sign
off on a companys drug manufacturing, will support the moves.
The FDA, seeing an opportunity
to improve the overall quality and
reliability of drug manufacturing,
began pushing for change in 2004,
said Janet Woodcock, who heads the
agencys drugs center.
Bloomberg News
Diabetes App to Work

On Apple Smartwatch
Jeffrey Katstra operates a panel of Vertex Pharmaceuticals continuous production

unit, which could make 100,000 cystic-fibrosis tablets in an hour.
The pharmaceutical industry
has been so slow to adopt approaches embraced by other industries, but I think the time is now,
FDA Commissioner Margaret Hamburg said during a tour of Vertexs
new continuous manufacturing line
in South Boston, which would be one
of the first such facilities to go into
production if a new cystic-fibrosis
drug is approved in mid-2015.
A key challenge companies are
confronting: developing the expertise
and skills to run the new kind of production, said Paul McKenzie, who
had overseen J&Js drug manufacturing before taking over the companys
medical-device R&D this year.
At a factory in Puerto Rico, J&J
has built a line that could manufacture the HIV/AIDS medicine Prezista
starting in 2016 using the new techniques if regulators approve. The
main ingredients will still be made
elsewhere, but J&J aims to manufacture 70% of its highest-volume
products using the processes within
eight years, Mr. McKenzie said.
Meantime, GlaxoSmithKline is
building a $29 million continuousmanufacturing facility in Singapore
to make respiratory-drug ingredients, starting in 2016.
J&J, Glaxo and most other companies remaking their manufacturing

intend to use the new approach for
the final stages of drug production,
not the manufacture of ingredients.
However, Novartis is building a line
at a Swiss plant that would make
drugs continuously from the start of
ingredient production through the
end of coating tablets, according to
Markus Krumme, who heads Novartiss continuous-manufacturing unit.
The upgrades should substantially reduce the risk of productquality failures, because companies
will be able to make any needed corrections throughout production, not
just after a batch is finished, officials said. The changes will also cut
waste because companies wont
need to throw out entire batches if a
problem turns up. And production
times will drop since the steps will
no longer be performed separately,
often in different places.
As a result of such benefits, companies will save an estimated 30% or
more in operating costs, according
to Bernhardt Trout, director of the
Novartis-MIT Center for Continuous
Manufacturing, which has been developing the new technologies with
funding from Novartis.
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BUSINESS & FINANCE
Kurdistan Oil Is Slow to Pay Off
LONDONStarting last year, oil

began coursing through a new pipeline running from Iraqi Kurdistan to
Turkey, seemingly the first payoff
for a handful of companies with the
opportunity to drill in one of the
worlds biggest untapped oil
patches.
A year later, the firms still havent been fully paid, highlighting
the conundrum of Kurdistans oil: Its
reserves are among the cheapest to
access, but they are a potential target of Islamic State militants and
the subject of a paralyzing dispute
in Iraq that is only now being resolved
Firms that bet early on Kurdish
oil and won rights thereGenel Energy PLC and Gulf Keystone Petroleum Ltd. of London and Norways
DNO ASA, among otherswatched
their share prices get pummeled as
Iraqs central government and Kurdistans regional leaders fought over
the resource last year.
On Friday, Gulf Keystone said it
would temporarily halt oil exports
from its giant Shaikan field, diverting the crude to the domestic market, where prices are lower but payment is more reliable. DNO and
Genel are also planning to sell more
oil locally.
In Iraq, the easy part is getting
the oil out of the ground, said Ali
Khedery, the chairman and CEO of
consultancy Dragoman Partners and
a former executive with Exxon Mobil
Corp. in Kurdistan. The hard part is
dealing with the politics.
Kurdistans oil riches are particularly hotly contested. Its efforts to
exploit its oil resources infuriated
Baghdad, which cut off payments to
the region after it had agreed to export oil through a new pipeline to
Turkey at the end of 2013. The region was plunged into an economic
crisis, even as the local government
ramped up exports by truck and
pipeline, leaving it unable to pay
firms their share for international
sales.
Genel is still owed about $230
million for oil exported via the pipeline, or almost half the revenue it
expects to report for 2014. Gulf Keystone said in November it was owed
$100 million, and HSBC estimated
that DNO was also owed $100 mil-
Reuters
BY SELINA WILLIAMS
AND SARAH KENT
An oil field in Iraqs Kurdistan region. For oil companies, Kurdistans vast reserves could make it worth the risk long term.
lion, though the company wont confirm that.
To date, the firms have gotten
just one $75 million payment between them at the end of 2014.
On Jan. 29, a budget agreement
in Baghdad cemented a fragile truce
between the Iraqi central government and Kurdistan, paving the way
for more than $400 million in payments owed to oil companies.
But Gulf Keystone and DNOs decision to halt exports, for now,
dashed hopes regular payments
would start soon. Gulf Keystone
shares fell more than 17% on Friday
and slumped further on Mondaythe
news. Genel and DNO fell 2.4% and
7.4% respectively, on Friday, underperforming the sector.
Henrik Madsen, a research analyst at Norwegian investment bank
Arctic Securities AS, expects the
firms to get just half the money they
will be owed for oil exports this year.
Its going to probably be 2016 and
maybe longer before you see stable
and regular payments received, he
said.
The Kurdistan Regional Government declined to comment.
For the oil companies, Kurdistans vast oil riches could make it
worth the risk in the long term.
Situated in northeastern Iraq, the
Switzerland-sized region is esti-
mated to hold 45 billion barrels of

oil. That is roughly equivalent to the
amount BP PLC, Royal Dutch Shell
PLC, Exxon and others have extracted from the U.K.s North Sea
since the 1970s.
Crucially, that oil is onshore and
relatively straightforward to access,
making it cheaper to develop than
more technologically challenging offshore fields elsewhere. It costs Genel
about $2 a barrel to pump oil from
its Kurdish fields, compared with an
average of about $26 a barrel for
North Sea oil.
But the political problems of producing in Kurdistan are joined by
two other looming worries: oil trading at less than $60 a barrel and a
surprise advance by Islamic State
militants. One IS attack last summer
was close enough that Gulf Keystone
Chairman Simon Murray could see
the smoke rising over the city of Mosul from his hotel room in Erbil. IS
fighters didnt cross the Kurdistan
borders and reach the oil fields, but
many were shaken by the experience.
The oil fields are two hours
from Erbil. Theyre vulnerable,
theres no question about that, said
Mr. Murray, referring to his companys fields.
Overall, the circumstances have
rocked the firms share prices. In the
past 12 months, as of Fridays close,

Genel and DNO share prices have
fallen around 36% and 18% respectively. Gulf Keystone is down more
than 67%, as of Fridays close, in part
due to a board struggle, now resolved, over executive pay that led to
the departure of the CEO in June.
The companies remain outwardly
optimistic, but the lack of clarity on
payments leaves them in an uncomfortable position.
Genel is well funded at the moment, thanks to a bond issue last
year that raised $500 million, but it
is slashing its capital-expenditure
budget 30% for 2015. It was a
roller-coaster year, but we weathered the storm, said Genel CFO Julian Metherell, who is leaving the
company in April.
DNO reported a net loss of $252.5
million for the fourth quarter. 2014
was clearly a difficult year, and were
happy to have it behind us, DNO Executive Chairman Bijan MossavarRahmani told investors this week.
The company plans to cut back on
spending this year amid lower prices
and uncertainty over payments.
Gulf Keystone is in a more difficult position with $575 million in
debt. CEO John Gerstenlauer said in
a statement Friday that the companys board is evaluating some longer-term financing options.
Reports Give
Nod to OPEC
Output Plan
Continued from page 15

fer in the medium term.
An OPEC official from the Persian Gulf said the cartels report reflects views held by Saudi Arabias
oil ministry. There are strong indications that U.S. shale producers are
taking a hit and by the second half
of this year a lot of marginal barrels
will disappear from the market and
demand will rise for OPEC members, he said.
OPECs new forecast doesnt necessarily mean oil prices will bounce
back to their previous levels. Its
own production remains nearly one
million barrels a day above the
amount markets need.
Outside the Persian Gulf, OPEC
members need a much higher price
to balance their budgets. They are in
trouble, said Olivier Jakob, managing director of Swiss-based consultancy Petromatrix.
In the IEA analysis, which takes
a five-year view, the price increases
will likely be tempered by a rebound
in U.S. oil output. From 2017, the organization expects U.S. shale oil to
come back with a vengeance. It forecasts supply will rise to about 5.2
million barrels a day in 2020 compared with 3.6 million barrels a day
in 2014. The price correction will
cause the North American supply
party to mark a pause; it will not
bring it to an end, the IEA said.
Though U.S. shale output
thought by many to be a target of
OPECs defensive policywill remain a major source of new oil supply at the end of the decade, demand for OPECs oil will also
increase as other sources of nonOPEC supply take longer to recover
from lower prices.
The IEA forecasts demand for
OPECs oil will start rising in 2016
and reach 32.1 million barrels a day
by 2020, 2.7 million barrels a day
above demand in 2014.
OPEC also sees motorists as an
ally. It increased its 2015 forecast
for North American oil consumption
by 150,000 barrels a day, a shift that
translates into an increase of 20,000
barrels a day in forecast demand
growth world-wide.
Summer Said
John Miller/The Wall Street Journal
Austrias Voestalpine Pursues a Holy Grail of Welding
Voestalpines Alois Leitner is developing techniques to join steel and aluminum.
Continued from page 15

pensive aluminum to meet new fuel
standards. Honda Motor Co. uses
another technique to fuse steel and
aluminum, but its application so far
has been limited. A handful of other
top metal and auto firms have explored how to make hybrid parts.
Steelmakers are fighting back by
developing lighter, harder steels that
can lessen the weight difference
with aluminum. They even can weld
together steel pieces of different
weight and thickness, to piece together a part that is only as thick as
it needs to be throughout its surface.
Under Chief Executive Wolfgang
Eder, Voestalpine has developed an
automotive niche market with BMW
AG, Daimler AGs Mercedes-Benz
and Volkswagen AG, which owns
Audi, Seat, Porsche and Bentley. We
are not competitive in commodity
steel in a high-cost country like Austria, Mr. Eder said in an interview.
We need to focus on high tech.
The quest to weld the two metals

is important enough for the U.S.
government to be involved in research. Its scientists say success
could make cars lighter and streamline car making. Zhili Feng, who researches how cars are made at the
Department of Energys laboratory
in Oak Ridge, Tenn., said a compact
car can have up to 6,000 spot welds.
Every extra weld adds cost, he
said. If you could have a hybrid
part, the welds have to be made
with high quality and cost-effectively. Hybrid steel-aluminum parts
are something everybody is working on, said Mr. Feng. Nobody has
really figured out what is the best
technology to weld aluminum to
steel. Right now, it is a wide open
field.
Voestalpines work is known
throughout the industry, he said.
Combinations
arent
new,
theyre just expanding in importance, said Todd Summe, director
of automotive technology for Novelis
Inc., the largest global producer of

automotive sheet aluminum.
Novelis said its researchers are
testing new technologies for mixedmaterial solutions, such as aluminum-steel hybrids. The company has
no commercial products specifically
designed for hybrid aluminum-steel
structures, but Mr. Summe said its
products have been successfully
paired with steel using adhesives
and mechanical fasteners for quite
some time.
Audi and other customers say
they are interested if costs can be
brought down, according to Voestalpine. It is working on doing that by,
for example, trying to make the
welding process faster and tinkering
with the alloy of the film between
the two metals.
We were the first to figure this
out, said Mr. Eder. People used to
say it was too expensive to make a
whole car out of aluminum.
William Boston
MARKETS
Rising Dollar Puts Squeeze on U.S. Banks

expanded overseas aggressively, like
consumer-products giant Procter &
Gamble Co. and pharmaceuticals
company Pfizer Inc., but are now
finding that sales abroad are suffering or not keeping up with dollarbased costs. The impact has weighed
on U.S. stocks and raised worries
about the health of the U.S. economy.
U.S. banks say the currency volatility exposes underlying problems
with the Feds proposal, which is
aimed at forcing banks to shrink by
putting a price on bigness but ties
their capital requirements in part to
forces beyond their control. Banks
have already expressed concern that
the Feds surcharge proposal is
tougher than what European regulators are expected to require.
It was curious that the Fed, in
proposing a new surcharge for U.S.
banks, that they would choose to in
effect double down on an arguably
flawed methodology, especially one
that would cause a U.S. banks surcharge to increase merely because of
the dollar strengthening, said John
Gerspach, chief financial officer of
Citigroup, on a Jan. 23 conference
call with investors. He said the dollars rise against the euro likely
meant the bank would face a higher
surcharge than many expected when
the Fed released its proposal.
In a speech on Jan. 30, Fed governor Daniel Tarullo defended the
rule, saying it should provide substantial net economic benefits by reducing the risks of destabilizing failures of very large banking
organizations.
Fed officials have asked banks
and others to detail how the rule
should be changed during the comment period, which ends Feb. 28.
The proposed rule would phase in
starting in 2016 and take full effect
in 2019.
The surcharge levies an extra
capital charge scaled to a firms size,
complexity, share of the banking
By Victoria McGrane,
James Sterngold
and Ryan Tracy
Big U.S. banks say that, under the
rule proposed in December, the recent steep rise in the dollars value
would force some U.S. firms to hold
billions of dollars more in capital
than foreign competitors, including
weaker European banks, because of
how the Fed plans to calculate a socalled surcharge levied on the eight
most systemically important U.S.
banks.
The Fed rule is aimed at forcing
big banks to add extra layers of financing to protect against losses.
The banks believe it would wind up
penalizing U.S. banks if the dollar remains strong against the euro, as
many economists expect, because
the high exchange rate makes their
dollar-denominated assets and operations look larger relative to their
European peers.
Officials from banks including
Citigroup Inc., Goldman Sachs
Group Inc., Bank of America Corp.
and Morgan Stanley met privately
with Fed officials in January to discuss the threat and other concerns
about the rule, according to people
who attended. The banks plan to file
an official comment letter later this
month detailing those concerns and
seeking changes to how the proposal
calculates the extra capital required.
The currencys potential impact
on big U.S. banks is the latest example of how a strengthening dollar is
affecting the U.S. economy. The
strong dollar is hitting the profits
and sales of a wide swath of corporate America, including firms that
NAV
GF AT LB DATE CR
NAV
n ALEXANDRA INVESTMENT MANAGEMENT

AlexandraConvertibleBondFundI,Ltd.(ClassA) OT
market and how heavily it relies on

volatile short-term funding, such as
overnight loans. Each banks score is
based on how the firm stacks up
against a pool of 74 other global
banks in these categories. Banks
must meet the requirement by funding themselves with less borrowed
money and more common equity,
which tends to reduce a firms return on equity, an important profitability measure.
The Fed proposal goes beyond an
international standard agreed to by
global regulators, roughly doubling
the surcharge for the big U.S. banks.
Banks would fall into capital buckets ranging from 1% and 4.5% of
risk-weighted assetsthough the
top of the range could move higher.
That comes on top of a base 7%
common-equity capital requirement
most banks already face.
Steven Chubak, an analyst with
Nomura Holdings Inc., said banks
OT VGB 08/31 USD
2155.22
%RETURN
YTD 12-MO 2-YR
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FUND NAME
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n HERMITAGE CAPITAL MANAGEMENT LTD.

Tel: +7501 258 3160 www.hermitagefund.com
The Hermitage Fund
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n HORSEMAN CAPITAL MANAGEMENT LTD.

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25839.68
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n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866

Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
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Citadele Eastern Europ Bal EU BD LVA 02/06 EUR

Citadele Eastern Europ Bd EU BD LVA 02/06 USD
Citadele Russian Eq
EE EQ LVA 02/06 USD
15.23
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n DJE INVESTMENT S.A.

internet: www.dje.lu email: info@dje.lu phone:+00 352 269 2522 0 fax:+00 352 269 25252
DJE Real Estate P
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LuxTopic-Aktien Europa
LuxTopic-Pacific
like J.P. Morgan Chase & Co., Citigroup and Bank of America face the
biggest impact and might be pushed
to hold hundreds of millions of dollars more in capital each because of
the currency fluctuations. The
greater amounts of capital relative
to their earnings would potentially
decrease the banks value by about
3% each, he said.
It could result in some unintended consequences, Mr. Chubak
said. Twelve months ago, I dont
think anybody anticipated this particular issue arising.
Big bank financial chiefs raised
concerns about the rule during a
Jan. 7 meeting with Mr. Tarullo and
two Fed staffers, according to people
familiar with the gathering and a
disclosure on the Feds website,
posted after inquiries from The Wall
Street Journal. Mr. Tarullo meets
with the bankers two or three times
a year to discuss a variety of issues,
these people said, and at this meeting the bankers aired their concerns.
Mr. Tarullo excused himself from
that part of the discussion because
the discussion was turning to a
pending rule making, a Fed spokesman said. But the Fed staffers who
heard the complaints suggested that
the banks include the concerns in an
official comment letter, which will
be public, people involved in the session said.
At the meeting were Citigroups
Mr. Gerspach as well as Goldman
Sachss Harvey Schwartz, Morgan
Stanleys Ruth Porat, Bank of Americas Bruce Thompson and State
Street Corp.s Michael Bell. All are
CFOs at their firms. Representatives
for the banks either declined to
comment or didnt respond to requests for comment.
As they analyzed the details of
the Fed proposal, bankers realized
the unexpected role of currency
rates. The Fed rule relies on financial data compiled by the Basel Committee that is expressed in euros,
which enables regulators to compare
U.S. banks with their foreign competitors using just one currency. Under the Fed rule, the data are converted to dollars using a spot
exchange rate provided by Basel.
The problem is that the dollars
rise made the asset bases and operations of the U.S. banks look larger
relative to their European and Asian
peers.
I think wed probably all sit
around the table and say, It seems
like a slightly strange outcome that
financial institutions in the slower
growth part of the world would end
up with lower capital and those in
the faster growing part of the world
would end up with more capital,
Mr. Schwartz of Goldman Sachs said
during a Jan. 29 investor call.
I think theres probably a lot of
ways this issue could be thoughtfully
addressed, Mr. Schwartz said of the
currency problem.
INTERNATIONAL INVESTMENT FUNDS
Advertisement
FUND NAME
Federal Reserve
Governor
Daniel Tarullo
Getty Images
WASHINGTONThe strengthening U.S. dollar is rippling through

the financial system in unexpected
ways, revealing what bankers say is
a hidden flaw in a Federal Reserve
proposal to increase capital cushions
at the nations largest banks.
OT OT LUX 02/09 EUR

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11/30
11/30
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NS
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n HSBC ALTERNATIVE INVESTMENTS LIMITED

T +44 20 7860 3074 F + 44 20 7860 3174 www.hail.hsbc.com
HSBC ALTERNATIVE STRATEGY FUND
Special Opp EUR
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n HSBC Portfolio Selection Fund

GH Fund CHF Hdg
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Hedge Investments
Leverage GH USD
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n HSBC Uni-folio
Asian AdbantEdge EUR

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01/16
03/31
03/28
01/16
EUR
EUR
USD
USD
126.56
88.51
123.18
133.80
-1.2
0.7
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NS
2.2
-0.3
18.5
2.3
8.4
13.3
10.6
8.4
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
GGY
GGY
GGY
GGY
CYM
CYM
CYM
GGY
GGY
GGY
JEY
JEY
JEY
JEY
JEY
JEY
JEY
01/16
01/16
01/16
01/16
01/16
01/16
01/16
01/16
08/16
01/16
01/16
01/16
01/16
01/16
01/16
01/16
01/16
CHF
EUR
GBP
USD
EUR
GBP
USD
USD
USD
USD
CHF
EUR
GBP
EUR
GBP
USD
USD
130.72
145.98
161.95
140.11
164.46
172.68
193.26
331.48
158.48
158.13
103.54
116.05
127.13
132.12
139.93
150.92
219.53
-0.2
-0.1
-0.1
-0.1
0.0
0.0
0.0
-0.1
NS
-0.3
-0.5
-0.2
0.0
-0.2
-0.1
-0.2
-0.2
3.3
3.6
4.0
4.3
4.9
5.2
4.9
3.6
NS
5.3
3.0
3.6
4.2
4.6
4.8
4.5
3.7
5.6
5.6
6.1
6.5
6.9
7.2
7.0
NS
3.6
11.1
3.6
3.9
4.5
5.1
5.4
5.0
4.1
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
EQ
EQ
EQ
EQ
EQ
EQ
OT
OT
OT
OT
OT
JEY
JEY
JEY
JEY
JEY
JEY
JEY
JEY
GGY
GGY
GGY
06/30
06/30
09/28
09/28
06/30
06/30
04/30
04/30
01/16
01/16
01/16
EUR
USD
USD
EUR
EUR
USD
EUR
USD
USD
EUR
GBP
91.36
171.19
151.22
82.99
127.84
135.07
104.69
105.31
152.85
138.59
148.03
-6.2
-6.2
3.4
2.8
-3.4
2.0
1.3
1.5
1.1
1.1
1.1
-4.5
-4.4
-2.4
-3.0
-1.3
4.3
-9.5
-8.8
19.1
19.5
19.6
2.5
2.8
-5.5
-5.9
2.2
5.1
-1.9
-1.7
3.4
3.6
3.6
FUND NAME
NAV
GF AT LB DATE CR
n HSBC Trinkaus Investment Managers SA

E-Mail: funds@hsbctrinkaus.lu
Telephone: 352 - 47 18471
HSBC Trinkaus Golden Opportunities
Prosperity Return Fund A
Prosperity Return Fund B
Prosperity Return Fund C
Prosperity Return Fund D
Renaissance Hgh Grade Bd A
Renaissance Hgh Grade Bd B
Renaissance Hgh Grade Bd C
Renaissance Hgh Grade Bd D
OT
JP
EU
EU
EU
EU
EU
EU
EU
OT
BD
BA
BA
BA
BA
BA
BA
BA
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
02/05
12/06
12/06
12/06
12/06
12/06
12/06
12/06
12/06
USD
JPY
JPY
USD
EUR
JPY
JPY
USD
EUR
NAV
Data provided by:
%RETURN
YTD 12-MO 2-YR
FUND NAME
Latin America USD A
Paragon Limited USD A
UK Fund USD A
67.15
8577.68
9032.12
79.01
121.37
10807.34
11130.39
96.94
102.83
22.2
-9.3
4.6
-12.2
-9.0
3.5
17.9
-0.9
-4.6
-11.4
-8.4
11.0
-11.1
-8.8
5.1
25.6
0.7
-4.1
-26.7
0.3
13.2
-1.0
8.1
11.3
23.9
8.4
6.9
NAV
GF AT LB DATE CR
GL
EU
OT
NAV
EQ CYM 06/30 USD

EQ CYM 12/31 USD
OT CYM 04/13 USD
NS.00
NS.00
157.94
MP-BALKAN.SI
MP-TURKEY.SI
EE
OT
Indonesian Grth Fund
MENA Special Sits Fund

MENA UCITS Fund
UAE Blue Chip Fund
EQ SVN 08/12 EUR

OT SVN 02/06 EUR
19.29
45.58
-1.9
-0.3
-8.4
34.6
NS
12.7
1.8
NS
12.7
NS
NS
14.2
NS
n PT CIPTADANA ASSET MANAGEMENT

Tel: +6221 25574 883 Fax: +6221 25574 893 Website: www.ciptadana-asset.com
GL
EQ BMU 01/28 USD
170.66
n THE NATIONAL INVESTOR

PO Box 47435, Abu Dhabi, UAE Web:www.tni.ae
n MP ASSET MANAGEMENT INC.
Tel: + 386 1 587 47 77
%RETURN
YTD 12-MO 2-YR
OT
OT
OT
OT BMU 01/29 USD

OT IRL 02/05 USD
OT ARE 02/08 AED
965.83
1355.27
10.50
0.8
17.6
-2.7
-0.1
2.9
1.5
-14.4
0.3
1.9
-4.8
12.3
34.7
-10.9
-4.2
n OTHER FUNDS
For information about these funds, please contact us on Tel: +44 (0) 207 842 9694/9633
Medinvest Plc Dublin
OT EQ IRL 09/30 USD
NS.00
n WINTON CAPITAL MANAGEMENT LTD

Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301
n MERIDEN GROUP
Tel: + 376 741 175 Fax: + 376 741 183 Email: meriden@meriden-ipm.com
Antanta Combined Fund
Antanta MidCap Fund
Meriden Opps Fund
Meriden Protective Div
EE
EE
GL
GL
EQ
EQ
OT
EQ
AND
AND
AND
AND
01/23
01/23
02/05
11/24
USD
USD
EUR
EUR
156.12
149.68
22.68
NS.00
-1.0
-1.7
0.0
-2.8
-24.6
-59.9
-11.2
NS
-22.0
-39.0
-11.0
NS
Winton Evolution EUR Cls H

Winton Evolution GBP Cls G
Winton Evolution USD Cls F
Winton Futures EUR Cls C
Winton Futures GBP Cls D
Winton Futures JPY Cls E
Winton Futures USD Cls B
GL
GL
GL
GL
GL
GL
GL
n POLAR CAPITAL PARTNERS LIMITED

International Fund Managers (Ireland) Limited PH - 353 1 670 660 Fax - 353 1 670 1185
Global Technology
Japan Fund USD
Polar Healthcare Class I USD
Polar Healthcare Class R USD
OT
JP
OT
OT
EQ
EQ
EQ
EQ
IRL
IRL
IRL
IRL
02/06
02/09
02/06
02/06
USD
USD
USD
USD
24.24
20.14
37.03
36.11
-0.2
-1.6
2.9
2.9
7.7
-3.9
19.9
19.2
15.8
3.6
37.1
36.4
101.35
8.35
165.64
330.51
NS
NS
2.9
4.6
NS
NS
2.9
4.6
NS
NS
2.4
8.2
n Hemisphere Management (Ireland) Limited

Discovery USD A
Elbrus USD A
Europn Conviction USD B
Europn Forager USD B
GL
OT
EU
EU
OT
OT
EQ
EQ
CYM
CYM
CYM
CYM
12/31
12/31
12/31
12/31
USD
USD
USD
USD
OT
OT
OT
OT
OT
OT
OT
CYM
CYM
CYM
VGB
VGB
VGB
VGB
12/31
12/31
12/31
12/31
12/31
12/31
12/31
EUR 1379.72
GBP 1401.48
USD 1757.18
EUR
286.60
GBP
313.07
JPY 20107.25
USD 1022.41
NS
1.3
-4.4
17.2
17.7
17.2
13.9
14.3
14.2
13.9
17.2
17.7
17.2
13.9
14.3
14.2
13.9
15.6
16.2
15.9
11.4
11.8
11.9
11.6
INDICES
FUND NAME
NAV
%RETURN
GF DATE CR NAV 1-WK 1-MO 1-Q 1-YR 2-YR
n ARIX ABSOLUTE RETURN INVESTABLE INDEX

Feri Institutional Advisors, www.feri.de
ARIX Composite Gross USD OT
OT GBR 01/31.00
USD1689.46
0.6
5.4
5.5
NAV
OT CYM 06/07.00
GBP25839.68
5.3
10.9
9.8
n CG Portfolio Fund Ltd

OT
Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown arent registered with the U.S. Securities and Exchange Commission and arent available for sale to United States citizens and/or residents
except as noted. Prices are in local currencies. All performance figures are calculated using the most recent prices available. 12-month and 2-year returns may be calculated over 11- and 23-month periods pending receipt and publication of the last month end price.
For information about listing your funds, please contact: Freda Fung tel: +852 2831 2504; email: freda.fung@wsj.com
MARKETS
Apple Looks to Exploit

Low Swiss Bond Rates
Apple Inc. is seeking to add to
its recent run of blockbuster bond
deals with a debut sale in Swiss
francs, according to one of the
banks arranging the offering.
Goldman Sachs Group Inc. and
Credit Suisse Group AG have been
hired to manage the potential sale,
which could come as soon as Tuesday, a banker said.
Soaring demand for Swiss francdenominated debt has sent government-bond yields into negative territory, meaning that investors are
now willing to pay to lend Switzerland cash for as long as 10 years.
Those negative yields mean that
Apple will also be able to borrow
cheaply, because corporate bonds
are typically linked to the price of
government debt.
Last month, the Swiss central
bank removed its long-standing cap
on the strength of the franc against
the euro, prompting the currency to
rise sharply. The bank also lowered
its deposit rate, boosting demand
for corporate debt that pays comparatively higher yields.
Given the current pricing on
Apple deals and where Swiss government bonds are, any new Swissfranc deal is likely to price with an
extremely low funding cost, said
Bloomberg News
BY BEN EDWARDS
Apple will be able to borrow cheaply with a Swiss franc-denominated bond.

Chris Telfer, a specialist portfolio
manager at ECM Asset Management
in London. Mr. Telfer declined to
say whether his firm would consider
buying an Apple bond denominated
in Swiss francs.
The maturity of Apples proposed deal hasnt been decided, but
a short-dated bond could be sold
with a negative yielda first for a
corporate bond issued in Europe.
Last week, the yields on Swiss
food maker Nestls short-term euro
debt turned negative in secondary
trading, a relatively new phenomenon for a corporate bond, following
a swath of eurozone government
debt from Germany to Finland

whose yields have tumbled below
0%.
Investors say Apple may consider a 10-year or 15-year bond,
meaning that the yield would probably be lower than 0.5 percentage
point. The company sold $6.5 billion
of dollar bonds last week as it continues to raise cash from debt sales
to help fund dividend payments and
share buybacks.
Much like in the euro market,
we think retail demand for Apple
bonds will be strong in the Swiss
franc market, said Thibault Colle, a
credit strategist at UBS.
New Rules to Reshape Research

that some influential analysts,
whose comments can move stock
prices, give advanced access to the
clients who pay the most.
Paying for individual analysts
seems very likely to create a superstar system, said Simon Gleeson, a
partner at law firm Clifford Chance.
The problem with superstar systems is, who finds out what the superstar says first?
Industry officials said one likely
outcome of the proposed rules will
be a significant scaling down of
banks investment-research divisions as they struggle to find customers willing to pay for research.
Some banks and brokers already are
taking a hard look at their less popular analyst and research teams, according to industry officials.
Youre going to see some of the
banks exit this business outright or
rethink as to whether they need a
team of 13 or 14 covering a sector,
said Neil Shah, a director at Edison
Investment Research, which charges
fees to the companies it covers
rather than to research users.
He said the shift will level the
playing field between his business
and the investment banks. But independent research houses that sell
services directly to investment managers said they are concerned that
clients will spend less on research
and cut the number of providers.
U.S. regulators already have been
concerned that investment banks
high-paying clients may be getting
privileged information and have
slapped banks, such as Citigroup
last year, with fines over alleged
rule breaches. Separately, in 2003,
10 securities firms reached a record
$1.4 billion settlement with U.S. and
state regulators over allegations
that research analysts tailored reports and stock ratings to win in-
vestment-banking business.
In the U.K., regulators have
sought to physically separate research analysts from trading activities, to guard against traders seeing
draft research notes and leaking the
information to clients.
The EU rules, which still are being completed for implementation in
2017 and are the subject of lobbying
by banks and brokerages, are designed to address concerns about
potential conflicts of interest and
other problems associated with the
way investors pay for research.
Paying for research with brokerage commissions started in the U.S.
in the 1970s and in Europe a decade
later. About 60% of the U.S. and Europes roughly $8 billion in annual
brokerage commissions goes toward
research and advisory services, according to Greenwich Associates
data.
Investment managers such as
hedge funds and endowments typically get a greater supply of research, and better access to analysts, the more they trade. But the
research and trading commissions
ultimately are paid for by the investors whose money they oversee.
That gives investment managers little incentive to cap spending.
Now, the rule changes are
prompting large investment managers to reassess what research is
worth buying. Investment banks
think the asset managers will just
pay for [everything]. The [numbers]
of that just dont work, said Neil
Dwane, chief investment officer of
European equities at Allianz Global
Investors.
We are working to change the
mind-set so that fund managers understand that research should be
treated as a scarce resource. There
is a great opportunity to tap into
experts in their fields at brokers,
but we need to really think about

the value of research and determine
the right amount to pay for it, said
Nick Anderson, head of equities research at Henderson Global Investors.
The planned EU rules will require money managers to either pay
for research out of their own pockets or set agreed upon research
budgets with clients. EU regulators
also have recommended banning
any research payments linked to
trading volume.
Research analysts across different firms said they feel more pressure on their performance from the
proposed shake-up. But they said
they largely welcome greater transparency in valuing their work and a
breakdown in the perception that
research is considered free.
The changes could be most damaging for small brokers, particularly
those specializing in less-traded
stocks from smaller companies.
Those brokers could end up out of
business, if money managers use
less research and fewer providers,
industry officials said.
Robert van Brugge, chief executive of investment-research firm
Sanford C. Bernstein LLC, wrote to
clients last month to ask them to
write to EU lawmakers and lobbyists. He said the overhauls will lead
to greatly reduced research availability, less research on small and
mid-cap European companies, and
higher costs for asset managers and
their clients.
The European Securities and
Markets Authority, which consulted
with the industry about the rules,
received dozens of complaints from
brokers, independent research firms
and asset managers that their businesses and market efficiency would
be harmed by cutting the ties between research and trading charges.
Stocks Take a Fall

On Greek Impasse
BY TOMMY STUBBINGTON
The ensuing uncertainty could easily derail a brittle eurozone recovery. Few things are certain except
one: Grexit remains by a considerable margin the worst-case scenario
for Greece and for the rest of the
eurozone, said analysts at the bank
in a note to clients.
The worries over Greece also
weighed on U.S. shares. The Dow
Jones Industrial Average lost 95.08
points, or 0.5%, to 17729.21. The S&P
500 shed 8.73 points, or 0.4%, to
2046.74. The Nasdaq Composite fell
18.39 points, or 0.4%, to 4726.01.
Traders said U.S. investors appear far from panicked about the
outcome of the Greek standoff. Still,
many market observers have expressed concern that the impasse
could further dent economic growth
on the continent and spur other European countries to back off on
their bailout pledges.
As an example and as a precedent, Greece matters a ton, said
Michael Farr, president of Farr,
Miller and Washington, which manages about $1.2 billion. Its important and its putting a strain clearly
on markets.
Mr. Farr said stocks remain at
high valuations, making it difficult
to find bargains. Were still looking, he said. Its harder to find investments that we think are compelling and reasonably priced. Thats
never a good sign.
Other investors say stocks have
room to climb, pointing to the accelerating U.S. economy and rising
consumer confidence helped by
lower oil prices.
McDonalds shares shed 1.4% after the fast-food chain reported that
monthly sales fell a worse-than-expected 1.8% in January on weakness
in Asia.
The euro edged up to $1.1329 in
late New York trading from $1.1316
late Friday.
Gold, seen as a haven investment, got a lift from the Greek worries. Gold for February delivery
gained $6.90 an ounce, or 0.6%, to
$1,240.80 on the New York Mercantile Exchange.
Greek stock and bond prices

dropped Monday after Prime Minister Alexis Tsipras stuck to his commitment that he would refuse to accept an extension of Greeces
international bailout, heightening
fears that the country could default
on its debt or exit the eurozone.
The turmoil in Greece, where the
benchmark stock index dropped
4.8%, cast a shadow
MARKET over markets elseREPORT
where. The Stoxx Europe 600 index fell
0.7% to 370.55. Germanys DAX slid
1.7% to 10663.51, Frances CAC 40
dropped 0.9% to 4651.08, and the
U.K.s FTSE 100 declined 0.2% to
6837.15. Spains IBEX 35 sank 2%
and Italys FTSE MIB dropped 1.9%.
Greek banks were once again the
worst performers in the pan-European Stoxx 600. Piraeus Bank slid
14%, Eurobank Ergasias tumbled
9.6%, National Bank of Greece
dropped 9.8%, and Alpha Bank fell
6.1%.
Prices of Greek government
bonds, which have been subject to
wild swings in recent days, weakened. The 10-year yield climbed by
more than three-quarters of a percentage point to above 11%. Shorterterm yields rose more sharply, with
the two-year yield soaring above
20%, a sign that investors are worried about default. Yields rise as
prices fall.
The countrys cash crunch
prompted Standard & Poors Ratings
Services on Friday to cut Greeces
sovereign credit rating one notch
further into junk territory.
Gary Jenkins, chief strategist at
LNG Capital, estimates the probability of Greece exiting the euro bloc at
50%, up from around 35% before the
comments by Mr. Tsipras. It is difficult to argue with the view that
the possibility of a Grexit rose with
this speech, but at the same time it
is still possible that a compromise
agreement can be reached, he said.
UBS warned of possible broader
consequences for the rest of Europe.
Fund Scorecard
EUR Moderate Allocation - Global
These funds have a mandate to balance equity and bond investments for Euro-based
investors. The equity component does not exceed 60%. Ranked on % total return
(dividends reinvested) in Euros for one year ending February 09, 2015
Leading 10 Performers
FUND FUND
RATING * NAME
NS
NS
NS
5
4
4
5
3
4
NS
FUND MGM'T CO.
LEGAL
CURR. BASE
M&G Income
M&G Group
CHFGBR
Allocation CHF A-H Acc
Carmignac Pf
Carmignac Gestion
USDLUX
Patrimoine E USD acc Hdg
Algebris
Algebris
USDIRL
FinancialIncomeMUSDInc Investments (uk) LLP
Basket Fonds
Swiss Life Funds
EURLUX
(LUX) Ausgewogen Plus (LUX) Management Co.
Gutmann
Gutmann KAG
EURAUT
Strategie Select Plus T
HUK-Vermgensfonds BayernInvest
EURLUX
Dynamik
Luxembourg S.A.
Sand Aire
Sand Aire Limited
GBPGBR
Generation Inc
UBS (Lux)
UBS Fund
USDLUX
SICAV 1 All Rounder $ P Management (Luxembourg) S.A.
WALSER Valor Raiffeisen
EURAUT
AT T
Kapitalanlage-G.m.b.H.
AEGON
AEGON Investment
EURNLD
Balanced DC E
Management B.V.
NOTE: Changes in currency rates will affect performance and rankings.

KEY: ** 2YR and 5YR performance is annualized
NA-not available due to incomplete data;
NS-fund not in existence for entire period
YTD
% Return in $US **
1-YR 2-YR 5-YR
20.02 40.70
NS
NS
12.46 39.94
NS
NS
NS
NS
7.25 27.79 17.90
NS
4.11 27.43 17.48
NS
9.48
30.31
6.98 27.37 18.37 12.34

8.38 27.05 19.26 11.46
8.61 26.88 12.21
9.03
6.99 26.53 13.73
8.29
4.11 26.47 16.79
NS
Source: Morningstar, Ltd

1 Olivers Yard, 55-71 City Road
London EC1Y 1HQ United Kingdom
www.morningstar.co.uk; Email: mediaservice@morningstar.com
Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
GLOBAL MARKETS LINEUP

Major stock market indexes
Stock indexes from around the world, grouped by region. Shown in local-currency terms.
Index
EUROPE
Stoxx Europe 600
370.55
-2.76
Stoxx Europe 50
3250.30
-13.28
342.57
-4.87
Euro Stoxx 50
3347.75
-50.41
Austria
ATX
2287.74
12.92
Belgium
Bel-20
3511.57
-38.39
Czech Republic
PX
980.72
1.57
Denmark
OMX Copenhagen
714.69
-5.00
Finland
OMX Helsinki
8522.61
-120.30
France
CAC-40
4651.08
-39.95
Germany
DAX
10663.51
-182.88
Hungary
BUX
17665.69
326.56
Ireland
ISEQ
5581.83
-31.55
Italy
FTSE MIB
20366.64
-394.10
Netherlands
AEX
450.96
-3.73
Norway
All-Shares
664.51
4.31
Poland
WIG
52137.58
-279.84
Portugal
PSI 20
5220.72
-43.91
Russia
RTSI
840.48
14.08
Euro Zone
Close
Euro Stoxx
PERFORMANCE
Percentage change
Yr.-to-date
PREVIOUS SESSION
Region/Country
Net change
8.2%
-0.74%
52-wk.
14.0%
Region/Country
Spain
Index
IBEX 35
8.2
13.7
Sweden
OMX Stockholm
-1.40
7.2
10.2
Switzerland
SMI
-1.48
6.4
10.2
Turkey
BIST 100
-0.41
0.57%
-1.08
0.16
-0.70
-1.39
-0.85
-1.69
1.88
-0.56
-1.90
-0.82
0.65
-0.53
-0.83
1.70%
516.16
-2.19
8632.14
44.15
84574.27
-413.15
2.36%19.25
2.97 17.67
2.98 15.25
3.14 20.71
2.32 19.94
2.71 15.00
3.30 20.63
3.01 26.27
3.81 24.33
3.10 10.74
1.94 20.91
3.08 24.42
-0.49
3.7
-1.3
30.9
4.0
U.K.
FTSE 100
6837.15
-16.29
-0.24
4.1
20.7
ASIA-PACIFIC
DJ Asia-Pacific TSM
1457.20
-0.78
-0.05
2.2
6.0
3.6
-2.0
Australia
SPX/ASX 200
5814.90
-5.30
-0.09
7.5
11.4
-4.3
48.4
5.8
15.9
China
Shanghai Composite
3095.12
19.22
9.8
17.0
Hong Kong
Hang Seng
24521.00
-158.39
8.9
10.0
India
S&P BSE Sensex
28227.39
-490.52
8.7
14.6
Japan
Nikkei Stock Average
17711.93
63.43
6.2
-2.4
Singapore
Straits Times
3418.02
-13.34
-0.39
6.8
15.6
South Korea
Kospi
1947.00
-8.52
-0.44
1.6
1.2
7.1
3.4
AMERICAS
DJ Americas
504.39
-1.29
-0.5
11.5
6.2
15.8
Brazil
Bovespa
49382.58
590.31
7.2
9.4
Mexico
IPC
42850.40
134.97
1.4
...
8.8
-24.6
6.3
-37.1
Note: Americas index data are as of 3:00 p.m. ET.
0.62
-0.64
-1.71
3.9
13.6
2.6
38.8
1.5
20.3
1.6
13.3
0.36
-0.26
1.21
0.32
-1.2
2.7
-0.7
5.7
Sources: SIX Financial Information; WSJ Market Data Group
2078.64
281.81
-0.18% 25.1%
0.11 27.8
1517.74
1465.34
1493.57
469.60
-0.71
-1.40
-0.34
-0.49
14.5
11.3
8.2
32.1
PERFORMANCE (U.S.dollars)
Last
Daily
52-wk.
3315.44
2503.02
238.64
3165.02
3347.85
252.34
1543.31
1510.03
1798.04
507.65
21403.12
3756.22
Price-toDividend earnings
yield*
ratio* S&P Dow Jones Index
-0.28% 5.6%
-0.23
3.9
0.06
6.2
-0.74
-5.1
-0.24
5.7
-0.57
5.5
-0.82
-5.0
-1.51
-7.7
-0.42 -10.1
-0.54
9.8
-0.21
13.1
-0.65 18.4
5.10%17.67
5.54 16.23
3.54 15.16
2.05 19.92
2.37 17.66
3.47 20.68
3.43 29.29
2.02 17.43
Developed and emerging-market regional and country indexes

from MSCI as of February 09, 2015
PERFORMANCE (euros) PERFORMANCE (U.S.dollars)

Last
Daily
52-wk.
Last Daily 52-wk.
Turkey Titans 20 -c
Global Select Div
Asia/Pacific Select Div 325.74
U.S. Select Dividend -d
S&P Glb Nat Resources 2172.07
Islamic Market
Islamic Market 100
Islamic Turkey -c
Sustainability Europe
122.23
S&P Glb Infrastructure 1904.37
Luxury
DJ Commodity
855.42
243.10
-0.06% 18.2% 316.00
1428.93
0.51
11.8 2447.44
2888.60
3204.65
4521.93
-0.82
152.30
14.2
-0.94 29.3 2439.57
1935.40
557.67
-0.44%
-0.54
-0.14
-0.29
0.48
-0.17
-0.11
0.05
-0.90
-0.97
-1.14
1.20
31.0%
-0.4
-1.8
18.9
-7.1
8.1
9.9
15.6
-5.2
7.5
-4.0
-19.7
yield
ratio MSCI Index
GBP
CHF
SEK
RUB
NOK
JPY
ILS
DKK
CDN
420.50
PERFORMANCE
Daily
YTD
0.40%
0.8%
MSCI ACWI
2.40
17
World (Developed Markets) 1,720.55
0.40
0.6
7.6
2.40
17
World ex-EMU
0.33
0.5
9.4
213.38
18
World ex-UK
1,749.99
0.41
0.5
8.6
16
EAFE
1,812.12
0.48
2.1
-1.4
2.70
13
Emerging Markets (EM)
978.57
0.37
2.3
4.5
3.20
17
EUROPE
127.27
0.22
9.0
15.6
3.00
20
EMU
181.23
1.00
2.1
-4.1
3.00
19
Europe ex-UK
136.73
0.12
9.1
15.5
4.20
14
Europe Value
125.85
0.28
8.5
12.3
2.30
22
Europe Growth
123.79
0.16
9.6
19.0
2.40
20
Europe Small Cap
296.93
0.20
9.2
13.0
3.60
EM Europe
230.02
1.42
8.5
-9.8
3.70
14
UK
2,014.56
-0.19
4.3
4.9
AUD
3.10
16
Nordic Countries
231.37
0.17
9.7
16.2
812.25
3.35
22.7
7.9
1,377.15
0.54
6.9
26.3
1.2801
1.9477
1.3831
0.1531
0.0195
0.1680
0.0108
0.3300
1.4491
0.1894
1.0281
...
4.50
1.2453
1.8945
1.3452
0.1489
0.0190
0.1634
0.0105
0.3209
1.4094
0.1947
...
0.9727
2.70
19
Denmark
6.5750
10.0041
7.1035
0.7864
0.1002
0.8628
0.0554
1.6947
7.4433
...
5.2801
5.1364
Euro
0.8834
1.3441
0.9545
0.1057
0.0135
0.1159
0.0074
0.2277
...
0.1343
0.7095
0.6901
2.90
13
AC ASIA PACIFIC EX-JAPAN 482.07 -0.02
1.80
16
Japan
3.00
10
China
1.30
19
India
Israel
3.8798
5.9033
4.1917
0.4641
0.0591
0.5091
0.0327
...
4.3921
0.5901
3.1159
3.0305
Japan
118.6340
180.5000
128.1800
14.1890
1.8072
15.5670
...
30.5770
134.2900
18.0432
95.2758
92.6700
Norway
7.6207
11.5955
8.2333
0.9115
0.1161
...
0.0642
1.9643
8.6272
1.1590
6.1198
5.9533
Russia
65.6389
99.8777
70.9191
7.8514
...
8.6134
0.5533
16.9192
74.3108
9.9838
52.7187
51.2735
Sweden
8.3605
12.7207
9.0327
...
0.1274
1.0971
0.0705
2.1549
9.4646
1.2716
6.7139
6.5312
Switzerland
0.9256
1.4083
...
0.1107
0.0141
0.1215
0.0078
0.2386
1.0477
0.1408
0.7434
0.7230
U.K.
0.6572
...
0.7101
0.0786
0.0100
0.0862
0.0055
0.1694
0.7441
0.1000
0.5278
0.5134
U.S.
...
1.5217
1.0804
0.1196
0.0152
0.1312
0.0084
0.2577
1.1321
0.1521
0.8031
0.7812
Russia
South Africa
3.2
8.6
871.75
0.59
0.6
16.0
67.93
-0.78
2.8
15.2
1,070.19
-0.17
5.3
34.6
1.30
11
Korea
546.71
0.19
1.9
-2.7
2.90
15
Taiwan
349.93
-0.78
2.0
17.6
2.00
19
US BROAD MARKET
2,330.18
0.34
0.1
14.3
1.70
28
US Small Cap
3,393.66
0.22
0.5
7.3
3.40
16
EM LATIN AMERICA
2,619.01
1.30
-4.0
-9.5
Source: Tullett Prebon
Currencies
Prices of futures contracts with the most open interest
Corn (cents/bu.)
Soybeans (cents/bu.)
Wheat (cents/bu.)
Live cattle (cents/lb.)
Cocoa ($/ton)
Coffee (cents/lb.)
Sugar (cents/lb.)
Cotton (cents/lb.)
Rapeseed (euro/ton)
Cocoa (pounds/ton)
Robusta coffee ($/ton)
Copper ($/lb.)
Gold ($/troy oz.)
Silver ($/troy oz.)
Aluminum ($/ton)*
Tin ($/ton)*
Copper ($/ton)*
Lead ($/ton)*
Zinc ($/ton)*
Nickel ($/ton)*
Crude oil ($/bbl.)
Heating oil ($/gal.)
RBOB gasoline ($/gal.)
Natural gas ($/mmBtu)
Brent crude ($/bbl.)
Gas oil ($/ton)
CBOT
CBOT
CBOT
CME
ICE-US
ICE-US
ICE-US
ICE-US
LIFFE
LIFFE
LIFFE
COMEX
COMEX
COMEX
LME
LME
LME
LME
LME
LME
NYMEX
NYMEX
NYMEX
NYMEX
ICE-EU
ICE-EU
391.50
979.25
528.75
154.075
2,864
167.40
14.76
62.37
357.25
1,978
1,945
5.75
5.75
1.75
3.050
82
0.55
0.18
0.78
0.50
49
12
2.5835
1240.70
17.030
1,884.00
18,835.00
5,666.00
1,860.50
2,160.00
15,025
-0.0020
6.10
0.336
22.00
-85.00
79.00
0.50
42.00
125
52.79
1.8695
1.5766
2.612
59.15
563.50
1.10
0.0304
0.0175
0.033
0.47
13.00
1.49%
0.59
0.33
2.02
2.95
0.33
1.23
1.27
0.14
2.54
0.62
-0.08%
0.49
2.01
1.18
-0.45
1.41
0.03
1.98
0.84
2.13
1.65
1.12
1.28
0.80
2.36
Year
high
Year
low
409.50
1,062.00
603.50
166.000
2,994
184.90
16.27
62.81
361
2,028
2,030
365.50
955.00
492.00
146.650
2,674
158.40
14.37
57.05
340
1,864
1,858
2.8410
2.4190
1,308.80 1,168.30
18.505
15.510
1,889.50 1,778.50
19,750.00 18,835.00
6,247.00 5,369.00
1,894.00 1,760.00
2,196.50 2,028.00
15,540
14,290
55.51
1.9020
1.6260
3.2990
60.59
574.00
43.58
1.5623
1.2605
2.5670
47.68
456.25
Sources: SIX Financial Information; WSJ Market Data Group
WSJ.com>>
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7.3%
2.30
Canada
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.MDEX: Bursa Malaysia
Derivatives Berhad; LIFFE: London International Financial Futures Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange;ICE-EU: ICE Futures Europe. *Data as of February 6, 2015
ONE-DAY CHANGE
Commodity
Exchange
Last price
Net
Percentage
52-wk.
2.50% 17
3.00
Source: S&P Dow Jones Indices
EUR
LOCAL-CURRENCY
Last
Australia
Commodities
22.7
-3.9
-11.8
U.S.-dollar and euro foreign-exchange rates in global trading
USD
0.51
5.9
*Fundamentals are based on data in U.S. dollar. Footnotes: a-in US dollar. b-dividends reinvested. c-in local currency. Note:All data as of 2 p.m.ET.
Cross rates
8.9
-0.42
MSCI indexes
PERFORMANCE (euros)
Last
Daily 52-wk.
Global TSM
Global DOW
Global Titans 50
Dev Europe TSM
Developed Markets TSM
S&P BMI Emg Markets
S&P Europe 350
S&P Euro
Europe Dow
BRIC 50
U.S. TSM
DJ Global Select RESI
52-wk.
2.9
6.9
S&P Dow Jones Indices

yield*
ratio* S&P Dow Jones Index
PERFORMANCE
Net change
Percentage change
Yr.-to-date
-208.20 -1.97%
0.8
PREVIOUS SESSION
Close
10364.90
Source: MSCI
London close on Feb. 9

Per
U.S. dollar
In
U.S. dollars
Per
In
U.S. dollar
U.S. dollars
Per
In
In euros
U.S. dollar
U.S. dollars
AMERICAS
Per euro
In euros
Argentina peso-a
9.8053
0.1020
8.6615
0.1155
EUROPE
Brazil real
3.1558
0.3169
2.7875
0.3587
Bulgaria lev
1.956
0.5113
1.7277
0.5788
Canada dollar
1.4094
0.7095
1.2453
0.8031
Croatia kuna
7.716
0.1296
6.816
0.1467
Chile peso
706.85
0.001415
624.40
0.001602
0.8834
1.1321
27.714
0.0361
24.481
0.0408
Colombia peso
Ecuador US dollar-f
2677.00 0.0003736
2364.57 0.0004229
Per euro
In euros
Per euro
Euro zone euro

Czech Rep. koruna-b
1.1321
0.8834
Denmark krone
7.4433
0.1343
6.5750
0.1521
Mexico peso-a
16.7783
0.0596
14.8212
0.0675
Hungary forint
308.00
0.003247
272.07
0.003676
Peru sol
3.4730
0.2879
3.0679
0.3260
Iceland krona
149.89
0.006672
132.41
0.007552
Uruguay peso-e
27.747
0.0360
24.510
0.0408
Norway krone
8.6272
0.1159
7.6207
0.1312
1.1321
0.8834
Poland zloty
4.1855
0.2389
3.6973
0.2705
7.12
0.140492
6.29
0.159044
0.01523
U.S. dollar
Venezuela bolivar
ASIA-PACIFIC
Australia dollar
1.4491
0.6901
1.2801
China yuan
7.0721
0.1414
6.2472
0.1601
Hong Kong dollar
8.7770
0.1139
7.7535
0.1290
70.3230
0.0142
62.1202
0.0161
India rupee
Indonesia rupiah
14344 0.0000697
0.7812
12671 0.0000789
Japan yen
134.29
0.007446
118.63
0.008429
Kazakhstan tenge
209.93
0.004765
185.23
0.005399
Macau pataca
9.0343
0.1107
7.9805
Malaysia ringgit-c
4.0269
0.2483
New Zealand dollar
1.5263
0.6552
Pakistan rupee
114.507
Philippines peso
Singapore dollar
Russia ruble-d
74.311
0.01346
65.639
Sweden krona
9.4646
0.1057
8.3605
0.1196
Switzerland franc
1.0477
0.9545
0.9256
1.0804
Turkey lira
Ukraine hryvnia
2.8073
0.3562
2.4798
0.4033
27.2287
0.0367
24.0250
0.0416
0.7441
1.3441
0.6572
1.5217
2.6522
U.K. pound
MIDDLE EAST/AFRICA
Bahrain dinar
0.4268
2.3429
0.3771
Egypt pound-a
8.6366
0.1158
7.6292
0.1311
0.1253
Israel shekel
4.3921
0.2277
3.8798
0.2577
3.5572
0.2811
Kuwait dinar
0.3344
2.9905
0.2954
3.3849
1.3483
0.7417
Oman sul rial
0.4358
2.2948
0.3849
2.5978
0.0087
101.150
0.0099
Qatar rial
4.122
0.2426
3.642
0.2746
50.276
0.0199
44.350
0.0225
Saudi Arabia riyal
4.2475
0.2354
3.7520
0.2665
1.5323
0.6526
1.3535
0.7388
South Africa rand
13.1285
0.0762
11.5971
0.0862
South Korea won
1242.15 0.0008051
1097.26
0.0009114
United Arab dirham
4.1580
0.2405
3.6730
0.2723
Sri Lanka rupee
150.39 0.0066493
132.85
0.0075273
Taiwan dollar
35.774
0.02795
31.601
0.03164
Thailand baht
36.916
0.02709
32.610
0.03067
a-floating rate b-financial c-government rate c-commercial

rate d-Russian Central Bank rate.
Source: Tullett Prebon
BLUE CHIPS & BONDS
Major players & benchmarks
Dow Jones Industrial Average
Below, a look at the Dow Jones Stoxx

50, the biggest and best known
companies in Europe, including the U.K.
LAST: 17729.21
YEAR TO DATE:
OVER 52 WEEKS
Stoxx Europe 50: Monday's best and worst...
Previous
close, in
local currency
General Mining
33,934,489
275.60
Switzerland
Pharmaceuticals
11,408,905
95.00
United Kingdom
Integrated Oil & Gas
9,677,579
963.00
BHP Billiton
United Kingdom
General Mining
7,789,157
1,543
Rio Tinto
United Kingdom
General Mining
4,732,246
3,095
Country
Industry
Glencore PLC
United Kingdom
Novartis AG
BG Grp
YTD
3.84%
-7.8%
-15.3%
2.9
31.6
3.43
3.01
2.49
52-week
11.3
-8.5
11.1
-14.5
3.2
-9.2
2.20
BNP Paribas
France
Banks
8,127,673
45.70
-3.12%
-7.2
-23.2
Germany
Specialty Chemicals
3,090,831
121.60
-2.91
7.6
27.4
Banco Bilbao Vizcaya Argn
Spain
Banks
29,284,032
8.00
-2.87
1.9
-8.9
Banco Santander S.A.
Spain
Banks
49,284,079
6.01
-2.15
-13.2
-4.5
Deutsche Telekom
Germany
Mobile Telecommunications
12,384,374
15.56
-2.14
17.4
34.8
BP PLC
34,913,795
United Kingdom (Integrated Oil & Gas)
Royal Dutch Shell A
7,035,113
United Kingdom (Integrated Oil & Gas)
ABB
8,734,701
Switzerland (Industrial Machinery)
Total
8,108,676
France (Integrated Oil & Gas)
GlaxoSmithKline
8,481,804
United Kingdom (Pharmaceuticals)
Nestle
5,098,211
Switzerland (Food Products)
Standard Chartered
9,674,633
United Kingdom (Banks)
Unilever
3,159,633
United Kingdom (Food Products)
L'Air Liquide
895,637
France (Commodity Chemicals)
AstraZeneca
3,633,868
United Kingdom (Pharmaceuticals)
Zurich Insurance Group
423,626
Switzerland (Full Line Insurance)
Financiere Richemont
1,038,011
Switzerland (Clothing & Accessories)
Sanofi SA
3,947,373
France (Pharmaceuticals)
Unilever CVA
5,421,505
Netherlands (Food Products)
UBS Group
10,989,082
Switzerland (Banks)
British American Tobacco
2,433,455
United Kingdom (Tobacco)
SAP
3,446,789
Germany (Software)
Diageo
2,919,384
United Kingdom (Distillers & Vintners)
Barclays
31,406,863
ENI
17,918,169
Italy (Integrated Oil & Gas)
18500
Close
Low
18000
17500
50day
moving average
16000
Latest,
in local
currency
STOCK PERFORMANCE
Latest
YTD 52-week
457.10
1.44%
11.2%
-5.1%
2,187
0.99
1.5
4.1
19.07
0.79
-9.8
-16.1
47.95
0.57
12.8
11.1
1,526
0.56
10.9
-5.4
71.15
0.14
-2.5
5.3
939.40
0.13
-2.5
-24.2
2,804
0.07
6.7
18.7
112.25
0.04
9.1
16.3
4,467
-0.01
-2.0
15.7
312.00
-0.06
0.1
17.2
80.15
-0.12
-9.7
-8.0
84.82
-0.21
12.1
19.9
36.85
-0.61
12.9
33.1
16.10
-0.62
-5.8
-12.6
3,605
-0.63
3.0
23.2
58.81
-0.66
0.9
5.1
1,896
-0.68
2.6
4.3
253.65
-0.70
4.2
-6.6
15.45
-0.71
6.5
-6.9
Company/Country (Industry)
Volume
Reckitt Benckiser Grp

1,556,230
United Kingdom (Nondurable Household Products)
BASF
3,679,687
Germany (Commodity Chemicals)
Deutsche Bank
7,938,128
Germany (Banks)
27,073,958
ING Groep
Netherlands (Banks)
Schneider Electric SE
1,374,556
France (Electrical Components & Equipment)
Vodafone Group
62,232,217
United Kingdom (Mobile Telecommunications)
Anheuser-Busch InBev
1,720,546
Belgium (Brewers)
Prudential
2,824,183
United Kingdom (Life Insurance)
76,965,688
Lloyds Banking Group PLC
Siemens
2,725,609
Germany (Diversified Industrials)
Credit Suisse Group AG
5,423,210
Switzerland (Banks)
Telefonica S.A.
15,613,194
Spain (Fixed Line Telecommunications)
Moet Hennessy Louis Vuitt
1,195,742
France (Clothing & Accessories)
BT Group PLC
21,390,938
United Kingdom (Fixed Line Telecommunications)
Allianz SE
1,983,298
Germany (Full Line Insurance)
HSBC Hldgs
27,386,934
Roche Holding Part. Cert.
2,555,053
Switzerland (Pharmaceuticals)
AXA
11,879,330
France (Full Line Insurance)
5,008,580
Daimler
Germany (Automobiles)
National Grid
14,129,154
United Kingdom (Multiutilities)
14
Latest,
in local
currency
STOCK PERFORMANCE
Latest
YTD 52-week
5,535
-0.72
6.2
15.7
80.27
-0.78
14.9
2.5
26.87
-0.81
7.5
-23.5
11.05
-0.85
2.0
9.2
67.24
-1.12
10.9
10.5
228.80
-1.12
2.8
-0.4
106.15
-1.16
13.1
48.8
1,601
-1.17
7.3
25.5
74.92
-1.17
-1.2
-8.4
94.12
-1.24
0.4
0.9
20.00
-1.28
-20.3
-26.5
13.00
-1.37
9.1
15.0
150.60
-1.44
13.9
24.5
436.60
-1.44
8.7
11.4
146.90
-1.51
7.0
16.9
610.60
-1.64
0.3
-2.7
245.80
-1.95
-8.9
-3.2
20.43
-2.06
6.4
5.3
80.64
-2.08
16.9
27.6
890.10
-2.11
-3.0
12.4
21
28
Dec.
12
19
26
2
9
Jan.
Credit derivatives
Spreads on credit derivatives are one way the market rates
creditworthiness. Regions that are treading in rough waters
can see spreads swing toward the maximumand vice versa.
Indexes below are for five-year swaps.
Markit iTraxx Indexes
Index: series/version
Mid-spread,
in pct. pts.
Mid-price
Europe: 22/1
Eur. High Volatility: 20/1
Europe Crossover: 22/1
Asia ex-Japan IG: 22/1
Japan: 22/1
Coupon
SPREAD RANGE, in pct. pts.

since most recent roll
Maximum Minimum
Average
DJIA component stocks

Symbol
Volume,
in millions
Latest
Points
AT&T
AmExpress
Boeing
Caterpillar
Chevron
CiscoSys
CocaCola
Disney
DuPont
ExxonMobil
GenElec
GoldmanSachs
HomeDpt
Intel
IBM
JPMorgChas
JohnsJohns
McDonalds
Merck
Microsoft
Nike B
Pfizer
ProctGamb
3M
TravelersCos
UnitedTech
UtdHlthGp
Verizon
VISA ClA
T
AXP
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
VZ
V
17.3
2.7
3.6
6.6
5.3
16.5
10.9
4.2
3.7
8.7
21.5
1.6
3.4
25.4
2.0
12.4
8.2
6.2
7.9
23.3
3.1
24.0
7.2
1.7
2.0
1.9
3.2
18.7
1.5
$34.68
85.04
147.63
84.57
110.48
27.22
41.15
101.94
75.89
91.53
24.62
182.41
108.28
33.09
155.87
57.85
99.92
93.00
58.22
42.49
91.16
33.05
85.05
164.88
105.86
119.41
106.51
49.12
265.98
0.19
0.03
0.37
1.36
0.87
0.02
0.30
0.08
0.21
0.03
0.10
1.02
0.76
0.20
0.85
0.04
1.18
0.99
0.57
0.08
0.63
0.12
0.56
1.19
1.34
0.40
1.10
0.21
1.44
0.55%
0.04
0.25
1.63
0.79
0.09
0.73
0.08
0.28
0.03
0.41
0.56
0.70
0.60
0.55
0.07
1.17
1.05
0.97
0.19
0.69
0.36
0.65
0.72
1.25
0.33
1.02
0.43
0.54
WalMart
WMT
4.3
85.99
1.34
1.53
Stock
Spreads on
ve-year swaps
for corporate
debt; based on
Markit iTraxx
indexes.
0.01%
0.78
0.52
0.62
0.01
0.84
0.58
0.68
Alcatel Lucent
3.04
108.53
0.05
4.05
2.91
3.41
Daimler
1.09
99.61
0.01
1.28
1.00
1.10
0.64
101.75
0.01
0.79
0.59
0.67
Australia
t
1.50
1.00
0.50
And the most deterioration
CHANGE, in basis points
102.12%
Index roll
CHANGE
Percentage
Source: WSJ Market Data Group
Showing the biggest improvement...
101.50
In percentage points
30
6
Feb.
At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and
how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a
sense which way the market was moving yesterday.
0.61
Spreads
23
Credit-default swaps: European companies
0.56
Note: Data as of February 6
16
Note: Price-to-earnings ratios are for trailing 12 months
Sources: SIX Financial Information
Tracking
credit
markets &
dealmakers
17000
16500
...And the rest of Europe's blue chips

Volume
s 1,927.42, or 12.2%
High
STOCK PERFORMANCE
Previous session
Bayer
Company/Country (Industry)
t 95.08, or 0.53%
t 93.86, or 0.5%
Volume
Company
P/E: 17
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day

220
12
20
46
34
Anglo Amern
192
25
Yesterday Yesterday Five-day 28-day

Sunrise Comms Hldgs
111
18
10
Rexam
67
102
6
24
NEW LOOK BONDCO
225
30
5
Glencore Intl
189
37
29
Swedish Match
45
REPSOL
119
12
Novartis
19
...
JAGUAR LD ROVER
AUTOMOTIVE
114
17
37
Deutsche Lufthansa
97
28
Unitymedia KabelBW
143
17
25
ENI
71
12
Koninklijke KPN
76
LLOYDS BK
49
ACE
18
...
...
...
Astrazeneca
29
...
...
Edison
42
...
Unilever
23
...
...
Source: Markit Group
Japan
-0.50
Aug. Sept. Oct. Nov. Dec. Jan. Feb.
2015
2014
Source: Markit Group
Behind Europe's deals: Bank revenue rankings, Eurozone

Behind every IPO, bond offering, merger deal or syndicated loan is one or more investment banks. Here are
investment banks ranked by year-to-date revenues from recent deals.
PERCENTAGE OF TOTAL REVENUE
Debt
Mergers &
capital markets
acquisitions
Revenue,
in millions
share
Equity
capital markets
$96
10.0%
58%
19%
23%
JPMorgan
84
8.7
16
35
12
Deutsche Bank
80
8.3
17
41
41
UBS
51
5.3
74
17
...
Citi
46
4.8
14
53
33
...
Follow the markets throughout the day, with updated

stock quotes, news and commentary at WSJ.com.
Credit Agricole CIB
44
4.6
91
BNP Paribas
44
4.6
10
45
37
Morgan Stanley
42
4.4
17
47
36
...
Also, receive emails that summarize the days trading in

Europe and Asia. To sign up, go to WSJ.com/Email.
Bank of America Merrill Lynch
39
4.1
22
15
63
...
Goldman Sachs
WSJ.com>>
Loans
1%
36
Source: Dealogic
PERSONAL JOURNAL
Passports Help
Inform Doctors
About Patients
Basic Data About Diagnosis and Drugs
A doctor comes to the patients hospital room with a clipboard, gives a brisk update on important points and then is gone,
before the patient has a chance to
digest the treatment plan or
speak up about their own desires
or concerns.
That all-too-common experience can leave hospital patients
feeling powerless,
THE
intimidated and
INFORMED frustrated by the
PATIENT
lack of opportunity
to describe their
needs or have a say in decisions
about care. Some hospitals are
turning to a document known as a
patient passport to help bridge
the communication gap.
Like a standard medical record, the patient passport has basic data such as medical diagnosis
and prescription drugs. But there
are also places where the patients
provide the information, such as
how they cope with health conditions and the activities they need
assistance with, as well as their
concerns about being hospitalized
and their quality-of-life goals for
after discharge. They may request
counseling to help deal with illness, understand medical terms
or discuss end-of-life care.
Many patients are afraid to ask
doctors questions for fear of appearing to challenge them, studies
have found, and doctors often
dont take the time to listen to
their input. Yet when patients and
families are fully involved in medical decisions and able to express
themselves, studies show it can
The patient passport lists

basic medical data but
also describes the
individuals personal
concerns and quality-oflife goals.
result in better patient outcomes,
lower risk of medical errors and
fewer readmissions after discharge. In addition, patients incur
lower costs and rate their satisfaction more highly. Over the past
few years, Medicare has been basing some hospital payments on
patient satisfaction surveys.
The aim of a patient passport
is to even the playing field and
improve the quality of conversations that lead to deeper and
more trusting relationships between providers and patients,
says Susan Frampton, president of
Planetree, a nonprofit hospital
membership group that promotes
patient-centered care. Knowing
a patients personal story and
preferences can impact the entire plan of care, Ms. Frampton
says.
Planetree developed a passport
last year with another nonprofit

group, the National Quality Forum, which sets standards for
hospital quality measurement.
The passport is modeled in part
on a pediatric passport used at
the Mattel Childrens Hospital
UCLA, in the Ronald Reagan UCLA
Medical Center, Los Angeles.
Planetree is working with
member hospitals on pilot programs where patients fill out
passports when they are admitted
and keep paper or electronic copies for future visits. The passports
are customized to specific groups,
such as cancer patients or seniors, and hospitals can store
them in patients records.
Natalie Augustin, a two-time
cancer survivor, says she had
some upsetting experiences when
she was treated for colon cancer
and non-Hodgkins lymphoma,
such as when medical residents
came into her hospital room to
change dressings without introducing themselves or explaining
what they were doing. Ms. Augustin, 47, co-chairs a patient and
family advisory group at Stamford
Hospital in Connecticut, a Planetree member hospital, and provided feedback for the passports
development.
In filling out her own passport,
Ms. Augustin is spelling out preferences such as having clinicians
speak directly to her and explain
reasons for specific treatments or
procedures. This is a way for patients to be empowered from the
time they walk in the door and
feel a little more in control, Ms.
Augustin says.
The passport has been added
to Doctella, an app co-developed
by Peter Pronovost, a physician
who directs a patient safety and
quality institute at Johns Hopkins
Medicine, in Baltimore. His checklists are widely used by hospital
medical teams to prevent errors
and infections.
Doctellas checklists are designed for patients, with specific
questions they can ask about surgeries and medical procedures.
Using the free app, consumers
complete the passport on a mobile device or online and show it,
or email it, to a doctor. Doctella is
in talks with employers and
health systems to license it for
health and insurance benefit programs.
Mattel Childrens Hospital developed its passport to help parents carry a record of their childs
unique needs, which can be easily
shared with doctors outside the
pediatric ward where the child is
well known.
Parents serving on Mattels
Parent Advisory Council raised
concerns about how their children
were received when they had to
visit the emergency room at
UCLA. In some cases, because of
conditions that arent visible,
such as metabolic issues that
make someone prone to rapid deterioration, the children werent
recognized as urgent, and delays
Above, Natalie Augustin, with her husband, Tim Day; below, Jennifer Fine and her husband, Doug, with Ella, at left, and Jaiden.
(Top to bottom) Natalie Augustin; Darby Nicole Photography
BY LAURA LANDRO
exposed children with weak immune systems to other sick patients, parents said. Steps the ER
staff took to stabilize a patient
sometimes had to be changed after a pediatrician got involved,
says Gitanjli Arora, assistant clinical professor and chair of the Patient and Family Centered Care
Committee at Mattel Childrens.
During a hospital visit at Mattel, a doctor fills out the passport
with the patients family, and they
keep a copy to present whenever
checking the child into the ER.
They can note other sensitivities
and considerations on the passport, such as whether the child
can be present during medical
discussions or things that are upsetting, like loud noises.
Any pediatric patient can have
a passport, but they are most useful for patients with complex
medical histories and special

needs. Having a passport allows
parents to engage more fully in
their childs care and be an equal
partner with the provider, Dr.
Arora says.
Jennifer Fines 7-year-old
daughter, Ella, has been hospitalized frequently since having three
liver-transplant surgeries in infancy plus a brain injury. Though
Ella has a feeding tube and cant
walk or talk, she is otherwise
strong and a happy and healthy
little girl most days, Ms. Fine
saysso a clinician may not be
aware that she is taking drugs
that suppress her immune system
to avoid rejection of her donated
liver or that she must avoid exposure to other sick patients.
Ms. Fine, a member of Mattels
patient and family advisory council, personally spoke with doctors
and nurses during a three-week

period when Ella was hospitalized, floating ideas about how to
design a useful passport. The goal
was when we walk in the door,
the passport has everything that
is critical to know about our
child, Ms. Fine says.
Griffin Hospital in Derby,
Conn., is starting a passport program to engage patients in decisions and planning for things like
end-of-life care. It is working with
community groups and local senior centers to get people to fill
out passports ahead of a hospitalization.
We want patient preferences
to be honored all the time to the
extent possible, and for our team
to know who they are as a person, says Todd Liu, vice president of accountable care and general counsel at Griffin.
SPORTS
HEARD ON
THE PITCH
Italy Soccer Coach Conte
In Match-Fixing Probe
Italy coach Antonio Conte is

among 130 people who have been
formally notified they are under
investigation for match-fixing.
Conte is being investigated for
committing sports fraud when he
coached Siena in 2010-11, although a charge of criminal association was dropped.
Atalanta coach Stefano Colantuono has also been notified he is
under investigation by Cremona
prosecutor Roberto Di Martino in
a step that usually precedes indictments.
Conte is accused of involvement in fixing matches at the end
of the season when Siena had already clinched promotion to Serie
A and other clubs were still fighting to qualify for a playoff.
Conte, who has denied wrongdoing, already served a four-month
sports ban in the case. More than
50 people have been arrested in Italy for match-fixing since mid-2011.
Associated Press
Sports Illustrated/Getty Images
West Indies Blown Away

By Whirlwind Woakes
Dean Smith with Charlie Scott, the University of North Carolinas first black scholarship athlete, after clinching a Final Four trip in 1969.
A Coach Way Ahead of His Time
From Basketball Analytics to Civil RightsDean Smith Was a Fierce Progressive

BY BEN COHEN
Dean Oliver, a godfather of basketball statistics, published in 1988
what he thought was a pioneering
paper. It made the radical point that
basketball should be thought of in
terms of efficiency, not volume, an
insight that inspired the sports
rapid advances in analytics in recent
years. More people now know that
the true value of an offense isnt how
many points it scores but how often
each possession ends in a basket.
Soon after publishing, though,
Oliver realized that the innovation
wasnt as original as he thought. I
found out that the concept had existed for decades already, Oliver
wrote in his book Basketball on Paper.
It turns out that a similar idea
had been written about in the
1950s. The book was by North Carolina coach Frank McGuire, but the
person who wrote the chapters that
touched on points per possession
was one of McGuires assistants, a
mathematics major who would
eventually ascend to the top of college basketball. The authors name
was Dean Smith.
Smith, the celebrated North Carolina mens basketball coach who
died Saturday at the age of 83, was
ahead of his time in almost every
way. Both on and off the court, he
lived with a fiercely progressive
streak that was rare in coaches and
rarer still in Smiths era. This was
infectious on his Tar Heel teams,
and it spread throughout the South
during the turbulence of the civilrights movement.
Smith was a masterful basketball coach, a Hall of Famer who won

two national titles and sent more
than 50 players to the NBA, including no less an icon than Michael
Jordan. But he never acted as if he
had all the answers to coaching
basketball. Smiths was a complex
mind, capable of many different and
contradictory notions, in constant
search of the next new thing.
His unusual basketball ideas
wereand still areon display in
every North Carolina game. Smith
was one of the first coaches to see
the value in playing multiple offenses and defenses. He won with
styles that could be seen as exact
opposites.
When current Tar Heels coach
Roy Williams was hired in 2003, for
example, one of his first things he
did was restore an old strategy
from Smith, his coaching mentor, a
system of transition basketball so
synonymous with the school that it
is known as the Carolina break.
Yet one of the many other strategic breakthroughs often credited
to Smith couldnt be more different.
Until the 1980s, Smiths teams
would protect their leads by stalling, dropping back into a four-corner offense and holding the ball
for as long as they could. It was as
uglyand almost unsportingas it
was effective. Smith took it to the
extreme in the 1982 Atlantic Coast
Conference championship game
against Virginia, when he had North
Carolina sit on the ball for nearly
the last seven minutes of the game.
The Tar Heels turned a 44-43 lead
into a 47-45 victory. NCAA coaches
subsequently dulled Smiths edge by

voting that spring to experiment
with the change they had long resisted: a shot clock. That move resulted in more possessions per
game and a faster pace that favored
the better teamwhich was usually
North Carolina.
Smith, the son of Baptist schoolteachers in Kansas, also took public
stances off the court, even if they
were unpopular at the time. Being
the coach of North Carolinas basketball team meant Smith was a
demigod in a state that reveres the
sport. He used that influence to
champion civil rights and other liberal causes in the 1960s and beyond.
Smith was awarded the

Presidential Medal of
Freedom in 2013.
Smith recruited to North Carolina the schools first black scholarship athlete, Charlie Scott, in 1966.
He almost single-handedly smashed
segregation in Chapel Hill by walking into a restaurant with a black
student as an assistant coach at
North Carolina not long after
schools were integrated.
You should never be proud of
doing whats right, he said in 1981.
You should just do whats right.
Smith was awarded the Presidential Medal of Freedom, the nations highest civilian honor, not
only for his basketball career but

also for his vocal support of social
issues. President Barack Obama,
who bestowed the award in 2013,
said Sunday that Smith pushed
forward the civil-rights movement.
Smith wasnt at the White House
that day. His family announced in
2010 that he was suffering from a
progressive neurocognitive disorder
that hindered his memory. The disease was especially painful, people
close to him said, because of
Smiths' legendary recall and sharp
attention to details.
Smith, who coached before computers overtook basketball, was
even advanced when it came to
numbers. The statistical wave that
has swept through sports made
metrics like points per possession
common among basketball geeks,
who have come to understand the
game by fusing what they see with
what the percentages say. Smith,
though, was one of the first to embrace statistics. He was tracking his
teams points per possession as
long ago as the 1950s.
It was Smiths team-based
framework that inspired Oliver to
dream up the Four Factors of
winning basketball: shooting, rebounding, turnovers and free-throw
frequency. Oliver heard points per
possession mentioned on TV
broadcasts and realized that
Smiths former players and coaches
had absorbed his knowledge and
taken it with them everywhere they
went.
Were standing on the shoulders of giants, Oliver said Sunday.
He helped pave the way.
Chris Woakes snared five wickets to restrict West Indies to 122

before England cruised to a ninewicket victory in a World Cup
warm-up match on Monday.
Woakes (5-19) tore through
the top order, dismissing Chris
Gayle and Darren Bravo in the
first over and opener Dwayne
Smith for 21 to leave the West
Indies reeling on 35-3 at the Sydney Cricket Ground.
Also in Sydney, Sohaib Maqsood scored an unbeaten 93 from
90 deliveries to guide Pakistan to
a three-wicket win over Bangladesh. Mohammad Irfan took 5-52
to restrict Bangladesh to 246,
with Mahmudullah (83) and
Tamim Iqbal (81) sharing a 168run third-wicket stand before the
last four wickets fell for 15 runs.
Pakistan overcame the loss of two
early wickets to reach 247-7.
AP
Cubas Baseball Stars

Back in the Old Routine
Cuba won its first Caribbean

Series championship since 1960
with a 3-2 victory over Mexico
highlighted by Yulieski Gourriels
eighth inning homer.
The victory marked a return for
Cuba to its winning ways in the
regional baseball series it used to
dominate before Cuban stars were
barred by its government in 1961
from playing professionally overseas. Cuba returned to the roundrobin tournament last year but
made a quick exit.
AP
Associated Press
Italy coach Antonio Conte
OFF THE WALL
In Senate Office, Mrs. O Keeps Order
At 87, Great-Grandmother Keeps Capitol Hill in Line From Her Desk; No Stranger to Political Aspirations
BY KRISTINA PETERSON
Washington
Lawmakers know better

than to cross Mrs.
OMalley, who gives stern
looks to those who talk
too much.
Statistically speaking, Mrs. O is
an anomaly on Capitol Hill by virtue of both her age and longevity
in a role that usually serves as a
steppingstone for the 20-somethings who populate the place.
The median age of Senate staffers is 29, according to a LegiStorm
analysis. Mrs. OMalleys 27 years
to date on the job are more than
nine times the average experience
of other Senate receptionists and
staff assistants. She is almost certainly the only Senate receptionist
to have six children, 21 grandchildren and seven great-grandchildren.
She probably has the record
for the longest tenure of any receptionist on Capitol Hill, said
Ivan Adler, a principal at the McCormick Group who specializes in
recruiting congressional staffers
to downtown lobbying shops. Its
incredibly unusual because that is
a starter position. Most people
stay in there until they find the
next step up and shes never wor-
Melissa Golden for The Wall Street Journal
apitol Hill is a jungle of

youth and ambition, where
whippersnapper staffers
start one job already eyeing the
next.
Then there is Mrs. O.
In 1987, Barbara OMalley
known throughout Senate offices
as Mrs. Ojoined the staff of Sen.
Barbara Mikulski (D., Md.) as her
receptionist. Nearly three decades
later, at the age of 87, she is still
answering the senators phones
and keeping the Senates other inhabitants in line.
Mrs. O is no stranger to political aspirations. Her son Martin,
until recently the Maryland governor, is considered a potential Democratic 2016 presidential candidate. But her own popularity in an
environment fed on political calculations and arm-twisting is fueled
instead by loyalty and Spritz cookies.
Mrs. OMalley has greeted,
trained, baked for and even
scolded some of the hundreds of
lawmakers and constituents who
pass by her desk.
Shes so funnyand shes
tough, said retired Sen. Jay Rockefeller (D., W.Va.), who visited
Mrs. OMalley every day he was in
Washington. When she thinks the
conversation has gone on too long,
she goes, Go to your office and do
some work, he said.
From her perch on the Hart
Senate Office Buildings fifth floor,
Mrs. OMalley has become perhaps
the most well-known octogenarian
on Capitol Hill never elected to office. The Senate has two 81-yearold lawmakers and three 80-yearolds.
I will sometimes run into U.S.
senators who Ive never met before, but they already know who
my mom is, said former Gov.
OMalley.
Barbara OMalley has greeted, baked for and even scolded some of the hundreds of lawmakers who pass by her desk.
ried about that.
Instead of moving up, Mrs.
OMalley has instead extended her
influence out. She has trained generations of staffers, estimated at
somewhere between 50 and 75
aides who are now dispersed
among the hallways of Capitol Hill
and offices of downtown Washington.
Chung Shek began his Hill career in 2003, as a staff assistant
working with Mrs. OMalley, dueling over who could answer the
most phone calls. Mr. Shek later
became the offices director of operations, a position that made him
Mrs. OMalleys supervisor, at least
on paper.
But in my perspective, she
was always my supervisor, he
said. You dont mess with Mrs. O.
Beside Sen. Mikulski, Mrs. O is the
one you always want to keep
happy, said Mr. Shek, now the
chief clerk of the Senate Health,
Education, Labor and Pensions
Committee.
Lawmakers also know better
than to cross Mrs. OMalley, whose
stern looks are followed without
question when many stop in for
their daily chats.
You can tell when shes had
enough of both me and Rockefeller, shell point and say get to
your office, said Sen. Heidi Heitkamp (D., N.D.)
There are few known other examples of mothers of high-ranking
government officials working for
other lawmakers, said Senate Historian Don Ritchie, though
womens suffragists leaned on senators mothers to press their sons
to support the amendment passed
by the Senate in 1919 giving
women the right to vote. More
commonly, lawmakers sons found
jobs on Capitol Hill, and occasionally their wives, before nepotism
laws ended the practice.
Bess Truman worked in her
husbands Senate office, as did former House Speaker John Nance
Garners wife, who cooked him
lunch on a hot plate in his office
most days he was in Congress,
from 1903 to 1933, according to
newspaper accounts at the time,
Mr. Ritchie said.
Mrs. OMalley began her Senate
tenure after decades of staying
home to raise children. When her
youngest, who are twins, started

high school, her children advised
her to start working again.
I said, What have I been doing for 33 years? Mrs. OMalley
recounted. Her son Martin had
been the field director for Ms.
Mikulskis 1986 campaign and
alerted his mother to the receptionist job opening.
It didnt take too much urging, Mrs. OMalley said. I

thought, Yaya woman senator!
At the time there were only two,
including Ms. Mikulski, who is
now 78.
Though her job has changed
since her initial days recording
callers on pink slips of paper, Mrs.
OMalley said her philosophy
hasnt: Just be as nice as you can

and gracious, as she would want
us to be, Mrs. OMalley said of
her employer, who is now the top
Democrat on the Senate Appropriations Committee, and like her, a
Baltimore Orioles fan.
She has no plans to leave Ms.
Mikulskis office anytime soon.
What else would I do? said Mrs.
OMalley, who earned a private pilots license as a teenager and currently volunteers at the National
Air and Space Museums library
for docents.
Mr. OMalley, who is seriously
considering entering the 2016
presidential race, said he would
never poach his mother to work
for himat least, probably not.
Id never think of interfering
with her career, he said, but
added, shed be a tremendous asset and well see what the future
holds. Mrs. OMalley said she
doubted her son would want his
mother at work with him.
Ms. Mikulski, meanwhile, isnt
prepared to relinquish Mrs. OMalley, even to her son.
Hands off, Ms. Mikulski
growled. The governor would
know it would be one of our first
big battles.
The senator said demand for
her receptionist surely extends beyond the political realm. Im surprised [Orioles manager] Buck
Showalter doesnt have her in the
dugout, she said.
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Weak Euro Remains in a Fragile Position
The euros breakneck descent against the dollar has

come to a halt of late. That
might be surprising given the
growing tensions over Greece,
which are raising fundamental
questions about the single
currencys longer-term prospects. The best bet is still on
further euro decline.
There are several factors
that suggest the euro is just
undergoing something of a
consolidation, not staging a
rebound. The first thing to
note is how far the euro has
fallen already. At around $1.13
Monday, the currency is down
some 19% from its May 2014
peak against the dollar; it has
fallen 6.5% already this year.
Those are sizable moves, so it
isnt unreasonable that the
market is catching its breath.
The second is that, so far,
there has been little sign of
contagion from Greece. While
Greek bond yields have rocketed, with yields on its bonds
due 2017 above 20%, 10-year
Slippery Slope
How many U.S. dollars one

euro buys
$1.35
1.30
1 = $1.133*
1.25
1.20
1.15
1.10
2014
15
* As of 1:00 p.m. in New York

Sources: Tullett Prebon; Reuters (photo)
yields for Portugal, Italy and

Spain have fallen so far this
year. Greek stocks are down
more than 7% in the year to
date, but the other major European markets are higher.
The third factor is eurozone economic indicators
have been providing reason
for hope, even as U.S. data has
Apple Opens Up
A Swiss Account
Apples new slogan should
be: Strike while the iron is
hot.
The cash-rich tech giant
again is in the midst of tapping debt markets, having
sold $6.5 billion worth of
bonds last week. And Apple is
now considering an offer of
bonds denominated in Swiss
francs, according to The Wall
Street Journal.
This is the third year of
the company raising a significant amount of money
through bonds ostensibly to
fund its capital-return program, which includes a mix of
dividends and share buybacks.
On the current bond

sale, the timing for
Apple is good.
For Apple, the lure of issuing in Swiss francs is clear:
Swiss government yields are
negative as far out as 2027,
with its 10-year government
bond yielding negative-0.09%.
Apples strong brand and high
credit ratings should make it
an attractive proposition for
yield-starved investors who
have Swiss currency to put to
work. That will make any
funding raised ultracheap.
Not that Apple needs to
pinch pennies. As of Dec. 27,
the companys cash hoard had
swelled to nearly $178 billion,
boosted by a quarter of blowout iPhone sales. But 89% of
Apples cash remains outside
the U.S., so the company has
elected to finance its capital

return program through debt.
Apples stock price has
been on a tear, up 60% in the
last 12 months. But Apples
bond investors havent always
had the smoothest of rides.
Buyers of its first 30-year $3
billion bond, issued in 2013,
saw its price fall nearly 20%
in just four months after issuance, as Treasury yields rose
and Apple spreads widened.
Prices have since recovered, largely thanks to a powerful rally in Treasurys. But
the gap between 30-year Apple yields and comparable
Treasurys has been widening
since May last year.
European markets in general have become attractive to
U.S. issuers as government
bond yields have fallen to historic lows. Apple last year
raised 2.8 billion ($3.2 billion) of euro-denominated
bonds at what were then record-low yields for a corporate issuer.
On the current sale, the
timing for Apple is good. The
company just came off a stellar quarter, and is on the
verge of launching a new
product category with the Apple Watch.
Long-term bondholders
are betting Apple can maintain its pace of innovation,
and Apples cash pile provides
a good deal of comfort in this
regard.
Even so, with yields this
low, it is a bet that could still
sour for all but the longestterm investors.
Dan Gallagher
and Richard Barley
Greek Premier Alexis Tsipras

delivers his Parliament speech.
proved less reliable. Economists have been upgrading

their forecasts for eurozone
growth, with the lower euro,
the big fall in oil prices, European Central Bank easing and
a brighter outlook for credit
creation all acting as a tailwind for Europes economy.
But Fridays U.S. jobs data,
which showed over a million

jobs created in just three
months, have re-emphasized
that there is a big gap between the economies of the
U.S. and the eurozone. That
pushed up two-year U.S.
yields sharply; U.S. rates
stand at their highest compared with German two-year
rates since 2007. Meanwhile,
the U.S. Federal Reserve and
ECB are going in opposite directions.
These two latter factors
both point toward a weaker
euro. On contagion, the markets apparent calm may yet
prove hard to maintain, with
Greek Prime Minister Alexis
Tsipras apparently on a collision course with the rest of
the eurozone. His speech Sunday pledging to unwind austerity measures and rejecting
an extension of the current
bailout have raised the stakes
for vital meetings with European officials this week.
Unlike in 2012, when the
euro was supported by banks

repatriating foreign assets
even as the currencys survival was questioned, there
are fewer supports now. Already, bond investors appear
to be favoring higher-yielding
U.S. assets. As the ECB starts
buying eurozone government
bonds, that could drive further outflows from Europe.
And even if the eurozone
economy fares slightly better
than expected, it is unlikely to
be the kind of sharp recovery
that would make investors reassess the outlook for monetary policy divergence. There
is too wide a gulf between the
U.S. and eurozone economies.
Taken together, these
forces suggest the euro could
head lower yet. Barclays forecasts it at parity with the U.S.
dollar by the fourth quarter;
BNP Paribas by early 2016.
The euros journey may not
be smooth, but the direction
still looks clear.
Richard Barley
Alibaba Nervously Calls Up Meizu

Alibaba Group Holding
investing in a small mobilephone maker shows how nervous it is about upstarts such
as Xiaomi. As other tech giants laid waste by change
can attest, sometimes it pays
to be paranoid.
Chinas leading e-commerce giant said it would
make a $590 million investment in Meizu Technology,
a little-known player in
Chinas handset world. While
Meizu lacks market share, it
represents
a
hardware
beachhead for Alibaba to
protect its position in mobile
commerce.
In China even more than
elsewhere, the future of the
Internet is mobile. Alibabas
own results show consumers
wandering from their desktops. In the three months to
December, 42% of transactions on its marketplaces
were through mobile devices,
up from 20% a year earlier.
For Alibaba, the trend is a
threat as well as an opportunity. If others control the
smartphone access point,
they could use it to channel
shopping interest away from
Alibaba. Whats more, because Googles services such
as maps and email are
mostly absent due to government controls, local players
have outsize influence to
shape the mobile experience
on Android-based phones.
Alibaba rival Tencent
Holdings is well positioned
in mobile thanks to the
wildly popular messaging
app WeChat. It uses this
platform to channel shoppers
to a network of sites including its partner JD.com.
Up-and-coming Xiaomi
also is on Alibabas mind.
Chinas top mobile-phone
maker sells attractive phones

for cheaper than international rivals like Apple. The
key is its operating system, a
popular Android overlay that
it uses to distribute lucrative
software such as games.
Showing the scope of its
ambition to be a major Internet player, Xiaomi is an investor in Baidus video platform iQiyi, as well as
independent video site Youku
Tudou, in which Alibaba
holds a nearly 20% stake.
But Xiaomis links with
Tencent are probably strongestit holds a 3% stake,
and Tencent has a nearly 10%
stake, in software firm Kingsoft. Xiaomi founder Lei Jun
is also chairman and holder
of a 30% stake in Kingsoft. A
potential Xiaomi-Tencent alliance presents a formidable
threat to Alibaba.
Much as Google developed Android to keep its
hold on search advertising as

users migrated to mobile,
Alibaba has developed its
own, cloud-based mobile operating system called YunOS.
But as of October last year, it
had just 10 million users.
Alibabas Meizu investment is intended to jumpstart the process. Last fall,
Meizu released a YunOS
phone alongside its usual Android-powered models. But
Meizu remains a bit player,
and YunOS may struggle to
gain wider acceptance. Meizu
hopes to sell 20 million
phones this year, compared
with 100 million each for Xiaomi, Lenovo Group and
Huawei Technologies.
Alibaba has identified a
clear risk on the horizon. Its
solution may be far from sufficient, but investors should
at least be glad it is thinking
about it.
Aaron Back
Raising Stakes
Complex ownership links among Chinas top Internet companies

BAIDU
Search engine
ALIBABA
e-commerce
Controlling stake,
size undisclosed
19.9% Undisclosed stake
Undisclosed stake
XIAOMI
Smartphone
maker
Source: the companies
MEIZU
TECH.
Smartphone
maker
YOUKU
TUDOU
Online video
iQiyi
Online video
Undisclosed
stake
3%
KINGSOFT
Security
and games
software
9.6%
TENCENT
Games and
messaging
Testing
Times for
BGs New
Captain
Timing is everything.
Helge Lund, the former boss
of Statoil, has arrived to take
the reins at BG Group three
weeks early.
Mr. Lund was meant to be
joining BG just as its growth
projects in Brazil and Australia started up, producing cash
that could be redeployed in
building the U.K. oil and gas
groups business. Instead, the
tumbling oil price has just
created fresh headaches.
After repeated problems,
BG finally seems on track operationally. Its liquefied-natural-gas project in Queensland,
Australia, is up and running.
BG concedes there are unknown unknowns in Brazil,
given a corruption scandal engulfing operator Petrobras.
Still, the two floating production units added last year are
ramping up, which account
for the bulk of 2015s forecast
output growth.
But oils drop has upended
BGs LNG business. BG expects
operating profit of $700 million to $1 billion this year in
shipping and marketing, down
from $2.5 billion last year
when the unit accounted for
40% of operating profit.
Producers have poured billions into high-cost LNG projects in Australia and Asia on
which they now face meager
returns. BG last quarter took
a pretax write-down of $4.1
billion on the value of its
Queensland project. The business wont deliver meaningful
cash flows this year thanks to
higher costs during ramp-up,
reckons Barclays.
Decembers $5 billion sale
of BGs Australian pipelines
will reduce BGs debt levels.
But it may need that room to
maneuver. Hopes of covering
its outgoings with cash flows
evaporated with $100 oil:
Even given reduced spending
plans, BG would need $85-abarrel oil this year to live
within its means, estimates
RBC Capital Markets.
BG trades at a handsome
premium on a price/earnings
basis to BP or Royal Dutch
Shell thanks to its forecast
growth. But strategically, that
growth gives its new chief executive fewer options than
when he signed his contract
last October. Selling assets
will be tougher, and certainly
less lucrative. Despite rising
demand for LNG, it is unlikely
any of BGs big, risky growth
projects could move ahead
this year, or early next.
Hunkering down, and
avoiding further operational
stumbles, may be as much as
BGs new boss, and shareholders, can hope for.
Helen Thomas

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Dubais Second Boom

VOL. XXXIII NO. 7

$1.75 (C/V) - KES 250 - NAI 375 -

TUESDAY, FEBRUARY 10, 2015

Obama Backs Ukraine Peace Talks Russian

WAS H I N GT O N P re s i dent Barack Obama said he

Opinion: Stop letting Putin

Russian President Vladimir

EU Rules Set to Reshape

Because many large money

posed new rules, UBS AG has

about this issue, the president said. Its not based on

do to help Ukraine bolster its

Africa Bond Bonanza

In a big shift, majority

Budget car brands gain in

NAIROBIFor the past

billion in 2014. By comparison, in 2000 they raised $1

2 | Tuesday, February 10, 2015

THE WALL STREET JOURNAL.

n India expects its economy to

n Greece said it would cancel

Business & Finance

n Germanys exports, imports

Costs for Entitlements?

n A year after the Winter

n Australias leader, Tony Abbott, survived a move by party

n A Japanese traveler was

health-care cost growth, the

both parties, which a few years

THE WALL STREET JOURNAL EUROPE

Advertising Sales worldwide through Dow Jones

THE WALL STREET JOURNAL.

Tuesday, February 10, 2015 | 3

India Growth Rate Poised to Rival Chinas

Obama Presses Iran on Talks

We have a practice of not

ports in December shrank 3.8% in

gent pictures of manufacturing activity. For the previous fiscal year,

U.S.-Led Airstrikes Help

WASHINGTONU.S. and allied

eration is yet another example of

4 | Tuesday, February 10, 2015

THE WALL STREET JOURNAL.

Greece Digs In Over Austerity

Greeces new government said it

Meanwhile, a top French official

By Harriet Torry and

Mr. Varoufakis told lawmakers in

Greece is expected to ask for a

Germany Set Records in Exports, Imports in 2014

hauls of their rigid economies.

policies were also supporters of the

Source: German Federal Statistics Ofce